<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)

 [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934

For the fiscal year ended December 31, 2001

                                       OR

 [_]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________.

                         Commission file number: 1-8729

                               UNISYS CORPORATION

             (Exact name of registrant as specified in its charter)

            Delaware                                         38-0387840
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                           Identification No.)

Unisys Way
Blue Bell, Pennsylvania                                         19424
(Address of principal executive offices)                      (Zip Code)

               Registrant's telephone number, including area code:
                                 (215) 986-4011

           Securities registered pursuant to Section 12(b) of the Act:

                                                     Name of each exchange on
    Title of each class                                  which registered
    -------------------                              ------------------------

Common Stock, par value $.01                         New York Stock Exchange
Preferred Share Purchase Rights                      New York Stock Exchange


<PAGE>

Securities registered pursuant to Section 12(g) of the Act:

                                      None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES   X   NO ____
                                       -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]

Aggregate market value of the voting stock held by non-affiliates:
approximately $4,013,000,000 as of December 31, 2001. The amount shown is based
on the closing price of Unisys Common Stock as reported on the New York Stock
Exchange composite tape on that date. Voting stock beneficially held by officers
and directors is not included in the computation. However, Unisys Corporation
has not determined that such individuals are "affiliates" within the meaning of
Rule 405 under the Securities Act of 1933.

Number of shares of Unisys Common Stock, par value $.01, outstanding as of
December 31, 2001: 320,493,667.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Unisys Corporation 2001 Annual Report to Stockholders -- Part I,

Part II and Part IV.

Portions of the Unisys Corporation Proxy Statement for the 2002 Annual Meeting
of Stockholders -- Part III.

                                        2


<PAGE>


                                     PART I


ITEM 1.  BUSINESS
-----------------

     Unisys Corporation ("Unisys" or the "Company") is a worldwide information
services and technology company providing business solutions that help customers
utilize information technology to seize opportunities, overcome challenges, and
succeed in the global economy.

     Unisys has two business segments -- Services and Technology. Financial
information concerning the two segments is set forth in Note 14, "Segment
information", of the Notes to Consolidated Financial Statements appearing in the
Unisys 2001 Annual Report to Stockholders, and such information is incorporated
herein by reference.

     The principal executive offices of Unisys are located at Unisys Way, Blue
Bell, Pennsylvania 19424.

Principal Products and Services
-------------------------------

    Unisys provides services and technology to commercial businesses and
governments throughout most of the world.

     In the Services segment, Unisys provides a range of services and solutions
designed to help clients apply information technology to meet their business
problems. The Unisys portfolio of solutions and services includes consulting and
systems integration; outsourcing, including the management of a customer's
internal information systems and management of specific business processes, such
as payment processing, mortgage administration and cargo management; network
services involving the management and support of customers' multi-vendor
networks, desktops, and servers; and security solutions to protect systems,
networks, applications and data.

     In the Technology segment, Unisys develops servers and related products
that operate in high-volume, mission-critical environments. Major offerings
include enterprise-class servers based on Cellular Multi Processing
architecture, such as the ClearPath Enterprise server, which integrates
proprietary and "open" platforms, and Intel-based servers with enterprise-class
attributes, such as the ES7000 server; system middleware to power high-end
servers; storage products; payment systems; and specialized technologies.

     The primary vertical markets Unisys serves worldwide include financial
services, communications, transportation, media, commercial, and public sector,
including the U.S. federal government.

     Products and services are marketed primarily through a direct sales force.
In certain foreign countries, Unisys markets primarily through distributors.

                                        3


<PAGE>

Raw Materials
-------------

     Raw materials essential to the conduct of the business are generally
readily available at competitive prices in reasonable proximity to those
facilities utilizing such materials.

Patents, Trademarks and Licenses
--------------------------------

     Unisys owns many domestic and foreign patents relating to the design and
manufacture of its products, has granted licenses under certain of its patents
to others and is licensed under the patents of others. Unisys does not believe
that its business is materially dependent upon any single patent or license or
related group thereof. Trademarks and service marks used on or in connection
with Unisys products and services are considered to be valuable assets of
Unisys.

Backlog
-------

     In the Services segment, firm order backlog at December 31, 2001 was $5.7
billion, compared to $5.8 billion at December 31, 2000. Approximately $2.3
billion (40%) of 2001 backlog is expected to be filled in 2002. Although the
Company believes that this backlog is firm, the Company may, for commercial
reasons, allow the orders to be cancelled, with or without penalty. In addition,
funded government contracts included in this backlog are generally subject to
termination, in whole or part, at the convenience of the government or if
funding becomes unavailable. In such cases, the Company is generally entitled to
receive payment for work completed plus allowable termination or cancellation
costs.

     At the end of 2001, the Company also had $2.8 billion of potential future
Services order value which it may receive under certain multi-year U.S.
government contracts for which funding is appropriated annually. The comparable
value of unfunded multi-year U.S. government contracts for 2000 was $2.1
billion.

     Because of the relatively short cycle between order and shipment in its
Technology segment, the Company believes that backlog information for this
segment is not material to the understanding of its business.

Customers
---------

     No single customer accounts for more than 10% of Unisys revenue. Sales of
commercial products to various agencies of the U.S. government represented 10%
of total consolidated revenue in 2001.

Competition
-----------

     Unisys business is affected by rapid change in technology in the
information services and technology industries and aggressive competition from
many domestic and foreign companies. Principal

                                        4


<PAGE>

competitors are computer hardware manufacturers, software providers, and
information technology services companies, including companies that provide
systems integration and consulting, outsourcing and network services. Unisys
competes primarily on the basis of service, product performance, technological
innovation, and price. Unisys believes that its continued investment in
engineering and research and development, coupled with its marketing
capabilities, will have a favorable impact on its competitive position.

Research and Development
------------------------

     Unisys-sponsored research and development costs were $331.5 million in
2001, $333.6 million in 2000, and $339.4 million in 1999.

Environmental Matters
---------------------

     Capital expenditures, earnings and the competitive position of Unisys have
not been materially affected by compliance with federal, state and local laws
regulating the protection of the environment. Capital expenditures for
environmental control facilities are not expected to be material in 2002 and
2003.

Employees
---------

     As of December 31, 2001, Unisys had approximately 38,900 employees.

International and Domestic Operations
-------------------------------------

     Financial information by geographic area is set forth in Note 14, "Segment
information", of the Notes to Consolidated Financial Statements appearing in the
Unisys 2001 Annual Report to Stockholders, and such information is incorporated
herein by reference.


I
TEM 2.  PROPERTIES
-------------------

     As of December 31, 2001, Unisys had 24 major facilities in the United
States with an aggregate floor space of approximately 5.2 million square feet,
located primarily in California, Georgia, Illinois, Michigan, Minnesota,
Pennsylvania, Utah and Virginia. Three of these facilities, with aggregate floor
space of approximately 1.5 million square feet, were owned by Unisys and 21,
with approximately 3.7 million square feet of floor space, were leased to
Unisys. Approximately 4.9 million square feet of the U.S. facilities were in
current operation, approximately .2 million square feet were subleased to
others, and approximately .1 million square feet were being held in reserve or
were declared surplus with disposition efforts in progress.

     As of December 31, 2001, Unisys had 26 major facilities outside the United
States with an aggregate floor space of approximately 2.6 million square feet,
located primarily in Australia, Brazil, France, Germany, Netherlands, South
Africa, Switzerland and the United Kingdom. Six of these facilities, with
approximately .8 million square feet of

                                        5


<PAGE>

floor space, were owned by Unisys and 20, with approximately 1.8 million square
feet of floor space, were leased to Unisys. Approximately 2.2 million square
feet were in current operation, approximately .3 million square feet were
subleased to others, and approximately .1 million square feet were being held in
reserve or were declared surplus with disposition efforts in progress.

     Unisys major facilities include offices, laboratories, centers of
excellence, manufacturing plants, warehouses, and distribution and sales
centers. Unisys believes that its facilities are suitable and adequate for
current and presently projected needs. Unisys continuously reviews its
anticipated requirements for facilities and will from time to time acquire
additional facilities, expand existing facilities, and dispose of existing
facilities or parts thereof, as necessary.


ITEM 3.  LEGAL PROCEEDINGS
--------------------------

     The Company has previously reported, most recently in its Quarterly Report
on Form 10-Q for the quarterly period ended September 30, 2001, its involvement
in a consolidated class action captioned In re: Unisys Corporation Securities
                                         ------------------------------------
Litigation, filed in the U. S. District Court for the Eastern District of
----------
Pennsylvania. This matter has been settled, and the case was dismissed in the
fourth quarter of 2001. The terms of the settlement did not have a material
effect on the company's consolidated financial position, consolidated results of
operations or liquidity.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

     No matters were submitted to a vote of security holders of Unisys during
the fourth quarter of 2001.

                                        6


<PAGE>


ITEM 10.  EXECUTIVE OFFICERS OF THE REGISTRANT
----------------------------------------------

     Information concerning the executive officers of Unisys is set forth below.

         Name                    Age        Position with Unisys
         ----                    ---        --------------------

Lawrence A. Weinbach             62         Chairman of the Board,
                                            President and Chief
                                            Executive Officer

Jack A. Blaine                   57         Executive Vice President;
                                            President, Worldwide Sales
                                            and Services

George R. Gazerwitz              61         Executive Vice President;
                                            President, Systems &
                                            Technology

Joseph W. McGrath                49         Executive Vice President;
                                            President, Global Industries

David O. Aker                    55         Senior Vice President,
                                            Worldwide Human Resources

Janet Brutschea Haugen           43         Senior Vice President and
                                            Chief Financial Officer

Nancy Straus Sundheim            50         Senior Vice President,
                                            General Counsel and Secretary

Janet B. Wallace                 50         Senior Vice President;
                                            President, Global Network
                                            Services

Leigh Alexander                  44         Vice President and Chief
                                            Marketing Officer

Richard D. Badler                51         Vice President, Corporate
                                            Communications

Scott A. Battersby               43         Vice President and Treasurer

Leo C. Daiuto                    56         Vice President, Product
                                            Development and Technology

Robert D. Evans                  54         Vice President; President,
                                            Global Outsourcing

Jack F. McHale                   52         Vice President,
                                            Investor Relations

     There is no family relationship among any of the above-named executive
officers. The Bylaws provide that the officers of Unisys shall be elected
annually by the Board of Directors and that each

                                        7


<PAGE>

officer shall hold office for a term of one year and until a successor is
elected and qualified, or until the officer's earlier resignation or removal.

     Mr. Weinbach, Chairman of the Board, President and Chief Executive Officer
since 1997. Prior to that time, he held the position of Managing Partner-Chief
Executive of Andersen Worldwide (Arthur Andersen and Andersen Consulting), a
global professional services organization. He had been with Andersen Worldwide
since 1961.

     Mr. Blaine, Executive Vice President and President, Worldwide Sales and
Services since 2000. Prior to that time, he served as Senior Vice President and
President of the Pacific Asia Americas Group (1996-1999). Mr. Blaine has been an
officer since 1988.

     Mr. Gazerwitz, Executive Vice President and President, Systems and
Technology since 2000. Prior to that time, he served as Executive Vice President
and President of the Computer Systems Group (1996-1999). Mr. Gazerwitz has been
an officer since 1984.

     Mr. McGrath, Executive Vice President and President, Global Industries
since 2000. During 1999, he served as Senior Vice President of Major Accounts
Sales and Chief Marketing Officer. Prior to joining Unisys in 1999, he was with
Xerox Corporation from 1988 until 1998, serving as vice president and general
manager of its Production Color Systems unit and as vice president of strategy
and integration for the Production Systems division. Mr. McGrath has been an
officer since 1999.

     Mr. Aker, Senior Vice President, Worldwide Human Resources since 1997.
Prior to that time, he served as Vice President, Worldwide Human Resources
(1995-1997). Mr. Aker has been an officer since 1995.

     Ms. Haugen, Senior Vice President and Chief Financial Officer since 2000.
Prior to that time, she served as Vice President and Controller and Acting Chief
Financial Officer (1999-2000) and Vice President and Controller (1996-1999). Ms.
Haugen has been an officer since 1996.

     Ms. Sundheim, Senior Vice President, General Counsel and Secretary since
January 2001. From 1999 to 2001, she was Vice President, Deputy General Counsel
and Secretary. She had been Deputy General Counsel since 1990. Ms. Sundheim has
been an officer since 1999.

     Ms. Wallace, Senior Vice President and President, Global Network Services
since 2000. Ms. Wallace joined Unisys in 1999 as Vice President and President,
Global Network Services. Prior to that, she was Vice President of Services
Marketing and Sales, Compaq Computer Corporation (1998-1999); and Vice President
of Marketing and Services, Digital Equipment Corporation (1993-1998). Ms.
Wallace has been an officer since 2000.

     Ms. Alexander, Vice President and Chief Marketing Officer since 2000. Prior
to joining Unisys in 2000, she was with Comdial Corporation from 1998 serving as
president, Comdial Enterprise Solutions and as Senior Vice President, Marketing.
Before that, Ms. Alexander was Senior Vice President, Marketing and Strategic
Planning

                                        8


<PAGE>

at PageNet Corporation (1996-1997).  Ms. Alexander has been an officer since
2000.

     Mr. Badler, Vice President, Corporate Communications since 1998. Prior to
joining Unisys, he was Vice President, Corporate Communications for General
Instrument Corporation (1996-1998); and an executive vice president and account
director for Golin/Harris Communications in Chicago (1994-1996). Mr. Badler has
been an officer since 1998.

     Mr. Battersby, Vice President and Treasurer since 2000. Prior to that time,
he served as vice president of corporate strategy and development (1998-2000);
and vice president and Assistant Treasurer (1996-1998). Mr. Battersby has been
an officer since 2000.

     Mr. Daiuto, Vice President, Product Development and Technology since 2000.
Prior to that time, he had held a variety of business and engineering management
positions with Unisys since he joined the Company in 1970. Mr. Daiuto has been
an officer since 2000.

     Mr. Evans, Vice President and President, Global Outsourcing since 2000.
Prior to that time, he served as vice president and general manager for
outsourcing in North America (1996-1999). Mr. Evans has been an officer since
2000.

     Mr. McHale, Vice President, Investor Relations since 1997. From 1989 to
1997, he was Vice President, Investor and Corporate Communications. Mr. McHale
has been an officer since 1986.



                                     PART II


ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
         MATTERS
-------------------------------------------------------------------------

     Unisys Common Stock (trading symbol "UIS") is listed for trading on the New
York Stock Exchange, on exchanges in Amsterdam, Brussels, and London and on the
SWX Swiss Exchange. Information on the high and low sales prices for Unisys
Common Stock is set forth under the heading "Quarterly financial information",
in the Unisys 2001 Annual Report to Stockholders and is incorporated herein by
reference. At December 31, 2001, there were 320.5 million shares outstanding and
approximately 28,400 stockholders of record. Unisys has not declared or paid any
cash dividends on its Common Stock since 1990.

                                       9


<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA
--------------------------------

     A summary of selected financial data for Unisys is set forth under the
heading "Five-year summary of selected financial data" in the Unisys 2001 Annual
Report to Stockholders and is incorporated herein by reference.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS
------------------------------------------------------------------------

     Management's discussion and analysis of financial condition and results of
operations is set forth under the heading "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in the Unisys 2001 Annual
Report to Stockholders and is incorporated herein by reference.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------

     Information concerning market risk is set forth under the heading "Market
risk" in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Unisys 2001 Annual Report to Stockholders and is
incorporated herein by reference.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------

     The financial statements of Unisys, consisting of the consolidated balance
sheets at December 31, 2001 and 2000 and the related consolidated statements of
income, cash flows and stockholders' equity for each of the three years in the
period ended December 31, 2001, appearing in the Unisys 2001 Annual Report to
Stockholders, together with the report of Ernst & Young LLP, independent
auditors, on the financial statements at December 31, 2001 and 2000 and for each
of the three years in the period ended December 31, 2001, appearing in the
Unisys 2001 Annual Report to Stockholders, are incorporated herein by reference.
Supplementary financial data, consisting of information appearing under the
heading "Quarterly financial information" in the Unisys 2001 Annual Report to
Stockholders, is incorporated herein by reference.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE
------------------------------------------------------------------------

     Not applicable.

                                       10


<PAGE>


                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------------------------------

     (a)  Identification of Directors. Information concerning the directors of
Unisys is set forth under the headings "Nominees for Election to the Board of
Directors", "Members of the Board of Directors Continuing in Office -- Term
Expiring in 2003" and "Members of the Board of Directors Continuing in Office --
Term Expiring in 2004" in the Unisys Proxy Statement for the 2002 Annual Meeting
of Stockholders and is incorporated herein by reference.

     (b)  Identification of Executive Officers. Information concerning executive
officers of Unisys is set forth under the caption "EXECUTIVE OFFICERS OF THE
REGISTRANT" in Part I, Item 10, of this report.

     (c)  Section 16(a) Beneficial Ownership Reporting Compliance. Information
concerning compliance with beneficial ownership reporting requirements is set
forth under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Unisys Proxy Statement for the 2002 Annual Meeting of
Stockholders and is incorporated herein by reference.


ITEM 11.  EXECUTIVE COMPENSATION
--------------------------------

     Information concerning executive compensation is set forth under the
headings "EXECUTIVE COMPENSATION", "REPORT OF THE CORPORATE GOVERNANCE AND
COMPENSATION COMMITTEE" and "STOCK PERFORMANCE GRAPH" in the Unisys Proxy
Statement for the 2002 Annual Meeting of Stockholders and is incorporated herein
by reference.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------

     Information concerning shares of Unisys equity securities beneficially
owned by certain beneficial owners and by management is set forth under the
heading "SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in the
Unisys Proxy Statement for the 2002 Annual Meeting of Stockholders and is
incorporated herein by reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

     Information concerning certain relationships and related transactions is
set forth under the heading "EXECUTIVE COMPENSATION - Transactions with
Management" in the Unisys Proxy Statement for the 2002 Annual Meeting of
Stockholders and is incorporated herein by reference.

                                       11


<PAGE>


                                     PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------

(a)  The following documents are filed as part of this report:

1.   Financial Statements from the Unisys 2001 Annual Report to Stockholders
which are incorporated herein by reference:

                                                                   Annual Report
                                                                      Page No.
                                                                   -------------
         Consolidated Balance Sheet at
           December 31, 2001 and December 31, 2000                            23

         Consolidated Statement of Income for each of the
           three years in the period ended December 31, 2001                  22

         Consolidated Statement of Cash Flows for each of the
           three years in the period ended December 31, 2001                  24

         Consolidated Statement of Stockholders' Equity for
           each of the three years in the period ended
           December 31, 2001                                                  25

         Notes to Consolidated Financial Statements                        26-43

         Report of Independent Auditors                                       44

2.   Financial Statement Schedules filed as part of this report pursuant to Item
8 of this report:

     Schedule                                                          Form 10-K
      Number                                                            Page No.
     --------                                                          ---------

     II     Valuation and Qualifying Accounts                                 16

          The financial statement schedule should be read in conjunction with
     the consolidated financial statements and notes thereto in the Unisys 2001
     Annual Report to Stockholders. Financial statement schedules not included
     with this report have been omitted because they are not applicable or the
     required information is shown in the consolidated financial statements or
     notes thereto.

     Separate financial statements of subsidiaries not consolidated with Unisys
and entities in which Unisys has a fifty percent or less ownership interest have
been omitted because these operations do not meet any of the conditions set
forth in Rule 3-09 of Regulation S-X.

3.   Exhibits. Those exhibits required to be filed by Item 601 of Regulation S-K
are listed in the Exhibit Index included in this report at pages 17 through 19.
Management contracts and compensatory plans and arrangements are listed as
Exhibits 10.1 through 10.16.

                                       12


<PAGE>

(b) Reports on Form 8-K.

     During the quarter ended December 31, 2001, Unisys filed a Current Report
on Form 8-K, dated December 14, 2001, to report under Items 5 and 7 of such
Form.

                                       13


<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                   UNISYS CORPORATION

                                       /s/ Lawrence A. Weinbach
                                   By: ----------------------------
                                           Lawrence A. Weinbach
                                           Chairman of the Board,
                                           President and Chief
Date: February 15, 2002                    Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on February 15, 2002.

/s/ Lawrence A. Weinbach            *James J. Duderstadt
------------------------------       ---------------------
 Lawrence A. Weinbach                James J. Duderstadt
 Chairman of the Board,              Director
 President and Chief Executive
 Officer (principal                 *Henry C. Duques
 executive officer) and              ---------------------
 Director                            Henry C. Duques
                                     Director

/s/ Janet Brutschea Haugen          *Denise K. Fletcher
------------------------------       ---------------------
 Janet Brutschea Haugen              Denise K. Fletcher
 Senior Vice President               Director
 and Chief Financial Officer
 (principal financial and           *Gail D. Fosler
 accounting officer)                 ---------------------
                                     Gail D. Fosler
                                     Director
*J. P. Bolduc
------------------------------      *Melvin R. Goodes
 J. P. Bolduc                        ---------------------
 Director                            Melvin R. Goodes
                                     Director

*Kenneth A. Macke
------------------------------      *Edwin A. Huston
 Kenneth A. Macke                    ---------------------
 Director                            Edwin A. Huston
                                     Director

*Theodore E. Martin
------------------------------
 Theodore E. Martin
 Director

                                       14


<PAGE>
                                    *By:/s/ Lawrence A. Weinbach
                                        ---------------------------
                                            Lawrence A. Weinbach
                                            Attorney-in-Fact

                                       15


<PAGE>

                               UNISYS CORPORATION
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                   (Millions)

                                     Additions
                        Balance at   Charged                         Balance
                        Beginning    to Costs                        at End
Description             of Period    and Expenses   Deductions (1)   of Period
-----------------------------------------------------------------------------

Allowance for
  Doubtful Accounts
  (deducted from
  accounts and notes
  receivable):


Year Ended
  December 31, 1999        $51.2       $13.6         $(13.0)         $51.8

Year Ended
  December 31, 2000        $51.8       $ 8.2         $(11.7)         $48.3

Year Ended
  December 31, 2001        $48.3       $23.6         $(21.3)         $50.6

(1) Write-off of bad debts less recoveries.

                                       16


<PAGE>


                                  EXHIBIT INDEX

Exhibit
Number                     Description
-------                    -----------

   3.1      Restated Certificate of Incorporation of Unisys Corporation
            (incorporated by reference to Exhibit 3.1 to the registrant's
            Quarterly Report on Form 10-Q for the quarterly period ended
            September 30, 1999)

   3.3      By-Laws of Unisys Corporation

   4.1      Agreement to furnish to the Commission on request a copy of any
            instrument defining the rights of the holders of long-term debt
            which authorizes a total amount of debt not exceeding 10% of the
            total assets of the registrant (incorporated by reference to Exhibit
            4 to the registrant's Annual Report on Form 10-K for the year ended
            December 31, 1982 (File No. 1-145))

   4.2      Form of Rights Agreement dated as of March 7, 1986, which includes
            as Exhibit A, the Certificate of Designations for the Junior
            Participating Preferred Stock, and as Exhibit B, the Form of Rights
            Certificate (incorporated by reference to Exhibit 1 to the
            registrant's Registration Statement on Form 8-A, dated March 11,
            1986)

   4.3      Amendment No. 1, dated as of February 22, 1996, to Rights Agreement
            (incorporated by reference to Exhibit 4 to the registrant's Current
            Report on Form 8-K dated February 22, 1996)

   4.4      Amendment No. 2, dated as of December 7, 2000, to Rights Agreement
            (incorporated by reference to Exhibit 4 to the registrant's Current
            Report on Form 8-K dated December 7, 2000)

  10.1      Unisys Corporation Deferred Compensation Plan as amended and
            restated effective September 22, 2000 (incorporated by reference to
            Exhibit 10.3 to the registrant's Quarterly Report on Form 10-Q for
            the quarterly period ended September 30, 2000)

  10.2      Deferred Compensation Plan for Directors of Unisys Corporation, as
            amended and restated effective September 22, 2000 (incorporated by
            reference to Exhibit 10.4 to the registrant's Quarterly Report on
            Form 10-Q for the quarterly period ended September 30, 2000)

  10.3      Unisys Corporation Director Stock Unit Plan, as amended and
            restated, effective September 22, 2000 (incorporated by reference to
            Exhibit 10.5 to the registrant's Quarterly Report on Form 10-Q for
            the quarterly period ended September 30, 2000)

                                       17


<PAGE>

  10.4      Unisys Directors Stock Option Plan, as amended and restated
            effective September 22, 2000 (incorporated by reference to Exhibit
            10.2 to the registrant's Quarterly Report on Form 10-Q for the
            quarterly period ended September 30, 2000)

  10.5      Unisys Executive Annual Variable Compensation Plan (incorporated by
            reference to Exhibit A to the registrant's Proxy Statement, dated
            March 23, 1993, for its 1993 Annual Meeting of Stockholders)

  10.6      1990 Unisys Long-Term Incentive Plan, as amended and restated
            effective September 22, 2000 (incorporated by reference to Exhibit
            10.1 to the registrant's Quarterly Report on Form 10-Q for the
            quarterly period ended September 30, 2000)

  10.7      Unisys Corporation Executive Life Insurance Program (incorporated by
            reference to Exhibit 10.1 to the registrant's Quarterly Report on
            Form 10-Q for the quarterly period ended June 30, 1999)

  10.8      Form of Indemnification Agreement between Unisys Corporation and
            each of its Directors (incorporated by reference to Exhibit B to the
            registrant's Proxy Statement, dated March 22, 1988, for the 1988
            Annual Meeting of Stockholders)

  10.9      Form of Executive Employment Agreement (incorporated by reference to
            Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q for
            the quarterly period ended June 30, 1995)

  10.10     Employment Agreement, dated September 23, 1997, between the
            registrant and Lawrence A. Weinbach (incorporated by reference to
            Exhibit 10.2 to the registrant's Quarterly Report on Form 10-Q for
            the quarterly period ended September 30, 1997)

  10.11     Employment Agreement, dated as of November 19, 1999, by and between
            Unisys Corporation and Joseph W. McGrath (incorporated by reference
            to Exhibit 10.24 to the registrant's Annual Report on Form 10-K for
            the year ended December 31, 1999)

  10.12     Unisys Corporation Supplemental Executive Retirement Income Plan, as
            amended through May 22, 1997 (incorporated by reference to Exhibit
            10.3 to the registrant's Quarterly Report on Form 10-Q for the
            quarterly period ended June 30, 1997)

  10.13     Amendment 2001-1 to the Unisys Corporation Supplemental Executive
            Retirement Income Plan

  10.14     Summary of supplemental executive benefits provided to officers of
            Unisys Corporation

                                       18


<PAGE>

  10.15     Unisys Corporation Elected Officer Pension Plan, as amended through
            July 19, 2001

  10.16     Agreement dated November 14, 2001 between Unisys Corporation and
            Jack A. Blaine

  12        Computation of Ratio of Earnings to Fixed Charges

  13        Portions of the Annual Report to Stockholders of the Registrant for
            the year ended December 31, 2001

  21        Subsidiaries of the Registrant

  23        Consent of Independent Auditors

  24        Power of Attorney

                                       19




<PAGE>


                                                                     Exhibit 3.3

                               UNISYS CORPORATION

                                     BYLAWS

                                    ARTICLE I


                                  Stockholders

         SECTION 1.  Annual Meeting of Stockholders.

