<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, 2002

                                       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. [ ]

Indicate by check mark whether the registrant is an accelerated
filer (as defined in Exchange Act Rule 12b-2).  YES [X]  NO [ ]

Aggregate market value of the voting and non-voting common equity held by
non-affiliates as of the last business day of the registrant's most recently
completed second fiscal quarter: approximately $2.9 billion.

The amount shown is based on the closing price of Unisys Common Stock as
reported on the New York Stock Exchange composite tape on June 28, 2002. 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, 2002: 326,202,273.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Unisys Corporation 2002 Annual Report to Stockholders -- Part I,

Part II and Part IV.

Portions of the Unisys Corporation Proxy Statement for the 2003 Annual Meeting
of Stockholders -- Part III.

                                       2


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                                     PART I


ITEM 1.  BUSINESS

     Unisys Corporation ("Unisys" or the "Company") is a worldwide information
technology services and solutions company that combines expertise in systems
integration, outsourcing, infrastructure, server technology and consulting to
help clients achieve competitive advantage.

     Unisys has two business segments -- Services and Technology. Financial
information concerning the two segments is set forth in Note 15, "Segment
information", of the Notes to Consolidated Financial Statements appearing in the
Unisys 2002 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 end-to-end services and solutions
designed to help clients improve their competitiveness and efficiency in the
global marketplace. The Unisys portfolio of solutions and services includes
systems integration and consulting; 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; infrastructure services involving the design, management and support
of customers' IT infrastructure, including desktops, servers, mobile and
wireless systems, and networks; core maintenance; and enterprise-wide security
solutions to protect systems, networks, applications and data.

     In the Technology segment, Unisys develops servers and related products
that operate in transaction-intensive, mission-critical environments. Major
offerings include enterprise-class servers based on Cellular MultiProcessing
architecture, such as the ClearPath Plus family of servers, which integrates
proprietary and "open" platforms, and the ES7000 family of servers, which
provide enterprise-class attributes on Intel-based servers; operating system
software and middleware to power high-end servers; and specialized technologies
such as payment systems, chip testing and peripheral support products.

     The primary vertical markets Unisys serves worldwide include financial
services, communications, transportation, 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


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MATERIALS

     Unisys purchases components and supplies from a number of suppliers around
the world. For certain technology products, the Company relies on a single or
limited number of suppliers, although the Company makes every effort to assure
that alternative sources are available if the need arises. The failure of the
Company's suppliers to deliver components and supplies in sufficient quantities
and in a timely manner could adversely affect the Company's business.

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.

SEASONALITY

     The revenues of the Company's Technology segment are affected by such
factors as the introduction of new products, the length of sales cycles and the
seasonality of technology purchases. These factors historically have generally
resulted in higher fourth quarter technology revenue than in other quarters.

CUSTOMERS

     No single customer accounts for more than 10% of Unisys revenue. Sales of
commercial products and services to various agencies of the U.S. government
represented 10% of total consolidated revenue in 2002.

BACKLOG

     In the Services segment, firm order backlog at December 31, 2002 was $6.0
billion, compared to $5.7 billion at December 31, 2001. Approximately $2.1
billion (35%) of 2002 backlog is expected to be filled in 2003. 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 2002, the Company also had $3.0 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 at the end of 2001 was
$2.8 billion.

                                       4


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     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.

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 competitors are computer hardware
manufacturers, software providers, systems integrators, consulting and other
professional services firms, outsourcing providers and infrastructure services
providers. 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 $273.3 million in
2002, $331.5 million in 2001, and $333.6 million in 2000.

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 2003 and
2004.

EMPLOYEES

     As of December 31, 2002, Unisys had approximately 36,400 employees.

     Unisys uses the title "partner" for certain members of its services
business management. In using the term "partner" or "partners," Unisys does not
mean to imply that these individuals are partners in the legal sense or to imply
any intention to create a separate legal entity, such as a partnership.

INTERNATIONAL AND DOMESTIC OPERATIONS

     Financial information by geographic area is set forth in Note 15, "Segment
information", of the Notes to Consolidated Financial Statements appearing in the
Unisys 2002 Annual Report to Stockholders, and such information is incorporated
herein by reference.

                                       5


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AVAILABLE INFORMATION

     Unisys makes available, free of charge through its Internet web site at
http://www.unisys.com/about_unisys/investors, its annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as soon as reasonably practicable after such
material is electronically filed with or furnished to the SEC.


I
TEM 2.  PROPERTIES

     As of December 31, 2002, Unisys had 24 major facilities in the United
States with an aggregate floor space of approximately 5.1 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 3.6 million square feet of floor space, were leased to
Unisys. Approximately 4.6 million square feet of the U.S. facilities were in
current operation, approximately .3 million square feet were subleased to
others, and approximately .2 million square feet were being held in reserve or
were declared surplus with disposition efforts in progress.

     As of December 31, 2002, Unisys had 24 major facilities outside the United
States with an aggregate floor space of approximately 2.4 million square feet,
located primarily in Australia, Brazil, France, Germany, Netherlands, South
Africa, Switzerland and the United Kingdom. Five of these facilities, with
approximately .7 million square feet of floor space, were owned by Unisys and
19, with approximately 1.7 million square feet of floor space, were leased to
Unisys. Approximately 1.9 million square feet were in current operation,
approximately .3 million square feet were subleased to others, and approximately
.2 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

     As of the date of filing of this report, Unisys has no material legal
proceedings required to be disclosed under this Item 3.


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 2002.

                                       6


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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          63          Chairman of the Board,
                                          President and Chief
                                          Executive Officer

George R. Gazerwitz           62          Executive Vice President;
                                          President, Systems and
                                          Technology

Joseph W. McGrath             50          Executive Vice President;
                                          President, Global Industries

David O. Aker                 56          Senior Vice President,
                                          Worldwide Human Resources

Richard D. Badler             52          Senior Vice President,
                                          Corporate Communications

Robert D. Evans               55          Senior Vice President;
                                          President, Global Outsourcing

Janet Brutschea Haugen        44          Senior Vice President and
                                          Chief Financial Officer

Nancy Straus Sundheim         51          Senior Vice President,
                                          General Counsel and Secretary

Janet B. Wallace              51          Senior Vice President;
                                          President, Global
                                          Infrastructure Services

Leigh Alexander               45          Vice President and Chief
                                          Marketing Officer

Scott A. Battersby            44          Vice President and Treasurer

Leo C. Daiuto                 57          Vice President, Product
                                          Development and Technology

Jack F. McHale                53          Vice President,
                                          Investor Relations

Carol S. Sabochick            42          Vice President and Corporate
                                          Controller

     There is no family relationship among any of the above-named executive
officers. The By-Laws provide that the officers of Unisys shall be elected
annually by the Board of Directors and that each officer shall hold office for a
term of one year and until a successor

                                       7


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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. 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.

     Mr. Badler, Senior Vice President, Corporate Communications since February
2002. From 1998 to 2002, he served as Vice President, Corporate Communications.
Prior to joining Unisys, he was Vice President, Corporate Communications for
General Instrument Corporation (1996-1998). Mr. Badler has been an officer since
1998.

     Mr. Evans, Senior Vice President and President, Global Outsourcing since
February 2002. From 2000 to 2002, he served as Vice President and President,
Global Outsourcing. 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.

     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
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 Infrastructure
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.

                                       8


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

     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. 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.

     Ms. Sabochick, Vice President and Corporate Controller since February 2002.
Prior to joining Unisys, she was with Safeguard Global Services serving as Chief
Financial Officer (2001), and with AstraMerck Pharmaceuticals (1995-2000)
serving as Controller. Prior to AstraMerck, she was with PriceWaterhouseCoopers
for 11 years. Ms. Sabochick has been an officer since February 2002.


                                     PART II


ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY 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 2002 Annual Report to Stockholders and is incorporated herein by
reference. At December 31, 2002, there were 326.2 million shares outstanding and
approximately 27,300 stockholders of record. Unisys has not declared or paid any
cash dividends on its Common Stock since 1990 and does not anticipate declaring
or paying cash dividends in the foreseeable future.


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 2002 Annual
Report to Stockholders and is incorporated herein by reference.

                                       9


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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 2002 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 2002 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, 2002 and 2001 and the related consolidated statements of
income, cash flows and stockholders' equity for each of the three years in the
period ended December 31, 2002, appearing in the Unisys 2002 Annual Report to
Stockholders, together with the report of Ernst & Young LLP, independent
auditors, on the financial statements at December 31, 2002 and 2001 and for each
of the three years in the period ended December 31, 2002, appearing in the
Unisys 2002 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 2002 Annual Report to
Stockholders, is incorporated herein by reference.


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

     Not applicable.


                                    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 2004" and "Members of the Board of Directors Continuing in Office --
Term Expiring in 2005" in the Unisys Proxy Statement for the 2003 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.

                                       10


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     (c)  Audit Committee Financial Experts. Information concerning audit
committee financial experts is set forth under the heading "Committees" in the
Unisys Proxy Statement for the 2003 Annual Meeting of Stockholders and is
incorporated herein by reference.

     (d)  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 2003 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 2003 Annual Meeting of Stockholders and is incorporated herein
by reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

     Information concerning securities authorized for issuance under equity
compensation plans is set forth under the heading "EQUITY COMPENSATION PLAN
INFORMATION" in the Unisys Proxy Statement for the 2003 Annual Meeting of
Stockholders and is incorporated herein by reference.

     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 2003 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 2003 Annual Meeting of
Stockholders and is incorporated herein by reference.


ITEM 14.  CONTROLS AND PROCEDURES

     Within 90 days prior to the date of filing of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Chief Executive Officer and the Chief
Financial Officer, of the design and operation of the Company's disclosure
controls and procedures. Based on this evaluation, the Company's Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures are effective for gathering, analyzing and disclosing
the

                                       11


<PAGE>

information the Company is required to disclose in the reports it files
under the Securities Exchange Act of 1934, within the time periods specified in
the SEC's rules and forms. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
internal controls subsequent to the date of this evaluation.


                                     PART IV


ITEM 15.  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 2002 Annual Report to Stockholders
which are incorporated herein by reference:

                                                                   ANNUAL REPORT
                                                                      PAGE NO.
                                                                   -------------
         Consolidated Balance Sheets at December 31,
         2002 and December 31, 2001                                           33

         Consolidated Statements of Income for each of the
         three years in the period ended December 31, 2002                    32

         Consolidated Statements of Cash Flows for each of the
         three years in the period ended December 31, 2002                    34

         Consolidated Statements of Stockholders' Equity for
         each of the three years in the period ended
         December 31, 2002                                                    35

         Notes to Consolidated Financial Statements                        36-52

         Report of Independent Auditors                                       53

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                             19

              The financial statement schedule should be read in conjunction
         with the consolidated financial statements and notes thereto in the
         Unisys 2002 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

                                       12


<PAGE>

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 20 through 22.
Management contracts and compensatory plans and arrangements are listed as
Exhibits 10.1 through 10.19.

(b) Reports on Form 8-K.

     During the quarter ended December 31, 2002, Unisys filed no Current Reports
on Form 8-K.

                                       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 18, 2003                 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 18, 2003.


/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               *Gail D. Fosler
 officer)                            ---------------------
                                     Gail D. Fosler
/s/ Carol S. Sabochick               Director
---------------------------
Carol S. Sabochick                  *Melvin R. Goodes
Vice President and                   ---------------------
Corporate Controller                 Melvin R. Goodes
(principal accounting officer)       Director

*J. P. Bolduc                       *Edwin A. Huston
-----------------------              ---------------------
 J. P. Bolduc                        Edwin A. Huston
 Director                            Director

*Kenneth A. Macke                   *Theodore E. Martin
---------------------                ---------------------
 Kenneth A. Macke                    Theodore E. Martin
 Director                            Director


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

                                       14


<PAGE>


                                  CERTIFICATION


I, Lawrence A. Weinbach, certify that:

1.  I have reviewed this annual report on Form 10-K of Unisys Corporation;

2.  Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.  Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a. Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

     b.  Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

     c.  Presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):

     a.  All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

     b.  Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

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<PAGE>

6.  The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: February 18, 2003                 /s/ Lawrence A. Weinbach
                                          ---------------------------
                                     Name:  Lawrence A. Weinbach
                                     Title: Chairman, President and Chief
                                            Executive Officer

                                       16


<PAGE>

                                  CERTIFICATION

I, Janet Brutschea Haugen, certify that:

1.  I have reviewed this annual report on Form 10-K of Unisys Corporation;

2.  Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.  Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a.  Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

     b.  Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

     c.  Presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):

     a.  All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

     b.  Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6.  The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation,

                                       17


<PAGE>

including any corrective actions with regard to significant deficiencies and
material weaknesses.


Date: February 18, 2003                  /s/ Janet Brutschea Haugen
                                         --------------------------
                                      Name:  Janet Brutschea Haugen
                                     Title:  Senior Vice President and Chief
                                             Financial Officer

                                       18


<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, 2000      $     51.8   $        8.2   $        (11.7)  $    48.3

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

Year Ended
 December 31, 2002      $     50.6   $       23.9   $        (12.7)  $    61.8

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

                                       19


<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 (incorporated by reference to Exhibit
            3.3 to the registrant's Annual Report on Form 10-K for the year
            ended December 31, 2001)

 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)

                                       20


<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 April 25, 2002 between the registrant
            and Lawrence A. Weinbach (incorporated by reference to Exhibit 10 to
            the registrant's Quarterly Report on Form 10-Q for the quarterly
            period ended March 31, 2002)

10.11       Amendment dated July 25, 2002, to Employment Agreement 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 June 30, 2002)

10.12       Letter Agreement, dated June 3, 2002, between Unisys Corporation and
            Joseph W. McGrath (incorporated by reference to Exhibit 10.1 to the
            registrant's Quarterly Report on Form 10-Q for the quarterly period
            ended June 30, 2002)

10.13       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)

                                       21


<PAGE>

10.14       Amendment 2001-1 to the Unisys Corporation Supplemental Executive
            Retirement Income Plan (incorporated by reference to Exhibit 10.13
            to the registrant's Annual Report on Form 10-K for the year ended
            December 31, 2001)

10.15       Summary of supplemental executive benefits provided to officers of
            Unisys Corporation (incorporated by reference to Exhibit 10.14 to
            the registrant's Annual Report on Form 10-K for the year ended
            December 31, 2001)

10.16       Unisys Corporation Elected Officer Pension Plan, as amended through
            July 19, 2001 (incorporated by reference to Exhibit 10.15 to the
            registrant's Annual Report on Form 10-K for the year ended December
            31, 2001)

10.17       Unisys Corporation 2002 Stock Option Plan

10.18       Unisys Corporation Employee Stock Purchase Plan, as amended and
            restated July 1, 2001

10.19       Unisys Corporation Savings Plan, amended and restated effective
            January 1, 2002

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, 2002

21          Subsidiaries of the Registrant

23          Consent of Independent Auditors

24          Power of Attorney

                                       22




<PAGE>

                             THE UNISYS CORPORATION
                             2002 STOCK OPTION PLAN

SECTION 1. PURPOSE; DEFINITIONS.

         The purpose of the Plan is to support the Company's ongoing efforts to
attract and retain highly competent employees and enable the Company to provide
incentives directly linked to the profitability of the Company's businesses and
to increases in shareholder value.

         For purposes of the Plan, the following terms are defined as set forth
below:

         a.    "Awards" mean grants under the Plan of Non-qualified Stock
Options.

         b.    "Beneficiary" means the individual, trust or estate who or which
by designation of the participant or operation of law succeeds to the rights and
obligations of the participant under the Plan and award agreement upon the
participant's death.

         c.    "Board" means the Board of Directors of the Company.

         d.    "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.

         e.    "Commission" means the Securities and Exchange Commission or any
successor agency.

         f.    "Committee" means the Corporate Governance and Compensation
Committee of the Board or a subcommittee thereof, any successor thereto or such
other committee or subcommittee as may be designated by the Board to administer
the Plan.

         g.    "Common
 Stock" or "Stock" means the common stock of the Company,
par value $0.01 per share.

         h.    "Company" means Unisys Corporation or any successor thereto.

         i.    "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.

         j.    "Fair Market Value" means, on any date, the average of the high
and the low quoted sales prices of a share of Stock, sold regular way, through
the official close of the New York Stock Exchange at 4:00 p.m. US Eastern Time
on such date, or if there were no sales on such date, on the last date preceding
such date on which a sale was reported.

         k.    "Nonqualified Stock Option" means a Stock Option that is not
qualified under Section 422 of the Code.

         l.    "Normal Retirement Date" means the date on which the participant
is eligible to retire with unreduced benefits under a defined benefit pension
plan or


<PAGE>

arrangement of the Company or one of its Subsidiaries or, in the event that the
participant is not a member of such a plan or arrangement, the date on which the
participant attains age 65.

         m.    "Plan" means The Unisys Corporation 2002 Stock Option Plan, as

set forth herein and as may be amended from time to time.

         n.    "Stock Option" means an option granted pursuant to Section 5(a).

         o.    "Subsidiary" shall have the meaning set forth in Section 425(f)
of the Code.

         p.    "Termination of Employment" means the voluntary or involuntary
termination of a participant's employment with the Company or a Subsidiary for
any reason, including death, disability, retirement or as a result of the
divestiture of the participant's employer or any similar transaction in which
the participant's employer ceases to be the Company or one of its Subsidiaries.
The Committee, in its sole discretion, shall determine whether a Termination of
Employment is a result of disability, and shall determine whether military or
other government or eleemosynary service constitutes a Termination of
Employment.

In addition, the terms "Business Combination," "Change in Control," "Change in
Control Price," "Incumbent Board," "Outstanding Stock," "Outstanding Voting
Securities" and "Person" have the meanings set forth in Section 6.

SECTION 2. ADMINISTRATION.

         The Plan will be administered by the Committee, which will have the
power to interpret the Plan and to adopt such rules and guidelines for carrying
out the Plan as it may deem appropriate. The Committee will have the authority
to adopt such modifications, procedures and subplans as may be necessary or
desirable to comply with the laws, regulations, compensation practices and tax
and accounting principles of the countries in which the Company, a subsidiary or
an affiliate may operate to assure the viability of the benefits of Awards made
to individuals employed in such countries and to meet the objectives of the
Plan.

         Subject to the terms of the Plan, the Committee will have the authority
to determine those individuals eligible to receive Awards and the amount, type
and terms of each Award.

         The Committee may delegate its authority or power under the Plan to one
or more officers of the Company, subject to guidelines prescribed by the
Committee, with respect to participants who are not subject to Section 16 of the
Exchange Act.

         Any determination made by the Committee or pursuant to delegated
authority in accordance with the provisions of the Plan with respect to any
Award will be made in the sole discretion of the Committee or such delegate, and
all decisions made by the Committee or any appropriately designated officer
pursuant to the provisions of the Plan will be final

                                     -2-


<PAGE>

and binding on all persons, including the Company and Plan participants, but
subject to ratification by the Board if the Board so provides.

SECTION 3. ELIGIBILITY.

         All employees of the Company and its subsidiaries or affiliates, except
for elected officers of the Company, are eligible to be granted Awards under the
Plan.

SECTION 4. STOCK SUBJECT TO PLAN.

         The number of shares of Stock reserved and available for distribution
pursuant to the Plan will be 15,000,000 shares. If any Award is exercised,
cashed out or terminates or expires without a payment being made to the
participant in the form of Stock, the shares subject to such Award, if any, will
again be available for distribution in connection with Awards under the Plan.
Any shares of Stock that are used by a participant as full or partial payment of
withholding or other taxes or as payment for the exercise or conversion price of
an Award will be available for distribution in connection with Awards under the
Plan.

         In the event of any merger, reorganization, consolidation,
recapitalization, share exchange, stock dividend, stock split, reverse stock
split, split-up, spin-off, issuance of rights or warrants or other change in
corporate structure affecting the Stock after adoption of the Plan by the Board,
the Board is authorized to make substitutions or adjustments in the aggregate
number and kind of shares reserved for issuance under the Plan and in the
number, kind and price of shares subject to outstanding Awards, provided,
however, that any such substitutions or adjustments will be, to the extent
deemed appropriate by the Board, consistent with the treatment of shares of
Stock not subject to the Plan, and that the number of shares subject to any
Award will always be a whole number.

SECTION 5. AWARDS.

         (a)   Stock Option Awards. A Stock Option represents the right to
purchase a share of Stock at a predetermined exercise price. Stock Options
granted under this Plan will be in the form of Nonqualified Stock Options only.
The terms and conditions of each Stock Option Award, including the Stock Option
term, exercise price, applicable vesting periods and any other
restrictions/conditions on exercise, will be determined in the sole discretion
of the Committee and will be set forth in an Award agreement.

         (b)   Exercise Price. The exercise price of a Stock Option may not be
less than 100% of the Fair Market Value on the date of grant. Notwithstanding
the foregoing, in connection with any reorganization, merger, consolidation or
similar transaction in which the Company or any affiliate or subsidiary of the
Company is a surviving corporation, the Committee may grant Stock Options in
substitution for similar awards granted under a plan of another party to the
transaction, and in such a case the exercise price or grant price of the
substituted Stock Options granted by the Company may equal or exceed 100% of the
Fair Market Value on the date of grant reduced by any unrealized gain existing
as of the date of the transaction in the option being replaced.

                                     -3-


<PAGE>

         (c)   Duration of Stock Options.  Stock Options will terminate after
the first to occur of the following:

         (1)   Expiration of the Stock Option as provided in the applicable
               Award Agreement; or

         (2)   Termination of the Stock Option Award, as provided in Section
               5(e), following the participant's Termination of Employment.

         (d)   Acceleration/Extension of Exercise Time. The Committee, in its
sole discretion, shall have the right (but shall not in any case be obligated)
to permit purchase of shares under any Stock Option prior to the time such
Option would otherwise become exercisable under the terms of the applicable
Award agreement. In addition, the Committee, in its sole discretion, shall have
the right (but shall not in any case be obligated) to permit any Stock Option
granted under this Plan to be exercised after its termination date described in
Section 5(e), but in no event later than the last day of the term of the Stock
Option as set forth in the applicable Award agreement.

         (e)   Exercise of Stock Options upon Termination of Employment. Except
as otherwise provided in this Section 5(e) or in Section 5(d), the right of the
participant to exercise Stock Options shall terminate upon the participant's
Termination of Employment, regardless of whether or not the Stock Options were
vested in whole or in part on the date of Termination of Employment.

         (1)   Disability or Normal Retirement. Upon a participant's Termination
of Employment by reason of disability or retirement on a Normal Retirement Date,
a participant may, within five years after the Termination of Employment,
exercise all or a part of his/her Stock Options that were exercisable upon such
Termination of Employment (or which became exercisable at a later date pursuant
to Section 5(e)(3) below). In no event, however, may any Stock Option be
exercised later than the last day of the term of the Stock Option as set forth
in the applicable Award agreement.

         (2)   Death. In the event of the death of a participant while employed
by the Company or a Subsidiary, or within the additional period of time from the
date of Termination of Employment and prior to the termination of the Stock
Option as permitted under Section 5(e)(1) or Section 5(e)(3)(B), to the extent
that the right to exercise the Stock Option had vested as of the date of the
participant's death, the right of the participant's Beneficiary to exercise the
vested portion of the Stock Option shall expire on the earliest of (A) five
years from the date of the participant's death, (B) five years from the date of
the participant's Termination of Employment or (C) the last day of the term of
the Stock Option as set forth in the applicable Award agreement.

         (3)   Termination of Employment at Age 55 with Five Years of Service.
Notwithstanding anything in this Section 5 to the contrary, if Termination of
Employment occurs after the participant has attained age 55 and completed five
years of service with the Company and/or its Subsidiaries, (A) the participant
shall continue to vest in each of his/her Stock Options in accordance with the
vesting schedules set forth in the applicable Award agreements, and (B) the
participant may exercise his/her Stock Options, to the

                                     -4-


<PAGE>

extent that the Stock Options have vested as of the Termination of Employment or
thereafter in accordance with Section 5(e)(3)(A), for a period of five years
from the date of the participant's Termination of Employment. In no event,
however, may any Stock Option be exercised later than the last day of the term
of the Stock Option as set forth in the applicable Award agreement.

         (f)   Exercise Procedures. Subject to the applicable Award agreement,
Stock Options may be exercised, in whole or in part, by giving written notice of
exercise to the Company or its designee specifying the number of shares to be
purchased. This notice must be accompanied by payment in full of the exercise
price by certified or bank check or such other instrument as the Company or its
designee may accept (including a copy of instructions to a broker or bank
acceptable to the Company to deliver promptly to the Company an amount of sale
or loan proceeds sufficient to pay the purchase price). If authorized by the
Committee, payment in full or in part may also be made (1) in the form of Stock
already owned by the optionee valued at the Fair Market Value on the date the
Stock Option is exercised, under such terms and conditions as are deemed
appropriate by the Committee, or (2) through a cashless exercise program
established or otherwise authorized by the Company.

SECTION. 6. CHANGE IN CONTROL PROVISIONS.

         (a)   Impact of Event. Notwithstanding any other provision of the Plan
to the contrary, and except to the extent expressly provided otherwise in an
Award agreement, in the event of a Change in Control all Stock Options
outstanding as of the date the Change in Control occurs will become fully vested
and immediately exercisable. In addition, a participant who is an elected
officer of the Company will be permitted to surrender for cancellation within 60
days after the Change in Control any Stock Option or portion of a Stock Option
to the extent not exercised and to receive a cash payment in an amount equal to
the excess, if any, of (A) the Change in Control Price, over (B) the exercise
price of the Stock Option. The provisions of this Section 6(a) will not be
applicable to any Stock Options granted to a participant if the Change in
Control results from the participant's beneficial ownership (within the meaning
of Rule 13d(3) under the Exchange Act) of Stock or Voting Securities.

         (b)   Definition of Change in Control. A "Change in Control" means any
of the following events:

               (1)  The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of 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 (A) the then outstanding shares of Stock
(the "Outstanding Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Voting Securities"), provided, however,
that the following acquisitions will not constitute a Change in Control: (1) any
acquisition directly from the Company, (2) any acquisition by the Company, (3)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the

                                      -5-


<PAGE>

Company or any corporation controlled by the Company or (4) any acquisition by
any corporation pursuant to a transaction described in clauses (A), (B) and (C)
of paragraph (3) of this Section 6(b); or

               (2)  Individuals who, as of the effective date of the Plan,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board, provided, however, that any individual's
becoming a director after the effective date of the Plan whose election, or
nomination for election by the stockholders of the Company, was approved by a
vote of at least a majority of the directors then comprising the Incumbent Board
will be considered as though the individual were a member of the Incumbent
Board, but excluding, for this purpose, any 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

               (3)  Consummation of a reorganization, merger or consolidation or
sale or disposition of all or substantially all of the assets of the Company (a
"Business Combination"), unless, in each case following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Stock and
Outstanding Voting Securities immediately before the 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 that as a result of
the transaction owns the Company or all or substantially all of the assets of
the Company either directly or indirectly through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Stock and Outstanding Voting Securities,
as the case may be, (B) no Person (excluding any employee benefit plan (or
related trust) of the Company or the corporation resulting from the Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from the Business Combination or the combined voting power of the then
outstanding voting securities of the corporation except to the extent that the
Person owned 20% or more of the Outstanding Stock or Outstanding Securities
before the Business Combination, and (C) at least a majority of the members of
the board of directors of the corporation resulting from the 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 the Business
Combination; or

               (4)  Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

         (c)   Definition of Change in Control Price. "Change in Control Price"
means the greater of (1) the highest Fair Market Value of a share of Stock
during the 60-day period ending on the date of the Change in Control, and (2)
the highest price per share of Stock paid to holders of Stock in any transaction
(or series of transactions) constituting or resulting from the Change in
Control.

                                     -6-


<PAGE>

SECTION 7.  PLAN AMENDMENT AND TERMINATION.

         The Board may amend or terminate the Plan at any time. Except as set
forth in any Award agreement, no amendment or termination of the Plan may
materially and adversely affect any outstanding Award under the Plan without the
Award recipient's consent.

SECTION 8.  PAYMENTS AND PAYMENT DEFERRALS.

         Payment of Awards will be in the form of Stock. The Committee, either
at the time of grant or by subsequent amendment, may require or permit deferral
of the payment of Awards under such rules and procedures as it may establish. It
also may provide that deferred settlements include the payment or crediting of
interest or other earnings on the deferred amounts, or the payment or crediting
of dividend equivalents where the deferred amounts are denominated in Stock
equivalents.

SECTION 9.  TRANSFERABILITY.

         Except to the extent permitted by the Award agreement, either initially
or by subsequent amendment, Awards will not be transferable or assignable other
than by will or the laws of descent and distribution, and will be exercisable
during the lifetime of the recipient only by the recipient.

SECTION 10. AWARD AGREEMENTS.

         Each Award under the Plan will be evidenced by a written agreement
(which need not be signed by the recipient unless otherwise specified by the
Committee) that sets forth the terms, conditions and limitations for each Award.
Such terms may include, but are not limited to, the term of the Award, vesting
and forfeiture provisions, and the provisions applicable in the event the
recipient's employment terminates. The Committee may amend an Award agreement,
provided that no such amendment may materially and adversely affect an Award
without the Award recipient's consent.

SECTION 11. UNFUNDED STATUS OF PLAN.

         It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or make payments; however, unless the Committee
otherwise determines, the structure of such trusts or other arrangements must be
consistent with the "unfunded" status of the Plan.

SECTION 12. GENERAL PROVISIONS.

         (a)   The Committee may require each person acquiring shares of Stock
pursuant to an Award to represent to and agree with the Company in writing that
such person is acquiring the shares without a view to the distribution thereof.
The certificates for such shares may include any legend that the Committee deems
appropriate to reflect any restrictions on transfer.

                                     -7-


<PAGE>

         All certificates for shares of Common Stock or other securities
delivered under the Plan will be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Commission, any stock exchange upon which the
Stock is then listed and any applicable Federal, state or foreign securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

         (b)   Nothing contained in this Plan will prevent the Company, a
Subsidiary or an affiliate from adopting other or additional compensation
arrangements for its employees or directors.

         (c)   The adoption of the Plan will not confer upon any employee any
right to continued employment nor will it interfere in any way with the right of
the Company, a Subsidiary or an affiliate to terminate the employment of any
employee at any time.

         (d)   No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income tax
purposes with respect to any Award under the Plan, the participant will pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any Federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Committee, withholding obligations arising from an Award may be settled with
Stock, including Stock that is part of, or is received upon exercise or
conversion of, the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan will be conditional on such payment or
arrangements, and the Company, its subsidiaries and its affiliates will, to the
extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the participant. The Committee may establish such
procedures as it deems appropriate, including the making of irrevocable
elections, for the settling of withholding obligations with Stock.

         (e)   On receipt of written notice of exercise, the Committee may elect
to cash out all or a portion of the shares of Stock for which a Stock Option is
being exercised by paying the optionee an amount, in cash or Stock, equal to the
Spread Value of such shares on the date such notice of exercise is received.

         (f)   The Plan and all Awards made and actions taken thereunder will be
governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania.

         (g)   If any provision of the Plan is held invalid or unenforceable,
the invalidity or unenforceability will not affect the remaining parts of the
Plan, and the Plan will be enforced and construed as if such provision had not
been included.

         (h)   Any reference in the Plan to a provision of the Code, the
Exchange Act or other law may be interpreted by the Committee, in its
discretion, to encompass any successor provision of the law.

