UNITED STATES          
                    SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C.  20549
                    __________________________________

                                FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2007

[ ]   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             (I.R.S. Employer
       of 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


     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 whether the registrant is a large accelerated 
filer, an accelerated filer, or a non-accelerated filer.  See definition of 
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange 
Act.  (Check one):

Large Accelerated Filer [X]  Accelerated Filer [ ]  Non-Accelerated Filer [ ]

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).                YES [ ]    NO [X]


     Number of shares of Common Stock outstanding as of June 30, 2007:  
349,948,612.



<PAGE> 2


Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

                             UNISYS CORPORATION
                         CONSOLIDATED BALANCE SHEETS
                                (Millions)
   
                                          
                                          June 30,    
                                            2007       December 31,
                                         (Unaudited)       2006
                                         -----------   ------------
Assets
------
Current assets
Cash and cash equivalents                 $  520.7       $  719.3
Accounts and notes receivable, net         1,045.2        1,164.6
Inventories:
   Parts and finished equipment              101.2           95.0
   Work in process and materials              86.5           81.2
Deferred income taxes                         30.0           30.0
Prepaid expenses and other current assets    173.1          148.4
                                          --------       --------
Total                                      1,956.7        2,238.5
                                          --------       --------

Properties                                 1,294.7        1,233.4
Less-Accumulated depreciation and
  amortization                               943.8          892.1
                                          --------       --------
Properties, net                              350.9          341.3
                                          --------       --------
Outsourcing assets, net                      419.2          401.1
Marketable software, net                     286.8          304.3
Prepaid postretirement assets                308.8          250.1
Deferred income taxes                        191.3          191.3
Goodwill                                     196.8          193.9
Other long-term assets                       121.8          117.4
                                          --------       --------
Total                                     $3,832.3       $4,037.9
                                          ========       ========
Liabilities and stockholders' equity
------------------------------------
Current liabilities
Notes payable                             $     .6       $    1.2

Current maturities of long-term debt         200.3             .5
Accounts payable                             373.3          460.9
Other accrued liabilities                  1,342.1        1,469.1
                                          --------       --------
Total                                      1,916.3        1,931.7
                                          --------       --------
Long-term debt                               849.3        1,049.1
Long-term postretirement liabilities         642.7          667.7
Other long-term liabilities                  426.2          453.6

Stockholders' equity (deficit)
Common stock, shares issued: 2007; 352.1
   2006, 347.5                                 3.5            3.5
Accumulated deficit                       (2,448.7)      (2,386.8)
Other capital                              3,984.2        3,945.1
Accumulated other comprehensive loss      (1,541.2)      (1,626.0)
                                          --------       --------
Stockholders' equity (deficit)                (2.2)         (64.2)
                                          --------       --------
Total                                     $3,832.3       $4,037.9
                                          ========       ========

See notes to consolidated financial statements.




<PAGE> 3

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


                                         Three Months         Six Months
                                         Ended June 30      Ended June 30
                                      ----------------      ---------------
                                      2007         2006     2007       2006
                                      ----         ----     ----       ----
                                                                             
Revenue                                                                      
  Services                          $1,208.6    $1,224.5  $2,361.5   $2,400.9
  Technology                           167.1       182.8     362.2      394.2
                                    --------    --------  --------   --------
                                     1,375.7     1,407.3   2,723.7    2,795.1
Costs and expenses
   Cost of revenue:
     Services                          992.2     1,136.3   1,986.1    2,212.8
     Technology                         84.1       108.1     180.8      217.5
                                    --------    --------  --------   --------
                                     1,076.3     1,244.4   2,166.9    2,430.3
                            
Selling, general and administrative    247.4       282.7     492.0      578.1
Research and development                49.5        63.9      91.9      139.2
                                    --------    --------  --------   --------
                                     1,373.2     1,591.0   2,750.8    3,147.6
                                    --------     -------  --------   --------
Operating profit (loss)                  2.5      (183.7)    (27.1)    (352.5)

Interest expense                        18.7        19.1      37.6       38.9
Other income (expense), net             (8.7)        (.7)     16.8      152.7
                                    --------    --------  --------   --------
Loss before income taxes               (24.9)     (203.5)    (47.9)    (238.7)
Provision (benefit) for income taxes    40.6        (8.9)     14.0      (16.2)
                                    --------    --------  --------   --------
Net loss                            $  (65.5)   $ (194.6) $  (61.9)  $ (222.5)
                                    ========    ========  ========   ========
Loss per share
   Basic                            $   (.19)   $   (.57) $   (.18)  $   (.65)
                                    ========    ========  ========   ========
   Diluted                          $   (.19)   $   (.57) $   (.18)  $   (.65)
                                    ========    ========  ========   ========


See notes to consolidated financial statements.




