Unisys Corporation — FY 2011 Form 10-K
Reporting period: Fiscal year ended December 31, 2011; filed February 24, 2012. The filing describes a global IT services and technology company serving commercial and government customers, with Services and Technology segments. It focuses on security, data center transformation, end-user outsourcing, and application modernization.
Financial performance and position
- Revenue, earnings, margins, cash flow, liquidity, and debt balances: The supplied filing text incorporates the financial statements and MD&A from Unisys’s 2011 Annual Report but does not provide clear values for these measures.
- Services backlog: $5.5 billion at year-end, down from $5.8 billion at December 31, 2010. About $2.25 billion, or 41%, of the 2011 backlog was expected to be fulfilled in 2012. The company cautions that some orders may be canceled and government contracts may be terminated or lose funding.
- Research and development: Company-sponsored costs were $76.1 million in 2011, versus $78.9 million in 2010 and $101.9 million in 2009.
- Debt and preferred securities: The exhibit index identifies 12.75% senior secured notes due 2014 and 14.25% senior secured notes due 2015, and the company had 6.25% mandatory convertible preferred stock. Outstanding balances and related terms are not clear in the supplied text.
- Other: U.S. government agency sales represented approximately 17% of 2011 consolidated revenue. Unisys had about 22,700 employees and 43.4 million common shares outstanding at year-end. It had not paid common-stock dividends since 1990 and did not anticipate doing so in the foreseeable future.
Material changes versus prior comparable period
- Services backlog declined by $300 million, approximately 5%, from year-end 2010.
- R&D spending decreased by $2.8 million from 2010 and by $25.8 million from 2009.
Outlook, risks, and notable disclosures
- Management’s strategy emphasized investment in four target markets: security, data center transformation, end-user outsourcing, and applications modernization. The supplied text does not provide financial guidance or quantified forecasts.
- Backlog is not guaranteed: commercial orders may be canceled, while government contracts may be terminated or affected by unavailable funding. The company generally expects payment for completed work and allowable termination costs.
- Other stated business risks include dependence on a limited number of suppliers for certain technology components, intense competition and rapid technological change, and seasonal revenue patterns that have generally made fourth-quarter revenue higher. Detailed risk-factor and litigation discussions are incorporated by reference and are not included in the supplied text.
- Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2011; KPMG audited internal control over financial reporting.
Investor facts to verify
- Review the incorporated annual report for audited revenue, operating and net income, margins, cash flow, cash and liquidity, and full debt balances and maturities.
- Check segment results and whether the Services backlog converted to revenue as expected, including cancellation and government-funding exposure.
- Read the incorporated risk factors and litigation and contingencies notes for specific claims, obligations, and other unusual items.
- Confirm the terms and potential dilution from the 6.25% mandatory convertible preferred stock and assess the company’s ability to service its high-coupon secured notes.