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

Thank you, operator. Good afternoon, everyone, and thank you for joining us. Earlier today, Unisys released its third 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 want 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 third quarter 2011 financial results. This was a strong quarter for Unisys. We grew our revenue and tripled EPS from continuing operations as we benefited from the foundational work we've been doing to strengthening our competitive and financial profile. Page 4 of the slides summarizes our results in the quarter. Our revenue grew 6% despite lower revenue in our U.S. Federal business, where we continue to be impacted by the ending of the TSA contract last November and budget uncertainties in that market. Excluding the U.S. Federal business, our overall revenue grew 14%. Services revenue grew 2%, 12% excluding U.S. Federal business. Within services, we grew revenue in both of our strategic growth areas of IT outsourcing and systems integration. Excluding U.S. Federal, IT outsourcing revenue grew 12%, marking the seventh consecutive quarter of growth in this business. And excluding U.S. Federal, systems integration revenue grew 21%, reflecting higher sales of industry solutions. In technology, we grew revenue 36%, driven by significantly higher ClearPath sales. As I mentioned in our last call, our ClearPath sales can vary significantly from quarter-to-quarter, which is why we believe the best way to measure this business is on a full year basis. With a strong third quarter, year-to-date ClearPath revenue is approximately flat, and we continue to focus on our goal of maintaining 2011 ClearPath revenue roughly flat with 2010 levels. Along with continued focus on cost discipline, we were able to leverage the revenue growth in the quarter into higher margins and profitability. We reported an operating profit of $113 million, up 48%, and achieved an overall operating margin of 11.1%. In our services business, we achieved an operating profit margin of 8.7%, which was within our targeted 8% to…

Thanks, Ed, and hello, everyone. Please turn to Page 13 for some more details on our third quarter results. At the top line, we reported revenue of $1 billion in the quarter, which was up 6% year-over-year. Currency had a favorable impact on our revenue of almost 6 percentage points in the quarter, so we were up slightly on a constant-currency basis. Based on today's rates, we anticipate currency to have a minimal impact on the year-over-year revenue comparisons in the fourth quarter of 2011. On higher gross margins, we reported increased operating profits and margins. We reported third quarter 2011 operating profit of $113 million compared to the year-ago quarter's operating profit of $76.1 million. Our operating profit margin increased to 11.1%, up from 7.9% a year ago. Operating expenses rose about 6.5% year-over-year but were flat on a constant-currency basis, including $3 million of higher pension expense. Interest expense decreased 50% from third quarter 2010 on lower debt level, from $25 million in the third quarter of 2010 to $12.5 million in the third quarter of 2011. The other income expense line for the third quarter of 2011 was a net $16.6 million of income, primarily reflecting the favorable impact of foreign exchange gains in the quarter. In the third quarter of 2010, this line netted to 0. For the third quarter of 2011, our pension expense increased $9.3 million compared to the third quarter of 2010. We continue to expect approximately $34 million in pension expense in 2011 compared with pension income of about $3 million in 2010. At the tax line, we had a $33.4 million tax provision in the quarter compared with the $28.2 million tax provision in the year-ago quarter. As I've said previously, our tax provision continues to be highly variable from quarter-to-quarter…

Thank you, Janet. Operator, if we may, we'd like to open the call up to questions.

[Operator Instructions] We'll take our first question from Frank Jarman with Goldman Sachs.

I really just had one question with regards to the balance sheet and your debt reduction targets. As you noted in your prepared comments, you're getting closer to achieving your goal of the 75% debt reduction. Given the strength of your free cash flow that we've seen so far and still a relatively strong cash position, would you guys consider going beyond that 75% target? I think pretty much all of your debt can be taken out at some point next year either through call provisions. Would you consider running the business on a debt-free basis at some point down the road?

Our goal remains the 75% debt reduction from the September 30, 2010 levels. That's our goal, we still have a bit more to go and we'll accomplish that by the end of 2013. And that's our stated goal and our stated plan. Once we hit that, we'll evaluate whether we need to do more.

We'll take our next question from Ned Davis with Wm Smith & Co. Ned Davis - Wm Smith & Co.: I just wanted to ask 2 things. First of all, a more general question about the operating margins on the services side. I know you haven't given specific guidance except for a range out in the future, and I'm wondering maybe you can give us a little bit of color on what kind of the gates are to further margin improvement. You had a pretty strong revenue quarter; you picked up, I think, 70 basis points. But what does it take to get up close to the double-digit top end of that range? I have a question I'll come back to it on the balance sheet.

As you note, our goal has been to get in that 8% to 10% services operating margin range, and do that consistently and predictably. So we've hit it a few times, we hit it this quarter. We continue to have work to do to make sure that we can do that both consistently and predictably. The key to continuing to improve it is certainly cost consciousness, but we need to keep revenue growth in those services lines coming. Ned Davis - Wm Smith & Co.: How much was the FedEx (sic) [ForEx] impact on the -- if you just look at the non-government services business on its own? You may have disclosed that but I was a little bit confused about the numbers. How much was the FedEx (sic) [ForEx] the currency impact on the revenue growth year-over-year?

