Good day, and welcome to the Unisys Fourth Quarter and Full Year 2012 Results Conference Call. At this time, I would 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 fourth quarter and full year 2012 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 some non-GAAP financial measures. These have been provided in an effort to give investors additional information. The non-GAAP measures have been reconciled to their related GAAP measures, and we've 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. And now I'd like to turn the call over to Ed.

Thanks, Niels. Hello, everyone, and thank you for joining us today to discuss our fourth quarter and full year 2012 financial results. Please turn to Page 4 of the presentation to begin our discussion. We completed another profitable year for Unisys in 2012 with a good fourth quarter. Led by a strong performance in our technology business, we reported diluted earnings per share of $1.67. On a non-GAAP basis, excluding pension expense and debt reduction charges, our fourth quarter diluted EPS rose to $2.27 from $2.22 in the fourth quarter of 2011. Our fourth quarter results closed out a year of continued progress for Unisys in 2012. In an uncertain IT spending environment, we increased our profitability and generated significant cash flow. For the full year of 2012, we reported diluted earnings per share of $2.84, up from $2.71 in 2011. Our non-GAAP diluted EPS rose to $5.50 from $5.18 in 2011. Cash flow was also strong in 2012. Before pension contributions, we generated free cash flow of $330 million in 2012, up from $266 million in 2011. Turning to Page 5, in 2012, we made continued progress toward our 3-year financial goals through 2013. Against our 2013 goal of increasing our pretax profit to $350 million, excluding pension expense, we exceeded that goal in 2012. We also met our debt reduction goal more than a year ahead of schedule. We have not yet hit our services operating margin objective of 8% to 10%, consistently and predictably. To do so, we must couple revenue growth with continued work to identify ways to operate more efficiently. Revenue growth continues to be our biggest challenge with mixed results in 2012. In our technology business, we exceeded the target of maintaining flat revenue in 2012, growing revenue 3% with the benefit of some…

Thanks, Ed, and hello, everyone. In my comments today, I will be referring to certain GAAP and non-GAAP comparisons throughout my remarks. For the fourth quarter comparison, the non-GAAP results exclude pension expense and debt reduction charges. For the full year comparison, non-GAAP references exclude pension expense and debt reduction charges in both years, as well as a charge related to a Brazilian non-income tax case in the second quarter of 2011. Now let me start with our overall fourth quarter and full year 2012 financial results. Please turn to Page 9. At the top line, we reported revenue of $979 million in the quarter, which was down 1% year-over-year. Currency had a 1 percentage point negative impact. So on a constant currency basis, revenue was flat. For the full year revenue of $3.7 billion was down 4%, down 1% on a constant currency basis. Based on today's rates, we anticipate currency to have about a 1 percentage point negative impact on revenue comparisons in the first quarter of 2013 when compared to the first quarter of 2012. We reported an operating profit of $114.6 million for the fourth quarter of 2012. Our gross profit margin improved 80 basis points to 29.2%. Operating expenses rose in the fourth quarter of 2012 compared to the year-ago quarter as both SG&A and R&D increased. This increase was largely attributable to higher pension expense and investments in growth programs. For the full year 2012 on lower revenue, our operating profit of $319.2 million was down 2% versus 2011. However, the operating margin improved to 8.6% from 8.4% on higher gross profit margin and lower operating expenses. Higher research and development funding for the full year was more than offset by lower SG&A. Interest expense in the fourth quarter of 2012 decreased by over…

Thanks, Janet, very much. Operator, at this time, we'd like to open the call up to questions, if we may.

[Operator Instructions] We'll go first to James Friedman with Susquehanna.

So I had a couple of questions. I guess I'll ask them all at first, then I'll go back in the queue. So, Ed, this was a terrific quarter in terms of the things that you can control, namely the P&L. I wanted to ask you about Slide 6 with your 4 areas of strength. Maybe as you look forward to 2013, what of these are different than what they used to be between security data center, end user and application outsourcing? That's my operational question. And then I've got 2 quick ones for Janet, and I'll get them out of the way. So, Janet, do you think that for modeling purposes in 2013, we should contemplate somewhere relative to your services targets funding for 2013 margins? That's my one question and then my second one is, first, some folks who may be new to the name, could you just on Slide 19 describe how the 4%, the 4.9%, 4.96% work in terms of your annual assumptions? Because that million dollar increase in liability may be misinterpreted by some people. So on those levels, we could get the first one. Slide 6, the second about the service and the third about the pension discount assumptions.

Great. Thanks, Jamie. On Slide 6, the point that we're trying to make there fundamentally is that we want to continue to focus on the same areas of strength that we've been focused on for the last 4 years. We think this is where we have real capability in the marketplace and where we can provide real value to our clients. So as you see, it's Security, Data Center, End-User Outsourcing and Application Modernization. But what changes in that is really our ability to infuse the solutions in those 4 areas with the technologies represented by the disruptive trend? So how do we bring big data in smart computing more into our Security solutions? How do we bring social computing into our Application Modernization, and bring mobility and consumerization of IT, not only into the end user support but also into the impacts that it has on both Security and Data Centers, the way customers are going to operate Data Centers? So the areas of strength remain the same, but we're constantly looking for ways to enhance those solutions to take into account those disruptive trends. So one of the things I mentioned, Jamie, is that we're focused on enhancing the new solutions, going to market through new channels in order to win new customers. But all built around these 4 areas of strength. Does that help?

