Business context and reporting period
Unisys Corporation’s Form 10-K covers the fiscal year ended December 31, 2015. Unisys provides IT services and technology products, including cloud and infrastructure services, application services, business process outsourcing, servers and security software. It reports two segments: Services and Technology, serving government, commercial and financial-services customers.
Financial performance and position
The supplied filing text incorporates the financial statements and management’s discussion from Unisys’s 2015 Annual Report to Stockholders but does not reproduce them. It therefore does not provide clear values for revenue, profit, margins, cash flow, debt balances, cash, liquidity or segment results.
- Services firm backlog was $4.3 billion at year-end 2015, versus $4.8 billion at year-end 2014. About $1.8 billion, or 42%, of 2015 backlog was expected to be filled in 2016.
- Research and development costs were $76.4 million in 2015, $68.8 million in 2014 and $69.5 million in 2013.
- U.S. government agency sales represented approximately 19% of 2015 consolidated revenue. No single client represented more than 10%.
- Unisys had approximately 49.9 million shares outstanding at December 31, 2015. It had not paid a common-stock dividend since 1990 and did not anticipate paying one in the foreseeable future.
Material changes and outlook
Services backlog declined by $0.5 billion, approximately 10%, from year-end 2014. R&D spending increased by $7.6 million from 2014 to 2015. The company identified improving Services margins, selling new Technology products while retaining the installed base, refinancing outstanding debt and delivering cost savings as important future challenges. The supplied text gives no quantified financial guidance or detailed forecast.
Risks, contingencies and other items
- Management cited significant pension obligations and the potential need for substantial defined-benefit-plan contributions, as well as the ability to access financing markets to refinance debt.
- Other stated risks include rapid technological change, competition, contract profitability and revenue uncertainty, client retention, cybersecurity incidents, IT-system disruption, international operations, and attracting and retaining key personnel.
- Government contracts may be audited or terminated; funded contracts can be terminated for convenience or lack of funding. Backlog orders may also be cancellable, with or without penalty.
- Litigation and contingencies are discussed in an incorporated note, but the supplied text does not provide their amounts or details.
- Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2015. KPMG audited the financial statements and internal controls.
- The company employed approximately 23,000 people at year-end; the general business description separately refers to more than 20,000 employees.
Important facts for investors to verify
- Review the incorporated 2015 Annual Report for reported revenue, earnings, margins, cash flows, segment performance, debt, liquidity and pension obligations.
- Check debt maturity and refinancing terms, borrowing capacity and compliance with credit-agreement requirements.
- Assess pension funding needs and related expected cash contributions.
- Evaluate the quality, cancellation exposure and conversion timing of the $4.3 billion Services backlog, including the 2016 expected delivery estimate.
- Review the incorporated litigation and contingencies disclosures and the company’s government-contract exposure.