company presentation€¦ · business process outsourcing (bpo) ... life sciences & healthcare....

Company PresentationMarch 2017

© 2017 Unisys Corporation. All rights reserved. 2

Disclaimer

• This presentation includes certain financial measures not presented in accordance with U.S. generally accepted accounting principles (“GAAP”), including, but not limited to, EBITDA, Adjusted EBITDA, Free Cash Flow, Adjusted Free Cash Flow, and constant currency, and certain ratios and other metrics derived therefrom. These non-GAAP financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing the Company’s financial results.

• Therefore, these measures should not be considered in isolation or as an alternative to cash flows from operations or other measures of profitability, liquidity or performance under GAAP. You should be aware that the Company’s presentation of these measures may not be comparable to similarly-titled measures used by other companies. Reconciliations of all non-GAAP financial measures are available in this presentation.


Presenters

Peter AltabefPresident and Chief Executive Officer

Courtney HolbenVP, Investor Relations


Agenda

II. Financial Overview 16

I. Business Overview 5

© 2017 Unisys Corporation. All rights reserved.

I. Business Overview


Our Value Proposition

• Enhancing peoples’ lives through digital security

• Security in everything we do• Software/IP/Domain

Knowledge-led solutions• Vertical industry

integrated solutions• Best-in-class capabilities

with a global footprint

© 2017 Unisys Corporation | All rights reserved. 7

Unisys Today

2016 Revenue Profile

Technology15%

Technology15%

Services85%

BPO 7%

Segment Segment Detail Geography Regional Detail Sector Sector Detail Revenue Type

Application Services 30%

Cloud & Infrastructure

Services48% Enterprise

Solutions80%

Recurring Services

66%

Non-Recurring Services

19%

Financial23%

Commercial33%

U.S. & Canada

48%

International52%

EMEA29%

U.S. & Canada

48%

Asia Pacific 14%

Latin America 9%U.S. Federal

20%

Public Sector24%

U.S. Federal20%

Technology15%

More than 100 of the Fortune Global 500 companies

7 out of the top 10 Life Science firms

>100 million air cargo transactions per month

Over half of the top 50 global banks and

9 of the world’s top insurance companies

>300 government agencies worldwide

18 of the top 25global airlines


Unisys – Who We Are

Cloud & Infrastructure Services (CIS) Application Services (AS) Business Process Outsourcing (BPO)

48% of total revenue

• End user and workspace services(32% of total revenue)

- Provides help desk and workplace support services

• Data center & infrastructure management(16% of total revenue)

- Provides cloud migration and related advisory services

30% of total revenue

• Software application development and integration services

- Provides full lifecycle of application services, including advisory, implementation and management services

7% of total revenue

• Industry-specific business process outsourcing services

- Check processing for a group of large U.K. banks

- Mortgage origination in Australia

• Main driver of historical Technology revenue

• New software-only architecture

Technology (15% of total revenue)

Services (85% of total revenue)

Server systems and operating system software Innovative software-based security solution

• Conceals and protects endpoints from unauthorized parties

• Protects sensitive data from potential compromise via microsegmentation and data encryption

Note: Revenue is FY 2016

Application SoftwareProprietary, vertical-specific applications

• Air Core®

• Logistics Management System™

• Digital Investigator™

• LineSight®

• Active Insights™

• Elevate by Unisys™


Industries

Solutions

Vertical Strategy Paying Dividends

Government Commercial Financial Services

Justice, Law Enforcement & Border Security

Social Services Solutions

Digital Government Solutions

• Digital Investigator™• LineSight®

• Unisys FamilyNow™• ENFORCE™• AMANDA™

Travel and Transportation

Life Sciences & Healthcare

Manufacturing

Retail

• AirCoreTM

• Logistics Management System™

• Active Insights™ -Integrated Medical Device Management

• Active Insights™ - RxTrak

• Elevate™ by Unisys• Core Banking Solutions -

CSF, URBIS, and SFB• Mortgage Processing – UFSS™• Unisys Appointment Manager™

Retail Banking

Mortgage/Lending

Insurance

Commercial Banking


Progress with Key Focus Industries

Overall IT $3.56T1 $3.752T 2%• Digital Transformation• Security First • Smarter Analytics

