Unisys Corp (UIS) 2009 Q2 法說會逐字稿

完整原文

使用警語:中文譯文來源為 Google 翻譯,僅供參考,實際內容請以英文原文為主

  • Operator

  • Good day, everyone and welcome to the Unisys second quarter 2009 financial results conference call.

  • Now I'd like to turn the conference over to Mr.

  • Jack McHale, Vice President of Investor Relations at Unisys Corporation.

  • Please go ahead, sir.

  • Jack McHale - VP IR

  • Thank you, operator.

  • Good morning, everyone, and thank you for joining us today.

  • About an hour ago, Unisys released its second quarter 2009 financial results.

  • And with us this morning to discuss our results are Ed Coleman, our CEO, and Janet Haugen, our CFO.

  • Before we begin, I want to cover just a few housekeeping details.

  • First, today's conference call and the Q&A session are being Webcast via the Unisys investor website.

  • Second, you can find on our investor website the earnings release and the presentation slides that we will be using this morning to guide our discussions.

  • These materials are available for viewing as well as downloading and printing.

  • Finally, I'd like to remind you that all forward-looking statements made in this conference call are subject to various risks and uncertainties that could cause actual results to differ materially from expectations.

  • These factors are discussed more fully in the earnings release and in the Company's SEC filings.

  • Copies of these SEC reports are available from the SEC and from the Unisys investor website.

  • Now let me turn today's call over to Ed.

  • Ed Coleman - Chairman, CEO

  • Thanks, Jack.

  • Hello everyone.

  • Thank you for joining us today to discuss our second quarter financial results.

  • As we begin our call, please turn to slide one of the presentation.

  • In our last two calls, I've outlined a turnaround program that we're driving at Unisys to enhance our profitability, strengthen our balance sheet and improve our competitive position in the IT marketplace.

  • We saw some encouraging signs in the second quarter that our efforts are working and beginning to show results.

  • Driven by our actions to focus our resources, simplify our organization, and reduce expenses, we more than tripled our operating profit in the quarter from a year ago.

  • And we delivered net income.

  • We also reduced our free cash usage to almost breakeven levels.

  • Also during the quarter, we took steps to address our debt by conducting a private debt exchange.

  • The exchange process isn't complete yet.

  • The offers will expire at midnight tonight.

  • As of yesterday, about $230 million of the $300 million of March 2010 notes have been tendered for exchange.

  • Janet will comment more on this later.

  • As we implement our turnaround program, our primary focus is on driving profitability and cash flow.

  • So I'm pleased by our results in the quarter and the progress we're making in turning around the financial profile of the Company.

  • At the same time, we recognize that this is only a first step.

  • Our objective is to build a Company that is consistently and predictably profitable, and that generates free cash flow.

  • While we were profitable in the quarter, we much continue the progress.

  • Although we came close to generating free cash flow in the quarter, we have to turn that corner and begin to generate free cash flow on a consistent basis.

  • So we have a lot of work to do, and we're doing this work in what continues to be a very difficult business environment.

  • Our revenue was down 16% in the quarter, or about 8% on a constant currency basis.

  • We saw continued soft demand in our commercial business as organizations remain cautious about investing in new IT projects as they work through the economic downturn.

  • However, our US Federal Government business continued to grow as we benefit from government spending on security and other key areas of focus for us.

  • To drive profitable revenue our teams are doing exciting work to introduce innovative services and solutions tied to our focused areas of strength.

  • I'll talk more about this in a moment.

  • It will take time for these new initiatives to gain traction, particularly given the broader economic environment.

  • In the meantime, we will continue to simplify the organization, reduce our cost base, and work more efficiently.

  • Janet will provide more details on our second quarter results in her comments.

  • But now I'd like to take a few minutes to review our progress against the four key priorities of our turnaround program.

  • Please turn to slide two.

  • This should be a familiar slide as used it last quarter and will continue to use it in the months ahead as we track our progress.

  • The first two priorities are about driving profitable revenue by being tightly focused on where and how we invest our resources, and by providing solutions that clients recognize as being differentiated and adding value.

  • The second two priorities are about driving cost efficiency and margin improvement across our business by enhancing our labor model and reducing overhead.

