Business context and reporting period
Unisys Corporation filed this Form 10-K for the fiscal year ended December 31, 2013. It provides IT services, software and technology to commercial and government customers through its Services and Technology segments. Its focus areas include security, data-center transformation, end-user outsourcing and applications modernization.
Financial and operating metrics
- Services firm-order backlog was $4.8 billion at year-end 2013, down from $5.1 billion at year-end 2012. The company expected approximately $2.1 billion, or 44%, of the 2013 backlog to be filled in 2014.
- Unisys-sponsored research and development costs were $69.5 million in 2013, compared with $85.1 million in 2012 and $76.1 million in 2011.
- U.S. government agency sales represented approximately 15% of 2013 consolidated revenue. No single customer accounted for more than 10% of revenue.
- The supplied filing text does not provide clear values for revenue, profit, cash flow, margins, debt or liquidity. The financial statements and management discussion are incorporated by reference to the 2013 Annual Report to Stockholders.
Material changes versus the prior comparable period
Services backlog declined by $300 million year over year. R&D expense decreased by $15.6 million from 2012. The filing also reports executive changes, including a new general counsel in November 2013 and a new global sales president in January 2014; the Technology, Consulting and Integration Solutions president announced retirement effective March 31, 2014.
Outlook, risks and other matters
- The filing excerpt provides no specific revenue, earnings or cash-flow guidance.
- Management noted that fourth-quarter revenue has generally been higher than in other quarters because of seasonality.
- Backlog may be cancelled, and government contracts may be terminated or lose funding; government-contract backlog is therefore not assured revenue.
- Other stated risks include intense competition and rapid technology change, reliance on a single or limited number of suppliers for certain components, and risks of international operations. The detailed risk-factor discussion is incorporated by reference and is not included in the supplied text.
- Unisys had not paid common-stock cash dividends since 1990 and did not anticipate doing so in the foreseeable future. During Q4 2013 it repurchased 5,700 shares for an average $26.50 per share under its repurchase authorization.
- Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2013; the filing reports no material quarterly change in internal control over financial reporting.
Investor verification points
- Review the incorporated annual report for full-year and quarterly revenue, earnings, cash flow, segment results, margins, balance-sheet liquidity and debt details.
- Assess whether backlog converts to revenue as expected, including cancellation and government-funding exposure.
- Review the incorporated risk-factor and litigation disclosures for contingencies and other potential obligations.
- Check the terms and potential dilution associated with the 6.25% mandatory convertible preferred stock and the remaining share-repurchase authorization.