• Stealth by Unisys®• ClearPath Forward Systems™• InfoImage™

Travel &Transportation $130B1 $151B 3.7%

• Passenger• Cargo• Airports

• AirCore™• Logistic Solutions™• Airport Operations™

Commercial & Retail Banking $50B2 $68B 6.4%

• Multichannel Banking• Security & Risk

Mitigation• Core Banking in Cloud

• Elevate by Unisys™• USFF™• Core Banking™

Justice, Law Enforcement and Border Security

$24B2 $49B 5.6%• Border Protection• Law Enforcement• Immigration

• Digital Investigator™• LineSight™• Jail Management Systems

Life Sciences & Healthcare $15B2 $24B 10.7%

• Personalized Medicine• Integrated, Secure

Patient Info• Decentralized Clinical

Locations

• Active Insights™• RXTrak™

Client Needs

✓

✓

✓

✓

CAGR2020

1 Gartner Group2 Everest Group

2014 Key Unisys Solutions

Revenue from Unisys’ focus industries comprised 42% of 2016 revenue and saw growth of (0.6)% year over year, or 2.6% on a constant-currency basis.

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Cyber Resilience

Business Processes

End User Services

Cloud Infrastructure

Secure Mobile Management

Application Security

Strategy & Transformation

Managed Security Services

Unisys Is Focused on Pervasive SecuritySecurity In Everything We Do

Cloud

Mobile

IdentityAnalytics

Core

Aware


Case Study: FederalProtecting More Than 500 U.S. Points of Entry

470Refusals of

Entryper Day

61Arrests at

Port of Entry

Advanced Integrated Border Analytics

Solution• Stitching together data from 30 different systems and applications• More than 1.3 billion transactions• Running an average of 700,000 data queries per day

Facial Recognition

Social Media Analysis

Tag & Cargo Scanning

Passenger Check Points Multi-modal Biometrics

Intel Community

9,435lbsIllegal Drug

Seizuresper Day

1MPassengers and

PedestriansScanned per Day

72KTruck, Rail andSea Containers

Scanned per Day


II. Financial Overview


$408

$346

$381

12.1% 11.5%13.5%

2014 2015 2016

Adj. EBITDA % Adj. EBITDA Margin

$92

2014 2015 2016

Summary Financial Performance

Revenue Non-GAAP Operating Profit and Margins*

Adjusted FCF***

($ in millions)

$3,356$3,015

$2,821

2014 2015 2016

See Schedule *A, **B and ***C: GAAP to non-GAAP Reconciliation

($ in millions)

(2%)Growth in CC: (2%) (4%)

Adjusted EBITDA and Margins**($ in millions)

($6)

($ in millions)

$278

$229

$176

$217

6.8%5.8%

7.7%

2014 2015 2016

Non-GAAP Operating Profit % Margin


2016 Results Show Significant MomentumDiluted Earnings

per ShareGAAP and Non-GAAP**

OperatingCash Flow ($M)

GAAP

Revenue ($M)GAAP

Adjusted FreeCash Flow ($M)

Non-GAAP***

2015 20162015 2016 2015 2016 2015 2016 2015 2016

$3,015$2,821

(1.8)%GAAP

1.7%GAAP

Non-GAAP5.8%

Non-GAAP7.7%

$(2.20)GAAP

$(0.95)GAAP

Non-GAAP$2.26 Non-GAAP

$2.03

$1GAAP

$218GAAP

Non-GAAP$(6)

Non-GAAP$278

See Schedule *A, **D and ***C: GAAP to non-GAAP Reconciliation

Operating Profit Margin (%)

GAAP and Non-GAAP*

• Achieved full-year guidance on Revenue and non-GAAP Operating Profit Margin and exceeded on Adjusted Free Cash Flow. • Achieved $205M of annualized run-rate savings exiting 2016. Still targeting $230M annualized run-rate savings exiting 2017.