  • All four priorities are aimed, as I said before, at the overriding objective of creating an organization that is consistently and predictably profitable and that generates free cash flow, while delivering great customer service and solutions.

  • Moving to slide three, reviewing our progress against the first two priorities, I believe we've taken some major strides forward over the past six months in terms of sharpening our business focus and our market differentiation.

  • We have identified our core strengths as a Company.

  • We've matched up our strengths against the marketplace in growing areas of client need, and we have focused on four areas of the market where we're investing our resources to drive profitable revenue.

  • These four areas are security, data center transformation and outsourcing, end user outsourcing and support services, and application modernization and outsourcing.

  • Across these four areas of strength, we're doing innovative work to bring to market differentiated solutions and services that solve critical problems being faced by our clients.

  • I hope you've seen some of the announcements we've made recently around cloud computing and security, outsourcing, and our clear path mainframe technology.

  • Our recent cloud computing launch, which builds on all four of our areas of strength, is a good example of the work we're doing to apply our resources in a more focused way, to drive profitable revenue in a growing area of the market.

  • The cloud computing market is a natural one for Unisys to play in.

  • Organizations increasingly recognize the advantages of migrating their IT work loads to the cloud, but they face significant obstacles that are holding them back from widespread adoption.

  • One of the biggest obstacles is security.

  • Before shifting applications to a cloud environment, clients need to make sure their organizational data and applications will be truly secure.

  • Unisys brings to this market our mainframe heritage, a deep understanding of the data center, decades of experience in managing and modernizing complex mission critical applications, and recognized capabilities in managing these applications in an outsourced environment.

  • Very few providers in the market have this combination of capabilities.

  • We also have something else that differentiates us from others in this market.

  • Our security capabilities, Including our ground-breaking network security technology that we call Stealth.

  • By bringing together these capabilities, we can provide the added levels of security and reliability that clients need to move safely and securely into an online cloud environment.

  • We received positive responses in the media and analyst communities to our new cloud solutions and our other recently announced offerings.

  • We have additional solution offerings planned in the months ahead as we continue to enhance our portfolio.

  • As a Company we're becoming more focused, which I believe will help us not only to be more profitable, but also to gain critical mass and traction in those areas of the market where we've chosen to place our bets.

  • Turning to slide four, our second set of priorities is aimed at enhancing our profit margins by improving our services labor model and reducing overhead expenses.

  • Reviewing our progress on the gross margin side, our goal is to improve our services gross profit margins by 4 to 5 percentage points from where they've been running in recent years.

  • We're working to do that by shifting our services mix towards more higher margin work such as application modernization and security, and by delivering services more cost efficiently.

  • To date, we've initiated actions to lower our annualized cost of revenue by about $150 million, by expanding our use of lower cost labor pools, both offshore and onshore, and by making greater use of automated tools and service delivery.

  • We saw the results in our services gross margins which improved by nearly 2 percentage points year-over-year in the second quarter.

  • As a Company, we still have more work to do.

  • Particularly in expanding our use of offshore and onshore low cost labor pools.

  • We're behind our competition in this area, and I'm making it a priority to improve our execution of this important area.

  • In terms of overhead expenses, as I've stated before, our goal is to reduce our annualized SG&A expenses by about $250 million.

  • We've moved effectively on this program, and today we put in place actions to reduce our annual SG&A expenses by about $200 million.

  • Slide five shows our SG&A expense levels over the first half of the year.

  • You can see the progress we've made in bringing down our SG&A, both on a dollar basis and as a percent of revenue.

  • Our SG&A came down 33% in the second quarter, of which about 7 points came from currency.

  • This progress on expenses was key to the operating margin improvement we saw in the quarter, particularly in our services business.

  • As we continue our work to simplify the business, we expect to uncover additional opportunities to streamline the business that will move us further toward our $250 million savings target.

  • Moving to slide six.

  • Looking ahead, we'll remain focused on the two primary objectives of profitability and free cash flow.

  • We will continue to be vigilant on cost and to look for ways to operate more cost effectively and to reduce overhead.

