Good day, and welcome to the Unisys Second Quarter 2011 Results Conference Call. At this time, I'd like to turn the conference over to Mr. Niels Christensen, Vice President of Investor Relations at Unisys Corporation. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and thank you for joining us. Earlier today, Unisys released its second quarter 2011 financial results. With us this afternoon to discuss our results are Ed Coleman, our CEO; and Janet Haugen, our CFO. Before we begin, I wanted to cover 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 the earnings press release and the presentation slides that we will be using this afternoon to guide our discussion on our investor website. These materials are available for viewing, as well as downloading and printing. Third, today's presentation, which is complementary to the earnings press release, includes non-GAAP financial measures. These have been provided in an effort to give investors additional information. The non-GAAP measures have been reconciled to the related GAAP measures and we have provided reconciliation charts at the end of the presentation. Finally, I'd like to remind you that all forward looking statements made during 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 I'd like to turn the call over to Ed.

Thanks, Niels. Hello, everyone. Thank you for joining us today to discuss our second quarter 2011 financial results. Please turn to Slide 1 to begin our discussion. As you saw in our earnings release, we reported a net loss in the quarter driven by the previously announced debt reduction charge. On a non-GAAP basis, diluted earnings per share were $0.93 and we generated adjusted EBITDA of $106 million. We made progress in the second quarter toward our 3-year financial goals, despite continued weakness in the U.S. Federal Government market and lower revenue number in our Technology business. In our Services business, we continue to be impacted by lower revenue in our U.S. Federal business due to the ending of the TSA contract and the uncertainties in Washington. Outside the U.S. Federal business, our overall services revenue was essentially flat year-over-year in the quarter helped by currency. We were able to improve the profitability of the Services business in the second quarter even with the lower revenue, driven by continued improvements in service delivery execution. We reported a service's operating profit margin of 7.1%, up from 6.1% a year ago and up from 4% in the first quarter of this year. As you may recall, one of our goals is to drive a consistent 8% to 10% operating profit margin in our Services business. While we're not there yet, I'm pleased with the progress we've been making towards the goal. In our Technology business, our revenue in the quarter was impacted by lower sales in ClearPath systems against the strong quarter a year ago. As you know, our ClearPath sales can vary significantly from quarter-to-quarter, which is why we believe the best way to measure this business is on an annual basis. We grew our ClearPath sales in the first quarter…

Thanks, Ed, and hello everyone. As Ed said, our second quarter results were impacted by the continued weakness in the U.S. Federal marketplace, and the lower year-over-year ClearPath sales. However, we were encouraged by the improving services operating margin, which improved to 7.1% for the quarter, up from 4% in the first quarter of 2011 and moving closer to our targeted range of 8% to 10%. We are continuing our discipline in controlling operating expenses, which were down 9% from the second quarter of last year, down 14% at constant currency rate. As we've discussed, in April, we further reduced debt by $179 million. We incurred $45.7 million charge in the quarter for the debt redemption. On a non-GAAP basis, excluding the debt retirement charge and the impact of the old Brazilian above-the-line tax item, Unisys had net income from continuing operations of $47 million in the quarter. We generated positive free cash flow during the second quarter of 2011, and ended the quarter with cash net of debt of $178 million, a $518 million improvement from June 30, 2010. We ended the quarter with $625 million of cash. I'll now provide some more details on our second quarter results. We ended the second quarter with $5.7 billion in services backlog, which was down 1% from December 31, 2010, and about 5% on a constant-currency basis. Year-over-year, services backlog was up 3% but down 5% at constant currency rate. Second quarter services orders decline by double digits versus the second quarter of 2010. This decrease was attributable to lower year-over-year orders in outsourcing. These declines more than offset orders growth in Systems Integration and infrastructure services. In the term of geographic trends in the second quarter, we saw year-over-year services order growth in our North America region, excluding U.S. Federal…

Great. Thanks, Janet, very much. Operator, we'd like to open the call up to questions at this point.

[Operator Instructions] And first, we'll hear from Joe Vafi with Jefferies & Company. Joseph Vafi - Jefferies & Company, Inc.: Just wondering if we could start on the margins. Obviously, some good progress there on Services. Janet, was there any boost to the service margin due to less mix from the government, or is it really mostly efficiency gains or did lower government revenue actually become a margin headwind for Services?