Yes.

So, Jamie, on the first of the 2 questions that you sent my way, the first regards our services operating margin end. As we've said, we have a goal of driving that services business to the point where it generates 8% to 10% services margin. As we go forward, we expect to see improvement from where we're at right now to get to -- in that targeted range coming from 3 areas. We need to see revenue growth from our strategic portfolio and some improvement in the U.S. Federal business, the commentary we are close to that low end of that range outside of the U.S. Federal business. So the impact of the demand really does -- the lower revenue has impacted our overall services operating margins. So we clearly need to get to the revenue growth from our strategic portfolio and some improvement in the U.S. Federal business. Outside of the U.S. Federal business, in currency services in 2012 was up about 0.5%. So we are -- we've seen growth, but we need to be on the trajectory in our strategic goals as we've outlined before. The second area that we continue to make sure that the way we deliver our offerings are cost-effective from both the use of automation, as well as using a cost-effective resource allocation strategy. We think we still have more room to go there and that should also help us achieve the services operating margin. And lastly, we'll continue to look for opportunities for us to improve SG&A as a percentage of revenue. However, as you saw in our results for the quarter, we have set aside some investment in order to help drive the revenue growth. So we clearly have a targeted goal for us to get to that 8% to 10% services…

But you -- and yes, sorry to monopolize the time, but just to contextualize it, can you remind people what the pension obligation -- what the underfunded obligations was when you started?

Yes, it was October 7 of 2008, I think. And as of September 30, 2008, the pension plans were fully funded.

U.S. plans.

The U.S. plan was fully funded, and that's the impact again of the recession and somewhat asset returns, but primarily the reduction in interest rates is driven it from fully funded to the numbers that Janet reported earlier.

Right. From December -- from October of 2008, and then we've seen the asset move consistent with where market returns have been, approximately around the same level they were in 2008. So the increase in that underfunded situation is coming from the change in the discount rate.

And we'll go next to Ned Davis with Wm Smith and Company. Ned Davis - Wm Smith & Co.: Thank you for the clarity on the pension, but I just wanted to understand a little bit more granularity on this. Supposing that the federal index rate were to rise by 25 basis points, what would happen to the schedule of funding requirements on the domestic plan that you've, I think, on Slide 20? Can you give us the sensitivity of those future funding obligations relative to that federal rate as opposed to the GAAP rate?

Ned, the U.S. GAAP rate is one rate as determined. And so there is only one data element for which you can flex the 25 basis point change. For the international -- I mean, for the funding of the U.S. plan, based upon the way the MAP-21 legislation works, it's based on a number of factors. So I really can't at this time tell you what a 25 basis point change in your scenario would do because it does -- there are choices in which you make and 25-year averages versus averages at other points in the year, and so it's a little bit hard to pinpoint exactly at a current 25 basis point change, how that would correlate to a funded change. Ned Davis - Wm Smith & Co.: Could you just sort of evaluate more -- I understand the limitations of trying to do that, but I -- if you kept all the other factors kind of constant, would you be able to at least do a theoretical calculation that would reflect this over time?

At this point in time, given the number of moving elements in there, we feel it's most appropriate to give our best estimate over that extended horizon. There can be a number of pieces that would change, and I think we're more comfortable with the point estimates reflecting the current market because I don't want to speculate on what that would do because it could also affect the assets based upon the change in interest rate environment, could affect the returns on the fixed income assets. And depending upon how long that 25 basis point change happens and what time period, it may or may not have an effect on the MAP-21 rate that we use for the pension funding. Ned Davis - Wm Smith & Co.: Okay. And a related question, if it's under the new guidelines, you have higher predictability, I think, in any scenario of your funding requirements, at least the domestic. And I was interested that you haven't bought back shares. You had great fourth quarter in terms of cash flow, particularly on the technology side. Is the company looking to be aggressive in buying back shares or can you give us any kind of flavor as to what your appetite will be based on your financial situation?

I think we announced this -- the board approved and authorized this back in mid-December, so close to the end of the fourth quarter. And they authorized $50 million of repurchases over the next 2 years, and we're going to do that as we think is appropriate. And we'll report back on that when we do. Ned Davis - Wm Smith & Co.: Finally, on the technology side, I mean, it was a very impressive Q4. You've cautioned us many times not to look at too much into a quarter, but from the tone of your remarks and your comments about the technology, it sounded like you're a lot more constructive about the outlook for selling software to your user base and expanding that user base. Can you give us a little more flavor on that on the technology side, ClearPath?

I think -- yes, I mean, I think our -- the goal as stated is to keep it technology flat year-over-year, and we're very pleased with the fact that we've done that. We've grown at some each of the last 3 years. We continue and certainly it's an important of investments for us to look for ways to continue to make that a more open platform, a more capable platform as I described, and look for additional market opportunities for our technology.

