Unisys Announces Third-Quarter 2006 Financial Results; Company Reports Improved Results and Solid Progress in Repositioning Program

Business Wire, Oct 25, 2006

Cash Flow and Balance Sheet Highlights

Unisys generated $27 million of cash from operations in the third quarter compared with cash usage of $68 million in the third quarter of 2005. The company used $71 million of cash in the third quarter of 2006 for restructuring payments, compared to $15 million of cash for restructuring payments in the third quarter of 2005.

Capital expenditures in the third quarter of 2006 were $60 million compared to $85 million in the year-ago quarter. After deducting for capital expenditures, Unisys used $33 million of free cash in the quarter compared with usage of $154 million in the third quarter of 2005. The company ended the third quarter of 2006 with $612 million of cash on hand.

Year-to-Date Results

For the nine months ended September 30, 2006, Unisys reported a net loss of $300.0 million, or 87 cents per share. These results included total pre-tax charges of $323.5 million for headcount reductions; a first-quarter 2006 pre-tax gain of $149.9 million on the sale of the company's shares in Nihon Unisys Limited; and a first-quarter 2006 pre-tax curtailment gain of $45.0 million related to changes in the company's U.S. defined benefit pension plans. Pre-tax pension expense in the first nine months of 2006, including the first-quarter curtailment gain, was $91.8 million compared with pre-tax pension expense of $136.8 million in the first nine months of 2005. In the first nine months of 2005, the company reported a net loss of $1.7 billion, or $5.01 per share, which included the $1.57 billion charge for an increase in the deferred tax asset valuation allowance. Revenue for the first nine months of 2006 was $4.21 billion compared to revenue of $4.19 billion for the comparable period in 2005.

Conference Call

Unisys will hold a conference call today at 8:15 am EDT to discuss its results. The listen-only Webcast, as well as the accompanying presentation materials, can be accessed via a link on the Unisys Investor Web site at www.unisys.com/investor. Following the call, an audio replay of the Webcast, and accompanying presentation materials, can be accessed through the same link.

About Unisys

Unisys is a worldwide technology services and solutions company. Our consultants apply Unisys expertise in consulting, systems integration, outsourcing, infrastructure, and server technology to help our clients achieve secure business operations. We build more secure organizations by creating visibility into clients' business operations. Leveraging the Unisys 3D Visible Enterprise approach, we make visible the impact of their decisionsCoahead of investments, opportunities and risks. For more information, visit www.unisys.com.

Forward-Looking Statements

Any statements contained in this release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, any projections of earnings, revenues, contract values or other financial items; any statements of the company's plans, strategies or objectives for future operations; statements regarding future economic conditions or performance; and any statements of belief or expectation. All forward-looking statements rely on assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Statements in this release concerning the company's cost reduction plan are subject to the risk that the company may not implement the planned headcount reductions as quickly as currently planned, which could affect the timing of anticipated cost savings. The amount of anticipated cost savings is also subject to currency exchange rate fluctuations with regard to actions taken outside the U.S. Statements in this release regarding contract values are based upon various assumptions, which are subject to change, including the projected volume of products and services to be provided by Unisys, the estimated costs of performance, the continuation of the contracts for their full term and the exercise of all option years, and, for contracts with governmental entities, the availability of appropriated funds. Accordingly, the contract values are not guaranteed. Other risks and uncertainties that could affect the company's future results include general economic and business conditions; the effects of aggressive competition in the information services and technology markets on the company's revenues, pricing and margins and on the competitiveness of its product and services offerings; the level of demand for the company's products and services and the company's ability to anticipate and respond to changes in technology and customer preferences; the company's ability to grow outsourcing and infrastructure services and its ability to effectively and timely complete the related solutions implementations, client transitions to the new environment and work force and facilities rationalizations; the company's ability to effectively address its challenging outsourcing operations through negotiations or operationally and to fully recover the associated outsourcing assets; the company's ability to drive profitable growth in consulting and systems integration; the level of demand for the company's high-end enterprise servers; the company's ability to effectively rightsize its cost structure; the risks of doing business internationally and the potential for infringement claims to be asserted against the company or its clients. Additional discussion of these and other factors that could affect Unisys future results is contained in its periodic filings with the Securities and Exchange Commission. Unisys assumes no obligation to update any forward-looking statements.