         The Board of Directors may fix the date, time and place of the annual
meeting of stockholders, but if no such date and time is fixed and designated by
the Board of Directors, the annual meeting of stockholders shall be held on the
last Thursday in April in each year. At the annual meeting, the stockholders
then entitled to vote shall elect directors and shall transact such other
business as may properly be brought before the meeting.

         SECTION 2.  Special Meetings of Stockholders.

         Subject to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation,
special meetings of the stockholders for any purpose may be called only by a
majority of the entire Board of Directors.

         SECTION 3.  Stockholder Action.

         Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders.

         SECTION 4.  Place of Meeting.

         All meetings of the stockholders of the Corporation shall
 be held at
such place as shall be designated by the Board of Directors in the notice of
such meeting.

         SECTION 5.  Notice of Business to be Transacted.

         (a)  Annual Meetings.
              ---------------

                  (1) Nominations of persons for election to the Board of
         Directors of the Corporation shall be made pursuant to Article II,
         Section 5 of these bylaws. The proposal of business other than director
         nominations to be transacted by the stockholders may be made at an
         annual meeting of stockholders (a) pursuant to the Corporation's notice
         with respect to such meeting, (b) by or at the direction of the Board
         of Directors, or (c) by any stockholder of the Corporation who was a
         stockholder of record at the time of giving of the notice


<PAGE>

         provided for in these bylaws, who is entitled to vote at the meeting
         and who has complied with the notice procedures set forth in this
         section.

                  (2) For business other than director nominations to be
         properly brought before an annual meeting by a stockholder pursuant to
         clause (c) of paragraph (1) of this section, the stockholder must have
         given timely notice thereof in writing to the Secretary of the
         Corporation and such business must be a proper matter for stockholder
         action under the Delaware General Corporation Law (the "GCL"). To be
         timely, a stockholder's notice shall be delivered to the Secretary at
         the principal executive offices of the Corporation not less than 90
         days prior to the first anniversary of the preceding year's annual
         meeting of stockholders; provided, however, that in the event that the
         date of the annual meeting is more than 30 days prior to or more than
         60 days after such anniversary date, notice by the stockholder to be
         timely must be so delivered not earlier than the 90th day prior to such
         annual meeting or later than the 7th day following the day on which
         notice of the date of such meeting is first given. Such stockholder's
         notice shall set forth (a) as to any business that the stockholder
         proposes to bring before the meeting, a brief description of such
         business, the reasons for conducting such business at the meeting and
         any material interest in such business of such stockholder and the
         beneficial owner, if any, on whose behalf the proposal is made; and (b)
         as to the stockholder giving the notice and the beneficial owner, if
         any, on whose behalf the proposal is made (i) the name and address of
         such stockholder, as they appear on the Corporation's books, and of
         such beneficial owner and (ii) the class and number of shares of the
         capital stock of the Corporation which are owned beneficially and of
         record by such stockholder and such beneficial owner.

                  (3) Only such business shall be conducted at an annual meeting
         of stockholders as shall have been brought before the meeting in
         accordance with the procedures set forth in this section and, with
         respect to the election of directors, Article II, Section 5. The
         chairman of the meeting shall determine whether any business proposed
         to be transacted by the stockholders has been properly brought before
         the meeting and, if any proposed business has not been properly brought
         before the meeting, the chairman shall declare that such proposed
         business shall not be presented for stockholder action at the meeting.

         (b) Special Meetings. Nominations of persons for election to the Board
             ----------------
of Directors may be made by stockholders at special meetings of stockholders at
which directors are to be selected pursuant to the stockholders' notice
requirements of Article II, Section 5 of these bylaws. Stockholders shall not
propose business at any special meetings of stockholders.

         (c) Proxy Rules. Nothing in this Section 5 shall be deemed to affect
             -----------
any rights of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934.

                                       2


<PAGE>

         SECTION 6.  Quorum, Manner of Acting and Adjournment and Postponement.

         (a) Quorum, Adjournment and Postponement. The holders of a majority of
             ------------------------------------
the shares entitled to vote, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders except as otherwise
provided by the GCL, by the certificate of incorporation or by these bylaws.
Whether or not a quorum is present or represented at any meeting of the
stockholders, the chairman of the meeting shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting. At any such adjourned meeting at which a quorum is present or
represented, the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than 30 days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting. The stockholders present in person or by
proxy at a meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding withdrawal of enough stockholders to leave
less than a quorum. Any meeting of stockholders, whether special or annual, may
be postponed by resolution of the Board of Directors upon public notice given
prior to the date of such meeting.

         (b) Manner of Acting. Directors shall be elected by a plurality of the
             ----------------
votes of the shares present in person or represented by proxy at the meeting and
entitled to vote on the election of directors. In all matters other than the
election of directors, the affirmative vote of the majority of shares present in
person or represented by proxy at the meeting and entitled to vote thereon shall
be the act of the stockholders, unless the question is one upon which, by
express provision of the applicable statute, the certificate of incorporation or
these bylaws, a different vote is required in which case such express provision
shall govern and control the decision of the question.

         SECTION 7.  Organization and Conduct of Business.

         At every meeting of the stockholders, the Chairman of the Board, if
there be one, or in the case of a vacancy in the office or absence of the
Chairman of the Board, one of the following persons present in the order stated:
the Vice Chairman, if one has been appointed, the President, the Vice Presidents
in their order of rank or seniority, a chairman designated by the Board of
Directors or a chairman chosen by the stockholders entitled to cast a majority
of the votes which all stockholders present in person or by proxy are entitled
to cast, shall act as chairman, and the Secretary, or, in the absence of the
Secretary, an Assistant Secretary, or in the absence of the Secretary and the
Assistant Secretaries, a person appointed by the chairman, shall act as
secretary. The chairman of any meeting of stockholders shall determine the order
of business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as may seem to him in order.

         SECTION 8.  Voting.

         (a) General Rule. Unless otherwise provided in the certificate of
             ------------
incorporation, each stockholder shall be entitled to one vote, in person or by
proxy, for each share of capital stock having voting power held by such
stockholder.

                                       3


<PAGE>

         (b)   Voting and Other Action by Proxy. At any meeting of the
               --------------------------------
stockholders, every stockholder entitled to vote may vote in person or by proxy
authorized by an instrument in writing or by a transmission permitted by law
filed in accordance with the procedure established for the meeting. Any copy,
facsimile telecommunication or other reliable reproduction of the writing or
transmission created pursuant to this paragraph may be substituted or used in
lieu of the original writing or transmission for any and all purposes for which
the original writing or transmission could be used, provided that such copy,
facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission.

               All voting, except where otherwise required by law, these bylaws
or the certificate of incorporation, may be by a voice vote. Any vote not taken
by voice shall be taken by ballots, each of which shall state the name of the
stockholder or proxy voting and such other information as may be required under
the procedure established for the meeting.

         SECTION 9.  Voting Lists.

         The Corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting. The list shall be arranged in alphabetical order, showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. This list shall presumptively determine the identity
of the stockholders entitled to vote at the meeting and the number of shares
held by each of them.

         SECTION 10. Inspectors of Election.

         (a)   Appointment. All elections of directors shall be by written
               -----------
ballot. In advance of any meeting of stockholders the Board of Directors shall
appoint one or more inspectors to act at the meeting. No person who is a
candidate for office shall act as an inspector. In case any person appointed as
an inspector fails to appear or fails or refuses to act, the vacancy may be
filled by appointment made by the Board of Directors in advance of the convening
of the meeting, or at the meeting by the chairman of the meeting.

         (b)   Duties. Inspectors shall determine the number of shares
               ------
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum and the authenticity, validity and effect of proxies
and ballots, shall receive votes or ballots, shall hear and determine all
challenges and questions in any way arising in connection with the right to
vote, shall count and tabulate all votes and ballots, shall determine and
certify the result, and shall do such acts as may be proper to conduct the
election or vote with fairness to all stockholders. If there be

                                       4


<PAGE>

more than one inspector of election, the decision, act or certificate of a
majority shall be effective in all respects as the decision, act or certificate
of all.

         (c)   Report. On request of the chairman of the meeting or of any
               ------
stockholder or his proxy, the inspectors shall make a report in writing of any
challenge or question or matter determined by them, and execute a certificate of
any fact found by them.

         (d)   Opening and Closing of Polls. The date and time of the opening
               ----------------------------
and closing of the polls for each matter to be voted upon at the meeting shall
be determined by the chairman of the meeting and announced at the meeting. No
ballot, proxies or votes, nor any revocations thereof or changes thereto, shall
be accepted by the inspectors after the closing of the polls unless the Court of
Chancery in Delaware upon application by a stockholder shall determine
otherwise.
                                   ARTICLE II

                                    Directors

         SECTION 1.  Number.

         The business and affairs of the Corporation shall be managed under the
direction of the Board of Directors which, subject to any right of the holders
of any series of Preferred Stock then outstanding to elect additional directors
under specified circumstances, shall consist of not less than 10 nor more than
20 persons. The exact number of directors within the minimum and maximum
limitations specified in the preceding sentence shall be fixed from time to time
by the Board of Directors pursuant to a resolution adopted by a majority of the
entire Board of Directors.

         SECTION 2.  Terms.

         The directors, other than those who may be elected by the holders of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, shall be divided into three classes, as nearly
equal in number as possible, with the term of office of the first class to
expire at the 1985 Annual Meeting of Stockholders, the term of office of the
second class to expire at the 1986 Annual Meeting of Stockholders and the term
of office of the third class to expire at the 1987 Annual Meeting of
Stockholders. At each Annual Meeting of Stockholders following such initial
classification and election, directors elected to succeed those directors whose
terms expire shall be elected for a term of office to expire at the third
succeeding Annual Meeting of Stockholders after their election.

         SECTION 3.  Newly Created Directorships and Vacancies.

         Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause shall be filled by a majority vote of the directors then
in office, and directors so chosen shall hold office for a term expiring at the
Annual Meeting of Stockholders at

                                       5


<PAGE>

which the term of the class to which they have been elected expires. No decrease
in the number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.

         SECTION 4.  Removal.

         Subject to the rights of the holders of any series of Preferred Stock
then outstanding, any director, or the entire Board of Directors, may be removed
from office at any time, but only for cause and only by the affirmative vote of
the holders of at least 80% of the voting power of all of the shares of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.

         SECTION 5.  Nomination of Director Candidates.

         (a)   Nominations of candidates for election as directors of the
Corporation at any meeting of stockholders called for election of directors (an
"Election Meeting") may be made by the Board of Directors or by any stockholder
entitled to vote at such Election Meeting.

         (b)   Nominations made by the Board of Directors shall be made at a
meeting of the Board of Directors, or by written consent of directors in lieu of
a meeting, not less than 30 days prior to the date of the Election Meeting, and
such nomination shall be reflected in the minute books of the Corporation as of
the date made. At the request of the Secretary of the Corporation each proposed
nominee shall provide the Corporation with such information concerning himself
as is required, under the rules of the Securities and Exchange Commission, to be
included in the Corporation's proxy statement soliciting proxies for his
election as a director.

         (c)   Not less than 90 days prior to the date of the Election Meeting
in the case of an annual meeting, and not more than 7 days following the date of
notice of the meeting in the case of a special meeting, any stockholder who
intends to make a nomination at the Election Meeting shall deliver a notice to
the Secretary of the Corporation setting forth (i) the name, age, business
address and residence address of each nominee proposed in such notice, (ii) the
principal occupation or employment of each such nominee, (iii) the number of
shares of capital stock of the Corporation which are beneficially owned by each
such nominee, (iv) a statement that the nominee is willing to be nominated and
(v) such other information concerning each such nominee as would be required,
under the rules of the Securities and Exchange Commission, in a proxy statement
soliciting proxies for the election of such nominees.

         (d)   In the event that a person is validly designated as a nominee in
accordance with paragraph (b) or paragraph (c) hereof and shall thereafter
become unable or unwilling to stand for election to the Board of Directors, the
Board of Directors or the stockholder who proposed such nominee, as the case may
be, may designate a substitute nominee.

         (e)   If the Chairman of the Election Meeting determines that a
nomination was not made in accordance with the foregoing procedures, such
nominations shall be void.

                                       6


<PAGE>

         No person shall be elected a director of the Corporation after having
attained the age of seventy years.

                                       7


<PAGE>
         SECTION 6.  Organization.

         At every meeting of the Board of Directors, the Chairman of the Board
or, in the case of a vacancy in the office or absence of the Chairman of the
Board, a chairman chosen by a majority of the directors present, shall preside,
and the Secretary, or, in the absence of the Secretary, an Assistant Secretary,
or in the absence of the Secretary and the Assistant Secretaries, any person
appointed by the chairman of the meeting, shall act as secretary.

         SECTION 7.  Regular Meetings.

         Regular meetings of the Board of Directors shall be held at such place
or places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
notice of each regular meeting shall not be required.

         SECTION 8.  Special Meetings.

         Special meetings of the Board of Directors shall be held whenever
called by the Chairman of the Board or by three or more of the directors and
shall be held at such place, on such date and at such time as they or he shall
fix.

         SECTION 9.  Quorum, Manner of Acting and Adjournment.

         (a)   General Rule. One-half of the total number of directors shall
               ------------
constitute a quorum for the transaction of business at all meetings of the Board
of Directors. The vote of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board of Directors, except (1)
as may be otherwise specifically provided by the GCL or by the certificate of
incorporation; and (2) for any amendment to these bylaws, which shall require
the vote of not less than a majority of the directors then in office. If a
quorum is not present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without further
waiver or notice other than announcement at the meeting, until a quorum is
present.

         (b)   Unanimous Written Consent. Unless otherwise restricted by the
               -------------------------
certificate of incorporation, any action required or permitted to be taken at
any meeting of the Board of Directors may be taken without a meeting, if all
members of the Board consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors.

         (c)   Conference Telephone Meetings. One or more directors of the Board
               -----------------------------
of Directors may participate in a meeting by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in this manner constitutes
presence in person at the meeting.

         SECTION 10. Committees of the Board of Directors.

                                       8


<PAGE>

     (a)   Establishment and Powers. The Board of Directors may, by resolution
           ------------------------
adopted by a majority of the whole Board,establish one or more committees, each
committee to consist of one or more directors. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee and the alternate or alternates, if
any, designated for such member, the member or members of the committee present
at any meeting and not disqualified from voting, whether or not they constitute
a quorum, may unanimously appoint another director to act at the meeting in the
place of any such absent or disqualified member. Subject to the provisions of
the GCL, committees established by the Board of Directors shall have such power
and authority as provided by resolution of the board. Each committee so formed
shall have such name as may be determined from time to time by resolution
adopted by the Board of Directors and shall keep regular minutes of its meetings
and report the same to the Board of Directors when required.

     (b)   Committee Procedures and Conduct of Business. Each committee of the
           --------------------------------------------
Board of Directors may determine the procedural rules for meeting and conducting
its business and shall act in accordance therewith, except as otherwise provided
herein or required by law. Adequate provision shall be made for notice to
members of all meetings of committees. A majority of the members of any
committee shall constitute a quorum unless the committee shall consist of one
(1) or two (2) members, in which event one (1) member and two (2) members,
respectively, shall constitute a quorum; and all matters shall be determined by
a majority vote of the members present. Action may be taken by any committee
without a meeting if all members thereof consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of such
committee.

     SECTION 11. Compensation of Directors.

     Unless otherwise restricted by the certificate of incorporation, the Board
of Directors shall have the authority to fix the fees and other compensation of
directors.


                                   ARTICLE III

                           Notice - Waivers - Meetings

     SECTION 1. Notice, What Constitutes.

     Whenever, under the provisions of the GCL or of the certificate of
incorporation or of these bylaws, notice is required to be given to any director
or stockholder, such notice may be given in writing, by mail or by telegram
(with messenger service specified), telex or TWX (with answerback received) or
courier service, charges prepaid, or by facsimile transmission to the address
(or to the telex, TWX, facsimile or telephone number) of the person appearing on
the books of the Corporation, or in the case of directors, supplied to the
Corporation for the purpose of notice. If the notice is sent by mail, telegraph
or courier service, it shall be deemed to be given when

                                       9


<PAGE>

deposited in the United States mail or with a telegraph office or courier
service for delivery to that person or, in the case of telex or TWX, when
dispatched, or in the case of facsimile transmission, when electronically
received.

                                       10


<PAGE>

     SECTION 2. Notice of Meetings of Board of Directors.

     Notice of a regular meeting of the Board of Directors need not be given.
Notice of every special meeting of the Board of Directors shall be given to each
director by telephone or in writing at least 24 hours (in the case of notice by
telephone, telex, TWX or facsimile transmission) or 48 hours (in the case of
notice by telegraph, courier service or express mail) or five days (in the case
of notice by first class mail) before the time at which the meeting is to be
held. Every such notice shall state the time and place of the meeting. Unless
otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.

     SECTION 3. Notice of Meetings of Stockholders.

     Written notice of the place, date and hour of every meeting of the
stockholders, whether annual or special, shall be given to each stockholder of
record entitled to vote at the meeting not less than ten nor more than 60 days
before the date of the meeting and shall state the purpose or purposes thereof.
If the notice is sent by mail, it shall be deemed to have been given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at the address of the stockholder as it appears on the records of
the Corporation.

     SECTION 4. Waivers of Notice.

     (a)   Written Waiver. Whenever notice is required to be given under any
           --------------
provisions of the GCL or the certificate of incorporation or these bylaws, a
written waiver, signed by the person or persons entitled to the notice, whether
before or after the time stated therein, shall be deemed equivalent to notice.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders, directors, or members of a committee of
directors need be specified in any written waiver of notice of such meeting.

     (b)   Waiver by Attendance. Attendance of a person at a meeting, either in
           --------------------
person or by proxy, shall constitute a waiver of notice of such meeting, except
where a person attends a meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
was not lawfully called or convened.


                                   ARTICLE IV

                                    Officers

     SECTION 1. Number, Qualifications and Designation.

     The officers of the Corporation shall be chosen by the Board of Directors
and shall be a Chairman of the Board of Directors, a President, one or more Vice
Presidents, a Secretary, a Treasurer, a Controller and such other officers as
may be elected in accordance with the provisions of Section 3 of this Article
IV. Any number

                                       11


<PAGE>

of offices may be held by the same person. The Board of Directors shall elect
the Chairman of the Board from among the members of the board.

     SECTION 2. Election and Term of Office.

The officers of the Corporation, except those appointed by delegated authority
pursuant to section 3 of this Article IV, shall be elected annually by the Board
of Directors, and each such officer shall hold office for a term of one year and
until a successor is elected and qualified, or until his or her earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation. Any officer may be removed from office at any time by the
affirmative written vote of a majority of the directors then in office.
Notwithstanding anything to the contrary in these by-laws and regardless of
whether the officer has tendered his/her resignation, an officer's term of
office and employment shall terminate on the first day of the month following
the officer's attainment of age sixty-five.

     SECTION 3. Other Officers, Committees and Agents.

     The Board of Directors may from time to time elect such other officers, and
appoint such committees, employees or other agents as it deems necessary, who
shall hold their offices for such terms and shall exercise such powers and
perform such duties as are provided in these bylaws, or as the Board of
Directors may from time to time determine. The Board of Directors may delegate
to any officer or committee the power to appoint subordinate officers and to
retain or appoint employees or other agents, or committees thereof, and to
prescribe the authority and duties of such subordinate officers, committees,
employees or other agents.

     SECTION 4. The Chairman and Vice Chairman of the Board.

     The Chairman of the Board shall be the chief executive officer of the
Corporation and, in that capacity, shall have general responsibility for the
management and control of the business of the Corporation and shall perform all
duties and have all powers that are commonly incident to the office of chief
executive officer. He or she shall preside at all meetings of the stockholders
and of the Board of Directors and shall perform such other duties as may from
time to time be assigned to him or her by the Board of Directors. The Vice
Chairman of the Board, if there be one, shall perform such duties as may be
delegated to him or her by the Board of Directors or by the chief executive
officer.

     SECTION 5. The President.

     The President shall perform such duties as from time to time may be
assigned by the Board of Directors or by the chief executive officer.

     SECTION 6. The Vice Presidents.

     The Vice Presidents shall perform such duties as may from time to time be
assigned to each and any of them by the Board of Directors or by the chief
executive officer. A Vice President or Vice Presidents may have such additional
designations as the Board may approve.

                                       12


<PAGE>

     SECTION 7. The Secretary.

     The Secretary, or an Assistant Secretary, shall attend all meetings of the
stockholders, the Board of Directors and committees thereof and shall record the
proceedings of the stockholders and of the directors and of committees of the
Board in a book or books to be kept for that purpose; shall see that notices are
given and records and reports properly kept and filed by the Corporation as
required by law; shall be the custodian of the seal of the Corporation and see
that it is affixed to all documents to be executed on behalf of the Corporation
under its seal; and, in general, shall perform all duties incident to the office
of Secretary, and such other duties as may from time to time be assigned by the
Board of Directors or by the chief executive officer.

     SECTION 8. The Treasurer.

     The Treasurer, or an Assistant Treasurer, shall have or provide for the
custody of the funds or other property of the Corporation; shall collect and
receive or provide for the collection and receipt of moneys earned by or in any
manner due to or received by the Corporation; shall deposit all funds in his or
her custody as Treasurer in such banks or other places of deposit as the Board
of Directors may from time to time designate; whenever so required by the Board
of Directors, shall render an account showing his or her transactions as
Treasurer and the financial condition of the Corporation; and, in general, shall
discharge such other duties as may from time to time be assigned by the Board of
Directors or by the chief executive officer.

     SECTION 9. The Controller.

     The Controller shall provide and maintain financial and accounting controls
over the business and affairs of the Corporation. He or she shall maintain
adequate records of the assets, liabilities and financial transactions of the
Corporation, and shall direct the preparation of financial statements, reports
and analyses. He or she shall perform all acts incident to the position of
Controller subject to the control of the Board of Directors and the chief
executive officer.

     SECTION 10. General Counsel.

     The Corporation may have a General Counsel who shall be appointed by
resolution of the Board of Directors and who shall have general supervision of
all matters of a legal nature concerning the Corporation.

     SECTION 11. Officers' Bonds.

     No officer of the Corporation need provide a bond to guarantee the faithful
discharge of the officer's duties unless the Board of Directors shall by
resolution so require a bond in which event such officer shall give the
Corporation a bond (which shall be renewed if and as required) in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of office.

                                       13


<PAGE>

     SECTION 12. Compensation.

     The compensation of the officers of the Corporation elected by the Board of
Directors shall be fixed from time to time by the Board of Directors or a
committee thereof designated for such purpose.


                                    ARTICLE V

                      Certificates of Stock, Transfer, Etc.

     SECTION 1. Form and Issuance.

     (a)   Issuance and Form. The shares of the capital stock of the Corporation
           -----------------
shall be represented by certificates in such form as shall be approved by the
Board of Directors. The certificates shall be signed by the Chairman or the
President or any Vice President and by the Treasurer or the Secretary.

     (b)   Records and Regulations. The stock record books shall be kept by the
           -----------------------
Secretary or by any registrar, stock transfer agent or other agency designated
by the Board of Directors for that purpose. The stock certificates of the
Corporation shall be registered in the stock ledger and transfer books of the
Corporation as they are issued. Except as may otherwise be required by the
Corporation's certificate of incorporation or the GCL, the Board of Directors
may make such other rules and regulations concerning the issue, transfer and
registration of certificates of shares of the capital stock of the Corporation
as it deems necessary or appropriate from time to time.

     (c)   Signatures. Any of or all the signatures upon the stock certificates
           ----------
of the Corporation may be a facsimile. In case any officer, transfer agent or
registrar who has signed, or whose facsimile signature has been placed upon, any
share certificate shall have ceased to be such officer, transfer agent or
registrar, before the certificate is issued, it may be issued with the same
effect as if the signatory were such officer, transfer agent or registrar at the
date of its issue.