<PAGE> 4



                           UNISYS CORPORATION
               CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                (Millions)

                                                    Six Months Ended
                                                         June 30
                                                    ------------------
                                                       2007      2006
                                                    --------   --------
                                                      
Cash flows from operating activities
Net loss                                           $  (61.9)   $(222.5) 
Add (deduct) items to reconcile net loss
   to net cash used for operating activities:
Equity loss                                              -         4.3
Employee stock compensation                             5.5        3.2
Company stock issued for U.S. 401(k) plan              23.0        8.9   
Depreciation and amortization of properties            56.9       58.5
Depreciation and amortization of outsourcing assets    70.6       66.7
Amortization of marketable software                    62.1       66.2
Gain on sale of assets                                (23.1)    (153.2)       
Increase in deferred income taxes, net                  -        (41.9)
Decrease in receivables, net                          136.0       66.7
(Increase) decrease in inventories                     (9.0)      10.2
(Decrease) increase in accounts payable and other
  accrued liabilities                                (250.5)       8.0
Decrease in other liabilities                         (50.9)     (44.5)
(Increase) decrease in other assets                   (39.9)       1.2
Other                                                    .1        2.2
                                                    -------     ------
Net cash used for operating activities                (81.1)    (166.0)
                                                    -------     ------
Cash flows from investing activities
   Proceeds from investments                        3,942.4    3,729.3
   Purchases of investments                        (3,941.0)  (3,731.3)
   Investment in marketable software                  (48.9)     (55.3)
   Capital additions of properties                    (39.8)     (32.7)
   Capital additions of outsourcing assets            (78.5)     (50.1)
   Purchases of businesses                             (1.6)       -
   Proceeds from sale of assets                        27.7      380.6
                                                     -------     -----
Net cash (used for) provided by 
  investing activities                               (139.7)     240.5
                                                     -------     -----
Cash flows from financing activities
   Net reduction in short-term borrowings               (.6)      (7.4)
   Proceeds from exercise of stock options             11.3         .9
   Payments of long-term debt                            -       (57.9)
   Cost of credit agreement                              -        (4.6)
                                                    -------     ------
Net cash provided by (used for) financing 
   activities                                          10.7      (69.0)
                                                    -------     ------
Effect of exchange rate changes on
   cash and cash equivalents                           11.5        7.1
                                                    -------     ------

(Decrease) increase in cash and cash equivalents     (198.6)      12.6
Cash and cash equivalents, beginning of period        719.3      642.5
                                                    -------    -------
Cash and cash equivalents, end of period           $  520.7    $ 655.1
                                                   ========    =======



See notes to consolidated financial statements.




<PAGE> 5

Unisys Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

In the opinion of management, the financial information furnished herein 
reflects all adjustments necessary for a fair presentation of the financial 
position, results of operations and cash flows for the interim periods 
specified.  These adjustments consist only of normal recurring accruals except 
as disclosed herein.  Because of seasonal and other factors, results for interim
periods are not necessarily indicative of the results to be expected for the 
full year.

a. The following table shows how earnings (loss) per share were computed for the
three and six months ended June 30, 2007 and 2006 (dollars in millions,   
shares in thousands):
                                         Three Months         Six Months
                                         Ended June 30      Ended June 30
                                         -------------      -------------
                                      2007         2006     2007       2006
                                      ----         ----     ----       ----
    Basic Loss Per Share

    Net loss                        $  (65.5)   $  (194.6) $  (61.9) $ (222.5)
                                    ========    =========  ========  ========
    Weighted average shares          348,958      343,414   347,690   342,936
                                    ========    =========  ========  ========
    Basic loss per share            $   (.19)   $    (.57) $   (.18) $   (.65)
                                    ========    =========  ========  ========
    Diluted Loss Per Share
    
    Net loss                        $  (65.5)   $  (194.6) $  (61.9) $ (222.5)
                                    ========    =========  ========  ========
    Weighted average shares          348,958      343,414   347,690   342,936
    Plus incremental shares 
      from assumed conversions 
      of employee stock plans           -           -          -         -  
                                    --------    ---------  --------  --------
    Adjusted weighted average shares 348,958      343,414   347,690   342,936
                                    ========    =========  ========  ========
    Diluted loss per share          $   (.19)   $    (.57) $   (.18) $   (.65)
                                    ========    =========  ========  ========

At June 30, 2007, no shares related to employee stock plans were included in 
the computation of diluted earnings per share since inclusion of these 
shares would be antidilutive because of the net loss incurred in the three 
and six months ended June 30, 2007.

b.  In October 2005, the company announced a cost-reduction plan to right size 
the company's cost structure.  During 2006, the company committed to a  
reduction of 5,665 employees.  This resulted in pretax charges in 2006 of 
$330.1 million, principally related to severance costs, and was comprised of 
(a) a charge of $72.4 million for 2,250 employees in the U.S. and (b) a 
charge of $257.7 million for 3,415 employees outside the U.S. 