                                     -8-


<PAGE>

                               UNISYS CORPORATION

                          EMPLOYEE STOCK PURCHASE PLAN


<PAGE>

                               UNISYS CORPORATION
                          EMPLOYEE STOCK PURCHASE PLAN
                     (as amended and restated July 1, 2001)

1.       PURPOSE.

         The purpose of the Plan is to provide an opportunity for Employees of
Unisys Corporation and Related Corporations designated as Participating
Employers to purchase Common Stock of the Corporation and thereby to have an
additional incentive to contribute to the prosperity of the Corporation. The
Plan is not intended to be an "Employee Stock Purchase Plan" under Section 423
of the Internal Revenue Code of 1986, as amended.

2.       DEFINITIONS.

         (a)   "Board" shall mean the Board of Directors of the Corporation.

         (b)   "Committee" shall mean the Unisys Corporation Employee Benefits
Administrative Committee.

         (c)   "Common Stock" shall mean the Common Stock of the Corporation.

         (d)   "Compensation" shall mean an Employee's regular salary or wages
paid by the Participating Employer for a payroll period, including bonus
payments, overtime and commissions. Compensation does not include wage or salary
substitution payments during approved paid leaves of absences, expense
reimbursement, relocation allowances, long-term disability payments, tuition
reimbursement, adoption
 assistance benefits, earnings related to stock options
or other equity incentives and post-employment payments that may be computed
from eligible compensation, such as severance benefits, salary continuation
after termination of service, redundancy pay or termination indemnities.

         (e)   "Corporation" shall mean Unisys Corporation, a Delaware
corporation, (or any successor corporation).

         (f)   "Effective Date" shall mean July 1, 1998, provided, however, that
the Effective Date with respect to one or more Participating Employers or
business units may be a date later than July 1, 1998 as determined in the
discretion of the Vice-President, Worldwide Human Resources.

         (g)   "Employee" shall mean an individual who (a) is classified as a
regular full or part time employee by the Corporation or a Related Corporation
on their payroll records during the relevant participation period and (b) who is
eligible to participate in the employee benefit plans maintained by the
Corporation or Participating Employer. No other individual will be considered as
an Employee, including any temporary employee, independent contractor,
non-employee

                                     -1-


<PAGE>

consultant, an employee of any entity other than the Corporation or Related
Corporation or other service provider, even if such classification is determined
to be erroneous, or is retroactively revised by a governmental agency, by court
order or as a result of litigation, or otherwise. In the event the
classification of a person who was excluded from the definition of Employee
under the preceding sentence is determined to be erroneous or is retroactively
revised, the person shall nonetheless continue to be excluded from treatment as
an Employee for all periods prior to the date the Employer specifically
determines, for the purpose of eligibility in the Plan, that its classification
of the person should be revised.

         (h)   "Fair Market Value" shall mean on any date the sales price, in
U.S. Dollars, of the Common Stock as of the official close of the New York Stock
Exchange at 4:00 p.m. US Eastern Standard Time on such date. In lieu of the
forgoing, the Committee may in good faith determine the Fair Market Value on any
other reasonable basis. Such determination shall be conclusive and binding on
all persons.

         (i)   "Option Period" shall mean a quarterly, semi-annual or other
period as determined by the Board. In the absence of a Board determination, the
Option Period shall be calendar quarters.

         The first Option Period under the Plan will begin on July 1, 1998 and
end on September 30, 1998.

         (j)   "Participant" shall mean a participant in the Plan as
described in Section 4 of the Plan.

         (k)   "Participating Employer" shall mean the Corporation, a Related
Corporation or a business unit of the Corporation or a Related Corporation
designated by the Senior Vice-President, Worldwide Human Resources or his
successor to participate in the Plan.

         (l)   "Plan" shall mean the Unisys Employee Stock Purchase Plan.

         (m)   "Purchase Date" shall mean the first day following the end of
the Option Period.

         (n)   "Related Corporation" shall mean every non-U.S. subsidiary
that is a direct or indirect at least 100%-owned subsidiary of the Corporation.
In the event that the Senior Vice President, Worldwide Human Resources so
designates, any other non-U.S. affiliate of the Corporation will become a
Related Corporation.

         (o)   "Service" shall mean continuous regular employment with the
Corporation or a Related Corporation, even if a Participant can no longer make
contributions because he or she no longer works for a Participating Employer.

         (p)   "Shareholder" shall mean a record holder of shares entitled to
vote shares of Common Stock under the Corporation's by-laws.

                                       -2-


<PAGE>

3.       ELIGIBILITY.

         3.1   An Employee employed by the Corporation or a Participating
Employer is eligible to participate in the Plan beginning with any payroll
period that begins on or after the Effective Date.

4.       PARTICIPATION.

         4.1   An Employee who is eligible to participate in the Plan in
accordance with Section 3 may become a Participant by filing a completed payroll
deduction authorization and Plan enrollment form provided by the Corporation.
Participation in the Plan will become effective as soon as is administratively
feasible after receipt by the Corporation or Plan Recordkeeper of the completed
forms. An eligible Employee may authorize payroll deductions at the rate of any
whole percentage of the Employee's Compensation, between 1% and 10%, or such
lesser percentage as specified by the Committee. Contributions will be made by
payroll deductions only, unless prohibited by local law, in which case
contributions will be made by any method determined by the Committee to be
permissible and administratively feasible. All contributions may be held by the
Corporation and commingled with its other corporate funds. No interest shall be
paid or credited to the Participant with respect to such contributions, except
where required by local law as determined by the Committee. A separate
bookkeeping account for each Participant will be maintained by the Corporation
or Plan Recordkeeper under the Plan and the amount of each Participant's
contributions shall be credited to such account. A Participant may not make any
additional payments into such account. A Participant may not make payroll
deductions or any other contributions for periods after his or her termination
of Service even if he or she is then being paid salary continuation or severance
benefits.

         4.2   Each Participating Employer will be responsible for making
payroll deductions pursuant to the Plan (unless prohibited by local law),
causing these payroll deductions (or other form of contributions) to be sent to
the Corporation and sending the contribution detail (by Participant) to the Plan
Recordkeeper. Contributions in non-U.S. currency shall be converted to U.S.
Dollars under procedures established by the Committee.

         4.3   Under procedures established by the Committee, a Participant
may suspend or discontinue participation in the Plan at any time during an
Option Period by completing and filing with the Corporation or Plan Recordkeeper
the appropriate forms provided by the Corporation or by following electronic or
other procedures prescribed by the Committee. A Participant may resume, increase
or decrease his or her rate of contribution by completing and filing with the
Corporation or Plan Recordkeeper the appropriate forms provided by the
Corporation. A Participant's election to suspend or discontinue participation or
to resume, increase or decrease contributions will become effective as soon as
is administratively feasible after receipt by the Corporation or Plan
Recordkeeper of the completed forms. If a new election regarding the
Participant's contributions is not filed with the Corporation or Plan
Recordkeeper,

                                       -3-


<PAGE>

the rate of contribution shall continue at the originally elected rate
throughout the Option Period unless the Corporation determines to change the
permissible rate.

         If a Participant suspends or discontinues participation during an
Option Period, his or her accumulated contributions will remain in the Plan for
purchase of shares as specified in Section 6 on the following Purchase Date, but
the Participant will not again participate until he or she completes a new
payroll deduction authorization (or other contribution authorization as is in
effect in his/her country) and Plan enrollment form. The Committee may establish
rules limiting the frequency with which Participants may suspend and resume
contributions under the Plan and may impose a waiting period on Participants
wishing to resume suspended contributions.

5.       OFFERING.

         5.1   The maximum number of shares of Common Stock that may be
issued pursuant to the Plan shall be thirteen million shares. The Board may
designate any amount of available shares for offering for any Option Period
determined pursuant to Section 5.2.

         5.2   Option Periods under the Plan will be calendar quarters
commencing January 1, March 1, July 1 and October 1 and the Purchase Date shall
be the date described in Section 2(m). The Corporation shall have the power to
change the duration of future Option Periods or Purchase Dates, with respect to
any prospective offering, and without regard to the expectations of any
Participants.

         5.3   With respect to each Option Period, each eligible Employee who
has elected to participate as provided in Section 4.1 shall be granted an option
to purchase that number of shares of Common Stock which may be purchased with
the contributions accumulated on behalf of such Employee during such Option
Period at the purchase price specified in Section 5.4 below.

         5.4   The option price under each option shall be the lesser of (1) 85%
of the Fair Market Value of the Common Stock on the first trading day of the
Option Period or (2) 85% of the Fair Market Value on the last trading day of the
Option Period.

         5.5   If the total number of shares of Common Stock for which options
granted under the Plan are exercisable exceeds the remaining number of shares
available for offering under the Plan, the number of shares which may be
purchased by all Participants shall be reduced on a pro rata basis in as nearly
a uniform manner as shall be practicable and equitable. In this event,
contributions shall also be reduced or refunded accordingly. If an Employee's
contributions during any Option Period exceeds the purchase price for the
maximum number of shares permitted to be purchased, the excess shall be refunded
to the Participant without interest (except where otherwise required by local
law).

6.       PURCHASE OF STOCK.

                                       -4-


<PAGE>

         On the Purchase Date, a Participant's option shall be exercised
automatically for the purchase of that number of full and fractional shares of
Common Stock which the accumulated contributions credited to the Participant's
account at that time shall purchase at the applicable price specified in Section
5.4.

         To the extent practicable, all of the Participant's contributions
accumulated during the Option Period will be applied to the purchase of shares
of Common Stock on the Purchase Date.

7.       PAYMENT AND DELIVERY.

         Upon the exercise of an option, the Corporation shall deliver the
Common Stock purchased on behalf of the Participant to an account held by the
Plan Broker for the Participant. At any time after the purchased shares are
credited to the Participant's account, the Participant may elect to (a) direct
the Plan Broker to sell all or some of the shares credited to the Participant's
account, in which case applicable transaction fees will be charged, (b) receive
a stock certificate, at no charge, evidencing all or some of the whole number of
shares of stock credited to his/her account or (c) electronically transfer all
or some of the whole shares credited to his/her account, at no charge, to a
broker designated by the Participant. If a Participant elects to transfer or
receive a share certificate for all of the shares credited to his/her account,
the value of any fractional shares credited to the account will be paid to the
Participant in cash. The value of any fractional shares will be determined in
accordance with procedures established by the Committee.

         If a Participant elects to direct the Plan Broker to sell all or some
of his/her shares, the sales price for the shares will be the price obtained by
the Plan Broker when it sells the shares. For Participants residing outside of
the United States, the Plan Broker will convert sales proceeds from U.S. dollars
to the Participant's local currency before the proceeds are distributed under
procedures established by the Committee.

         The Corporation shall retain the amount of Employee contributions used
to purchase Common Stock as full payment for the Common Stock and the Common
Stock shall then be fully paid and non-assessable.

         No Participant shall have any voting, dividend, or other stockholder
rights with respect to shares subject to any option granted under the Plan until
the option has been exercised and shares issued. Participants will receive a
statement reflecting the status of their Plan account on a quarterly or other
periodic basis.

8.       TERMINATION OF EMPLOYMENT.

         No purchases will be made on behalf of a Participant for an Option
Period if the Participant terminated his/her employment with the Corporation and
all Related Corporations before the Purchase Date for the Option Period. A
refund of payroll deductions and/or other

                                       -5-


<PAGE>

contributions (without interest unless legally prohibited) will be made to a
Participant by reason of the Participant's termination of employment during an
Option Period.

         In the event any Participant terminates employment with the Corporation
and all of its Related Corporations for any reason (including death or
retirement), (a) the Participant's participation in the Plan shall terminate and
(b) all accumulated payroll deductions and/or other contributions shall be paid
without interest (except where required by local law) to the Participant or the
Participant's estate.

         Whether a termination of employment has occurred shall be determined by
the Committee. The Committee may also establish rules regarding when leaves of
absence or change of employment status (e.g., from full time to part time) will
be considered a termination of employment, and the Committee may establish
termination of employment procedures for this Plan which are independent of
similar rules established under other benefit plans of the Corporation and its
Related Corporations.

9.       WITHHOLDING.

         If a Participant is subject to withholding taxes as a result of
participation in the Plan, then the Committee shall establish appropriate
procedures, which may include, but are not limited to, withholding required
amounts from the Participant's regular salary or wages.

10.      RECAPITALIZATION.

         If after the grant of an option, but prior to the purchase of Common
Stock under the option, there is any increase or decrease in the number of
outstanding shares of Common Stock because of a stock split, stock dividend,
combination or recapitalization of shares subject to options, the number of
shares to be purchased pursuant to an option, the share limit of Section 5.3 and
the maximum number of shares specified in Section 5.1 shall be proportionately
increased or decreased, the terms relating to the purchase price with respect to
the option shall be appropriately adjusted by the Board, and the Board shall
take any further actions which, in the exercise of its discretion, may be
necessary or appropriate under the circumstances.

         The Board, if it so determines in the exercise of its sole discretion,
also may adjust the number of shares specified in Section 5.1, as well as the
price per share of Common Stock covered by each outstanding option and the
maximum number of shares subject to any individual option, in the event the
Corporation effects one or more reorganizations, recapitalizations, spin-offs,
split-ups, rights offerings or reductions of shares of its outstanding Common
Stock.

         The Board's determinations under this Section 10 shall be conclusive
and binding on all parties.

11.      MERGER, LIQUIDATION, OTHER CORPORATION TRANSACTIONS.

                                     -6-


<PAGE>

         In the event of the proposed liquidation or dissolution of the
Corporation, the Option Period will terminate immediately prior to the
consummation of such proposed transaction, unless otherwise provided by the
Board in its sole discretion, and all outstanding options shall automatically
terminate and the amounts of all payroll deductions will be refunded without
interest to the Participants.

         In the event of a proposed sale of all or substantially all of the
assets of the Corporation, or the merger or consolidation of the Corporation
with or into another corporation, then in the sole discretion of the Board, (1)
each option shall be assumed or an equivalent option shall be substituted by the
successor corporation or parent or subsidiary of such successor corporation, (2)
a date established by the Board on or before the date of consummation of such
merger, consolidation or sale shall be treated as a Purchase Date, and all
outstanding options shall be deemed exercisable on such date or (3) all
outstanding options shall terminate and the accumulated payroll deductions shall
be returned to the Participants.

12.      TRANSFERABILITY.

         Options granted to Participants may not be voluntarily or involuntarily
assigned, transferred, pledged, or otherwise disposed of in any way, and any
attempted assignment, transfer, pledge, or other disposition shall be null and
void and without effect. If a Participant in any manner attempts to transfer,
assign or otherwise encumber his or her rights or interest under the Plan, such
act shall be treated as an election by the Participant to discontinue
participation in the Plan pursuant to Section 4.2.

13.      AMENDMENT OR TERMINATION OF THE PLAN.

         The Corporation may, in its sole discretion, insofar as permitted by
law, terminate or suspend the Plan, or revise or amend it in any respect
whatsoever, except that, without approval of the Participant, no such revision
or amendment shall adversely affect any outstanding option under the Plan.

14.      ADMINISTRATION.

         The Committee will have the authority and responsibility for the
day-to-day administration of the Plan, the authority and responsibility
specifically provided in this Plan and any additional duties, responsibility and
authority delegated to the Committee by the Board or any duly authorized officer
of the Corporation, which may include any of the functions assigned to the Board
or any officer in this Plan. The Committee shall have full power and authority
to promulgate any rules and regulations which it deems necessary for the proper
administration of the Plan, to interpret the provisions and supervise the
administration of the Plan, to take all action in connection with administration
of the Plan as it deems necessary or advisable, consistent with the delegation
from the Board, and to delegate to any one or more of its members or a third
party any of its powers or responsibilities. Decisions of the Board, any duly
authorized officer and the Committee shall be final and binding upon all
Participants. Any decision reduced to writing and

                                       -7-


<PAGE>

signed by a majority of the Participants of the Committee shall be fully
effective as if it had been made at a meeting of the Committee duly held. No
Board member, or Committee member or any other employee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted thereunder.

         The Committee may prescribe rules, regulations, requirements and fees
related to the delivery, retention, transfer or administration of shares
acquired pursuant to the Plan, including, but not limited to: (1) establishing a
requirement that share certificates be maintained with a financial institution
designated by the Corporation or the Committee; (2) establishing rules and
procedures relating to the termination of employment (e.g., including long-term
disability, military duty, approved unpaid leaves of absence, layoffs and
reductions in force); (3) establishing procedures and fees for the sale of
shares in a Participant's account; (4) establishing procedures and fees for the
transfer of shares in a Participant's account; (5) establishing rules,
procedures and fees for the delivery of share certificates for the shares in a
Participant's account; and (6) establishing regulations and procedures relating
to fractional shares.

15.      COMMITTEE RULES FOR FOREIGN JURISDICTIONS.

         The Committee may adopt rules or procedures relating to the operation
and administration of the Plan in non-United States jurisdictions to accommodate
the specific requirements of local laws and procedures. Without limiting the
generality of the foregoing, the Committee is specifically authorized to adopt
rules and procedures regarding handling of payroll deductions or other forms of
employee contribution, payment of interest, conversion of local currency,
withholding procedure, handling of stock certificates, and death benefit and
beneficiary matters which vary with local requirements.

         The Committee may also adopt sub-plans applicable to particular
Participating Employers or locations. The rules of such sub-plans may take
precedence over other provisions of this Plan, with the exception of Section
5.1, but unless otherwise superseded by the terms of such sub-plan, the
provisions of this Plan shall govern the operation of such sub-plan.

16.      SECURITIES LAWS REQUIREMENTS.

         The Corporation shall not be under any obligation to issue Common Stock
upon the exercise of any option unless and until the Corporation has determined
that: (i) it and the Participants have taken all actions required to register
the Common Stock under the Securities Act of 1933, or to perfect an exemption
from the registration requirements thereof; (ii) any applicable listing
requirement of any stock exchange on which the Common Stock is listed has been
satisfied; and (iii) all other applicable provisions of state, federal and
applicable foreign law have been satisfied.

17.      GOVERNMENTAL REGULATIONS.

                                       -8-


<PAGE>

         This Plan and the Corporation's obligation to sell and deliver shares
of its stock under the Plan shall be subject to the approval of any governmental
authority required in connection with the Plan or the authorization, issuance,
sale, or delivery of stock hereunder.

18.      NO ENLARGEMENT OF EMPLOYEE RIGHTS.

         Nothing contained in this Plan shall be deemed to give any Employee the
right to be retained in the employ of the Corporation or any Related Corporation
or to interfere with the right of the Corporation or Related Corporation to
discharge any Employee at any time.

         The Plan is entirely discretionary in nature, and any benefit derived
from it does not give rise to any contractual entitlement and shall not be
included for purposes of calculating severance, resignation, redundancy or
similar pay, if any.

19.      GOVERNING LAW.

         This Plan shall be governed by Pennsylvania law.

                                     -9-


<PAGE>

                                TABLE OF CONTENTS


<TABLE>
<S>                                                                           <C>
1.       PURPOSE...............................................................1

2.       DEFINITIONS...........................................................1

3.       ELIGIBILITY...........................................................3

4.       PARTICIPATION.........................................................3

5.       OFFERING..............................................................4

6.       PURCHASE OF STOCK.....................................................4

7.       PAYMENT AND DELIVERY..................................................5

8.       TERMINATION OF EMPLOYMENT.............................................5

9.       WITHHOLDING...........................................................6

10.      RECAPITALIZATION......................................................6

11.      MERGER, LIQUIDATION, OTHER CORPORATION TRANSACTIONS...................6

12.      TRANSFERABILITY.......................................................7

13.      AMENDMENT OR TERMINATION OF THE PLAN..................................7

14.      ADMINISTRATION........................................................7

15.      COMMITTEE RULES FOR FOREIGN JURISDICTIONS.............................8

16.      SECURITIES LAWS REQUIREMENTS..........................................8

17.      GOVERNMENTAL REGULATIONS..............................................8

18.      NO ENLARGEMENT OF EMPLOYEE RIGHTS.....................................9

19.      GOVERNING LAW.........................................................9
</TABLE>


                                     -i-


<PAGE>

                               UNISYS CORPORATION
                                  SAVINGS PLAN

                              Amended and Restated

                            Effective January 1, 2002


<PAGE>


                               UNISYS CORPORATION
                                  SAVINGS PLAN

                              Amended And Restated
                            Effective January 1, 2002

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                             PAGE
<S>                                                                                                             <C>
ARTICLE I             HISTORY AND SCOPE..........................................................................1

ARTICLE II            DEFINITIONS................................................................................2

ARTICLE III           ELIGIBILITY FOR PARTICIPATION.............................................................12

ARTICLE IV            CONTRIBUTIONS.............................................................................13

ARTICLE V             LIMITATIONS ON EMPLOYER CONTRIBUTIONS.....................................................18

ARTICLE VI            INVESTMENT AND VALUATION OF ACCOUNTS......................................................23

ARTICLE VII           VESTING...................................................................................26

ARTICLE VIII          AMOUNT OF BENEFITS........................................................................28

ARTICLE IX            PAYMENT AND FORM OF BENEFITS..............................................................28

ARTICLE X             WITHDRAWALS AND LOANS.....................................................................32

ARTICLE XI            SPECIAL PROVISIONS FOR TOP-HEAVY PLANS....................................................36

ARTICLE XII           PLAN ADMINISTRATION.......................................................................36

ARTICLE XIII          AMENDMENT AND TERMINATION.................................................................40

ARTICLE XIV           MISCELLANEOUS.............................................................................42
</TABLE>

                                      -i-


<PAGE>

                               UNISYS CORPORATION

                                  SAVINGS PLAN

                              Amended and Restated

                            Effective January 1, 2002

                                    ARTICLE I

                                HISTORY AND SCOPE

          1.01     HISTORY. Unisys Corporation (formerly, Burroughs
Corporation), adopted the Burroughs Plan, effective July 1, 1984. Unisys
Corporation is successor by merger to Sperry Corporation which, prior to such
merger, established and maintained the Sperry Plan. Effective April 1, 1988, the
Burroughs Plan and Sperry Plan were merged to form the Plan. The
 Plan is
maintained for the benefit of eligible employees of Unisys Corporation and the
eligible employees of its subsidiaries that adopt the Plan.

Effective October 1, 1990, the Company's CTIP was merged into the Plan.Effective
November 30, 1992, the RIPII was merged into the Plan. Effective March 31, 1996,
the RIP was merged into the Plan.

This Plan was amended and restated, effective January 1, 1998, to bring the Plan
into compliance with the Uniformed Services Employment and Reemployment Act of
1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of
1997, the IRS Restructuring and Reform Act of 1998, the Internal Revenue Service
Restructuring and Reform Act of 1998, the Community Renewal Tax Relief Act of
2000, and all other applicable law as in effect on the effective date of that
amendment and restatement of the Plan.

The Plan is hereby amended and restated herein, effective January 1, 2002, to
bring the Plan into compliance with he Economic Growth and Tax Relief
Reconciliation Act of 2001, the Job Creation and Worker Assistance Act of 2002,
and certain final regulations issued by the Department of Labor and the
Department of Treasury.

          1.02     EFFECTIVE DATES. The effective date of the Plan is April 1,
1988, the original effective date of the Plan. This amendment and restatement of
the Plan is effective January 1, 2002.

          1.03     RIGHTS AFFECTED. Unless provided to the contrary herein, the
provisions of the Plan shall apply to Employees who are credited with an Hour of
Service after December 31, 2001.

                                        1


<PAGE>

          1.04     QUALIFICATION UNDER THE INTERNAL REVENUE CODE. It is intended
that the Plan be a qualified plan within the meaning of section 401(a) of the
Code and that the Trust be exempt from federal income taxation under the
provisions of section 501(a) of the Code.

          1.05     DOCUMENTS. The Plan consists of the Plan document as set
forth herein and any subsequent amendments thereto.

                                   ARTICLE II

                                   DEFINITIONS

          The following words and phrases as used herein have the following
meanings unless a different meaning is plainly required by the context:

          2.01     "ACCOUNT" means a Participant's After-Tax Account, ESOP
Account, GPEP Account, Regular Account, Tax Deferred Account, Tax Deductible
Contribution Account, Qualified Nonelective ESOP Contribution Account, Qualified
Nonelective Non-ESOP Contribution Account, or Rollover Account.

          2.02     "ACTUAL CONTRIBUTION PERCENTAGE" means, with respect to a
Plan Year, the ratio (expressed as a percentage) of the sum of the amount of (a)
Matching Contributions, (b) After-Tax Contributions, (c) Qualified Nonelective
ESOP Contributions, and (d) Tax Deferred Contributions recharacterized as
After-Tax Contributions, made on behalf of the Participant for the Plan Year to
the Participant's Testing Compensation for the Plan Year.

          2.03     "ACTUAL DEFERRAL PERCENTAGE" means, with respect to a Plan
Year, the ratio (expressed as a percentage) of the amount of Tax Deferred
Contributions made pursuant to Section 4.01(a) and Qualified Nonelective
Non-ESOP Contributions made on behalf of the Participant for the Plan Year to
the Participant's Testing Compensation for the Plan Year.

          2.04     "ADMINISTRATIVE COMMITTEE" means the committee appointed in
accordance with Section 12.02 which is responsible for the day-to-day
administration of the Plan.

          2.05     "AFFILIATE" means any entity included with the Employer in
(a) a controlled group of employers or trades or businesses within the meaning
of section 414(b) or 414(c) of the Code; (b) an affiliated service group within
the meaning of section 414(m) of the Code; or (c) a group required to be
aggregated pursuant to the regulations under section 414(o) of the Code;
provided that any such employer shall be included within the term "Affiliate"
only while a member of a group including the Employer. For purposes of Section
5.05, whether a member of a controlled group is an Affiliate shall be determined
under section 1563(a) of the Code (as incorporated through application of
sections 414(b) and (c) of the Code) by substituting "50%" for "80%" everywhere
it appears in section 1563(a) of the Code.

                                        2


<PAGE>

          2.06     "AFTER-TAX ACCOUNT" means a Participant's account to which
are credited After-Tax Contributions, if any, and earnings and losses thereon.

          2.07     "AFTER-TAX CONTRIBUTION" means a contribution made by (a) an
Employee who is employed by an Employer domiciled in Puerto Rico in accordance
with a Participant's salary reduction agreement pursuant to Section 4.02(b), (b)
made by an Employee with respect to a Plan Year beginning before January 1,
1989.

          2.08     "AGGREGATION GROUP" means the group of qualified plans
sponsored by the Employer or by an Affiliate formed by including in such group
(a) all such plans in which a Key Employee participates in the Plan Year
containing the Determination Date, or any of the four preceding Plan Years,
including any frozen or terminated plan that was maintained within the five-year
period ending on the Determination Date, (b) all such plans which enable any
plan described in clause (a) to meet the requirements of either section
401(a)(4) of the Code or section 410 of the Code, and (c) such other qualified
plans sponsored by the Employer or an Affiliate as the Employer elects to
include in such group, as long as the group, including those plans electively
included, continues to meet the requirements of sections 401(a)(4) and 410 of
the Code.

          2.09     "ASSOCIATED COMPANY" means any entity that is not a member of
a controlled group of corporations within the meaning of section 1563(a) of the
Code (as incorporated through application of sections 414(b) and (c) of the
Code), of which the Company is the common parent, but which would be a member of
such controlled group of corporations if "50%" were substituted for "80%"
everywhere it appears in section 1563(a) of the Code.

          2.10     "BENEFICIARY" means (a) the Participant's Spouse, or (b) the
person, persons or trust designated by the Participant, with the consent of his
Spouse, if any, as direct or contingent beneficiary. In order to be valid, the
Spouse's consent to a Beneficiary other than or in addition to the Participant's
Spouse, must be in writing, must consent to the specific Beneficiary designated,
must acknowledge the effect of such consent, and must be witnessed by a Plan
representative or notary public. If the Participant has no Spouse and no
effective beneficiary designation, his Beneficiary shall be the first of the
following classes in which there is any person surviving the Participant: (a)
the Participant's children, (b) the Participant's parents, and (c) the
Participant's brothers and sisters. If none of the foregoing classes include a
person surviving the Participant, the Participant's Beneficiary shall be his
estate.

          2.11     "BENEFIT COMMENCEMENT DATE" means the first day on which all
events have occurred that entitle a Participant to the benefit.

          2.12     "BOARD" means the Board of Directors of the Company.

          2.13     "BURROUGHS PLAN" means the Burroughs Employees Savings Thrift
Plan, as in effect on March 30, 1988.

          2.14     "CODE" means the Internal Revenue Code of 1986, as amended.

                                        3


<PAGE>

          2.15     "COMPANY" means Unisys Corporation.

          2.16     "COMPENSATION" means a Participant's wages or salary paid by
an Employer to an Employee, including amounts deducted in accordance with
sections 125 or 401(k) of the Code, overtime pay, shift differentials, overseas
hardship and war risk premiums, temporary promotional supplements, payments for
accrued but unused vacation, commissions paid under the terms of a written
ongoing sales commission plan, and paid bonuses paid under the terms of a
written ongoing bonus plan approved as such by the Administrative Committee, but
excluding any amounts received by an Employee while he is not a Participant, and
any other deferred compensation. A Participant's Compensation shall not exceed
the dollar limitation in effect under section 401(a)(17) of the Code with
respect to any Plan Year. Effective January 1, 2001, "Compensation" shall
include amounts deducted from a Participant's wages or salary in accordance with
section 132(f)(4) of the Code. Notwithstanding the foregoing, any amounts
deducted on a pre-tax basis for group health coverage because the Participant is
unable to certify that he or she has other health coverage, so long as the
Employer does not otherwise request or collect information regarding the
Participant's other health coverage as part of the enrollment process for the
Employer's health plan, shall be included as Compensation.

          2.17     "COVERED EMPLOYEE" means any Employee other than:

          (a)      any Employee who is a member of a collective bargaining unit,
unless such collective bargaining agreement provides for the Employee's
participation in the Plan;

          (b)      any Employee who is a nonresident alien of the United States
(including the District of Columbia, Puerto Rico, or the Virgin Islands) and who
does not receive any United States (including the District of Columbia, Puerto
Rico or the Virgin Islands) source income from the Employer;

          (c)      an Employee who is (1) employed by an overseas subsidiary of
an Employer, (2) on temporary assignment to the Employer, and (3) not eligible
for participation in a defined benefit plan maintained by the Employer; and

          (d)      any Employee whose terms of employment with the Employer are
covered under the Contract Service Act, the Davis-Bacon Act, or a similar
government contracting statute, unless the terms of the statue or government
contract expressly provide for participation in this Plan.

          (e)      any individual who is not an employee of the Employer but who
provides services as described in section 414(n)(2) of the Code; and

          (f)      any individual who is classified as an independent contractor
by the Employer or any persons who are not treated by the Employer as employees
for purposes of withholding federal employment taxes, regardless of (1) how such
individual is classified by the Internal Revenue Service, other governmental
agency,

                                        4


<PAGE>

government or court, or (2) a contrary governmental or judicial determination
relating to such employment status or tax withholding.

          2.18     "CTIP" means the Convergent Tax Investment Plan, as in effect
on September 30, 1990.

          2.19     "DETERMINATION DATE" means the last day of the preceding Plan
Year.

          2.20     "DISTRIBUTEE" means a Participant, the surviving Spouse of a
deceased Participant, or a Participant's Spouse or former Spouse who is an
alternate payee under a Qualified Domestic Relations Order.

          2.21     "EMPLOYEE" means (a) an individual who is employed by the
Employer, (b) when required by context for purposes of crediting Hours of
Service under Section 2.29, a former Employee, and (c) a leased employee as
described under section 414(n)(2) of the Code.

          2.22     "EMPLOYER" means the Company and any Affiliate listed on
Appendix A.

          2.23     "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

          2.24     "ESOP ACCOUNT" means a Participant's account to which are
credited Matching Contributions made to the Plan after March 31, 1989, and
earnings and losses thereon.