  • We will also continue to drive new differentiated offerings across our four areas of strength, and make sure that we're showcasing Unisys and our enhanced portfolio to the market.

  • It is important to remember that economic conditions remain difficult and we're in the seasonally soft third quarter.

  • But with a more focused business model, a streamlined cost base and a continuing commitment to service quality and customer satisfaction, we've taken a solid first step and are better positioned to take advantage of economic trends as they improve.

  • Again, thank you for joining us this morning.

  • Now I'd like to turn the call over to Janet, who will take you through the quarter results in more detail.

  • Janet Haugen - SVP, CFO

  • Thanks, Ed, and hello everyone.

  • We made good progress in the second quarter in making Unisys a leaner, more cost efficient and profitable Company.

  • I was pleased with our cost and cash management as we work through what continues to be a difficult economic environment.

  • This morning I will take you through our financial results for the quarter.

  • I will also review our cash flow in the quarter and provide an update on expectations for capital expenditures.

  • In addition, I will provide a brief update on the debt exchange process.

  • Starting with orders, please turn to slide seven for an overview of order trends in the quarter.

  • Our services orders showed substantial declines from the year ago quarter, primarily reflecting order declines for outsourcing and systems integration projects.

  • However, our services orders increased sequentially from the first quarter of 2009.

  • Geographically, we saw year-over-year order declines in the US and Europe, partially offset by order gains in Latin America and Asia-Pacific.

  • We closed the second quarter with $5.9 billion in services backlog, which was up 4% from services backlog at March 31st, 2009.

  • The increase in services backlog was driven by foreign currency exchange.

  • On a constant currency basis, services backlog was down about 3% from March 31st backlog.

  • Slide eight summarizes our financial results in the second quarter.

  • At the top line, we reported revenue of $1.13 billion, a decline of 16% year-over-year.

  • Foreign currency exchange had an 8 point negative impact on revenue this quarter.

  • On a constant currency basis, revenue was down 8%.

  • Based on today's rates, we anticipate 4 to 5 percentage point negative impact on revenue in the third quarter of 2009 and a 2 to 3 percentage point positive impact on revenue in the fourth quarter of 2009.

  • Total gross profit dollars declined due to lower revenue volumes, but our overall gross profit margin improved by 120 basis points from the year-ago period, as we benefited from actions to enhance the cost efficiency of services delivery.

  • During the quarter, the Company recorded a benefit of approximately $11 million related to a change in a Brazilian gross receipts tax law.

  • Approximately $6 million of this benefit was recorded in cost of revenue and $5 million in other income.

  • Operating expenses declined 31% year-over-year, driven by significant reduction in SG&A expenses as well as a 6 percentage point benefit from currency translation.

  • Our operating profit more than tripled in the quarter to $75 million, and we reported an operating profit margin of 6.7%, which was up 500 basis points from the year-ago period.

  • At the other income expense line, which improved $9 million year-over-year, about half of that change is related to the Brazilian matter I discussed earlier and the other half due to changes in foreign exchange gains and losses.

  • At the tax line, we had a $16.6 million tax provision in the quarter, versus a tax provision of $3.5 million in the year-ago quarter.

  • At the bottom line, after taxes, we reported $38.1 million in net income, compared with a net loss of $14 million a year ago.

  • Slide nine shows our second quarter revenue by geography.

  • Our US revenue declined 5% in the quarter and represented 48% of the Company's revenue in the quarter.

  • Within the US, we saw double-digit growth in our Federal Government revenue, which was more than offset by revenue declines in commercial markets.

  • International revenue declined 24% and represented 52% of our revenue in the quarter.

  • On a constant currency basis, international revenue declined 10%.

  • Internationally, revenue declined on a constant currency basis in all regions, with the exception of Asia-Pacific, which grew 4%.

  • Slide 10 provides more details on our second quarter revenue by business offering.

  • We saw revenue declines in all of our services and technology offerings in the quarter and our technology business in particular was impacted by deferrals by clients of expected IT purchases.

  • Moving on to expenses and margins, please turn to slide 11.

  • Despite lower revenue, we were able to significantly improve margins in our services business as a result of improved execution and cost reduction actions.

  • Gross margins in the services business improved by 180 basis points to 21%.