The foreign exchange impact on revenue was almost 6%. So we had overall company revenue growth of 6%. We had foreign currency benefit of slightly under 6%. So on a constant-currency basis, we were slightly up. Ned Davis - Wm Smith & Co.: Okay. And then finally with regard to the -- I'm trying to reconcile the free cash flow figure against a very strong EBITDA performance. And I'm sure when I have a chance to study this in more detail I can figure it out. But how much was the pension funding impact on free cash flow as opposed to EBITDA?

Right. So the pension funding payment in the quarter, I've given the number for the full year. The pension, which I referred to is $63.5 million. We funded approximately $21 million in the third quarter of this year. And that compares with a pension expense of $8.5 million in the quarter. Roughly $9 million. Ned Davis - Wm Smith & Co.: So if one tries to reconcile the free cash flow as opposed to the EBITDA, what's the net impact comparatively of the pension funding on a differentiation between free cash flow and EBITDA?

So it's roughly, the defined contributions were $21 million, the DB pension expense was $9 million. So an $11 million delta.

We'll take our next question from James Friedman with SIG.

My first question was with regard to the services margin, maybe that's directed towards Ed. Could you give us a sense of what the pricing environment might be, and how improved utilization may be accelerating the services margin towards the middle to high end of the guidance?

Well, I think it continues to be, Jamie, an awfully competitive marketplace out there. The margin improvement that we saw was somewhat driven by revenue. It's is also driven by the fact, as we noted, we did better in our industry solutions portion of our services business this particular quarter. And when we include Unisys IP in our services engagement, it tends to drive more profitable engagement. So that was helpful this quarter as well.

Okay. And then, just so -- for a housekeeping question. My recollection is you have a little bit of TSA left, if that's incorrect I apologize. But, Janet, maybe if you could just update us. Isn't there a month left in the year-over-year compare?

Right. Yes, there is. In -- it's about $2 million in the fourth quarter -- I'm sorry, $22 million in the fourth quarter. That contract expired November 30, 2010. And we show that on the -- if you look on the chart that's in the presentation material, the accompanying presentation materials, you can see the fourth quarter amount.

Okay. And then the last thing, Janet, just so I understand. Again, I apologize for this. But are you redeeming the 2012 callable debt as well? Or is it just that the other tranche that remain?

We are redeeming the only maturity that we have in 2012, the 8% senior notes. We are calling the entire remaining balance of those up for redemption.

Okay. And that's where you get the -- was it a couple -- $4 million early redemption expense?

Right. We will have -- it is -- the call premium is consistent with the debt indentures. The make whole premium on that is based on the one-year treasury rate. And has a plus 50 bps on top of that. We will provide notice to the bondholders tomorrow through DTC and we expect that it would close on Friday, November 25. That would cause us to have a $4.5 million charge in the quarter for that early redemption. And obviously, we save more than that on the interest savings, the combination of the remainder of the month of December essentially and all of 2012 until the maturity.

We'll take our next question from Chris McDonald with Kennedy Capital.

On ClearPath, just with the framework of being flat year-over-year. If I'm doing the math correctly, that looks like it implies a fairly significant sequential increase in revenue for ClearPath in Q4. Am I thinking about that correctly? And it's that just kind of a typical seasonality you'd expect?

Right. Chris, we do have the typical seasonality in the fourth quarter. We -- looking at that business to keep it flat, we're essentially flat through the third quarter and that would imply a similar type of quarter as the fourth quarter of last year.

Okay. And then, would there be any reason to think that a typical leverage on higher revenue that the company normally delivers in that business. I think the segment margins were above 30% in technology in Q4 of 2010, is there any -- without being specific as to the margin, is there anything that would cause the typical leverage to be stronger, weaker or anything in the current environment that you see?

No, Chris, they -- the cost in that business have a fair amount of fixed costs that are spread across the year. And as we've talked about from before, we believe this is a business that's best measured on an annual basis. And looking at those margins on an annual basis, that would imply that with higher revenue in the fourth quarter, the margins will come down at a higher rate given the amount of fixed cost in that business.

Great. And then just one last one, relative to debt, just refresh my memory on -- it's my recollection that some of the higher cost debt is indeed callable in 2012. I think there was a portion that was earlier in the year and some that was potentially callable later in the year. Am I thinking about that right, Janet?

That's right. All of our debt provisions, all of our remaining debt is eligible to be called in 2012. Obviously, at different dates. The senior secured debt, the 12.75% and the 14.25% senior secured debt all have different call provisions around September 15, 2012, and October 15, 2012. And then the 2016s, which will be the last piece that's remaining, have an early call date of January 15, 2012, a provision to be eligible to be called on January 15, 2012.

Okay. Those are the 12.5% that could be called as early as January.

That's correct.

Okay, great.

That's the 2016 maturity.

It appears there are no further questions at this time. Mr. Coleman, I'd like to turn the conference back to you for any additional or closing remarks.

Thank you, operator. And thank you all for attending the call this afternoon. As I said, it was a good quarter and a third quarter, but we recognize that we have more work to do to continue to advance, and that's what we aim to do. So we look forward to speaking with you again at the end of the next quarter. Thank you very much.

That concludes today's conference. Thank you for your participation.