          2.25     "ESOP PORTION OF THE PLAN" means the portion of the Plan that
is both a stock bonus plan and an employee stock ownership plan intended to
qualify under sections 401(a) and 4975(e)(7) of the Code, the assets of which
are held in the ESOP Account and Qualified Nonelective ESOP Accounts of
Participants and invested primarily in shares of Unisys Stock that meet the
requirements of section 404(l) of the Code.

          2.26     "FUND" means the assets and all earnings, appreciation and
additions thereto, less losses, depreciation and any proper payments made by the
Trustee, held under the Trust by the Trustee for the exclusive benefit of
Participants and their Beneficiaries.

          2.27     "GPEP ACCOUNT" means a Participant's account to which are
credited GPEP contributions made with respect to Plan Years beginning before
January 1, 1998, if any, and earnings and losses thereon.

          2.28     "HIGHLY COMPENSATED EMPLOYEE" means an Employee who either:

          (a)      was a 5% owner (as defined in section 416(i)(1) of the Code)
at any time during the Plan Year for which Highly Compensated Employees are
being identified or the preceding Plan Year; or

                                        5


<PAGE>

          (b)      with respect to the Plan Year preceding the calendar year for
which Highly Compensated Employees are being identified both (1) had Testing
Compensation in excess of the dollar amount under section 414(q)(1)(B)(i) of the
Code, as in effect for such Plan Year, and (2) was in the top 20% of all
Employees when ranked on the basis of Testing Compensation.

          2.29     "HOUR OF SERVICE" means each hour for which an Employee is
directly or indirectly paid or entitled to payment by the Company, an Affiliate,
or an Associated Company for the performance of Service.

          2.30     "INVESTMENT COMMITTEE" means the Pension Investment Review
Committee appointed pursuant to Section 12.02 which is responsible for the
control and management of the Investment Funds.

          2.31     "INVESTMENT FUND" means a fund selected by the Investment
Committee in which the Fund or any portion thereof may be invested.

          2.32     "INVESTMENT MANAGER" means the individual or entity, if any,
selected by the Trustee responsible for the investment of all or a portion of
the Fund.

          2.33     "KEY EMPLOYEE" means a person employed or formerly employed
by the Employer or an Affiliate who, during the Plan Year or during any of the
preceding four Plan Years, was any of the following:

          (a)      an officer of the Employer having annual Testing Compensation
of more than $130,000, or such other amount as may be in effect under section
415(1)(A)(i) of the Code;

          (b)      a 5% owner of the Employer.

          (c)      a person who is both an employee whose annual Testing
Compensation exceeds $150,000 and who is a 1% owner of the Employer.

The Beneficiary of any deceased Participant who was a Key Employee shall be
considered a Key Employee for the same period as the deceased Participant would
have been so considered.

          2.34     "KEY EMPLOYEE RATIO" means the ratio (expressed as a
percentage) for any Plan Year, calculated as of the Determination Date with
respect to such Plan Year, determined by dividing the amount described in
subsection (a) hereof by the amount described in subsection (b) hereof, after
deduction from both such amounts of the amount described in subsection (c)
hereof.

          (a)      The amount described in this subsection (a) is the sum of (1)
the aggregate of the present value of all accrued benefits of Key Employees
under all qualified defined benefit plans included in the Aggregation Group, (2)
the aggregate of the balances in all of the accounts standing to the credit of
Key Employees under all qualified defined contribution plans included in the
Aggregation Group, and (3) the

                                        6


<PAGE>

aggregate amount distributed from all plans in such Aggregation Group to or on
behalf of any Key Employee during the one-year period ending on the
Determination Date.

          (b)      The amount described in this subsection (b) is the sum of (1)
the aggregate of the present value of all accrued benefits of all Participants
under all qualified defined benefit plans included in the Aggregation Group, (2)
the aggregate of the balances in all of the accounts standing to the credit of
all Participants under all qualified defined contribution plans included in the
Aggregation Group, and (3) the aggregate amount distributed from all plans in
such Aggregation Group to or on behalf of any Participant during the one-year
period ending on the Determination Date.

          (c)      The amount described in this subsection (c) is the sum of (1)
all rollover contributions (or similar transfers) to plans included in the
Aggregation Group initiated by an Employee from a plan sponsored by an employer
which is not the Employer or an Affiliate, (2) any amount that would have been
included under subsection (a) or (b) hereof with respect to any person who has
not rendered service to any Employer at any time during the one-year period
ending on the Determination Date, and (3) any amount that is included in
subsection (b) hereof for, on behalf of, or on account of, a person who is a
Non-Key Employee as to the Plan Year of reference but who was a Key Employee as
to any earlier Plan Year.

The present value of accrued benefits under any defined benefit plan shall be
determined under the method used for accrual purposes for all plans maintained
by the Employer and all Affiliates if a single method is used by all such plans,
or otherwise, the slowest accrual method permitted under section 411(b)(1)(C) of
the Code.

          2.35     "MATCHING CONTRIBUTION" means a contribution made by an
Employer in accordance with Section 4.03.

          2.36     "NON-HIGHLY COMPENSATED EMPLOYEE" means an Employee other
than a Highly Compensated Employee.

          2.37     "NON-KEY EMPLOYEE" means any Employee or former Employee who
is not a Key Employee as to that Plan Year, or a Beneficiary of a deceased
Participant who was a Non-Key Employee.

          2.38     "NORMAL RETIREMENT AGE" means age 65.

          2.39     "NOTICE PERIOD" means the period beginning 90 days before and
ending 30 days before the Benefit Commencement Date. The 30-day minimum may be
waived by a Distributee; provided, however, that with respect to a Participant
scheduled to receive his benefit in the form of a Qualified Joint and Survivor
Annuity, the minimum Notice Period may not be less than seven days before the
date distribution is made.

          2.40     "PARTICIPANT" means a Covered Employee who has met the
eligibility requirements of Section 3.01. An individual who is a Participant but
who ceases to be a Covered Employee shall nonetheless remain a Participant for
purposes of benefit payments only, until all amounts due him under the Plan have
been paid.

                                        7


<PAGE>

          2.41     "PERIOD OF SEVERANCE" means a period beginning on the date of
an Employee's Severance from Service and ending on the date on which the
Employee again performs an Hour of Service.

Notwithstanding the foregoing, solely for the purpose of determining whether a
Period of Severance has occurred, in the case of an absence from employment by
reason of the pregnancy of the Employee, the birth of a child of the Employee,
the placement of a child with the Employee in connection with the adoption of
the child by the Employee or the caring for the child for a period beginning
immediately following that birth or placement, the period between the first and
second anniversary of the first day of such absence from employment shall
neither be construed as a Period of Severance nor a period of Service. In order
for an absence to be considered to be for the reasons described in the foregoing
sentence, an Employee shall provide the Administrative Committee or its designee
with information regarding the reasons for the absence and the length of the
absence. Nothing in this Section 2.41 shall be construed as expanding or
amending any maternity or paternity leave policy of an Employer or Affiliate.

          2.42     "PLAN" means the profit sharing plan, known as the "Unisys
Savings Plan" set forth in this document, which includes a stock bonus plan and
employee stock ownership plan intended to qualify under sections 401(a) and
4975(e)(7) of the Code, and the related trust agreement pursuant to which the
Trust is maintained.

          2.43     "PLAN YEAR" means the calendar year.

          2.44     "PRIOR PLAN" means the Burroughs Plan, Sperry Plan, CTIP, RIP
or RIPII.

          2.45     "QUALIFIED DOMESTIC RELATIONS ORDER" means a judgment, decree
or order that relates to a Participant's benefit under the Plan and meets the
requirements of section 414(p) of the Code.

          2.46     "QUALIFIED JOINT AND SURVIVOR ANNUITY" means an annuity for
the life of the Participant with a survivor annuity for the life of the
Participant's Spouse equal to 50% of the monthly amount payable for the
Participant's life.

          2.47     "QUALIFIED NONELECTIVE ESOP ACCOUNT" means a Participant's
account to which are credited Qualified Nonelective ESOP Contributions, if any,
and earnings and losses thereon.

          2.48     "QUALIFIED NONELECTIVE ESOP CONTRIBUTION" means a
contribution made by the Employer pursuant to Section 4.05 for purposes of
satisfying the requirements of Section 5.03.

          2.49     "QUALIFIED NONELECTIVE NON-ESOP ACCOUNT" means a
Participant's Account to which are credited Qualified Nonelective Non-ESOP
Contributions, if any, and earnings and losses thereon.

                                        8


<PAGE>

          2.50     "QUALIFIED NONELECTIVE NON-ESOP CONTRIBUTION" means a
contribution made by the Employer pursuant to Section 4.05 for purposes of
satisfying the requirements of Section 5.02.

          2.51     "REGULAR ACCOUNT" means a Participant's Account to which are
credited (a) Matching Contributions made before April 1, 1989, (b) matching
contributions made to a Prior Plan (other than CTIP) before April 1, 1989, (c)
matching contributions made to the CTIP before October 1, 1990, (d) employee
contributions made to the Sperry Plan, and (e) earnings and losses.

          2.52     "RIP" means the Unisys Retirement Investment Plan, as in
effect on March 31, 1996.

          2.53     "RIPII" means the Retirement Investment Plan II, as in effect
on November 30, 1996.

          2.54     "ROLLOVER ACCOUNT" means a Participant's account to which are
credited the (a) Participant's Rollover Contributions, if any, (b) amounts, if
any, transferred to a Participant's Account from a Prior Plan which were derived
from such Participant's rollover contributions to such Prior Plan, and (c)
earnings and losses thereon.

          2.55     "ROLLOVER CONTRIBUTION" means a contribution made by a
Participant pursuant to Section 4.06.

          2.56     "SERVICE" means the periods determined in accordance with the
following provisions of this Section 2.55. An Employee's total period of Service
shall be determined from the first date the Employee performs an Hour of Service
until the date of his Separation from Service.

          (a)      Service shall include:

                   (1)     periods of active employment with the Employer, an
Affiliate, or an Associated Company and with any entity that is a predecessor to
the Employer;

                   (2)     periods during which no active duties are performed
by the Employee for the Company, an Affiliate, an Associated Company, or any
entity that is a predecessor to the Employer because the Employee is:

                           (A)     absent from work because of occupational
injury or disease incurred in the course of employment with the Company, an
Affiliate, or an Associated Company and on account of such absence receives
workers' compensation;

                           (B)     in the service of the Armed Forces of the
United States during a period with respect to which an Employer, Affiliate, or
an Associated Company is required to give reemployment rights by law, provided
the Employee returns to work with the Company, Affiliate, or an Associated
Company immediately after the termination of such military service;

                                        9


<PAGE>

                           (C)     absent from work and receives short-term
disability benefits under an Employer's short-term disability plan or other plan
of the Company, an Affiliate, or an Associated Company providing similar
benefits;

                           (D)     for vesting purposes under the Plan, service
performed for the Company, an Affiliate, or an Associated Company in a capacity
described under subsection (a), (b), (c), (d), or (e) of Section 2.17, prior to
the Employee becoming a Covered Employee;

          (b)      Service shall exclude service prior to the date on which a
business is acquired, merged, consolidated, or otherwise absorbed by the
Company, an Affiliate, or an Associated Company, or prior to the date the assets
of a business are acquired by the Company, an Affiliate, or an Associated
Company, unless otherwise provided herein or authorized by the Company.

          (c)      Notwithstanding any provision of the Plan to the contrary, if
a Participant was a participant in a Prior Plan as of the date of the Prior
Plan's merger with and into the Plan, such Participant's Service immediately
after such merger shall be the greater of:

                   (1)     the Participant's service under the terms of the
Prior Plan immediately prior to the date of such Prior Plan's merger with and
into the Plan; or

                   (2)     the Participant's Service determined under the Plan
without regard to this subsection (c).

          (d)      To the extent that a prior period of employment with
Burroughs Corporation, Memorex Corporation, System Development Corporation,
Sperry Corporation, or any Affiliate of the foregoing corporations was not
credited under the terms of a Prior Plan, such period shall be counted as
Service under the Plan; provided that the Plan has, or is furnished with,
evidence of such prior period of employment.

          (e)      If an Employee separates from Service but returns to
employment with the Employer before incurring a one-year Period of Severance,
the period between the date he separated from Service and his date of
reemployment by the Company, an Affiliate, or an Associated Company.

          2.57     "SEVERANCE FROM SERVICE" means the earliest of (a) the date a
person quits, retires or is discharged from Service with the Company and all
Affiliates and Associated Companies, (b) the date a person dies, or (c) the date
following a one-year period during which a person is absent from Service for any
other reason. Notwithstanding the foregoing, however, the Severance from Service
of a Participant who incurs a Total Disability shall be the earlier of (a) the
date the Participant quits, retires, is discharged or dies, or (b) the date his
Total Disability ends, provided he does not return to active Service as of such
date.

          2.58     "SPERRY PLAN" means the Sperry Retirement Program - Part B,
as in effect on March 30, 1988.

                                       10


<PAGE>

          2.59     "SPOUSE" means the person to whom a Participant is married;
provided, however, that a former spouse shall be treated as the Spouse or
surviving Spouse to the extent provided under a Qualified Domestic Relations
Order.

          2.60     "TAX DEDUCTIBLE CONTRIBUTION ACCOUNT" means a Participant's
account to which are credited tax deductible contributions, if any, made to the
Plan before April 1, 1989, and earnings and losses thereon.

          2.61     "TAX DEFERRED ACCOUNT" means a Participant's account to which
are credited (a) Tax-Deferred Contributions, if any, (b) tax deferred
contributions made under a Prior Plan and transferred to the Plan, (c) basic
member contributions, if any, made under the Sperry Plan and transferred to the
Plan, and (d) earnings and losses thereon.

          2.62     "TAX DEFERRED CONTRIBUTION" means a contribution made by an
Employer in accordance with a Participant's salary reduction agreement pursuant
to Section 4.01(a).

          2.63     "TERMINATION OF EMPLOYMENT" means an Employee's cessation of
employment with the Company and all Affiliates and Associated Companies as a
result of quitting, retirement, discharge, release or placement on extended
lay-off with no expectation of recall, or failure to return to active employment
upon expiration of an approved leave of absence.

          2.64     "TESTING COMPENSATION" means the total of a Participant's
wages, salary and other amounts paid by an Employer and reported in IRS Form
W-2, and any amounts deferred under section 402(g)(3) or 125 of the Code and,
effective January 1, 2001, section 132(f)(4) of the Code; provided, however, for
purposes of Sections 5.02, 5.03 and 5.04, the Administrative Committee may elect
to exclude amounts deducted in accordance with sections 125, 132(f)(4), and
402(e)(3) of the Code as Testing Compensation. Notwithstanding the foregoing,
any amounts deducted on a pre-tax basis for group health coverage because the
Participant is unable to certify that he or she has other health coverage, so
long as the Employer does not otherwise request or collect information regarding
the Participant's other health coverage as part of the enrollment process for
the Employer's health plan, shall be included as Testing Compensation.

          2.65     "TOTAL DISABILITY" means a condition resulting from injury or
sickness that, in the judgement of the Administrative Committee or its designee:

          (a)      with regard to the first 24-months of an absence from Service
due to a condition resulting from the injury or sickness, constitutes a
condition likely to render the Participant unable to perform each of the
material duties of his regular occupation; and

          (b)      with regard to the period of an absence from Service due to a
condition resulting from the injury or sickness after the initial 24-months of
such absence, constitutes a condition which renders the Participant unable to
perform the material duties of any occupation for which he is reasonably fitted
by training, education or experience.

                                       11


<PAGE>

Notwithstanding the foregoing, however, in no event shall a Participant be
deemed to have incurred a Total Disability until he has exhausted all benefits
available under his Employer's short-term disability plan or other plan
providing short term disability benefits. For purposes of this Section 2.64, a
determination of a Participant's disabled status under the Unisys Long-Term
Disability Plan or similar long-term disability plan sponsored by an Employer
shall be deemed a conclusive and binding determination of the Participant's
Total Disability status under the Plan.

          2.66     "TRUST" means the legal entity created by the trust agreement
between the Employer and the Trustee, fixing the rights and liabilities with
respect to controlling and managing the Fund for the purposes of the Plan.

          2.67     "TRUSTEE" means the party or parties appointed by the Board
of Directors as trustee of the Trust and named as trustee pursuant to the Trust
Agreement or any successors thereto.

          2.68     "UNISYS STOCK" means Unisys Corporation common stock, par
value $0.01 per share.

          2.69     "VALUATION DATE" means each day of each calendar year.

                                   ARTICLE III

                          ELIGIBILITY FOR PARTICIPATION

          3.01     ELIGIBILITY REQUIREMENT. An Employee shall be eligible to
become a Participant if he is a Covered Employee.

          3.02     PARTICIPATION COMMENCEMENT DATE. Each Covered Employee who
was a Participant as of December 31, 2001, shall continue to be a Participant on
January 1, 2002, if he is then a Covered Employee. Each other Covered Employee
shall be a Participant on his first day of employment as a Covered Employee.

          3.03     TIME OF PARTICIPATION-EXCLUDED EMPLOYEES. An Employee who is
ineligible to be a Participant because he is not a Covered Employee, shall
become a Participant as of the first day on which he becomes a Covered Employee.
A Participant shall cease to be an active Participant on any date on which he
ceases to be a Covered Employee; however, a Participant who ceases to be a
Covered Employee will remain a Participant for distribution purposes under the
Plan until such time as he no longer has a vested interest under the Plan.

                                       12


<PAGE>

                                   ARTICLE IV

                                  CONTRIBUTIONS

          4.01     TAX DEFERRED CONTRIBUTIONS.

          (a)      (1)     Subject to the limitations contained in Article V,
each Employer, other than an Employer domiciled in Puerto Rico, shall make a Tax
Deferred Contribution for the Plan Year to the Tax Deferred Account of each of
its Covered Employees who, with respect to such Plan Year is a Participant and
has filed a salary reduction notice with the Employer that provides for a
reduction in Compensation otherwise payable to the Participant by a designated
whole percentage that does not exceed the limit described in paragraph (2), and
a contribution of that amount by the Employer to the Participant's Tax Deferred
Account.

                   (2)     The amount of the Tax Deferred Contribution made for
a Participant with respect to any Plan Year pursuant to this subsection (a)
shall be the amount specified in the salary reduction notice. The percentage
specified shall be a whole percentage of the Participant's Compensation not to
exceed (A) 20% with respect to a Non-Highly Compensated Employee, or (B) 18%
with respect to a Highly Compensated Employee. The Administrative Committee may,
in its discretion, increase or decrease the maximum permissible amount of Tax
Deferred Contributions at any time and from time to time as it deems
appropriate. Any salary reduction notice shall relate only to Compensation as
yet unearned when the notice is filed and may not be amended during the period
to which it pertains, except that it may be terminated as to amounts unearned at
the date of a Participant's Termination of Employment.

          (b)      Each Employer, other than an Employer domiciled in Puerto
Rico, shall make an additional Salary Deferral Contribution for the Plan Year to
the Tax Deferred Account of each of its Covered Employees who, with respect to
such Plan Year is a Participant, is age 50 or older as of the last day of the
Plan Year, and has elected, in accordance with procedures established by the
Administrative Committee and subject to any limitations imposed by the
Administrative Committee, to make an additional Salary Deferral Contribution in
an amount not to exceed $1,000 for the Plan Year (or such other amount as may be
applicable under section 414(v) of the Code), reduced by, to the extent required
by the Code and applicable Treasury regulations, any other elective deferrals
contributed on the Participant's behalf pursuant to section 414(v) of the Code
for the Plan Year; provided, however, that elective deferrals shall be treated
for all Plan purposes as contributed under subsection (a) above in lieu of this
subsection, unless the Participant is unable to make additional Salary Deferral
Contributions under subsection (a) above for the Plan Year due to limitations
imposed by the Plan or applicable federal law.

          (c)      Salary reduction notices pursuant to this Section 4.01 must
be made within the time prescribed by the Administrative Committee and shall
become effective in accordance with the rules and procedures established by the
Administrative Committee.

                                       13


<PAGE>

          (d)      Subject to, and in accordance with, the rules and procedures
established by the Administrative Committee, a Participant may elect to change,
discontinue, or resume the percentage of Compensation under his salary reduction
notice. All such elections shall become effective in accordance with the rules
and procedures established by the Administrative Committee.

          4.02     AFTER-TAX CONTRIBUTIONS.

          (a)      A Participant may make After-Tax Contributions to the Plan by
filing a salary reduction notice authorizing the Employer to reduce the
after-tax Compensation otherwise payable to the Participant by a designated
whole percentage (up to the limit specified in subsection (b)), and deposit such
amounts into the Participant's After-Tax Contribution Account.

          (b)      The amount of the After-Tax Contribution made by a
Participant with respect to any Plan Year shall be the amount specified in the
salary reduction notice. The percentage specified shall be a whole percentage of
the Participant's Compensation not to exceed the following:

                   (1)     with respect to any Participant who is not employed
by an Employer domiciled in Puerto Rico, 5%; and

                   (2)     with respect to any Participant who is employed by an
Employer domiciled in Puerto Rico, (A) 20% with respect to a Non-Highly
Compensated Employee, or (B) 18% with respect to a Highly Compensated Employee.

Any salary reduction notice shall relate only to Compensation as yet unearned
when the notice is filed and may not be amended during the period to which it
pertains, except that it may be terminated as to amounts unearned at the date of
a Participant's Termination of Employment.

          (c)      Salary reduction notices pursuant to this Section 4.05 must
be made within the time prescribed by the Administrative Committee and shall
become effective in accordance with the rules and procedures established by the
Administrative Committee.

          (d)      Subject to, and in accordance with, the rules and procedures
established by the Administrative Committee, a Participant may elect to change,
discontinue, or resume the percentage of Compensation under his salary reduction
notice. All such elections shall become effective in accordance with the ruled
and procedures established by the Administrative Committee.

          4.03     MATCHING CONTRIBUTIONS. Subject to the limitations in
Article V, each Employer shall make a Matching Contribution for each Plan Year
to the ESOP Account of each of its Covered Employees who, with respect to such
Plan Year, is a Participant and has filed a salary reduction notice in
accordance with Section 4.01. In addition, subject to the limitations in Article
V, each Employer domiciled in Puerto Rico shall make a Matching Contribution for
each Plan Year to the ESOP Account of each of its

                                       14


<PAGE>

Covered Employees who made After-Tax Contributions with respect to such Plan
Year. The amount of Matching Contributions for pay periods beginning on or after
July 1, 1998 shall be the amount determined in accordance with subsections (a)
and (b) below.

          (a)      Subject to the minimum set forth in subsection (b), the
amount of the Matching Contribution made in accordance with this Section 4.03
with respect to each pay period in the Plan Year shall be an amount equal to 50%
of the first 4% of Compensation deferred Contributed as a Tax Deferred
Contribution made pursuant to Section 4.01(a), (or, with respect to Participants
employed by an Employer domiciled in Puerto Rico, as an After-Tax Contribution);
provided, that the maximum Matching Contribution payable to a Participant shall
not equal more than 2% of such Participant's Compensation for the period.

          (b)      Notwithstanding anything in subsection (a) to the contrary:

                   (1) each Participant who was employed by an Employer at any
time during the period beginning July 1, 1998 and ending December 31, 1998 who
had Tax Deferred Contributions made on his behalf for the Plan Year ending
December 31, 1998 shall receive a minimum Matching Contribution for such Plan
Year in an amount equal to the lesser of:

                           (A)     1% of the Participant's Compensation not in
excess of $80,000 for the period July 1, 1998 through December 31, 1998; or

                           (B)     25% of the total of the Tax Deferred
Contributions made on behalf of the Participant for the Plan Year (regardless of
when the Tax Deferred Contributions were made during such Plan Year).

                   (2)     each Participant who was employed by an Employer on
December 31 of a Plan Year beginning on or after January 1, 1999 and who had Tax
Deferred Contributions made on his behalf shall receive a minimum Matching
Contribution, in accordance with procedures adopted by the Administrative
Committee, in an amount, when added to the Matching Contributions made on behalf
of such Participant (before application of this paragraph), equal to the lesser
of:

                           (A)     2% of the Participant's Compensation not in
excess of the limit described in section 401(a)(17) of the Code as in effect
with respect to such Plan Year; or

                           (B)     50% of the total of the Tax Deferred
Contributions made on behalf of the Participant for the Plan Year.

          4.04     GPEP CONTRIBUTIONS. No contributions may be made to an
individual's GPEP Account with respect to any Plan Year beginning on or after
January 1, 1998. Amounts, if any, allocated to a Participant's GPEP Account
prior to January 1, 1998 shall continue to be held in the GPEP Account until
distributed in accordance with the terms of the Plan.

                                       15


<PAGE>

          4.05     QUALIFIED NONELECTIVE CONTRIBUTIONS. Subject to the
limitations described in Article V, each Employer shall make a Qualified
Nonelective Non-ESOP Contribution, a Qualified Nonelective ESOP Contribution, or
both in such amount, if any, as the Board shall determine. Qualified Nonelective
Non-ESOP Contributions made by an Employer shall be allocated to the Qualified
Nonelective Non-ESOP Account of its employees who are both Participants and
Non-Highly Compensated Employees. Qualified Nonelective ESOP Contributions made
by an Employer shall be allocated to the Qualified Nonelective ESOP Account of
its employees who are both Participants and Non-Highly Compensated Employees.

          4.06     ROLLOVER CONTRIBUTIONS. With the approval of the
Administrative Committee, a Participant may contribute to a Rollover Account all
or a portion of the amount payable to the Participant as an eligible rollover
distribution from an eligible retirement plan (as defined under section
401(a)(31) of the Code). Any payment to the Plan pursuant to this Section 4.06
shall be made as a direct rollover that satisfies section 401(a)(31) of the Code
or shall be made to the Plan within 60 days after the Participant's receipt of
the distribution from the plan or individual retirement account in such manner
as may be approved by the Administrative Committee.

          4.07     CONTRIBUTION ATTRIBUTABLE TO MILITARY SERVICE. If a
Participant returns to employment with the Employer following a period of
service in the Armed Forces of the United States for which an Employer is
required to give reemployment rights by law, the Employer contributions to the
Plan with respect to such period shall be as follows:

          (a)      During the period that begins on the date of the
Participant's return to employment and lasts for the lesser of (1) the product
of 3 multiplied by the applicable period of military service; or (2) five years,
the Participant may elect a Compensation reduction in return for the
corresponding Tax Deferred Contributions on his behalf, or After-Tax
Contributions, as applicable, that could have been made if the Participant had
continued to be employed and received Compensation during the applicable period
of military service.

          (b)      The Employer shall contribute to the Plan, on behalf of each
Participant who has been credited under subsection (a) with Tax Deferred
Contributions or After-Tax Contributions, Matching Contributions equal to the
amount of Matching Contribution that would have been required under Section 4.02
had such Tax Deferred or After-Tax Contributions, as applicable, been made
during the applicable period of military service.

A Participant who is entitled to a contribution pursuant to this Section 4.07
shall not be entitled to receive corresponding retroactive earnings attributable
to such contribution nor shall he be entitled to participate in the allocation
of any forfeiture that occurred during his period of military service. For
purposes of this Section 4.07, an Employee's Compensation for the applicable
period of military service shall be deemed to equal the amount of Compensation
the Employee would have received from the Employer during such period, based on
the rate of pay the Employee would have received from the Employer but for the
absence due to military service, or, if such rate of pay is not reasonably
certain, the Employee's average Compensation during the 12-month period

                                       16


<PAGE>

immediately before the qualified military service or, if shorter, the period of
employment immediately before the qualified military service. The limitations
under Sections 5.01 and 5.04 are applicable to contributions made pursuant to
this Section 4.07 for the Plan Year to which the contributions relate. The
limitations under Sections 5.02 and 5.03 shall not apply to contributions made
pursuant to subsections (a) or (b) of this Section 4.07.

          4.08     ALLOCATION OF PAYMENTS RELATING TO EXECUTIVE LIFE INSURANCE
COMPANY INSOLVENCY. To the extent the Plan is paid any amount from a state
guaranty association with regard to the insolvency of Executive Life Insurance
Company in 1991, such amount shall be allocated on a pro rata basis, in
accordance with procedures adopted by the Administrative Committee, to the
Accounts of any Participant who (a) resided in such state on the applicable
trigger date for coverage under the state's guaranty association statute, and
(b) had any portion of his Accounts invested, as of April 11, 1991, in a fund
that held an Executive Life Insurance Company guaranteed investment contract.
The specific Accounts to which a Participant's allocation shall be credited
shall be the Accounts which was invested in the guaranteed investment contract.

          4.09     FORM AND TIMING OF CONTRIBUTIONS. Contributions shall be made
to the Fund as soon as administratively practicable after the close of the
payroll period to which they relate. In no event, however, shall Tax Deferred
and After-Tax Contributions be made to the Fund later than the date prescribed
under applicable regulations. In no event shall Matching Contributions be made
to the Fund later than the last date on which amounts so paid may be deducted
for federal income tax purposes by the contributing Employer for the taxable
year in which the Plan Year ends. Generally, contributions shall be made in
cash; provided, however, that Matching Contributions shall be made in the form
of Unisys Stock. The value of the Unisys Stock contributed as Matching
Contributions shall be equal to the fair market value of such stock at the time
of the market closing on the date such Matching Contributions is actually made
to the Fund.

          4.10     RECOVERY OF EMPLOYER CONTRIBUTIONS. The Employer may recover
its contributions under the Plan as follows:

          (a)      if a contribution is made by an Employer under a mistake of
fact, the excess of the amount contributed over the amount that would have been
contributed had there not occurred a mistake of fact may be recovered by the
Employer within one year after payment of the contribution; or

          (b)      if the contribution is conditioned upon its deductibility
under section 404 of the Code, the contribution may be recovered, to the extent
a deduction is disallowed, within one year after the disallowance.

Earnings attributable to an excess contribution may not be recovered by the
Employer. Any losses attributable to the excess contribution shall reduce the
amount the Employer may recover.

                                       17


<PAGE>

                                   ARTICLE V

                      LIMITATIONS ON EMPLOYER CONTRIBUTIONS

          5.01     DOLLAR LIMITATION ON TAX DEFERRED CONTRIBUTIONS.

          (a)      The Tax Deferred Contribution made on behalf of a Participant
pursuant to Section 4.01(a) for a calendar year shall not exceed the dollar
limit specified under section 402(g) of the Code. This dollar limit shall be
reduced by the amount, if any, contributed on behalf of the Participant under
any other qualified cash or deferred arrangement, simplified employee pension or
annuity established under section 403(b) of the Code for the calendar year,
other than elective deferral contributions made pursuant to section 414(v) of
the Code.

          (b)      In the event the dollar limit described in subsection (a) is
exceeded for a Participant, the Administrative Committee shall direct the
Trustee to distribute the excess to the Employee by the April 15 following the
end of the calendar year with respect to which the excess occurred. The excess
returned to an Employee in accordance with this subsection (b), shall be
adjusted for any income or loss thereon up to the date of the distribution of
the excess, using the Plan's method for allocating income and loss.

          5.02     LIMITATION ON TAX DEFERRED CONTRIBUTIONS FOR HIGHLY
COMPENSATED EMPLOYEES.

          (a)      For each Plan Year the average of the Actual Deferral
Percentages for Participants who are Highly Compensated Employees shall be
compared to the average of the Actual Deferral Percentages for the other
Participants for the preceding Plan Year; the average of the Actual Deferral
Percentages for Participants who are Highly Compensated Employees shall not
exceed the greater of:

                   (1)     the average of the Actual Deferral Percentages for
Participants who are Non-Highly Compensated Employees for the preceding Plan
Year, multiplied by 1.25; or

                   (2)     the lesser of:

                           (A)     the average of the Actual Deferral
Percentages for Participants who are Non-Highly Compensated Employees for the
preceding Plan Year multiplied by two, or

                           (B)     the average of the Actual Deferral
Percentages for Participants who are Non-Highly Compensated Employees for the
preceding Plan Year plus two.