Focused on Stabilizing Revenue

Vertical Approach

Sales

Product Mix Shift

Investments

• Ongoing mix shift to higher value-added Services • Focus on driving TCV1 and Services growth• Strong momentum in Application Services and Technology sales

• Driving domain and industry vertical orientation• Targeting verticals with the highest growth profile

• Re-aligning sales force with a focus on cross-selling into existing client base and leading with Security solutions

• Targeting investments in IP and software

1 TCV is the estimated total contractual revenue related to signed contracts including option years and without regard for cancellation


Improving Trends in Key Revenue Drivers

($B)

$3.9$3.8

$4.1

2Q16 3Q16

Services backlog

4Q16

TCV1

up 13% 2016vs. 2015

Non-US Federal pipeline up 12% vs. comparable period last year

1TCV is the estimated total contractual revenue related to signed contracts2 Win Rate by value

$4.1

1Q16

New Business TCV1

up 17% 2016vs. 2015

New Business Win Rates2 up sequentially on a quarterly basis throughout 2016

Revenue from Unisys’ focus industries comprised 42% of 2016 revenue and saw growth of (0.6)% year over year, or 2.6% on a

constant-currency basis.

Focus Industry Pipeline up ~20% vs. comparable period last year


Cost Reduction Plan Update

Progress To Date

In April 2015, Unisys announced a plan to create a more competitive cost structure and rebalance the global skill set

• Successfully generated $205M in annualized cost savings through YE2016

– Principally related to employee reductions in the U.S. and Europe• Pre-tax charges through YE2016 of $201M, below guidance

– Pre-tax charges comprise of 47% from cost of revenue, 46% from SG&A expense, and 7% from R&D expense

• $133M cash spent on cost reduction initiatives

See Schedule *A and **C: GAAP to non-GAAP Reconciliation

Adjusted Free Cash Flow**Non-GAAP Operating Profit* %

2015$100M

2016$105M

2017E$25M

Cost Savings Progress

Cost Reduction Plan Overview

• Original plan to achieve $200M of annualized cost savings exiting YE2016• Anticipated pre-tax charges of $300M through 2017

– Majority of anticipated charges in 2017 related to severance payments in Europe

5.8%7.7%

2015 2016

Non-GAAP operating profit margin up 190 bps

($6)

$278

2015 2016

Adj. FCF up $284M YoY

$205M achieved

vs. $200M

planned

Additional $25M in

2017


$6.26 $5.88

$8.22 $8.05

($1.96) ($2.17)

December 31, 2015 December 31, 2016 Assets

PBO

Deficit

Defined Benefit Pension Plans Funded Status

In accordance with U.S. GAAP, discount rates are set annually at December 31.

($B)


Estimated Future Pension Cash Contributions

$80 $59 $52 $54 $86

$159

$249 $212

$241 $226 $181

$129

$104

$89 $80 $74

$64

$65

$64

$54

$54 $54

$54

$34

$20 $19

$183

$148 $132 $128

$150

$224

$313

$266

$295 $280

$235

$163

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

U.S. Defined Benefit Plan All Other Plans($M)

The funding estimates for our U.S. qualified defined benefit pension plan are based on current estimated asset returns and the funding discount rates used for the U.S. qualified defined benefit plan which have been updated to reflect the year end 2016 discount rates and projected discount rates based on current legislation. The future funding requirements are likely to change based on, among other items, market conditions and changes in discount rates. Current estimates for future contributions to international plans are based on local funding regulations and agreements and are likely to change in 2018 and beyond based on a number of factors including market conditions, changes in funding agreements, changes in discount rates and changes in currency rates.


Aligning Incentives with Corporate Strategy

Goal-Setting

Mix of Performance-

Based LTI

LTI Performance

Period

Executive Compensation

• 2016 incentive goals align with financial guidance range and operating plan

• Profitability and free cash flow goals increase incrementally year-over-year

Three-year performance period, with performance measured separately for each year

Drives retention and motivates performanceover entire three-year period

Goals increase incrementally each year

2015 Performance-

Based LTI

2016 Performance-

Based LTI

Compensation plans aligned with overall strategy to incentivize associates properly• Vertical leaders’

compensation based on growth of verticals

• Sales and Client Executives compensated based on pricing discipline and gross margin

• Services organization measured against improvements in profitability


Overview of Financial Strategy and Goals

• Vertical go-to-market strategy expected to improve top-line performance over time