As part of the company's continuing repositioning plan to right size its 
cost structure, during the three months ended June 30, 2007, the company 
consolidated facility space and committed to an additional reduction of 551 
employees.  This resulted in a pretax charge in the quarter of $33.3 
million.  The charge related to work force reductions of $19.8 million is 
broken down as follows: (a) 425 employees in the U.S. for a charge of $12.0 
million and (b) 126 employees outside the U.S. for a charge of $7.8 million.  
The facility charge of $13.5 million principally relates to leased property 
that the company ceased using as of June 30, 2007.  The facility charge 
represents the fair value of the liability at the cease-use date and was 
determined based on the remaining lease rental payments, reduced by 
estimated sublease rentals that could be reasonably obtained for the 
property.  The pretax charge was recorded in the following statement of 
income classifications: cost of revenue-services, $6.8 million; cost of 
revenue-technology, $.5 million; selling, general and administrative 
expenses, $16.5 million; research and development expenses, $9.7 million; 
and other income (expense), net, $.2 million.  The income recorded in other 
income (expense), net relates to minority shareholders' portion of the 
charge related to majority owned subsidiaries which are fully consolidated 
by the company.



<PAGE> 6

During the three months ended March 31, 2007, the company committed to a 
reduction of 966 employees.  This resulted in a pretax charge in the March 
2007 quarter of $32.7 million, principally related to severance costs.  The 
charge was broken down as follows: (a) 451 employees in the U.S. for a 
charge of $11.6 million and (b) 515 employees outside the U.S. for a charge 
of $21.1 million.  The pretax charge was recorded in the following statement 
of income classifications: cost of revenue-services, $25.0 million; selling, 
general and administrative expenses, $2.1 million; research and development 
expenses, $6.2 million; and other income (expense), net, $.6 million.  

The cost reduction actions taken in the first half of 2007 when combined 
with the 2006 actions bring the total pretax charge to $396.1 million, 
comprised of $382.6 million for 7,182 work force reductions and $13.5 
million for idle lease cost. The combined employee reduction actions are 
expected to be substantially completed by the end of 2007.  During the 
current quarter, the company took the first steps to consolidate lease space 
around the world to reflect its recent headcount reductions and its 
continued move to an increasingly mobile services delivery work force.  The 
company is currently looking at other potential opportunities and may take 
additional actions later in the year to further consolidate facility space.  

For the six months ended June 30, 2007, the pretax charge of $66.0 million 
was recorded in the following statement of income classifications:  cost of 
revenue-services, $31.8 million; cost of revenue-technology, $.5 million; 
selling, general and administrative expenses, $18.6 million; research and 
development expenses, $15.9 million; and other income (expense), net, $.8 
million.  
    
On March 31, 2006, the company committed to a reduction of approximately 
3,600 employees.  This resulted in a pretax charge in the first quarter of 
2006 of $145.9 million, principally related to severance costs.  The charge 
was broken down as follows: (a) approximately 1,600 employees in the U.S. 
for a charge of $50.3 million and (b) approximately 2,000 employees outside 
the U.S. for a charge of $95.6 million.  The pretax charge was recorded in 
the following statement of income classifications: cost of revenue-services, 
$83.4 million; cost of revenue-technology, $2.0 million; selling, general 
and administrative expenses, $45.4 million; research and development 
expenses, $17.6 million; and other income (expense), net, $2.5 million.  

During the three months ended June 30, 2006, the company committed to a 
reduction of approximately 1,900 employees.  This resulted in a pretax 
charge in the second quarter of 2006 of $141.2 million, principally related 
to severance costs.  The charge is broken down as follows: (a) approximately 
650 employees in the U.S. for a charge of $22.1 million and (b) 
approximately 1,250 employees outside the U.S. for a charge of $119.1 
million.  The pretax charge was recorded in the following statement of 
income classifications: cost of revenue-services, $101.4 million; selling, 
general and administrative expenses, $28.3 million; research and development 
expenses, $11.8 million; and other income (expense), net, $.3 million.  

For the six months ended June 30, 2006, the pretax charge of $287.1 million 
was recorded in the following statement of income classifications:  cost of 
revenue-services, $184.8 million; cost of revenue-technology, $2.0 million; 
selling, general and administrative expenses, $73.7 million; research and 
development expenses, $29.4 million; and other income (expense), net, $2.8 
million.  

