1st Quarter Results

1st Quarter Results 

    BLUE BELL, Pa.--(BUSINESS WIRE)--April 14, 2003--

            Unisys Reports 20% Growth in First-Quarter 2003
               Earnings Per Share Over Year-Ago Period

                     Orders Show Substantial Gains

                    Company Reaffirms Outlook for
              Double-Digit EPS Growth for Full-Year 2003

Unisys Corporation (NYSE: UIS) today reported double-digit earnings
per share (EPS) growth for the first quarter of 2003, achieving its
targeted earnings range for the quarter. The company also reported
substantial growth in its first-quarter orders, driven by significant
long-term contract signings in business process outsourcing (BPO) and
managed infrastructure services.

Unisys reported first-quarter 2003 net income of $38.5 million, or 12
cents per share, compared to first-quarter 2002 net income of $32.7
million, or 10 cents per share, an EPS increase of 20% over the first
quarter of 2002. Revenue for the first quarter of 2003 was $1.40
billion, up from $1.36 billion of revenue a year ago. Currency had a 4
percentage-point positive impact on the company's revenue in the first
quarter, as the U.S. dollar weakened against most major currencies
worldwide.

Comments from Chairman and CEO Larry Weinbach

'We demonstrated continued solid execution in the first quarter of
2003,' said Unisys Chairman and CEO Lawrence A. Weinbach. 'Despite a
highly uncertain geopolitical environment, we met our earnings and
revenue targets for the quarter and achieved double-digit growth in
our earnings per share. We achieved this earnings growth even though
pension income in the first quarter of 2003 declined to approximately
$6 million from $38 million in the year-ago quarter.

'Growth in our services business this quarter was driven by strong
double-digit growth in outsourcing as we continue to expand our
strategic BPO offerings. We saw continued strong demand for our
enterprise security services, building on our work with large
organizations such as the U.S. Transportation Security Administration
and Lloyds TSB in the United Kingdom, to create secure networks. In
addition, our technology business delivered a strong profit
performance in the first quarter, driven by sales of new ClearPath
server models. Sales of our ES7000 family of high-end Intel-based
servers showed strong double-digit growth in the quarter as we benefit
from our ongoing efforts to market the significant capabilities of
these systems to both new and existing clients.

'I was particularly pleased by our new orders in the first quarter,'
Weinbach said. 'We showed substantial double-digit growth in our
orders and won a number of significant BPO and managed infrastructure
services contracts. Overall, we closed more than $800 million of
long-term services business in the first quarter.'

Major services contracts signed during the quarter included:

-  A 10-year business process outsourcing contract to assume
    processing and administration of 2.4 million life and pensions
    policies for Royal & SunAlliance in the United Kingdom;

-  A seven-year outsourcing contract with the city of Minneapolis
    to provide a full range of outsourcing services to manage the
    city's complete IT infrastructure, ranging from the data
    center to desktops and mobile devices;

-  A three-year contract extension with the city of Chicago under
    which Unisys will continue providing a full range of
    outsourcing services to manage the city's distributed IT
    infrastructure;

-  A three-year contract with HBOS plc, a leading financial
    services firm in the United Kingdom, to provide infrastructure
    support services for some 29,000 employees;

-  A four-year contract with the West Virginia Department of
    Health and Human Services to become the new Medicaid fiscal
    agent for the state; and

-  A five-year contract with the Board of Airline Representatives
    (BARA) in Australia to implement and manage a new baggage
    reconciliation system at all Australian international
    airports.

'These client wins, and many others achieved during the quarter, add
to our base of annuity services business,' Weinbach said. 'Our ability
to win such large, value-added contracts -- particularly in the
current business environment -- speaks to the competitiveness of our
offerings and the ability of Unisys people to deliver on client
commitments.'

Overall Company Highlights

Total worldwide orders showed strong double-digit growth in the first
quarter, driven by substantial order gains in international markets,
primarily Europe. U.S. orders increased slightly in the quarter over
the year-ago period. On a business segment basis, services orders
showed substantial double-digit gains while technology orders declined
in the quarter.

The company's U.S. revenue increased 17% in the first quarter to $665
million compared to $570 million in the year-ago period driven
primarily by strength in the U.S. Federal government business. Revenue
in international markets declined 7% to $734 million from $793 million
a year ago despite double-digit growth in Japan.

First-quarter 2003 gross profit and operating margins reflected lower
pension income in the quarter compared to the first quarter of 2002.
The company's overall first-quarter 2003 gross profit margin declined
to 27.7% from 28.6% in the year-ago period, while operating profit
margins declined to 5.5% from 5.8% in the year-ago quarter. Selling,
general, and administrative (SG&A) expenses were approximately flat
with first-quarter 2002 levels. SG&A expenses represented 17.4% of
revenue in the first quarter of 2003 compared to 18.0% of revenue in
the year-ago quarter.

Business Segment Highlights

Customer revenue in the company's services business increased 6% in
the first quarter over the year-ago period. Double-digit growth in
outsourcing revenue was offset by slight revenue declines in systems
integration and consulting and infrastructure services. Reflecting the
lower levels of pension income, gross profit margins in the services
business declined 3 percentage points from year-ago levels to 18.7%,
and services operating margins declined 2 percentage points from a
year ago to 3.1%.