• Improving sales trends indicate forward momentum

Improve Profitability

Drive Enhanced Cash Flow

Stabilize and Grow Revenue

Manage PensionObligations

• Reduce capital intensity of business by transitioning to more asset-lite model

• Improving Services Operating Profit Margin• Cost-cutting program established with $205M of annualized cost

reductions realized exiting 2016• Enhanced cost structure expected to increase competitiveness with

respect to pricing dynamics• Shift mix to more profitable services

• Optimize capital resources to meet ongoing pension requirements


2017 Financial Guidance

• Revenue: $2.65B-2.75B– 1-5% Y/Y decline in constant currency

• Non-GAAP Operating Profit Margin: 7.25-8.25%

• Adjusted Free Cash Flow: $130M-170M


Appendix


2016 Challenger in Gartner’s Magic Quadrant for North American Data Center Outsourcing and Infrastructure Utility Services

2017 Challenger in Gartner’s Magic Quadrant for Managed Workplace Services

2016 Leader in the “Management Focus” Market Segment in NelsonHall NEAT Assessment on Cloud Migration and Management

2016 Execution Powerhouse in HfS Blueprint Report for Mortgage as a Service

“Unisys’ significant footprint in providing infrastructure services makes it a logical partner as clients look to begin leveraging cloud environments; this is particularly true in the public sector and U.S. Federal space.” (Nelson Hall, 2016)

“The company has a clear vision for competing in the digital era by embedding security across its portfolio, taking a consulting led approach and having a targeted vertical focus.” (IDC, 2016)

“In its strongest sectors, Unisys is at the cutting edge of the market with the development of its data product libraries. It also has the advantage that it has earned customer trust.”(451 Research, 2016)

2016 Market Challenger in Ovum Decision Matrix: Selecting a Managed Security Services Provider

2015 Azure Innovation Partner of the Year

2015 Excellence in Performance (LACR)

Global Healthcare Provider

2015 Dell Best Region Partner

(AP)

StealthCRN Top 25

Frost & Sullivan 2015 New Product Innovation Award

-------------------Encrypted Network

Security

Stealth

2016 Leader in IDC MarketScape: U.S. Systems Integrators Serving the Federal Government

2015 Retail Banking Security Innovation of the

Year Award -------------------

Behavior Biometrics

Deep Domain Expertise: Industry Recognition

2016 Major Contender in Everest Group’s PEAK Matrix for Workplace Services

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Competitive Landscape

Cloud & Infrastructure Services (CIS) Application Services (AS) Business Process Outsourcing (BPO)

48% of total revenue• End user and workspace services

(32% of total revenue)

- Key competitors: Atos, Cognizant,Compucom, Dell/EMC, HCL, HPE, CSC, IBM, Pomeroy, Stefanini, TCS, Wipro

• Data center & infrastructure management(16% of total revenue)

- Key competitors: Atos, Booz Allen, CACI, Capgemini, Cognizant, CSC, CSRA, Dell, HCL,IBM, Infosys, Leidos, TCS, Wipro

30% of total revenue• Key competitors: Accenture, Atos, CapGemini,

CGI, Cognizant, CSC, CSRA, Deloitte, E&Y, IBM, Infosys, Janeiro Digital, KPMG, Leidos, Mindtree, TCS, Wipro

7% of total revenue• Key competitors: Cognizant, FIS,

Infosys, Sutherland Global, Syntel,TCS, Tech Mahindra, Wipro, WNS

• Key competitors: IBM, Oracle, SAP

Technology (15% of total revenue)

Services (85% of total revenue)

Server systems and operating system software Innovative software-based security solution

• Key competitors: Cisco, Illumio, vArmor Vidder, VMWare

Note: Revenue is FY 2016

Application SoftwareProprietary, vertical-specific applications

• Key competitors: Various depending on solution


Technology15%

Revenue Type

Cloud & Infrastructure

Services

• 3-7 year contracts for end user support services

• 18-60 month contracts for systems integration services

• 6-18 month contracts for project-based advisory services

• 6-24 month contracts for project-based engagementsApplication

Services

Business Process

Outsourcing

Technology

• 3-7 year contracts based on transaction volume

• 3-5 year contracts

Typical Contract Durations

Recurring Services

66%

Non-Recurring Services

19%

• $3.9 billion of Services backlog as of YE2016

• 66% of 2016 revenue from recurring, multi-year outsourcing and managed services contracts