     SECTION 2. Transfer of Stock.

     Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 3 of this Article, an
outstanding certificate for the number of shares involved shall be surrendered
for cancellation, properly endorsed, before a new certificate is issued
therefor.

     SECTION 3. Lost, Stolen, Destroyed or Mutilated Certificates.

     The Corporation may direct a new certificate of stock to be issued in place
of any certificate theretofore issued by the Corporation alleged to have been
lost, stolen

                                       14


<PAGE>

or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Corporation
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or certificates,
or the legal representative of the owner, to give the Corporation a bond
sufficient to indemnify the Corporation against any claim that may be made
against the Corporation on account of the alleged loss, theft or destruction of
such certificate or the issuance of such new certificate.

     SECTION 4. Record Holder of Shares.

     The Corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and to hold liable for calls and assessments a person
registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the GCL.

     SECTION 5. Determination of Stockholders of Record.

     (a)   Meetings of Stockholders. In order that the Corporation may determine
           ------------------------
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than 60 nor less than ten days before the date of such meeting. If
no record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting unless the Board of
Directors fixes a new record date for the adjourned meeting.

     (b)   Dividends. In order that the Corporation may determine the
           ---------
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights of the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than 60 days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.

                                       15


<PAGE>

                                   ARTICLE VI

                               General Provisions

     SECTION 1. Dividends.

     Subject to the restrictions contained in the GCL and any restrictions
contained in the certificate of incorporation, the Board of Directors may
declare and pay dividends upon the shares of capital stock of the Corporation.

     SECTION 2. Contracts.

     Except as otherwise provided in these bylaws, the Board of Directors or the
chief executive officer, to the extent authorized by the Board, may authorize
any officer or officers, or any agent or agents, to enter into any contract or
to execute or deliver any instrument on behalf of the Corporation and such
authority may be general or confined to specific instances.

     SECTION 3. Corporate Seal.

     The Corporation shall have a corporate seal, which shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or in any other manner reproduced. If and when so directed by the Board
or a committee thereof, duplicates of the seal may be kept and used by the
Secretary or Treasurer or by an Assistant Secretary or Assistant Treasurer.

     SECTION 4. Amendment of Bylaws.

     Subject to the provisions of the certificate of incorporation, these bylaws
may be altered, amended or repealed or new bylaws may be adopted either (1) by
vote of the stockholders at a duly held annual or special meeting of
stockholders, or (2) by vote of a majority of the Board of Directors at any
regular or special meeting of directors.

     SECTION 5. Action with Respect to Securities of Other Corporations.

     The Chairman of the Board, the Vice Chairman of the Board, the President,
any Vice President, the Treasurer or Secretary, or such other person appointed
by such officer or the Board of Directors, shall have the power to vote and
otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other corporation in which the Corporation may hold securities and otherwise to
exercise any and all rights and powers which the Corporation may possess by
reason of its ownership of securities in such other corporation. The Corporation
shall not directly or indirectly vote any shares issued by it.

                                       16


<PAGE>

     SECTION 6. Fiscal Year.

     The fiscal year of the Corporation shall end on the thirty-first of
December in each year.

     SECTION 7. Time Periods.

     In applying any provision of these bylaws that requires that an act be done
or not be done a specified number of days prior to an event or that an act be
done during a period of a specified number of days prior to an event, calendar
days shall be used, the day of the doing of the act shall be excluded, and the
day of the event shall be included.

     SECTION 8. Confidentiality Policies.

     The provisions of these Bylaws shall be subject to any policies with
respect to inspectors of election and confidential proxy voting which may be
adopted by the Board of Directors from time to time and which are not
inconsistent with applicable law.

                                       17


<PAGE>

                                                                   EXHIBIT 10.13

                               UNISYS CORPORATION
                  SUPPLEMENTAL EXECUTIVE RETIREMENT INCOME PLAN
                                AMENDMENT 2001-1


Pursuant to the authority reserved to Unisys Corporation (the "Company") under
Section 2.6 of the Unisys Corporation Supplemental Executive Retirement Income
Plan (the "Plan"), the Company hereby amends the Plan as follows:

              1.  A new Subsection (d) is added to Section 1.2, effective
                  December 31, 2000, to read as follows:

                  "(d) The supplemental pension benefit calculated under
                  Subsection (a) shall exclude any amount of a Participant's
                  accrued benefit payable under the Company Plan attributable to
                  the 2000 Additional Benefit described in Supplement V of the
                  Company Plan."

              2.  Section 2.4 is amended and restated in its entirety, effective
                  October 1, 2000, to read as follows:

                  "2.4  Payment of Benefits.
                        -------------------

                  Payment of benefits under this Supplemental Plan shall be
                  coincident with and in the same form as the payment of the
                  limited benefit payments made to the employee or on his behalf
                  to his beneficiaries under the Company Plan, provided,
                  however,

                        (a) the payment of the additional benefit accrued under
                            this Plan as a result of the 2000 Early Retirement
                            Incentive Plan described in Supplement IV of the
                            Company Plan shall be made in the
 form of an
                            actuarially equivalent lump sum distribution,
                            provided that the monthly amount of the additional
                            benefit is less than $20, and
                        (b) the payment of the additional benefit accrued under
                            this Plan as a result of the 2001 Early Retirement
                            Incentive Plan described in Supplement VI of the
                            Company Plan shall be made in the form of an
                            actuarially equivalent lump sum distribution,
                            provided however, that the lump sum payment shall be
                            made in two annual installments (payable in 2002 and
                            2003) where the actuarially equivalent lump sum
                            value of the additional benefit is greater than


<PAGE>

                        $200,000."

Executed this 19th day of December, 2001.




_________________________                   ______________________________
David O. Aker                               Janet Brutschea Haugen


<PAGE>

                                                                   Exhibit 10.14


                      Elected Officer Supplemental Benefits

1.   Personal Liability Umbrella Insurance - Unisys provides $5 million personal
     -------------------------------------
     liability insurance for coverage over and above minimum levels of personal
     insurance for home, cars, recreational vehicles or watercraft.

2.   Financial Counseling Services - Unisys will pay for financial counseling
     -----------------------------
     services, including investment planning, estate planning and/or tax
     preparation up to a fixed amount as noted below. The executives may elect
     to pay a firm of their choice directly and have Unisys reimburse the
     executive, or they may authorize Unisys to submit payment to the firm on
     their behalf.

                                      1st Year of            Annual Maximum
                  Role                Appointment              Thereafter
                  ----                -----------              ----------

                  VP                    $5,000                   $4,000
         Executive/Senior VP            $7,500                   $5,000

3.   Car Allowance - A monthly car allowance, which will be taxed as ordinary
     -------------
     income at the time of payment. The costs of vehicle acquisition, insurance,
     maintenance, repair, and gasoline are the executive's responsibility;
     however, business mileage expense is reimbursable under normal expense
     reporting procedures.

                  Role                    Monthly Allowance
                  ----                    -----------------

         Elected Officer                        $600
         CEO                                    $900


4.   Luncheon and Country Club - Elected Officers may join a luncheon club or
     -------------------------
     country club (does not include
 social or athletic membership) in the
     Philadelphia area.

5.   Airline Club Membership - Elected Officers may join one airline club of
     -----------------------
     their preference. This is to enable them to perform their executive role
     while traveling on company business.

6.   Annual Physical Examination - Elected officers have the opportunity to
     ---------------------------
     participate, at no cost, in the Executive Health Program through the
     University of Pennsylvania Health System. Alternatively, if elected
     officers choose not to participate in this program, they are eligible to
     obtain an annual company-paid physical examination from their personal
     physicians.


<PAGE>

                                                                   EXHIBIT 10.15






                               UNISYS CORPORATION
                          ELECTED OFFICER PENSION PLAN
                             EFFECTIVE JUNE 1, 1988
                       (As Amended through July 19, 2001)

                                    ARTICLE I

                                     PURPOSE
                                     -------

1.01     The Unisys Corporation Elected Officer Pension Plan (the "Plan") has
         been adopted by Unisys Corporation (the "Company") to provide a minimum
         level of retirement benefits for elected Officers (as defined in
         Section 2.12 below) of the Company. The Plan is effective June 1, 1988
         and applies to any elected Officer or other eligible employee of the
         Company who terminates employment on or after that date. This document
         is a restatement that includes all amendments made through July 19,
         2001. Prior to June 1, 1988, elected Officers of the Company were
         provided executive pension benefits under the Unisys Corporation
         Supplemental Executive Retirement Income Plan - Part IV or the Sperry
         Corporation Executive Pension Plan. Officers who terminated employment
         prior to June 1, 1988 will receive executive pension benefits, if any,
         under the terms of the prior plan in effect on their termination date.

                                   ARTICLE II

                                   DEFINITIONS
                                   -----------

2.01     "Board" shall mean the Board of Directors of Unisys Corporation.
          -----

2.02     "Bonus Plan" shall mean the Unisys Executive Bonus Plan, the Unisys
          ----------
         Senior Manager Bonus
 Plan or any predecessor or successor annual bonus
         plan.

2.03     "Company" shall mean Unisys Corporation, a Delaware corporation.
          -------

2.04     "Company Plan" shall mean the Unisys Pension Plan.
          ------------


<PAGE>

2.05     "Committee" shall mean the Corporate Governance and Compensation
          ---------
         Committee of the Board.

2.06     "Code" shall mean the Internal Revenue Code of 1986, as amended from
          ----
         time to time.

2.07     "Credited Service" shall mean the Participant's Credited Service, as
          ----------------
         defined in Article IV.

2.08     "Disability" shall refer to a Participant who is determined by the
          ----------
         Committee or its designee to be unable to perform, because of injury or
         sickness, each of the regular duties of the Participant's occupation
         for a period of up to 24 months. After 24 months, the Participant will
         continue to be considered Disabled if the Committee or its designee
         determines that the Participant cannot perform each of the regular
         duties of any gainful occupation for which he or she is fitted by
         training, education or experience.

2.09     "Effective Date" shall mean June 1, 1988.
          --------------

2.10     "Final Average Compensation" shall mean the Participant's Final Average
          --------------------------
         Compensation, as defined in the Company Plan, except that any annual
         bonus amount payable under the Bonus Plan and deferred by the
         Participant (or any salary amounts deferred under an arrangement
         approved by the Board) and any amounts excluded from consideration
         under the Company Plan due to the application of Section 401(a)(17) of
         the Code shall be included in the calculation of Final Average
         Compensation in the month in which such amounts were or would otherwise
         have been paid; provided, however, that no more than the most recent
         five annual bonus amounts (whether paid or deferred) shall be included
         in the calculation of Final Average Compensation.

2.11     "Employee" shall mean any person employed by Unisys Corporation or one
          --------
         of its subsidiaries.

2.12     "Officer" shall mean any officer of the Company elected by the Board,
          -------
         but excluding assistant officers, appointed officers or the general
         auditor.

                                        2


<PAGE>

2.13     "Part IV" shall mean Part IV of the Unisys Corporation Supplemental
          -------
         Executive Retirement Income Plan, as in effect immediately prior to the
         Effective Date.

2.14     "Participant" shall mean any person entitled to participate in this
          -----------
         Plan under Article III.

2.15     "Plan" shall mean the Unisys Corporation Elected Officer Pension Plan,
          ----
         as set forth herein and as hereafter amended.

2.16     "Primary Social Security Benefit" shall mean the annualized amount
          -------------------------------
         calculated according to the rules for computing the primary social
         security benefit payable to a Participant upon attainment of Social
         Security Retirement Age under the Federal Social Security Act as in
         effect at the time the Participant retires. In the event that a
         Participant retires prior to attainment of eligibility for Social
         Security benefits, the Participant's Primary Social Security Benefit
         shall be deemed to be 80% of the Primary Social Security Benefit
         payable at Social Security Retirement Age. In the event the Participant
         retires after attainment of eligibility for Social Security benefits,
         but before Social Security Retirement Age, the Primary Social Security
         Benefit shall be deemed to be an amount prorated between the benefit
         payable at Social Security Retirement Age and 80% of such amount. For
         purposes of this calculation, it will be assumed that the Participant
         has no earnings for Social Security purposes beyond the date of
         retirement.

2.17     "Prior Plan(s)" shall mean Part IV and/or the Sperry Plan.
          -------------

2.18     "Sperry Plan" shall mean the Sperry Corporation Executive Pension Plan,
          -----------
         as in effect immediately prior to the Effective Date.

2.19     "Supplemental Plan" shall mean the Unisys Corporation Supplemental
          -----------------
         Executive Retirement Income Plan-Part I, as amended and restated
         effective April 1, 1988, and as amended from time to time.

2.20     Change in Control means any of the following events:
         -----------------

         (a)     The acquisition by any individual, entity or group (within the
                 meaning of Section 13(d)(3) or 14(d)(2) of the Securities

                                        3


<PAGE>

                 Exchange Act of 1934, as amended (the "Exchange Act")) (a
                 "Person") of beneficial ownership (within the meaning of Rule
                 13d-3 promulgated under the Exchange Act) of 20% or more of
                 either (i) the then outstanding shares of common stock of the
                 Company (the "Outstanding Company Common Stock") or (ii) the
                 combined voting power of the then outstanding voting
                 securities of the Company entitled to vote generally in the
                 election of directors (the "Outstanding Company Voting
                 Securities"); provided, however, that for purposes of this
                 subsection (a), the following acquisitions shall not
                 constitute a Change of Control: (i) any acquisition directly
                 from the Company, (ii) any acquisition by the Company, (iii)
                 any acquisition by any employee benefit plan (or related
                 trust) sponsored or maintained by the Company or any
                 corporation controlled by the Company or (iv) any acquisition
                 by any corporation pursuant to a transaction which complies
                 with clauses (i), (ii) and (iii) of subsection (c) of this
                 Section 2.20; or

         (b)     Individuals who, as of May 25, 1995, constitute the Board (the
                 "Incumbent Board") cease for any reason to constitute at least
                 a majority of the Board; provided, however, that any
                 individual becoming a director subsequent to the date hereof
                 whose election, or nomination for election by the Company's
                 shareholders, was approved by a vote of at least a majority of
                 the directors then comprising the Incumbent Board shall be
                 considered as though such individual were a member of the
                 Incumbent Board, but excluding, for this purpose, any such
                 individual whose initial assumption of office occurs as a
                 result of an actual or threatened election contest with
                 respect to the election or removal of directors or other
                 actual or threatened solicitation of proxies or consents by or
                 on behalf of a Person other than the Board; or

         (c)     Consummation of a reorganization, merger or consolidation or
                 sale or other disposition of all or substantially all of the
                 assets of the Company (a "Business Combination"), in each case,
                 unless, following such Business Combination, (i) all or
                 substantially all of the individuals and entities who were the
                 beneficial owners, respectively, of the Outstanding Company
                 Common Stock and Outstanding Company Voting Securities

                                        4


<PAGE>
                 immediately prior to such Business Combination beneficially
                 own, directly or indirectly, more than 50% of, respectively,
                 the then outstanding shares of common stock and the combined
                 voting power of the then outstanding voting securities
                 entitled to vote generally in the election of directors, as
                 the case may be, of the corporation resulting from such
                 Business Combination (including, without limitation, a
                 corporation which as a result of such transaction owns the
                 Company or all or substantially all of the Company's assets
                 either directly or through one or more subsidiaries) in
                 substantially the same proportions as their ownership,
                 immediately prior to such Business Combination of the
                 Outstanding Company Common Stock and Outstanding Company
                 Voting Securities, as the case may be, (ii) no Person
                 (excluding any corporation resulting from such Business
                 Combination or any employee benefit plan (or related trust) of
                 the Company or such corporation resulting from such Business
                 Combination) beneficially owns, directly or indirectly, 20% or
                 more of, respectively, the then outstanding shares of common
                 stock of the corporation resulting from such Business
                 Combination or the combined voting power of the then
                 outstanding voting securities of such corporation except to
                 the extent that such ownership existed prior to the Business
                 Combination and (iii) at least a majority of the members of
                 the board of directors of the corporation resulting from such
                 Business Combination were members of the Incumbent Board at
                 the time of the execution of the initial agreement, or of the
                 action of the Board, providing for such Business Combination;
                 or

         (d)     Approval by the shareholders of the Company of a complete
                 liquidation or dissolution of the Company.

2.21     "Date of an Insolvency" shall mean the date on which the Company (i)
          ---------------------
         voluntarily files a petition under the United States Bankruptcy Code,
         (including a petition for Chapter 11 reorganization) or (ii) has filed
         involuntarily against it a petition under the United States Bankruptcy
         Code and an Order for Relief is entered thereon.

                                        5


<PAGE>

Unless otherwise specified, capitalized words and phrases used in this Plan
shall have the same meaning as such words or phrases when used in the Company
Plan.

                                   ARTICLE III

                          ELIGIBILITY FOR PARTICIPATION
                          -----------------------------

3.01     Participation
         -------------

         An Officer shall become a Participant in the Plan on the later of (i)
         the Effective Date or (ii) the effective date on which the Officer is
         elected to officer status by the Board.

3.02     Vesting
         -------

         (a)     Each Participant shall acquire a vested right to a retirement
                 benefit calculated in accordance with Article V on the
                 earliest to occur of the following:

                 (1)     the date on which the Employee attains age 55 and
                         completes 10 years of Credited Service, provided that
                         the Employee is or becomes an Officer on or after
                         such date; or

                 (2)     the date on which occurs a Change in Control or the
                         Date of an Insolvency, provided the Employee is an
                         Officer on such date; or

                 (3)     for an Employee who is or becomes an Officer on or
                         after January 1, 1997 and before July 19, 2001, the
                         date on which the Employee attains age 50 and
                         completes 5 years of Credited Service, provided that
                         the Employee is employed by the Company or an
                         Affiliated Company on or after December 31, 1998; or

                 (4)     The date specified in a written agreement between a
                         Participant and the Company, provided that for

                                        6


<PAGE>
                         agreements entered into on and after May 22, 1997, such
                         agreements must be approved by the Committee.

         (b)     A Participant who (i) retires from active employment or
                 terminates employment due to Disability or death, or (ii)
                 retires from active employment or terminates employment with
                 the Company due to death or Disability within twelve months of
                 ceasing to be an Officer, shall be eligible, upon application,
                 to receive the retirement and surviving spouse benefits
                 provided in Article V below.

         (c)     A former Officer who was a Participant but who continues in
                 active employment for more than twelve months after ceasing to
                 be an Officer shall be eligible, upon application, to receive
                 a vested annual retirement benefit calculated in accordance
                 with Sections 5.01(a), 5.03, 5.05 and 5.06, utilizing as an
                 offset the amount of benefits payable under the Company Plan
                 and the Supplemental Plan calculated as if the Participant had
                 elected a single life annuity form of benefit under the
                 Company Plan, and such former Officer shall not be eligible
                 for the survivor benefits described in Section 5.04. This
                 Section 3.01(c) shall not apply after the occurrence of a
                 Change in Control with respect to any individual who was an
                 Officer on the date of the Change in Control.

         (d)     Each Employee who was a participant in a Prior Plan, but who
                 is not eligible to participate in this Plan, shall continue to
                 have his or her rights to executive pension benefits
                 determined under such Prior Plan.





                                   ARTICLE IV

                                CREDITED SERVICE
                                ----------------

4.01     Credited Service
         ----------------

                                        7


<PAGE>
         Credited Service under this Plan shall be calculated on the basis of
         Credited Service as defined in the Company Plan for the following
         periods:

         (a)     periods of employment as an Officer; and

         (b)     up to twelve months of active employment with the Company
                 immediately following termination of Officer status, or, if
                 longer, the number of months of a Company approved leave of
                 absence due to Disability immediately following termination of
                 Officer status; and

         (c)     employment prior to becoming an Officer with the Company
                 including a predecessor or an Affiliated Company or 50%
                 Affiliated Company for the period of time such company was an
                 Affiliated Company or 50% Affiliated Company. However, if a
                 Participant receives Credited Service under the Company Plan
                 for employment with a company before it became an Affiliated
                 Company or 50% Affiliated Company, Credited Service shall
                 include the period of employment with such company.



                                    ARTICLE V

                             CALCULATION OF BENEFITS
                             -----------------------

5.01     Amount of Benefits
         ------------------

         (a)     Subject to the adjustments set forth in Sections 5.02 and 5.03,
                 a Participant who satisfies the vesting requirements described
                 in Section 3.02(a) shall receive an annual retirement benefit
                 payable at Normal Retirement Date equal to:

                 (1)     40% of the Participant's Final Average Compensation
                         for the Participant's first 10 years of Credited
                         Service, or, for a Participant who has less than 10
                         years of Credited Service, one-third of one percent of
                         the Participant's Final Average Compensation for each
                         month of Credited Service; plus

                                        8


<PAGE>

                 (2)     1% of the Participant's Final Average Compensation for
                         each year of Credited Service in excess of 10 (but not
                         in excess of 30) including proportional credit for a
                         fraction of a year; minus

                 (3)     50% of the Participant's Primary Social Security
                         Benefit.

         (b)     The benefit payable from this Plan and described in paragraph
                 (a) shall be a monthly benefit paid in the form of a single
                 life annuity if the Participant is unmarried on the date that
                 the Participant commences receipt of benefits, or in the form
                 of a joint and 50% surviving spouse annuity if the Participant
                 is married on the date the Participant commences receipt of
                 benefits. The benefit payable to a Participant shall not be
                 reduced or increased as a result of such payment in the
                 surviving spouse benefit form or for any age difference
                 between the Participant and spouse.

5.02     Optional Forms of Benefit Payments
         ----------------------------------

         In lieu of the normal form of benefit payment described in Section
         5.01(b), a Participant who is married at commencement of benefit
         payments may elect to receive the benefit payable from this Plan and
         described in Section 5.01(a) in either of the following optional forms:

         (a)     a joint and 75% surviving spouse annuity which will provide
                 the Participant with a reduced lifetime benefit equal to 95% of
                 the benefit described in Section 5.01(a) and with a benefit
                 equal to 75% of such reduced benefit payable to the
                 Participant's surviving spouse for the spouse's life; or

         (b)     a joint and 100% surviving spouse annuity which will provide
                 the Participant with a reduced lifetime benefit equal to 90%
                 of the benefit described in Section 5.01(a) and with a benefit
                 equal to 100% of such reduced benefit payable to the
                 Participant's surviving spouse for the spouse's life.

5.03     Early Retirement Prior to Age 62
         --------------------------------

                                        9


<PAGE>

         Benefits paid under this Plan shall be reduced by one- half of one
         percent (0.5%) for each calendar month by which the commencement of
         benefits precedes the first day of the month following the
         Participant's 62nd birthday.

5.04     Death Benefits
         --------------

         (a)     In the event of the death of a Participant who, at the time of
                 death, has satisfied the vesting requirements described in
                 Section 3.01(a) above, and who:

                 (1)     has not commenced retirement benefits under this
                         Plan; and

                 (2)     who has a surviving spouse, such Participant's
                         surviving spouse shall receive a survivor's benefit
                         in the amount described in paragraph (b).

         (b)     The amount payable under this paragraph shall be equal to the
                 benefit the spouse would have received if the Participant:

                 (1)     had terminated employment on the earlier of the date of
                         death or the date of the Participant's actual
                         termination of employment; and

                 (2)     had survived to the benefit commencement date described
                         in subsection (c); and

                 (3)     had begun to receive an immediate retirement benefit in
                         the Normal Form under Section 5.01(b); and

                 (4)     had died on the following day.

         (c)     The benefit payable under this Section shall be paid to the
                 surviving spouse in the form of a single life annuity and
                 shall commence on the date on which the Surviving Spouse's
                 Benefit under the Company Plan commences (or, if the
                 Participant was not a participant in the Company Plan, the
                 first day of any month elected by the surviving spouse).

                                       10


<PAGE>

         (d)     No benefits shall be payable from this Plan to a surviving
                 spouse (or any other beneficiary) of a Participant unless the
                 form of benefit paid to the Participant provides for the
                 payment of benefits upon the Participant's death or except as
                 otherwise provided in this Section.

5.05     Special Minimum Benefit Provisions
         ----------------------------------

         (a)     The value of the accrued benefit determined under this Article
                 (but without regard to this Section 5.05) for a Participant
                 who was a participant in a Prior Plan shall in no event be
                 less than the value of the Participant's accrued benefit under
                 the terms of such Prior Plan as of May 31, 1988, including
                 early retirement reduction factors in effect under the Prior
                 Plan on such date.

         (b)     Notwithstanding anything in this Article to the contrary, any
                 Participant who was a participant in a Prior Plan may elect to
                 continue to have annual retirement benefits determined under
                 the terms of such Prior Plan as in effect on May 31, 1988
                 provided that:

                 (1)     such election shall expire as to an Participant who
                         continues in employment beyond May 31, 1991, and

                 (2)     for purpose of calculating a Participant's benefit
                         under the Sperry Plan, the actuarial equivalent
                         factors in converting the Participant's benefit to an
                         optional form of payment shall be those factors in
                         effect on March 31, 1988.

         (c)     In the event that a Participant's benefit under the Company
                 Plan is determined under the grandfather provision described
                 in Section 4.5 of the Company Plan (as in effect April 1,
                 1988), such Participant may elect to have the normal
                 retirement benefit otherwise determined under Section 5.01
                 determined under the benefit formula set forth in the
                 Participant's Prior Plan.

5.06     Benefit Offset
         --------------

                                       11


<PAGE>

         (a)     The retirement benefit determined under this Article and
                 payable to a Participant or surviving spouse shall be reduced
                 by any benefit payable under the Company Plan and the
                 Supplemental Plan, calculated in accordance with Section 6.01.