In the event that the Plan satisfies the requirements of Code section 401(a)(4),
401(k) or 410(b) only if aggregated with one or more other qualified retirement
plans, or if one or more other qualified retirement plans satisfy the
requirements of these sections only if

                                       18


<PAGE>

aggregated with the Plan, then this subsection (a) shall be applied as if all
such plans were a single plan.

          (b)      If in the Plan Year, the average of the Actual Deferral
Percentages for Participants who are Highly Compensated Employees exceeds the
limit in subsection (a) for a Plan Year, the Administrative Committee shall:

                   (1)     determine the amount by which the Actual Deferral
Percentage for Highly Compensated Employee or Employees with the highest Actual
Deferral Percentage or Percentages for the Plan Year would need to be reduced to
comply with the limit in subsection (a);

                   (2)     convert the excess percentage amount determined under
clause (1) into a dollar amount; and

                   (3)     reduce the Tax Deferred Contributions of the Highly
Compensated Employee with the greatest dollar amount of Tax Deferred
Contributions made on their behalf with respect to the Plan Year pursuant to
Section 4.01(a) by the lesser of (A) the amount by which the dollar amount of
the affected Highly Compensated Employee's Tax Deferred Contributions made
pursuant to Section 4.01(a) exceeds the dollar amount of the Highly Compensated
Employee with the next highest dollar amount of Tax Deferred Contributions made
pursuant to Section 4.01(a), or (B) the amount of the excess dollar amount
determined under clause (2); and

                   (4)     either:

                           (A)     direct the Trustee to return the excess Tax
Deferred Contributions, as adjusted in accordance with subsection (d), to the
individuals from whose Accounts the excess Tax Deferred Contributions were
obtained within two and one-half months following the close of the Plan Year, if
administratively practicable, but in no event later than the close of the
following Plan Year;

                           (B)     recharacterize the Tax Deferred Contribution
as an After-Tax Contribution, to the extent permitted by the applicable Treasury
regulations, no later than two and one-half months following the close of the
Plan Year; or

                           (C)     make Qualified Nonelective Non-ESOP
Contributions, as described under Section 4.04, to the extent necessary to
satisfy subsection (a).

          (c)      To the extent that a Matching Contribution relates to excess
Tax Deferred Contributions returned or recharacterized pursuant to subsection
(b)(4), such Matching Contributions, as adjusted in accordance with subsection
(d), shall be forfeited immediately. Amounts forfeited during the Plan Year
shall be used to reduce future Matching Contributions made by the Employer.

          (d)      The excess Tax Deferred Contributions returned or
recharacterized pursuant to subsection (b), and any Matching Contributions
forfeited pursuant to subsection (c) shall be adjusted for any income or loss
thereon up to the date of

                                       19


<PAGE>

distribution or forfeiture, as applicable, using the Plan's method for
allocating income and loss.

          (e)      The amount of the excess Tax Deferred Contributions to be
returned pursuant to subsection (b) for a Plan Year shall be reduced by the
amount of excess Tax Deferred Contributions previously distributed to the Highly
Compensated Employee pursuant to Section 5.01(b) for such Employee's taxable
year ending on or within the Plan Year for which the excess Tax Deferred
Contributions are returned pursuant to subsection (b).

          5.03     LIMITATION ON AFTER-TAX CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS FOR HIGHLY COMPENSATED EMPLOYEES.

          (a)      For each Plan Year the average of the Actual Contribution
Percentages for Participants who are Highly Compensated Employees shall be
compared to the average of the Actual Contribution Percentages for the other
Participants; the average of the Actual Contribution Percentages for
Participants who are Highly Compensated Employees shall not exceed the greater
of:

                   (1)     the average of the Actual Contribution Percentages
for Participants who are Non-Highly Compensated Employees for the preceding Plan
Year multiplied by 1.25; or

                   (2)     the lesser of:

                           (A)     the average of the Actual Contribution
Percentages for Participants who are Non-Highly Compensated Employees for the
preceding Plan Year multiplied by two, or

                           (B)     the average of the Actual Contribution
Percentages for Participants who are Non-Highly Compensated Employees for the
preceding Plan Year plus two.

In the event that the Plan satisfies the requirements of Code section 401(a)(4),
401(m) or 410(b) only if aggregated with one or more other qualified retirement
plans, or if one or more other qualified retirement plans satisfy the
requirements of these sections only if aggregated with the Plan, then this
subsection (a) shall be applied as if all such plans were a single plan.

          (b)      If in any Plan Year the average of the Actual Contribution
Percentages for Participants who are Highly Compensated Employees exceeds the
limit in subsection (a) for a Plan Year, the Administrative Committee shall:

                   (1) determine the amount by which the Actual Contribution
Percentage for Highly Compensated Employee or Employees with the highest Actual
Contribution Percentage or Percentages for the Plan Year would need to be
reduced to comply with the limit in subsection (a);

                                       20


<PAGE>

                   (2)     convert the excess percentage amount determined under
clause (1) into a dollar amount; and

                   (3) reduce the After-Tax Contributions (including any Tax
Deferred Contributions recharacterized as After-Tax Contributions pursuant to
Section 5.02(b)(4)(B)) and then, to the extent necessary, the Matching
Contributions of the Highly Compensated Employee with the greatest dollar amount
of aggregate After-Tax and Matching Contributions made on their behalf with
respect to the Plan Year by the lesser of (A) the amount by which the dollar
amount of the affected Highly Compensated Employee's aggregate After-Tax and
Matching Contributions exceeds the dollar amount of the Highly Compensated
Employee with the next highest dollar amount of After-Tax and Matching
Contributions, or (B) the amount equal to the excess dollar amount determined
under clause (2); and

                   (4)     either:

                           (A)     direct the Trustee to return the excess
After-Tax Contributions and vested Matching Contributions, as adjusted in
accordance with subsection (c), to the individuals from whose Accounts the
excess Matching Contributions were obtained within two and one-half months
following the close of the Plan Year, if administratively practicable, but in no
event later than the close of the following Plan Year; or

                           (B)     make Qualified Nonelective Non-ESOP
Contributions, as described under Section 4.04, to the extent necessary to
satisfy the limit under subsection (a); and

                   (5)     direct the Trustee to forfeit the excess unvested
Matching Contributions, as adjusted in accordance with subsection (c), to the
individuals from whose Accounts the excess Matching Contributions were obtained.
Amounts forfeited during the Plan Year shall be used to reduce future Matching
Contributions made by the Employer.

          (c)      To the extent that a Matching Contribution relates to excess
After-Tax Contributions returned pursuant to subsection (b)(4), such Matching
Contributions, as adjusted in accordance with subsection (d), shall be forfeited
immediately. Amounts forfeited during the Plan Year shall be used to reduce
future Matching Contributions made by the Employer.

          (d)      The excess After-Tax and Matching Contributions returned or
recharacterized pursuant to subsection (b) shall be adjusted for any income or
loss thereon up to the date of the distribution or forfeiture, as applicable,
using the Plan's method for allocating income and loss.

          (e)      Notwithstanding anything in this Section 5.03 to contrary,
the provisions of this Section 5.03 shall be applied separately to the After-Tax
Contributions of Employees in Puerto Rico by taking into account only such
After-Tax Contributions and, to the extent permitted by applicable Treasury
regulations, any Tax-Deferred

                                       21


<PAGE>

Contributions or Qualified Nonelective Non-ESOP Contributions or under any other
plan maintained by an Employer or an Affiliate that is or could be aggregated
with the non-ESOP Portion of the Plan for purposes of section 410(b) of the
Code. For purposes of this subsection (e), only Employees in Puerto Rico shall
be treated as Employees. In the event that such After-Tax Contributions fail to
satisfy the limit under subsection (a) for any Plan Year, the Administrative
Committee shall correct such failure in a manner comparable to one or more of
the correction methods described in paragraph (4) of subsection (b).

          5.04     LIMITATIONS ON ALLOCATIONS.

          (a)      The maximum allowable addition to any Participant's Accounts
for any Plan Year shall be the lesser of:

                   (1)     $40,000 (as adjusted under section 415(d) of the
Code); or

                   (2)     100% of the Participant's Testing Compensation for
the Plan Year.

For purposes of this Section 5.04, an addition shall not include Tax Deferred
Contributions made pursuant to Section 4.01(b) and Rollover Contributions but
shall include all other contributions and forfeitures allocated to a
Participant's Accounts for the Plan Year, and all contributions and forfeitures
under any other defined contribution plan of the Company or an Affiliate (other
than elective deferral contributions made pursuant to section 414(v) of the
Code).

          (b)      If the addition to any Participant's Accounts (other than his
Rollover Account) for any Plan Year exceeds the maximum annual allowable
addition to such Participant's Accounts under subsection (a), then the excess
amount shall be eliminated by reducing the additions made to such Participant's
account, by first reducing the Participant's After-Tax Contributions and related
Matching Contributions to the extent necessary or, if less, to the extent the
After-Tax Contributions made with respect to the Plan Year are exhausted. To the
extent there is an excess remaining after this reduction, the Tax Deferred
Contributions and related Matching Contributions made on behalf of such
Participant shall be reduced. To the extent that an excess remains after this
reduction, the Matching Contribution of the Participant shall be reduced. Any
After-Tax or Tax Deferred Contributions reduced pursuant to this subsection (b)
shall be returned to the Participant. Any Matching Contributions reduced
pursuant to this subsection (b) shall be held in a suspense account (which shall
share in the investment gains and losses of the Fund) by the Trustee until the
following Plan Year. Such amounts shall be used in the following Plan Year to
reduce the Matching Contributions otherwise payable by the Employer by which the
Participant is employed in such subsequent Plan Year.

          (c)      In no event shall the amount allocated to the Account of any
Participant for any Limitation Year cause the sum of the "defined contribution
fraction" and the "defined benefit fraction," as such terms are defined in
section 415(e) of the Code, to exceed 1.0,

                                       22


<PAGE>

or such other limitation as may be applicable under section 415 of the Code with
respect to any combination of qualified plans of the Employer or an without
disqualification of any such plan. In the event that the amount tentatively
available for allocation to the Account of any Participant in any Limitation
Year exceeds the maximum amount permissible hereunder, benefits under the
defined benefit plan or plans in which the Participant is participating shall be
adjusted to the extent necessary to satisfy the requirements of section 415(e)
of the Code. Notwithstanding the foregoing, the limitations described above in
this subsection (c) shall not apply with respect to payments due on or after the
first day of the limitation year beginning January 1, 2000; provided, however,
that the aggregate benefits payable to, or on account of, a Participant who is
not credited with an Hour of Service on or after January 1, 2000 shall continue
to be subject to the limitations described above in this subsection (c).

          5.05     OVERALL DEDUCTIBILITY LIMIT. In no event may the aggregate
contribution made by an Employer under the Plan for a Plan Year exceed the
amount that may be deducted under section 404 of the Code with respect to such
Plan Year.

                                   ARTICLE VI

                      INVESTMENT AND VALUATION OF ACCOUNTS

          6.01     INVESTMENT DIRECTION BY PARTICIPANTS. Except as otherwise
provided in Section 6.02, each Participant shall direct the Trustee to invest
the amounts credited to his Accounts in one or more Investment Funds, subject to
the rules and procedures established by the Administrative Committee. A
Participant's investment direction shall be made at the time and in the manner
prescribed by the Administrative Committee. If any balance remains in a
Participant's Accounts after his death, his Beneficiary shall direct the
investment of the amounts credited to the Accounts as if the Beneficiary were
the Participant. To the extent required by a Qualified Domestic Relations Order,
the alternate payee of a Participant shall direct the investment of the amounts
credited to the Participant's Accounts as though the alternate payee were the
Participant. To the extent a Participant, Beneficiary or alternate payee directs
the investment of the amounts credited to his Accounts, this Plan is intended to
be subject to section 404(c) of ERISA, as described under Section 6.07.

          6.02     RESTRICTIONS ON PARTICIPANT INVESTMENT DIRECTION.
Notwithstanding the investment direction otherwise provided to Participants
under Section 6.01, the restrictions set forth below shall apply to the
availability of investment direction to Participants.

          (a)      For periods prior to February 1, 2000, a Participant may not
direct the investment of amounts held under his GPEP Account. Instead, with
respect to such periods, a Participant's GPEP Account shall be invested solely
in the Unisys Common Stock Fund.

          (b)      A Participant's ESOP Account and Regular Account (excluding
amounts attributable to the Burroughs Plan or the Sperry Plan) shall be invested
solely in the

                                       23


<PAGE>

Unisys Common Stock Fund until the Participant's attainment of age 50. Upon his
attainment of age 50, a Participant may direct the investment of his ESOP
Account and Regular Account in accordance with Section 6.01.

          (c)      Generally, the portion of a Participant's Accounts
attributable to the Sperry Plan may be invested in accordance with Section 6.01;
provided, however, that any amounts which a Participant directs to have invested
in the Unisys Common Stock Fund must remain in such Investment Fund until the
Participant attains age 50.

          6.03     INVESTMENT FUNDS. The Investment Funds available under the
Plan shall be designated by, and at the sole discretion of, the Investment
Committee. The Investment Committee, at its sole discretion, may from time to
time designate or establish new investment funds or eliminate existing
Investment Funds. Investment in any Investment Fund shall be made in accordance
with rules formulated by the Investment Committee and the accounting procedures
applied under the Plan shall be modified by the Investment Committee to the
extent they deem appropriate to reflect investments in that Investment Fund. The
Investment Committee has the authority to select and appoint Investment
Managers. The Investment Funds shall be managed by the Trustee or an Investment
Manager, as applicable. Pending investment, reinvestment or distribution, as
provided in the Plan, the Trustee or Investment Manager may temporarily retain
the assets of any one or more Investment Funds in cash, commercial paper,
short-term government obligations or, unless otherwise directed by the
Investment Committee, undivided interests or participations in common or
collective funds consisting of short-term investments, including funds of the
Trustee or Investment Manager.

          6.04     VALUATION OF THE FUND. As of each Valuation Date, any
increase or decrease in the fair market value of each Investment Fund (net after
deduction of liabilities) since the preceding Valuation Date shall be credited
to or deducted from the Accounts, if any, of each Participant. The allocation
for each Investment Fund shall be made in the proportion that the balance in
each Account invested in the Investment Fund as of the Valuation Date bears to
the aggregate balance in all Accounts invested in the Investment Fund on that
date. For purposes of the preceding sentence, the Employer's contributions to
the Plan for the current year shall be excluded. The fair market value of
investments shall be determined in accordance with any reasonable method
permitted under regulations prescribed by the United States Department of the
Treasury and such reasonable and uniform rules as the Trustee may adopt.

          6.05     UNISYS COMMON STOCK FUND. Unless subsequently discontinued by
the Investment Committee, the Investment Funds under the Plan shall include the
Unisys Common Stock Fund which is a Investment Fund providing for investment and
reinvestment exclusively in Unisys Stock, except to the extent cash is held to
facilitate purchases and sales within the fund. Investments in the Unisys Common
Stock Fund shall be accounted for on the basis of units of the Unisys Common
Stock Fund. Shares of Unisys Stock and cash received by the Unisys Common Stock
Fund that are attributable to dividends, stock dividends, stock splits or to any
reorganization or recapitalization of Unisys Corporation shall remain in or be
invested in, as applicable,

                                       24


<PAGE>

the Unisys Common Stock Fund and allocated to the Participant Accounts in
proportion to the number of units of the Unisys Common Stock Fund held in such
accounts. The transfer taxes, brokerage fees and other expenses incurred in
connection with the purchase, sale or distribution of Unisys Stock shall be paid
by the Unisys Common Stock Fund, and shall be deemed part of the cost of such
Unisys Stock, or deducted in computing the sale proceeds therefrom, as the case
may be, unless paid by an Employer. The Investment Committee shall determine to
what extent a Participant shall bear any other administrative fee incurred by
the Plan in connection with the transfer of the Participant's interest in the
Unisys Common Stock Fund and provide appropriate written notice to such
Participants. The voting and tendering of Unisys Stock held in the Unisys Common
Stock Fund shall be subject to the following:

          (a)      For purposes of this Section, shares of Unisys Stock shall be
deemed to be allocated and credited to each applicable Account of the
Participant in an amount to be determined based on the balance in such account
on the accounting date coincident with or next preceding the record date of any
vote or tender offer and the closing price of Unisys Stock on such accounting
date or if not traded on that date, on the business day on which shares of
Unisys Stock were last traded before that accounting date.

          (b)      Each Participant who has any amounts under his Account
invested in the Unisys Common Stock Fund shall be given notice by the Trustee of
the date and purpose of each meeting of the stockholders of the Company at which
shares of Unisys Stock are entitled to be voted, and instructions shall be
requested from each such Participant as to the voting at the meeting of such
Unisys Stock. If the Participant furnishes instructions within the time
specified in the notification given to him, the Trustee shall vote such Unisys
Stock in accordance with the Participant's instructions. Shares of Unisys Stock
that have not been credited to any Participant's Account or for which no
instructions were timely received by the Trustees, whether or not credited to
the Account of any Participant shall be voted by the Trustee in the same
proportion that the allocated and voted shares of Unisys Stock have been voted
by Participants. The Investment Committee shall establish procedures under which
notices shall be furnished to Participants as required by this subsection (b)
and under which the Participants' instructions shall be furnished to the
Trustee.

          (c)      Each Participant who has any amounts under his Account
invested in the Unisys Common Stock Fund shall be given notice of any tender
offer for, or a request or invitation for tenders of, Unisys Stock made to the
Trustees. Instructions shall be requested from each such Participant as to the
tendering of shares of Unisys Stock credited to his Account and for this purpose
Participants shall be provided with a reasonable period of time in which they
may consider any such tender offer for, or request or invitation for tenders of,
Unisys Stock made to the Trustees. The Trustees shall tender such Unisys Stock
as to which the Trustees have received instructions to tender from Participants
within the time specified. Unisys Stock credited to an Account as to which the
Trustee has not received instructions from a Participant shall not be tendered.
Shares of stock that have not been credited to any Participant's Account shall
be tendered by the Trustee in the same proportion that the allocated and
tendered shares of Unisys Stock have been tendered by Participants. The
Investment

                                       25


<PAGE>

Committee shall establish procedures under which notices shall be furnished to
Participants as required by this subsection (c) and under which the
Participants' instructions shall be furnished to the Trustee. In carrying out
their responsibilities under this subsection (c) the Trustees may rely on
information furnished to them by (or under procedures established by) the
Investment Committee.

          (d)      For all purposes of this Section 6.05, the number of shares
of Unisys Stock held in a Participant's Account which are invested in the Unisys
Common Stock Fund shall be the number of shares of Unisys Stock represented by
the number of units held in such accounts after reducing such number of units by
the number of units in such accounts which represent cash.

          (e)      With respect to Participants subject to Section 16 of the
Securities Exchange Act of 1934, the Investment Committee shall apply any
requirements or restrictions required for the Plan to obtain the protections of
Rule 16b-3 under the Securities Exchange Act of 1934 or any successor Rule or
regulation intended to replace Rule 16b-3.

          6.06     SPECIAL RULE REGARDING APPRAISAL OF UNISYS STOCK. If at any
time the Unisys Stock held by the ESOP Portion of the Plan is not readily
tradable on an established securities market, all valuations of such Unisys
Stock with respect to activities carried on by the Plan shall be made by an
independent appraiser meeting the requirements of section 401(a)(28) of the
Code.

          6.07     SECTION 404(C) COMPLIANCE. The Plan is intended to constitute
a plan described in section 404(c) of ERISA and section 2550.404c-1 of the DOL
regulations. Thus, no fiduciary of the Plan shall be liable for any loss, or by
reason of any breach, which results from any investment direction made by a
Participant, Beneficiary or alternate payee under a Qualified Domestic Relations
Order. The Company or its delegate shall comply with, or monitor compliance
with, as required, all disclosure and other responsibilities described in
sections 2550.404c-1(b)(2)(i)(A) and (b)(2)(i)(B)(1) of the DOL regulations
except that the Trustee shall monitor compliance with those procedures
established to provide confidentiality of information relating to the exercise
of voting and tender rights by Participants. If the Company determines that a
situation has potential for undue influence by the Company, the Company shall
direct an independent party to perform such activities as are necessary to
ensure the confidentiality of the rights of Participants.

                                  ARTICLE VII

                                     VESTING

          7.01     VESTING SCHEDULE.

          (a)      A Participant shall at all times be fully vested in the
balance of his After-Tax Account, Tax Deferred Account, GPEP Account, Tax
Deductible Contribution Account, and Rollover Account.

                                       26


<PAGE>

          (b)      A Participant employed by an Employer on or after January 1,
2000 shall be fully vested in his ESOP Account and Regular Account. Before
January 1, 2000, a Participant generally was fully vested in his ESOP Account
and Regular Account upon his completion of a five-year period of Service;
provided, however, that:

                   (1)     a Participant who was formerly a participant in CTIP
who incurs a Severance from Service after October 1, 1992 was at all times fully
vested in his Regular Account and ESOP Account.

                   (2)     a Participant who was formerly a participant in the
Burroughs Plan who incurred a Termination of Employment after March 31, 1988,
before being credited with five years of Service, or who incurred a Termination
of Employment on or before March 31, 1988, before being credited with ten years
of Service, shall continue to be vested in the portion of his Account, if any,
attributable to his vested matching contributions previously made under the
Burroughs Plan in accordance with the terms of the Burroughs Plan on March 31,
1988.

Notwithstanding the foregoing, however, a Participant shall be 100% vested in
his ESOP and Regular Account upon the earliest of his attainment of Normal
Retirement Age or death, regardless of the number of his years of Service if
such event occurs prior to his Termination of Employment.

          7.02     FORFEITURES.

          (a)      The unvested portion of a Participant's Accounts shall be
forfeited as of the earlier of the date described in paragraphs (1) and (2)
below:

                   (1)     as of the last day of the Plan Year in which a
Participant first incurs a Period of Severance;

                   (2)     the last day of the Plan Year following the Plan Year
in which the Participant receives a distribution of his entire vested interest
under the Plan.

          (b)      For purposes of subsection (a), a Participant who terminates
employment with the Employer and all Affiliates and has no vested interest in
his Accounts at such time, shall be deemed to have received a single sum payment
of his entire vested interest in his Accounts as of the date of his Termination
of Employment. Restorations pursuant to this subsection (b) shall be made from
currently forfeited accounts in accordance with subsection (d), or from
additional contributions by the employer.

          (c)      If a Participant whose unvested Account balance is forfeited
in accordance with this Section 7.02 is rehired by the Company, an Affiliate, or
an Associated Company before incurring a five-year Period of Severance, any
amount forfeited under this Section 7.02 shall be restored to his Accounts.
Restorations pursuant to this subsection (c) shall be made from currently
forfeited amounts in accordance with subsection (d) or from additional
contributions by the Employer.

                                       27


<PAGE>

          (d)      Amounts forfeited in accordance with this Section 7.02 with
respect to a Plan Year shall be used first to restore future amounts required to
be restored in accordance with subsections (b) or (c) with respect to the Plan
Year. After such restoration, if any, is made, such amounts shall be used to
reduce the Matching Contribution of the Employer of the Employee to whom the
forfeiture relates or pay Plan expenses.

                                  ARTICLE VIII

                               AMOUNT OF BENEFITS

          8.01     BENEFITS UPON SEVERANCE FROM SERVICE. A Participant who
incurs a Severance from Service for a reason other than death shall be entitled
to a distribution of the entire vested balance of his Accounts as of the
Valuation Date coincident with or immediately preceding his Benefit Commencement
Date.

          8.02     DEATH BENEFITS. If a Participant's Severance from Service
occurs by reason of his death, his Beneficiary shall be entitled to a
distribution of the entire vested amount credited to the Participant's Accounts
as of the Valuation Date coincident with or next following his Benefit
Commencement Date.

                                   ARTICLE IX

                          PAYMENT AND FORM OF BENEFITS

          9.01     FORM OF BENEFIT PAID TO PARTICIPANT.

          (a)      Unless a Participant elects otherwise in accordance with
subsection (b), any benefit due a Participant under Article IX shall be paid in
a single sum, subject to 9.04. If the vested Account balance to which a
Participant is entitled is zero as of the date of the Participant's Severance
from Service, such Participant shall be deemed to have received a single sum
payment of his entire vested Account balance under the Plan as of such date.

          (b)      If a Participant's vested Account balance exceeds $1,000 as
of his Benefit Commencement Date, he may, in lieu of the single sum payment
prescribed under subsection (a), elect an optional form of distribution;
provided that such election must be in writing and be made within the Notice
Period in the manner prescribed by the Administrative Committee. The optional
forms of distribution among which a Participant may elect shall be determined as
follows:

                   (1)     an annuity as described below:

                           (A)     Unless an optional form of annuity is elected
under paragraph (B), the normal form of an annuity for a married participant is
a Qualified Joint and Survivor Annuity and the normal form of annuity for an
unmarried participant is a single life annuity.

                                       28


<PAGE>

                           (B)     Subject to the election requirements
described in this paragraph (B), a Participant described under this paragraph
(B) may elect to receive one of the following forms of annuities in lieu of the
normal form of annuity described under paragraph (A):

                                   (i)      a reduced monthly pension payable to
the Participant for life and, after his death, 50% to his Beneficiary for life;
or

                                   (ii)     a single life annuity.

An election under this paragraph (B) is only valid if (i) it is in writing, (ii)
it is made within the Notice Period, and (iii) the Participant's Spouse, if any,
consents to the form of benefit in writing and such consent is witnessed by a
notary public or an authorized representative of the Plan. Such election will
not be valid, however, if it is made before the Participant receives, within the
Notice Period, an explanation from the Administrative Committee of (i) the terms
and conditions of the normal form of annuity and the other forms of benefit
available to him under the Plan, (ii) the Participant's ability to make, and the
effect of, an election to waive the normal form of annuity, (iii) to the extent
applicable, the rights of the Participant's Spouse; and (iv) the Participant's
ability to make, and the effect of, a revocation of a previous waiver of the
normal form of annuity.

                   (2)     monthly, quarterly, semi-annual or annual
installments payable over a period of no less than one-year and no greater than
the joint life expectancy of the Participant and his Beneficiary.

          9.02     BENEFIT COMMENCEMENT DATE.

          (a)      Except as provided under this Article IX, if the
Participant's vested Account balance as of his Benefit Commencement Date does
not exceed $1,000, his benefit under the Plan shall be paid in a single sum as
soon as administratively practicable following the Valuation Date coinciding
with or next following date of the Participant's termination of employment with
Employer.

          (b)      Except as otherwise provided under this Article IX, if the
Participant's vested Account balance as of his Benefit Commencement Date is
greater than $1,000 the benefit payable to a Participant in accordance with
Article VIII shall be paid or commence as of the first day of the month
following the Participant's attainment of Normal Retirement Age. If the
Participant's Severance from Service occurs before his attainment of Normal
Retirement Age, however, the Participant may elect, in writing, to have his
benefit paid or commence on the first day of any month following the month in
which his Severance from Service occurred.

          9.03     FORM AND PAYMENT OF DEATH BENEFIT. A Participant shall
designate a Beneficiary or Beneficiaries to receive any benefits which may be
payable under the Plan in the event of his death. If the vested Account balance
to which a Beneficiary is entitled is $1,000 or less, such amount shall be paid
in a single sum, subject to Section 9.04. If the Account balance payable upon a
Participant's death is zero, the

                                       29


<PAGE>

Participant's Beneficiary shall be deemed to have received a single sum payment
of the Participant's entire Account balance under the Plan or on the date of the
Participant's death. If the vested Account balance exceeds $1,000, the form of
the death benefit shall be determined as follows:

          (a)      If a married Participant dies before his Benefit Commencement
Date:

                   (1)     if the Participant dies after electing an annuity
payment in accordance with Section 9.01(b) and his sole Beneficiary is his
surviving Spouse, unless his surviving Spouse elects otherwise in accordance
with subsection (b), the Participant's vested Account balance shall be paid to
his surviving Spouse in the form of a single life annuity;

                   (2)     if (A) a Participant is unmarried at the time of his
death, or (B) is married but either (i) did not elect an annuity form of payment
under Section 9.01(b) of the Plan prior to his death, or (ii) designated a
Beneficiary other than or in addition to his Spouse, the Participant's vested
Account balance shall be paid to his Beneficiary in a single sum, subject to
Section 9.04.

          (b)      If a Participant dies before his Benefit Commencement Date,
his Beneficiary may elect one of the following forms of payment in lieu of the
form described under subsection (a):

                   (1)     an immediately payable single sum;

                   (2)     a single life annuity; or

                   (3)     monthly installment payments over a period of no less
than the life expectancy of the Beneficiary.

          (c)      If a Participant dies on or after his Benefit Commencement
Date but before the entire amount of his benefit has been paid, the remaining
amount shall be paid to his Beneficiary in the form and over the period being
used at the Participant's date of death.

With respect to a Benefit Commence Date beginning before March 22, 1999, the
$1,000 threshold under this Section 9.03 shall take into account all amounts
withdrawn or distributed prior to such Benefit Commencement Date.

          9.04     FORM OF SINGLE SUM DISTRIBUTIONS. If a benefit under the Plan
is payable in a single sum, such amount shall generally be paid in cash.
However, a Participant or Beneficiary entitled to a distribution may elect, in
the form and manner prescribed by the Administrative Committee, to receive the
vested balance of the Account invested in the Unisys Common Stock Fund in the
form of whole shares of Unisys Stock (and cash with respect to fractional
shares). Before any distribution is made from the Plan in a single sum, the
portion of a Participant's ESOP Account that has been invested in Investment
Funds other than the Unisys Common Stock Fund, shall be automatically reinvested
in the Unisys Stock Fund before distribution.

                                       30


<PAGE>

          9.05     PUT OPTIONS. If the Unisys Stock held under the ESOP Portion
of the Plan is not readily tradable on an established securities market (within
the meaning of section 409(h)(1)(B) of the Code), any Participant who is
entitled to a distribution of such shares from the Plan shall have a right to
require the Company to repurchase such shares in accordance with section
409(h)(1)(B) of the Code. Unisys Stock held under the ESOP Portion of the Plan
shall not be subject to a put, call, or other option, or a buy-sell or similar
arrangement either while held by the Plan or when distributed to or on account
of a Participant whether or not the Plan is then an Employee Stock Ownership
Plan.

          9.06     DIRECT ROLLOVERS. In the event any payment or payments,
excluding any amount not includible in gross income, to be made to a Distributee
pursuant to this Article IX would constitute an "eligible rollover
distribution," such Distributee may elect, in accordance with this Section 9.06,
that, in lieu of payment to the Distributee, all or part of such "eligible
rollover distribution" be rolled over directly to the trustee or custodian of an
"eligible retirement plan." Any such request shall be made in writing, on the
form and subject to such requirements and restrictions as may be prescribed by
the Administrative Committee for such purpose pursuant to Treasury regulations,
at such time in advance of the date payment would otherwise be made as may be
required by the Administrative Committee. Within the Notice Period, the
Administrative Committee shall supply a Participant or other Distributee
entitled to receive an "eligible rollover distribution" with a written
explanation of the rollover rules and tax treatment applicable to his
distribution.

For purposes of this Section 9.06, an "eligible rollover distribution" means a
distribution from the Plan, excluding (i) any distribution that is one of a
series of substantially equal periodic payments (not less frequently than
annually) over the life (or life expectancy) of the individual, the joint lives
(or joint life expectancies) of the individual and the individual's designated
beneficiary, or a specified period of ten (10) or more years, (ii) any
distribution to the extent such distribution is required under section 401(a)(9)
of the Code, and (iii) effective January 1, 1999, any hardship distribution
described in section 401(k)(2)(B)(i)(IV) of the Code.