• Recurring services include managed cloud and infrastructure services (40%), a portion of application services (19%) and BPO (7%)

• Approximately $1.7 billion (43%) of 2016 backlog is expected to be filled in 2017

Large Contractual Backlog

Recurring Service Revenue with Large Contractual Backlog

YE2016

Over 95% contract renewal rate for 2016 based on number of contracts1 15% represents initial technology sales; resulting maintenance contracts included in recurring services

1


Services Trends and Profitability

Key Highlights / Commentary

Source: Company information

Cloud & Infrastructure Services• Declines due to select large scale contracts• Continue to rationalize the business, expand margin and capitalize on

verticalized approach

Application Services• Continued momentum in win rates from our verticalized approach - key

differentiator vs Indian based firms• Lever the success of US Federal across our other businesses

Business Process Outsourcing• Recent declines associated with our check processing business for

Financial Services• Increasing digital opportunities should help stabilize the business• Diversifying the business beyond check processing and Financial

Services; recent example includes the Philippines Statistics Authority

Services Gross Margin• Top line impact led to ‘15 decline• Key restructuring initiatives in ’15 and ’16 led to solid gains in ’16 margin

% which are anticipated to continue

Cloud & Infrastructure Services Revenue

$1,705 $1,513 $1,353

2014 2015 2016(2%)Growth

in CC: (4%) (9%)

Application Services Revenue

$820 $869 $859

2014 2015 2016(0%)Growth

in CC: 15% 2%

Business Process Outsourcing Revenue

$261$224 $194

2014 2015 20161%

Growth in CC: (6%) (5%)

Services Gross Profit and Margins

$485$412 $390

17.4% 15.8% 16.2%

2014 2015 2016

Gross Profit % Margin

($ in millions)

($ in millions)

($ in millions) ($ in millions)


Technology Trends and Profitability

Source: Company information

Key Highlights / CommentaryTechnology Revenue1

$571

$410 $414

2014 2015 2016

(6%)Growth in CC: (22%) 2%

Technology Gross Profit and Margins

Technology Revenue• Disciplined approach away from lower margin 3rd party products• Large lumpy contracts can skew trend line

Technology Gross Margin• Increasing stabilization of ClearPath Forward• Reduction in lower margin products and increasing higher margin

software contribution from Stealth

2016 Segment Contribution

85%

15%

Revenue

61%

39%

Gross Profit

Services Technology

$348

$254 $262

55.3% 55.3%59.9%

2014 2015 2016

Gross Profit % Margin

($ in millions)

($ in millions)

1 Technology revenue excludes intercompany sales


Potential Economic Benefit of Unisys Tax Assets

Description Unisys Net

Deferred Tax Assets(1)

Future Available Reductions in

Taxable Income U.S.

NOLs and Tax Credits

Net Operating Loss – Federal & State $656 $1,302Tax Credits 408 1,166

Pension and OtherPension 631 1,657Other Deferred Tax Assets 152 400

Total available U.S. $1,847 $4,525

Non-U.S.

Foreign Tax Attributes

Net Operating Loss – Non-U.S. $234 $924Pension and other – Non-U.S. 143 650Total available non-U.S. $377 $1,574

Total available $2,224 $6,099

Valuation Allowance (1) (2,084)Total Net Deferred Tax Asset (1) $140

Note: As of Dec. 31, 2016(1) The elements listed above are for informational purposes only and are based on expectations and assumptions defined in the Form 10-K filed for December 31, 2016. See Critical Accounting Policies – Income Taxes for the assessment of the realization of company’s deferred tax assets and liabilities and Footnote 7 in 2015 Form 10-K.

Net Deferred Tax Assets represent the tax effected difference between the book and tax basis of assets and liabilities. Deferred tax assets represent future deductions against taxable income or a credit against a future income tax liability. Deferred tax liabilities represent taxable amounts in future years when the related asset or liability is recovered.