  • Service operating margins increased even more significantly, a 460 basis point increase to 7.9%, driven by significant reduction in expenses.

  • About a half point of that improvement came from the Brazilian tax matter I mentioned earlier.

  • And I do want to remind you that we are going into the seasonally slower third quarter which we do expect will have an impact on our third quarter services margins.

  • In our technology business, we were able to maintain and slightly improve our gross margins, despite lower revenue, by focusing on the higher margin areas of our business.

  • However, technology operating margins declined 170 basis points year-over-year.

  • We reduced operating expenses significantly in this business, but were impacted by the sizable revenue decline in the quarter.

  • Now, please turn to slide 12 for an overview of our cash flow performance in the quarter.

  • We generated $48 million of cash from operations in the second quarter, which was down slightly from $52 million of cash generated from operations in the year-ago quarter.

  • Year-to-date, operating cash flow has increased to $88 million, compared to $2 million in the first six months of 2008.

  • We used $20 million of cash in the quarter for restructuring payments, compared with $22 million a year ago.

  • We continue to tightly manage capital expenditures as we work through the current economic environment.

  • CapEx for the second quarter declined to $53 million from $71 million in the second quarter of 2009(Sic-see press release).

  • CapEx for the first six months has declined to $101 million, compared to $136 million in the year-ago period.

  • Looking at free cash flow, which is cash from operations less capital expenditures, we used $5 million of free cash in the quarter, compared with $19 million of free cash usage a year ago.

  • Year-to-date, free cash usage has decreased to $13 million, compared with $134 million over the first six months of 2008.

  • Depreciation and amortization was $90 million in the quarter, down from $99 million last year, reflecting a lower CapEx base and currency translation.

  • We ended the quarter with $475 million of cash on hand, compared to $469 million as of March 31st.

  • The current cash balance is down from the $544 million of cash December 31st, 2008, due primarily to the $72 million of cash used to collateralize letters of credit.

  • This restricted cash is reported in other assets.

  • Not in cash.

  • For the full year 2009 we look for capital expenditures in the $200 million to $225 million range compared with $295 million in 2008.

  • We look for depreciation and amortization in the $325 million to $350 million range in 2009, compared with depreciation and amortization of $418 million in 2008.

  • For the full year of 2009, we have increased our expectations for cash contributions to our Defined Benefit Pension Plans to $100 million to $105 million.

  • This increase is solely due to the impact of exchange rates.

  • Finally, moving to slide 13, I would like to provide a bit more color on the private debt exchange offers that we are currently conducting to address our outstanding debt including the March 2010 maturity of $300 million.

  • We are offering to exchange the March 2010 unsecured notes for secured notes maturing at a later date and cash.

  • We are also offering to exchange our other unsecured notes for secured notes and shares of common stock.

  • The offers expire at midnight tonight and we expect to announce final results later this week.

  • As of yesterday, approximately $230 million of the 2010 notes had been tendered in the exchange, which would leave about $70 million outstanding that come due next March.

  • We intend to address any remaining 2010 notes from cash generated through improved operations, asset sales, additional refinancing or a combination of these.

  • About $290 million of our $400 million of 2012 notes have also been tendered in the exchange.

  • The exchange offers have a condition that at least 40% of the 2010 notes and 40% of the 2012 notes be tendered and we have met that condition.

  • We are committed to strengthening our balance sheet and this will remain a key focus of the Company and the management team going forward.

  • Turning to slide 14, in summary, this was a quarter of important progress for the Company.

  • I am pleased by the discipline we showed in the quarter in reducing expenses, increasing our profitability and continuing to improve the cash flow performance of the business.

  • As we look forward to the third quarter, we expect that the services business will be a bit softer the third quarter due to normal seasonal patterns combined with the economic environment.

  • As we work through this period, we will continue to look for further opportunities to reduce our cost base, operate more cost efficiently and improve the cash flow performance of the business.

  • Thank you for your time this morning and now I'd like to turn the call back over to Jack.

  • Jack McHale - VP IR

  • Thank you, Janet, and thank you, Ed, for those comments.

  • Operator, we'd now like to open the call to see if there are any questions.

