Unisys Corporation — 2014 Form 10-K
Reporting period: Fiscal year ended December 31, 2014. Although the request identifies 2014 Q4, this is an annual filing; the supplied text does not include a separate fourth-quarter results discussion. The filing incorporates the company’s annual report to stockholders for its financial statements and MD&A, but those details are not included in the supplied text.
Business context
Unisys is a global IT company operating through Services and Technology segments. Offerings include outsourcing and managed services, systems integration and consulting, infrastructure and maintenance support, servers, cybersecurity software, and cloud and data-center solutions. The company reported approximately 23,200 employees at year-end and serves commercial, financial services, public-sector, and U.S. federal-government customers.
Financial and operating metrics
- Revenue, profit, cash flow, margins, debt, and liquidity: The supplied filing text does not provide clear values. The underlying financial statements and MD&A are incorporated by reference but are not reproduced here.
- Services backlog: $4.8 billion at December 31, 2014, unchanged from December 31, 2013. Approximately $2.0 billion, or 41%, was expected to be filled in 2015. The company cautions that some orders may be canceled and government contracts may be terminated or lose funding.
- U.S. government revenue: Sales to U.S. government agencies represented approximately 16% of consolidated 2014 revenue.
- Research and development: Company-sponsored R&D costs were $68.8 million in 2014, versus $69.5 million in 2013 and $81.5 million in 2012.
- Share repurchases: 267,174 shares were repurchased in October 2014 at an average price of $20.52. The remaining authorization expired by December 31, 2014.
- Dividends: No cash dividends have been paid since 1990, and the company did not anticipate paying them in the foreseeable future.
Changes and notable developments
- Services backlog was flat year over year; R&D spending declined modestly from 2013 and was below 2012.
- Peter A. Altabef became president and CEO in January 2015. The filing also notes leadership changes in Federal Systems and that M. Lazane Smith planned to retire effective February 27, 2015.
- The company completed the sale of a facility outside the United States in December 2014 and planned to transition out of its use during 2015.
Outlook, risks, and controls
- The filing text gives no quantified revenue, earnings, cash-flow, or margin guidance. Management expected higher fourth-quarter revenue to remain a seasonal pattern, but no forecast is provided.
- Risks described include intense competition and rapid technological change; reliance on single or limited suppliers for some technology components; contract cancellations and government termination or funding risk; and international business exposure. The filing refers readers to the incorporated MD&A for fuller risk-factor discussion.
- Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2014. KPMG audited the financial statements and internal control, with its reports incorporated by reference.
Important facts for investors to verify
- Review the incorporated 2014 annual report for actual revenue, operating and net income, cash flow, margins, debt, liquidity, segment results, and year-over-year comparisons; the supplied text does not provide those values.
- Assess the quality, expected timing, and cancellation or termination exposure of the $4.8 billion Services backlog, including government-contract funding risk.
- Verify the company’s 2015 outlook and the financial effects of leadership and facility changes in the incorporated MD&A and notes.
- Review the incorporated litigation and contingencies disclosures and the detailed risk factors referenced by the filing.