Unisys Closes Sale
of U.S. Federal Business to SAIC
$1.2 billion transaction significantly
strengthens company's balance sheet and cash flow profile,
increases operational flexibility; company expects to use net
proceeds largely to pay down debt and reduce pension
obligations
Company promotes
Eric Hutto to president and chief
operating officer
BLUE BELL, Pa., March 16, 2020 /PRNewswire/ -- Unisys
Corporation (NYSE: UIS) today announced the close of the sale
of the company's U.S. Federal business to Science Applications
International Corp. (NYSE: SAIC).
Net proceeds from the transaction, which the company announced
on February 6, are largely expected
to be used to pay down debt and reduce pension obligations, thereby
significantly improving Unisys' balance sheet and cash flow
profile, U.S. pension funded status and overall financial
flexibility. Related to this, the company also announced that it
has issued a notice of redemption to redeem all $440 million in aggregate principal amount of its
outstanding 10.750% Senior Secured Notes due 2022. Pro forma for
the transaction, the company's net leverage (inclusive of pension
deficit) has been reduced from 4.3x 2019 Adj. EBITDA(1)
pre-transaction to 2.4x on a pro forma basis.
"The transaction ushers in a more agile Unisys," said Unisys
Chairman and CEO Peter Altabef. "The
improved capital structure that comes from the sale of U.S. Federal
positions Unisys with improved operational flexibility to better
serve our clients and provides the potential for delivering
increased value to shareholders."
Company Promotes Eric Hutto
In conjunction with the announcement of the transaction's close,
Unisys also today announced the appointment of Eric Hutto, senior vice president and president
of the Enterprise Solutions business, as the company's president
and chief operating officer. Enterprise Solutions and U.S. Federal
were the company's two business units prior to the sale of U.S.
Federal.
"Eric's business acumen, hard work and visionary leadership have
all been on display since he joined the company in 2015," Altabef
said. "Eric brings passion and a competitive will to win that is
contagious among our associates, and he will help drive Unisys to
continued success. I look forward to working closely with him in
taking our company forward."
Non-GAAP and Other Information
Although appropriate under generally accepted accounting principles
("GAAP"), the company's results reflect revenue and charges that
the company believes are not indicative of its ongoing operations
and that can make its revenue, profitability and liquidity results
difficult to compare to prior periods, anticipated future periods,
or to its competitors' results. These items consist of certain
portions of revenue, post-retirement, debt exchange and
cost-reduction and other expenses. Management believes each of
these items can distort the visibility of trends associated with
the company's ongoing performance. Management also believes that
the evaluation of the company's financial performance can be
enhanced by use of supplemental presentation of its results that
exclude the impact of these items in order to enhance consistency
and comparativeness with prior or future period results. The
following measures are often provided and utilized by the company's
management, analysts, and investors to enhance comparability of
year-over-year results, as well as to compare results to other
companies in our industry.
(1) EBITDA & adjusted EBITDA –
Earnings before interest, taxes, depreciation and amortization
("EBITDA") is calculated by starting with net income (loss)
attributable to Unisys Corporation common shareholders and adding
or subtracting the following items: net income attributable to
noncontrolling interests, interest expense (net of interest
income), provision for income taxes, depreciation and amortization.
Adjusted EBITDA further excludes certain revenue and related profit
relating to reimbursements from the company's check-processing JV
partners for restructuring expenses included as part of the
company's restructuring program, post-retirement, debt exchange,
and cost-reduction and other expenses, non-cash share-based
expense, and other (income) expense adjustments. In order to
provide investors with additional understanding of the company's
operating results, these charges are excluded from the adjusted
EBITDA calculation. Pro forma adjusted EBITDA excludes Adjusted
EBITDA for U.S. Federal business for the full year 2019.
About Unisys
Unisys is a global information technology company that builds
high-performance, security-centric solutions for the most demanding
businesses and governments. Unisys offerings include security
software and services; digital transformation and workplace
services; industry applications and services; and innovative
software operating environments for high-intensity enterprise
computing. For more information on how Unisys builds better
outcomes securely for its clients across the government, commercial
and financial services markets, visit www.unisys.com.
Follow Unisys on Twitter and LinkedIn.
Forward-Looking Statements
Any statements contained in this release are not historical facts,
including those regarding future performance, are forward-looking
statements under the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on current
expectations, assumptions, anticipated events or trend, beliefs
relating to matters that are not historical in nature and involve
risks and uncertainties that could cause actual results to differ
from expectations, all of which are difficult to predict and many
of which are beyond the control of the company. Actual results may
differ materially from the company's current expectations depending
upon a number of factors affecting the company's business and risks
associated with the transaction. These factors include, among
others: the ability of the company to achieve the intended benefits
of the transaction (including, without limitation, risks related to
the ability of the company to repay certain indebtedness and reduce
pension obligations following the closing of the transaction); the
risk related to the change of the company's business structure and
a decrease in the size of the company following the closing of the
transaction; the risk related to the company's ability to
operate its business as a going-concern following the closing of
the transaction; the company's ability to continue revenue growth
and margin expansion in its services business; the company's
significant pension obligations and required cash contributions and
requirements to make additional significant cash contributions to
its defined benefit pension plans; the company's ability to access
financing markets; a reduction in the company's credit rating; the
company's ability to maintain its installed base and sell new
solutions; the potential adverse effects of aggressive competition
in the information services and technology marketplace;
cybersecurity breaches could result in significant costs and could
harm the company's business and reputation; the company's ability
to effectively anticipate and respond to volatility and rapid
technological innovation in its industry; the company's ability to
retain significant clients; the company's contracts may not be as
profitable as expected or provide the expected level of revenues;
the risks of doing business internationally when a significant
portion of the company's revenue is derived from international
operations; the business and financial risk in implementing future
acquisitions or dispositions; the adverse effects of global
economic conditions, acts of war, terrorism or natural disasters or
the widespread outbreak of infectious diseases; the impact of
Brexit could adversely affect the company's operations in the
United Kingdom as well as the
funded status of the company's U.K. pension plans; the company's
ability to attract, motivate and retain experienced and
knowledgeable personnel in key positions; a significant disruption
in the company's IT systems could adversely affect its business and
reputation; the company may face damage to its reputation or legal
liability if its clients are not satisfied with the company's
services or products; the performance and capabilities of third
parties with whom the company has commercial relationships; an
involuntary termination of the company's U.S. qualified defined
benefit pension plans; the potential for intellectual property
infringement claims to be asserted against the company or its
clients; and the possibility that legal proceedings could affect
the company's results of operations or cash flow or may adversely
affect the company's business or reputation;. These risks and
uncertainties are discussed in the company's reports filed with the
SEC, including but not limited to the company's annual report on
Form 10-K and in its subsequent reports on Form 10-Q and periodic
reports on Form 8-K, and from time to time in the company's other
investor communications. Except as expressly required by law, the
company assumes no obligation to update any forward-looking
statement to reflect events or circumstances that occur after the
date on which the statement is made.
RELEASE NO.: 0316/9758
Unisys and other Unisys products and services mentioned herein,
as well as their respective logos, are trademarks or registered
trademarks of Unisys Corporation. Any other brand or product
referenced herein is acknowledged to be a trademark or registered
trademark of its respective holder.
UIS-C
CONTACT: Investors: Courtney
Holben, Unisys, 215-986-3379, courtney.holben@unisys.com or
Media: Tony Buglione, Unisys,
1-215-274-1942, tony.buglione@unisys.com