For purposes of this Section 9.06, an "eligible retirement plan" means (1) an
individual retirement account described in section 408(a) of the Code, (2) an
individual retirement annuity described in section 408(b) of the Code (other
than an endowment contract), (3) a qualified plan the terms of which permit the
acceptance of rollover distributions, or (4) an annuity plan described in
section 403(a) of the Code; provided, however, that the eligible retirement
plans described in clauses (3) and (4) shall not apply with respect to a
distribution made to a Beneficiary who is the surviving spouse of a Participant.

          9.07     MINIMUM REQUIRED DISTRIBUTION. If a Participant is a 5% owner
of the Employer (as determined under section 416 of the Code), or if a
Participant attained age 70 1/2 before January 1, 2002, he shall receive, with
respect to each calendar year during which and following the calendar year in
which he attained age 70 1/2, the minimum required distribution amount described
under section 401(a)(9) of the Code and the regulations thereunder. In no event
shall the first minimum required distribution be made later than the April 1 of
the calendar year following the calendar year in which

                                       31


<PAGE>

he attained age 70 1/2. The amount of such distribution shall be determined in
accordance with section 401(a)(9) of the Code and the regulations thereunder.
The amount of minimum required distributions for calendar years prior to 2003
shall be determined and made in accordance with the regulations under section
401(a)(9) of the Code that were proposed in 1987, including the minimum
distribution incidental benefit requirement of section 1.401(a)(9)-2 of the
proposed regulations. The amount of minimum required distributions for the 2003
calendar year and thereafter shall be determined and made in accordance with the
final regulations promulgated under section 401(a)(9) of the Code, including the
minimum distribution incidental benefit requirement of Q&A-1(d) of section
1.401(a)(9)-5 of the final regulations.

                                    ARTICLE X

                              WITHDRAWALS AND LOANS

          10.01    GENERAL. A Participant may withdraw amounts from his Account
to the extent provided under this Article X. Any withdrawal shall be considered
the distribution of a portion of the Participant's benefit and shall be paid in
a single sum. A withdrawal shall be disregarded, however, for purposes of
determining whether the Participant's Benefit Commencement Date has occurred. A
Participant's request for a withdrawal must be made in writing within the period
prescribed by the Administrative Committee. The amount of the withdrawal shall
be divided proportionally among the Investment Funds in which the Accounts from
which the withdrawal is to be made are invested. Withdrawals shall be made in
accordance with the procedures established by the Administrative Committee.

          10.02    WITHDRAWALS FROM AFTER-TAX ACCOUNT. Subject to the
requirements set forth in Section 10.01, a Participant who is an Employee may
withdraw all or a portion of the balance of his After-Tax Account (other than
earnings on After-Tax Contributions made on or after January 1, 1987), up to one
time in any six-consecutive month period. Withdrawals from a Participant's
After-Tax Account shall be made in the following order:

          (a)      After-Tax Contributions made before January 1, 1987; then

          (b)      Amounts relating to After-Tax Contributions after
December 31, 1986, including a pro-rata portion of the earnings thereon; and
then

          (c)      Earnings on After-Tax Contributions made before January 1,
1987.

          10.03    WITHDRAWALS FROM TAX DEDUCTIBLE CONTRIBUTION ACCOUNT AND
ROLLOVER ACCOUNT. Subject to the requirements set forth in Section 10.01, a
Participant may withdraw all or a portion of the balance of his Tax Deductible
Contribution Account or Rollover Account at any time.

          10.04    WITHDRAWALS FROM REGULAR ACCOUNT. Subject to the requirements
set forth in Section 10.01, a Participant who is an Employee may withdraw all or
a portion of the balance of his Regular Account, up to one time in any
six-consecutive month period if the following requirements are met:

                                       32


<PAGE>

          (a)      the Participant has withdrawn the entire balance of his
After-Tax Account; and

          (b)      the Participant's aggregate years of participation in this
Plan and any Prior Plan is five years.

          10.05    WITHDRAWALS FROM ESOP ACCOUNT. Subject to the requirements
set forth in Section 10.01, a Participant who is an Employee may withdraw all or
a portion of the vested balance of his ESOP Account, up to one time in any
six-consecutive month period if the following requirements are met:

          (a)      the Participant has withdrawn the entire balance of his
After-Tax Account and his Regular Account; and

          (b)      the Participant's aggregate years of participation in this
Plan and any Prior Plan is five years.

          10.06    WITHDRAWALS FROM GPEP ACCOUNT. Subject to the requirements
set forth in Section 10.01, a Participant who is an Employee and who has
withdrawn the entire balance of his After-Tax Account and his Regular Account
may, up to one time in any six consecutive month period, withdraw the portion of
the balance of his GPEP Account attributable to Contributions made at least
36-months prior to the date the withdrawal is requested.

          10.07    HARDSHIP WITHDRAWALS.

          (a)      Subject to the requirements set forth in Section 10.01 and in
subsection (b) of this Section 10.07, a Participant may elect a withdrawal from
his Tax Deferred Account (excluding any earnings credited after December 31,
1988), on account of an immediate and heavy financial hardship; provided,
however, that the amount of such withdrawal must be necessary to satisfy the
immediate and heavy financial need as determined under subsections (c) and (d).

          (b)      In the event a Participant receives a withdrawal under this
Section 10.07, the Participant shall be both ineligible to have Tax Deferred
Contributions made on his behalf and ineligible to make After-Tax Contribution
for the 6-month period following his receipt of the withdrawal.

          (c)      For purposes of this Section 10.07, an immediate financial
hardship is expenses incurred as a result of:

                   (1)     medical expenses of the Participant, his spouse,
children or dependents, as described in section 152 of the Code, that are
deductible for federal income tax purposes under Code section 213(d);

                   (2)     costs related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;

                                       33


<PAGE>

                   (3)     the payment of tuition (and related expenses) for the
next 12 months of post-secondary education for the Participant, his spouse,
children or dependents; or

                   (4)     the need to prevent the eviction of the Participant
from, or foreclosure on the mortgage of, the Participant's principal residence.

The final determination of whether an immediate and heavy financial hardship
exists shall be determined by the Administrative Committee or its designee,
which shall be under no obligation to verify independently the facts of hardship
submitted by a Participant. Unless the Administrative Committee or its designee
has actual knowledge to the contrary, the Administrative Committee shall be
entitled to rely upon an affidavit signed by the Participant as proof of the
elements necessary for a hardship withdrawal.

          (d)      For purposes of this Section 10.07, a withdrawal shall be
deemed to be in the amount necessary to alleviate an immediate financial
hardship if:

                   (1)     the amount of the withdrawal does not exceed the
amount required to satisfy the immediate and heavy financial need;

                   (2)     the Participant has obtained all available
withdrawals and distributions from his Regular Account, ESOP Account, GPEP
Account, Tax Deductible Contribution Account, Rollover Account, and After-Tax
Contribution Account;

                   (3)     the amount of the withdrawal under this Section 10.07
will not cause the a violation of the maximum loan limitations for any loan
outstanding at the time of the withdrawal request; and

                   (4)     the Participant has obtained all nontaxable loans
currently available to the Participant from the Plan and all plans maintained by
the Company or an Affiliate.

          10.08    WITHDRAWALS AFTER AGE 59 1/2. Subject to the requirements set
forth in 10.01, after he has attained age 59 1/2, a Participant may withdraw all
or any portion of his vested interest in his Account, up to one time in any
six-consecutive month period.

          10.09    LOANS TO PARTICIPANTS. The Administrative Committee may in
its discretion cause the Plan to lend to any qualified Participant an amount, as
requested by the Participant, from his Accounts (excluding amounts held in his
Tax Deductible Contribution Account or GPEP Account), upon such terms as the
Administrative Committee may see fit.

          (a)      QUALIFICATION FOR LOANS. A Participant is eligible for a Plan
loan if he is (1) an Employee, or (2) a Participant who is a party in interest,
as determined under section 3(14) of ERISA.

          (b)      AMOUNT OF LOAN. The amount lent to any Participant shall not
exceed the lesser of:

                                       34


<PAGE>

                   (1)     the lesser of  $50,000 or 50% of the amount in the
Participant's vested interest in his Accounts; or

                   (2)     the greater of $10,000, or one-half of the value of
the vested portion of the Employee's accounts under all plans maintained by the
Employer and all Affiliates. For purposes of determining the maximum amount of a
loan under this subsection (b), the balance of a Participant's Tax Deductible
Contribution Account and GPEP Account shall be disregarded. The minimum amount
of any loan made to a Participant shall be set by the Administrative Committee
from time to time, in a uniform and nondiscriminatory manner. A Participant may
not have more than one loan outstanding at any time.

          (c)      LOAN TERM; INTEREST RATES. Each loan shall be repaid within
no less than one year and no more than five years from the date the loan is
made, unless the loan proceeds are used to acquire a dwelling that is to be used
as the Participant's principal residence, in which event the term of the loan
may not be more than fifteen years. Each loan shall bear a fixed rate of
interest that is commercially reasonable, as determined by the Administrative
Committee.

          (d)      OTHER LOAN REQUIREMENTS. The amount lent to any Participant
shall be debited against all of the Participant's Accounts from which the loan
may be made (as determined under subsection (a)) such that the amount of the
loan is prorated among such Accounts on the basis of the balance of each Account
at the time the loan is made, and the interest paid to the Trustee by the
Participant on the loan shall be allocated to such Accounts and to the Account
of no other Participant. The amount of any loan, including accrued interest,
unrepaid at the time a Participant or his Beneficiary becomes entitled to a
distribution under Article IX shall be deducted from the amount otherwise
distributable to the Participant or Beneficiary. No note or other document
evidencing a loan shall be negotiable or otherwise assignable.

          (e)      ELECTIONS. In order to be valid, a Participant's request for
a loan must be made in the time and manner prescribed by the Administrative
Committee.

          (f)      EXPENSE OF LOAN. The Administrative Committee may charge a
reasonable loan processing fee as well as an annual loan administration fee for
each year the loan is outstanding. Such fee shall be applied on a uniform and
nondiscriminatory manner.

          (g)      REPAYMENT. Loans shall be repaid in equal installments (not
less frequently than quarterly) through payroll withholding or, in the case of a
Participant's unpaid authorized leave of absence or lay-off, by personal check.
A Participant may fully repay the loan at any time without penalty. Loans shall
become immediately due and payable upon a Participant's Termination of
Employment, retirement or death.

          (h)      LOAN SECURITY AND DOCUMENTATION. A loan shall be evidenced by
a written document containing such terms and conditions as the Administrative
Committee shall

                                       35


<PAGE>

determine, and shall be secured by the Participant's vested interest in his
Accounts (other than his Tax Deductible Contributions Account).

                                   ARTICLE XI

                     SPECIAL PROVISIONS FOR TOP-HEAVY PLANS

          11.01    DETERMINATION OF TOP-HEAVY STATUS. The Plan shall be
considered top-heavy for the Plan Year, if, as of the Determination Date:

          (a)      the Plan is not part of an Aggregation Group and the Key
Employee Ratio, determined by substituting the "Plan" for the "Aggregation
Group" each place it appears in Section 2.34, exceeds 60%, or

          (b)      the Plan is part of an Aggregation Group and the Key Employee
Ratio of such Aggregation Group exceeds 60%;

The Plan shall be deemed super top-heavy as to any Plan Year if, as of the
Determination Date with respect to such Plan Year, the conditions of subsections
(a) or (b) hereof are met with "90%" substituted for "60%" therein.

          11.02    MINIMUM CONTRIBUTIONS. For any Plan Year in which the Plan is
determined to be top-heavy or super top-heavy within the meaning of Section
11.01, the Plan shall provide a minimum Employer contribution (consisting of
Matching Contributions, nonelective Employer contributions, or both) for each
Participant who is a Non-Key Employee and has not incurred a Severance from
Service by the end of the Plan Year in an amount equal to 5% of the
Participant's Testing Compensation.

          11.03    ADJUSTMENTS TO MAXIMUM LIMITS ON BENEFITS AND CONTRIBUTIONS.
For any Plan Year in which the Plan is determined in accordance with Section
11.01 to be a top-heavy plan or a super top-heavy plan, the definitions of
"defined contribution fraction" and "defined benefit fraction" for purposes of
the limitation on benefits referenced in Section 5.05 shall be modified as
required under section 416 of the Code.

          11.04    MINIMUM VESTING. For any Plan Year in which the Plan is
defined to be top-heavy or super top-heavy within the meaning of Section 11.01,
each Participant during such Plan Year shall become 100% vested in all of his
Accounts and shall remain fully vested in such Accounts after the Plan ceases to
be top-heavy.

                                   ARTICLE XII

                               PLAN ADMINISTRATION

          12.01    FIDUCIARY RESPONSIBILITY.

          (a)      The Plan shall be administered by the Administrative
Committee, which shall be the Plan's "named fiduciary" and "administrator," as
those terms are defined by ERISA, and its agent designated to receive service of
process. All matters relating to

                                       36


<PAGE>

the administration of the Plan, including the duties imposed upon the plan
administrator by law, except those duties relating to the control or management
of Plan assets, shall be the responsibility of the Administrative Committee. The
Administrative Committee shall have the power to interpret and construe the
provisions of the Plan, and to decide such questions as may rise in connection
with the operation of the Plan, including interpretation of ambiguous Plan
provisions, determination of disputed facts, and application of Plan provisions
to unanticipated circumstances. The determination of the Administrative
Committee shall be subject to review only for abuse of discretion. The duties
and responsibilities of the Administrative Committee also shall include, but not
be limited to, the selection of the Investment Funds and the monitoring of the
performance of the Trustee.

          (b)      The Investment Committee shall be responsible for all matters
relating to the control and management of Plan assets to the extent not assigned
to the Trustee in the Trust Agreement or other instrument. The duties and
responsibilities of the Investment Committee shall include, but not be limited
to, the selection of the Investment Funds, the selection of the Investment
Manager, and the monitoring of the performance of the Investment Manager and
Trustee. The Investment Committee shall be a "named fiduciary" as that term is
defined by ERISA.

          12.02    APPOINTMENT AND REMOVAL OF COMMITTEE. The Administrative
Committee and the Investment Committee shall be appointed and may be removed by
the Board. Persons appointed to the Administrative Committee or the Investment
Committee may be, but need not be, employees of the Employer. Any Administrative
Committee or Investment Committee member may resign by giving written notice to
the Board, which notice shall be effective 30 days after delivery. An
Administrative Committee or Investment Committee member may be removed by the
Board by written notice to such Committee member, which notice shall be
effective upon delivery. The Board shall promptly select a successor following
the resignation or removal of any Administrative Committee or Investment
Committee member, if necessary to maintain both an Administrative Committee and
the Investment Committee of at least one member.

          12.03    COMPENSATION AND EXPENSES OF THE COMMITTEE. Members of the
Administrative Committee and members of the Investment Committee who are
Employees shall serve without compensation. Members of the Administrative
Committee or Investment Committee who are not Employees may be paid reasonable
compensation for services rendered to the Plan. Such compensation, if any, and
all ordinary and necessary expenses of the Administrative Committee or
Investment Committee shall be paid from the Fund unless paid by the Employer.

          12.04    COMMITTEE PROCEDURES. The Administrative Committee and
Investment Committee may enact such rules and regulations for the conduct of its
business and for the administration of the Plan as it may deem desirable. The
Administrative Committee and Investment Committee may act either at meetings at
which a majority of its members are present or by a writing signed by a majority
of its members without the holding of a meeting. Records shall be kept of the
meetings and actions of the Administrative Committee and the Investment
Committee. No Administrative

                                       37


<PAGE>

Committee or Investment Committee member who is a Participant in the Plan shall
vote upon, or take an active role in resolving, any question affecting only his
Accounts.

          12.05    INDEMNIFICATION OF THE COMMITTEE. Each member of the
Administrative Committee and the Investment Committee shall be indemnified by
the Company against costs, expenses and liabilities (other than amounts paid in
settlement to which the Company does not consent) reasonably incurred by him in
connection with any action to which he may be a party by reason of his service
as a member of the Administrative Committee or Investment Committee except in
relation to matters as to which he shall be adjudged in such action to be
personally guilty of negligence or willful misconduct in the performance of his
duties. The foregoing right to indemnification shall be in addition to such
other rights as the member may enjoy as a matter of law or by reason of
insurance coverage of any kind, but shall not extend to costs, expenses and/or
liabilities otherwise covered by insurance or that would be so covered by any
insurance then in force if such insurance contained a waiver of subrogation.
Rights granted hereunder shall be in addition to and not in lieu of any rights
to indemnification to which the member of the Administrative Committee or
Investment Committee may be entitled pursuant to the bylaws of the Company.
Service on the Administrative Committee or Investment Committee shall be deemed
in partial fulfillment of the member's function as an employee, officer or
director of the Employer, if he serves in that capacity as well as in the role
of a member of the Administrative Committee or Investment Committee.

          12.06    EXCLUSIVE BENEFIT RULE. The Administrative Committee and
Investment Committee shall administer the Plan for the exclusive benefit of
Participants and their Beneficiaries.

          12.07    CONSULTANTS. The Administrative Committee and Investment
Committee may, and to the extent required for the preparation of reports shall,
employ accountants, actuaries, attorneys and other consultants or advisors. The
fees charged by such accountants, actuaries, attorneys and other consultants or
advisors shall represent reasonable compensation for services rendered and shall
be paid from the Fund unless paid by the Employer.

          12.08    PAYMENT OF PLAN EXPENSES. The expenses incurred by the
Employer in connection with the operation of the Plan, including, but not
limited to, expenses incurred by reason of the engagement of professional
assistants and consultants, shall be expenses of the Plan and shall be payable
by the Plan at the direction of the Board. The Employer shall have the option,
but not the obligation, to pay any such expenses, in whole or in part, and, by
so doing, to relieve the Plan from the obligation of bearing such expenses.
Payment of any such expenses by the Employer on one occasion shall not bind the
Employer to pay any similar expenses on any subsequent occasion.

          12.09    METHOD OF HANDLING PLAN FUNDS. All payments to the Fund shall
be made by the employee of the Employer charged with that responsibility by the
Board. All payments from the Fund shall be made by the Trustee.

                                       38


<PAGE>

          12.10    DELEGATION AND ALLOCATION OF RESPONSIBILITY. To the extent
permitted under the terms of the Trust Agreement, the Trustee may, by unanimous
action in writing, delegate or assign any of its responsibilities for
administering the Plan to one or more individuals or entities. In the event of
any such delegation or allocation, the Trustee shall establish procedures for
the thorough and frequent review of the performance of such duties. Persons to
whom responsibilities have been delegated may not delegate to others any
discretionary authority or discretionary control with respect to the management
or administration of the Plan.

          12.11    CLAIMS PROCEDURES.

          (a)      INITIAL CLAIM. In the event of a claim by a Participant or
his or her Beneficiary with respect to the Plan, such claimant shall present his
or her claim in writing to the Administrative Committee. The Administrative
Committee shall, within 90 days after receipt of such written claim, make a
determination and send a written or electronic notification to the claimant as
to its disposition. If warranted by special circumstances, the Administrative
Committee shall be allowed an extension of time not to exceed 90 days from the
end of the initial period and shall so notify the claimant. In the event the
claim is wholly or partially denied, such notification shall:

                   (1)     state the specific reason or reasons for the denial;

                   (2)     make specific reference to the pertinent provisions
of the Plan upon which the denial is based;

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

                   (4)     set forth the procedure by which the claimant may
appeal the denial of his or her claim and the applicable time limitations; and

                   (5)     a statement of the claimant's rights to bring a civil
action under section 502(a) of ERISA following an adverse benefit determination
on appeal.

          (b)      REVIEW OF DENIAL. In the event a claimant wishes to appeal
the denial of his claim, he may request a review of such denial by making
application in writing to the Administrative Committee within 60 days after
receipt of such denial. Such claimant (or his or her duly authorized
representative) may, upon written request to the Administrative Committee and
free of charge, reasonable access to, and copies of, all documents, records, and
other information relevant to the claim for benefits. In addition, the claimant
or his authorized representative may submit issues and comments to the
Administrative Committee in writing. Appeals not timely filed shall be barred.
Within 60 days after receipt of a written appeal the Administrative Committee
shall make a determination and notify the claimant of its final decision. If
warranted by special circumstances, the Administrative Committee shall be
allowed an extension of time not to exceed 120 days from the receipt of the
appeal and shall so notify the claimant. The final decision on review shall
contain:

                                       39


<PAGE>

                   (1)     specific reasons therefor;

                   (2)     specific Plan references upon which it is based;

                   (3)     a description of the claimant's right to, upon
request and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claim for benefits;

                   (4)     a description of any voluntary appeals procedures
offered by the Plan; and

                   (5)     a statement of the claimant's rights to bring a civil
action under section 502(a) of ERISA.

If the Administrative Committee has not exceeded the time limitations set forth
in this Section 12.11, the decision shall be final and conclusive on all persons
claiming benefits under the Plan, subject to applicable law. If the claimant
challenges the decision of the Administrative Committee, a review by a court of
law shall be limited to the facts, evidence, and issues presented during the
claims procedure set forth above. The review process described herein must be
exhausted before the claimant can pursue the claim in federal court. Facts and
evidence that become known to the claimant after having exhausted the review
procedure may be submitted for reconsideration of the review in accordance with
the time limits established above. Issues not raised during the review process
shall be deemed waived.

                                  ARTICLE XIII

                            AMENDMENT AND TERMINATION

          13.01    AMENDMENT. The Plan may be amended at any time and from time
to time by or pursuant to a formal written action of the Board, the Compensation
and Organization Committee of the Board, the Company's Chief Financial Officer,
the Company's Vice-President of Human Resources, or the Administrative
Committee, subject to the following restrictions:

          (a)      the Administrative Committee may make amendments only to the
extent that they are necessary or appropriate to maintain the Plan's compliance
with the applicable statutes or regulations;

          (b)      the Company's Chief Financial Officer and Vice-President of
Human Resources may make amendments only to the extent that the effect of the
amendments results in an annual cost of less than $1,000,000;

          (c)      the Company's Chief Executive Officer may make amendments
only to the extent that the effect of the amendments results in an annual cost
less than $25,000,000; and

                                       40


<PAGE>

          (d)      the Corporate Governance and Compensation Committee of the
Board may make amendments only to the extent that the affect of the amendments
results in an annual cost less than $50,000,000.

Notwithstanding the foregoing, however, to the extent that the Company's
Corporate Delegation Chart or other action of the Board modifies the amendatory
authority described in the preceding sentence, the Plan shall be deemed to have
been amended in accordance with the Delegation of Authority Chart or such Board
action. In no event shall an amendment be effective to the extent that it has
the effect of decreasing the balance of a Participant's Account or eliminating
an optional form of benefit payment for benefits attributable to service before
the later of the date the amendment is adopted or the date it becomes effective,
except to the extent permissible under section 411(d)(6) of the Code and the
regulations thereunder. If the vesting schedule of the Plan is amended, the
nonforfeitable interest of a Participant in his Accounts, determined as of the
later of the date the amendment is adopted or the date it becomes effective,
shall not be less than the Participant's nonforfeitable interest in his Accounts
determined without regard to such amendment. If the Plan's vesting schedule is
amended, each Participant with three or more Years of Service may elect to have
the nonforfeitable percentage of his Accounts computed under the Plan without
regard to such amendment. The Participant's election shall be made within 60
days after the latest of (1) the date the amendment is adopted, (2) the date the
amendment becomes effective, or (3) the date the Participant is given written
notice of the amendment by the Board or the Trustee.

          13.02    TERMINATION OR PARTIAL TERMINATION.

          (a)      RIGHT TO TERMINATE RESERVED. While the Company intends to
continue the Plan indefinitely, it reserves the right to terminate the Plan at
any time by formal written action of the Board. Further, any Employer may, at
any time for any reason, withdraw from participation in the Plan, in whole or in
part, by action of its governing board.

          (b)      TREATMENT OF PARTICIPANTS UPON TERMINATION. If the Plan is
terminated or partially terminated, Accrued Benefits of the Participants
affected thereby shall immediately vest and be nonforfeitable, to the extent
funded. No employees of such Employer who are not then Participants may
thereafter be admitted to the Plan, and the Employer shall make no further
contributions to the Fund.

          (c)      LIABILITY OF EMPLOYER. The Employer shall have no liability
in respect of payment under the Plan, except to pay over to the Trustee the
contributions otherwise required under the Plan, and each Participant or his
Beneficiary shall look solely to the Trust for distribution of benefits under
the Plan.

          (d)      SUCCESSOR EMPLOYERS. Unless this Plan is terminated earlier,
a successor employer of the Employees of the Employer may continue this Plan and
Trust by joining with the Trustee in executing an appropriate supplemental
agreement. Such successor employer shall ipso facto succeed to all the rights,
powers, and duties of the Employer hereunder. In such event, the Plan shall not
be deemed to have terminated and the

                                       41


<PAGE>

employment of any Employee who is continued in the employ of such successor
Employer shall be deemed not to have been terminated or severed for any purposes
hereunder.

                                  ARTICLE XIV

                                  MISCELLANEOUS

          14.01    MERGER, CONSOLIDATION OR TRANSFER OF ASSETS OR LIABILITIES.
The Company reserves the right to merge or consolidate the Plan with any other
defined contribution plan qualified under section 401(a) of the Code, or to
transfer Plan assets or liabilities to any other qualified defined contribution
plan, provided that the amount standing to the credit of each Participant's
Accounts immediately after any such merger, consolidation or transfer of assets
or liabilities shall be at least equal to the amount standing to the credit of
the Participant's Accounts immediately before such merger, consolidation or
transfer, determined as if the Plan had then terminated.

          14.02    LIMITED PURPOSE OF PLAN. The establishment or existence of
the Plan shall not confer upon any Employee the right to be continued as an
Employee. The Employer expressly reserves the right to discharge any Employee
whenever in its judgment its best interests so require.

          14.03    NONALIENATION. No benefit payable under the Plan shall be
subject in any manner to anticipation, assignment, or voluntary or involuntary
alienation. This Section 14.03 shall not preclude the Trustee from complying
with the terms of (a) a Qualified Domestic Relations Order, (b) a federal tax
levy made pursuant to section 6331 of the Code, (c) subject to section
401(a)(13) of the Code, a judgement relating to the Participant's conviction of
a crime involving the Plan, or (d) subject to section 401(a)(13) of the Code, a
judgement, order, decree, or settlement agreement between the Participant and
the United States Department of Labor or the Pension Benefit Guaranty
Corporation relating to a violation (or an alleged violation) of part 4 subtitle
B or Title I of ERISA.

          14.04    GENERAL DISTRIBUTION REQUIREMENTS. All distributions under
the Plan shall be determined and made in accordance with the minimum
distribution incidental death benefit requirements of the regulations under
section 401(a)(9) of the Code. Effective prior to January 1, 2003, all
distributions shall be determined and made in accordance with the minimum
distribution requirements of the regulations under section 401(a)(9) of the Code
that were proposed in 1987, including the minimum distribution incidental
benefit requirement of section 1.401(a)(9)-2 of the proposed regulations.
Effective January 1, 2003, all distributions shall be determined and made in
accordance with the final regulations promulgated under section 401(a)(9) of the
Code, including the minimum distribution incidental benefit requirement of
Q&A-1(d) of section 1.401(a)(9)-5 of the final regulations; provided, however,
that the amount of any payments made to a Participant with a Benefit
Commencement Date prior to January 1, 2003 shall not be decreased by the
application of the final regulations.

                                       42


<PAGE>

          14.05    FACILITY OF PAYMENT. If the Administrative Committee, in its
sole discretion, deems a Participant or Beneficiary who is entitled to receive
any payment hereunder to be incompetent to receive the same by reason of age,
illness, infirmity or incapacity of any kind, the Administrative Committee may
direct the Trustee to apply such payment directly for the benefit of such
person, or to make payment to any person selected by the Administrative
Committee to disburse the same for the benefit of the Participant or
Beneficiary. Payments made pursuant to this Section 14.05 shall operate as a
discharge, to the extent thereof, of all liabilities of the Employer, the
Trustee, the Administrative Committee and the Fund to the person for whose
benefit the payments are made.

          14.06    IMPOSSIBILITY OF DIVERSION. All Plan assets shall be held as
part of the Fund until paid to satisfy allowable Plan expenses or to provide
benefits to Participants or their Beneficiaries. It shall be impossible, unless
Section 4.10 or 14.07 applies, for any part of the fund to be used for, or
diverted to, purposes other than the exclusive benefit of the Participants or
their Beneficiaries or the payment of the reasonable expenses of the
administration of the Plan or of the Fund or both, and the Fund shall continue
for such time as may be necessary to accomplish the purposes for which it was
established.

          14.07    UNCLAIMED BENEFITS. If a Participant or Beneficiary to whom a
benefit is payable under the Plan cannot be located following a reasonable
effort to do so by the Trustee, such benefit shall be forfeited but shall be
reinstated if a claim therefor is filed by the Participant or Beneficiary.

          14.08    CONTINGENT EFFECTIVENESS OF PLAN AMENDMENT AND RESTATEMENT.
The effectiveness of this amendment and restatement of the Plan shall be subject
to and contingent upon a determination by the District Director of the Internal
Revenue Service that the Plan and Trust continue to be qualified under the
applicable provisions of the Code, so that the contributions by the Employer are
deductible when made and the Trust continues to be exempt from federal income
tax. If the District Director determines that the amendment and restatement
adversely affect the existing qualified status of the Plan and Trust, then, upon
notice to the Trustee, the Board shall have the right further to amend the Plan
or to rescind the amendment and restatement.

                                       43


<PAGE>

          14.09    CONTROLLING LAW. The Plan shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania to the extent not
preempted by federal law, which shall otherwise control.

IN WITNESS WHEREOF, and is evidence of the adoption of the Plan as amended and
restated herein, Unisys Corporation has caused this instrument to be executed by
its duly authorized representatives and corporate seal to be affixed hereto this
day of ______ 2002.


------------------------                    ----------------------------
Janet Brutschea Haugen                      David O. Aker

                                       44


<PAGE>

                                   Exhibit 12

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


<TABLE>
<CAPTION>

                                               Years Ended December 31
                                   -----------------------------------------------
                                     2002      2001     2000     1999      1998
                                   -------   -------   -------   -------   -------
<S>                                <C>       <C>       <C>       <C>       <C>
FIXED CHARGES
Interest expense                   $  66.5   $  70.0   $  79.8   $ 127.8   $ 171.7
Interest capitalized during
 the period                           13.9      11.8      11.4       3.6         -
Amortization of debt issuance
 expenses                              2.6       2.7       3.2       4.1       4.6
Portion of rental expense
 representative of interest           53.0      53.9      42.2      46.3      49.1
                                   -------   -------   -------   -------   -------
    Total Fixed Charges              136.0     138.4     136.6     181.8     225.4
                                   -------   -------   -------   -------   -------
EARNINGS
Income (loss) from continuing
 operations before income taxes      332.8     (46.5)    379.0     770.3     594.2
Add (deduct) the following:
 Share of loss (income) of
  associated companies                14.2      (8.6)    (20.5)      8.9       (.3)
 Amortization of capitalized
  interest                             8.8       5.4       2.2         -         -
                                   -------   -------   -------   -------   -------
    Subtotal                         355.8     (49.7)    360.7     779.2     593.9
                                   -------   -------   -------   -------   -------

Fixed charges per above              136.0     138.4     136.6     181.8     225.4
Less interest capitalized during
 the period                         ( 13.9)    (11.8)    (11.4)     (3.6)        -
                                   -------   -------   -------   -------   -------
Total earnings                     $ 477.9   $  76.9   $ 485.9   $ 957.4   $ 819.3
                                   =======   =======   =======   =======   =======
Ratio of earnings to fixed
 charges                              3.51        *       3.56      5.27      3.63
                                   =======   =======   =======   =======   =======
</TABLE>


* Earnings for the year ended December 31, 2001 were inadequate to cover fixed
  charges by approximately $61.5 million.




