Unisys in the US has reported a strong fourth quarter of 2003, meeting its earnings per share target for both the quarter and the year and generating $134 million of free cash flow (cash from operations reduced by capital expenditures) in 2003.
For the fourth quarter of 2003, Unisys net income rose to $111.5 million, or 33c per diluted share, compared to fourth-quarter 2002 net income of $89.1 million, or 27c per share.
The fourth-quarter 2003 results include a tax benefit of $3.8 million, or 1c per share, from the positive resolution of a tax matter. Revenue for the fourth quarter of 2003 grew 5% to $1.64 billion from revenue of $1.55 billion in the year-ago period.
Currency had a six percentage point positive impact on the company`s revenue in the fourth quarter, reflecting a weak US dollar against most major currencies worldwide.
For the full year of 2003, Unisys reported net income of $258.7 million, or 78c per diluted share, compared to annual 2002 net income of $223 million, or 69c a share. Included in these results is the $3.8 million tax benefit. Revenue for the full year of 2003 rose 5% to $5.91 billion from $5.61 billion for all of 2002. Revenue grew 1% on a constant currency basis in 2003. At 31 December 2003, the company had approximately $9 billion of services backlog, which included $2.6 billion of unfunded US government orders.
Included in the results for the fourth quarter and full year 2003 and 2002 is the impact of pension accounting. For the fourth quarter, pre-tax pension income declined from $34.8 million in 2002 to $0.2 million expense in 2003, a decrease of $35 million. For the full year, pre-tax pension income decreased from $143.5 million in 2002 to $22.6 million in 2003, a decrease of $121 million. Earnings per share excluding pension accounting increased from 39c in 2002 to 73c in 2003 and from 20c in the fourth quarter of 2002 to 33c in the fourth quarter of 2003.
"This was a very good year for Unisys, delivering consistent results in a volatile industry environment," says Barry Holt, MD of Unisys Africa. "We significantly increased our operating cash flow, generated $134 million in free cash flow, and met our earnings per share target for the year. Our earnings per share in 2003 increased 13% on a reported basis and 87% after eliminating the impact of pension accounting in both 2003 and 2002. We also continued to enhance our value-added strategy with new services and product offerings."
Holt says that in 2003 Unisys met each of its strategic objectives for the year. These accomplishments included:
* Double-digit growth in business process outsourcing;
* Double-digit growth in enterprise security revenue with a growing base of security clients;
* A 110 basis point improvement in services operating margins, excluding the impact of pension accounting;
* Double-digit growth in ES7000 server sales; and
* A reduction in selling, general and administrative (SG&A) expenses as a percentage of revenue from 17.7% in 2002 to 17% in 2003.
"We look for continued strong progress in 2004 as the market continues to improve," says Holt. "We have five strategic objectives for the new year: to continue double-digit growth in our annuity-based outsourcing business; to drive continued growth in our services operating margin; to accelerate growth in enterprise security; to achieve double-digit growth in our ES7000 server sales; and to continue enhancing market brand awareness of Unisys.
"Financially, we continue to look for mid single-digit revenue growth in 2004, with earnings per share, excluding the impact of pension accounting, of about 83c - 87c. In the first quarter of 2004, we expect earnings per share of about 11c - 13c, excluding the impact of pension accounting, on single-digit revenue growth."
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