         (b)     With respect to a Participant who is not a participant in the
                 Company Plan, the retirement benefit payable to the Participant
                 or surviving spouse shall be reduced by the amount of
                 retirement pension payable under the plan of any Affiliated
                 Company or 50% Affiliated Company, including any governmental
                 plan retirement benefit or lump sum termination or similar
                 entitlements, in effect at the time of the Participant's
                 termination of employment.








                                   ARTICLE VI

                                BENEFIT PAYMENTS
                                ----------------

6.01     Form of Benefit Payment
         -----------------------

         If a Participant should elect a form of benefit payment under the
         Company Plan (or such other plan or program, unless impracticable not
         to so elect) which is different than the form of benefit payment under
         this Plan, then for purposes of determining the offset under Section
         5.06, the Participant shall be deemed to be in receipt of the amount of
         benefit payable as if the Participant had elected the Normal Form of
         Benefit under the Company Plan.

6.02     Commencement of Benefits
         ------------------------

         Benefit payments to a Participant shall commence at the same time that
         benefit payments commence under the Company Plan. If a Participant is
         not a Participant in the Company Plan, the Participant will commence
         receipt of benefits under this Plan as of

                                       12


<PAGE>

         the first day of the calendar month following the later of (i) the
         Participant's termination of employment or (ii) the Participant's
         attainment of age 62, unless the Committee, in its sole discretion,
         agrees to an alternative commencement date.

6.03     Funding of Benefits
         -------------------

         Benefits under this Plan shall not be funded and shall be paid out of
         the general assets of the Company. The Company shall not be required to
         segregate any funds for the Plan's Participants. Notwithstanding any
         provision in this Section 6.03 to the contrary, the Committee shall
         have the discretion but not the obligation to fund this Plan through a
         trust of the type described in Internal Revenue Service Private Letter
         Ruling 8502023.

6.04     Forfeiture and Suspension of Benefits
         -------------------------------------

         (a)     Any benefit payable under this Plan shall be suspended for any
                 period during which it is determined by the Committee that a
                 Participant is engaged or employed as a business owner,
                 employee or consultant in any activity which is in competition
                 with any line of business of the Company existing as of the
                 date of the Participant's termination of employment from the
                 Company.

         (b)     Additionally, any benefit payable under this Plan shall be
                 forfeitable in the event it is found by the Committee that a
                 Participant, either during or following termination of
                 employment with the Company, willfully engaged in any activity
                 which is determined by the Committee to be materially adverse
                 or detrimental to the interests of the Company, including any
                 activity that might reasonably be considered by the Committee
                 to be of a nature warranting dismissal of an employee for
                 cause. If the Committee so finds, it may suspend benefits to
                 the Participant and, after furnishing notice to the
                 Participant, may terminate benefits under this Plan. The
                 Committee will consider in its deliberation relative to this
                 provision any explanation or justification submitted to it in
                 writing by the Participant within 60 days following the giving
                 of such notice.

                                       13


<PAGE>
         (c)     Except as heretofore provided for in this Section 6.04, the
                 acceptance by a Participant of any benefit under this Plan
                 shall constitute an agreement with the provisions of this Plan
                 and a representation that he or she is not engaged or employed
                 in any activity serving as a basis for suspension or
                 forfeiture of benefits hereunder. The Committee may require
                 each Participant eligible for a benefit under this Plan to
                 acknowledge in writing prior to the payment of such benefit
                 that he or she will accept payment of benefits under this Plan
                 only if there is no basis for such suspension or forfeiture.


                                   ARTICLE VII

                                 ADMINISTRATION
                                 --------------

7.01     Committee
         ---------

         The Plan shall be administered by the Committee, which shall administer
         the Plan in a manner consistent with the administration of the Company
         Plan, except that this Plan shall be administered as an unfunded plan
         that is not intended to meet the requirements of Section 401 of the
         Code. The Committee shall be the Plan administrator and named fiduciary
         of the Plan that has the discretionary authority to control and manage
         the operation and administration of the Plan. The Committee has the
         discretionary authority to supply omissions, make factual
         determinations, and to decide any dispute that may arise regarding the
         rights of Participants. All such decisions are binding and conclusive
         on all interested parties.

7.02     Claims Procedure
         ----------------

         (a)     In the event that the Committee denies, in whole or in part, a
                 claim for benefits by a Participant or surviving spouse, the
                 Committee shall furnish notice of the denial to the claimant,
                 setting forth:

                 (1)     the specific reasons for the denial,

                                       14


<PAGE>

                 (2)     specific reference to the pertinent Plan provisions on
                         which the denial is based,

                 (3)     a description of any additional information necessary
                         for the claimant to perfect the claim and an
                         explanation of why such information is necessary, and

                 (4)     appropriate information as to the steps to be taken if
                         the claimant wishes to submit the claim for review.

                 Such notice shall be forwarded to the claimant within 90 days
                 of the Committee's receipt of the claim; provided, however,
                 that in special circumstances the Committee may extend the
                 response period for up to an additional 90 days, in which
                 event it shall notify the claimant in writing of the
                 extension, and shall specify the reason or reasons for the
                 extension.

         (b)     Within 60 days of receipt of a notice of claim denial, a
                 claimant or the claimant's duly authorized representative may
                 petition the Committee in writing for a full and fair review
                 of the denial. The claimant or the claimant's duly authorized
                 representative shall have the opportunity to review pertinent
                 documents and to submit issues and comments in writing to the
                 Committee. The Committee shall review the denial and shall
                 communicate its decision and the reasons therefore to the
                 claimant in writing within 60 days of receipt of the petition;
                 provided, however, that in special circumstances the Committee
                 may extend the response period for up to an additional 60
                 days, in which event it shall notify the claimant in writing
                 prior to the commencement of the extension.

                                       15


<PAGE>

7.03     Plan Amendment and Termination
         ------------------------------

         The Company expects to continue this Plan indefinitely, but reserves
         the right to amend or discontinue it if, in its sole judgment, such a
         change is deemed necessary or desirable. However, if the Company should
         amend or discontinue this Plan, the Company shall be liable for any
         benefits accrued under this Plan (determined on the basis of each
         Employee's presumed termination of employment as of the date of such
         amendment or discontinuance) as of the date of such action. Any change
         to the Plan which adversely affects a Participant's or Beneficiary's
         rights to benefits and/or the amount, form and manner in which benefits
         are accrued, vested and/or paid shall not affect the Participant's or
         Beneficiary's benefits accrued up to the date of the change. Changes
         which adversely affect a Participant's or Beneficiary's rights under
         the Plan may only take effect on the adoption date of the change and on
         a going forward basis.

7.04     No Employment Rights
         --------------------

         Neither the action of the Company in establishing the Plan, nor any
         provisions of the Plan, nor any action taken by the Company or by the
         Committee shall be construed as giving to any employee of the Company
         or any of its subsidiaries the right to be retained in its employ, or
         any right to payment except to the extent of the benefits provided by
         the Plan.

7.05     Severability of Provisions
         --------------------------

         If any provision of this Plan is determined to be void by any court of
         competent jurisdiction, the Plan shall continue to operate and, for the
         purposes of the jurisdiction of that court only, shall be deemed not to
         include the provision determined to be void.

7.06     Non-Assignability
         -----------------

         Except as required by applicable law, no benefits under this Plan shall
         be subject in any manner to alienation, anticipation, sale, transfer,
         assignment, pledge, or encumbrance.

                                       16


<PAGE>

7.07     Withholding
         -----------

         The Company shall have the right to withhold any and all state, local,
         and Federal taxes which may be withheld in accordance with applicable
         law.

7.08     Governing Law
         -------------

         Except to the extent superseded by ERISA, all questions pertaining to
         the validity, construction, and operation of the Plan shall be
         determined in accordance with the laws of the Commonwealth of
         Pennsylvania.

                                       17


<PAGE>

                                                                   EXHIBIT 10.16

November 14, 2001


Jack A. Blaine
2245 SW 15/th/ Place
Boca Raton, FL 19454

Dear Jack:

This correspondence will outline our understanding concerning your retirement
from Unisys.

1.   Unisys will continue your employment at your current salary from the date
     of this letter until up to August 31, 2002 ("Continuation Period"),
     according to the terms and conditions described in this letter. You agree
     to submit a signed request volunteering for the early retirement incentive
     plan ("ERIP") on or before November 30, 2001. A copy of this Plan is
     attached as Exhibit A. At this time, Unisys accepts your voluntary request
     to participate in the ERIP. Your election to participate in the ERIP will
     be irrevocable and effective as of the date on which you submit your ERIP
     election form, provided that you submit the election form on or before
     November 30, 2001. The effective date of your retirement will be the date
     upon which you commence new employment, or September 1, 2002, whichever
     first occurs. In the event you obtain full-time employment/1/ prior to
     September 1, 2002, Unisys will pay you any remaining salary payments due
     from the date of this letter until August 31, 2002 in a lump sum, less
     lawful deductions./2/ You will not be
 required to report to the office
     after March 1, 2002 and you will not be eligible for any vacation accrual
     after that date. You will be eligible to participate in the 2001 EVC Plan,
     pursuant to the terms of the Plan. You will not be eligible for EVC
     participation in 2002.

2.   During the Continuation Period, your current pension, health and welfare
     benefits, and car allowance will be continued pursuant to the terms of the
     applicable Plan documents and you will continue to vest in the stock
     options previously granted to you in accordance with the terms of the 1990
     Unisys Long Term Incentive Plan ("Stock Option Plan"). You will be eligible
     for a stock grant in February 2002, pursuant to the terms of the Stock
     Option Plan. You will continue to be eligible to participate in the Unisys
     Deferred Compensation Plan and the Unisys Savings Plan until the effective
     date of your retirement, pursuant to the terms of the applicable Plan
     documents. Your participation in the Unisys Short Term and Long Term

_____________________________
/1/ For purposes of this Agreement, a consulting arrangement that provides for
employment for less than 15 hours per week and for a term of not more than 4
weeks will not be considered full-time employment.
/2/ Any lump sum payments provided for in this Agreement shall not be considered
program compensation for purposes of any Unisys Pension Plan or the Unisys
Savings Plan.


<PAGE>

Jack A. Blaine
November 14, 2001
Page 2

     Disability Plans, as well as the Personal Liability Umbrella Insurance
     Policies, will terminate on March 1, 2002. During the Continuation Period
     and upon receipt of the appropriate invoices, Unisys will reimburse your
     monthly country club dues ($350 per month). At the conclusion of the
     Continuation Period, Unisys will pay you your accrued and unused vacation.
     This payment will not be subject to the Deferred Compensation scheme.

3.   You will be eligible to participate in the Right Associates Key Executive
     Service Outplacement Program. A description of this program is attached as
     Exhibit B. You agree to exercise your best efforts toward obtaining new
     employment.

4.   As an additional condition of your continued employment, you specifically
     agree that you will conduct yourself in a manner consistent with Unisys
     work rules, Code of Ethical Conduct and the highest professional standards.
     You also agree that you shall not negatively comment, either publicly or
     privately, about Unisys (or its subsidiaries or affiliates), any of its
     products, services or other businesses, its present or past Board of
     Directors, its officers, or employees, except that you may give truthful
     testimony before a court or governmental agency, if duly subpoenaed to
     testify.

5.   You agree that the meaning, effect and terms of this Release have been
     fully explained to you and that you understand that this Release settles,
     bars, and waives any and all claims that you have or could possibly have
     against Unisys and any of its employees, agents or assigns as of the date
     of this Release.

6.   You also agree that you have been allowed at least twenty-one (21) days to
     consider the meaning and effect of this Release and that this Release
     constitutes written notice that you have been advised to consult with an
     attorney prior to executing this Release.

7.   You have seven (7) days from the day you sign this Release to revoke your
     acceptance of this Agreement and this Release shall not become effective or
     enforceable until this revocation period has expired.

In consideration for the foregoing promises and intending to be legally bound,
you knowingly and voluntarily agree to the following:

1.   To release and forever discharge Unisys Corporation and its officers,
     directors, employees and agents and their predecessors, successors and
     assigns, heirs, executors and administrators, (collectively "successor and
     assigns") from any and all causes of action, suits, debts, claims and
     demands (collectively, "claims") which you have ever had, now have or
     hereafter may have arising from or relating in any way to your employment
     relationship with Unisys or the termination thereof, including but not
     limited to, any claims for unpaid wages, vacation pay or severance pay and
     any claims for alleged violations of Title VII of the Civil Rights Act of
     1964, as amended, the Civil Rights Act of 1991, as amended, the Americans
     with Disabilities Act of 1990,


<PAGE>

Jack A. Blaine
November 14, 2001
Page 3

     as amended, the Age Discrimination in Employment Act, as amended, the
     Employee Retirement Income Security Act, as amended, or breach of any
     employment contract or agreement, wrongful discharge, breach of the
     covenant of good faith and fair dealing and any claims which may have been
     asserted under the common law or any other federal, state or local law.
     Provided, however, that this Release shall not discharge in any way either
     party's right to contest any claimed breach of this Agreement.

2.   Both parties agree that they will keep the contents of this Agreement and
     Release and all discussions leading up to it confidential and that neither
     party will disclose them to any third party, except as may be required by
     law. You are permitted, however, to discuss this Agreement with your
     family, attorney and financial advisor.

3.   You understand and agree that neither this Release, nor the furnishing of
     the consideration for the Release, nor the negotiations leading up to this
     Release shall be deemed or construed at any time for any purpose as an
     admission by either party of liability or responsibility for any wrongdoing
     of any kind.

4.   You acknowledge that, by reason of the position which you held within
     Unisys that you have become familiar with highly confidential and/or
     proprietary information relating to the business of Unisys such as various
     customer lists, sales and marketing strategies and plans, bids,
     projections, costs, financial data, personnel information developments,
     improvements, processes, methods, tools and customer relationships. You
     further recognize that the business of Unisys is highly competitive, and
     that Unisys has a legitimate business interest in preserving the highly
     unique and specialized skills that you have developed, as well as any and
     all trade secrets and other highly confidential and/or proprietary
     information that you may acquire therefrom, which are essential to the
     continued success of Unisys, and that Unisys will suffer irreparable harm
     should such skills or confidential information be utilized by a competitor.
     You further acknowledge that all such confidential and/or proprietary
     information and trade secrets acquired through your employment are owned
     and shall continue to be owned by Unisys.

5.   Without prejudice to the Employee Proprietary Information and Invention and
     Stock Option Agreements which you previously signed, you agree that you
     will not, at any time, whether during your term of employment or
     thereafter, disclose to any unauthorized person, firm or corporation any
     information acquired by you in confidence through your employment with
     Unisys, it being understood that all such confidential and/or proprietary
     information constitutes trade secrets that are material to the successful
     conduct of Unisys and belong exclusively to Unisys. By way of example and
     not limitation, such confidential and/or proprietary information and trade
     secrets include any and all information, not otherwise available to the
     public, concerning: (i) marketing plans, business plans, strategies,
     forecasts, unpublished financial statements, budgets, bids, projections and
     costs; (ii) personnel information;




<PAGE>

Jack A. Blaine
November 14, 2001
Page 4

     (iii) customer lists, customer and supplier transaction histories,
     identities, contacts, volumes, characteristics, agreements and prices; (iv)
     information regarding promotional, operational, program management, sales,
     marketing, research and development techniques, methods and reports and (v)
     other trade secrets. You specifically acknowledge that such confidential
     and/or proprietary information and trade secrets have commercial value to
     Unisys, the unauthorized disclosure of which could be detrimental to the
     interests of Unisys, whether or not such information is specifically
     identified as "Confidential" and/or "Proprietary" information by Unisys.
     Provided, however, that the restrictions of this paragraph shall not extend
     to any information or materials that are either known to the public or that
     can be derived, compiled or learned by a third party without significant
     effort or expense. Nothing contained in this Agreement or in the Agreements
                        --------------------------------------------------------
     referenced in this paragraph 5 shall be construed as a blanket prohibition
     --------------------------------------------------------------------------
     against you from working for any competitor of Unisys or to otherwise
     ---------------------------------------------------------------------
     obtain gainful employment in the Industry. Except for the limited
     ------------------------------------------------------------------
     restrictions contained in these agreements relating to the poaching of
     ----------------------------------------------------------------------
     Unisys employees or the diversion of Unisys customers/3/ to a competitor,
     -------------------------------------------------------------------------
     you are free to obtain alternate employment.
     ---------------------------------------

6.   You acknowledge that the restrictions contained in the foregoing paragraphs
     5 and 6, in view of the nature of the work performed by Unisys, are
     reasonable and necessary in order to protect the legitimate interests of
     Unisys, and that any violation thereof may result in irreparable injuries
     to Unisys, and you therefore acknowledge that, in the event of any
     violation of any of these restrictions, Unisys shall be entitled to obtain
     from any court of competent jurisdiction preliminary and permanent
     injunctive relief as well as damages and an equitable accounting of all
     earnings, profits and other benefits arising from such violation, which
     rights shall be cumulative and in addition to any other rights or remedies
     to which Unisys may be entitled.

7.   You agree that on or before August 31, 2002, you will return all company
     information including and without limitation, related reports, files,
     memoranda, records, software, credit cards, telephone cards, computer
     access codes, disk and instructional manuals, I.D. badge, keys, library
     books, and other physical or personal property which you have received or
     prepared or helped prepare in connection with your employment with Unisys;
     and you have not retained and will not retain any copies, duplicates or
     reproductions or excerpts thereof. You will be permitted to retain your
     laptop computer upon the condition that upon the expiration of the
     Continuation Period, you will return this computer to Unisys for purposes
     of removing all software licensed to Unisys and its employees.

8.   Except for the provisions of the Proprietary Information and Invention and
     Stock Option Agreements, whose terms survive the termination of your
     employment, this

____________________________
/3/ It is expressly agreed that any post employment restriction that references
Unisys customers shall mean only those Unisys customers for whom you were
responsible as an "Executive of Interest" at any time during your tenure of
employment with Unisys.


<PAGE>

Jack A. Blaine
November 14, 2001
Page 5

     Agreement supersedes all prior agreements, whether written or oral, between
     you and Unisys relating to your employment, the termination of your
     employment and the additional matters provided for herein. No provision of
     this Agreement may be modified, waived or discharged unless such waiver,
     modification or discharge is agreed to in writing and signed by you and a
     representative of the Company. The validity interpretation, construction
     and performance of this agreement shall be governed by the laws of the
     Commonwealth of Pennsylvania without giving effect to the provisions
     thereof relating to conflicts of laws. It is further agreed that if, for
     any reason, any provision hereof is determined to be unenforceable, the
     remainder shall remain binding and in effect.

9.   Any dispute or controversy arising under or in connection with this
     Agreement shall be settled exclusively by arbitration in Philadelphia,
     Pennsylvania in accordance with the rules of the American Arbitration
     Association. Any arbitration award will be final and conclusive upon the
     parties and a judgment enforcing such award may be entered in any court of
     competent jurisdiction.

10.  If, in connection with any contemplated or filed Unisys litigation, you are
     called upon to provide evidence or to testify in any manner, you agree to
     cooperate fully with Unisys. If requested by Unisys, you agree to be
     present and participate in the trial of any such matter. You will, to the
     extent permitted by law, be reimbursed for your reasonable costs and
     expenses, including lost salary and attorneys fees.

If you agree to the terms set forth above, please sign and date this letter in
the space provided below and return it to me. Should you have any further
questions regarding this matter, please do not hesitate to contact me.

Yours truly,


David O. Aker
Senior Vice President

World Wide Human Resources and Training

Agreed:______________________________                         _____________
              Jack A. Blaine                                      Date






<PAGE>

                                   Exhibit 12

                               UNISYS CORPORATION
          COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)
                                 ($ in millions)


<TABLE>
<CAPTION>
                                                                                  Years Ended December 31
                                                          -----------------------------------------------------------------------
                                                             2001           2000             1999           1998            1997
                                                             ----           ----             ----           ----            ----
<S>                                                       <C>            <C>             <C>             <C>             <C>
Fixed charges
Interest expense                                          $   70.0       $    79.8       $   127.8       $   171.7       $  233.2
Interest capitalized during the period                        11.8            11.4             3.6               -              -
Amortization of debt issuance expenses                         2.7             3.2             4.1             4.6            6.7
Portion of rental expense representative of
  interest                                                    53.9            42.2            46.3            49.1           51.8
                                                          --------       ---------       ---------       ---------       --------
    Total Fixed Charges                                      138.4           136.6           181.8           225.4          291.7
                                                          --------       ---------       ---------       ---------       --------
Earnings
Income (loss) from continuing operations before
  income taxes                                               (46.5)          379.0           770.3           594.2         (748.1)
Add (deduct) the following:
 Share of loss (income) of associated companies               (8.6)          (20.5)            8.9             (.3)           5.9
 Amortization of capitalized interest                          5.4             2.2               -               -              -
                                                          --------       ---------       ---------       ---------       --------
    Subtotal                                                 (49.7)          360.7           779.2           593.9         (742.2)
                                                          --------       ---------       ---------       ---------       --------

Fixed charges per above                                      138.4           136.6           181.8           225.4          291.7
Less interest capitalized during the period                  (11.8)          (11.4)           (3.6)              -              -
                                                          --------       ---------       ---------       ---------       --------
Total earnings (loss)                                     $   76.9       $   485.9       $   957.4       $   819.3       $ (450.5)
                                                          ========       =========       =========       =========       ========

Ratio of earnings to fixed
  charges                                                        *            3.56            5.27           3.63               *
                                                          ========       =========       =========       =========       ========
</TABLE>


* Earnings for the years ended December 31, 2001 and 1997 were inadequate to
  cover fixed charges by approximately $49.7 and $742.2 million, respectively.




<PAGE>

                                                                      EXHIBIT 13

Unisys Corporation


Management's Discussion and Analysis of Financial Condition and Results of
Operations



Overview

The company faced a very challenging economic environment in 2001, compounded by
the events of September 11, 2001. In this environment, many organizations
delayed planned information technology purchases. This resulted in a falloff in
demand industry wide for certain information technology products and services.
For the company, this was particularly the case in certain of its key markets:
airlines and travel, financial services, and communications, with the impact
most pronounced in high-end enterprise servers and in systems integration and
consulting projects. As a result, the company took actions to further reduce its
cost structure. In the fourth quarter of 2001, the company recorded a pretax
charge of $276.3 million, or $.64 per share, to cover a work-force reduction of
approximately 3,750 people and other actions. In the fourth quarter of 2000, the
company recorded a pretax charge of $127.6 million, or $.29 per diluted share,
primarily for a work-force reduction. Included in the charge for both years was
an early retirement incentive for certain eligible groups of U.S.
 employees. See
Note 4 of the Notes to Consolidated Financial Statements.

Results of operations

     In 2001, the company recorded a net loss of $67.1 million, or $.21 per
share, compared with net income of $225.0 million, or $.71 per diluted share, in
2000. The results for 2001 include the fourth-quarter pretax charges of $276.3
million, or $.64 per share, as well as an extraordinary charge of $17.2 million,
or $.05 per share, for the early extinguishment of debt. Excluding these items,
diluted earnings per share in 2001 was $.48. The results for 2000 include the
fourth-quarter pretax charge of $127.6 million, or $.29 per diluted share, as
well as an extraordinary charge of $19.8 million, or $.06 per diluted share, for
the early extinguishment of debt. Excluding these items, diluted earnings per
share in 2000 was $1.06. The results for 1999 included a one-time tax benefit of
$22.0 million, or $.07 per common share, related to a U.S. Treasury income tax
regulation, as well as an extraordinary charge of $12.1 million, or $.04 per
diluted share, for the early extinguishment of debt. Excluding these items,
diluted earnings per share in 1999 was $1.56.

     The following comparisons of income statement categories exclude the
fourth-quarter charges and extraordinary items in all years.

     Revenue for 2001 was $6.02 billion compared to $6.89 billion in 2000 and
$7.54 billion in 1999. Revenue in 2001 decreased 13% from the prior year, and
revenue in 2000 decreased 9% from 1999. Excluding the negative impact of foreign
currency fluctuations, revenue in 2001 declined 9% and revenue in 2000 decreased
5%. The decrease in revenue in 2001 was principally due to lower sales of
de-emphasized commodity products, enterprise servers and systems integration.
Revenue from international operations in 2001, 2000 and 1999 was $3.42 billion,
$4.01 billion and $4.19 billion, respectively. Revenue from U.S. operations was
$2.60 billion in 2001, $2.88 billion in 2000 and $3.35 billion in 1999.

     At December 31, 2001, the company owned approximately 28% of the voting
common stock of Nihon Unisys, Ltd., a publicly traded Japanese company ("NUL").
The company accounts for this investment by the equity method. NUL is the
exclusive supplier of the company's hardware and software products in Japan. The
company considers its investment in NUL to be of a long-term strategic nature.
For the years ended December 31, 2001, 2000 and 1999, both direct and indirect
sales to NUL were approximately $340 million, $530 million and $490 million,
respectively.

                                       14


<PAGE>

     At December 31, 2001, the market value of the company's investment in NUL
was approximately $188 million and the amount recorded on the company's books
was $210.5 million. The market value is determined by both the quoted price per
share of NUL's shares on the Tokyo stock exchange and the current exchange rate
of the Japanese yen to the U.S. dollar. At any point in time, the company's book
value may be higher or lower than market value. The company would only reflect
impairment in this investment if the loss in value of the investment were deemed
to be other than a temporary decline.