<PAGE>

FINANCIAL REVIEW

Management's Discussion and Analysis                                          20

Consolidated Statements of Income                                             32

Consolidated Balance Sheets                                                   33

Consolidated Statements of Cash Flows                                         34

Consolidated Statements of Stockholders' Equity                               35

Notes to Consolidated Financial Statements                                    36

Report of Management                                                          53

Report of Independent Auditors                                                53

Quarterly Financial Information                                               54

Five-Year Summary of Selected Financial Data                                  55



<PAGE>

UNISYS CORPORATION


MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

In recent years, the company has been transitioning its business model to
strengthen its capabilities as a services-led, technology-based solutions
provider. As part of this transformation, the company has moved away from
low-margin, commodity-type products and services to higher-end, value-added
business opportunities, such as business process outsourcing, managed
infrastructure services, business consulting, enterprise security, and high-end
server technology. As a result of this transformation, the company has seen a
fundamental shift in its revenue composition. For 2002, 76% of the company's
revenue came from its Services segment while 24% of revenue
 came from its
Technology segment. By contrast, in the year 2000, 69% of the company's revenue
came from the Services segment while 31% of revenue derived from its Technology
segment.

     In addition, during this time period the IT services and technology
industry has experienced a severe contraction in demand resulting from a weak
economic environment worldwide. In response to these business conditions, in the
fourth quarters of 2001 and 2000, the company took significant charges for
work-force reductions and other actions to reduce its cost base and reposition
its business model as a services-led, technology-enabled solutions provider. See
Note 4 of the Notes to Consolidated Financial Statements.

RESULTS OF OPERATIONS

COMPANY RESULTS

In 2002, the company reported net income of $223.0 million, or $.69 per share,
compared to a net loss of $67.1 million, or $.21 per share in 2001, and net
income of $225.0 million, or $.71 per diluted share, in 2000. The results for
2001 include a fourth-quarter pretax charge of $276.3 million, or $.64 per
share, principally for a work-force reduction, as well as an extraordinary
charge of $17.2 million, or $.05 per share, for the early extinguishment of
debt. Excluding these items, earnings per share in 2001 was $.48. The results
for 2000 include a fourth-quarter pretax charge of $127.6 million, or $.29 per
diluted share, principally for a work-force reduction, 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. See Note 4 of the Notes to Consolidated Financial Statements.

     Revenue for 2002 was $5.61 billion compared to $6.02 billion in 2001 and
$6.89 billion in 2000. Revenue in 2002 decreased 7% from the prior year. The
decrease was due to a decline in Technology revenue of 16% as well as a 4%
decline in Services revenue. Foreign currency fluctuations had a negligible
impact on revenue in 2002. Revenue in 2001 decreased 13% from 2000. The decrease
was due to a decline in Technology revenue of 27% as well as a 6% decline in
Services revenue. Excluding the negative impact of foreign currency
fluctuations, revenue in 2001 declined 9%. Revenue from international operations
in 2002, 2001 and 2000 was $3.11 billion, $3.42 billion and $4.01 billion,
respectively. Revenue from U.S. operations was $2.50 billion in 2002, $2.60
billion in 2001 and $2.88 billion in 2000.

     Total gross profit percent was 30.1% in 2002, 24.6% (27.4% exclusive of the
fourth-quarter charge of $163.8 million) in 2001 and 30.3% (31.2% exclusive of
the fourth-quarter charge of $56.1 million) in 2000. The increase in gross
profit in 2002 from 2001 was principally due to the company's focus on higher
value-added business opportunities and continued tight cost controls, including
the personnel reduction actions taken in the last two years. The decrease in the
2001 gross profit margin from 2000 primarily reflected lower sales of
high-margin enterprise servers and services, which were impacted by the general
falloff in demand industrywide for information technology products and services.

     Selling, general and administrative expenses were $.99 billion in 2002
(17.7% of revenue), $1.16 billion in 2001 ($1.07 billion or 17.8% of revenue
excluding the fourth-quarter charge of $83.2 million) and $1.33 billion in 2000
($1.28 billion or 18.5% of revenue excluding the fourth-quarter charge of $51.9
million). The decreases, net of the impacts of the fourth-quarter charges in
2001 and 2000, reflect the benefits of the personnel reduction actions announced
in the fourth quarter of 2001 and 2000 and continued tight cost controls.

20


<PAGE>

     Research and development ("R&D") expenses in 2002 were $273.3 million
compared to $331.5 million in 2001 ($303.9 million before the fourth-quarter
charge of $27.6 million) and $333.6 million in 2000 ($315.4 million before the
fourth-quarter charge of $18.2 million). The lower level of R&D reflects changes
that the company has made to improve efficiencies, including the consolidation
of R&D activities in systems integration to improve synergies and the use of
lower-cost offshore resources for software support. Although the amount of R&D
is down, the company continues to invest in high-end Cellular MultiProcessing
(CMP) server technology and in key programs within its industry practices.

     In 2002, the company reported operating income of $423.2 million, or 7.5%
of revenue, compared to a loss of $4.5 million in 2001 ($270.1 million income or
4.5% of revenue before the fourth-quarter charge of $274.6 million) and income
of $426.8 million in 2000 ($553.0 million or 8.0% of revenue before the fourth-
quarter charge of $126.2 million).

     Interest expense was $66.5 million in 2002, $70.0 million in 2001 and $79.8
million in 2000. The decline in 2002 was due to lower average interest rates and
an increase in 2002 over 2001 in capitalized interest expense. The decline in
2001 was principally due to lower average borrowings and lower average interest
rates.

     Other income (expense), net, which can vary from year to year, was an
expense of $23.9 million in 2002, income of $28.0 million in 2001 and income of
$32.0 million in 2000. The difference in 2002 from 2001 was principally due to
foreign exchange losses of $1.2 million in 2002 compared to foreign exchange
gains of $21.4 million in 2001 (principally relating to Latin America) and
equity investment losses of $12.4 million in 2002 (principally due to a charge
of $21.8 million relating to the company's share of an early retirement charge
recorded by Nihon Unisys, Ltd.) compared to gains of $10.4 million in 2001.

     Pension income for 2002 was $143.5 million compared to $170.0 million in
2001 and $139.0 million in 2000. At the beginning of each year, accounting rules
require that the company establish an expected long-term rate of return on its
pension plan assets. The principal reason for the decline in pension income in
2002 was that, effective January 1, 2002, the company reduced its expected
long-term rate of return on plan assets for its U.S. pension plan to 9.5% from
10.0%. This change caused 2002 pension income in the U.S. to decline by
approximately $24 million from the 2001 amount. The company records pension
income or expense, as well as other employee-related costs such as FICA and
medical insurance costs, in operating income in the following income statement
categories: cost of sales; selling, general and administrative expenses; and
research and development expenses. The amount allocated to each line is based on
where the salaries of the active employees are charged.

     Income before income taxes in 2002 was $332.8 million compared to a loss of
$46.5 million in 2001 ($229.8 million income excluding the fourth-quarter charge
of $276.3 million) and income of $379.0 million in 2000 ($506.6 million income
excluding the fourth-quarter charge of $127.6 million).

     The provision for income taxes in 2002 was $109.8 million (33% effective
tax rate) compared to $3.4 million ($75.9 million excluding the fourth-quarter
charge of $72.5 million, representing a 33% effective tax rate) in 2001 and
$134.2 million ($172.3 million excluding the fourth-quarter charge of $38.1
million, representing a 34% tax rate) in 2000. It is expected that the effective
tax rate will be 33% for 2003.

     At December 31, 2002, 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, 2002, 2001 and 2000, total direct and indirect
sales to NUL were approximately $270 million, $340 million and $530 million,
respectively.

     At December 31, 2002, the market value of the company's investment in NUL
was approximately $171 million and the amount recorded on the company's books
was $110.7 million, which is net of $80.4 million relating to the company's
share of NUL's minimum pension liability adjustment. 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 the
market value. The company would reflect impairment in this investment only if
the loss in value of the investment were deemed to be other than a temporary
decline.

                                                                              21


<PAGE>

SEGMENTS RESULTS

The company has two business segments: Services and Technology. Revenue
classifications by segment are as follows: Services - systems integration,
outsourcing, infrastructure services, and core maintenance; Technology -
enterprise-class servers and specialized technologies. The accounting policies
of each business segment are the same as those followed by the company as a
whole. Intersegment sales and transfers are priced as if the sales or transfers
were to third parties. Accordingly, the Technology segment recognizes
intersegment revenue and manufacturing profit on hardware and software shipments
to customers under Services contracts. The Services segment, in turn, recognizes
customer revenue and marketing profit on such shipments of company hardware and
software to customers. The Services segment also includes the sale of hardware
and software products sourced from third parties that are sold to customers
through the company's Services channels. In the company's consolidated
statements of income, the manufacturing costs of products sourced from the
Technology segment and sold to Services customers are reported in cost of
revenue for Services. Also included in the Technology segment's sales and
operating profit are sales of hardware and software sold to the Services segment
for internal use in Services engagements. The amount of such profit included in
operating income of the Technology segment for the years ended December 31,
2002, 2001 and 2000, was $19.2 million, $21.8 million and $23.6 million,
respectively. The profit on these transactions is eliminated in Corporate. The
company evaluates business segment performance on operating income exclusive of
restructuring charges and unusual and nonrecurring items, which are included in
Corporate. All other corporate and centrally incurred costs are allocated to the
business segments based principally on revenue, employees, square footage or
usage.

     Information by business segment for 2002, 2001 and 2000 is presented below:


<TABLE>
<CAPTION>
          (Millions of dollars)              Total      Eliminations     Services      Technology
          ----------------------------------------------------------------------------------------
          <S>                            <C>            <C>            <C>            <C>
          2002
          --------------
          Customer revenue               $    5,607.4                  $    4,285.1   $    1,322.3
          Intersegment                                  $     (331.9)          38.8          293.1
                                         ---------------------------------------------------------
          Total revenue                  $    5,607.4   $     (331.9)  $    4,323.9   $    1,615.4
                                         ---------------------------------------------------------
          Gross profit percent                   30.1%                         22.2%          46.5%
          Operating income percent                7.5%                          5.9%          11.7%

          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%
          ----------------------------------------------------------------------------------------
</TABLE>


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

     In the Services segment, customer revenue was $4.29 billion in 2002, $4.44
billion in 2001 and $4.74 billion in 2000. Revenue in 2002 was down 4% from
2001, as an 11% increase in outsourcing ($1.44 billion in 2002 compared to $1.30
billion in 2001) was more than offset by a 24% decline in infrastructure
services ($.83 billion in 2002 compared to $1.09 billion in 2001) and a 4%
decline in core maintenance revenue ($.56 billion in 2002 compared to $.58
billion in 2001). Systems integration revenue in 2002 was $1.46 billion compared
to $1.47 billion in 2001. Services customer revenue in 2001 was down 6% from
2000, as a 9% increase in outsourcing was more than offset by a 17%

22


<PAGE>

decline in infrastructure services, an 8% decline in systems integration and a
7% decline in core maintenance revenue. Within the Services segment, the change
in revenue in 2002 from 2001 reflects market conditions. Market demand in the
Services segment currently varies by revenue classification. Demand for services
that drive short-term cost and process efficiencies (outsourcing) remains
strong, while market demand for project-based work (systems integration and
infrastructure services) remains weak. The growth in outsourcing revenue, which
was particularly driven by growth in business process outsourcing, and the
decline in both systems integration and infrastructure services were reflective
of these market conditions. In addition, the decline in Services customer
revenue in 2002 from 2001 reflected the company's de-emphasis in 2001 of
low-margin commodity hardware sales within infrastructure services contracts.
The core maintenance decline is reflective of the long-term industry trend for
reduction in maintenance, as the underlying equipment reliability has improved
over time. Additionally, the decline in Services customer revenue in 2001 from
2000 reflected the company's de-emphasis in 2001 of low-margin commodity
hardware sales within infrastructure services contracts. Services gross profit
was 22.2% in 2002, 19.7% in 2001 and 21.6% in 2000, and Services operating
income percent was 5.9% in 2002, 2.1% in 2001 and 1.7% in 2000. The company
achieved the margin improvements in 2002 by executing its strategy of selective
pursuit of higher value-added business opportunities and resizing its work force
to meet the market demand. The decrease in 2001 margins compared to 2000 was
largely due to a lower content of higher-margin systems integration and core
maintenance revenue. In addition, margins in 2001 were negatively impacted by
the start-up of several large outsourcing contracts. Typically, 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.

     In the Technology segment, customer revenue was $1.32 billion in 2002,
$1.57 billion in 2001 and $2.14 billion in 2000. Demand throughout the period in
the Technology segment remained weak industrywide as customers deferred spending
on new computer hardware and software. Revenue in 2002 was down 16% from 2001,
due to a 30% decrease in sales of specialized technology products ($.37 billion
in 2002 compared to $.52 billion in 2001) and a 9% decline in sales of
enterprise-class servers ($.96 billion in 2002 compared to $1.05 billion in
2001). In addition to weak industrywide demand for technology products and
software, the decline in customer revenue in 2002 reflected lower commodity
hardware sales as a result of the company's decision to de-emphasize sales of
these 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 as a result
of the company's decision to de-emphasize sales of these products. Technology
gross profit percent was 46.5% in 2002, 43.0% in 2001 and 44.7% in 2000, and
Technology operating income percent was 11.7% in 2002, 11.6% in 2001 and 17.7%
in 2000. The margin improvements in 2002 primarily reflected a higher proportion
of high-end, higher-margin products within ClearPath revenue, increased demand
for high-end payment systems products and continued tight cost controls. The
decrease in 2001 margins was due in large part to lower sales of high-end
ClearPath systems as compared to 2000.

NEW ACCOUNTING PRONOUNCEMENTS

Effective January 1, 2002, the company adopted Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." 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. SFAS No. 142 required the company to perform a
transitional impairment test of its goodwill as of January 1, 2002, as well as
perform impairment tests on an annual basis and whenever events or circumstances
occur indicating that the goodwill may be impaired. During 2002, the company
performed its transitional and annual impairment tests, which indicated that the
company's goodwill was not impaired.

     Effective January 1, 2002, the company adopted SFAS No. 143, "Accounting
for Asset Retirement Obligations." This statement addresses financial accounting
and reporting for legal obligations associated with the retirement of tangible
long-lived assets that result from the acquisition, construction, development
and normal operation of a long-lived asset. SFAS No. 143 requires that the fair
value of a liability for an asset retirement obligation be recognized in the
period in which it is incurred if a reasonable estimate of fair value can be
made. The associated

                                                                              23


<PAGE>

asset retirement costs are capitalized as part of the carrying amount of the
long-lived asset and subsequently allocated to expense over the asset's useful
life. Adoption of SFAS No. 143 had no effect on the company's consolidated
financial position, consolidated results of operations, or liquidity.

     Effective January 1, 2002, the company adopted SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets." This statement addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. SFAS No. 144 requires an impairment loss to be recognized only if the
carrying amounts of long-lived assets to be held and used are not recoverable
from their expected undiscounted future cash flows. Adoption of SFAS No. 144 had
no effect on the company's consolidated financial position, consolidated results
of operations, or liquidity.

     In April 2002, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections." SFAS No. 145 rescinds SFAS
No. 4, which required that all gains and losses from extinguishment of debt be
reported as an extraordinary item. The provisions of SFAS No. 145 related to the
rescission of SFAS No. 4 must be applied in fiscal years beginning after May 15,
2002. The company will adopt this statement effective January 1, 2003.
Previously recorded losses on the early extinguishment of debt that were
classified as an extraordinary item in prior periods will be reclassified to
other income (expense), net. The adoption of SFAS No. 145 will have no effect on
the company's consolidated financial position, consolidated results of
operations, or liquidity.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS No. 146 replaces previous accounting guidance provided by Emerging Issues
Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)," and will be effective for the company for
exit or disposal activities initiated after December 31, 2002. The company does
not believe that adoption of this statement will have a material impact on its
consolidated financial position, consolidated results of operations, or
liquidity.

     In November 2002, the FASB issued EITF Issue No. 00-21, "Accounting for
Revenue Arrangements with Multiple Deliverables." This issue addresses how to
account for arrangements that may involve the delivery or performance of
multiple products, services and/or rights to use assets. The final consensus of
this issue is applicable to agreements entered into in fiscal periods beginning
after June 15, 2003. Additionally, companies will be permitted to apply the
guidance in this issue to all existing arrangements as the cumulative effect of
a change in accounting principle in accordance with APB Opinion No. 20,
"Accounting Changes." The company does not believe that adoption of this issue
will have a material impact on its consolidated financial position, consolidated
results of operations, or liquidity.

     In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No.
5, 57, and 107 and Rescission of FASB Interpretation No. 34" ("FIN No. 45"). The
interpretation requires that upon issuance of a guarantee, the entity must
recognize a liability for the fair value of the obligation it assumes under that
obligation. This interpretation is intended to improve the comparability of
financial reporting by requiring identical accounting for guarantees issued with
separately identified consideration and guarantees issued without separately
identified consideration. For the company, the initial recognition, measurement
provision and disclosure requirements of FIN No. 45 are applicable to guarantees
issued or modified after December 31, 2002. The company is currently evaluating
what impact, if any, adoption of FIN No. 45 will have on its consolidated
financial position, consolidated results of operations, or liquidity.

     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN No. 46"). This interpretation clarifies the
application of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements," to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN No. 46 applies
immediately to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that
date. For the company's synthetic lease, as described in Note 12 of the Notes to
Consolidated Financial Statements, FIN No. 46 is effective for the period
beginning July 1, 2003.

24


<PAGE>

FINANCIAL CONDITION

Cash and cash equivalents at December 31, 2002, were $301.8 million compared to
$325.9 million at December 31, 2001.

     During 2002, cash provided by operations was $324.5 million compared to
$202.4 million in 2001, principally reflecting strong working capital management
and an increase in profitability. Cash expenditures related to both current and
prior-year restructuring actions (which are included in operating activities) in
2002, 2001 and 2000 were $104.4 million, $71.5 million and $26.3 million,
respectively, and are expected to be approximately $66 million in 2003,
principally for international work-force reductions and facility costs.
Personnel reductions in 2002 related to both current and prior-year
restructuring actions were approximately 1,900 and are expected to be
approximately 630 in 2003.

     Cash used for investing activities in 2002 was $379.2 million compared to
$325.6 million for 2001. The increase was principally due to net purchases of
investments (derivative financial instruments used to manage the company's
exposure to market risks from changes in foreign currency exchange rates) of
$38.3 million for 2002 compared to net proceeds of $19.7 million in the
prior-year period. In 2002, the investment in marketable software was $139.9
million and capital additions to properties was $196.2 million, which combined
was essentially flat compared to the prior-year period.

     Cash provided by financing activities during 2002 was $25.3 million
compared to $71.6 million in 2001. In 2002, the company had a reduction in
short-term borrowings of $1.6 million compared to a reduction of $127.7 million
in 2001. In addition, the prior year included proceeds from issuance of
long-term debt of $536.5 million and payment of long-term debt of $370.8
million, as described below.

     At December 31, 2002, total debt was $829.7 million, an increase of $3.6
million from December 31, 2001. See Note 9 of the Notes to Consolidated
Financial Statements for components of the company's long-term debt.

     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 2001, the company also
completed a cash tender offer for $319.2 million principal amount of its 11 3/4%
senior notes due 2004 and 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 after-tax charge of $19.8 million,
or $.06 per diluted share, for the call premium and unamortized debt expense.

     The company has a $450 million credit agreement that expires in March 2004.
As of December 31, 2002, there were no borrowings under this 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, a minimum level of net worth and limitations on certain types of
transactions, which could reduce the amount the company is able to borrow.
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.

     In addition, the company and certain international subsidiaries have access
to certain uncommitted lines of credit from various banks. 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 expires in December 2003. See Note 5 of the Notes to
Consolidated Financial Statements.

     At December 31, 2002, the company had short-term borrowings of $77.3
million. Of this amount, $34.1 million was borrowed by the company's Brazilian
subsidiaries in their local currency at a weighted average interest rate at
December 31st of 28.0%, and $43.2 million was borrowed principally by other
international subsidiaries at a weighted average interest rate at December 31st
of 5.5%.

     At December 31, 2002, the company has met all 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.

                                                                              25


<PAGE>

     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 12 of the Notes to Consolidated
Financial Statements, at December 31, 2002, the company had certain cash
obligations, which are due as follows:


<TABLE>
<CAPTION>
(Millions)                               Total      Less than 1 year   1-3 years    4-5 years    After 5 years
---------------------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>                <C>          <C>          <C>
Notes payable                          $     77.3   $           77.3
Long-term debt                              750.0                      $    150.0   $    400.0   $        200.0
Capital lease obligations                     7.6                4.4          2.8           .4
Operating leases, net of sublease
 income                                     581.0              135.7        171.9        103.3            170.1
Minimum purchase obligations                 53.7               33.7         20.0
Work-force reductions                        53.1               53.1
                                       ------------------------------------------------------------------------
Total                                  $  1,522.7   $          304.2   $    344.7   $    503.7   $        370.1
---------------------------------------------------------------------------------------------------------------
</TABLE>


     As more fully described in Note 12 of the Notes to Consolidated Financial
Statements, the company could have an additional obligation under an operating
lease for one of its facilities.

     At December 31, 2002, the company had outstanding standby letters of credit
and surety bonds of approximately $340 million related to performance and
payment guarantees. On the basis of 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
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 an
effective registration statement covering $1.5 billion of debt or equity
securities, which enables the company to be prepared for future market
opportunities.

     Stockholders' equity decreased $1.3 billion during 2002, principally
reflecting a minimum pension liability adjustment of $1.5 billion and currency
translation of $33.8 million, offset in part by net income of $223.0 million,
$46.9 million for issuance of stock under stock option and other plans, and $3.5
million of tax benefits related to employee stock plans.

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 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 13 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, 2002 and
2001, the analysis indicated that such market movements would have reduced the
estimated fair value of these derivative financial instruments by approximately
$45 million and $25 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.

26


<PAGE>

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 10 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 upfront 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 systematically over future periods as services
are delivered or performed.

     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 setup 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 useful life or the term of the contract.

     At December 31, 2002 and 2001, the net capitalized amount related to
outsourcing contracts was $321.0 million and $217.8 million, respectively,
consisting of $163.0 million and $80.8 million, respectively, reported in
properties and $158.0 million and $137.0 million, respectively, of net
contract-related costs reported in other long-term assets. The contract-related
costs are tested for recoverability quarterly.

SYSTEMS INTEGRATION

For long-term systems integration contracts, the company recognizes revenue and
profit as the 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 the 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 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 upon
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. For other systems integration
projects, the company recognizes revenue when the services have been performed.

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, 2002 and 2001, the company had deferred tax assets in
excess of deferred tax liabilities of $2,178 million and $1,376 million,
respectively. For the reasons cited below, at December 31, 2002 and 2001,
management determined that it is more likely than not that $1,726 million and
$1,034 million, respectively, of such assets will be realized, resulting in a
valuation allowance of $452 million and $342 million, respectively.

                                                                              27


<PAGE>

     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 $5.2 billion of future taxable income (predominately U.S.)
ultimately is needed to realize the net deferred tax assets at December 31,
2002. 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.

     A significant element in determining the company's pension income (expense)
in accordance with SFAS No. 87 is the expected return on plan assets. In 2002,
the company assumed that the expected long-term rate of return on U.S. plan
assets would be 9.5%. For 2003, the company has assumed that the expected
long-term rate of return on U.S. plan assets will be 8.75%. 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).

     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 (i)
receive one of the two highest ratings given by a recognized ratings agency, and
(ii) are currently available and expected to be available during the period to
maturity of the pension benefits. At December 31, 2002, the company determined
this rate to be 6.75% for its U.S. defined benefit pension plan, a decrease of
75 basis points from the rate used at December 31, 2001. The net effect of
changes in the discount rate, as well as the net effect of other changes in
actuarial assumptions and experience, has been deferred in accordance with SFAS
No. 87.

     For the year ended December 31, 2002, the company recognized consolidated
pretax pension income of $143.5 million, compared to $170.0 million in 2001. The
principal reason for the decline was the reduction in the expected long-term
rate of return on U.S. pension plan assets from 10.0% in 2001 to 9.5% in 2002.

     For 2003, the company expects pension income to be approximately $30
million, approximately $114 million less than 2002. Approximately $90 million of
the decline is in the U.S. and $24 million is in international subsidiaries,
principally the United Kingdom. The most significant assumptions underlying
these estimates, namely the expected long-term rate of return on plan assets and
the discount rate, were chosen by management with consultation from and
concurrence of the company's actuaries.

28


<PAGE>

     For 2003, the company has assumed that the expected long-term rate of
return on plan assets for its U.S. defined benefit pension plan will be 8.75%,
down from 9.50% in 2002. This will cause U.S. pension income to decline by
approximately $35 million. In addition, the discount rate used for the U.S.
pension plan has declined to 6.75% at December 31, 2002, from 7.50% at December
31, 2001. This will cause U.S. pension income to decline by approximately $22
million. The remainder of the decline in the U.S. of approximately $33 million
is due to lower expected return on assets due to asset declines (about $27
million) and the recent prospective change to a cash balance plan (about $6
million). The decline of $24 million in international plans is principally due
to discount rate declines, lower expected longterm rates of return on plan
assets, and currency translation.

     During 2002, the company made cash contributions to its defined benefit
pension plans of $42.2 million and expects to make cash contributions of
approximately $60 million during 2003. In accordance with regulations governing
contributions to U.S. defined benefit pension plans, the company is not required
to fund its U.S. defined benefit plan in 2003.

     At December 31st of each year, accounting rules require a company to
recognize a liability on its balance sheet for each pension plan if the fair
value of the assets of that pension plan is less than the present value of the
pension obligation (the accumulated benefit obligation, or "ABO"). This
liability is called a "minimum pension liability." Concurrently, any existing
prepaid pension asset for the pension plan must be removed. These adjustments
are recorded as a charge in "accumulated other comprehensive income (loss)" in
stockholders' equity. If at any future year-end, the fair value of the pension
plan assets exceeds the ABO, the charge to stockholders' equity would be
reversed for such plan. Alternatively, if the fair market value of pension plan
assets experiences further declines or the discount rate was to be reduced,
additional charges to accumulated other comprehensive income (loss) may be
required at a future year-end.

     At December 31, 2002, for all of the company's defined benefit pension
plans, as well as the defined benefit pension plan of NUL (an equity
investment), the ABO exceeded the fair value of pension plan assets. As a
result, the company was required to do the following: remove from its assets
$1.4 billion of prepaid pension plan assets; increase its accrued pension
liability by approximately $700 million; reduce its investments at equity by
approximately $80 million relating to the company's share of NUL's minimum
pension liability; and offset these changes by a charge to other comprehensive
loss in stockholders' equity of $2.2 billion, or $1.5 billion net of tax.

     This accounting has no effect on the company's net income, liquidity or
cash flows. Financial ratios and net worth covenants in the company's credit
arrangements and debt securities are unaffected by the charge to stockholders'
equity caused by recording a minimum pension liability.

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.
Forward-looking statements provide current expectations of future events and
include any statement that does not directly relate to any historical or current
fact. Words such as "anticipates," "believes," "expects," "estimates,"
"intends," "plans," "projects" and similar expressions may identify such
forward-looking statements. 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. These other
factors include, but are not limited to, those discussed below. Any
forward-looking statement speaks only as of the date on which that statement is
made. The company assumes no obligation to update any forward-looking statement
to reflect events or circumstances that occur after the date on which the
statement is made.

     The company's business is affected by changes in general economic and
business conditions. It also could be affected by acts of war, terrorism or
natural disasters. The company is also facing a very challenging economic
environment. In this environment, many organizations are delaying planned
purchases of information technology products and services. If the level of
demand for the company's products and services declines in the future, the
company's business could be adversely affected.

                                                                              29


<PAGE>

     The information services and technology markets in which the company
operates include a large number of companies vying for customers and market
share both domestically and internationally. The company's competitors include
computer hardware manufacturers, software providers, systems integrators,
consulting and other professional services firms, outsourcing providers, and
infrastructure services providers. Some of the company's competitors may develop
competing products and services that offer better price-performance or that
reach the market in advance of the company's offerings. Some competitors also
have or may develop greater financial and other resources than the company, with
enhanced ability to compete for market share, in some instances through
significant economic incentives to secure contracts. Some may also be better
able to compete for skilled professionals. Any of this could have an adverse
effect on the company's business. Future results will depend on the company's
ability to mitigate the effects of aggressive competition on revenues, pricing
and margins and on the company's ability to attract and retain talented people.

     The company operates in a highly volatile industry characterized by rapid
technological change, evolving technology standards, short product life cycles
and continually changing customer demand patterns. Future success will depend in
part on the company's ability to anticipate and respond to these market trends
and to design, develop, introduce, deliver or obtain new and innovative products
and services on a timely and cost-effective basis. The company may not be
successful in anticipating or responding to changes in technology, industry
standards or customer preferences, and the market may not demand or accept its
services and product offerings. In addition, products and services developed by
competitors may make the company's offerings less competitive.

     The company's future results will depend in part on its ability to continue
to accelerate growth in outsourcing and infrastructure services. The company's
outsourcing contracts are multiyear engagements under which the company takes
over management of a client's technology operations, business processes or
networks. The company will need to maintain a strong financial position in order
to grow its outsourcing business. In a number of these arrangements, the company
hires certain of its clients' employees and may become responsible for the
related employee obligations, such as pension and severance commitments.

     In addition, system development activity on outsourcing contracts may
require the company to make significant upfront investments. As long-term
relationships, these outsourcing contracts provide a base of recurring revenue.
However, 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.

     Future results will also depend in part on the company's ability to drive
profitable growth in systems integration and consulting. The company's systems
integration and consulting business has been adversely affected by the current
economic slowdown. In this economic environment, customers have been delaying
systems integration projects. The company's ability to grow profitably in this
business will depend in part on an improvement in economic conditions and a
pick-up in demand for systems integration projects. It will also depend on the
success of the actions the company has taken to enhance the skills base and
management team in this business and to refocus the business on integrating
best-of-breed, standards-based solutions to solve client needs. In addition,
profit margins in this business are largely a function of the rates the company
is able to charge for services and the chargeability of its professionals. If
the company is unable to maintain the rates it charges, or appropriate
chargeability, for its professionals, profit margins will suffer. The rates the
company is able to charge for services are affected by a number of factors,
including clients' perception of the company's ability to add value through its
services; introduction of new services or products by the company or its
competitors; pricing policies of competitors; and general economic conditions.
Chargeability is also affected by a number of factors, including the company's
ability to transition employees from completed projects to new engagements; and
its ability to forecast demand for services and thereby maintain an appropriate
head count.

30


<PAGE>

     Future results will also depend in part on market acceptance of the
company's high-end enterprise servers. In its technology business, the company
is focusing its resources on high-end enterprise servers based on its CMP
architecture. The company's CMP servers are designed to provide mainframe-class
capabilities with compelling price-performance by making use of standards-based
technologies such as Intel chips and Microsoft operating system software. The
company has transitioned both its legacy ClearPath servers and its Intel-based
ES7000s to the CMP platform, creating a common platform for all the company's
high-end server lines. Future results will depend, in part, on customer
acceptance of the new CMP-based ClearPath Plus systems and the company's ability
to maintain its installed base for ClearPath. In addition, future results will
depend, in part, on the company's ability to generate new customers and increase
sales of the Intel-based ES7000 line. The company believes there is significant
growth potential in the developing market for high-end Intel-based servers
running Microsoft operating system software. However, competition in this new
market is likely to intensify in coming years, and the company's ability to
succeed will depend on its ability to compete effectively against enterprise
server competitors with more substantial resources and its ability to achieve
market acceptance of the ES7000 technology by clients, systems integrators, and
independent software vendors.