  • Operator

  • (Operator Instructions).

  • We'll pause for a moment.

  • Our first question comes from Arun Seshadri with Credit Suisse.

  • Arun Seshadri - Analyst

  • Yes, hi.

  • Thanks for taking my question.

  • Just wanted to get a sense for SG&A and R&D over the back half of the year.

  • Is it fair to say that these comps are generally sequential now, i.e.

  • should drift lower versus your 2Q numbers for the rest of the year?

  • Janet Haugen - SVP, CFO

  • The only anomaly that we may have, although the management team is continuing to work in reducing SG&A on a sequential basis, is that sometimes we do see a pick-up in SG&A expenses in the fourth quarter, predominantly due to the amount of technology transactions that happen in the quarter and increased commissions in that area.

  • Arun Seshadri - Analyst

  • Okay.

  • Janet Haugen - SVP, CFO

  • And obviously the other impact on this, as we've talked through the comments, is we do expect a negative impact of currency, and for SG&A that's a positive impact and reducing SG&A expenses in the third quarter, but currency will flip in the fourth quarter as I mentioned in my comments, so that may sequentially just because of the impact of currency as we see it right now cause the number to go up.

  • Arun Seshadri - Analyst

  • I appreciate that.

  • And just to clarify, I think you said before in the quarter that roughly $11 million in the quarter was -- could be considered one-time flowing through your operating income line?

  • Janet Haugen - SVP, CFO

  • That's correct.

  • Arun Seshadri - Analyst

  • Okay.

  • Janet Haugen - SVP, CFO

  • Let me clarify.

  • $11 million is going through the P&L.

  • $6 million of that is going through operating income and the remaining goes in other income and expenses, as I said in my comments.

  • So if you're looking at the pretax line, $11 million is a one-time benefit, not all of that is in operating income.

  • Arun Seshadri - Analyst

  • Got it.

  • Got it.

  • And the other -- one more question.

  • On the -- I just noticed when you talked about the 6 7/8 notes, retiring the remainder of those, you said that you would pursue a variety of options to take care of that maturity.

  • You did not mention balance sheet cash.

  • Was that intentional?

  • Janet Haugen - SVP, CFO

  • In my comments, I mentioned that we are working to deal with the 2010 maturity with the same three actions that we have said all the way through 2009.

  • And that is the cash that is generated from the business through asset sales and through potential refinancing or a combination of those.

  • And clearly, cash on hand is part of the overall Company's balance sheet, but we have a focus on improving the free cash flow, as Ed said in his comments and I did, we were almost at breakeven, so we want to continue improving the free cash flow performance of the business and that's our goal to use the portions of that to reduce the remaining debt maturity.

  • Arun Seshadri - Analyst

  • And have you talked about any specific asset sales that you're looking at at all?

  • Janet Haugen - SVP, CFO

  • No, we have not.

  • Arun Seshadri - Analyst

  • Okay.

  • Thanks a lot.

  • Ed Coleman - Chairman, CEO

  • Thanks, Arun.

  • Operator

  • Our next question comes from John Moore of KDP.

  • John Moore - Analyst

  • Hi.

  • Just two ones.

  • The first, just if you could tell us where you are on the offshore or where you think -- if there's a goal of where you would like to be for the workforce by the end of the year?

  • And then just on the federal growth in the quarter, just how broad-based that was?

  • Are there any particular departments or agencies in there for that?

  • Thanks.

  • Ed Coleman - Chairman, CEO

  • John, let me take the first piece of it.

  • On the offshore piece, if you combine our low cost labor pools in terms of both offshore and onshore, about 19% of our population, our employee population would be in low cost labor pools and that's up 3 percentage points from last fall but still significantly behind our competition which I think is often in the 35 to 40% range.

  • So that represents an area of improvement for us but it also represents an opportunity for us to continue to work on our gross margins.

  • Janet Haugen - SVP, CFO

  • Good morning, John.

  • How are you today?

  • John Moore - Analyst

  • I'm fine.

  • Janet Haugen - SVP, CFO

  • On the federal revenue growth, we did see increase in our civilian, as you know, we have three groupings of agencies of a civilian agencies, the Homeland Security agencies and the defense agencies and in particular, we did see revenue growth in our civilian agencies this quarter.