A further breakdown of the individual components of these costs follows (in 
millions of dollars): 
                                                 Work Force
                                                 Reductions       
                                              --------------      Idle
                         Headcount    Total    U.S.    Int'l.  Lease Cost
                         ---------    -----    ----    ------  ----------
Balance at December 
 31, 2006                    757     $142.6   $ 26.1   $116.5
Additional provisions      1,517       66.0     23.6     28.9     $13.5
Minority interest                        .8                .8
Utilized                    (911)     (82.3)   (22.4)   (59.9)
Changes in estimates 
  and revisions             (110)     (15.7)     6.0    (21.7)
Translation adjustments                 1.7               1.7
                          ------     ------    -----    -----    ------
Balance at June 30, 2007   1,253     $113.1    $33.3   $ 66.3     $13.5
                          ======     ======    =====    =====    ======


<PAGE> 7

Expected future utilization:
2007 remaining six months   1,082     $70.1    $25.1   $ 43.4     $ 1.6
Beyond 2007                   171      43.0      8.2     22.9      11.9

c.  In March 2006, the company adopted changes to its U.S. defined benefit    
pension plans effective December 31, 2006.  The changes affected most U.S.  
employees including senior management and included ending the accrual of 
future benefits in the company's defined benefit pension plans for employees 
effective December 31, 2006.  No new entrants to the plans are allowed after 
that date.  The changes do not affect the vested accrued pension benefits of 
current and former employees, including retirees. In addition, effective  
January 1, 2007, the company increased its matching contribution for its 
U.S. defined contribution plan to 100 percent of the first 6 percent of 
eligible pay contributed by plan participants.  As a result of the 
amendment to stop accruals for future benefits in its U.S. defined benefit 
pension plans, the company recorded a pretax curtailment gain of $45.0 
million in the first quarter of 2006.  

Net periodic pension expense (income) for the three and six months ended 
June 30, 2007 and 2006 is presented below (in millions of dollars):

                                     Three Months             Three Months
                                 Ended June 30, 2007     Ended June 30, 2006
                                --------------------     -------------------
                                       U.S.    Int'l.            U.S.    Int'l.
                               Total   Plans   Plans    Total    Plans   Plans
                               -----   -----   -----    -----    -----   -----

    Service cost             $  11.0  $   -    $ 11.0  $  27.4  $  15.2 $ 12.2
    Interest cost              100.3     69.6    30.7    111.9     84.2   27.7
    Expected return on
      plan assets             (133.3)   (97.3)  (36.0)  (140.7)  (110.3) (30.4)
    Amortization of prior
      service (benefit) cost      .1     -         .1    (  .2)   (  .5)    .3
    Recognized net actuarial 
      loss                      33.3     24.4     8.9     42.1     29.9   12.2
                               -----   ------   ------   -----    -----   ----
    Net periodic pension
      expense (income)       $  11.4  $  (3.3)  $14.7   $ 40.5  $  18.5  $22.0
                              ======   ======   ======  ======  =======  =====


                                     Six Months                Six Months
                                Ended June 30, 2007        Ended June 30, 2006
                                -------------------      ----------------------
                                       U.S.    Int'l.            U.S.    Int'l.
                               Total   Plans   Plans     Total   Plans   Plans
                               -----   -----   ------    -----   -----   ------

    Service cost             $  21.8  $    .1   $21.7    $ 57.2  $ 33.6  $ 23.6
    Interest cost              200.1    139.0    61.1     206.8   152.3    54.5
    Expected return on
      plan assets             (266.5)  (194.9)  (71.6)   (260.6) (201.0)  (59.6)
    Amortization of prior
      service (benefit) cost      .3     -         .3       (.5)   (1.0)     .5
    Recognized net actuarial 
      loss                      66.3     48.7    17.6      90.5    66.4    24.1
    Curtailment gain             -        -       -       (45.0)  (45.0)    -   
                             -------  -------   -----    -------  ------  -----
    Net periodic pension 
      expense (income)       $  22.0  $  (7.1)  $29.1    $ 48.4   $ 5.3   $43.1
                             =======  =======   =====    ======   ======  =====

The company currently expects to make cash contributions of approximately 
$77 million to its worldwide defined benefit pension plans in 2007 compared 
with $78.0 million in 2006.  For the six months ended June 30, 2007 and 
2006, $34.3 million and $33.7 million, respectively, of cash contributions 
have been made.  In accordance with regulations governing contributions to 
U.S. defined benefit pension plans, the company is not required to fund its 
U.S. qualified defined benefit pension plan in 2007.

Net periodic postretirement benefit expense for the three and six months 
ended June 30, 2007 and 2006 is presented below (in millions of dollars):



<PAGE> 8


                                  Three Months                   Six Months
                                  Ended June 30                 Ended June 30
                                  -------------                 -------------
                                2007         2006             2007          2006
                                ----         ----             ----          ----

    Interest cost               $3.1         $3.2            $ 6.1        $ 6.4
    Expected return on assets    (.2)          -               (.3)         (.1)
    Amortization of prior 
      service benefit             -           (.5)              -          (1.0)
    Recognized net actuarial 
      loss                       1.3          1.3              2.6          2.6
                                ----         ----             ----        -----
    Net periodic postretirement 
      benefit expense           $4.2         $4.0            $ 8.4        $ 7.9
                                ====         ====             ====        =====

The company expects to make cash contributions of approximately $30 million 
to its postretirement benefit plan in 2007 compared with $26.9 million in 
2006.  For the six months ended June 30, 2007 and 2006, $16.7 million and 
$12.7 million, respectively, of cash contributions have been made.

d.  In March 2006, the company sold all of the shares it owned in Nihon Unisys, 
Ltd. (NUL), a publicly traded Japanese company.  The company received gross 
proceeds of $378.1 million and recognized a pretax gain of $149.9 million in 
the first quarter of 2006.  NUL will remain the exclusive distributor of the 
company's hardware and software in Japan.