     Total gross profit percent was 27.4% in 2001, 31.2% in 2000 and 35.6% in
1999. The decrease in gross profit margin over this period primarily reflected a
lower percentage of revenue from high-margin enterprise server sales as the
company continued to shift its business model to emphasize lower-margin but
higher-growth services businesses, such as outsourcing. Additionally in 2001,
the gross profit margin was impacted by the falloff in demand industry-wide for
certain information technology products and services.

     Selling, general and administrative expenses were $1.07 billion in 2001
(17.8% of revenue), $1.28 billion in 2000 (18.5% of revenue) and $1.38 billion
in 1999 (18.4% of revenue). The decreases reflected tight controls placed on
discretionary spending during these periods. The decline in the current year
also reflected the benefits of the personnel reduction actions announced in the
fourth quarter of 2000.

     Research and development expenses in 2001 were $303.9 million compared to
$315.4 million in 2000 and $339.4 million in 1999.

     In 2001, the company reported operating income of $270.1 million (4.5% of
revenue) compared to $553.0 million (8.0% of revenue) in 2000 and $960.7 million
(12.7% of revenue) in 1999. The declines reflected lower sales of high-margin
enterprise servers and systems integration services, offset in part by tight
cost controls.

          Information by business segment for 2001, 2000 and 1999 is presented
below:

     (Millions of dollars)        Total    Eliminations  Services    Technology
     ---------------------------------------------------------------------------

     2001
     ----------------
     Customer revenue           $ 6,018.1          --   $  4,444.6   $ 1,573.5
     Intersegment                      --   $  (363.4)        73.8       289.6
                               -----------------------------------------------
     Total revenue              $ 6,018.1   $  (363.4)  $  4,518.4   $ 1,863.1
                               -----------------------------------------------
     Gross profit percent            27.4%         --         19.7%       43.0%
     Operating income percent         4.5%         --          2.1%       11.6%

     2000
     ----------------
     Customer revenue           $ 6,885.0          --   $  4,741.6   $ 2,143.4
     Intersegment                      --   $  (437.2)        46.6       390.6
                               -----------------------------------------------
     Total revenue              $ 6,885.0   $  (437.2)  $  4,788.2   $ 2,534.0
                               -----------------------------------------------
     Gross profit percent            31.2%         --         21.6%       44.7%
     Operating income percent         8.0%         --          1.7%       17.7%

     1999
     ----------------
     Customer revenue           $ 7,544.6          --   $  5,287.0   $ 2,257.6
     Intersegment                      --   $   (577.5)       65.6       511.9
                               -----------------------------------------------
     Total revenue              $ 7,544.6   $   (577.5) $  5,352.6   $ 2,769.5
                               -----------------------------------------------
     Gross profit percent            35.6%          --        25.6%       48.1%
     Operating income percent        12.7%          --         7.9%       20.3%

     ---------------------------------------------------------------------------
     Gross profit percent and operating income percent are as a percent of total
     revenue.

                                       15







<PAGE>

     In the services segment, customer revenue was $4.44 billion in 2001, $4.74
billion in 2000 and $5.29 billion in 1999. The revenue decline over this period
primarily reflected two factors: (a) weak demand industry-wide for systems
integration services and proprietary maintenance, partially offset by increased
demand in outsourcing, and (b) the company's de-emphasis in year 2001 of
commodity hardware sales within network services contracts. The 6% decrease in
customer revenue in 2001 from 2000 reflected reduced commodity hardware sales as
well as declines in systems integration and proprietary maintenance, offset in
part by an increase in outsourcing revenue. In 2001, demand for systems
integration weakened as organizations cut back on discretionary information
technology projects to focus on cost reduction initiatives. The 10% decrease in
2000 from 1999 reflected declines in systems integration and proprietary
maintenance revenue, offset in part by an increase in networking services
revenue. Services gross profit declined to 19.7% in 2001 from 21.6% in 2000 and
25.6% in 1999. The decrease in gross profit was largely due to a lower content
of higher-margin systems integration and proprietary maintenance revenue. In
addition, gross profit in 2001 was negatively impacted by the startup of several
large outsourcing contracts. Due to continuing tight controls on spending,
operating profit for 2001 increased to 2.1% from 1.7% in 2000. The operating
profit percent for 1999 was 7.9%. The decrease in operating profit in 2000 from
1999 was principally due to the gross profit decline.

     In the technology segment, customer revenue was $1.57 billion in 2001,
$2.14 billion in 2000 and $2.26 billion in 1999. The revenue decline over this
period was primarily driven by two factors: (a) lower sales of ClearPath
enterprise servers, reflecting weak economic conditions, as well as the
company's transition to a new generation of product families based on the Unisys
Cellular MultiProcessing (CMP) architecture, and (b) lower sales of
de-emphasized low-margin commodity hardware products as the company focused on
high-end server products. The 27% decline in customer revenue in 2001 from 2000
reflected the impact of the global downturn in information technology spending
on sales of high-end server products, as well as lower commodity hardware sales.
The 5% decline in customer revenue in 2000 from 1999 was primarily due to a
decline in ClearPath enterprise server revenue. The gross profit percent was
43.0% in 2001, 44.7% in 2000 and 48.1% in 1999. The gross profit declines were
due in large part to lower sales of high-margin ClearPath systems. Operating
profit in this segment was 11.6% in 2001, 17.7% in 2000 and 20.3% in 1999. The
decrease in operating profits was principally due to the gross profit decline.

     Interest expense declined to $70.0 million in 2001 from $79.8 million in
2000, and $127.8 million in 1999. The decline in 2001 was principally due to
lower average borrowings and lower average interest rates. The decline in 2000
from 1999 was principally due to lower average interest rates as well as the
effect of interest rate swaps (discussed below).

     Other income (expense), net, which can vary from year to year, was income
of $29.7 million in 2001, income of $33.4 million in 2000 and an expense of
$62.6 million in 1999. The difference in 2001 from 2000 was principally due to
discounts on higher sales of receivables and lower equity income, offset in part
by higher foreign exchange gains. The difference in 2000 compared to 1999 was
principally due to higher equity and interest income in 2000 and charges in 1999
related to legal actions.

     Income before income taxes in 2001 was $229.8 million compared to $506.6
million in 2000 and $770.3 million in 1999.

     The provision for income taxes in 2001 was $75.9 million (33.0% effective
tax rate) compared to $172.3 million (34.0% effective tax rate) in 2000 and
$269.5 million (35.0% tax rate) in 1999. It is expected that the effective tax
rate will be 33.0% for 2002.

     In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001 and prohibits the use of the pooling-of-interests method.
SFAS No. 141 also includes guidance on the initial recognition and measurement
of goodwill and other intangible assets acquired in a business combination that
is completed after June 30, 2001. SFAS No. 142 no longer permits the
amortization of goodwill and indefinite-lived intangible assets. Instead, these
assets must be reviewed annually for impairment in accordance with this
statement. The company is required to adopt SFAS No. 142 effective January 1,
2002. In anticipation of adoption, the company reclassified the amount of
goodwill as a separate line item in its balance sheet. During the first half of
2002, the

                                       16



<PAGE>

company will perform the first of the required impairment tests of goodwill. The
company has not yet determined what effect, if any, this initial test will have
on the company's consolidated financial position or consolidated results of
operations. An impairment charge, if any, from this initial test will be
reported as a change in accounting principle. As a result of adoption of SFAS
No. 142, all amortization of goodwill as a charge to earnings ($16.5 million in
2001, or $.04 per share) will be eliminated.

     Effective April 1, 2001, the company adopted SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
This statement revised the accounting standards for securitizations and other
transfers of financial assets and collateral and requires certain disclosures.
Adoption of SFAS No. 140 had no effect on the company's consolidated financial
position, consolidated results of operations, or liquidity.

Financial condition

Cash and cash equivalents at December 31, 2001 were $325.9 million compared to
$378.0 million at December 31, 2000.

     During 2001, cash provided by operations was $202.4 million compared to
$419.9 million in 2000 principally reflecting a decline in profitability. Cash
expenditures related to both current and prior-year restructuring actions (which
are included in operating activities) in 2001, 2000 and 1999 were $71.5 million,
$26.3 million and $44.6 million, respectively, and are expected to be
approximately $125 to $130 million in 2002, principally for work-force
reductions and facility costs. Personnel reductions in 2001 related to both
current and prior-year restructuring actions were approximately 2,500 and are
expected to be approximately 1,500 in 2002.

     Cash used for investing activities in 2001 was $325.6 million compared to
$270.9 million for 2000. During 2001, both proceeds from investments and
purchases of investments, which represent primarily foreign exchange contract
activity, increased from the prior year as a result of shortening the duration
of individual contracts. In addition, 2000 includes $18.5 million net proceeds
from the termination of the euro and Japanese yen swaps as described below.

     Cash provided by financing activities during 2001 was $71.6 million
compared to cash usage of $217.3 million in 2000. The current year includes net
proceeds from issuance of long-term debt of $536.5 million and payment of
long-term debt of $370.8 million, as described below. In 2000, the company used
$448.0 million to repay long-term debt. The cash usage was funded through a
combination of cash and short-term borrowings.

     At December 31, 2001, total debt was $826.1 million, an increase of $63.5
million from December 31, 2000. At December 31, 2001, the debt-to-capital ratio
was 28.1% compared to 25.9% at December 31, 2000.

     During 2001, the company issued $400 million of 8 1/8% senior notes due
2006 and $150 million of 7 1/4% senior notes due 2005. In June 2001, the company
completed a cash tender offer for $319.2 million principal amount of its 11 3/4%
senior notes due 2004 and in October 2001, the company redeemed, at a premium,
the remaining $15.0 million outstanding principal amount of such notes. As a
result of these actions, the company recorded an extraordinary after-tax charge
of $17.2 million, net of $9.3 million tax benefit, or $.05 per share, for the
premium paid, unamortized debt-related expenses and transaction costs.

     In March 2001, the company entered into a new three-year $450 million
credit agreement which replaced the $400 million three-year facility that was
due to expire in June 2001. This agreement was amended in November 2001 to
modify certain financial covenants to accommodate the company's fourth-quarter
charge, discussed above. As of December 31, 2001, there were no borrowings under
this facility and the entire $450 million was available for borrowings.
Borrowings under the agreement bear interest based on the then current LIBOR or
prime rates and the company's credit rating. The credit agreement contains
financial and other covenants, including maintenance of certain financial
ratios, a minimum level of net worth and limitations on certain types of
transactions. Events of default under the credit agreement include failure to
perform covenants, material adverse change, change of control and default under
other debt aggregating at least $25 million. If an event of default were to
occur under the credit agreement, the lenders would be entitled to declare all
amounts borrowed under it immediately due and payable. The occurrence of an
event of default under the credit agreement could also cause the acceleration of
obligations under certain other agreements and the termination of the company's
U.S. trade accounts receivable facility, described below.

                                       17


<PAGE>

     In addition, the company has access to certain uncommitted lines of credit
from U.S. banks, and certain international subsidiaries maintain short-term
credit arrangements with banks in accordance with local customary practice.
Other sources of short-term funding are operational cash flows, including
customer prepayments, and the company's U.S. trade accounts receivable facility.
Using this facility the company sells, on an ongoing basis, up to $225 million
of its eligible U.S. trade accounts receivable through a wholly owned
subsidiary, Unisys Funding Corporation I. The facility is renewable annually at
the purchasers' option and expires in December 2003. See Note 5 of the Notes to
Consolidated Financial Statements.

     At December 31, 2001, the company has met all of the covenants and
conditions under its various lending and funding agreements. Since the company
believes that it will continue to meet these covenants and conditions, the
company believes that it has adequate sources and availability of short-term
funding to meet its expected cash requirements.

     In April 2000, the company redeemed all of its $399.5 million outstanding
12% senior notes due 2003 at the stated redemption price of 106% of principal.
As a result, the company recorded an extraordinary after-tax charge of $19.8
million, or $.06 per diluted share, for the call premium and unamortized debt
expense.

     In 2000, the company terminated its interest rate swaps and currency swaps
for euro and Japanese yen which were established in 1999. The currency swaps
were designated as hedges of the foreign currency exposure on the company's net
investments in foreign subsidiaries and equity investments. As a result of these
terminations, the company received net cash of $18.5 million and recognized a
pretax loss of $2.7 million. The interest expense benefit related to these swaps
amounted to approximately $16 million in 2000.

As described more fully in Notes 4, 9 and 11 of the Notes to Consolidated
Financial Statements, at December 31, 2001 the company had certain cash
obligations, which are due as follows:


<TABLE>
<CAPTION>
                                                          Less than                             After 5
(Millions of dollars)                             Total     1 year    1-3 years   4-5 years     years
<S>                                             <C>     <C>         <C>         <C>          <C>
Notes payable                                   $   78.9    $ 78.9
Long-term debt                                     750.0                            $550.0      $200.0
Capital lease obligations                            4.3       2.2      $  1.6          .4          .1
Operating leases, net of sublease income           679.6     128.3       192.2       104.3       254.8
Work-force reductions                              138.1     119.1        19.0
                                                -------------------------------------------------------
Total                                           $1,650.9    $328.5      $212.8      $654.7      $454.9
                                                =======================================================
</TABLE>


     As more fully described in Note 11 to the Notes to Consolidated Financial
Statements, the company may have an additional obligation under an operating
lease for one of its facilities.

     At December 31, 2001, the company had outstanding standby letters of credit
and surety bonds of approximately $230 million related to performance and
payment guarantees. Based on experience with these arrangements, the company
believes that any obligations that may arise will not be material.

     The company may, from time to time, redeem, tender for, or repurchase its
debt securities in the open market or in privately negotiated transactions
depending upon availability, market conditions and other factors.

     The company has on file with the Securities and Exchange Commission ("SEC")
an effective registration statement covering $150 million of debt or equity
securities, which enables the company to be prepared for future market
opportunities. The company intends to file a new registration statement with the
SEC during the first quarter of 2002 covering $1.5 billion of securities
(inclusive of the $150 million already registered). The company cannot determine
when the SEC will declare this registration statement effective.

     Stockholders' equity decreased $73.4 million during 2001, principally
reflecting the net loss of $67.1 million and currency translation of $63.1
million, offset in part by $52.0 million for issuance of stock under stock
option and other plans and $4.6 million of tax benefits related to employee
stock plans.

                                       18


<PAGE>

Market risk

The company has exposure to interest rate risk from its short-term and long-term
debt. In general, the company's long-term debt is fixed rate and the short-term
debt is variable rate. See Note 9 of the Notes to Consolidated Financial
Statements for components of the company's long-term debt. The company believes
that the market risk from changes in interest rates (assuming a hypothetical 10%
movement in these rates) would not be material to the fair value of these
financial instruments, or the related cash flows, or future results of
operations.

     The company is also exposed to foreign currency exchange rate risks. The
company uses derivative financial instruments to reduce its exposure to market
risks from changes in foreign currency exchange rates. The derivative
instruments used are foreign exchange forward contracts and foreign exchange
options. See Note 12 of the Notes to Consolidated Financial Statements for
additional information on the company's derivative financial instruments.

     The company has performed a sensitivity analysis assuming a hypothetical
10% adverse movement in foreign currency exchange rates applied to these
derivative financial instruments described above. As of December 31, 2001 and
2000, the analysis indicated that such market movements would have reduced the
estimated fair value of these derivative financial instruments by approximately
$25 million and $10 million, respectively.

     Based on changes in the timing and amount of interest rate and foreign
currency exchange rate movements and the company's actual exposures and hedges,
actual gains and losses in the future may differ from the above analysis.


Critical accounting policies

Outsourcing

     In recent years, the company's outsourcing business has increased
significantly. Typically the terms of these contracts are between three and ten
years. In a number of these arrangements, the company hires certain of the
customers' employees and often becomes responsible for the related employee
obligations, such as pension and severance commitments. In addition, system
development activity on outsourcing contracts may require significant up-front
investments by the company. The company funds these investments, and any
employee-related obligations, from customer prepayments and operating cash flow.
Also, in the early phases of these contracts, gross margins may be lower than in
later years when the work force and facilities have been rationalized for
efficient operations, and an integrated systems solution has been implemented.

     Revenue under these contracts is recognized when the company performs the
services or processes transactions in accordance with contractual performance
standards. Customer prepayments (even if nonrefundable) are deferred (classified
as a liability) and recognized over future periods as services are delivered or
performed.

     Costs on outsourcing contracts are generally charged to expense as
incurred. However, direct cost incurred related to the inception of an
outsourcing contract are deferred and charged to expense over the contract term.
These costs consist principally of initial customer set-up and employment
obligations related to employees assumed. In addition, the costs of equipment
and software, some of which is internally developed, is capitalized and
depreciated over the shorter of their life or the term of the contract.

     At December 31, 2001, the net capitalized amount related to outsourcing
contracts was $188.0 million, consisting of $65.2 million reported in properties
and $122.8 million of net contract-related costs reported in other long-term
assets. The contract-related costs are tested for recoverability quarterly.

Systems integration

The company recognizes revenue and profit as long-term systems integration
contracts progress using the percentage-of-completion method of accounting,
which relies on estimates of total expected contract revenues and costs. The
company follows this method since reasonably dependable estimates of the revenue
and costs applicable to various elements of a contract can be made. Since the
financial reporting of these contracts depends on estimates, which are assessed
continually during the term of these contracts, recognized revenues and profit
are subject to revisions as the contract progresses to completion. Revisions in
profit estimates are reflected in the period in which the facts that give rise
to the revision become known. Accordingly, favorable changes in estimates result
in additional revenue and profit

                                       19


<PAGE>

recognition, and unfavorable changes in estimates result in a reduction of
recognized revenue and profits. When estimates indicate that a loss will be
incurred on a contract on completion, a provision for the expected loss is
recorded in the period in which the loss becomes evident. As work progresses
under a loss contract, revenue continues to be recognized, and a portion of the
contract costs incurred in each period is charged to the contract loss reserve.

Taxes

The company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes" which requires that deferred tax assets and
liabilities be recognized using enacted tax rates for the effect of temporary
differences between the book and tax bases of recorded assets and liabilities.
SFAS No. 109 also requires that deferred tax assets be reduced by a valuation
allowance if it is more likely than not that some portion or all of the deferred
tax asset will not be realized.

     At December 31, 2001 and 2000, the company had deferred tax assets in
excess of deferred tax liabilities of $1,376 million and $1,299 million,
respectively. For the reasons cited below, at December 31, 2001 and 2000,
management determined that it is more likely than not that $1,034 million and
$990 million, respectively, of such assets will be realized, resulting in a
valuation allowance of $342 million and $309 million, respectively.

     The company evaluates quarterly the realizability of its deferred tax
assets by assessing its valuation allowance and by adjusting the amount of such
allowance, if necessary. The factors used to assess the likelihood of
realization are the company's forecast of future taxable income and available
tax planning strategies that could be implemented to realize the net deferred
tax assets. The company has used tax planning strategies to realize or renew net
deferred tax assets in order to avoid the potential loss of future tax benefits.

     Approximately $3.2 billion of future taxable income (predominately U.S.)
ultimately is needed to realize the net deferred tax assets at December 31,
2001. Failure to achieve forecasted taxable income might affect the ultimate
realization of the net deferred tax assets. Factors that may affect the
company's ability to achieve sufficient forecasted taxable income include, but
are not limited to, the following: increased competition, a decline in sales or
margins, loss of market share, delays in product availability or technological
obsolescence.

     In addition, the company operates within multiple taxing jurisdictions and
is subject to audit in these jurisdictions. These audits can involve complex
issues, which may require an extended period of time to resolve. In management's
opinion, adequate provisions for income taxes have been made for all years.

Pensions

The company accounts for its defined benefit pension plans in accordance with
SFAS No. 87, "Employers' Accounting for Pensions," which requires that amounts
recognized in financial statements be determined on an actuarial basis. A
substantial portion of the company's pension amounts relate to its defined
benefit plan in the United States. As permitted by SFAS No. 87, the company uses
a calculated value of plan assets (which is further described below). SFAS No.
87 requires that the effects of the performance of the pension plan's assets and
changes in pension liability discount rates on the company's computation of
pension income (expense) be amortized over future periods.

     The most significant element in determining the company's pension income
(expense) in accordance with SFAS No. 87 is the expected return on plan assets.
In 2001, the company has assumed that the expected long-term rate of return on
plan assets will be 10%. Over the long term, the company's pension plan assets
have earned in excess of 10%. The assumed long-term rate of return on assets is
applied to a calculated value of plan assets, which recognizes changes in the
fair value of plan assets in a systematic manner over four years. This produces
the expected return on plan assets that is included in pension income (expense).
The difference between this expected return and the actual return on plan assets
is deferred. The net deferral of past asset gains (losses) affects the
calculated value of plan assets and, ultimately, future pension income
(expense). The plan assets have earned a rate of return substantially less than
10% in the last two years. Should this trend continue, the company would be
required to reconsider its assumed expected rate of return on plan assets. If
the company were to lower this rate, future pension income would likely decline.

                                       20


<PAGE>

     At the end of each year, the company determines the discount rate to be
used to calculate the present value of plan liabilities. The discount rate is an
estimate of the current interest rate at which the pension liabilities could be
effectively settled at the end of the year. In estimating this rate, the company
looks to rates of return on high-quality, fixed-income investments that receive
one of the two highest ratings given by a recognized ratings agency. At December
31, 2001, the company determined this rate to be 7.50%, a decrease of 50 basis
points from the rate used at December 31, 2000. Changes in discount rates over
the past three years have not materially affected pension income (expense), and
the net effect of changes in the discount rate, as well as the net effect of
other changes in actuarial assumptions and experience, have been deferred, in
accordance with SFAS No. 87.

     At December 31, 2001, the company's consolidated prepaid pension asset was
$1.2 billion, up from $1.1 billion at the end of 2000. The increase was
principally due to the recognition of pension income. For the year ended
December 31, 2001, the company recognized consolidated pretax pension income of
$170.0 million, up from $139.0 million in 2000. The company currently expects
that consolidated pension income for 2002 will not be materially different from
2001.


Factors that may affect future results

From time to time, the company provides information containing "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 risks,
uncertainties and other factors that could cause the company's actual results to
differ materially from expectations. In addition to changes in general economic
and business conditions, acts of war, terrorism and natural disasters, these
other factors include, but are not limited to, those discussed below.

     The company operates in an industry characterized by aggressive
competition, rapid technological change, evolving technology standards, and
short product life-cycles. Future operating results will depend on the company's
ability to design, develop, introduce, deliver, or obtain new and innovative
products and services on a timely and cost-effective basis; on its ability to
succeed in the high-end information technology services segment; on its ability
to effectively manage the shift in its technology business into higher growth,
lower-margin standards-based server products; on its ability to mitigate the
effects of competitive pressures and volatility in the information services and
technology industry on revenues, pricing and margins; and on its ability to
successfully attract and retain highly skilled people. In addition, future
operating results could be impacted by market demand for and acceptance of the
company's service and product offerings.

     A number of the company's contracts are long-term contracts for network
services, outsourcing, help desk and similar services, for which volumes are not
guaranteed. Future results will depend upon the company's ability to meet
performance levels over the terms of these contracts.

     Certain of the company's systems integration contracts are fixed-price
contracts under which the company assumes the risk for delivery of the
contracted services at an agreed-upon price. Future results will depend on the
company's ability to profitably perform these services contracts and obtain new
contracts.

     The company frequently enters into contracts with governmental entities.
Associated risks and uncertainties include the availability of appropriated
funds and contractual provisions allowing governmental entities to terminate
agreements at their discretion before the end of the contract terms.

     The company has commercial relationships with suppliers, channel partners
and other parties that have complementary products, services, or skills. Future
results will depend in part on the performance and capabilities of these third
parties. Future results will also depend upon the ability of external suppliers
to deliver materials at reasonable prices and in a timely manner and on the
financial condition of, and the company's relationship with, distributors and
other indirect channel partners.

     Approximately 57% of the company's total revenue derives from international
operations. The risk of doing business internationally includes foreign currency
exchange rate fluctuations, changes in political or economic conditions, trade
protection measures, and import or export licensing requirements.

                                       21


<PAGE>

Unisys Corporation
Consolidated Statement of Income


<TABLE>
<CAPTION>
Year Ended December 31 (Millions, except per share data)           2001         2000          1999
----------------------------------------------------------------------------------------------------
<S>                                                               <C>          <C>          <C>
Revenue                                                           $6,018.1     $6,885.0     $7,544.6
                                                                  ----------------------------------
Costs and expenses
Cost of revenue                                                    4,534.8      4,795.9      4,859.9
Selling, general and administrative expenses                       1,156.3      1,328.7      1,384.6
Research and development expenses                                    331.5        333.6        339.4
                                                                  ----------------------------------
                                                                   6,022.6      6,458.2      6,583.9
                                                                  ----------------------------------
Operating income (loss)                                               (4.5)       426.8        960.7
Interest expense                                                      70.0         79.8        127.8
Other income (expense), net                                           28.0         32.0        (62.6)
                                                                  ----------------------------------
Income (loss) before income taxes                                    (46.5)       379.0        770.3
Provision for income taxes                                             3.4        134.2        247.5
                                                                  ----------------------------------
Income (loss) before extraordinary items                             (49.9)       244.8        522.8
Extraordinary items                                                  (17.2)       (19.8)       (12.1)
                                                                  ----------------------------------
Net income (loss)                                                    (67.1)       225.0        510.7
Dividends on preferred shares                                                                   36.7
                                                                  ----------------------------------
Earnings (loss) on common shares                                  $  (67.1)    $  225.0     $  474.0
                                                                  ----------------------------------
Earnings (loss) per common share - basic
Before extraordinary items                                        $   (.16)    $    .78     $   1.69
Extraordinary items                                                   (.05)        (.06)        (.04)
                                                                  ----------------------------------
Total                                                             $   (.21)    $    .72     $   1.65
                                                                  ----------------------------------
Earnings (loss) per common share - diluted
Before extraordinary items                                        $   (.16)    $    .77     $   1.63
Extraordinary items                                                   (.05)        (.06)        (.04)
                                                                  ----------------------------------
Total                                                             $   (.21)    $    .71     $   1.59
----------------------------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.