And we'll go next to Brian Gesuale with Raymond James. Brian Gesuale - Raymond James & Associates, Inc., Research Division: I wanted to kind of follow up on that technology question that was just asked. ClearPath seems to have a really nice product roadmap that's being accepted by the customers. Stealth is now getting into your channel, and your commentary about growing sales from channel seem to imply some optimism. Should we think about business as growing going forward and maybe the new benchmark is not flat? Or maybe even more directly to ask the question is what's more likely, technology growing for next year or this year rather in 2013 or your services business hitting that 8% to 10% operating margin number?

It's important for us that the services -- our goal remains as we said. For the technology business, we want to at least maintain that business. And you're right to pick up in our commentary that we continue to enhance those product offerings and are excited about the customer reactions to both ClearPath and initial reactions to the Stealth and by the reseller community. But we -- equally important to us is to hit that services operating profit 8% to 10%. And they remain goals for us going forward and we are focused on both. Brian Gesuale - Raymond James & Associates, Inc., Research Division: In the near-term, though, is it fair to say that you have more visibility in '13 on your technology business -- in your technology goals than your service goals just given the challenging federal environment and some of the delayed buying patterns we've seen globally?

No, I'm not sure I would say that, Brian. I mean the services has a backlog. We always have a backlog to be working off of and getting some directional sense based on the backlog, and orders are a leading indicator. On the technology side, it's fundamentally a sell-and-bill business within the same quarter. And so that can make it, as we've said many times before, a spikier business, and again, that's why we recommend not drawing too many conclusions from any one quarter but looking more at the full year performance. Brian Gesuale - Raymond James & Associates, Inc., Research Division: Right, absolutely. And you guys keep growing that business. I know our expectations keep expanding as you guys continue to execute. Maybe just 2 other quick ones for you. Where does this Federal business bottom out? I mean, we're hearing from a lot of folks who are selling IT into the federal space that uncertainty has just kind of even exacerbated and grown more recently with the fiscal cliff solution and the many cliffs that are numbered here coming up over the next few months. How do you feel about that business?

Well, it's a challenging environment for sure. I think the macro environment and the uncertainty in federal budgets and sequestration, all those issues isn't going away and it seems like that just kind of lingers or gets worse over time. At the same time, I think we've been fairly forthright in saying that we think our issues in the Federal business were not just macro related, that we had some execution issues, we lost some recompetes over a year ago. They're washing through the year-over-year compares. And as that happens, we're finding ourselves having the opportunity not to be focused on recompetes so much as we are focused on winning new business. And we've been excited to get the TASCO [ph] award back in Q3. I think you saw our press -- in the press recently, we won a significant IRS deal. We won that IRS storage as a service project. So a lot of good things going on in that Federal business and I feel like it's getting better, but we have to wait and see. But our issues have been a combination of our own issues, as well as macro. I think we're dealing with our own issues, the macro still has a lot of uncertainty to it. Brian Gesuale - Raymond James & Associates, Inc., Research Division: Okay, that's very helpful. And, Ed, maybe just one follow-up. As you guys have paid down all this debt and built up the cash balances, you mentioned about the $50 million authorization to buy back stock. I think you went into the detail that you're going to go into that. Are you entertaining or looking at any minor tuck-in acquisitions? Anything to bolster either your technology or services portfolio?

Yes. I think the areas that we're really focused on are the ones I mentioned. How do we enhance our existing solutions with those disruptive trends and how do we invest in areas like the ClearPath program, Stealth and Application Management services, which are all more organic in nature, I would say.

And we'll go next to Bill Smith with Wm Smith and Company.

The last 4 years, Ed, what you've accomplished under your leadership, I think it speaks for itself, so we appreciate that. My question is on your capital expenditures. I think you mentioned or Janet did that they're going to increase a little bit from $132 million or $133 million to $155 million or so. Could you comment on what that capital allocation might look like and where that might go here in 2013?

Sure, Bill. Thank you for your comments earlier. As I did say in my comments, we anticipate 2013 CapEx in the $150 million to $175 million range. Our capital expenditures are in 3 areas, largest being the amount that supports our outsourcing business followed by investments in marketable software and the last, the internal infrastructure capital expense. We -- as we -- every year when we've given a range, we've always said it's somewhat still dependent, dependent upon the opportunities that we see in the pipeline from some new deal, new business opportunities. And as we go from 2012 into 2013, the increase would be in the areas of revenues, generating revenues, supporting type of capital expenditures, either those in support of the outsourcing business or to a lesser extent in software for revenue growth. That answer your question, Bill?

Those 2 primary areas, is that correct?

Yes, it is.

And that does conclude our question-and-answer session. At this time, I would like to turn the conference back over to the speakers for any additional or closing remarks.

Great. Thanks, operator. Let me just thank all the people that are on the call and have participated in the call. We appreciate your interest. We appreciate you being with us today. I'd like to thank all the members of the Unisys teams for their hard work, and we look forward to speaking with you again to report on our first quarter results. Thank you very much.

Thank you. That does conclude our conference. You may now disconnect.