In February 2007, the company sold its media business for gross proceeds of 
$27.7 million and recognized a pretax gain of $23.1 million.

e.  Under the company's stockholder approved stock-based plans, stock options, 
stock appreciation rights, restricted stock and restricted stock units may 
be granted to officers, directors and other key employees.  As of June 30, 
2007, the company has granted non-qualified stock options and restricted 
stock units under these plans.  At June 30, 2007, 3.5 million shares of 
unissued common stock of the company were available for granting under these 
plans.  

For the six months ended June 30, 2007, no stock options were granted.  The 
company currently expects that any future grants of stock option awards will 
be principally to newly hired individuals. 

The fair value of stock option awards was estimated using the Black-Scholes  
option pricing model with the following assumptions and weighted-average 
fair values:    
                                                    Six Months Ended June 30, 
                                                ----------------------------
                                                       2007          2006
                                                       ----          ----
Weighted-average fair value of grant                   N/A          $2.53
Risk-free interest rate                                N/A           4.35%
Expected volatility                                    N/A          45.88%
Expected life of options in years                      N/A           3.67
Expected dividend yield                                 -              -

For periods after January 1, 2006, the company has granted an annual 
restricted stock unit award to officers, directors and other key employees 
in lieu of an annual stock option grant.  The restricted stock unit awards 
granted in March 2006 contained both time-based units (25% of the grant) and 
performance-based units (75% of the grant).  The time-based units vest in 
three equal annual installments beginning with the first anniversary of the 
grant, and the performance-based units vest in three equal annual 
installments, beginning with the first anniversary of the grant, based upon 
the achievement of pretax profit and revenue growth rate goals in 2006 (the 
first installment), 2006-2007 (the second installment), and 2006-2008 (the 
third installment).  The restricted stock unit awards granted in March 2007 
consist of only performance-based units which vest at the end of three 
years, based upon the achievement of pretax profit and revenue growth rate 


<PAGE> 9

goals for the three-year period from 2007-2009.  Each performance-based unit 
will vest into zero to 1.5 shares depending on the degree to which the 
performance goals are met.  Compensation expense resulting from these awards 
is recognized as expense ratably for each installment from the date of grant 
until the date the restrictions lapse and is based on the fair market value 
at the date of grant and the probability of achievement of the specific 
performance-related goals.  The company records share-based expense in 
selling, general and administrative expense.

During the six months ended June 30, 2007 and 2006, the company recorded 
$5.5 million and $3.2 million of share-based compensation expense, 
respectively, which is comprised of $5.3 million and $3.0 million of 
restricted stock unit expense and $.2 million and $.2 million of stock 
option expense, respectively.  

A summary of stock option activity for the six months ended June 30, 2007 
follows (shares in thousands):
                                              Weighted-
                               Weighted-      Average        Aggregate
                               Average        Remaining      Intrinsic
                               Exercise       Contractual    Value
   Options           Shares    Price          Term (years)   ($ in millions)
   -------           ------    ---------      ------------   ---------------
Outstanding at
   December 
   31, 2006           43,190       $16.44
Granted                  -            -
Exercised             (1,578)        7.13
Forfeited and
   expired            (1,978)       16.87
                      -------
Outstanding at
   June 30, 2007      39,634        16.79            3.76           $19.3
                      ======
Vested and 
   expected to
   vest at 
   June 30, 2007      39,634        16.79            3.76            19.3     
                      ======
Exercisable at
   June 30, 2007      39,164        16.92            3.76            17.9
                      ======

The aggregate intrinsic value in the above table reflects the total pretax 
intrinsic value (the difference between the company's closing stock price on 
the last trading day of the period and the exercise price of the options, 
multiplied by the number of in-the-money stock options) that would have been 
received by the option holders had all option holders exercised their 
options on June 30, 2007.  The intrinsic value of the company's stock 
options changes based on the closing price of the company's stock.  The 
total intrinsic value of options exercised for the six months ended June 30, 
2007 was $2.8 million; the amount for the six months ended June 30, 2006 was 
immaterial.  As of June 30, 2007, $1.1 million of total unrecognized 
compensation cost related to stock options is expected to be recognized over 
a weighted-average period of 1.1 years.  

