SECUTITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _____________.
Commission file number 1-8729
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
UNISYS SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
UNISYS CORPORATION
Unisys Way
Blue Bell, Pennsylvania 19424
REQUIRED INFORMATION
Financial Statements and Supplemental Schedule
Unisys Savings Plan
Years ended December 31, 2003 and 2002
with Report of Independent Registered Public Accounting Firm
CONTENTS
Report of Independent Registered Public Accounting Firm 1
Audited Financial Statements:
Statements of Assets Available for Benefits 2
Statements of Changes in Assets Available for Benefits 3
Notes to Financial Statements 4
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 10
Exhibit Index 12
1
Report of Independent Registered Public Accounting Firm
To the Plan Administrator of
Unisys Savings Plan
We have audited the accompanying statements of assets available for
benefits of the Unisys Savings Plan (the Plan) as of December 31, 2003
and 2002, and the related statements of changes in assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (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 assets available for benefits of
the Plan at December 31, 2003 and 2002, and the changes in its assets
available for benefits for the years then ended, in conformity with
U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental
schedule of assets (held at end of year) as of December 31, 2003, is
presented for purposes of additional analysis and is not a required
part of the financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security
Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the
auditing procedures applied in our audits of the financial statements
and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
June 4, 2004
2
Unisys Savings Plan
Statements of Assets Available for Benefits
December 31
2003 2002
---------------------------------------
(In Thousands)
Investments at fair value:
Fidelity Mutual Funds $ 1,708,723 $ 1,423,184
Unisys Common Stock Funds 268,747 177,975
Unisys Interest Income Fund 406,585 398,727
Participants' Loans 14,704 14,906
Frozen Investment Contracts 10 13
--------------------------------------
2,398,769 2,014,805
Employer contributions receivable 2,198 -
--------------------------------------
Assets available for benefits $ 2,400,967 $ 2,014,805
======================================
See accompanying notes.
3
Unisys Savings Plan
Statements of Changes in Assets Available for Benefits
Year ended December 31
2003 2002
-------------------------------------
(In Thousands)
Additions:
Interest and dividend income $ 48,649 $ 52,236
Contributions:
Employer 20,065 17,895
Employee 89,137 85,013
------------------------------------
109,202 102,908
------------------------------------
Total additions 157,851 155,144
------------------------------------
Deductions:
Benefit payments 141,054 225,040
Administrative and other expenses 81 115
------------------------------------
Total deductions 141,135 225,155
------------------------------------
Net appreciation (depreciation) in fair
value of investments 369,446 (312,374)
------------------------------------
Net increase (decrease) 386,162 (382,385)
Assets available for benefits:
Beginning of year 2,014,805 2,397,190
------------------------------------
End of year $2,400,967 $2,014,805
====================================
See accompanying notes.
4
Unisys Savings Plan
Notes to Financial Statements
December 31, 2003
1. PLAN DESCRIPTION
The Unisys Savings Plan (the Plan) is a defined contribution plan that
covers non-bargaining employees paid from a United States payroll of
Unisys Corporation (the Company) and bargaining unit employees whose
collective bargaining agreement provides for participation in the Plan.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Participants should refer to the Plan document, summary plan
description and their respective bargaining unit agreement, if
applicable, for complete information.
CONTRIBUTIONS
Each plan year, participants may contribute up to 20% or 18% of their
pretax compensation up to the prescribed Internal Revenue Code limit,
depending on their classification as a non-highly compensated or highly
compensated employee, respectively. Participants who are age fifty or
older may make catch-up contributions to the Plan. Participants may
also make after-tax contributions up to 5% of their eligible
compensation. The Company makes a nondiscretionary matching
contribution in Company Common Stock equal to 50% of the first 4% of
eligible compensation deferred by the participant during 2003 and 2002.
The Plan also allows for rollover contributions from other qualified
defined contribution plans.
INVESTMENT OPTIONS
Participants may elect to have their current contributions and existing
account balances invested in any one or more of the investment options
offered and managed by Fidelity Management & Research Company and
Fidelity Management Trust Company (Fidelity). Information regarding the
investment options is provided to each participant through electronic
media and prepared materials provided by the Company and in each
investment fund's prospectus made available by Fidelity.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions, matching contributions from the Company and allocations
of Plan earnings, and is charged with an allocation of administrative
expenses. Allocations are based on participant earnings or account
balances, as defined in the Plan document. The benefit to which a
participant is entitled is equal to the vested portion of his or her
account.
5
1. PLAN DESCRIPTION (continued)
VESTING AND FORFEITURES
Plan participants who were actively employed on January 1, 2000 or
later are immediately vested in their account balances at all times.
