Good day, and welcome to the Unisys Second Quarter 2013 Results Conference Call. At this time, I would like to turn the conference over to Mr. Neils 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 2013 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. 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 the related GAAP measures and we provided reconciliations 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.

Great. Thanks, Niels. Hello, everyone. Thank you for joining us today to discuss our second quarter 2013 financial results. Please turn to Slide 4 for an overview of our performance in the quarter. After a difficult start to the year in the first quarter, Unisys reported a sequentially improved and profitable second quarter in what continues to be a challenging IT spending environment. We reported diluted earnings per share of $0.46 in the quarter compared with diluted EPS of $0.99 in the second quarter of 2012. Excluding pension expense in both periods, as well as a small debt reduction charge in the year ago quarter, our non-GAAP EPS was $0.91 in the current quarter compared with $1.41 a year ago. Our technology business had a strong second quarter, growing revenue 13% on higher sales of our ClearPath enterprise software and servers. Year-to-date, our ClearPath revenue is up 3%. As we've said in the past, this business is best measured on an annual basis, and we remain focused on our goal of stable annual technology revenue. Our primary challenge from a business perspective continues to be in our services business. Our services revenue declined 9% in the quarter, driven primarily by revenue declines in both systems integration and outsourcing services. The lower revenue impacted our services' operating margins, which came in at 4% for the quarter, up sequentially but below our 8% to 10% target. We were encouraged by some improvement in our U.S. Federal revenue from the declines that we were seeing in previous quarters. Total revenue in U.S. Federal declined 2% in the quarter and was up 4% sequentially. The year-over-year revenue decline was due to lower technology sales. Federal services revenue was flat with a year ago. During the quarter, we won a number of key U.S. Federal…

Thanks, Ed, and hello, everyone. Let me start with our overall second quarter 2013 financial results. Please turn to Slide 8. At the top line, we reported revenue of $859 million in the quarter, which was down 7% year-over-year, but up 6% from the first quarter. After a soft first quarter, our technology revenue grew 13% year-over-year in the second quarter fueled by increased ClearPath sales. ClearPath revenue was up 18% for the quarter and 3% for the first half. Services revenue declined 9% year-over-year but recovered modestly from the first quarter, growing 2% sequentially, largely due to improved levels of project work. Currency had a minimal negative impact on our overall revenue in the quarter. Based on today's rates, we anticipate currency to have a 1 percentage point negative impact on revenue in the third quarter of 2013 compared to the third quarter of 2012. As a result of the lower year-over-year volume in our services segment, as well as the mix of our technology revenue, our gross profit margin declined from 26.4% in the second quarter of 2012 to 23.4% in the second quarter of 2013. Operating expenses fell by 1% year-over-year in the second quarter of 2013. Our operating expense reductions in the quarter more than offset the incremental investments we continue to make in our key growth initiatives, as well as some additional cost reduction actions taken during the second quarter to lower the company's overhead. Interest expense decreased by about 2/3 from $7.9 million in the second quarter of 2012 to $2.6 million in the second quarter of 2013, reflecting the impact of our debt reductions and the refinancing in the third quarter of 2012. Other income expense for the second quarter of 2013 was $14.1 million of other income, principally attributable to foreign exchange…

Thanks, Janet, very much. Operator, if we may, let's open the lines up for questions.

[Operator Instructions] We'll go first to Ned Davis with William Smith & Co. Ned Davis - Wm Smith & Co.: I'd like to get a little more clarification on the estimated future pension cash contributions. So the chart that's on Slide 17, that does not reflect the June 30 $600 million potential adjustment at all? Or does it?