                                       22


<PAGE>

Unisys Corporation



Consolidated Balance Sheet


<TABLE>
<CAPTION>
December 31 (Millions)                                        2001        2000
--------------------------------------------------------------------------------
<S>                                                       <C>         <C>
Assets
Current assets
Cash and cash equivalents                                 $    325.9  $   378.0
Accounts and notes receivable, net                           1,093.7    1,247.4
Inventories
 Parts and finished equipment                                  201.6      249.4
 Work in process and materials                                 144.2      176.1
Deferred income taxes                                          342.6      460.6
Other current assets                                            96.1       75.5
                                                          ---------------------
Total                                                        2,204.1    2,587.0
                                                          ---------------------
Properties                                                   1,445.0    1,400.6
Less - Accumulated depreciation                                910.8      890.7
                                                          ---------------------
Properties, net                                                534.2      509.9
                                                          ---------------------
Investments at equity                                          212.3      225.8
                                                          ---------------------
Marketable software, net                                       287.9      296.7
                                                          ---------------------
Prepaid pension cost                                         1,221.0    1,063.0
                                                          ---------------------
Deferred income taxes                                          747.8      583.6
                                                          ---------------------
Goodwill                                                       159.0      186.3
                                                          ---------------------
Other long-term assets                                         402.8      261.0
                                                          ---------------------
Total                                                     $  5,769.1  $ 5,713.3
-------------------------------------------------------------------------------

Liabilities and stockholders' equity
Current liabilities
Notes payable                                             $     78.9  $   209.5

Current maturities of long-term debt                             2.2       16.8
Accounts payable                                               694.9      847.7
Other accrued liabilities                                    1,312.5    1,278.8
Income taxes payable                                           234.6      288.3
                                                          ---------------------
Total                                                        2,323.1    2,641.1
                                                          ---------------------
Long-term debt                                                 745.0      536.3
                                                          ---------------------
Other long-term liabilities                                    588.3      349.8
                                                          ---------------------
Stockholders' equity
Common stock, shares issued: 2001 - 322.5; 2000 - 317.3          3.2        3.2
Accumulated deficit                                           (896.5)    (829.4)
Other capital                                                3,712.8    3,656.0
Accumulated other comprehensive loss                          (706.8)    (643.7)
                                                          ---------------------
Stockholders' equity                                         2,112.7    2,186.1
                                                          ---------------------
Total                                                     $  5,769.1  $ 5,713.3
-------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.

                                       23


<PAGE>

Unisys Corporation



Consolidated Statement of Cash Flows


<TABLE>
<CAPTION>
Year Ended December 31 (Millions)                                        2001       2000       1999
-------------------------------------------------------------------------------------------------------
<S>                                                                  <C>         <C>       <C>
Cash flows from operating activities
Income (loss) before extraordinary items                             $    (49.9) $  244.8  $    522.8
Add (deduct) items to reconcile income (loss) before extraordinary
   items to net cash provided by operating activities:
Extraordinary items                                                       (17.2)    (19.8)      (12.1)
Depreciation                                                              140.2     135.6       134.5
Amortization:
  Marketable software                                                     145.5     115.5       110.9
  Goodwill                                                                 16.5      21.8        21.7
(Increase) decrease in deferred income taxes, net                         (44.4)     85.6        (9.9)
Decrease (increase) in receivables, net                                    72.3     158.2      (244.5)
Decrease (increase) in inventories                                         79.7     (52.5)       98.0
(Decrease) in accounts payable and other accrued liabilities             (143.6)   (140.0)      (81.8)
(Decrease) increase in income taxes payable                               (58.0)    (62.8)       78.2
Increase (decrease) in other liabilities                                  245.6      (2.5)       (2.2)
(Increase) in other assets                                               (238.4)    (69.2)     (159.2)
Other                                                                      54.1       5.2        61.2
                                                                     --------------------------------
Net cash provided by operating activities                                 202.4     419.9       517.6
                                                                     --------------------------------
Cash flows from investing activities
Proceeds from investments                                               3,028.7     790.4     1,033.8
Purchases of investments                                               (3,009.0)   (716.7)   (1,013.8)
Investment in marketable software                                        (136.8)   (152.4)     (122.8)
Capital additions of properties                                          (199.4)   (198.3)     (219.6)
Purchases of businesses                                                    (9.1)    (13.9)      (53.9)
Proceeds from sales of properties                                                    20.0        47.9
                                                                     --------------------------------
Net cash used for investing activities                                   (325.6)   (270.9)     (328.4)
                                                                     --------------------------------
Cash flows from financing activities
Proceeds from issuance of long-term debt                                  536.5                  30.3
Payments of long-term debt                                               (370.8)   (448.0)     (164.4)
Net (reduction in) proceeds from short-term borrowings                   (127.7)    179.6       (25.6)
Proceeds from employee stock plans                                         33.6      51.1        87.7
Dividends paid on preferred shares                                                              (59.4)
Redemption of preferred stock                                                                  (197.0)
                                                                     --------------------------------
Net cash provided by (used for) financing activities                       71.6    (217.3)     (328.4)
                                                                     --------------------------------
Effect of exchange rate changes on cash and cash equivalents                (.5)    (17.7)      (13.2)
                                                                     --------------------------------
Decrease in cash and cash equivalents                                     (52.1)    (86.0)     (152.4)
Cash and cash equivalents, beginning of year                              378.0     464.0       616.4
                                                                     --------------------------------
Cash and cash equivalents, end of year                               $    325.9  $  378.0  $    464.0
-----------------------------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.

                                       24


<PAGE>

Unisys Corporation



Consolidated Statement of Stockholders' Equity


<TABLE>
<CAPTION>
                                                                                        Other,       Accumulated
                                                                                      Principally       Other      Comprehensive
                                      Preferred    Common    Accumulated   Treasury     Paid-In     Comprehensive      Income
(Millions)                              Stock      Stock       Deficit       Stock      Capital     Income (Loss)      (Loss)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>          <C>       <C>            <C>        <C>           <C>            <C>
Balance at December 31, 1998         $  1,444.7   $   2.6   $  (1,532.2)   $  (23.6)   $  2,175.7    $  (531.6)
Conversions to common stock            (1,245.3)       .4                                 1,271.2
Redemption of preferred stock            (197.0)
Issuance of stock under stock
  option and other plans                               .1                     (17.8)        103.4
Net income                                                        510.7                                              $  510.7
Other comprehensive loss                                                                                 (38.8)         (38.8)
                                                                                                                     --------
Comprehensive income                                                                                                 $  471.9
                                                                                                                     --------
Dividends                                                         (32.9)
Tax benefit related to stock plans                                                           66.1
Other                                      (2.4)
----------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999                  -       3.1      (1,054.4)      (41.4)      3,616.4       (570.4)
Issuance of stock under stock
  option and other plans                               .1                       (.7)         70.0
Net income                                                        225.0                                              $  225.0
Other comprehensive loss                                                                                 (73.3)         (73.3)
                                                                                                                     --------
Comprehensive income                                                                                                 $  151.7
                                                                                                                     --------
Unearned compensation                                                                          .4
Tax benefit related to stock plans                                                           11.3
----------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000                  -       3.2        (829.4)      (42.1)      3,698.1       (643.7)
Issuance of stock under stock
  option and other plans                                                        (.2)         52.2
Net loss                                                          (67.1)                                             $  (67.1)
Other comprehensive loss                                                                                 (63.1)         (63.1)
                                                                                                                     --------
Comprehensive loss                                                                                                   $ (130.2)
                                                                                                                     --------
Unearned compensation                                                                          .2
Tax benefit related to stock plans                                                            4.6
----------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001         $        -   $   3.2   $    (896.5)   $  (42.3)   $  3,755.1    $  (706.8)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.

                                       25


<PAGE>

Unisys Corporation

Notes to Consolidated Financial Statements

/1/ Summary of significant accounting policies

Principles of consolidation. The consolidated financial statements include the
accounts of all majority-owned subsidiaries. Investments in companies
representing ownership interests of 20% to 50% are accounted for by the equity
method.

Use of estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates and
assumptions.

Cash equivalents. All short-term investments purchased with a maturity of three
months or less are classified as cash equivalents.

Inventories. Inventories are valued at the lower of cost or market. Cost is
determined principally on the first-in, first-out method.

Properties and depreciation. Properties are carried at cost and are depreciated
over the estimated lives of such assets using the straight-line method.
Outsourcing equipment is depreciated over the shorter of the asset life or the
term of the contract. For other classifications of properties, the principal
rates used are summarized below:

                                  Rate per Year (%)
                                  -----------------

Buildings                               2-5
Machinery and office equipment          5-25
Rental equipment                        25
Internal use software                   10-33

Advertising costs. The company expenses all advertising costs as they are
incurred. The amount charged to expense during 2001, 2000 and 1999 was $35.6,
$38.2, and $48.6 million, respectively.

Revenue recognition. The company generally recognizes revenue when persuasive
evidence of an arrangement exists, delivery has occurred, the fee is fixed or
determinable and collectibility is probable.

     Revenue from hardware sales is recognized upon shipment and the passage of
title. Outside of the United States, the company recognizes revenue even if it
retains a form of title to products delivered to customers, provided the sole
purpose is to enable the company to recover the products in the event of
customer payment default, and the arrangement does not prohibit the customer's
use of the product in the ordinary course of business.

     Revenue from software licenses is recognized at the inception of the
initial license term and upon execution of an extension to the license term.
Revenue for post-contract software support arrangements, which are marketed
separately, is recorded on a straight-line basis over the support period for
multi-year contracts and at the inception of contracts of one year or less.

     Revenue from equipment and software maintenance is recognized on a
straight-line basis as earned over the lives of the respective contracts.

     For equipment leased to a customer under an operating lease or a sales-type
lease, revenue recognition commences when the equipment has been shipped,
installed and is ready for use. Revenue for operating leases is recognized on a
monthly basis over the term of the lease and for sales-type leases at the
inception of the lease term.

     Revenue and profit under systems integration contracts is recognized on the
percentage-of-completion method of accounting using the cost-to-cost method or
when services have been performed, depending on the nature of the project. For
contracts accounted for on the percentage-of-completion basis, revenue and
profit recognized in any given accounting

                                       26


<PAGE>

period is based on estimates of total projected contract costs, the estimates
are continually reevaluated and revised, when necessary, throughout the life of
a contract. Any adjustments to revenue and profit due to changes in estimates
are accounted for in the period of the change in estimate. When estimates
indicate that a loss will be incurred on a contract on completion, a provision
for the expected loss is recorded in the period in which the loss becomes
evident.

     Revenue from time and materials service contracts and outsourcing contracts
is recognized as the services are provided.

Income taxes. Income taxes are provided on taxable income at the statutory rates
applicable to such income. Deferred taxes have not been provided on the
cumulative undistributed earnings of foreign subsidiaries because such amounts
are expected to be reinvested indefinitely.

Marketable software. The cost of development of computer software to be sold or
leased, incurred subsequent to establishment of technological feasibility, is
capitalized and amortized to cost of sales over the estimated revenue-producing
lives of the products, but not in excess of three years following product
release.

Outsourcing contract costs. Costs on outsourcing contracts are generally charged
to expense as incurred. However, direct costs incurred related to the inception
of an outsourcing contract are deferred and charged to expense over the contract
term. These costs consist principally of initial customer set-up and employment
obligations related to employees assumed. At December 31, 2001 and 2000, $122.8
million and $34.7 million, respectively, of these costs were reported in other
long-term assets.

Goodwill. Goodwill represents the excess of cost over fair value of net assets
acquired, which is being amortized on the straight-line method. Accumulated
amortization at December 31, 2001 and 2000 was $120.0 and $106.9 million,
respectively.

     Whenever events or changes in circumstances indicate that the carrying
value of goodwill may not be recoverable, the company would prepare projections
of future cash flows for the applicable business. If such projections indicated
that goodwill would not be recoverable, the company's carrying value of goodwill
would be reduced by the estimated excess of such value over projected discounted
cash flows, after reduction for the carrying amount of the other net assets of
the business.

Translation of foreign currency. The local currency is the functional currency
for most of the company's international subsidiaries and, as such, assets and
liabilities are translated into U.S. dollars at year-end exchange rates. Income
and expense items are translated at average exchange rates during the year.
Translation adjustments resulting from changes in exchange rates are reported in
other comprehensive income. Exchange gains and losses on intercompany balances
of a long-term investment nature are reported in other comprehensive income. All
other exchange gains and losses on intercompany balances are reported in other
income (expense), net.

     For those international subsidiaries operating in hyper-inflationary
economies, the U.S. dollar is the functional currency and, as such, non-monetary
assets and liabilities are translated at historical exchange rates and monetary
assets and liabilities are translated at current exchange rates. Exchange gains
and losses arising from translation are included in other income (expense), net.

Reclassifications. Certain prior-year amounts have been reclassified to conform
with the 2001 presentation.

                                       27


<PAGE>


2 Earnings per share

  The following table shows how earnings per share were computed for the three
  years ended December 31, 2001.


<TABLE>
<CAPTION>
  Year ended December 31
  (Millions, except per share data)                                              2001          2000          1999
--------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>           <C>           <C>
  Basic earnings per share computation
  Income (loss) before extraordinary items                                    $   (49.9)    $   244.8     $   522.8
  Less dividends on preferred shares                                                                          (36.7)
                                                                              -------------------------------------
  Income (loss) available to common stockholders before extraordinary items       (49.9)        244.8         486.1
  Extraordinary items                                                             (17.2)        (19.8)        (12.1)
                                                                              -------------------------------------
  Net income (loss) available to common stockholders                          $   (67.1)    $   225.0     $   474.0
                                                                              -------------------------------------
  Weighted average shares (thousands)                                           318,207       313,115       287,290
                                                                              -------------------------------------
  Basic earnings (loss) per share
  Before extraordinary items                                                  $    (.16)    $     .78     $    1.69
  Extraordinary items                                                              (.05)         (.06)         (.04)
                                                                              -------------------------------------
  Total                                                                       $    (.21)    $     .72     $    1.65
                                                                              -------------------------------------
  Diluted earnings per share computation
  Income (loss) available to common stockholders before extraordinary items   $   (49.9)    $   244.8     $   486.1
  Plus interest expense on assumed conversion of
    8 1/4% Convertible Notes, net of tax                                                                         .3
                                                                              -------------------------------------
  Income (loss) available to common stockholders
    plus assumed conversions before extraordinary items                           (49.9)        244.8         486.4
  Extraordinary items                                                             (17.2)        (19.8)        (12.1)
                                                                              -------------------------------------
  Net income (loss) available to common stockholders                          $   (67.1)    $   225.0     $   474.3
                                                                              -------------------------------------
  Weighted average shares (thousands)                                           318,207       313,115       287,290
  Plus incremental shares from assumed conversions:
    Employee stock plans                                                                        3,536         9,835
    8 1/4% Convertible Notes                                                                                    818
    Preferred stock                                                                                             877
                                                                              -------------------------------------
  Adjusted weighted average shares                                              318,207       316,651       298,820
                                                                              -------------------------------------
  Diluted earnings (loss) per share
  Before extraordinary items                                                  $    (.16)    $     .77     $    1.63
  Extraordinary items                                                              (.05)         (.06)         (.04)
                                                                              -------------------------------------
  Total                                                                       $    (.21)    $     .71     $    1.59
                                                                              -------------------------------------
</TABLE>


  The shares listed below were not included in the computation of diluted
  earnings per share because the option prices were above the average market
  price of the company's common stock or their inclusion would have been
  antidilutive.

  Year ended December 31 (thousands)          2001            2000         1999
--------------------------------------------------------------------------------
  Employee stock plans                       28,653         16,073         6,680
--------------------------------------------------------------------------------

                                       28


<PAGE>

3 Accounting changes

  Effective January 1, 2001, the company adopted Statement of Financial
  Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
  and Hedging Activities." This statement establishes accounting and reporting
  standards for derivative instruments and hedging activities. SFAS No. 133
  requires a company to recognize all derivatives as either assets or
  liabilities in the statement of financial position and measure those
  instruments at fair value. Derivatives that are not hedges must be adjusted to
  fair value through income. If the derivative is a hedge, depending on the
  nature of the hedge, changes in the fair value of the derivative are either
  offset against the change in fair value of assets, liabilities, or firm
  commitments through earnings or recognized in other comprehensive income until
  the hedged item is recognized in earnings. The ineffective portion of a
  derivative's change in fair value is immediately recognized in earnings. The
  cumulative effect of the change in accounting principle due to the adoption of
  SFAS No. 133 resulted in the recognition of income of $3.3 million (net of
  $1.8 million of tax) in other comprehensive income.

     Effective April 1, 2001, the company adopted SFAS No. 140, "Accounting for
  Transfers and Servicing of Financial Assets and Extinguishments of
  Liabilities." This statement revised the accounting standards for
  securitizations and other transfers of financial assets and collateral and
  requires certain disclosures. Adoption of SFAS No. 140 had no effect on the
  company's consolidated financial position, consolidated results of operations,
  or liquidity.

     In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
  "Business Combinations," and No. 142, "Goodwill and Other Intangible Assets."
  SFAS No. 141 requires that the purchase method of accounting be used for all
  business combinations initiated after June 30, 2001 and prohibits the use of
  the pooling-of-interests method. SFAS No. 141 also includes guidance on the
  initial recognition and measurement of goodwill and other intangible assets
  acquired in a business combination that is completed after June 30, 2001. SFAS
  No. 142 no longer permits the amortization of goodwill and indefinite-lived
  intangible assets. Instead, these assets must be reviewed annually for
  impairment in accordance with this statement. The company is required to adopt
  SFAS No. 142 effective January 1, 2002. In anticipation of adoption, the
  company reclassified the amount of goodwill as a separate line item in its
  balance sheet. During the first half of 2002, the company will perform the
  first of the required impairment tests of goodwill. The company has not yet
  determined what effect, if any, this initial test will have on the company's
  consolidated financial position or consolidated results of operations. An
  impairment charge, if any, from this initial test will be reported as a change
  in accounting principle. As a result of the adoption of SFAS No. 142, all
  amortization of goodwill as a charge to earnings ($16.5 million in 2001, or
  $.04 per share) will be eliminated.

                                       29


<PAGE>

4 Fourth-quarter charges

  2001 charge. In response to the weak economic environment in 2001, the company
  took actions in 2001 to further reduce its cost structure. In the fourth
  quarter of 2001, the company recorded a pretax charge of $276.3 million, or
  $.64 per share, primarily for a work-force reduction of approximately 3,750
  people (1,700 in the United States and 2,050 outside the United States). Of
  the total, approximately 2,000 people left the company in 2001 with the
  remainder to leave in 2002. Of the total work-force reduction, 764 people
  accepted an early retirement program in the United States. For those employees
  who accepted the early retirement program, cash requirements will be provided
  through the company's pension plan. Cash expenditures related to the
  involuntary reductions were $23.3 million in 2001. A further breakdown of the
  individual components of these costs follows:

                        Work-Force Reductions/(1)/
(Millions)           Total           U. S.    Int'l     Other /(2)/
------------------------------------------------------------------
Work-force
reductions /(1)/
Early retirement   $   58.8        $  58.8
Involuntary
reductions            145.9           18.8  $  127.1
                   ---------------------------------
  Subtotal            204.7           77.6     127.1
Other /(2)/            71.6                             $  71.6
                   -----------------------------------------------
Total charge          276.3           77.6     127.1       71.6
Utilized             (127.2)         (62.5)    (22.6)     (42.1)
                   -----------------------------------------------
Balance at
Dec. 31, 2001      $  149.1        $  15.1  $  104.5    $  29.5
                   -----------------------------------------------
Expected future
utilization:
2002               $  118.7        $  12.3  $   93.1    $  13.3
2003 and
thereafter             30.4            2.8      11.4       16.2
------------------------------------------------------------------

/(1)/ Includes severance, notice pay, medical and other benefits.
/(2)/ Includes facilities costs (principally representing provision for idle
      lease costs) of $29.5 million and product and program discontinuances
      (principally representing a provision for asset write-downs) of $42.1
      million.

The 2001 fourth-quarter charge was recorded in the following statement of income
classifications: cost of revenue, $163.8 million; selling, general and
administrative expenses, $83.2 million; research and development expenses, $27.6
million; and other income (expense), net, $1.7 million.

2000 charge. As a result of a strategic business review of its operations in
2000, the company took actions to focus its resources on value-added business
opportunities, de-emphasize or eliminate low-return businesses and lower its
cost base. In the fourth quarter of 2000, the company recorded a pretax charge
of $127.6 million, or $.29 per diluted share, primarily for a work-force
reduction of 2,000 people (1,400 in the United States and 600 outside the United
States). Of the total, approximately 500 people left the company in 2001 and
1,300 in 2000. Of the total work-force reduction, 742 people accepted an early
retirement program in the United States. For those employees who accepted the
early retirement program, cash requirements were provided through the company's
pension plan. Cash expenditures related to the involuntary reductions were $39.3
million in 2001 and $8.7 million in 2000. A further breakdown of the individual
components of these costs follows:

                                       30


<PAGE>

                        Work-Force Reductions/(1)/
(Millions)             Total    U. S.   Int'l    Other /(2)/
------------------------------------------------------------
Work-force
reductions /(1)/
Early retirement    $   57.8  $  57.8
Involuntary
reductions              60.9     13.3  $  47.6
                    --------------------------
   Subtotal            118.7     71.1     47.6
Other /(2)/              8.9                    $ 8.9
                    ----------------------------------------
Total charge           127.6     71.1     47.6    8.9
Utilized               (71.9)   (58.7)    (7.8)  (5.4)
                    ----------------------------------------
Balance at
Dec. 31, 2000           55.7     12.4     39.8    3.5
Utilized               (40.0)    (8.8)   (30.5)   (.7)
Other/(3)/              (7.1)    (2.3)    (4.0)   (.8)
                    ----------------------------------------
Balance at
Dec. 31, 2001       $    8.6  $   1.3  $   5.3  $ 2.0
------------------------------------------------------------

/(1)/ Includes severance, notice pay, medical and other benefits.
/(2)/ Includes facilities costs, and product and program discontinuances.
/(3)/ Includes changes in estimates, reversals of excess reserves, translation
      adjustments and additional provisions.


     In 2001, there was a reduction in accrued work-force provisions principally
  for the reversal of unneeded reserves due to approximately 200 voluntary
  terminations.

     The 2000 fourth-quarter charge was recorded in the following statement of
  income classifications: cost of revenue, $56.1 million; selling, general and
  administrative expenses, $51.9 million; research and development expenses,
  $18.2 million; and other income (expense), net, $1.4 million.

     The December 31, 2001 balance is all expected to be utilized in 2002.

  Prior-year charges. As a result of prior-year actions related to a strategic
  realignment of the company's business in 1997 and 1995, cash expenditures in
  2001, 2000 and 1999 were $8.9, $17.6 and $44.6 million, respectively. At
  December 31, 2001, a $12.3 million balance remains principally representing
  contractual obligations (reduced by sublease income) existing under long-term
  leases of vacated facilities. All but $4.8 million of this balance is expected
  to be utilized in 2002.


5 Accounts receivable

  In December 2000, the company entered into an agreement, renewable annually,
  at the purchasers' option, for up to three years, to sell through Unisys
  Funding Corporation I, a wholly owned subsidiary, interests in eligible U.S.
  trade accounts receivable for up to $275 million. Upon renewal of the facility
  in December 2001, the amount was reduced to $225 million. Unisys Funding
  Corporation I has been structured to isolate its assets from creditors of
  Unisys. In 2000, the company received proceeds of $232 million from the
  initial sale and in 2001, the company received an aggregate of $2.3 billion
  from ongoing sales of accounts receivable interests under the program. At
  December 31, 2001 and 2000, the company retained subordinated interests of
  $135 million and $223 million, respectively, in the associated receivables.
  These receivables have been included in accounts and notes receivable, net in
  the accompanying consolidated balance sheet. As collections reduce previously
  sold interests, interests in new eligible receivables can be sold, subject to
  meeting certain conditions. At December 31, 2001 and 2000, receivables of $176
  million and $232 million, respectively, were sold and therefore removed from
  the accompanying consolidated balance sheet.

     The selling price of the receivables interests reflects a discount based on
  the A-1 rated commercial paper borrowing rates of the purchasers (2.0% at
  December 31, 2001 and 6.7% at December 31, 2000). The company remains
  responsible for servicing the underlying accounts receivable, for which it
  will receive a fee of 0.5% of the outstanding balance, which it believes
  represents adequate compensation. The company estimates the fair

                                       31


<PAGE>
  value of its retained interests by considering two key assumptions: the
  payment rate, which is derived from the average life of the accounts
  receivable which is less than 60 days, and the rate of expected credit losses.
  Based on the company's favorable collection experience and very short-term
  nature of the receivables, both assumptions are considered to be highly
  predictable. Therefore, the company's estimated fair value of its retained
  interests in the pool of eligible receivables is approximately equal to book
  value, less the associated allowance for doubtful accounts. The discount on
  the sales of these accounts receivable during the year ended December 31, 2001
  was $12.2 million. The amount of discount for the year ended December 31, 2000
  was not material. These discounts are recorded in other income (expense), net
  in the accompanying consolidated statement of income.