PARTICIPANT LOANS
Participants may borrow from their fund accounts up to a maximum equal
to the lesser of $50,000 or 50% of their vested account balance. Loan
terms range from one to five years, or up to fifteen years for the
purchase of a primary residence. The loans are secured by the balance
in the participant's account and bear interest at a fixed rate of
interest that is commercially reasonable, as determined by the
Administrative Committee. A participant may not have more than one loan
outstanding. Principal and interest is paid ratably through payroll
deductions.
PAYMENT OF BENEFITS
On termination of service, a participant may receive a lump-sum amount
equal to his or her account, or upon death, disability or retirement,
elect to receive payments in the form of an annuity or annual
installments over the participant's actuarially determined lifetime.
Plan participants also may receive in-service withdrawals in certain
circumstances as defined in the Plan.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its matching contributions and/or
to terminate the Plan at any time subject to the provisions of ERISA.
In the event of Plan termination, participants remain 100% vested in
their accounts.
2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with
U.S. 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.
6
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
INVESTMENT VALUATION AND INCOME RECOGNITION
Except for the Unisys Interest Income Fund, the Plan's investments are
stated at fair value, which equals the quoted market price on the last
business day of the Plan year. Shares of registered investment
companies are valued at quoted market prices, which represent net asset
values of shares held by the Plan at year-end. Shares of Unisys common
stock are valued at the closing market price on the last day of the
Plan year. Participant loans are valued at their outstanding balances,
which approximate fair value.
The Unisys Interest Income Fund, which includes investments in
guaranteed investment contracts issued principally by insurance
companies and financial institutions which are valued at contract value
as estimated by the insurance companies. Contract value represents
contributions and reinvested income, less any withdrawals plus accrued
interest, because these investments have fully benefit-responsive
features. All participant-initiated transactions with the fund are
permitted at contract value with no conditions, limits or restrictions.
However, withdrawals influenced by Company-initiated events, such as in
connection with the sale of a business, may result in a distribution at
other than contract value. No reserves have been provided or are
considered necessary against contract values for credit risk of
contract issuers or otherwise. The contract value of these investment
contracts approximates their fair value. Interest accrued on the
contract balances, during 2003 and 2002, at rates ranging from 1.00% to
5.40% and from 1.35% to 5.95%, respectively. Interest rates are set at
the time the contract is negotiated and, depending on the terms of the
contract, are fixed through the maturity date or are re-set quarterly,
semiannually or annually. The average yield on the contracts was 5.34%
and 5.69% for 2003 and 2002, respectively.
Investments in Frozen Investment Contracts represent the cash balance
from payments made to the Plan from the Conservation Estate of the
Executive Life Insurance Company (ELIC) and from state guaranty
associations in settlement of claims made by the Plan as a result of
the insolvency of ELIC. The remaining cash balance at December 31, 2003
represents amounts that will be allocated to Plan participants or
applied to pay administrative expenses of the Plan.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is reported on the accrual basis. Dividends are
recorded on the ex-dividend date. Realized gains and losses from
securities sold are reported on an average cost basis.
7
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
RECLASSIFICATIONS
Certain prior-year amounts have been reclassified to conform with the
2003 presentation.
3. INVESTMENTS
The Plan's investments at December 31, 2003 and 2002 were held in
trusts with Fidelity Management Trust Company, Wachovia Bank N.A., and
Oriental Bank & Trust, each of which was established for the investment
of the Plan's assets.