A summary of restricted stock unit activity for the six months ended June 
30, 2007 follows (shares in thousands):
                                                                Weighted-
                                         Restricted             Average
                                           Stock                Grant Date
                                           Units                Fair Value
                                         ----------             ----------
Outstanding at
   December 31, 2006                       1,963                  $6.66
Granted                                    3,223                   8.32
Vested                                      (342)                  6.95
Forfeited and expired                       (305)                  5.71
                                            ----
Outstanding at
   June 30, 2007                           4,539                   7.80
                                           =====


<PAGE> 10

The fair value of restricted stock units is determined based on the average 
of the high and low trading price of the company's common shares on the date 
of grant.  The weighted-average grant-date fair value of restricted stock 
units granted during the six months ended June 30, 2007 and 2006 was $8.32 
and $6.63, respectively.  As of June 30, 2007, there was $26.8 million of 
total unrecognized compensation cost related to outstanding restricted stock 
units granted under the company's plans.  That cost is expected to be 
recognized over a weighted-average period of 2.3 years.  The total fair 
value of restricted share units vested during the six months ended June 30, 
2007 and 2006 was $2.9 million and $.8 million, respectively.   

Common stock issued upon exercise of stock options or upon lapse of 
restrictions on restricted stock units is newly issued shares.  Cash 
received from the exercise of stock options for the six months ended June 
30, 2007 and 2006 was $11.3 million and $.9 million, respectively.  The 
company is currently not recognizing any tax benefits from the exercise of 
stock options or upon issuance of stock upon lapse of restrictions on 
restricted stock units in light of its tax position.  Tax benefits resulting 
from tax deductions in excess of the compensation costs recognized are 
classified as financing cash flows.

f.  The company has two business segments:  Services and Technology.  Revenue 
classifications by segment are as follows:  Services - systems integration 
and consulting, 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 
profits 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 three and six months ended June 30, 
2007 and 2006 was $1.3 million and $2.0 million, and $1.8 million and $3.3 
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.  Therefore, the segment comparisons 
below exclude the cost reduction items mentioned above.  

A summary of the company's operations by business segment for the three and 
six month periods ended June 30, 2007 and 2006 is presented below (in 
millions of dollars):

                               Total    Corporate    Services    Technology
                               -----    ---------    --------    ----------
    Three Months Ended 
      June 30, 2007
    ------------------
    Customer revenue         $1,375.7                $1,208.6     $ 167.1
    Intersegment                        $ (47.4)          3.6        43.8
                             --------   --------     --------      ------
    Total revenue            $1,375.7   $ (47.4)     $1,212.2     $ 210.9
                             ========   =======      ========      ======
    Operating income (loss)  $    2.5   $ (27.0)     $   30.7     $  (1.2)
                             ========   =======      ========     =======


<PAGE> 11

    Three Months Ended
      June 30, 2006  
    ------------------  

    Customer revenue         $1,407.3                $1,224.5     $ 182.8
    Intersegment                        $ (53.2)          3.8        49.4
                             --------   --------     --------     -------
    Total revenue            $1,407.3   $ (53.2)     $1,228.3     $ 232.2
                             ========   =======      ========     =======
   
    Operating income (loss)  $ (183.7)  $(143.9)     $  (11.6)    $ (28.2)
                             ========   =======      ========     =======

    
    Six Months Ended
      June 30, 2007
    ----------------

    Customer revenue         $2,723.7               $2,361.5     $ 362.2 
    Intersegment                         $ (87.5)        7.5        80.0 
                             --------    -------    --------     -------
    Total revenue            $2,723.7    $ (87.5)   $2,369.0     $ 442.2 
                             ========    =======    ========     =======
    Operating income (loss)  $  (27.1)   $ (53.1)   $   19.2     $   6.8
                             ========    =======    ========     =======

    Six Months Ended
      June 30, 2006
    ----------------

    Customer revenue         $2,795.1               $2,400.9     $ 394.2
    Intersegment                         $ (95.8)        7.2        88.6
                             --------    --------   --------     -------
    Total revenue            $2,795.1    $ (95.8)   $2,408.1     $ 482.8
                             ========    ========   ========     =======
    Operating income (loss)  $ (352.5)   $(288.7)   $  (22.1)    $ (41.7)
                             ========    ========   ========     =======


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


                                    Three Months                Six Months
                                   Ended June 30               Ended June 30
                                   -------------               -------------

                                   2007       2006           2007        2006
                                   ----       ----           ----        ----
    Total segment operating 
       income (loss)             $  29.5    $ (39.8)       $  26.0     $ (63.8)
    Interest expense               (18.7)     (19.1)         (37.6)      (38.9)
    Other income (expense), net     (8.7)       (.7)          16.8       152.7 
    Cost reduction charges         (33.3)    (141.2)         (66.0)     (287.1)
    Corporate and eliminations       6.3       (2.7)          12.9        (1.6)
                                 -------    -------        -------     ------- 
    Total loss before income                                                   
      taxes                      $ (24.9)   $(203.5)       $ (47.9)    $(238.7)
                                 =======    =======        =======     =======

Customer revenue by classes of similar products or services, by segment, is 
presented below (in millions of dollars):