It does not. Ned, it does not. The funding requirements -- let me back up. The discount rate that's used on Slide 16 is the U.S. GAAP discount rate. The funding requirements that are shown on Slide 17 are a function of the regulatory or other -- predominantly, the regulatory environment that sets different rates from the discount rate. So on Slide 16, we have updated that for the discount rate environment at June 30 and the estimated future pension cash requirements on 17 are based on the December 31, 2012, rate as they existed. Ned Davis - Wm Smith & Co.: Okay. But my question is, I know you can't estimate exactly what the IRS rate would be or exactly how it will be adjusted, but assuming just that the change in rate since December 31 were to remain in effect at the end of the year, when you did your projection for actual cash contributions at the end of 2013, the number would -- the total of these payments would drop. It's just the timing is a little bit uncertain. Is that a correct assumption?

It will depend. The U.S. funding requirements are set by the PPA rate. And as we've discussed before, include looking at both current rate and a 25-year average. So those rates are -- do not move the same direction or as quickly as you would see in the discount rate used for U.S. GAAP. Ned Davis - Wm Smith & Co.: Okay. Can I just switch over to ClearPath quickly? The -- it was encouraging to see such an excellent quarter. I'm wondering, with the new server that you're introducing later in the year, are you gaining momentum with new customers? And is there any kind of increment with new customers that you haven't been experiencing the last few years? Is there some acceleration of opportunity with new customers, particularly around the Stealth and all those others -- I'm sorry, yes?

Yes. Thanks, Ned. I mean there's -- in any given year, there's a few new customers that come over to the ClearPath platform. Predominantly, the growth in ClearPath capacity in the marketplace has really stemmed from the growth of existing customers' use of ClearPath, either for the traditional workload or as we've opened a platform up, in some cases, moving some additional new workloads over to those existing installations. What we think is exciting about the platform that we intend to announce later this year is it opens -- in our view, it opens us up to the opportunity to pursue fundamentally new markets for our technology, mission-critical computing, running on Intel x86 technology to reach new customers in new markets.

We'll go next to Joey Yang with Susquehanna.

It's actually Jamie Friedman with Susquehanna. I want to ask a couple of questions. First, on the federal business, I know you touched on this briefly, but I think you may have modestly understated the magnitude. I wanted to see if you could share a little bit more about the Custom and Border Protection assignment, which you guys press released, but it was also press released on the Custom and Border Protection website. And if you can give us a sense, Ed, of the magnitude of this? Was it in your backlog? It is, I believe, an IDIQ, and when you would expect to start billing for something of this magnitude?

So as we've said, it's new work for us. Customs and Border Protection has been a good client of ours for a number of years. We've had an award-winning program. The land border initiative with them, which has been more of a front office support for their mission at the border crossings, this is really new work for us supporting their back office, more their back office systems. So it's new work. It's one that we've been working on for quite a while. We're very excited about having been awarded it. It's not been in our backlog. It's been in our pipeline but not in our backlog, and the ramp-up of the revenue and the degree to which it hits our backlog, our order backlog, will really depend on the funding that occurs for the individual task orders that will be issued on the contract.

Okay, that was going to be my follow-up, whether it was funded or unfunded. So I don't know if this is from your press release or from their press release, but there was a public disclosure of $460 million of ceiling volume. Is that accurate?

That's correct. It's a single source award of an IDIQ, indefinite delivery, indefinite quantity, which means task orders are going to be issued against this contract. And so the ceiling value of the whole contract over 5 years, which is 1 base year and 4 optional years is the $460 million.

Okay. And then just stepping back, Ed, with regard to services margins, and it was otherwise a tremendous quarter, it was a tremendous quarter in all respects. When, though, do you think that we can return to the target margin objectives in services? And at least as importantly, how do we get there of 8% long term?

Yes, I think it's really dependent -- as Janet said in her comments, one, we've got to get revenue growth going in IT outsourcing and systems integration. And we're certainly looking to, in the second half of this year, to begin to move up as opposed to moving down in IT outsourcing and systems integration. And also, I think, as Janet noted, we need to get that continued improvement in the federal business. That's a large part of our systems integration business. We need to see the continued progress there. Very happy about what we saw this quarter with the new wins in the second quarter and certainly kicking off the third quarter with the BIMS contract, or the BIMS award. But in addition to the revenue side of things, we have to keep looking at ways to make our service delivery more efficient. I have a portfolio of services that's more leverageable, that's less dependent on adding labor as you add services revenue and continued, as we always do, a focus on reducing our overhead to be as efficient as we can possibly be. But the real crux of it is we are fully engaged on the issue of revenue growth in systems integration and IT outsourcing, and we need to drive that across our business.