During 2003 and 2002, the Plan's investments (including investments
purchased, sold, as well as held during the year) appreciated
(depreciated) in fair value as follows (in thousands):
2003 2002
----------------------------------------
Fidelity Mutual Funds $ 275,730 $ (265,217)
Unisys Common Stock Funds 88,291 (41,771)
Unisys U.S. Equity Index Commingled
Pool Fund 5,425 (5,386)
----------------------------------------
$ 369,446 $ (312,374)
========================================
Investments that represent 5% or more of fair value of the Plan's
assets are as follows (in thousands):
2003 2002
----------------------------------------
*Unisys Stock Fund $ 254,246 $ 167,700
Unisys Interest Income Fund 406,585 398,727
Fidelity Magellan Fund 264,985 222,767
Fidelity Asset Manager Fund 203,763 183,673
Fidelity Asset Manager Growth Fund 204,354 178,337
Fidelity Retirement Money Market
Portfolio Fund 124,955 140,230
* Predominantly non-participant-directed
8
3. INVESTMENTS (continued)
Employer match contributions to the Plan are invested in the Unisys
Stock Fund. Participants who have reached age fifty are eligible to
diversify their investment in the Unisys Stock Fund to other funds
available within the Plan. The assets and significant components of the
changes in assets relating to the predominantly non-participant-
directed investments are as follows (in thousands):
December 31
2003 2002
------------------------------
Investments, at fair value:
Unisys Stock Fund $ 254,246 $ 167,700
Unisys Common Stock Fund 14,456 10,232
Interest-Bearing Cash 45 43
Frozen Investment Contracts 10 13
------------------------------
Total $ 268,757 $ 177,988
==============================
Year ended December 31
2003 2002
------------------------------
Changes in assets:
Interest and dividends $ 108 $ 137
Net appreciation (depreciation) in fair
value of investments 88,291 (40,918)
Contributions 20,771 20,143
Benefit payments (10,573) (11,063)
Administrative and other expenses (14) (10)
Net transfers (7,814) (1,834)
-------------------------------
Total $ 90,769 $ (33,545)
===============================
At December 31, 2003, the Plan held 973,441 and 16,859,543 shares of
Unisys Common Stock in the Unisys Common Stock Fund and Unisys Stock
Fund, respectively. At December 31, 2002, the Plan held 1,037,857 and
16,932,513 shares of Unisys Common Stock in the Unisys Common Stock
Fund and Unisys Stock Fund, respectively.
9
4. TAX STATUS OF THE PLAN
The Plan has received a determination letter from the Internal Revenue
Service dated September 25, 2002, stating that the Plan is qualified
under Section 401(a) of the Internal Revenue Code (the Code) and,
therefore, the related trusts are exempt from taxation. Once qualified,
the Plan is required to operate in conformity with the Code to maintain
its qualification. The Plan Administrator believes the Plan is being
operated in compliance with the applicable requirements of the Code
and, therefore, believes that the Plan is qualified and the related
trusts are tax-exempt.
5. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment
securities are exposed to various risks such as interest rate, market
and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes
in the values of investment securities will occur in the near term and
that such changes could materially affect participants' account
balances and the amounts reported in the statements of assets available
for benefits.
6. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Fidelity
Management Trust Company, the Trustee. The Plan also holds shares of common
stock of the Company. These transactions qualify as party-in-interest
transactions and are exempt from the prohibited transaction rules.
10
Supplemental Schedule
Unisys Savings Plan
EIN: 38-0387840 Plan: 004
Schedule H, Line 4i-
Schedule of Assets (Held at End of Year)
December 31, 2003
Description of Investment
Including Maturity Date,
Identity of Issue, Borrower, Rate of Interest, Par or Current
Lessor or Similar Party Maturity Value Cost** Value
- ----------------------------------------------------------------------------------------------------
*Fidelity Mutual Funds:
Fidelity Fund Registered Investment Company $ 14,978,644
Puritan Fund Registered Investment Company 18,162,076
Trend Fund Registered Investment Company 3,051,176
Ginnie Mae Portfolio Fund Registered Investment Company 9,494,579
Magellan Fund Registered Investment Company 264,985,277
Contra Fund Registered Investment Company 85,544,815
Equity Income Fund Registered Investment Company 16,038,755
Growth Company Fund Registered Investment Company 36,131,055
Investment Grade Bond Fund Registered Investment Company 9,665,964
Growth & Income Portfolio Fund Registered Investment Company 40,737,676
Intermediate Bond Fund Registered Investment Company 8,290,625
Capital & Income Portfolio Fund Registered Investment Company 8,971,619
Value Fund Registered Investment Company 36,062,212
Mortgage Securities Portfolio
Fund Registered Investment Company 4,713,159
Government Securities Fund Registered Investment Company 14,160,834
Independence Fund Registered Investment Company 9,850,467
Over-The-Counter Portfolio Fund Registered Investment Company 15,832,386
Overseas Fund Registered Investment Company 7,553,950