                                    Three Months                Six Months
                                   Ended June 30               Ended June 30
                                   -------------               -------------
                                   2007       2006           2007        2006
                                   ----       ----           ----        ----
    Services 
     Systems integration
       and consulting            $  370.8    $ 404.0       $  713.4    $  785.3
     Outsourcing                    504.7      471.2          973.8       926.4
     Infrastructure services        224.2      229.5          458.8       454.5
     Core maintenance               108.9      119.8          215.5       234.7
                                 --------   --------       --------    --------
                                  1,208.6    1,224.5        2,361.5     2,400.9
    Technology
     Enterprise-class servers       127.5      145.6          277.9       313.7
     Specialized technologies        39.6       37.2           84.3        80.5
                                 --------   --------       --------    --------
                                    167.1      182.8          362.2       394.2
                                 --------   --------       --------    --------
    Total                        $1,375.7   $1,407.3       $2,723.7    $2,795.1
                                 ========   ========       ========    ========


<PAGE> 12

g.  Comprehensive income (loss) for the three and six months ended June 30, 2007
and 2006 includes the following components (in millions of dollars):


                                    Three Months                Six Months
                                   Ended June 30               Ended June 30
                                   -------------               -------------
                                  2007         2006            2007        2006
                                  ----         ----            ----        ----
    Net loss                     $(65.5)    $ (194.6)       $ (61.9)   $ (222.5)
    Other comprehensive income   
      (loss)                     
      Cash flow hedges
        Income (loss)               (.2)         (.4)           (.4)       (.2) 
        Reclassification adj.        .3           .2             .4          -  
      Foreign currency                     
       translation adjustments     24.3         (1.7)          29.4      (12.2)
      Postretirement adjustments   23.2           -            55.4     1,446.0
                                  ------     -------         ------     ------- 
    Total other comprehensive 
      income (loss)                 47.6        (1.9)          84.8     1,433.6
                                 -------     -------        -------    --------
    Comprehensive income (loss)  $ (17.9)    $(196.5)       $  22.9    $1,211.1
                                 =======     =======        =======    ========

    Accumulated other comprehensive income (loss) as of December 31, 2006 and
    June 30, 2007 is as follows (in millions of dollars):

                                                          Cash    
                                            Translation   Flow   Postretirement
                                     Total  Adjustments  Hedges     Plans
                                     -----  -----------  ------  -------------
    Balance at December 31, 2006  $(1,626.0)  $(633.1)   $  -      $  (992.9)

    Change during period               84.8      29.4       -           55.4
                                   --------   -------    ------    ---------

    Balance at June 30, 2007      $(1,541.2)  $(603.7)   $  -      $  (937.5)
                                  =========   =======    ======    =========

h.  For equipment manufactured by the company, the company warrants that it will
substantially conform to relevant published specifications for 12 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 90 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 (in millions of dollars):



<PAGE> 13

                                     Three Months               Six Months
                                    Ended June 30              Ended June 30
                                    -------------              -------------

                                    2007       2006          2007        2006
                                    ----       ----          ----        ----

    Balance at beginning of 
      period                     $   8.5    $    9.3      $   8.2      $  8.0
    
    Accruals for warranties 
      issued during the period       1.1         2.1          2.5         5.0

    Settlements made during 
      the period                    (1.4)       (2.4)        (3.8)       (4.8)

    Changes in liability for 
      pre-existing warranties
      during the period,  
      including expirations           .4         (.1)         1.7          .7
                                 -------     -------      -------      ------
    Balance at June 30           $   8.6     $   8.9      $   8.6      $  8.9
                                 =======     =======      =======      ======

i.  Net cash refunds received during the six months ended June 30, 2007 for 
income taxes was $30.1 million compared with net cash paid for income taxes 
during the six months ended June 30, 2006 of $47.4 million.

Cash paid during the six months ended June 30, 2007 and 2006 for interest 
was $41.8 million and $49.0 million, respectively.

During the six months ended June 30, 2007, the company financed $22.7 
million of internal use software licenses.


j.  Effective January 1, 2007, the company adopted FASB Interpretation No. 48,  
"Accounting for Uncertainty in Income Taxes, an interpretation of FASB   
Statement No. 109" (FIN 48).  FIN 48 prescribes a recognition threshold and  
measurement attribute for the financial statement recognition and 
measurement of a tax position taken or expected to be taken in a tax return.  
Adoption of FIN 48 did not have a material impact on the company's 
consolidated results of operations and financial position.  See note (l).

Effective January 1, 2007, the company adopted EITF 06-2, "Accounting for    
Sabbatical Leave and Other Similar Benefits Pursuant to FASB Statement No.  
43." EITF 06-2 applies to compensated absences that require a minimum  
service period but have no increase in the benefit even with additional  
years of service and requires the benefit to be recognized as a liability  
over the service period.  Adoption of EITF 06-2 did not have a material  
impact on the company's consolidated results of operations and financial  
position.
    