     A number of the company's long-term contracts for infrastructure services,
outsourcing, help desk and similar services do not provide for minimum
transaction volumes. As a result, revenue levels are not guaranteed. In
addition, some of these contracts may permit termination or may impose other
penalties if the company does not meet the performance levels specified in the
contracts.

     Some of the company's systems integration contracts are fixed-priced
contracts under which the company assumes the risk for delivery of the
contracted services and products at an agreed-upon fixed price. At times the
company has experienced problems in performing some of these fixed-price
contracts on a profitable basis and has provided periodically for adjustments to
the estimated cost to complete them. Future results will depend on the company's
ability to perform these services contracts profitably.

     The company frequently enters into contracts with governmental entities.
Risks and uncertainties associated with these government contracts include the
availability of appropriated funds and contractual provisions that allow
governmental entities to terminate agreements at their discretion before the end
of their terms.

     The success of the company's business is dependent on strong, long-term
client relationships and on its reputation for responsiveness and quality. As a
result, if a client is not satisfied with the company's services or products,
its reputation could be damaged and its business adversely affected. In
addition, if the company fails to meet its contractual obligations, it could be
subject to legal liability, which could adversely affect its business, operating
results and financial condition.

     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, on the ability of external suppliers to deliver components 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 55% of the company's total revenue derives from international
operations. The risks of doing business internationally include foreign currency
exchange rate fluctuations, changes in political or economic conditions, trade
protection measures, import or export licensing requirements, multiple and
possibly overlapping and conflicting tax laws, and weaker intellectual property
protections in some jurisdictions.

     The company cannot be certain that its services and products do not
infringe on the intellectual property rights of third parties, and it may have
infringement claims asserted against it or against its clients. These claims
could cost the company money, prevent it from offering some services or
products, or damage its reputation.

                                                                              31


<PAGE>

UNISYS CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
Year Ended December 31 (Millions, except per share data)         2002            2001            2000
---------------------------------------------------------------------------------------------------------
<S>                                                          <C>             <C>             <C>
Revenue
Services                                                     $    4,285.1    $    4,444.6    $    4,741.6
Technology                                                        1,322.3         1,573.5         2,143.4
                                                             --------------------------------------------
                                                                  5,607.4         6,018.1         6,885.0
                                                             --------------------------------------------
Costs and Expenses
Cost of revenue:
  Services                                                        3,244.9         3,624.6         3,623.8
  Technology                                                        674.0           910.2         1,172.1
                                                             --------------------------------------------
                                                                  3,918.9         4,534.8         4,795.9
Selling, general and administrative expenses                        992.0         1,156.3         1,328.7
Research and development expenses                                   273.3           331.5           333.6
                                                             --------------------------------------------
                                                                  5,184.2         6,022.6         6,458.2
                                                             --------------------------------------------
Operating income (loss)                                             423.2            (4.5)          426.8
Interest expense                                                     66.5            70.0            79.8
Other income (expense), net                                         (23.9)           28.0            32.0
                                                             --------------------------------------------
Income (loss) before income taxes                                   332.8           (46.5)          379.0
Provision for income taxes                                          109.8             3.4           134.2
                                                             --------------------------------------------
Income (loss) before extraordinary items                            223.0           (49.9)          244.8
Extraordinary items                                                                 (17.2)          (19.8)
                                                             --------------------------------------------
Net income (loss)                                            $      223.0    $      (67.1)   $      225.0
                                                             --------------------------------------------
Earnings (loss) per share - Basic
Before extraordinary items                                   $        .69    $       (.16)   $        .78
Extraordinary items                                                                  (.05)           (.06)
                                                             --------------------------------------------
Total                                                        $        .69    $       (.21)   $        .72
                                                             --------------------------------------------
Earnings (loss) per share - Diluted
Before extraordinary items                                   $        .69    $       (.16)   $        .77
Extraordinary items                                                                  (.05)           (.06)
                                                             --------------------------------------------
Total                                                        $        .69    $       (.21)   $        .71
---------------------------------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.

32


<PAGE>

UNISYS CORPORATION

CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
December 31 (Millions)                                   2002           2001
--------------------------------------------------------------------------------
<S>                                                  <C>            <C>
ASSETS
Current assets
Cash and cash equivalents                            $      301.8   $      325.9
Accounts and notes receivable, net                          955.6        1,093.7
Inventories:
  Parts and finished equipment                              165.3          201.6
  Work in process and materials                             127.5          144.2
Deferred income taxes                                       311.3          342.6
Other current assets                                         84.5           96.1
                                                     ---------------------------
Total                                                     1,946.0        2,204.1
                                                     ---------------------------
Properties                                                1,542.7        1,460.4
Less - Accumulated depreciation and amortization            932.9          910.8
                                                     ---------------------------
Properties, net                                             609.8          549.6
                                                     ---------------------------
Investments at equity                                       111.8          212.3
Marketable software, net                                    311.8          287.9
Prepaid pension cost                                                     1,221.0
Deferred income taxes                                     1,476.0          747.8
Goodwill                                                    160.6          159.0
Other long-term assets                                      365.4          387.4
                                                     ---------------------------
Total                                                $    4,981.4   $    5,769.1
--------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable                                        $       77.3   $       78.9

Current maturities of long-term debt                          4.4            2.2
Accounts payable                                            532.5          694.9
Other accrued liabilities                                 1,341.4        1,302.9
Income taxes payable                                        228.9          234.6
                                                     ---------------------------
Total                                                     2,184.5        2,313.5
                                                     ---------------------------
Long-term debt                                              748.0          745.0
Accrued pension liability                                   727.7           10.1
Other long-term liabilities                                 465.2          587.8
STOCKHOLDERS' EQUITY
Common stock                                                  3.3            3.2
Accumulated deficit                                        (673.5)        (896.5)
Other capital                                             3,763.1        3,712.8
Accumulated other comprehensive loss                     (2,236.9)        (706.8)
                                                     ---------------------------
Stockholders' equity                                        856.0        2,112.7
                                                     ---------------------------
Total                                                $    4,981.4   $    5,769.1
--------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.

                                                                              33


<PAGE>

UNISYS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
Year Ended December 31 (Millions)                                          2002            2001            2000
-------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>             <C>             <C>
Cash flows from operating activities
Income (loss) before extraordinary items                               $      223.0    $      (49.9)   $      244.8
Add (deduct) items to reconcile income (loss) before extraordinary
 items to net cash provided by operating activities:
    Extraordinary items                                                                       (17.2)          (19.8)
    Depreciation and amortization of properties                               154.5           140.2           135.6
    Amortization:
      Marketable software                                                     121.0           145.5           115.5
      Deferred outsourcing contract cost                                       22.3            15.8            12.7
      Goodwill                                                                                 16.5            21.8
    Decrease (increase) in deferred income taxes, net                          39.4           (44.4)           85.6
    Decrease in receivables, net                                              156.5            72.3           158.2
    Decrease (increase) in inventories                                         53.0            79.7           (52.5)
    (Decrease) in accounts payable and other accrued liabilities             (116.5)         (144.5)         (140.0)
    (Decrease) in income taxes payable                                        (15.5)          (58.0)          (62.8)
    (Decrease) increase in other liabilities                                  (73.9)          246.5            (2.5)
    (Increase) in other assets                                               (251.2)         (238.8)          (81.9)
    Other                                                                      11.9            38.7             5.2
                                                                       --------------------------------------------
Net cash provided by operating activities                                     324.5           202.4           419.9
                                                                       --------------------------------------------
Cash flows from investing activities
Proceeds from investments                                                   3,447.1         3,028.7           790.4
Purchases of investments                                                   (3,485.4)       (3,009.0)         (716.7)
Investment in marketable software                                            (139.9)         (136.8)         (152.4)
Capital additions of properties                                              (196.2)         (199.4)         (198.3)
Purchases of businesses                                                        (4.8)           (9.1)          (13.9)
Proceeds from sales of properties                                                                              20.0
                                                                       --------------------------------------------
Net cash used for investing activities                                       (379.2)         (325.6)         (270.9)
                                                                       --------------------------------------------
Cash flows from financing activities
Net (reduction in) proceeds from short-term borrowings                         (1.6)         (127.7)          179.6
Proceeds from employee stock plans                                             29.0            33.6            51.1
Payments of long-term debt                                                     (2.1)         (370.8)         (448.0)
Proceeds from issuance of long-term debt                                                      536.5
                                                                       --------------------------------------------
Net cash provided by (used for) financing activities                           25.3            71.6          (217.3)
                                                                       --------------------------------------------
Effect of exchange rate changes on cash and cash equivalents                    5.3             (.5)          (17.7)
                                                                       --------------------------------------------
Decrease in cash and cash equivalents                                         (24.1)          (52.1)          (86.0)
Cash and cash equivalents, beginning of year                                  325.9           378.0           464.0
                                                                       --------------------------------------------
Cash and cash equivalents, end of year                                 $      301.8    $      325.9    $      378.0
-------------------------------------------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.

34


<PAGE>

UNISYS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                                            Other,       Accumulated
                                        Common Stock                   Treasury Stock    Principally       Other       Comprehensive
                                     ------------------ Accumulated -------------------    Paid-In     Comprehensive       Income
(Millions)                            Shares  Par Value   Deficit     Shares    Cost       Capital         Loss            (Loss)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>     <C>       <C>           <C>    <C>         <C>          <C>             <C>
Balance at December 31, 1999          312.5   $     3.1 $  (1,054.4)  (1.9)  $    (41.4) $   3,616.4  $      (570.4)
Issuance of stock under stock
 option and other plans                 4.8          .1                             (.7)        70.0
Net income                                                    225.0                                                   $       225.0
Other comprehensive income
  Translation adjustments                                                                                     (73.3)          (73.3)
                                                                                                                      -------------
Comprehensive income                                                                                                  $       151.7
                                                                                                                      -------------
Unearned compensation                                                                             .4
Tax benefit related to stock plans                                                              11.3
-------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000          317.3         3.2      (829.4)  (1.9)       (42.1)     3,698.1         (643.7)
Issuance of stock under stock
 option and other plans                 5.2                                         (.2)        52.2
Net loss                                                      (67.1)                                                  $       (67.1)
Other comprehensive loss                                                                                      (67.5)
  Translation adjustments                                                                                       4.4
  Cash flow hedges                                                                                    -------------
                                                                                                             (63.1)           (63.1)
                                                                                                                      -------------
Comprehensive loss                                                                                                    $      (130.2)
                                                                                                                      -------------
Unearned compensation                                                                             .2
Tax benefit related to stock plans                                                               4.6
-------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001          322.5         3.2      (896.5)  (1.9)       (42.3)     3,755.1         (706.8)
Issuance of stock under stock
 option and other plans                 5.6          .1                             (.1)        46.9
Net income                                                    223.0                                                   $       223.0
Other comprehensive loss
  Translation adjustments                                                                                     (33.8)
  Cash flow hedges                                                                                             (5.9)
  Minimum pension liability                                                                                (1,490.4)
                                                                                                      -------------
                                                                                                           (1,530.1)       (1,530.1)
                                                                                                                      -------------
Comprehensive loss                                                                                                    $    (1,307.1)
                                                                                                                      -------------

Tax benefit related to stock plans                                                               3.5
-------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2002          328.1   $     3.3 $    (673.5)  (1.9)  $    (42.4)  $  3,805.5  $    (2,236.9)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


See notes to consolidated financial statements.

                                       35


<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. 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                  12-33

Advertising costs. The company expenses all advertising costs as they are
incurred. The amount charged to expense during 2002, 2001 and 2000 was $29.3
million, $35.6 million and $38.2 million, respectively.

Revenue recognition. The company 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 postcontract software support arrangements, which are marketed
separately, is recorded on a straight-line basis over the support period for
multi-year contracts and at inception for contracts of one year or less. The
company also enters into multiple-element arrangements, which may include any
combination of hardware, software or services. In these transactions, the
company allocates the total revenue to be earned under the arrangement among the
various elements based on their relative fair value. For transactions that
include software, the allocation is based on vendor-specific objective evidence
of fair value. The company recognizes revenue on multiple-element arrangements
only if: (i) any undelivered products or services are not essential to the
functionality of the delivered products or services, (ii) the company has an
enforceable claim to receive the amount due in the event it does not deliver the
undelivered products or services, (iii) there is evidence of the fair value for
each undelivered product or service, and (iv) the revenue recognition criteria
otherwise applicable have been met for the delivered elements.

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

     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 either
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 period are based on
estimates of total projected contract costs; the estimates are continually
re-evaluated 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 upon 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.

36


<PAGE>

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, certain 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 setup and
employment obligations related to employees assumed. At December 31, 2002 and
2001, $158.0 million and $137.0 million, respectively, of these costs were
reported in other longterm assets. These costs are tested for recoverability
quarterly.

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, nonmonetary
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.

Stock-based compensation plans. The company has stock-based employee
compensation plans, which are described more fully in Note 16. The company
applies the recognition and measurement principles of APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for those plans. For stock options, no compensation expense is
reflected in net income as all stock options granted had an exercise price equal
to or greater than the market value of the underlying common stock on the date
of grant. In addition, no compensation expense is recognized for common stock
purchases under the Employees Stock Purchase Plan. Pro forma information
regarding net income and earnings per share is required by Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," and has been determined as if the company had accounted for its
stock plans under the fair value method of SFAS No. 123. For purposes of the pro
forma disclosures, the estimated fair value of the options is amortized to
expense over the options' vesting period. The following table illustrates the
effect on net income and earnings per share if the company had applied the fair
value recognition provisions of SFAS No. 123.

Years ended December 31
(Millions, except per share data)       2002        2001        2000
----------------------------------------------------------------------
Net income (loss) as reported        $   223.0   $   (67.1)  $   225.0
Deduct total stock-based employee
 compensation expense determined
 under fair value method for all
 awards, net of tax                      (49.0)      (51.8)      (42.5)
                                     ---------------------------------
Pro forma net income (loss)          $   174.0   $  (118.9)  $   182.5
                                     =================================
Earnings (loss) per share
   Basic - as reported               $     .69   $    (.21)  $     .72
   Basic - pro forma                 $     .54   $    (.37)  $     .58
   Diluted - as reported             $     .69   $    (.21)  $     .71
   Diluted - pro forma               $     .54   $    (.37)  $     .58
                                     =================================

Retirement benefits. 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 significant element in determining the company's pension
income (expense) is the expected return on plan assets. This expected return is
an assumption as to the rate of return on plan assets reflecting the average
rate of earnings expected on the funds invested or to be invested to provide for
the benefits included in the projected pension benefit obligation. The company
applies this assumed long-term rate of return 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).

     At December 31st of each year, the company determines the fair value of its
pension plan assets as well as the discount rate to be used to calculate the
present value of plan liabilities. The discount rate is an estimate of the
interest rate at which the pension benefits could be effectively settled. In
estimating the discount rate, the company looks to rates of return on
high-quality, fixed income investments currently available and expected to be
available during the period to maturity of the pension benefits. The company
specifically uses a portfolio of fixed-income securities, which receive at least
the second highest rating given by a recognized rating agency.

Reclassifications. Certain prior-year amounts have been reclassified to conform
with the 2002 presentation.

                                                                              37


<PAGE>

2 EARNINGS PER SHARE

The following table shows how earnings per share were computed for the three
years ended December 31, 2002.


<TABLE>
<CAPTION>
Year ended December 31
(Millions, except per share data)                            2002            2001          2000
---------------------------------------------------------------------------------------------------
<S>                                                      <C>            <C>            <C>
BASIC EARNINGS (LOSS) PER SHARE COMPUTATION
Income (loss) before extraordinary items                 $      223.0   $      (49.9)  $      244.8
Extraordinary items                                                            (17.2)         (19.8)
                                                         ------------------------------------------
Net income (loss)                                        $      223.0   $      (67.1)  $      225.0
                                                         ------------------------------------------
Weighted average shares (thousands)                           323,526        318,207        313,115
                                                         ------------------------------------------

BASIC EARNINGS (LOSS) PER SHARE
Before extraordinary items                               $        .69   $       (.16)  $        .78
Extraordinary items                                                             (.05)          (.06)
                                                         ------------------------------------------
Total                                                    $        .69   $       (.21)  $        .72
                                                         ------------------------------------------
DILUTED EARNINGS (LOSS) PER SHARE COMPUTATION
Income (loss) before extraordinary items                 $      223.0   $      (49.9)  $      244.8
Extraordinary items                                                            (17.2)         (19.8)
                                                         ------------------------------------------
Net income (loss)                                        $      223.0   $      (67.1)  $      225.0
                                                         ------------------------------------------
Weighted average shares (thousands)                           323,526        318,207        313,115
Plus incremental shares from assumed conversions of
 employee stock plans                                           1,218                         3,536
                                                         ------------------------------------------
Adjusted weighted average shares                              324,744        318,207        316,651
                                                         ------------------------------------------
DILUTED EARNINGS (LOSS) PER SHARE
Before extraordinary items                               $        .69   $       (.16)  $        .77
Extraordinary items                                                             (.05)          (.06)
                                                         ------------------------------------------
Total                                                    $        .69   $       (.21)  $        .71
                                                         ------------------------------------------
</TABLE>


The following shares 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 (in
thousands): 2002, 35,415; 2001, 28,653; 2000, 16,073.

3 ACCOUNTING CHANGES

Effective January 1, 2002, the company adopted SFAS No. 142, "Goodwill and Other
Intangible Assets." 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. SFAS No. 142 required
the company to perform a transitional impairment test of its goodwill as of
January 1, 2002, as well as perform impairment tests on an annual basis and
whenever events or circumstances occur indicating that the goodwill may be
impaired. During 2002, the company performed its transitional and annual
impairment tests, which indicated that the company's goodwill was not impaired.

The changes in the carrying amount of goodwill by segment for the year ended
December 31, 2002, were as follows:

(Millions)                     Total       Services    Technology
-----------------------------------------------------------------
Balance at
 December 31, 2001           $    159.0   $     41.9   $    117.1
Acquisition                         3.0          3.0
Foreign currency
 translation adjustments           (1.4)        (2.4)         1.0
                             ------------------------------------
Balance at
 December 31, 2002           $    160.6   $     42.5   $    118.1
-----------------------------------------------------------------

38


<PAGE>

     The company's net income and earnings per share adjusted to exclude
goodwill amortization was as follows:

Year ended December 31,
(Millions, except per share data)       2002         2001         2000
-------------------------------------------------------------------------
Reported income (loss)
 before extraordinary items          $    223.0   $    (49.9)  $    244.8
Add back goodwill amortization,
 net of tax                                             14.1         20.1
                                     ------------------------------------
Adjusted income (loss)
 before extraordinary items          $    223.0   $    (35.8)  $    264.9
                                     ------------------------------------
Reported net income (loss)           $    223.0   $    (67.1)  $    225.0
Add back goodwill amortization,
 net of tax                                             14.1         20.1
                                     ------------------------------------
Adjusted net income (loss)           $    223.0   $    (53.0)  $    245.1
                                     ------------------------------------
Earnings (loss) per share
 before extraordinary items
   Basic
     As reported                     $      .69   $     (.16)  $      .78
     Goodwill amortization                               .04          .06
                                     ------------------------------------
     As adjusted                     $      .69   $     (.12)  $      .84
                                     ------------------------------------
   Diluted
     As reported                     $      .69   $     (.16)  $      .77
     Goodwill amortization                               .04          .06
                                     ------------------------------------
     As adjusted                     $      .69   $     (.12)  $      .83
                                     ------------------------------------
Earnings (loss) per share
   Basic
     As reported                     $      .69   $     (.21)  $      .72
     Goodwill amortization                               .04          .06
                                     ------------------------------------
     As adjusted                     $      .69   $     (.17)  $      .78
                                     ------------------------------------
   Diluted
     As reported                     $      .69   $     (.21)  $      .71
     Goodwill amortization                               .04          .06
                                     ------------------------------------
     As adjusted                     $      .69   $     (.17)  $      .77
                                     ------------------------------------

     Effective January 1, 2002, the company adopted SFAS No. 143, "Accounting
for Asset Retirement Obligations." This statement addresses financial accounting
and reporting for legal obligations associated with the retirement of tangible
long-lived assets that result from the acquisition, construction, development
and normal operation of a long-lived asset. SFAS No. 143 requires that the fair
value of a liability for an asset retirement obligation be recognized in the
period in which it is incurred if a reasonable estimate of fair value can be
made. The associated asset retirement costs are capitalized as part of the
carrying amount of the long-lived asset and subsequently allocated to expense
over the asset's useful life. Adoption of SFAS No. 143 had no effect on the
company's consolidated financial position, consolidated results of operations,
or liquidity.

     Effective January 1, 2002, the company adopted SFAS No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets." This statement addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. SFAS No. 144 requires an impairment loss to be recognized only if the
carrying amounts of long-lived assets to be held and used are not recoverable
from their expected undiscounted future cash flows. Adoption of SFAS No. 144 had
no effect on the company's consolidated financial position, consolidated results
of operations, or liquidity.

     In April 2002, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections." SFAS No. 145 rescinds SFAS No. 4,
which required that all gains and losses from extinguishment of debt be reported
as an extraordinary item. The provisions of SFAS No. 145 related to the
rescission of SFAS No. 4 must be applied in fiscal years beginning after May 15,
2002. The company will adopt this statement effective January 1, 2003.
Previously recorded losses on the early extinguishment of debts that were
classified as an extraordinary item in prior periods will be reclassified to
other income (expense), net. Adoption of SFAS No. 145 will have no effect on the
company's consolidated financial position, consolidated results of operations,
or liquidity.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS No. 146 replaces previous accounting guidance provided by EITF Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)"
and will be effective for the company for exit or disposal activities initiated
after December 31, 2002. The company does not believe that adoption of this
statement will have a material impact on its consolidated financial position,
consolidated results of operations, or liquidity.

     In November 2002, the FASB issued EITF Issue No. 00-21, "Accounting for
Revenue Arrangements with Multiple Deliverables." This issue addresses how to
account for arrangements that may involve the delivery or performance of
multiple products, services, and/or rights to use assets. The final consensus of
this issue is applicable to agreements entered into in fiscal periods beginning
after June 15, 2003. Additionally, companies will be permitted to apply the
guidance in this issue to all existing arrangements as the cumulative effect of
a change in accounting principle in accordance with APB Opinion No. 20,
"Accounting Changes." The company does not believe that adoption of this issue
will have a material impact on its consolidated financial position, consolidated
results of operations, or liquidity.

                                                                              39


<PAGE>

     In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No.
5, 57, and 107 and Rescission of FASB Interpretation No. 34" ("FIN No. 45"). The
interpretation requires that upon issuance of a guarantee, the entity must
recognize a liability for the fair value of the obligation it assumes under that
obligation. This interpretation is intended to improve the comparability of
financial reporting by requiring identical accounting for guarantees issued with
separately identified consideration and guarantees issued without separately
identified consideration. For the company, the initial recognition, measurement
provision and disclosure requirements of FIN No. 45 are applicable to guarantees
issued or modified after December 31, 2002. The company is currently evaluating
what impact, if any, adoption of FIN No. 45 will have on its consolidated
financial position, consolidated results of operations, or liquidity.

     In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN No. 46"). This interpretation clarifies the
application of Accounting Research Bulletin No. 51, "Consolidated Financial
Statements," to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN No. 46 applies
immediately to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that
date. For the company's synthetic lease, as described in Note 12, FIN No. 46 is
effective for the period beginning July 1, 2003.

4 FOURTH-QUARTER CHARGES

2001 charge. In response to the weak economic environment in 2001, the company
took actions to 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, 1,910 people left the
company in 2001, which included 764 people who 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 in 2001 related to the involuntary reductions
were $23.3 million. These activities did not significantly affect the company's
operations while they were ongoing. A further breakdown of the individual
components of these costs follows:


<TABLE>
<CAPTION>
                                                           Work-Force
                                                         Reductions/(1)/          Idle
                                                     -----------------------     Lease
($ in Millions)            Headcount       Total         U.S.        Int'l        Costs     Other/(2)/
------------------------------------------------------------------------------------------------------
<S>                            <C>      <C>          <C>          <C>          <C>          <C>
Work-force
 reductions/(1)/
Early retirement                  764   $     58.8   $     58.8
Involuntary
 reductions                     3,001        145.9         18.8   $    127.1
                           -------------------------------------------------
  Subtotal                      3,765        204.7         77.6        127.1
Other                                         71.6                             $     29.5   $     42.1
                           ---------------------------------------------------------------------------
Total charge                    3,765        276.3         77.6        127.1         29.5         42.1
Utilized                       (1,910)      (127.2)       (62.5)       (22.6)                    (42.1)
                           ---------------------------------------------------------------------------
Balance at
 Dec. 31, 2001                  1,855        149.1         15.1        104.5         29.5   $        -
Additional
 provisions                       996         31.9          8.7         21.8          1.4
Utilized                       (1,890)       (98.0)       (13.4)       (75.5)        (9.1)
Reversal of
 excess reserves                 (330)       (20.2)        (4.6)       (12.4)        (3.2)
Other/(3)/                                     4.8          1.6          5.3         (2.1)
                           ---------------------------------------------------------------------------
Balance at
 Dec. 31, 2002                    631   $     67.6   $      7.4   $     43.7   $     16.5   $        -
                           ---------------------------------------------------------------------------
Expected future
 utilization:
   2003                           631   $     59.5   $      7.4   $     43.7   $      8.4
   2004 and thereafter                         8.1                                    8.1
------------------------------------------------------------------------------------------------------
</TABLE>


/(1)/ Includes severance, notice pay, medical and other benefits.

/(2)/ Includes product and program discontinuances, principally representing a
      provision for asset write-offs.

/(3)/ Changes in estimates and translation adjustments.

     Most of the 2001 fourth-quarter charges were related to work-force
reductions ($204.7 million), principally severance costs. Other employee-related
costs are not significant. Approximately $58.8 million of this total was funded
from the company's U.S. pension plan. The remainder of the cost related to
work-force reductions as well as idle lease costs, discussed below, is being
funded from the company's operating cash flow. The charge related to idle lease
costs was $29.5 million and relates to contractual obligations (reduced by
estimated sublease income) existing under long-term leases of vacated
facilities. Estimates of the amounts and timing of sublease income were based on
discussions with real estate brokers that considered the marketability of the
individual property involved. The charge for product and program discontinuances
was $42.1 million and principally represented capitalized marketable software
and inventory related to products or programs that were discontinued at December
31, 2001. These actions have lowered the company's cost base (principally
employee-related costs), thereby making the company better able to compete in
the marketplace.

40


<PAGE>

Cash expenditures related to the 2001 restructuring charges were approximately
$95.4 million in the year ended December 31, 2002, compared to $23.3 million in
2001. Cash expenditures are expected to be approximately $59.5 million for 2003
and $8.1 million in total for all subsequent years for idle lease costs.

     During 2002, the company reduced the accrued work-force portion of the
reserve by $17.0 million. This reduction related to 330 employees who were
designated for involuntary termination but were retained as a result of job
positions that became available due to voluntary terminations or acceptance of
alternative positions within the company. In addition, given the continuing weak
economic environment, the company identified new restructuring actions and
recorded an additional provision of $30.5 million, for a work-force reduction of
996 people.

     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 2000 restructuring charges were
$5.5 million in 2002, $39.3 million in 2001 and $8.7 million in 2000. Cash
expenditures for 2003 are expected to be approximately $2.0 million. 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      $     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
Utilized                    (6.6)          (1.3)          (3.3)        (2.0)
                      -----------------------------------------------------
Balance at
 Dec. 31, 2002        $      2.0   $          -   $        2.0   $        -
                      -----------------------------------------------------
Expected future
 utilization:
   2003               $      2.0                  $        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.

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
2002, 2001 and 2000 were $3.5 million, $8.9 million and $17.6 million,
respectively. At December 31, 2002, an $8.8 million accrued liability remains
principally for idle lease costs. Cash expenditures for 2003 are expected to be
approximately $4.3 million.

                                                                              41


<PAGE>

5 ACCOUNTS RECEIVABLE

In December 2000, the company entered into an agreement to sell, through Unisys
Funding Corporation I, a wholly owned subsidiary, interests in eligible U.S.
trade accounts receivable for up to $275 million. The agreement is renewable
annually, at the purchasers' option, for up to three years. 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 2002 and 2001, the company received an aggregate of $2.3
billion, each year, from ongoing sales of accounts receivable interests under
the program. At December 31, 2002 and 2001, the company retained subordinated
interests of $120 million and $135 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, 2002 and 2001,
receivables of $199 million and $176 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 (1.5% at
December 31, 2002, and 2.0% at December 31, 2001). 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 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 years ended December 31, 2002 and 2001, was $4.2 million and $12.2
million, respectively. 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 $133.3 million and $146.7 million at December 31, 2002
and 2001, respectively. Such amounts are included in accounts and notes
receivables, net. At December 31, 2002 and 2001, the company had long-term
accounts and notes receivable, net of $144.0 million and $186.3 million,
respectively. Such amounts are included in other long-term assets in the
accompanying consolidated balance sheet.

6 INCOME TAXES

Year ended December 31 (Millions)         2002         2001         2000
---------------------------------------------------------------------------
Income (loss) before income taxes
    United States                      $    125.7   $     95.9   $    389.0
    Foreign                                 207.1       (142.4)       (10.0)
                                       ------------------------------------
Total income (loss) before
 income taxes                          $    332.8   $    (46.5)  $    379.0
---------------------------------------------------------------------------
Provision for income taxes
    Current
      United States                    $     (6.5)  $      7.7   $     10.1
      Foreign                                62.4         24.0         63.6
      State and local                         7.7          3.5          4.9
                                       ------------------------------------
      Total                                  63.6         35.2         78.6
                                       ------------------------------------
    Deferred
      United States                          19.2        (16.2)        72.8
      Foreign                                27.0        (15.6)       (17.2)
                                       ------------------------------------
      Total                                  46.2        (31.8)        55.6
                                       ------------------------------------
Total provision for income taxes       $    109.8   $      3.4   $    134.2
---------------------------------------------------------------------------

     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)         2002         2001         2000
---------------------------------------------------------------------------
United States statutory income
 tax (benefit)                         $    116.5   $    (16.3)  $    132.7
Difference in estimated income
 taxes on foreign earnings, losses
 and remittances                             (4.1)        44.6         36.2
State taxes                                   5.0          2.3          3.2
Tax refund claims, audit issues
 and other matters                          (16.0)       (26.1)       (39.6)
Other                                         8.4         (1.1)         1.7
                                       ------------------------------------
Provision for income taxes             $    109.8   $      3.4   $    134.2
---------------------------------------------------------------------------

42


<PAGE>

     The tax effects of temporary differences and carryforwards that give rise
to significant portions of deferred tax assets and liabilities at December 31,
2002 and 2001, were as follows:

December 31 (Millions)                    2002         2001
--------------------------------------------------------------
Deferred tax assets
Capitalized research and
 development                           $    566.2   $    561.1
Tax loss carryforwards                      384.4        325.2
Foreign tax credit carryforwards             98.3         34.1
Other tax credit carryforwards              238.1        239.4
Capitalized intellectual
 property rights                            302.4        303.4
Pensions                                    259.8
Postretirement benefits                      70.5         71.8
Depreciation                                 52.6         48.4
Employee benefits                            44.4         77.5
Restructuring                                29.7         92.8
Other                                       277.1        278.0
                                       -----------------------
                                          2,323.5      2,031.7
Valuation allowance                        (451.5)      (342.2)
                                       -----------------------
Total deferred tax assets              $  1,872.0   $  1,689.5
                                       -----------------------
Deferred tax liabilities
Pensions                               $        -   $    501.2
Sales-type leases                            78.5        102.9
Other                                        67.5         51.2
                                       -----------------------
Total deferred tax liabilities         $    146.0   $    655.3
                                       -----------------------
Net deferred tax assets                $  1,726.0   $  1,034.2
--------------------------------------------------------------

     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, 2002,
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. During 2002, the net
increase in the valuation allowance of $109.3 million was principally related to
an increase in state and local deferred tax assets resulting from the
recognition of minimum pension liabilities.