Europe Fund Registered Investment Company 7,769,449
Pacific Fund Registered Investment Company 4,716,031
Real Estate Investment
Portfolio Fund Registered Investment Company 15,115,151
Balanced Fund Registered Investment Company 18,538,287
International Growth &
Income Fund Registered Investment Company 6,921,375
Capital Appreciation Fund Registered Investment Company 14,022,416
Conv. Securities Fund Registered Investment Company 10,700,298
Canada Fund Registered Investment Company 2,846,459
Utilities Fund Registered Investment Company 8,780,832
Blue Chip Fund Registered Investment Company 62,529,163
Asset Manager Fund Registered Investment Company 203,762,955
Disciplined Equity Fund Registered Investment Company 4,516,934
Low-Priced Fund Registered Investment Company 53,788,949
Worldwide Fund Registered Investment Company 5,680,625
Equity Income II Fund Registered Investment Company 37,241,686
Stock Selector Fund Registered Investment Company 7,301,158
Asset Manager Growth Fund Registered Investment Company 204,354,329
Emerging Markets Fund Registered Investment Company 2,415,688
Aggressive Growth Fund Registered Investment Company 26,187,785
Diversified International Fund Registered Investment Company 19,142,450
Asset Manager Income Fund Registered Investment Company 33,680,108
Diversified Growth Fund Registered Investment Company 41,826,345
New Markets Income Fund Registered Investment Company 11,596,376
Export & Multinational Fund Registered Investment Company 5,885,950
Global Balanced Fund Registered Investment Company 1,300,767
Aggressive International Fund Registered Investment Company 2,250,696
Small Capital Stock Fund Registered Investment Company 13,188,444
Mid-Capital Stock Fund Registered Investment Company 24,619,977
Large-Capital Stock Fund Registered Investment Company 3,292,468
Europe Capital Appreciation
Stock Fund Registered Investment Company 2,236,718
Latin America Fund Registered Investment Company 1,615,311
Japan Fund Registered Investment Company 5,220,401
Southeast Asia Fund Registered Investment Company 2,273,749
Freedom Income Fund Registered Investment Company 608,385
Freedom 2000 Fund Registered Investment Company 949,088
Freedom 2010 Fund Registered Investment Company 4,927,277
Freedom 2020 Fund Registered Investment Company 4,268,795
Freedom 2030 Fund Registered Investment Company 2,641,851
Spartan Total Market Index Fund Registered Investment Company 6,422,524
Spartan Extended Market Index
Fund Registered Investment Company 2,160,233
Spartan International Market
Index Fund Registered Investment Company 826,781
Short-Term Bond Fund Registered Investment Company 4,680,491
Fifty Fund Registered Investment Company 7,548,549
U.S. Bond Index Portfolio Fund Registered Investment Company 20,129,652
Institutional Short-Intermed.
Gov't. Portfolio Registered Investment Company 2,251,733
Inflation Pro Bond Registered Investment Company 1,656,680
Contra II Registered Investment Company 341,301
Asset Manager Aggressive Registered Investment Company 842,815
Strat Inc. Registered Investment Company 5,352,932
FID Freedom 2040 Registered Investment Company 609,895
--------------
1,535,763,581
*Fidelity Money Market Funds:
Retirement Money Market
Portfolio Fund Registered Investment Company 124,954,900
Retirement Gov't. Money Market
Portfolio Fund Registered Investment Company 23,169,823
--------------
148,124,723
*Fidelity U.S. Equity Index
Commingled Pool Fund Registered Investment Company 24,834,955
--------------
Total Fidelity Mutual Funds 1,708,723,259
*Unisys Common Stock Funds:
Unisys Common Stock Fund 973,441 units of
Common Stock Fund $ 9,273,063 14,455,599
Unisys Stock Fund 11,156,056 units of
Common Stock Fund 253,356,935 254,246,513
Interest-Bearing Cash 45,356 45,356
------------------------------
Total Unisys Common Stock Funds 262,675,354 268,747,468
*Unisys Interest Income Fund:
Fidelity STIF Cash Portfolio; 1.00% 4,886,838
Chase Manhattan Bank #430126; 5.40% 100,663,859
Monumental Life Insurance Company #MDA134TR; 5.39% 100,663,223
Rabobank Nederland #UNI-129901; 5.39% 99,706,715
UBS Warburg #3041; 5.39% 100,663,953
Total Unisys Interest Income Fund 406,584,588
*Participants' Loans Interest rates from 5.0% to
5.25% 14,703,397
Frozen Investment Contracts 10,334 10,334
--------------
Total $2,398,769,046
==============
* Party-In-Interest.
** Cost is not applicable for participant-directed investments.
11
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan administrator has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
UNISYS SAVINGS PLAN
UNISYS CORPORATION
Date: June 25, 2004 By: /s/ Janet Brutschea Haugen
--------------------------
Janet Brutschea Haugen
Senior Vice President and
Chief Financial Officer
12
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
23 Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 333-110019, Form S-8 No. 333-56038 and Form S-8 No. 333-87411)
pertaining to the Unisys Savings Plan of Unisys Corporation of our report
dated June 4, 2004, with respect to the financial statements and schedule of
the Unisys Savings Plan included in this Annual Report (Form 11-K) for the
year ended December 31, 2003.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
June 23, 2004