Unisys Sells Shares in Nihon Unisys Limited for $374 Million; Begins First Phase of Workforce Reduction
BLUE BELL, Pa., March 20, 2006 – Unisys Corporation (NYSE: UIS) today announced that it has completed the sale of 30.2 million, or 99 percent, of the shares it owns in Nihon Unisys Limited (NUL) of Japan. The company received gross proceeds of approximately $374 million from the sale and will recognize a pre-tax gain of approximately $145 million in the first quarter of 2006. The company will use the proceeds from the sale to begin its previously announced workforce reductions of 10 percent, or roughly 3,600 employees, worldwide. As previously announced, the sale will not affect the relationship between the two companies in the Japanese market. NUL will remain the exclusive distributor of Unisys hardware and software products in Japan.
“Unisys is undergoing a major transformation, as we committed to our shareholders, customers and employees last year,” said Joe McGrath, president and CEO of Unisys. “The NUL transaction, along with other planned divestitures and cost reduction initiatives, underscore the commitment to ensure we have a competitive cost base. We are implementing an equally aggressive set of actions to realign our sales, marketing and service delivery efforts to focus on our core growth markets and drive profitable growth over the long term.”
The initial stage of the Unisys workforce reductions will affect roughly 3,000 employees and is expected to be completed by the end of September. The remaining reductions are expected to be completed by the end of 2006, as the company complies with local country social legislation and employment practices. When complete, these actions are expected to yield approximately $250 million of annualized cost savings on a run-rate basis by the end of 2007.
“These changes will have some short-term impact on the business but we are confident that they will drive tangible results as we move into 2007,” said McGrath. “While 2006 is a transition year, we remain focused on our long-term objectives, which are to fundamentally change our business, enhance profitability and attain the financial goals we set out for ourselves by 2008.”
As part of its continuing efforts to divest non-core assets, Unisys also announced today that it had completed the sale of part of its Unigen semiconductor test equipment business to Cohu, Inc., a Poway, California-based provider of test handling equipment used by the global semiconductor industry.
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Any statements contained in this release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements rely on assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. In particular, the anticipated cost savings associated with the planned workforce reductions are subject to the risk that the company may not implement the reductions as quickly or as fully as currently planned. A discussion of factors that could affect Unisys future results is contained in periodic filings with the Securities and Exchange Commission.
RELEASE NO.: 0306/8634
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