Valuation Allowance - US GAAP requires net deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or the entire deferred tax asset will not be realized. The factors used to assess the likelihood of realization are the company’s historical profitability, forecast of future taxable income and available tax-planning strategies that could be implemented to realize the net deferred tax assets. The company considers tax-planning strategies to realize or renew net deferred tax assets to avoid the potential loss of future tax benefits.

($M)


Update on Defined Benefit Pension Plans

Worldwide P&L Impact ($M) 2016 2017E

Total Pension Expense* $82.7 $98.0

U.S. Qualified Defined Benefit Pension Plan

Expected Return on Assets 6.80% 6.80%

Actual Return 7.32%

U.S. GAAP Discount Rate at 12/31/154.56%

at 12/31/164.38%

International Qualified Defined Benefit Pension Plans

Expected Return on Assets 5.99% 5.30%

Weighted Average GAAP Discount Rate at 12/31/153.30%

at 12/31/162.34%

*All estimates are based on expected asset returns and discount rate assumptions as calculated at December 31, 2016.


Non-GAAP and Other Information

Although appropriate under generally accepted accounting principles (GAAP), the company’s results reflect charges that the company believes are not indicative of its ongoing operations and that can make its profitability and liquidity results difficult to compare to prior periods, anticipated future periods, or to its competitors’ results. These items consist of pension and cost-reduction and other expense. Management believes each of these items can distort the visibility of trends associated with the company’s ongoing performance. Management also believes that the evaluation of the company’s financial performance can be enhanced by use of supplemental presentation of its results that exclude the impact of these items in order to enhance consistency and comparativeness with prior or future period results. The following measures are often provided and utilized by the company’s management, analysts, and investors to enhance comparability of year-over-year results, as well as to compare results to other companies in our industry.

Total Contract Value – TCV is the estimated total contractual revenue related to signed contracts including option years and without regard for cancellation.

Constant currency – The company refers to growth rates in constant currency or on a constant currency basis so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates to facilitate comparisons of the company’s business performance from one period to another. Constant currency is calculated by retranslating current and prior period results at a consistent rate.

Non-GAAP operating profit – The company recorded pretax pension expense and pretax charges in connection with cost-reduction activities and other expenses. For the company, non-GAAP operating profit excluded these items. The company believes that this profitability measure is more indicative of the company’s operating results and aligns those results to the company’s external guidance which is used by the company’s management to allocate resources and may be used by analysts and investors to gauge the company’s ongoing performance.

Non-GAAP diluted earnings per share – The company has recorded pension expense and charges in connection with cost-reduction activities and other expenses. Management believes that investors may have a better understanding of the company’s performance and return to shareholders by excluding these charges from the GAAP diluted earnings/loss per share calculations. The tax amounts presented for these items for the calculation of non-GAAP diluted earnings per share include the current and deferred tax expense and benefits recognized under GAAP for these amounts.

Free cash flow – The company defines free cash flow as cash flow from operations less capital expenditures. Management believes this liquidity measure gives investors an additional perspective on cash flow from on-going operating activities in excess of amounts required for reinvestment.

Adjusted free cash flow – Because inclusion of the company’s pension contributions and cost-reduction payments in free cash flow may distort the visibility of the company’s ability to generate cash flow from its operations without the impact of these non-operational costs, management believes that investors may be interested in adjusted free cash flow, which provides free cash flow before these payments and is more indicative of its on-going operations. This liquidity measure was provided to analysts and investors in the form of external guidance and is used by management to measure operating liquidity.

EBITDA & adjusted EBITDA – For the company, earnings before interest, taxes, depreciation and amortization (EBITDA) is calculated by starting with net income (loss) attributable to Unisys Corporation common shareholders and adding or subtracting the following items: net income attributable to noncontrollinginterests, interest expense (net of interest income), provision for income taxes, depreciation and amortization. Adjusted EBITDA further excludes pension expense, cost-reduction and other expenses, non-cash share-based expense, and adjusted other (income) expense. In order to provide investors with additional understanding of the company's operating results, these charges are excluded from the adjusted EBITDA calculation. The company has also provided external guidance to investors and analysts that it thinks will aid any interested party in understanding and measuring the company’s ongoing operations and profitability.