Customer revenue in the company's technology business declined 7% in
the first quarter, reflecting lower sales of specialized equipment and
enterprise servers. Within enterprise servers, strong growth in
Intel-based ES7000 servers was offset by a single-digit revenue
decline in ClearPath systems. Reflecting a richer mix of higher-margin
ClearPath sales in the quarter, gross margins in the technology
business increased 7.5 percentage points from year-ago levels to
50.0%, and technology operating margins increased 3 percentage points
from a year ago to 11.1%.

Cash Flow and Balance Sheet Highlights

Unisys used $65 million of cash from operations in the first quarter
compared to operational cash flow of $10 million in the year-ago
quarter. The change in year-over-year cash from operations primarily
reflected lower levels of customer prepayments and payment of 2002
incentive compensation. Cash expenditures for prior restructuring
actions were $30 million in the first quarter of 2003 compared to $35
million in the first quarter of 2002.

The company spent $89 million in the first quarter on capital
expenditures, including $58 million invested in revenue-generating
projects.

During the quarter Unisys issued $300 million of 6 7/8% senior notes
due March 15, 2010. The company plans to use the proceeds for general
corporate purposes. Unisys ended the March 31, 2003 quarter with $433
million of cash on hand.

Business Outlook

'We're off to a solid start toward achieving our financial goals for
2003,' Weinbach said. 'While the global business environment remains
highly challenging, we are growing our earnings and revenue while
continuing to build our base of multi-year, annuity-based business.
For the second quarter of 2003, we look for earnings per share in the
14 - 17 cents range on modest revenue growth. We remain comfortable
with our previous expectation for double-digit earnings growth for
2003 overall, with full-year earnings per share in the 77 - 82 cents
range.'

Conference Call

Unisys will hold a conference call today from approximately 9:15 -
10:15 a.m. Eastern Time to discuss its results. The listen-only
Webcast, as well as the accompanying presentation materials, can be
accessed via a link on the Unisys Investor Web site at
www.unisys.com/investor. Following the call, an audio replay of the
Webcast, and accompanying presentation materials, can be accessed
through the same link.

About Unisys

Unisys is a worldwide information technology services and solutions
company. Our people combine expertise in systems integration,
outsourcing, infrastructure, server technology and consulting with
precision thinking and relentless execution to help clients, in more
than 100 countries, quickly and efficiently achieve competitive
advantage. For more information, visit www.unisys.com

Forward-Looking Statements

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. The
factors that could affect the company's future financial results are
discussed more fully in the company's periodic reports as filed with
the Securities and Exchange Commission.

RELEASE NO.: 0403/8265 (See accompanying financial information)
http://www.unisys.com/about__unisys/news_a_events/04148265.htm

Unisys is a registered trademark of Unisys Corporation. All other
brands and products referenced herein are acknowledged to be
trademarks or registered trademarks of their respective holders.


                        UNISYS CORPORATION
                 CONSOLIDATED STATEMENTS OF INCOME
                 (Millions, except per share data)

                                   Three Months
                                  Ended March 31
                                ------------------
                                   2003      2002
                                 --------  --------
Revenue
  Services                      $1,107.0  $1,049.2
  Technology                       291.9     313.3
                                 --------  --------
                                 1,398.9   1,362.5
Costs and expenses
  Cost of revenue:
    Services                       882.5     802.4
    Technology                     129.3     170.8
                                 --------  --------
                                 1,011.8     973.2
  Selling, general and
    administrative                 243.7     245.4
  Research and development          66.8      65.1
                                 --------  --------
                                 1,322.3   1,283.7
                                 --------  --------
Operating income                    76.6      78.8

Interest expense                    15.7      17.5
Other income
 (expense), net                     (3.4)    (12.4)
                                 --------  --------
Income before income taxes          57.5      48.9
Provision for income taxes          19.0      16.2
                                 --------  --------
Net income                         $38.5     $32.7
                                 ========  ========
Earnings per share
Basic                             $  .12    $  .10
                                 ========  ========
Diluted                           $  .12    $  .10
                                 ========  ========
Shares used in the per share
  computations (thousands):
  Basic                          327,208   321,469
                                 ========  ========
  Diluted                        328,824   323,307
                                 ========  ========


                        UNISYS CORPORATION
                          SEGMENT RESULTS
                             (Millions)

                                 Elimi-
                       Total     nations    Services  Technology
                      --------   --------   --------  ----------
Three Months Ended
March 31, 2003
-----------------
Customer revenue      $1,398.9              $1,107.0      $291.9
Intersegment                       ($70.0)       5.6        64.4
                      --------   --------   --------    --------
Total revenue         $1,398.9     ($70.0)  $1,112.6      $356.3
                      ========   ========   ========    ========

