Unisys Corporation (UIS) reported a first quarter loss of $40.8 million or $0.95 per share for the first quarter of 2011, compared to a net loss of $11.6 million or $0.27 in the year-ago quarter.
The net loss included a previously announced charge of $31.8 million related to debt reduction.
Excluding this charge, the net loss came in at $0.21, wider than the Zacks Consensus Estimate for a loss of $0.10.
Unisys reported revenues of $911 million, down 7% year over year. The decline in revenues was primarily due to a $50 million reduction in revenue from the U.S. Federal government. This reduction was mainly due to the termination of the Transportation Security Administration contract and weakness in spending related to the U.S. government budget uncertainty.
Foreign currency fluctuations had a two percentage-point positive impact on revenue in the quarter. Management stated that first quarter results were negatively impacted by greater –than-anticipated softness in the U.S. Federal business due to the budget impasse in Washington, which limited funding for new contracts.
The 2011 federal budget was passed a couple of weeks ago and the government was operating on a series of continuing resolutions that limited funding on new contracts. This also affected funding availability for many existing contracts. thereby,adversely impacting the federal revenue.
On a product basis, Services revenue came in at $800.3 million, down 5.9% from a year ago. Services revenue outside of the U.S. Federal business was essentially flat on a year-over-year basis. Within services, Systems integration and consulting revenue declined 3% year over year.
Revenue for Infrastructure services declined 12% year over year. Core maintenance declined 12% year over year. Within outsourcing, ITO revenue was down 5%. Business Process Outsourcing revenue declined 2% due to continued declines in check processing volumes in the U.K. joint venture.
Technology revenues came in at $110.9 million, down 12.6% from a year ago as growth in ClearPath revenue was more than offset by declines in other technology revenue.
Gross margin declined to 22.8% from 24.1% in the year-ago quarter, primarily due to lower revenues. Despite a 6% decline in operating expenses, operating margin declined to 4.6% compared to 6.0%.
During the quarter, Unisys generated $28 million of cash from operations and used $43 million in capital expenditures.
As of March 31, 2011, Unisys had a total debt of $618.5 million, down from $823.2 million a year ago. During the first quarter Unisys issued 2,587,500 shares of mandatory convertible preferred stock at an initial liquidation preference of $100 per share, and used the proceeds to redeem approximately $211 million of senior secured notes.
Unisys ended the quarter with cash and equivalents of $833.1 million, up from $828.3 million at the end of the previous quarter.
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