     Revenue recognized in excess of billings on services contracts, or unbilled
  accounts receivable, was $146.7 and $171.3 million at December 31, 2001 and
  2000, respectively. Such amounts are included in accounts and notes
  receivables, net.

6 Income taxes

Year ended December 31 (Millions)     2001      2000     1999
----------------------------------------------------------------
Income (loss) before income taxes
    United States                  $   95.9  $  389.0  $  485.4
    Foreign                          (142.4)    (10.0)    284.9
                                   -----------------------------
Total income (loss) before
  income taxes                     $  (46.5) $  379.0  $  770.3
----------------------------------------------------------------
Provision for income taxes
    Current
       United States               $    7.7  $   10.1  $   55.3
       Foreign                         24.0      63.6      79.1
       State and local                  3.5       4.9      10.5
                                   -----------------------------
       Total                           35.2      78.6     144.9
                                   -----------------------------
    Deferred
       United States                  (16.2)     72.8      75.7
       Foreign                        (15.6)    (17.2)     24.4
       State and local                                      2.5
                                   -----------------------------
       Total                          (31.8)     55.6     102.6
                                   -----------------------------
Total provision for income taxes   $    3.4  $  134.2  $  247.5
----------------------------------------------------------------

     Following is a reconciliation of the provision for income taxes at the
  United States statutory tax rate to the provision for income taxes as
  reported:

Year ended December 31 (Millions)      2001     2000      1999
-----------------------------------------------------------------
United States statutory income
 tax (benefit)                       $ (16.3) $  132.7  $  269.6
Difference in estimated income
 taxes on foreign earnings, losses
 and remittances                        44.6      36.2       3.8
State taxes                              2.3       3.2       9.3
Tax refund claims, audit issues
 and other matters                     (26.1)    (39.6)    (18.0)
U.S. tax law change                                        (22.0)
Other                                   (1.1)      1.7       4.8
                                     ----------------------------
Provision for income taxes           $   3.4  $  134.2  $  247.5
-----------------------------------------------------------------

                                       32


<PAGE>

     The tax effects of temporary differences and carryforwards that give rise
to significant portions of deferred tax assets and liabilities at December 31,
2001 and 2000, were as follows:

December 31 (Millions)                 2001        2000
----------------------------------------------------------
Deferred tax assets
Capitalized research and
  development                      $    561.1  $    592.7
Tax loss carryforwards                  325.2       280.0
Foreign tax credit carryforwards         34.1       159.1
Other tax credit carryforwards          239.4       232.2
Capitalized intellectual
  property rights                       303.4       101.7
Postretirement benefits                  71.8        80.1
Employee benefits                        77.5        83.8
Depreciation                             48.4        61.0
Restructuring                            92.8        67.1
Other                                   278.0       242.6
                                   ----------------------
                                      2,031.7     1,900.3
Valuation allowance                    (342.2)     (309.2)
                                   ----------------------
Total deferred tax assets          $  1,689.5  $  1,591.1
                                   ----------------------
Deferred tax liabilities
Pensions                           $    501.2  $    451.9
Sales-type leases                       102.9        85.2
Other                                    51.2        64.2
                                   ----------------------
Total deferred tax liabilities     $    655.3  $    601.3
                                   ----------------------
Net deferred tax assets            $  1,034.2  $    989.8
                                   ----------------------

     SFAS No. 109 requires that deferred tax assets be reduced by a valuation
allowance if it is more likely than not that some portion or all of the deferred
tax asset will not be realized. The valuation allowance at December 31, 2001,
applies to tax loss carryforwards and temporary differences relating to state
and local and certain foreign taxing jurisdictions that, in management's
opinion, are more likely than not to expire unused.

     Cumulative undistributed earnings of foreign subsidiaries, for which no
U.S. income or foreign withholding taxes have been recorded, approximated $750
million at December 31, 2001. Such earnings are expected to be reinvested
indefinitely. Determination of the amount of unrecognized deferred tax liability
with respect to such earnings is not practicable. The additional taxes payable
on the earnings of foreign subsidiaries, if remitted, would be substantially
offset by U.S. tax credits for foreign taxes already paid. While there are no
specific plans to distribute the undistributed earnings in the immediate future,
where economically appropriate to do so, such earnings may be remitted.

     Cash paid during 2001, 2000 and 1999 for income taxes was $97.0, $110.0 and
$96.6 million, respectively.

     In 1999, the company recognized a one-time tax benefit of $22.0 million, or
$.07 per diluted common share, related to a U.S. Treasury income tax regulation
pertaining to the use of net operating loss carryforwards of acquired companies.

     At December 31, 2001, the company has U.S. federal and state and local tax
loss carryforwards and foreign tax loss carryforwards for certain foreign
subsidiaries, the tax effect of which is approximately $325.2 million. These
carryforwards will expire as follows (in millions): 2002, $7.9; 2003, $11.8;
2004, $32.4; 2005, $16.0; 2006, $29.7; and $227.4 thereafter. The company also
has available tax credit carryforwards of approximately $273.5 million, which
will expire as follows (in millions): 2002, $ - ; 2003, $10.7; 2004, $7.5; 2005,
$40.1; 2006, $ - ; and $215.2 thereafter.

     The company's net deferred tax assets include substantial amounts of
capitalized research and development, tax credit carryforwards and capitalized
intellectual property rights. Failure to achieve forecasted taxable income might
affect the ultimate realization of the net deferred tax assets. Factors that may
affect the company's ability to achieve sufficient forecasted taxable income
include, but are not limited to, the following: increased competition, a decline
in sales or margins, loss of market share, delays in product availability or
technological obsolescence.

                                       33


<PAGE>

7 Properties

  Properties comprise the following:

  December 31 (Millions)               2001       2000
  ------------------------------------------------------
  Land                              $     5.2   $    8.3
  Buildings                             143.7      148.0
  Machinery and office equipment        897.4      903.0
  Internal use software                 139.9      121.2
  Rental and outsourcing equipment      258.8      220.1
                                    --------------------
  Total properties                  $ 1,445.0   $1,400.6
  ------------------------------------------------------

8 Investments at equity and minority interests

Substantially all of the company's investments at equity consist of Nihon
Unisys, Ltd., a publicly traded Japanese company ("NUL"). NUL is the exclusive
supplier of the company's hardware and software products in Japan. The
company considers its investment in NUL to be of a long-term strategic nature.
For the years ended December 31, 2001, 2000 and 1999, both direct and indirect
sales to NUL were approximately $340 million, $530 million and $490 million,
respectively. At December 31, 2001, the company owned approximately 28% of NUL's
common stock that has a market value of approximately $188 million. The company
has approximately $183 million of retained earnings that represents
undistributed earnings of NUL.

     During 2000, a new company was formed named Intelligent Processing
  Solutions Limited ("iPSL"), a UK-based company, which provides high-volume
  payment processing. iPSL is 51% owned by the company and is fully consolidated
  in the company's financial statements. The minority owners' interests are
  reported in other long-term liabilities ($48.6 million at December 31, 2001)
  and in other income (expense), net in the company's financial statements.

9 Debt

  Long-term debt comprises the following:

  December 31 (Millions)                  2001       2000
  ---------------------------------------------------------
   8 1/8%  senior notes due 2006        $  400.0  $      -
   7 7/8%  senior notes due 2008           200.0     200.0
   7 1/4%  senior notes due 2005           150.0         -
  11 3/4%  senior notes                        -     334.2
  Other, net of unamortized discounts       (2.8)     18.9
                                        ------------------
  Total                                    747.2     553.1
  Less - current maturities                  2.2      16.8
                                        ------------------
  Total long-term debt                  $  745.0  $  536.3
  --------------------------------------------------------


     Total long-term debt maturities in 2002, 2003, 2004, 2005 and 2006 are
  $2.2, $1.0, $.6, $150.2 and $400.2 million, respectively.

     Cash paid during 2001, 2000 and 1999 for interest was $92.9, $90.5 and
  $141.5 million, respectively.

     During 2001, the company issued $400 million of 8 1/8% senior notes due
  2006 and $150 million of 7 1/4% senior notes due 2005. In June 2001, the
  company completed a cash tender offer for $319.2 million principal amount of
  its 11 3/4% senior notes due 2004 and in October 2001, the company redeemed,
  at a premium, the remaining $15.0 million outstanding principal amount of such
  notes. As a result of these actions, the company recorded an extraordinary
  after-tax charge of $17.2 million, net of $9.3 million tax benefit, or $.05
  per share, for the premium paid, unamortized debt-related expenses and
  transaction costs.

     In 2000, the company redeemed all of its $399.5 million outstanding 12%
  senior notes due 2003 at the stated redemption price of 106% of principal. As
  a result, the company recorded an extraordinary charge of $19.8 million, net
  of $10.7 million of income tax benefits, or $.06 per diluted share, for the
  call premium and unamortized debt expense.

                                       34


<PAGE>

     During 1999, the company repurchased $115.8 million principal amount of its
   11 3/4% senior notes due 2004 and $25.5 million principal amount of its 12%
   senior notes due 2003 at a cost of $157.4 million. As a result, the company
   recorded an extraordinary charge of $12.1 million, net of $6.5 million of
   income tax benefits, or $.04 per diluted common share.

     In March 2001, the company entered into a new three-year $450 million
   unsecured credit agreement, which replaced the $400 million three-year
   facility that was to expire in June 2001. As of December 31, 2001, there were
   no borrowings under the facility and the entire $450 million was available
   for borrowings. The company pays commitment fees on the total amount of the
   facility. Borrowings under the agreement bear interest based on the then
   current LIBOR or prime rates and the company's credit rating.  The credit
   agreement contains financial and other covenants, including maintenance of
   certain financial ratios and a minimum level of net worth and limitations on
   certain types of transactions.  At December 31, 2001, the company has met all
   of the covenants and conditions under this agreement. In addition, the
   company has access to certain uncommitted lines of credit from U.S. banks,
   and international subsidiaries maintain short-term credit arrangements with
   banks in accordance with local customary practice.

10 Other accrued liabilities

   Other accrued liabilities (current) comprise the following:

   December 31 (Millions)                2001      2000
   ---------------------------------------------------------
   Payrolls and commissions          $   255.7  $   314.7
   Customers' deposits and
     prepayments                         561.6      504.7
   Taxes other than income taxes         106.0      120.2
   Restructuring*                        134.8       73.4
   Other                                 254.4      265.8
                                     --------------------
   Total other accrued liabilities   $ 1,312.5  $ 1,278.8
   ---------------------------------------------------------

   *At December 31, 2001 and 2000, an additional $35.2 million and $9.4 million,
   respectively, was reported in other long-term liabilities on the consolidated
   balance sheet.

11 Rental expense and commitments

   Rental expense, less income from subleases, for 2001, 2000 and 1999 was
   $161.6, $146.0 and $134.7 million, respectively.

     Minimum net rental commitments under noncancelable operating leases
   outstanding at December 31, 2001, substantially all of which relate to real
   properties, were as follows: 2002, $128.3; 2003, $109.2; 2004, $83.0; 2005,
   $58.2; 2006, $46.1; and $254.8 million thereafter. Such rental commitments
   have been reduced by minimum sublease rentals of $85.6 million due in the
   future under noncancelable subleases.

     Rental expense for 2001 and 2000 includes approximately $2.0 and $2,2
   million, respectively, under a facility lease that expires in March 2005. The
   owner of the property is a special purpose entity in which unrelated third
   parties made and have maintained an equity capital investment. The company
   has no debt or equity interest in this entity. The company does not
   consolidate this entity. If accounting rules were to change and the company
   were required to consolidate this entity, assets and debt would increase by
   approximately $33 million; however, the change in the company's results of
   operations would be minimal. The company has the option to purchase the
   facility at any time during the lease term for approximately $33 million. At
   the end of the lease term, the company has agreed to either purchase the
   facility or remarket it to a third party on behalf of the owner. If the sales
   price is less than $33 million, the company is obligated to make up the
   lesser of the shortfall or $28 million. At December 31, 2001, the fair value
   of the property exceeded $33 million. The lease contains a number of
   financial covenants and other provisions. At December 31, 2001, the company
   was in compliance with all of these covenants and provisions.

     At December 31, 2001, the company had outstanding standby letters of credit
   and surety bonds of approximately $230 million related to performance and
   payment guarantees. Based on experience with these arrangements, the company
   believes that any obligations that may arise will not be material.

                                       35


<PAGE>

12 Financial instruments

   Due to its foreign operations, the company is exposed to the effects of
   foreign currency exchange rate fluctuations on the U.S. dollar. The company
   uses derivative financial instruments to manage its exposure to market risks
   from changes in foreign currency exchange rates. The derivative instruments
   used are foreign exchange forward contracts and foreign exchange options.

     Certain of the company's qualifying derivative financial instruments have
   been designated as cash flow hedging instruments. Such instruments are used
   to manage the company's currency exchange rate risks for forecasted
   transactions involving intercompany sales and third-party royalty receipts.
   For the forecasted intercompany transactions, the company generally enters
   into derivative financial instruments for a six-month period by initially
   purchasing a three-month foreign exchange option, which, at expiration, is
   replaced with a three-month foreign exchange forward contract. For forecasted
   third-party royalty receipts, which are principally denominated in Japanese
   yen, the company generally purchases twelve-month foreign exchange forward
   contracts.

     Effective January 1, 2001, the company recognized the fair value of its
   cash flow hedge derivatives as either assets or liabilities in its balance
   sheet. Changes in the fair value related to the effective portion of such
   derivatives are recognized in other comprehensive income until the hedged
   item is recognized in earnings, at which point the accumulated gain or loss
   is reclassified out of other comprehensive income and into earnings. The
   ineffective portion of such derivative's change in fair value is immediately
   recognized in earnings. The amount of ineffectiveness recognized in earnings
   during the year ended December 31, 2001 related to cash flow hedge
   derivatives for third-party royalty was a gain of approximately $4.2 million.
   The ineffective amount related to cash flow hedge derivatives for
   intercompany transactions was immaterial. Both the amounts reclassified out
   of other comprehensive income and into earnings and the ineffectiveness
   recognized in earnings related to cash flow hedge derivatives for forecasted
   intercompany transactions are recognized in cost of revenue, and in revenue
   for forecasted third-party royalties. Substantially all of the accumulated
   income and loss in other comprehensive income related to cash flow hedges at
   December 31, 2001 is expected to be reclassified into earnings within the
   next twelve months.

     When a cash flow hedge is discontinued because it is probable that the
   original forcasted transactions will not occur by the end of the original
   specified time period, the company is required to reclassify any gains or
   losses out of other comprehensive income and into earnings. The amount of
   such reclassifications during the year ended December 31, 2001 was
   immaterial.

     In addition to the cash flow hedge derivatives mentioned above, the company
   enters into foreign exchange forward contracts that have not been designated
   as hedging instruments. Such contracts generally have maturities of one month
   and are used by the company to manage its exposure to changes in foreign
   currency exchange rates principally on intercompany accounts. The fair value
   of such instruments is recognized as either assets or liabilities in the
   company's balance sheet and changes in the fair value are recognized
   immediately in earnings in other income (expense), net in the company's
   statement of income.


                                       36


<PAGE>

     In 1999, the company entered into interest rate swaps and currency swaps
   for euros and Japanese yen. The currency swaps were designated as hedges of
   the foreign currency exposure on the company's net investments in foreign
   subsidiaries and equity investments. The currency effects of these hedges
   were reported in accumulated other comprehensive income (loss) thereby
   offsetting a portion of the foreign currency translation of net assets. The
   difference between receipts of a U.S. fixed rate of interest and payments of
   a foreign currency denominated floating rate was reported in interest
   expense. In 2000, the company terminated these swaps, and as a result
   received net cash of $18.5 million and recognized a pretax loss of $2.7
   million. Under the swaps, the company recognized an interest expense benefit
   of approximately $16 million and $7 million in 2000 and 1999, respectively.

     Financial instruments also include temporary cash investments and customer
   accounts receivable. Temporary investments are placed with creditworthy
   financial institutions, primarily in oversecuritized treasury repurchase
   agreements, Eurotime deposits, or commercial paper of major corporations. At
   December 31, 2001, the company's cash equivalents principally have maturities
   of less than one month. Due to the short maturities of these instruments,
   they are carried on the balance sheet at cost plus accrued interest, which
   approximates market value. Realized gains or losses during 2001 and 2000, as
   well as unrealized gains or losses at December 31, 2001, were immaterial.
   Receivables are due from a large number of customers that are dispersed
   worldwide across many industries. At December 31, 2001 and 2000, the company
   had no significant concentrations of credit risk. The carrying amount of cash
   and cash equivalents, notes payable and long-term debt approximates fair
   value.

13 Litigation

   There are various lawsuits, claims, and proceedings that have been brought or
   asserted against the company. Although the ultimate results of these
   lawsuits, claims, and proceedings are not currently determinable, management
   does not expect that these matters will have a material adverse effect on the
   company's consolidated financial position, consolidated results of
   operations, or liquidity.

                                       37


<PAGE>

14 Segment information

   The company has two business segments: Services and Technology. The products
   and services of each segment are marketed throughout the world to commercial
   businesses and governments. The major service and product lines by segment
   are as follows: Services - systems integration and consulting, outsourcing,
   network services, security and multivendor maintenance; Technology -
   enterprise-class servers and specialized technologies.

     The accounting policies of each business segment are the same as those
   described in the summary of significant accounting policies. Intersegment
   sales and transfers are priced as if the sales or transfers were to third
   parties. The company evaluates business segment performance on operating
   income exclusive of restructuring charges and unusual and nonrecurring items.
   All corporate and centrally incurred costs are allocated to the business
   segments based principally on assets, revenue, employees, square footage, or
   usage.

     Corporate assets are principally cash and cash equivalents, prepaid pension
   assets and deferred income taxes. The expense or income related to corporate
   assets is allocated to the business segments. In addition, corporate assets
   include an offset for interests in accounts receivable that have been
   recorded as sales in accordance with SFAS No. 140 because such receivables
   are included in the assets of the business segments.

     No single customer accounts for more than 10% of revenue. Revenue from
   various agencies of the U.S. Government, which is reported in both business
   segments, approximated $623, $689 and $865 million in 2001, 2000 and 1999,
   respectively.

     A summary of the company's operations by business segment for 2001, 2000
   and 1999 is presented below:


(Millions of dollars)           Total      Corporate    Services    Technology
------------------------------------------------------------------------------
2001
---------
Customer revenue             $  6,018.1                $  4,444.6   $  1,573.5
Intersegment                              $   (363.4)        73.8        289.6
                             -------------------------------------------------
Total revenue                $  6,018.1   $   (363.4)  $  4,518.4   $  1,863.1
                             -------------------------------------------------
Operating income
  (loss)                     $     (4.5)  $   (315.7)  $     94.7   $    216.5
Depreciation and
  amortization                    302.2                     139.3        162.9
Total assets                    5,769.1      2,617.6      2,009.3      1,142.2
Investments at
  equity                          212.3          1.8                     210.5
Capital expenditures
  for properties                  199.4         28.9        113.8         56.7

2000
---------
Customer revenue             $  6,885.0                $  4,741.6   $  2,143.4
Intersegment                              $   (437.2)        46.6        390.6
                             -------------------------------------------------
Total revenue                $  6,885.0   $   (437.2)  $  4,788.2   $  2,534.0
                             -------------------------------------------------
Operating income
  (loss)                     $    426.8   $   (103.3)  $     81.4   $    448.7
Depreciation and
  amortization                    272.9                     116.7        156.2
Total assets                    5,713.3      2,434.4      1,989.0      1,289.9
Investments at
  equity                          225.8          1.7                     224.1
Capital expenditures
  for properties                  198.3         21.4        111.9         65.0

1999
---------
Customer revenue             $  7,544.6                $  5,287.0   $  2,257.6
Intersegment                              $   (577.5)        65.6        511.9
                             -------------------------------------------------
Total revenue                $  7,544.6   $   (577.5)  $  5,352.6   $  2,769.5
                             -------------------------------------------------
Operating income
  (loss)                     $    960.7   $    (23.6)  $   421.0    $    563.3
Depreciation and
  amortization                    267.1                    115.1         152.0
Total assets                    5,885.0      2,750.2     1,991.8       1,143.0
Investments at
  equity                          225.5          1.8                     223.7
Capital expenditures
  for properties                  219.6         59.9        97.8          61.9

------------------------------------------------------------------------------

                                       38


<PAGE>

     Presented below is a reconciliation of total business segment operating
income to consolidated income (loss) before income taxes:

Year ended December 31
(Millions)                        2001     2000      1999
-----------------------------------------------------------
Total segment operating
   income                      $  311.2  $  530.1  $  984.3
Interest expense                  (70.0)    (79.8)   (127.8)
Other income (expense), net        28.0      32.0     (62.6)
Corporate and eliminations        (39.4)     24.3     (23.6)
Fourth-quarter charges           (276.3)   (127.6)
                               ----------------------------
  Total income (loss) before
    income taxes               $  (46.5) $  379.0  $  770.3
-----------------------------------------------------------

     Presented below is a reconciliation of total business segment assets to
consolidated assets:

December 31 (Millions)          2001        2000        1999
--------------------------------------------------------------
Total segment assets        $  3,151.5  $  3,278.9  $  3,134.8
Cash and cash equivalents        325.9       378.0       464.0
Prepaid pension assets         1,221.0     1,063.0       975.9
Deferred income taxes          1,090.4     1,044.2     1,128.3
Elimination for sale of
   receivables                  (191.8)     (279.1)      (30.7)
Other corporate assets           172.1       228.3       212.7
                            ----------------------------------
  Total assets              $  5,769.1  $  5,713.3  $  5,885.0
--------------------------------------------------------------

     Geographic information about the company's revenue, which is principally
based on location of the selling organization, and properties, is presented
below:

(Millions)              2001       2000      1999
---------------------------------------------------
Revenue
  United States     $ 2,595.3  $ 2,875.5  $ 3,357.9
  United Kingdom        823.9      762.9      806.5
  Other foreign       2,598.9    3,246.6    3,380.2
                    -------------------------------
    Total           $ 6,018.1  $ 6,885.0  $ 7,544.6
                    -------------------------------
Properties, net
  United States     $   345.9  $   334.0  $   308.3
  United Kingdom         60.1       52.6       64.2
  Other foreign         128.2      123.3      130.6
                    -------------------------------
    Total           $   534.2  $   509.9  $   503.1
---------------------------------------------------

15   Employee plans

Stock plans. Under plans approved by the stockholders, stock options, stock
appreciation rights, restricted stock, and restricted stock units may be granted
to officers and other key employees.

     Options have been granted to purchase the company's common stock at 100% of
the fair market value at the date of grant. Options generally have a maximum
duration of ten years and become exercisable in annual installments over a
four-year period following date of grant.

     Restricted stock and restricted stock units have been granted and are
subject to forfeiture until the expiration of a specified period of service
commencing on the date of grant. Compensation expense resulting from the awards
is charged to income ratably from the date of grant until the date the
restrictions lapse and is based on fair market value at the date of grant.
During the years ended December 31, 2001, 2000 and 1999, $.6, $1.0 and $2.5
million was charged to income, respectively.

     The company has a worldwide Employee Stock Purchase Plan ("ESPP"), which
enables substantially all regular employees to purchase shares of the company's
common stock through payroll deductions of up to 10% of eligible pay. The price
the employee pays is 85% of the market price at the beginning or end of a
calendar quarter, whichever is lower. During the years ended December 31, 2001,
2000 and 1999, employees purchased newly issued shares from the company for
$28.8, $37.3 and $35.1 million, respectively.

     U.S. employees are eligible to participate in an employee savings plan.
Under this plan, employees may contribute a percentage of their pay for
investment in various investment alternatives. Effective July 1, 1998, the
company reinstituted a company match for up to 1% of pay. Effective January 1,
2000, the company match was increased to 2% of pay. Company matching
contributions are made in the form of newly issued shares of company common
stock. The charge to income related to the company match for the years ended
December 31, 2001, 2000 and 1999 was $18.0, $19.1 and $8.2 million,
respectively.

                                       39


<PAGE>

     The company applies APB Opinion 25 for its stock plans and the
disclosure-only option under SFAS No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation expense is recognized for stock
options granted and for common stock purchases under the ESPP.

     Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the company had
accounted for its stock plans under the fair value method of SFAS No. 123. The
fair value of stock options is estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions for 2001, 2000 and 1999, respectively: risk-free interest rates of
5.08%, 6.84% and 5.14%, volatility factors of the expected market price of the
company's common stock of 55%, a weighted average expected life of the options
of five years and no dividends.

     For purposes of the pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The company's
pro forma net income (loss) for the years ended December 31, 2001, 2000 and
1999, respectively, follows: 2001, $(118.9) million, or $(.37) per share; 2000,
$182.5 million, or $.58 per diluted share; and 1999, $472.2 million, or $1.46
per diluted share.

