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Unisys Management Discusses Q2 2012 Results - Earnings Call Transcript

Revenue in our services business declined 3% but was up 1% in constant currency. Within services, we grew our IT outsourcing revenue 8%. We saw good margin improvement year-over-year in both our services and technology businesses. In services, we were pleased to reach our targeted 8% to 10% operating profit margin range. Cash flow also improved in the quarter, and we are announcing today a further debt reduction action of $84.5 million that will enable us to achieve over a year early our debt reduction goal for year end 2013.

Turning to Page 5. As you recall at the end of 2010, we set financial objectives that we wanted to achieve by the end of 2013. Those objectives are: to increase our pretax profit to $350 million, assuming no change in pension income or expense in 2010 levels; to consistently achieve an 8% to 10% operating profit margin in our services business; to grow our IT outsourcing and systems integration revenue at market rates while maintaining stable revenue in our technology business, particularly within the ClearPath business; and to reduce our debt by 75% from September 2010 levels.

As we are now at the midway point of this 3-year plan, I'd like to step back and review how we're doing against those objectives. In terms of our pretax profit goal, our first half 2012 pretax profit, excluding pension expense and debt reduction charges, is $171 million. From a margin perspective, our services operating profit margin was 8% in the second quarter, and through the first half of 2012 has improved 90 basis points year-over-year to 6.5%. While we still have work to do to get to our target 8% to 10% range on a consistent basis, we're pleased with the progress we've made in improving the profitability of our services business.

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