Schedule A: GAAP to Non-GAAP Reconciliation

Operating Profit

$M 2014 2015 2016

Operating profit (loss) $154.9 $(55.1) $47.6

Cost-reduction charges and other expense 0.0 122.5 86.4

Pension expense 73.8 108.7 82.7

Non-GAAP operating profit (loss) $228.7 $176.1 $216.7

Customer revenue $3,356.4 $3,015.1 $2,820.7

GAAP operating profit (loss) % 4.6% (1.8)% 1.7%

Non-GAAP operating profit (loss) % 6.8% 5.8% 7.7%


Schedule B: GAAP to Non-GAAP Reconciliation

EBITDA and Adjusted EBITDA

$M 2014 2015 2016Net income (loss) attributable to Unisys $44.0 $(109.9) $(47.7)Net income (loss) attributable to noncontrolling interests 12.6 6.7 11.0Interest expense, net of interest income of $13.6, $11.2, $9.2, respectively* (4.4) 2.7 16.2

Income tax provision 86.2 44.4 57.2Depreciation (1) 110.1 113.2 90.8Amortization 58.5 66.9 64.8EBITDA $307.0 $124.0 $192.3Pension expense 73.8 108.7 82.7Cost-reduction and other expense**(1) 0.0 102.6 89.2Non-cash share-based expense 10.4 9.4 9.5Preferred stock dividend 2.7 0.0 0.0Other (income) expense adjustment*** 13.8 1.0 6.9Adjusted EBITDA(1) $407.7 $345.7 $380.6

Earnings Before Interest, Taxes, Depreciation and Amortization

* Included in Other (income) expense, net on the Consolidated Statements of Income** Adjusted to exclude duplication of D&A*** Other (income) expense, net as reported on the Consolidated Statements of Income less interest income for the years ended December 31, 2016, 2015 and 2014. Also includes adjustment for the loss on debt extinguishment of $4.0 million for year ended December 31, 20161: In connection with our previously announced cost reduction and other expense, we recognized $122.5 million of pretax charges (which includes $19.9 million of asset write-offs which are reflected in Depreciation & Amortization) impacting Adjusted EBITDA by $102.6 million for the year ended December 31, 2015. The 2016 cost reduction and other expense is $90.4 million of pretax charges (which includes $1.2 million of asset writeoffs which are reflected in Depreciation & Amortization and includes loss on debt extinguishment of $4.0M reducing the Other (income) expense adjustment) impacting Adjusted EBITDA by $89.2 million for the year ended December 31, 2016. There were no cost reduction and other expense impact for the year ended December 31, 2014.


Schedule C: GAAP to Non-GAAP Reconciliation

Free Cash Flow

$M 2014 2015 2016Cash provided by (used for) operations $121.4 $1.2 $218.2Capital expenditures (212.8) (213.7) (147.1)

Free cash flow $(91.4) $(212.5) $71.1Pension funding 183.4 148.3 132.5

Cost-reduction funding 0.0 58.5 74.0

Adjusted free cash flow $92.0 $(5.7) $277.6


Schedule D: GAAP to Non-GAAP Reconciliation

Earnings per Diluted Share$M except share and per share data 2015 2016

Net income (loss) attributable to Unisys Corporation common shareholders $(109.9) $(47.7)Cost-reduction and other expense: Pretax 122.5 90.4

tax provision (benefit) (6.0) (4.0)

net of tax 116.5 86.4Pension expense: pretax 108.7 82.7

tax provision (benefit) (2.1) 1.5

net of tax 106.6 84.2

Non-GAAP net income (loss) attributable to Unisys Corporation common shareholders $113.2 $122.9Add interest expense on convertible notes 0.0 14.5

Non-GAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share $113.2 $137.4Weighted average shares (thousands) 49,905 50,060

Plus incremental shares from assumed conversion of employee stock plans & convertible notes 150 17,461

GAAP adjusted weighted average shares 50,055 67,523Diluted earnings (loss) per shareGAAP basis

GAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share $(109.9) $(47.7)

Divided by adjusted weighted average shares 49,905 50,060

GAAP earnings (loss) per diluted share $(2.20) $(0.95)Non-GAAP basis

Non-GAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share $113.2 $137.4

Divided by non-GAAP adjusted weighted average shares 50,055 67,523

Non-GAAP earnings (loss) per diluted share $2.26 $2.03

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