Gross profit percent     27.7%                 18.7%       50.0%
                      ========              ========    ========
Operating profit
  percent                 5.5%                  3.1%       11.1%
                      ========              ========    ========
Three Months Ended
March 31, 2002
-----------------
Customer revenue      $1,362.5              $1,049.2      $313.3
Intersegment                       ($80.7)      11.5        69.2
                      --------   --------   --------    --------
Total revenue         $1,362.5     ($80.7)  $1,060.7      $382.5
                      ========   ========   ========    ========

Gross profit percent     28.6%                 21.7%       42.5%
                      ========              ========    ========
Operating profit
  percent                 5.8%                  4.9%        7.7%
                      ========              ========    ========


                        UNISYS CORPORATION
                   CONSOLIDATED BALANCE SHEETS
                            (Millions)

                                         March 31,   December 31,
                                           2003         2002
                                        ----------   ----------
Assets
Current assets
 Cash and cash equivalents                  $433.1       $301.8
 Accounts and notes receivable, net          862.7        955.6
 Inventories
   Parts and finished equipment              156.9        165.3
   Work in process and materials             133.3        127.5
 Deferred income taxes                       312.3        311.3
 Other current assets                         97.4         84.5
                                        ----------   ----------
 Total                                     1,995.7      1,946.0
                                        ----------   ----------
Properties                                 1,576.0      1,542.7
 Less accumulated depreciation
   and amortization                          958.2        932.9
                                        ----------   ----------
 Properties, net                             617.8        609.8
                                        ----------   ----------
Investments at equity                        111.8        111.8
Marketable software, net                     322.1        311.8
Deferred income taxes                      1,476.0      1,476.0
Goodwill                                     161.7        160.6
Other long-term assets                       367.8        365.4
                                        ----------   ----------
 Total                                    $5,052.9     $4,981.4
                                        ==========   ==========

Liabilities and stockholders' equity
Current liabilities
 Notes payable                               $78.6        $77.3
 Current maturities of long-term debt          2.5          4.4
 Accounts payable                            434.9        532.5
 Other accrued liabilities                 1,152.9      1,341.4
 Income taxes payable                        235.0        228.9
                                        ----------   ----------
 Total                                     1,903.9      2,184.5
                                        ----------   ----------
Long-term debt                             1,046.3        748.0
Accrued pension liabilities                  715.1        727.7
Other long-term liabilities                  486.0        465.2
Stockholders' equity
 Common stock                                  3.3          3.3
 Accumulated deficit                        (635.0)      (673.5)
 Other capital                             3,775.9      3,763.1
 Accumulated other comprehensive loss     (2,242.6)    (2,236.9)
                                        ----------   ----------
 Stockholders' equity                        901.6        856.0
                                        ----------   ----------
 Total                                    $5,052.9     $4,981.4
                                        ==========   ==========


                        UNISYS CORPORATION
               CONSOLIDATED STATEMENT OF CASH FLOWS
                            (Millions)

                                             Three Months Ended
                                                  March 31
                                             ------------------
                                               2003       2002
                                             -------    -------
Cash flows from operating activities
Net income                                     $38.5      $32.7
Add (deduct) items to reconcile
  net income to net cash (used for)
  provided by operating activities:
Depreciation and amortization
  of properties                                 42.2       36.0
Amortization:
 Marketable software                            29.7       29.7
 Deferred outsourcing contract costs             7.8        3.9
(Increase) in deferred
  income taxes, net                             (1.0)      (1.5)
Decrease in receivables, net                    91.9      147.6
Decrease in inventories                          2.6       32.2
(Decrease) in accounts payable
 and other accrued liabilities                (267.8)    (199.1)
Increase (decrease) in income
  taxes payable                                  6.1       (5.8)
Increase (decrease) in other liabilities         4.5      (19.4)
(Increase) in other assets                     (20.3)     (77.0)
Other                                             .9       30.3
                                             -------    -------
Net cash (used for) provided by
 operating activities                          (64.9)       9.6
                                             -------    -------
Cash flows from investing activities
 Proceeds from investments                   1,279.1      701.7
 Purchases of investments                   (1,292.7)    (699.1)
 Investment in marketable software             (40.0)     (36.3)
 Capital additions of properties               (49.4)     (39.4)
 Purchases of businesses                         (.8)
                                             -------    -------
Net cash used for investing activities        (103.8)     (73.1)
                                             -------    -------
Cash flows from financing activities
 Proceeds from issuance of long-term debt      293.3
 Net proceeds from short-term borrowings         1.3       15.9
 Proceeds from employee stock plans              6.3        7.4
 Payments of long-term debt                     (2.4)       (.5)
                                             -------    -------
Net cash provided by financing activities      298.5       22.8
                                             -------    -------
Effect of exchange rate changes on cash
 and cash equivalents                            1.5       (1.9)
                                             -------    -------
Increase (decrease) in cash
  and cash equivalents                         131.3      (42.6)
Cash and cash equivalents, beginning of
 period                                        301.8      325.9
                                             -------    -------
Cash and cash equivalents, end of period      $433.1     $283.3
                                             =======    =======

   Short Name: Unisys Corp
   Category Code: QRF
   Sequence Number: 00003898
   Time of Receipt (offset from UTC): 20030411T233155+0100