A summary of the status of stock option activity follows:


<TABLE>
<CAPTION>

Year ended December 31
(Shares in thousands)                          2001                    2000                    1999
--------------------------------------------------------------------------------------------------------
                                           Weighted Avg.           Weighted Avg.           Weighted Avg.
                                  Shares  Exercise Price  Shares  Exercise Price  Shares  Exercise Price
                                 -----------------------------------------------------------------------
<S>                               <C>     <C>             <C>     <C>            <C>      <C>
Outstanding at
  beginning of year               22,085    $  24.44      19,158    $  19.74      18,252    $  13.28
Granted                            9,122       17.75       7,667       33.36       6,981       30.54
Exercised                           (697)       6.91      (1,455)       9.58      (4,649)      11.28
Forfeited and expired             (1,857)      27.07      (3,285)      24.41      (1,426)      17.05
                                  ------------------------------------------------------------------
Outstanding at end of year        28,653       22.56      22,085       24.44      19,158       19.74
                                  ------------------------------------------------------------------
Exercisable at end of year        11,709       19.90       7,946       15.72       6,138       11.39
                                  ------------------------------------------------------------------
Shares available for granting
  options at end of year           2,477                   4,008                   2,601
                                  ------------------------------------------------------------------
Weighted average fair value
  of options granted during
  the year                                  $   9.80                $  18.76                $  15.95
----------------------------------------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
December 31, 2001
Shares in thousands)           Outstanding                               Exercisable
-------------------------------------------------------------------------------------------
Exercise                        Average            Average                       Average
Price Range      Shares          Life *        Exercise Price       Shares   Exercise Price
-------------------------------------------------------------------------------------------
<S>              <C>            <C>            <C>                  <C>      <C>
$4-11             3,798           5.08            $  7.30            3,299       $ 7.14
$11-30           13,439           7.83              18.45            4,250        18.08
$30-52           11,416           7.79              32.49            4,160        31.88
                 --------------------------------------------------------------------------
Total            28,653           7.45              22.56           11,709        19.90
-------------------------------------------------------------------------------------------
</TABLE>


* Average contractual remaining life in years.

                                       40


<PAGE>


Retirement benefits

Retirement plans funded status and amounts recognized in the company's
consolidated balance sheet at December 31, 2001 and 2000, follows:


<TABLE>
<CAPTION>
                                                                          U.S. Plans        International Plans
                                                                   -----------------------  -------------------
December 31 (Millions)                                                 2001        2000        2001      2000
---------------------------------------------------------------------------------------------------------------
<S>                                                                <C>          <C>          <C>       <C>
Change in benefit obligation
  Benefit obligation at beginning of year                          $  3,559.0   $ 3,491.1    $  757.1  $  844.2
  Service cost                                                           35.2        37.4        22.3      18.7
  Interest cost                                                         273.7       263.5        55.1      49.9
  Plan participants' contributions                                                                8.2       9.4
  Plan amendments                                                        59.6        59.0         4.0       1.1
  Actuarial (gain) loss                                                 217.8       (29.2)       45.9     (11.2)
  Benefits paid                                                        (276.3)     (262.8)      (38.4)    (34.7)
  Effect of settlements/curtailments                                                              1.8       1.4
  Foreign currency translation adjustments                                                       10.1    (121.7)
  Other*                                                                                         80.9
                                                                   --------------------------------------------
  Benefit obligation at end of year                                $  3,869.0   $ 3,559.0    $  947.0  $  757.1
---------------------------------------------------------------------------------------------------------------

Change in plan assets
  Fair value of plan assets at beginning of year                   $  4,951.3   $ 5,045.5    $  847.9  $  959.3
  Actual return on plan assets                                         (381.4)      163.5       (46.2)     40.4
  Employer contribution                                                   6.5         5.1        26.0      10.1
  Plan participants' contributions                                                                8.2       9.4
  Benefits paid                                                        (276.3)     (262.8)      (38.4)    (34.7)
  Foreign currency translation adjustments                                                       15.0    (136.6)
  Other*                                                                                        102.4
                                                                   --------------------------------------------
  Fair value of plan assets at end of year                         $  4,300.1   $ 4,951.3    $  914.9  $  847.9
---------------------------------------------------------------------------------------------------------------

Funded status                                                      $    431.1   $  1,392.3   $  (32.1) $   90.8
  Unrecognized net actuarial (gain) loss                                660.4      (413.6)      152.0     (13.7)
  Unrecognized prior service (benefit) cost                              (6.3)      (12.8)        5.8       6.9
  Unrecognized net obligation at date of adoption                                                            .3
                                                                   --------------------------------------------
  Prepaid pension cost                                             $  1,085.2   $   965.9    $  125.7  $   84.3
---------------------------------------------------------------------------------------------------------------

Amounts recognized in the consolidated balance sheet consist of:
  Prepaid pension cost                                             $  1,085.2   $   965.9    $  135.8  $   97.1
  Other long-term liabilities                                                                   (10.1)    (12.8)
                                                                   --------------------------------------------
                                                                   $  1,085.2   $   965.9    $  125.7  $   84.3
---------------------------------------------------------------------------------------------------------------
</TABLE>


*  Represents amounts of pension assets and liabilities assumed by the company
   at the inception of certain outsourcing contracts related to the customers'
   employees hired by the company.

     The projected benefit obligations, accumulated benefit obligations and fair
value of plan assets for plans with accumulated benefit obligations in excess of
plan assets was as follows (in millions of dollars): $181.0, $171.3 and $93.3
million at December 31, 2001 and $168.7, $161.4 and $91.2 million at December
31, 2000.


                                       41


<PAGE>

Net periodic pension cost for 2001, 2000 and 1999 includes the following
components:


<TABLE>
<CAPTION>
                                                                               U.S. Plans                   International Plans
Year ended December 31 (Millions)                                     2001        2000       1999       2001       2000       1999
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>         <C>         <C>         <C>        <C>        <C>
Service cost                                                      $    35.2   $    37.4   $    39.3   $   22.3   $   18.7   $  18.0
Interest cost                                                         273.7       263.5       251.3       55.1       49.9      51.5
Expected return on plan assets                                       (476.2)     (440.3)     (395.4)     (79.4)     (67.3)    (67.4)
Amortization of prior service (benefit) cost                           (5.5)       (5.9)       (6.3)        .9         .9       1.0
Amortization of asset or liability at adoption                                       .8          .7         .3         .3        .1
Recognized net actuarial loss (gain)                                    1.2         1.1         1.4       (1.0)        .5       2.8
Settlement/curtailment (gain) loss                                                                         3.4        1.4       1.1
                                                                  ------------------------------------------------------------------
Net periodic pension (income) cost                                $  (171.6)  $  (143.4)  $  (109.0)  $    1.6   $    4.4   $   7.1
------------------------------------------------------------------------------------------------------------------------------------

Weighted-average assumptions as of December 31 were as follows:

Discount rate                                                           7.50%       8.00%       7.75%      6.25%      6.57%    6.35%
Rate of compensation increase                                           5.40%       5.40%       5.40%      3.80%      3.77%    3.81%
Expected long-term rate of return on assets                            10.00%      10.00%      10.00%      8.54%      8.51%    8.44%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


Other postretirement benefits

A reconciliation of the benefit obligation, fair value of the plan assets and
the funded status of the postretirement medical plan at December 31, 2001 and
2000, follows:

December 31 (Millions)                          2001     2000
---------------------------------------------------------------
Change in benefit obligation
   Benefit obligation at beginning of year   $  219.1  $  217.4
   Interest cost                                 15.2      14.9
   Plan participants' contributions              27.8      24.1
   Actuarial loss                                10.9       7.2
   Benefits paid                                (52.9)    (44.3)
   Effect of settlement/curtailment                         (.2)
                                             ------------------
Benefit obligation at end of year            $  220.1  $  219.1
                                             ------------------
Change in plan assets
   Fair value of plan assets at beginning
     of year                                 $   13.3  $   13.4
   Actual return on plan assets                   1.0       1.4
   Employer contributions                        24.2      18.7
   Plan participants' contributions              27.8      24.1
   Benefits paid                                (52.9)    (44.3)
                                             ------------------
Fair value of plan assets at end of year     $   13.4  $   13.3
                                             ------------------
Funded status                                $ (206.7) $ (205.8)
Unrecognized net actuarial loss                  26.2      17.5
Unrecognized prior service benefit               (9.9)    (11.8)
                                             ------------------
Accrued benefit cost                         $ (190.4) $ (200.1)
---------------------------------------------------------------

     Net periodic postretirement benefit cost for 2001, 2000 and 1999 follows:


<TABLE>
<CAPTION>
Year ended December 31 (Millions)                                    2001      2000       1999
------------------------------------------------------------------------------------------------
<S>                                                               <C>        <C>        <C>
Interest cost                                                     $   15.2   $   14.9   $   14.9
Expected return on plan assets                                                               (.4)
Amortization of prior
  service benefit                                                     (2.0)      (2.0)      (2.2)
Recognized net actuarial loss                                          1.3         .4         .6
Settlement/curtailment gain                                                                 (6.5)
                                                                  ------------------------------
Net periodic benefit cost                                         $   14.5   $   13.3   $    6.4
                                                                  ------------------------------
Weighted-average assumptions as of December 31 were as follows:
Discount rate                                                         7.40%      7.70%      7.50%
Expected return on plan assets                                        8.00%      8.00%      8.00%
------------------------------------------------------------------------------------------------
</TABLE>


     The assumed health care cost trend rate used in measuring the expected cost
of benefits covered by the plan is 9.1% for 2001, gradually declining to 5.5% in
2006 and thereafter. A one-percentage-point increase (decrease) in the assumed
health care cost trend rate would increase (decrease) the accumulated
postretirement benefit obligation at December 31, 2001, by $6.6 and $(6.4)
million, respectively, and increase (decrease) the interest cost component of
net periodic postretirement benefit cost for 2001 by $.5 and $(.5) million,
respectively.

                                       42


<PAGE>

16 Stockholders' equity

   The company has 720.0 million authorized shares of common stock, par value
   $.01 per share, and 40.0 million shares of authorized preferred stock, par
   value $1 per share, issuable in series.

     During the year ended December 31, 1999, the company made several calls of
   its Series A Cumulative Convertible Preferred Stock ("Series A Preferred
   Stock") for redemption. As a result, of the 28.4 million shares of Series A
   Preferred Stock outstanding at December 31, 1998, 24.5 million were converted
   into 40.8 million shares of the company's common stock and 3.9 million shares
   of Series A Preferred Stock were redeemed for $197.0 million in cash.

     In 1999, the remaining balance of $27 million of 8 1/4% convertible
   subordinated notes due 2006 were converted into 3.9 million shares of the
   company's common stock.

     Each outstanding share of common stock has attached to it one preferred
   share purchase right. The rights become exercisable only if a person or group
   acquires 20% or more of the company's common stock, or announces a tender or
   exchange offer for 30% or more of the common stock. Until the rights become
   exercisable, they have no dilutive effect on net income per common share.

     At December 31, 2001, 42.1 million shares of unissued common stock of the
   company were reserved for stock options and for stock purchase and savings
   plans.

     Changes in issued shares during the three years ended December 31, 2001,
   were as follows:

                                              Preferred    Common     Treasury
(Thousands)                                     Stock       Stock       Stock
--------------------------------------------------------------------------------
Balance at December 31, 1998                    28,941     259,447      (1,292)
Conversions to common stock                    (24,952)     46,090
Redemptions                                     (3,941)
Issuance of stock under stock option and
  other plans                                                6,916        (578)
Other                                              (48)
                                              --------------------------------
Balance at December 31, 1999                         -     312,453      (1,870)
Issuance of stock under stock option and
  other plans                                                4,882         (26)
                                              --------------------------------
Balance at December 31, 2000                         -     317,335      (1,896)
Issuance of stock under stock option and
  other plans                                                5,152         (17)
                                              --------------------------------
Balance at December 31, 2001                         -     322,487      (1,913)
--------------------------------------------------------------------------------

     Comprehensive income (loss) for the three years ended December 31, 2001,
   includes the following components:

Year ended
December 31 (Millions)                        2001        2000        1999
--------------------------------------------------------------------------------
Net income (loss)                         $  (67.1)   $  225.0    $  510.7
                                          --------------------------------------
Other comprehensive income (loss)
    Cumulative effect of change
      in accounting principle
      (SFAS No. 133), net of tax
      of $1.8                                  3.3
    Cash flow hedges
      Income (loss), net of tax of $5.1        9.7
      Reclassification adjustments,
        net of tax of $(4.6)                  (8.6)
    Foreign currency translation
      adjustments, net of tax of $-,
      $19.0 and $(2.8)                       (67.5)      (73.3)      (38.8)
                                          --------------------------------------

Total other comprehensive income (loss)      (63.1)      (73.3)      (38.8)
                                          --------------------------------------
Comprehensive income (loss)               $ (130.2)   $  151.7    $  471.9
--------------------------------------------------------------------------------

     Accumulated other comprehensive income (loss) as of December 31, 2001, 2000
   and 1999 is as follows (in millions of dollars):

                                                      Translation     Cash Flow
                                             Total     Adjustments     Hedges
--------------------------------------------------------------------------------
Balance at December 31, 1998               $ (531.6)   $ (531.6)     $     -
Current-period change                         (38.8)      (38.8)
                                           -------------------------------------
Balance at December 31, 1999                 (570.4)     (570.4)           -
Current-period change                         (73.3)      (73.3)
                                           -------------------------------------
Balance at December 31, 2000                 (643.7)     (643.7)           -
Current-period change                         (63.1)      (67.5)         4.4
                                           -------------------------------------
Balance at December 31, 2001               $ (706.8)   $ (711.2)     $   4.4
--------------------------------------------------------------------------------

                                       43


<PAGE>

Report of Management

The management of the company is responsible for the integrity of its financial
statements. These statements have been prepared in conformity with accounting
principles generally accepted in the United States and include amounts based on
the best estimates and judgments of management. Financial information included
elsewhere in this report is consistent with that in the financial statements.

     The company maintains a system of internal accounting controls designed to
provide reasonable assurance at a reasonable cost that assets are safeguarded
against loss or unauthorized use, and that transactions are executed in
accordance with management's authorization and recorded and summarized properly.
This system is augmented by written policies and procedures, an internal audit
program, and the selection and training of qualified personnel.

     Ernst & Young LLP, independent auditors, have audited the company's
financial statements. Their accompanying report is based on audits conducted in
accordance with auditing standards generally accepted in the United States,
which require a review of the system of internal accounting controls and tests
of accounting procedures and records to the extent necessary for the purpose of
their audits.

     The Board of Directors, through its Audit Committee, which is composed
entirely of outside directors, oversees management's responsibilities in the
preparation of the financial statements and selects the independent auditors,
subject to stockholder ratification. The Audit Committee meets regularly with
the independent auditors, representatives of management, and the internal
auditors to review the activities of each and to assure that each is properly
discharging its responsibilities. To ensure complete independence, the internal
auditors and representatives of Ernst & Young LLP have full access to meet with
the Audit Committee, with or without management representatives present, to
discuss the results of their examinations and their opinions on the adequacy of
internal controls and the quality of financial reporting.



/s/ Lawrence A. Weinbach               /s/ Janet Brutschea Haugen

Lawrence A. Weinbach                   Janet Brutschea Haugen
Chairman, President,                   Senior Vice President
and Chief Executive Officer            and Chief Financial Officer




Report of Independent Auditors

To the Board of Directors of Unisys Corporation

     We have audited the accompanying consolidated balance sheets of Unisys
Corporation as of December 31, 2001 and 2000, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 2001. These financial statements are the
responsibility of Unisys Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Unisys
Corporation at December 31, 2001 and 2000, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
January 17, 2002


                                       44


<PAGE>

Unisys Corporation

Supplemental Financial Data (Unaudited)


Quarterly financial information


<TABLE>
<CAPTION>
                                                           First           Second          Third          Fourth
(Millions, except per share data)                         Quarter         Quarter         Quarter        Quarter           Year
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>             <C>             <C>            <C>             <C>
2001
-------------------------------------
Revenue                                                 $   1,623.8     $   1,461.4     $   1,376.0    $   1,556.9     $   6,018.1
Gross profit                                                  427.6           397.4           379.9          278.4         1,483.3
Income (loss) before income taxes                             103.4            43.9            31.2         (225.0)          (46.5)
Income (loss) before extraordinary item                        69.3            29.3            20.9         (169.4)          (49.9)
Net income (loss)                                              69.3            12.1            20.9         (169.4)          (67.1)
Earnings (loss) per share - basic
  Before extraordinary item                                     .22             .09             .07           (.53)           (.16)
  Extraordinary item                                                           (.05)                                          (.05)
                                                        --------------------------------------------------------------------------
  Total                                                         .22             .04             .07           (.53)           (.21)
                                                        --------------------------------------------------------------------------
Earnings (loss) per share - diluted
  Before extraordinary item                                     .22             .09             .07           (.53)           (.16)
  Extraordinary item                                                           (.05)                                          (.05)
                                                        --------------------------------------------------------------------------
  Total                                                         .22             .04             .07           (.53)           (.21)
                                                        --------------------------------------------------------------------------
Market price per share - high                                 19.70           15.00           14.47          13.45           19.70
                       - low                                  12.69           11.15            7.70           7.95            7.70
----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
2000
-------------------------------------
<S>                                                     <C>             <C>             <C>            <C>             <C>
Revenue                                                 $   1,668.7     $   1,597.1     $   1,690.9    $   1,928.3     $   6,885.0
Gross profit                                                  539.3           480.8           474.7          594.3         2,089.1
Income before income taxes                                    161.4            85.3            65.0           67.3           379.0
Income before extraordinary item                              106.5            56.3            42.9           39.1           244.8
Net income                                                    106.5            36.5            42.9           39.1           225.0
Earnings per share - basic
  Before extraordinary item                                     .34             .18             .14            .12             .78
  Extraordinary item                                                           (.06)                                          (.06)
                                                        --------------------------------------------------------------------------
  Total                                                         .34             .12             .14            .12             .72
                                                        --------------------------------------------------------------------------
Earnings per share - diluted
  Before extraordinary item                                     .34             .18             .14            .12             .77
  Extraordinary item                                                           (.06)                                          (.06)
                                                        --------------------------------------------------------------------------
  Total                                                         .34             .12             .14            .12             .71
                                                        --------------------------------------------------------------------------
Market price per share - high                                 36.06           28.19           15.31          16.38           36.06
                        - low                                 24.25           14.25            9.13           9.25            9.13
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


In the fourth quarter of 2001 and 2000, the company recognized pretax
restructuring and related charges of $276.3 and $127.6 million, or $.64 and $.29
per share, respectively. Excluding these items, earnings per share before
extraordinary items for 2001 and 2000 was $.48 and $1.06, respectively. See Note
4 of the Notes to Consolidated Financial Statements.

The individual quarterly per-share amounts may not total to the per-share amount
for the full year because of accounting rules governing the computation of
earnings per share.

Market prices per share are as quoted on the New York Stock Exchange composite
listing.

                                       45


<PAGE>


Five-year summary of selected financial data


<TABLE>
<CAPTION>
(Millions, except per share data)                        2001/(1)/       2000/(1)/         1999           1998          1997/(1)/
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>             <C>             <C>            <C>             <C>
Results of operations
Revenue                                                 $   6,018.1     $   6,885.0     $   7,544.6    $   7,243.9     $   6,662.9
Operating income (loss)                                        (4.5)          426.8           960.7          799.0          (408.4)
Income (loss) before income taxes                             (46.5)          379.0           770.3          594.2          (748.1)
Income (loss) before extraordinary items                      (49.9)          244.8           522.8          376.4          (852.9)
Net income (loss)                                             (67.1)          225.0           510.7          376.4          (852.9)
Dividends on preferred shares                                                                  36.7          106.5           111.1
Earnings (loss) on common shares                              (67.1)          225.0           474.0          269.9          (964.0)
Earnings (loss) per common share before
   extraordinary items
    Basic                                                      (.16)            .78            1.69           1.07           (5.25)
    Diluted                                                    (.16)            .77            1.63           1.01           (5.25)
Financial position
Working capital (deficit)                               $    (119.0)    $     (54.1)    $     268.3    $     288.9     $     363.6
Total assets                                                5,769.1         5,713.3         5,885.0        5,608.2         5,608.3
Long-term debt                                                745.0           536.3           950.2        1,106.7         1,438.4
Common stockholders' equity                                 2,112.7         2,186.1         1,953.3           90.9          (210.3)
Common stockholders' equity per share                          6.59            6.93            6.29            .35            (.84)
Other data
Research and development                                $     331.5     $     333.6     $     339.4    $     308.3     $     314.8
Capital additions of properties                               199.4           198.3           219.6          209.1           184.0
Investment in marketable software                             136.8           152.4           122.8          100.3           133.5
Depreciation                                                  140.2           135.6           134.5          141.8           154.5
Amortization
   Marketable software                                        145.5           115.5           110.9          112.3            97.2
   Goodwill                                                    16.5            21.8            21.7           18.2           970.1
Common shares outstanding (millions)                          320.6           315.4           310.6          258.2           251.0
Stockholders of record (thousands)                             28.4            29.7            32.8           28.6            37.3
Employees (thousands)                                          38.9            36.9            35.8           33.5            32.9
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


/(1)/  Includes special pretax charges of $276.3 million, $127.6 million and
       $1,039.2 million for the years ended December 31, 2001, 2000 and 1997,
       respectively.

                                       46




<PAGE>

Exhibit 21

                         SUBSIDIARIES OF THE REGISTRANT




     Unisys Corporation, the registrant, a Delaware company, has no parent. The
registrant has the following subsidiaries:

                                                         State
                                                        or Other
                                                      Jurisdiction
                                                       Under the
                                                     Laws of Which
Name of Company                                        Organized
---------------                                      -------------

Datamec, S.A.                                        Brazil
Intelligent Processing Solutions Limited             United Kingdom
Unisys Australia Limited                             Michigan
Unisys Belgium                                       Belgium
Unisys Brasil Ltda.                                  Brazil
Unisys Deutschland G.m.b.H.                          Germany
Unisys Espana S.A.                                   Spain
Unisys France                                        France
Unisys Funding Corporation I                         Delaware
Unisys Italia S.p.A.                                 Italy
Unisys Korea Limited                                 Korea
Unisys Limited                                       England
Unisys Nederland N.V.                                Netherlands
Unisys Osterreich Gmbh                               Austria
Unisys Payment Services Limited                      United Kingdom
Unisys (Schweiz) A.G.                                Switzerland

     The names of certain subsidiaries are omitted from the above list; such
subsidiaries, considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.




<PAGE>

Exhibit 23


                         CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Unisys Corporation of our report dated January 17, 2002, included in the 2001
Annual Report to Stockholders of Unisys Corporation.

Our audits also included the financial statement schedule of Unisys Corporation
listed in Item 14(a). This schedule is the responsibility of Unisys
Corporation's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

We consent to the incorporation by reference in the following Registration
Statements:

(1)  Registration Statement (Form S-3 No. 33-51747) of Unisys Corporation,
(2)  Registration Statement (Form S-3 No. 333-51885) of Unisys Corporation,
(3)  Registration Statement (Form S-8 No. 333-51887) pertaining to the Unisys
     LTIP,
(4)  Registration Statement (Form S-8 No. 333-73399) pertaining to the Deferred
     Compensation Plan for Executives of Unisys Corporation,
(5)  Registration Statement (Form S-4 No. 333-74745) of Unisys
 Corporation,
(6)  Registration Statement (Form S-8 No. 333-87409) pertaining to the
     PulsePoint Communications 1983 Stock Option Plan, the Stock Option Plan for
     Independent Directors of Digital Sound Corporation and the Tech Hackers,
     Inc. 1997 Equity Incentive Plan,
(7)  Registration Statement (Form S-8 No. 333-87411) pertaining to the Unisys
     Savings Plan,
(8)  Registration Statement (Form S-8 No. 333-40012) pertaining to the Director
     Stock Unit Plan,
(9)  Registration Statement (Form S-8 No. 333-56036) pertaining to the Unisys
     Global Employee Stock Purchase Plan, and
(10) Registration Statement (Form S-8 No. 333-56038) pertaining to the Unisys
     Savings Plan;

of our report dated January 17, 2002, with respect to the consolidated financial
statements incorporated herein by reference and our report included in the
preceding paragraph with respect to the financial statement schedule included in
this Annual Report (Form 10-K) of Unisys Corporation.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
February 19, 2002



<PAGE>

Exhibit 24

                                POWER OF ATTORNEY
                               Unisys Corporation
                           Annual Report on Form 10-K
                      for the year ended December 31, 2001


           KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below does hereby make, constitute and appoint LAWRENCE A. WEINBACH,
JANET BRUTSCHEA HAUGEN AND NANCY STRAUS SUNDHEIM, and each one of them
severally, his true and lawful attorneys-in-fact and agents, for such person and
in such person's name, place and stead, to sign the Unisys Corporation Annual
Report on Form 10-K for the year ended December 31, 2001, and any and all
amendments thereto and to file such Annual Report on Form 10-K and any and all
amendments thereto with the Securities and Exchange Commission, and does hereby
grant unto such attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as
said person might or could do in person, hereby ratifying and confirming all
that such attorney-in-fact and agents and each of them may lawfully do or cause
to be done by virtue hereof.

Dated:  February 15, 2002


/s/ J. P. Bolduc                                /s/ Melvin R. Goodes
----------------------                          ------------------------
J. P. Bolduc                                        Melvin R. Goodes
Director                                            Director



/s/ James J. Duderstadt                         /s/ Edwin A. Huston
-----------------------                         ------------------------
James J. Duderstadt                                 Edwin A. Huston
Director                                            Director


/s/ Henry C. Duques                             /s/ Kenneth A. Macke
-----------------------                         -------------------------
Henry C. Duques                                     Kenneth A. Macke
Director                                            Director


/s/ Denise K. Fletcher                          /s/ Theodore E. Martin
----------------------                          -------------------------
Denise K. Fletcher                                  Theodore E. Martin
Director                                            Director


/s/ Gail D. Fosler                              /s/ Lawrence A. Weinbach
-----------------------                         -------------------------
Gail D. Fosler                                      Lawrence A. Weinbach
Director                                            Chairman of the Board,
                                                    President and Chief
                                                    Executive Officer;
                                                    Director