Joe, when we look sequentially between the 4% first quarter Services operating margin and how we improved going into the second quarter operating margin to 7%, our federal revenue was down slightly. So I think that's a good comparable to talk about where our business is and where the improvements came. About 2 points of that improvement in Services operating profit from the 4% to the 7% came in the gross margin line and that clearly came from 2 items: continued service execution, quality service execution delivery and then additionally, we had some time to adjust our federal cost base for the declining revenue. The other point came from continuing reduction in the operating expenses. So as we look at the Services operating profit at 7%, it is improved, 2 points in the gross margin line from service delivery, execution improvements across the business, as well as the benefit of being able to have some time to adjust the federal government across base for the lower revenue. And then an additional 1 point coming from the focus on reducing operating expenses in the business. Joseph Vafi - Jefferies & Company, Inc.: Very good. Where are we now in terms of, I guess, kind of continued talk on some of that cost reduction and services? And where are we in terms of personnel and lower-cost geographies now, and is there still some room to go here in 2011 on that front?

Joe, we ended the quarter at 29% of our headcount in the low cost, lower cost labor pools. We got up as high as 30% at the end of April. We reduced that a bit based on some work going away in South America back to 29%. But, yes, we still think that there's still room to improve there. We still look at the competition and see our competitors in the 35% to 40% range. And that's what we fully expect to get. What would take us there is new work. The biggest driver for us to increase that percentage is winning new outsourcing contracts. Joseph Vafi - Jefferies & Company, Inc.: And then, it does seem like outside of government, you're definitely making some progress here in terms of getting the growth in the Services business. How do you feel at about some of your lines of business that aren't maybe as the highest focus as maybe some of your outsourcing lines of business or your ITO business, let's say, in terms of stabilization in those businesses as we look forward and towards the end of this year and into next year?

I think the 2 major groups that we think about are the IT Outsourcing business and the Systems Integration business, 6 consecutive quarters of year-over-year growth in ITO makes us feel like we're on the right path there. The SI business is getting stronger, but as I mentioned, we still haven't turned the corner there to hit actual growth in that business. Some encouragement this past 2 quarters that orders have grown year-over-year, 2 quarters in a row in the SI business. But we still have work to do there. Again, our goal is to grow that business as well at industry rates and we think that's probably in the mid-single digits. But we have work to do there. But I'm feeling better about the focus that we have on the solutions that we're bringing to market and I think we're seeing some signs in the order rates that says that we're on the right track. Joseph Vafi - Jefferies & Company, Inc.: Right. and then just finally, just how you're seeing the macro IT spend environment right now just as we here in the middle of the year seems like there's kind of some mix commentary coming out of management team this earnings season on budget available, but now not being spend as much as it was or how are you seeing it?

Yes. I think the way we thought about this at the beginning of the year is probably still pretty solid. At least the forecast that I've seen would say mid-single-digit growth in the ITO business and the SI business is reasonable growth for 2011. I think Gartner just raised their estimate to, I think, between 6% and 7% for IT services for the year. So I think it's still in the range where we expected it to be.

Next we'll hear Ned Davis, William Smith & Co. Ned Davis - Wm Smith & Co.: I just want to try to get a little bit more color on the comment you made about changing the way you're approaching your Federal Government business. I know you mentioned that this involves trying to win business in the cloud area and things of that sort. Can you give a little bit more color and then what your expectations are for what the metrics might be for that over the next 3 or 4 years if you're successful?

The primary thing that we're referring to, one was the kinds of services that the federal government, we believe, will be buying, and certainly cloud -- and moving to the cloud is a major initiative of many of the government agencies today and we're pleased that we're perceived in acting as the leader in that part of the business, particularly with the work we do in the GSA and NOAA. The other part of the comment I was making in terms of how we're retooling the federal business is to change the way we operate a bit from focusing the business on large multi-year programs, which have difficulty in getting funded, to more tactical task order kind of business, shorter-term projects, smaller transactions and projects that we see are getting funded. So that forces us to change a little bit on how we think about selling to the federal government, as well as the back office processes, sales operations processes to support those efforts. But we think there's more business being done in smaller transactions perhaps, than it has been in the past. Ned Davis - Wm Smith & Co.: Just one other thing. Could you kind of give us any kind of an update on some of these partnership initiatives, particularly Computer Associates and Google, Apple? Is there any specifics that you can give us on any deals or progress there?

Well, certainly, the Google relationship has been important relationship for us. And as we've announced, the GSA movement to the cloud is being done in a partnership between ourselves as a prime and Google as a service provider. So we're very pleased with that relationship. And think that there's opportunities in the future to do more work together. Likewise with Apple, CA and BMC, these are all important relationships to us. We think they're good relationships and we're working hard to deliver additional business in the company through them. And as we have wins that we're able to announce and can announce, we certainly will do that.

I show no further questions at this time, I'd like to turn the conference back over to the speakers for any additional or closing comments.

Well, thank you all for being on the call. We certainly appreciate it, and look forward to our next call when we report our third quarter results. Thank you very much.

Once again, that does conclude today's conference. We thank you all for joining us.