  • John Moore - Analyst

  • Okay.

  • So that was the Homeland Security?

  • Janet Haugen - SVP, CFO

  • No, the three groupings as we look at our federal business are the civilian agencies, such as justice, Health and Human Services, et cetera.

  • Homeland Security agencies is our second grouping and then the third is our defense agencies and of those three, the civilian agencies were our strongest this quarter.

  • John Moore - Analyst

  • Got you.

  • Thank you.

  • Operator

  • We'll move next to Jeff Harlib of Barclays Capital.

  • Jeff Harlib - Analyst

  • Good morning.

  • Just wondering if you can clarify on the cost savings, I think last call you said you were taking actions to reduce your annualized cost by 310.

  • In your slide four you said 150 of gross margin actions, 250 of SG&A.

  • Does that mean you have 400 in process?

  • I'm just trying to get to where you might be on Q2 on a run rate basis as far as where you expect to be and the timing of that.

  • Ed Coleman - Chairman, CEO

  • The way we've looked at this is from an overhead standpoint in terms of SG&A, we've set ourselves a goal of reducing that by $250 million.

  • And against that goal, we've initiated and taken action that address about $200 million annual reduction.

  • We've also set a goal for ourselves to improve our gross margins by 4 or 5 points, which again equates to about another $250 million.

  • And against that, we've initiated actions that would yield $150 million improvement.

  • So when you put those two together, we've now sort of upped our activities to $350 million of reduction against a total goal, combining both overhead and gross margin, of $500 million.

  • Jeff Harlib - Analyst

  • Okay.

  • Ed Coleman - Chairman, CEO

  • Does that help?

  • Jeff Harlib - Analyst

  • Yeah.

  • What was the total gross margin number again?

  • Ed Coleman - Chairman, CEO

  • About 250.

  • Jeff Harlib - Analyst

  • About 250.

  • Okay.

  • What's the timing of completing the announced actions?

  • Ed Coleman - Chairman, CEO

  • As quickly as we can.

  • We're working hard at it.

  • Jeff Harlib - Analyst

  • Okay.

  • Ed Coleman - Chairman, CEO

  • I think we've taken some pretty good strides so far.

  • Jeff Harlib - Analyst

  • I mean by year end or early -- ?

  • Ed Coleman - Chairman, CEO

  • I'm not going to project that, but we're working -- I think you can see that we're working hard and effectively to bring those numbers down and we're going to continue to do so.

  • Jeff Harlib - Analyst

  • Okay.

  • And just remaining cash restructuring costs relating to those actions?

  • Janet Haugen - SVP, CFO

  • Yeah, there's about $40 million left to go.

  • We spent 20 in the quarter and then they start to tail down in the third and fourth quarter with very minimum amount remaining in 2010.

  • Jeff Harlib - Analyst

  • Okay.

  • And what was your pension expense income as well as total funding?

  • Talking international and other plans in the quarter.

  • Janet Haugen - SVP, CFO

  • Sure.

  • The pension expense in the quarter was an income of roughly $9 million in the quarter and the year-to-date cash contributions into the pension plans is $31 million.

  • Jeff Harlib - Analyst

  • 31 against the 100 or so you mentioned?

  • Janet Haugen - SVP, CFO

  • That's correct.

  • Jeff Harlib - Analyst

  • Okay.

  • Okay.

  • And just generally, if you can talk about -- I know -- you know, any change you're seeing from your customers domestically or internationally on their spending plans or pipeline of business?

  • Have you seen some stabilization or any color on that?

  • Ed Coleman - Chairman, CEO

  • Well, I think one thing we were pleased to see was that the orders grew sequentially in our services business from Q1 to Q2, which we took as a positive sign.

  • I think from an economic standpoint, customers are still being very wary of spending money until they actually have to.

  • I think across the industry you've seen the impact of that on the enterprise server and enterprise computing marketplace.

  • So again, we think our task at hand right now is to make sure that we get our business model as sharp as we can so that we can take advantage of an improving economic conditions as they occur.