     Cumulative undistributed earnings of foreign subsidiaries, for which no
U.S. income or foreign withholding taxes have been recorded, approximated $830
million at December 31, 2002. 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 2002, 2001 and 2000 for income taxes was $72.3 million,
$97.0 million and $110.0 million, respectively.

     At December 31, 2002, 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 $384.4 million. These
carryforwards will expire as follows (in millions): 2003, $14.6; 2004, $26.7;
2005, $20.9; 2006, $34.3; 2007, $25.5; and $262.4 thereafter. The company also
has available tax credit carryforwards of approximately $336.4 million, which
will expire as follows (in millions): 2003, $8.4; 2004, $7.5; 2005, $26.1; 2006,
$-; 2007, $78.2; and $216.2 thereafter.

     The company has substantial amounts of net deferred tax assets. Failure to
achieve forecasted taxable income might affect the ultimate realization of such
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.

7 PROPERTIES

Properties comprise the following:

December 31 (Millions)                    2002         2001
--------------------------------------------------------------
Land                                   $      5.3   $      5.2
Buildings                                   140.5        143.7
Machinery and office equipment              897.2        897.4
Internal-use software                       167.0        139.9
Rental and outsourcing
 equipment                                  332.7        274.2
                                       -----------------------
Total properties                       $  1,542.7   $  1,460.4
--------------------------------------------------------------

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, 2002, 2001 and 2000, total direct and indirect sales to
NUL were approximately $270 million, $340 million and $530 million,
respectively. At December 31, 2002, the company owned approximately 28% of NUL's
common stock that had a market value of approximately $171 million. The
company's share of NUL's earnings or

                                                                              43


<PAGE>

losses are recorded semiannually on a quarter-lag basis in other income
(expense), net in the company's statements of income. During the years ended
December 31, 2002, 2001 and 2000, the company recorded equity income or (loss)
related to NUL of $(11.8) million, $10.4 million and $18.2 million,
respectively. The year ended December 31, 2002, included $21.8 million related
to the company's share of an early retirement charge recorded by NUL. The
company has approximately $176 million of retained earnings that represents
undistributed earnings of NUL.

     Summarized financial information for NUL as of and for its fiscal years
ended March 31 is as follows:

(Millions) (Unaudited)                    2002         2001         2000
---------------------------------------------------------------------------
Year ended March 31
Revenue                                $  2,451.8   $  2,819.2   $  2,835.2
Gross profit                                646.0        815.5        903.2
Pretax income (loss)                       (101.2)        85.7         68.3
Net income (loss)                           (62.4)        44.0         32.8

At March 31
Current assets                            1,257.6      1,304.9      1,564.1
Noncurrent assets                           892.3        709.6        826.9
Current liabilities                         936.3        913.7      1,015.6
Noncurrent liabilities                      851.2        357.0        504.6
Minority interests                           10.7         11.0         11.4
---------------------------------------------------------------------------

     The company owns 51% of Intelligent Processing Solutions Limited ("iPSL"),
a UK-based company, which provides high-volume payment processing. iPSL is fully
consolidated in the company's financial statements. The minority owners'
interests are reported in other long-term liabilities ($52.8 million and $48.6
million at December 31, 2002 and 2001, respectively) and in other income
(expense), net in the company's financial statements.

9 DEBT

Long-term debt comprises the following:

December 31 (Millions)                    2002         2001
--------------------------------------------------------------
8 1/8% senior notes due 2006           $    400.0   $    400.0
7 7/8% senior notes due 2008                200.0        200.0
7 1/4% senior notes due 2005                150.0        150.0
Other, net of unamortized
 discounts                                    2.4         (2.8)
                                       -----------------------
Total                                       752.4        747.2
Less - current maturities                     4.4          2.2
                                       -----------------------
Total long-term debt                   $    748.0   $    745.0
--------------------------------------------------------------

     Total long-term debt maturities in 2003, 2004, 2005, 2006 and 2007 are
$4.4, $2.6, $150.2, $400.3 and $.1 million, respectively.

     Cash paid during 2002, 2001 and 2000 for interest was $73.6, $92.9 and
$90.5 million, respectively. Capitalized interest expense during 2002, 2001 and
2000 was $13.9, $11.8 and $11.4 million, respectively.

     At December 31, 2002, the company had short-term borrowings of $77.3
million. Of this amount $34.1 million was borrowed by the company's Brazilian
subsidiaries in their local currency at a weighted average interest rate at
December 31st of 28%, and $43.2 million was borrowed principally by other
international subsidiaries at a weighted average interest rate at December 31st
of 5.5%.

     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 2001, the company also
completed a cash tender offer for $319.2 million principal amount of its 11 3/4%
senior notes due 2004 and 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.

     The company has a $450 million credit agreement that expires in March 2004.
As of December 31, 2002, there were no borrowings under this 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, a minimum level of net worth and limitations on certain types of
transactions, which could reduce the amount the company is able to borrow.
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. In addition, the company and certain
international subsidiaries have access to certain uncommitted lines of credit
from various banks. At December 31, 2002, the company has met all covenants and
conditions under its various lending and funding agreements.

44


<PAGE>

10 OTHER ACCRUED LIABILITIES

Other accrued liabilities (current) comprise the following:

December 31 (Millions)                    2002         2001
--------------------------------------------------------------
Customers' deposits and
 prepayments                           $    347.8   $    333.8
Deferred revenue                            246.6        227.8
Payrolls and commissions                    240.5        176.9
Accrued vacations                           113.1        109.3
Taxes other than income taxes                74.5         75.5
Restructuring*                               65.8        134.8
Other                                       253.1        244.8
                                       -----------------------
Total other accrued liabilities        $  1,341.4   $  1,302.9
--------------------------------------------------------------

*At December 31, 2002 and 2001, an additional $12.6 million and $35.2
million, respectively, was reported in other long-term liabilities on the
consolidated balance sheet.

11 PRODUCT WARRANTY

For equipment manufactured by the company, the company warrants that it will
substantially conform to relevant published specifications for twelve months
after shipment to the customer. The company will repair or replace, at its
option and expense, items of equipment that do not meet this warranty. For
company software, the company warrants that it will conform substantially to
then-current published functional specifications for ninety days from customer's
receipt. The company will provide a workaround or correction for material errors
in its software that prevents its use in a production environment.

     The company estimates the costs that may be incurred under its warranties
and records a liability in the amount of such costs at the time revenue is
recognized. Factors that affect the company's warranty liability include the
number of units sold, historical and anticipated rates of warranty claims and
cost per claim. The company quarterly assesses the adequacy of its recorded
warranty liabilities and adjusts the amounts as necessary. Presented below is a
reconciliation of the aggregate product warranty liability:

Year ended December 31 (Millions)                      2002
--------------------------------------------------------------
Balance at December 31, 2001                        $     16.1
Accruals for warranties issued
 during the period                                        16.4
Settlements made during the period                       (15.2)
Changes in liability for pre-existing warranties
 during the period, including expirations                  1.9
                                                    ----------
Balance at December 31, 2002                        $     19.2
--------------------------------------------------------------

12 RENTAL EXPENSE AND COMMITMENTS

Rental expense, less income from subleases, for 2002, 2001 and 2000 was $159.0
million, $161.6 million and $146.0 million, respectively.

     Minimum net rental commitments under noncancelable operating leases
outstanding at December 31, 2002, substantially all of which relate to real
properties, were as follows: 2003, $135.7; 2004, $99.1; 2005, $72.8; 2006,
$56.8; 2007, $46.5; and $170.1 million thereafter. Such rental commitments have
been reduced by minimum sublease rentals of $124.5 million, due in the future
under noncancelable subleases.

     Rental expense for 2002, 2001 and 2000 includes approximately $1.0 million,
$2.0 million 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. At December 31, 2002
and 2001, the company did not consolidate this entity. Effective July 1, 2003,
in accordance with FASB Interpretation No. 46, "Consolidation of Variable
Interest Entities," the company will be required to consolidate this entity.
Assets and debt are expected to increase by approximately $33 million; however,
the change in the company's results of operations is expected to be immaterial.
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,
2002, the fair value of the property exceeded $33 million. The lease contains a
number of financial covenants and other provisions.

     At December 31, 2002, the company was in compliance with all of these
covenants and provisions. At December 31, 2002, the company had outstanding
standby letters of credit and surety bonds of approximately $340 million related
to performance and payment guarantees. On the basis of experience with these
arrangements, the company believes that any obligations that may arise will not
be material.

                                                                              45


<PAGE>

13 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 royalties 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.

     The company recognizes 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 years ended December 31, 2002 and 2001,
related to cash flow hedge derivatives for third-party royalties was a gain of
approximately $1.7 million and $4.2 million, respectively. 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, 2002, 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 transaction 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 years ended December 31, 2002 and 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.

     During the years ended December 31, 2002, 2001 and 2000, the company
recognized foreign exchange transaction gains or (losses) in other income
(expense), net in its statement of income of $(1.2) million, $21.4 million and
$(2.3) million, respectively.

     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 in
2000.

     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, 2002, 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 2002 and 2001, as well as
unrealized gains or losses at December 31, 2002, were immaterial. Receivables
are due from a large number of customers that are dispersed worldwide across
many industries. At December 31, 2002 and 2001, 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.

46


<PAGE>

14 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.

15 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. Revenue classifications by segment are as follows:
Services - systems integration, outsourcing, infrastructure services, and core
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.
Accordingly, the Technology segment recognizes intersegment revenue and
manufacturing profit on hardware and software shipments to customers under
Services contracts. The Services segment, in turn, recognizes customer revenue
and marketing profit on such shipments of company hardware and software to
customers. The Services segment also includes the sale of hardware and software
products sourced from third parties that are sold to customers through the
company's Services channels. In the company's consolidated statements of income,
the manufacturing costs of products sourced from the Technology segment and sold
to Services customers are reported in cost of revenue for Services. Also
included in the Technology segment's sales and operating profit are sales of
hardware and software sold to the Services segment for internal use in Services
engagements. The amount of such profit included in operating income of the
Technology segment for the years ended December 31, 2002, 2001 and 2000, was
$19.2 million, $21.8 million and $23.6 million, respectively. The profit on
these transactions is eliminated in Corporate. The company evaluates business
segment performance on operating income exclusive of restructuring charges and
unusual and nonrecurring items, which are included in Corporate. All corporate
and centrally incurred costs are allocated to the business segments based
principally on 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 $579 million, $623 million and $689 million in 2002, 2001
and 2000, respectively.

     A summary of the company's operations by business segment for 2002, 2001
and 2000 is presented below:

(Millions)                  Total      Corporate     Services    Technology
---------------------------------------------------------------------------
2002
-------
Customer revenue          $  5,607.4                $  4,285.1   $  1,322.3
Intersegment                           $   (331.9)        38.8        293.1
                          -------------------------------------------------
Total revenue             $  5,607.4   $   (331.9)  $  4,323.9   $  1,615.4
                          -------------------------------------------------
Operating income
 (loss)                   $    423.2   $    (21.4)  $    256.0   $    188.6
Depreciation and
 amortization                  297.8                     167.2        130.6
Total assets                 4,981.4      1,995.3      2,002.0        984.1
Investments at
 equity                        111.8          1.1                     110.7
Capital expenditures
 for properties                196.2         15.3        142.4         38.5

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                  318.0                     155.1        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                  285.6                     129.4        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
---------------------------------------------------------------------------

                                                                              47


<PAGE>

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

Year ended December 31
(Millions)                                2002         2001         2000
---------------------------------------------------------------------------
Total segment operating
 income                                $    444.6   $    311.2   $    530.1
Interest expense                            (66.5)       (70.0)       (79.8)
Other income (expense), net                 (23.9)        28.0         32.0
Corporate and eliminations                  (21.4)       (39.4)        24.3
Fourth-quarter charges                                  (276.3)      (127.6)
                                       ------------------------------------
  Total income (loss) before
    income taxes                       $    332.8   $    (46.5)  $    379.0
---------------------------------------------------------------------------

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

December 31 (Millions)                     2002        2001         2000
---------------------------------------------------------------------------
Total segment assets                   $  2,986.1   $  3,151.5   $  3,278.9
Cash and cash equivalents                   301.8        325.9        378.0
Prepaid pension assets                                 1,221.0      1,063.0
Deferred income taxes                     1,787.3      1,090.4      1,044.2
Elimination for sale of
 receivables                               (273.5)      (191.8)      (279.1)
Other corporate assets                      179.7        172.1        228.3
                                       ------------------------------------
  Total assets                         $  4,981.4   $  5,769.1   $  5,713.3
---------------------------------------------------------------------------

     Customer revenue by classes of similar products or services, by segment, is
presented below:

Year ended December 31
(Millions)                                2002         2001         2000
---------------------------------------------------------------------------
Services
  Systems integration                  $  1,455.6   $  1,465.3   $  1,599.0
  Outsourcing                             1,441.2      1,302.3      1,193.1
  Infrastructure services                   831.7      1,094.9      1,326.3
  Core maintenance                          556.6        582.1        623.2
                                       ------------------------------------
                                          4,285.1      4,444.6      4,741.6
Technology
  Enterprise-class servers                  955.9      1,048.5      1,424.4
  Specialized technologies                  366.4        525.0        719.0
                                       ------------------------------------
                                          1,322.3      1,573.5      2,143.4
                                       ------------------------------------
Total                                  $  5,607.4   $  6,108.1   $  6,885.0
---------------------------------------------------------------------------

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

(Millions)                                2002         2001         2000
---------------------------------------------------------------------------
Revenue
  United States                        $  2,500.7   $  2,595.3   $  2,875.5
  United Kingdom                            749.3        823.9        762.9
  Other foreign                           2,357.4      2,598.9      3,246.6
                                       ------------------------------------
    Total                              $  5,607.4   $  6,018.1   $  6,885.0
                                       ------------------------------------
  Properties, net
  United States                        $    315.4   $    345.9   $    334.0
  United Kingdom                            164.6         75.5         52.6
  Other foreign                             129.8        128.2        123.3
                                       ------------------------------------
    Total                              $    609.8   $    549.6   $    509.9
---------------------------------------------------------------------------

16 EMPLOYEE PLANS

Stock plans. Under the company's plans, stock options, stock appreciation
rights, restricted stock, and restricted stock units may be granted to officers,
directors and other key employees.

     Options have been granted to purchase the company's common stock at an
exercise price equal to or greater than 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, 2002, 2001 and 2000, $.2 million, $.6
million and $1.0 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, 2002,
2001 and 2000, employees purchased newly issued shares from the company for
$24.1 million, $28.8 million and $37.3 million, respectively.

48


<PAGE>

     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. Company matching contributions of
2% of pay 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, 2002, 2001 and 2000, was $17.9 million, $18.0 million and $19.1 million,
respectively.

     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.

     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 2002, 2001 and 2000, respectively: risk-free interest rates of
4.44%, 5.08% and 6.84%, 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.

     A summary of the status of stock option activity follows:


<TABLE>
<CAPTION>
Year ended December 31
(Shares in thousands)                          2002                          2001                          2000
--------------------------------------------------------------------------------------------------------------------------
                                                 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                     28,653   $        22.56       22,085   $        24.44       19,158   $        19.74
Granted                                13,873            14.39        9,122            17.75        7,667            33.36
Exercised                                (647)            7.68         (697)            6.91       (1,455)            9.58
Forfeited and expired                  (2,989)           29.18       (1,857)           27.07       (3,285)           24.41
                                   ---------------------------------------------------------------------------------------
Outstanding at end of year             38,890            19.73       28,653            22.56       22,085            24.44
                                   ---------------------------------------------------------------------------------------
Exercisable at end of year             15,570            21.94       11,709            19.90        7,946            15.72
                                   ---------------------------------------------------------------------------------------
Shares available for granting
 options at end of year                12,449                         2,477                         4,008
                                   ---------------------------------------------------------------------------------------
Weighted average fair value
 of options granted during
 the year                                       $         5.95                $         9.80                $        18.76
--------------------------------------------------------------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
December 31, 2002
(Shares in thousands)                                     Outstanding                   Exercisable
---------------------------------------------------------------------------------------------------------
Exercise                                          Average       Average                       Average
Price Range                          Shares       Life *     Exercise Price     Shares     Exercise Price
---------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>    <C>                  <C>      <C>
$ 5.75-11.79                            5,883         5.35   $         8.68        4,277   $         8.65
$11.79-12.11                            9,631         8.88            12.10          282            12.00
$12.11-18.57                            7,781         8.20            18.03        1,843            18.25
$18.57-30.19                            9,801         6.68            26.66        6,265            26.83
$30.19-51.73                            5,794         6.89            34.21        2,903            34.27
                                   ----------------------------------------------------------------------
Total                                  38,890         7.36            19.73       15,570            21.94
---------------------------------------------------------------------------------------------------------
</TABLE>


* Average contractual remaining life in years.

                                                                              49


<PAGE>

RETIREMENT BENEFITS

Retirement plans funded status and amounts recognized
in the company's consolidated balance sheet at
December 31, 2002 and 2001, follow:


<TABLE>
<CAPTION>
                                                        U.S. Plans            International Plans
                                                  -----------------------   -----------------------
December 31 (Millions)                               2002         2001          2002        2001
---------------------------------------------------------------------------------------------------
<S>                                               <C>          <C>          <C>          <C>
Change in benefit obligation
  Benefit obligation at beginning of year         $  3,869.0   $  3,559.0   $    947.0   $    757.1
  Service cost                                          36.0         35.2         27.6         22.3
  Interest cost                                        278.9        273.7         64.3         55.1
  Plan participants' contributions                                                 7.2          8.2
  Plan amendments                                      (74.0)        59.6          1.2          4.0
  Actuarial loss                                       319.1        217.8        117.3         45.9
  Benefits paid                                       (305.1)      (276.3)       (49.7)       (38.4)
  Effect of settlements/curtailments                                               2.6          1.8
  Foreign currency translation adjustments                                       152.1         10.1
  Other*                                                                          48.2         80.9
                                                  -------------------------------------------------
  Benefit obligation at end of year               $  4,123.9   $  3,869.0   $  1,317.8   $    947.0
---------------------------------------------------------------------------------------------------
Change in plan assets
  Fair value of plan assets at beginning of year  $  4,300.1   $  4,951.3   $    914.9   $    847.9
  Actual return on plan assets                        (428.2)      (381.4)      (111.6)       (46.2)
  Employer contribution                                  7.6          6.5         34.6         26.0
  Plan participants' contributions                                                 7.2          8.2
  Benefits paid                                       (305.1)      (276.3)       (49.7)       (38.4)
  Foreign currency translation adjustments                                       126.2         15.0
  Other*                                                                          53.0        102.4
                                                  -------------------------------------------------
  Fair value of plan assets at end of year        $  3,574.4   $  4,300.1   $    974.6   $    914.9
---------------------------------------------------------------------------------------------------
Funded status                                     $   (549.5)  $    431.1   $   (343.2)  $    (32.1)
  Unrecognized net actuarial loss                    1,865.9        660.4        514.6        152.0
  Unrecognized prior service (benefit) cost            (74.4)        (6.3)         6.8          5.8
                                                  -------------------------------------------------
  Net amount recognized                           $  1,242.0   $  1,085.2   $    178.2   $    125.7
---------------------------------------------------------------------------------------------------
Amounts recognized in the consolidated balance
 sheet consist of:
  Prepaid pension cost                            $        -   $  1,085.2   $        -   $    135.8
  Intangible asset                                                                 6.8
  Accrued pension liability                           (547.1)                   (180.6)       (10.1)
  Accumulated other comprehensive loss**             1,789.1                     352.0
                                                  -------------------------------------------------
                                                  $  1,242.0   $  1,085.2   $    178.2   $    125.7
---------------------------------------------------------------------------------------------------
</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.
** In addition to amounts recognized in other comprehensive loss relating to
   company pension plans, the company recorded $80.4 million in other
   comprehensive loss related to its share of NUL's minimum pension liability
   adjustment.

     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): $5,441.7 million,
$5,270.6 million and $4,549.0 million at
December 31, 2002, and $181.0 million,
$171.3 million and $93.3 million at
December 31, 2001.

50


<PAGE>

Net periodic pension cost for 2002, 2001 and 2000 includes the following
components:


<TABLE>
<CAPTION>
                                                               U.S. Plans                        International Plans
                                                  ------------------------------------   ------------------------------------
Year ended December 31 (Millions)                    2002         2001         2000         2002         2001         2000
-----------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>          <C>          <C>          <C>          <C>          <C>
Service cost                                      $     36.0   $     35.2   $     37.4   $     27.6   $     22.3   $     18.7
Interest cost                                          278.9        273.7        263.5         64.3         55.1         49.9
Expected return on plan assets                        (459.8)      (476.2)      (440.3)       (91.4)       (79.4)       (67.3)
Amortization of prior service (benefit) cost            (5.6)        (5.5)        (5.9)          .8           .9           .9
Amortization of asset or liability at adoption                                      .8                        .3           .3
Recognized net actuarial loss (gain)                     1.7          1.2          1.1          2.6         (1.0)          .5
Settlement/curtailment (gain) loss                       (.4)                                   1.8          3.4          1.4
                                                  ---------------------------------------------------------------------------
Net periodic pension (income) cost                $   (149.2)  $   (171.6)  $   (143.4)  $      5.7   $      1.6   $      4.4
-----------------------------------------------------------------------------------------------------------------------------

Weighted-average assumptions as of December 31
 were as follows:
Discount rate                                           6.75%        7.50%        8.00%        5.86%        6.25%        6.57%
Rate of compensation increase                           5.40%        5.40%        5.40%        3.80%        3.80%        3.77%
Expected long-term rate of return on assets             9.50%       10.00%       10.00%        8.20%        8.54%        8.51%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


*  For 2003, the company has assumed that the expected long-term rate of return
   on plan assets for its U.S. defined benefit pension plan will be 8.75%.

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, 2002 and
2001, follow:

December 31 (Millions)                               2002         2001
-------------------------------------------------------------------------
Change in benefit obligation
  Benefit obligation at beginning of year         $    220.1   $    219.1
  Interest cost                                         14.7         15.2
  Plan participants' contributions                      30.7         27.8
  Actuarial loss                                        17.5         10.9
  Benefits paid                                        (55.6)       (52.9)
                                                  -----------------------
Benefit obligation at end of year                 $    227.4   $    220.1
                                                  -----------------------
Change in plan assets
  Fair value of plan assets at beginning
   of year                                        $     13.4   $     13.3
  Actual return on plan assets                           1.1          1.0
  Employer contributions                                22.3         24.2
  Plan participants' contributions                      30.7         27.8
  Benefits paid                                        (55.6)       (52.9)
                                                  -----------------------
Fair value of plan assets at end of year          $     11.9   $     13.4
                                                  -----------------------
Funded status                                     $   (215.5)  $   (206.7)
Unrecognized net actuarial loss                         40.7         26.2
Unrecognized prior service benefit                      (7.9)        (9.9)
                                                  -----------------------
Accrued benefit cost                              $   (182.7)  $   (190.4)
-------------------------------------------------------------------------

     Net periodic postretirement benefit cost for 2002, 2001 and 2000, follows:

Year ended December 31 (Millions)       2002         2001         2000
-------------------------------------------------------------------------
Interest cost                        $     14.7   $     15.2   $     14.9
Amortization of prior
 service benefit                           (2.0)        (2.0)        (2.0)
Recognized net actuarial loss               1.9          1.3           .4
                                     ------------------------------------
Net periodic benefit cost            $     14.6   $     14.5   $     13.3
-------------------------------------------------------------------------
Weighted-average assumptions
 as of December 31 were as
 follows:
Discount rate                              7.00%        7.40%        7.70%
Expected return on plan assets             8.00%        8.00%        8.00%
-------------------------------------------------------------------------

     The assumed health care cost trend rate used in measuring the expected cost
of benefits covered by the plan is 10.5% for 2003, gradually declining to 5.5%
in 2008 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, 2002, by $10.4 million and
$(10.6) million, respectively, and increase (decrease) the interest cost
component of net periodic postretirement benefit cost for 2002 by $.7 million
and $(.7) million, respectively.

                                                                              51


<PAGE>

17 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.

     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, 2002, 67.4 million shares of unissued common stock of the
company were reserved principally for stock options and for stock purchase and
savings plans.

     Comprehensive income (loss) for the three years ended December 31, 2002,
includes the following components:

Year ended
December 31 (Millions)                  2002         2001         2000
-------------------------------------------------------------------------
Net income (loss)                    $    223.0   $    (67.1)  $    225.0
                                     ------------------------------------
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
     $(4.3) and $5.1                       (7.9)         9.7
    Reclassification adjustments,
     net of tax of $1.2 and $(4.6)          2.0         (8.6)
   Foreign currency translation
    adjustments, net of tax of $-,
    $- and $19.0                          (33.8)       (67.5)       (73.3)
 
  Minimum pension liability,
    net of tax of $731.2               (1,490.4)
                                     ------------------------------------
Total other comprehensive
 income (loss)                         (1,530.1)       (63.1)       (73.3)
                                     ------------------------------------
Comprehensive income (loss)          $ (1,307.1)  $   (130.2)  $    151.7
-------------------------------------------------------------------------

     Accumulated other comprehensive income (loss) as of December 31, 2002, 2001
and 2000, is as follows (in millions of dollars):

                                                                     Minimum
                                         Translation   Cash Flow     Pension
                              Total      Adjustments     Hedges     Liability
------------------------------------------------------------------------------
Balance at
  December 31, 1999        $   (570.4)  $     (570.4)  $        -   $        -
  Change during period          (73.3)         (73.3)
                           ---------------------------------------------------
Balance at
  December 31, 2000            (643.7)        (643.7)           -            -
  Change during period          (63.1)         (67.5)         4.4
                           ---------------------------------------------------
Balance at
  December 31, 2001            (706.8)        (711.2)         4.4            -
  Change during period       (1,530.1)         (33.8)        (5.9)    (1,490.4)
                           ---------------------------------------------------
Balance at
  December 31, 2002        $ (2,236.9)  $     (745.0)  $     (1.5)  $ (1,490.4)
------------------------------------------------------------------------------

52


<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 audits and their observations 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, 2002 and 2001, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 2002. 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, 2002 and 2001, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2002, in conformity with accounting principles generally accepted
in the United States.

     As discussed in Note 3 to the consolidated financial statements, in 2002
Unisys Corporation adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," which resulted in Unisys Corporation
changing the method of accounting for goodwill.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
January 21, 2003


                                                                              53


<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>
2002
Revenue                                    $  1,362.5   $    1,359.8   $  1,332.3   $  1,552.8   $  5,607.4
Gross profit                                    389.3          404.5        403.0        491.7      1,688.5
Income before income taxes                       48.9           62.9         88.1        132.9        332.8
Net income                                       32.7           42.2         59.0         89.1        223.0
Earnings per share - basic                        .10            .13          .18          .27          .69
                   - diluted                      .10            .13          .18          .27          .69
Market price per share - high                   13.74          13.84         9.67        11.49        13.84
                       - low                    10.78           8.30         6.39         5.92         5.92
-----------------------------------------------------------------------------------------------------------

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
-----------------------------------------------------------------------------------------------------------
</TABLE>


In the fourth quarter of 2001, the company recognized pretax restructuring and
related charges of $276.3 million, or $.64 per share. Excluding these items,
earnings per share before extraordinary items for 2001 was $.48. 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.

54


<PAGE>

FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA


<TABLE>
<CAPTION>
(Millions, except per share data)             2002       2001/(1)/    2000/(1)/      1999         1998
---------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>          <C>          <C>          <C>
RESULTS OF OPERATIONS
Revenue                                    $  5,607.4   $  6,018.1   $  6,885.0   $  7,544.6   $  7,243.9
Operating income (loss)                         423.2         (4.5)       426.8        960.7        799.0
Income (loss) before income taxes               332.8        (46.5)       379.0        770.3        594.2
Income (loss) before extraordinary items        223.0        (49.9)       244.8        522.8        376.4
Net income (loss)                               223.0        (67.1)       225.0        510.7        376.4
Dividends on preferred shares                                                           36.7        106.5
Earnings (loss) on common shares                223.0        (67.1)       225.0        474.0        269.9
Earnings (loss) per common share before
 extraordinary items
   Basic                                          .69         (.16)         .78         1.69         1.07
   Diluted                                        .69         (.16)         .77         1.63         1.01
FINANCIAL POSITION
Working capital (deficit)                  $   (238.5)  $   (109.4)  $    (54.1)  $    268.3   $    288.9
Total assets                                  4,981.4      5,769.1      5,713.3      5,885.0      5,608.2
Long-term debt                                  748.0        745.0        536.3        950.2      1,106.7
Common stockholders' equity                     856.0      2,112.7      2,186.1      1,953.3         90.9
Common stockholders' equity per share            2.62         6.59         6.93         6.29          .35
OTHER DATA
Research and development                   $    273.3   $    331.5   $    333.6   $    339.4   $    308.3
Capital additions of properties                 196.2        199.4        198.3        219.6        209.1
Investment in marketable software               139.9        136.8        152.4        122.8        100.3
Depreciation and amortization of properties     154.5        140.2        135.6        134.5        141.8
Amortization
   Marketable software                          121.0        145.5        115.5        110.9        112.3
   Deferred outsourcing contract costs           22.3         15.8         12.7         13.9          9.1
   Goodwill                                                   16.5         21.8         21.7         18.2
Common shares outstanding (millions)            326.2        320.6        315.4        310.6        258.2
Stockholders of record (thousands)               27.3         28.4         29.7         32.8         28.6
Employees (thousands)                            36.4         38.9         36.9         35.8         33.5
---------------------------------------------------------------------------------------------------------
</TABLE>


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

                                                                              55


<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
---------------                                                   --------------

Unisys (Schweiz) A.G.                                             Switzerland
Unisys Deutschland G.m.b.H.                                       Germany
Unisys Brasil Ltda.                                               Brazil
Unisys France                                                     France
Unisys Limited                                                    England
Unisys Nederland N.V.                                             Netherlands
Unisys Korea Limited                                              Korea
Unisys Funding Corporation I                                      Delaware
Intelligent Processing Solutions Limited                          United Kingdom


     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 21, 2003, included in the 2002
Annual Report to Stockholders of Unisys Corporation.

Our audits also included the financial statement schedule of Unisys Corporation
listed in Item 15(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 Unisys
     Director Stock Unit Plan,
(9)  Registration Statement (Form S-8 No. 333-56036) pertaining to the Unisys
     Global Employee Stock Purchase Plan,
(10) Registration Statement (Form S-8 No. 333-56038) pertaining to the Unisys
     Savings Plan, and
(11) Registration Statement (Form S-3 No. 333-85650) of Unisys Corporation,
     Unisys Capital Trust I, Unisys Capital Trust II;

of our report dated January 21, 2003, 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 14, 2003


<PAGE>

Exhibit 24

                                POWER OF ATTORNEY
                               Unisys Corporation
                           Annual Report on Form 10-K
                      for the year ended December 31, 2002

           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, 2002, 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 18, 2003



/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