Last question, I don't want to monopolize the time, but could you comment on the linearity of the quarter? Was it ratable, April, May, June? Was it front- or back-end loaded? If you can comment on the timing of delivery in the quarter?

It's -- the services generally are pretty consistent and smooth across the quarter, the technology transaction is less so. It's -- as you know, it can be very spiky depending on when transactions occur. And some occur early, some occur in the middle and some occur late.

We'll take our next question from Bill Smith of William Smith & Co.

Ed, on the 40 VARs that you've added to your distribution network, is that all just related to Stealth? Or could some of that also be related to the ITO and the systems integration and ClearPath businesses as well?

At this point, it's all about Stealth. We -- again, we're doing sort of 2 innovative things or new things at one time, which is one, how do we take this disruptive technology to market and reach a broader part of the market than we can reach with our direct sales force; and two, how do we build a channel, a reseller channel, which is a different way of going to market for us. So we've really used Stealth as the product to focus on to build the channel around. Once that channel's built out, we think there's an opportunity to look at other pieces of software or other technology products that we have to take to market through a reseller channel as well, some of whom may also be the Stealth resellers or they may require a different skill set for different products. So right now, it's really laser focused in on Stealth.

And is 40 VARs, are -- would that be the total build out of that network or could there be more?

There could be more, there could be -- what we're trying to do, Bill, with Stealth, though, is make sure that we're signing up VARs that understand the security business and understand that various technologies that are available to meet cybersecurity requirements as opposed to opening it up to as many VARs as we can possibly get. We really want people who are subject matter experts in the area of security.

And are you seeing other opportunities in vertical markets then, or do you think you would by virtue of developing these VAR relationships?

Yes, I mean -- when Janet goes through our vertical orientation, we talk about public sector, commercial, financial services. As an example, we don't talk much about health care, because we don't have a strong vertical presence in health care. But that's an example where a reseller that is oriented towards the health care industry vertical could help us get broader reach of our product into a vertical that we don't normally cover with our direct sales force.

And when you mentioned the 40 VARs, you also mentioned plus a European distributor. Is that different? You've segregated it out, so is that different?

Well, the IT channels, generally, are considered to be either 1-tier or 2-tier channels. 1-tier is where the OEM, that's us, manages a reseller network, the value-added reseller network themselves. In a 2-tier channel, the OEM does business with the distributor, who, in turn, has their own network of resellers. So in the U.S. right now, we're going 1-tier. In Europe, we're doing a combination of 1-tier, as well as a 2-tier approach.

[Operator Instructions] We'll go next to Paul Wehner with DLS.

Actually Ned, the first caller, asked my pension question verbatim, so I'll let someone else take over.

[Operator Instructions] And we have a follow-up from Ned Davis of William Smith & Co. Ned Davis - Wm Smith & Co.: I just was wondering why is the CapEx still at $150 million, growing 15%, I think, year-over-year if revenues aren't growing anywhere near that or a negative? What's in that CapEx that keeps driving it?

So that CapEx, the $150 million is our estimate of CapEx expenditures for the full year. I mean, it does include our investments in outsourcing. It includes our software development costs, as well as a small portion of what we use internally. As Ed mentioned, we are looking to improve our performance in moving revenue from declining to moving in the -- moving up in the second half of the year based upon the pipeline of what we see in opportunities. Right now, $150 million for CapEx is our best estimate of what we expect to be spending for the full year.

It appears there are no further questions. I'd now like to turn the conference back over to Chairman Ed Coleman for any additional or closing remarks.

Well, thank you, operator. Let me just close by saying thank you to everyone that was on the call this evening. And we certainly look forward to you joining us on our third quarter earnings call here in a couple of months. So thanks very much. Bye-bye.

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