  • Janet Haugen - SVP, CFO

  • And as I said in the comments, we continue, particularly in the technology business, to see customers being very judicious about where they spend cash and where they make investments and continue to be holding to try to make the capital expenditures, particularly in the tech business, just in time when they need it.

  • Ed Coleman - Chairman, CEO

  • I would characterize the second quarter as an encouraging quarter, perhaps an indicative quarter in terms of that we're on the right path and I think we're better prepared to take advantage of an improving economy as it occurs.

  • Jeff Harlib - Analyst

  • Okay.

  • And free cash flow-wise, are you now given you're decently ahead of last year, are you expecting positive free cash flow for the year?

  • Janet Haugen - SVP, CFO

  • We've said all throughout 2009 that our goal was for positive free cash flow and we continue to drive that quarter by quarter as we go through the year.

  • We are very pleased with the year-over-year improvement on the first six months of 2009 versus 2008 and we will continue to strive for the goal of positive free cash flow.

  • Jeff Harlib - Analyst

  • Okay.

  • And just lastly, what do you consider your base cash, given the movement of all your contracts?

  • I always assumed around 2 to $300 million.

  • Is that kind of a base cash balance you need to run the business?

  • Janet Haugen - SVP, CFO

  • We've not really commented on a theoretical assumption of what is the base cash.

  • It's a function of how many geographies we do business in.

  • Currency constraints in given countries.

  • We do believe that at the current balance sheet amount we have more cash than what we would need for a base case but we have never given a base case level because that can vary from year to year, mix of business, et cetera.

  • Jeff Harlib - Analyst

  • Okay.

  • Can you say how much of your cash is fairly available for -- to move for operations from location to location, how much might be tied up?

  • Janet Haugen - SVP, CFO

  • We have said that our mix of cash generally follows the mix of our international versus domestic revenue.

  • We do, as any multinational Company, have some currency that is locked up based upon governmental constraints, but the vast majority of our cash is available for us to move without consequence.

  • Operator

  • Our final question will come from Dan Chandra of BW Investment Management.

  • Dan Chandra - Analyst

  • Hi, guys.

  • Congratulations on a good quarter.

  • Could you talk about the period in which your backlog is generally recognized?

  • Is it over two quarters?

  • A year?

  • Two years?

  • Janet Haugen - SVP, CFO

  • The $5.9 billion of backlog that we have is a multi-year backlog.

  • We generally disclose the aging of that only at the year-end.

  • You can see that in our 10-K filing, how it ages ages out over time.

  • Given we are in the outsourcing business that makes up the bulk of the services backlog, that is multi-year.

  • Dan Chandra - Analyst

  • Okay.

  • Great.

  • And then you touched upon the 290 of the 2012 notes have tendered.

  • Is that as of yesterday or is that as of the early tender date on July 14th?

  • Janet Haugen - SVP, CFO

  • That is as of yesterday.

  • Dan Chandra - Analyst

  • As of yesterday.

  • All right.

  • And can you provide like an update on how much of the 2015s and 2016s have tenders as well.

  • Janet Haugen - SVP, CFO

  • The debt exchange expires at midnight tonight and so we will be making a -- we expect to make a release on the final details later this week.

  • Dan Chandra - Analyst

  • Understood.

  • Could you update us on where it stands as of yesterday?

  • Janet Haugen - SVP, CFO

  • Well, we -- I would -- given that the the exchange expires at midnight tonight, we will disclose those final details when the release -- when we issue a release later this week.

  • The 2010 and 2012 are essentially the same as what was in our early tender offer released earlier this week and I would point you to that for the 15th and 16th as well.

  • Dan Chandra - Analyst

  • Thank you.

  • Operator

  • I'd like to turn the conference back over to our speakers for any closing or additional remarks.

  • Ed Coleman - Chairman, CEO

  • Great.

  • Well, thank you everyone for joining us today.

  • As we've said during the course of this call, it was an encouraging quarter but we still have a great deal of work to do and in closing, I would like to thank all the colleagues with Unisys that are listening to this call for your hard work and contributions in the quarter and let's keep making the progress.

  • Thanks everyone.

  • Operator

  • That does conclude our conference for today.

  • Thank you all for your participation.