Effective January 1, 2007, the company adopted EITF 06-5, "Accounting for  
Purchases of Life Insurance - Determining the Amount That Could Be Realized  
in Accordance with FASB Technical Bulletin No. 85-4."  EITF 06-5 requires  
that a policyholder should consider any additional amounts included in the   
contractual terms of the policy in determining the amount that could be   
realized under the insurance contract on a policy-by-policy basis.  Adoption   
of EITF 06-5 did not have a material impact on the company's consolidated   
results of operations and financial position.

In September 2006, the Financial Accounting Standards Board (FASB) issued 
Statement of Financial Accounting Standards No. 157, "Fair Value 
Measurements" (SFAS No. 157).  SFAS No. 157 defines fair value, establishes 
a framework for measuring fair value and expands disclosures about fair 
value measurements.  This statement applies under other accounting 
pronouncements that require or permit fair value measurements.  Accordingly, 
SFAS No. 157 does not require any new fair value measurements.  The 
provisions of SFAS No. 157 are to be applied prospectively and are effective 
for financial statements issued for fiscal years beginning after November 
15, 2007.  The company is currently evaluating what effect, if any, adoption 
of SFAS No. 157 will have on the company's consolidated results of 
operations and financial position.

In February 2007, the FASB issued Statement of Financial Accounting 
Standards No. 159, "The Fair Value Option for Financial Assets and Financial 
Liabilities" (SFAS No. 159).  SFAS No. 159 permits entities to choose to 
measure many financial instruments and certain other items at fair value.  
Unrealized gains and losses on items for which the fair value option has 
been elected are reportable in earnings.  The provisions of SFAS No. 159 
shall be effective as of the beginning of each reporting entity's first 
fiscal year that begins after November 15, 2007.  SFAS No. 159 should not be 
applied retrospectively to fiscal years beginning prior to the effective 
date.  The company is currently evaluating whether it will adopt the 
provisions of SFAS No. 159, and if adopted, what effect adoption of SFAS No. 
159 will have on the company's consolidated results of operations and 
financial position.


<PAGE> 14

EITF 06-4, "Accounting for Deferred Compensation and Postretirement Benefit  
Aspects of Endorsement Split-Dollar Life Insurance Arrangements," was issued 
in September 2006 and is effective for fiscal years beginning after December 
15, 2007.  EITF 06-4 requires that, for split-dollar life insurance 
arrangements that provide a benefit to an employee that extends to 
postretirement periods, an employer should recognize a liability for future 
benefits in accordance with SFAS No. 106.  EITF 06-4 requires that 
recognition of the effects of adoption should be either by (a) a change in 
accounting principle through a cumulative-effect adjustment to retained 
earnings as of the beginning of the year of adoption or (b) a change in 
accounting principle through retrospective application to all prior periods.  
The company is reviewing EITF 06-4 and does not currently expect that its 
adoption will have a material impact on the company's consolidated results 
of operations and financial position.

k.  In 2002, the company and the Transportation Security Administration (TSA)  
entered into a competitively awarded contract providing for the 
establishment of secure information technology environments in airports. The
Defense Contract Audit Agency (DCAA), at the request of TSA, reviewed  
contract performance and raised some government contracting issues.  The 
company continues to work to address certain contracts administration issues 
raised by the DCAA.  In addition, the company has learned that the Civil 
Division of the Department of Justice, working with the Inspector General's 
Office of the Department of Homeland Security, is reviewing issues raised by 
the DCAA relating to labor categorization and overtime on the TSA contract.  
The company understands that the Civil Division is at an early stage in its 
review.  The company is working cooperatively with the Civil Division.  The 
company does not know whether the Civil Division will pursue the matter, or, 
if pursued, what effect this might have on the company.


l.  Effective January 1, 2007, the company adopted FASB Interpretation No. 48, 
"Accounting for Uncertainty in Income Taxes, an interpretation of FASB 
Statement No. 109" (FIN 48).  FIN 48 prescribes a recognition threshold and 
measurement attribute for the financial statement recognition and 
measurement of a tax position taken or expected to be taken in a tax return.  
Adoption of FIN 48 did not have a material impact on the company's 
consolidated results of operations and financial position.

The company and its subsidiaries file income tax returns in the U.S. federal
jurisdiction, and various states and foreign jurisdictions.  The company 
recently concluded a U.S. federal income tax audit of the years 2000-2003 
with no material impact.  Several U.S. state and foreign income tax audits 
are in process.  There are currently no income tax audits in process in 
either Brazil or the United Kingdom, which are the most significant 
jurisdictions outside the U.S.  For Brazil, the audit period through 2000 is 
closed and for the United Kingdom, the audit period through 2004 is closed.  
All of the various ongoing income tax audits throughout the world are not 
expected to have a material impact on the company's financial position.

The company recognizes penalties and interest accrued related to income tax 
liabilities in the provision (benefit) for income taxes in its consolidated 
statements of income.  The company had an accrual of $11.4 million for the 
payment of penalties and interest at June 30, 2007 and $10.3 million at 
December 31, 2006.  The increase in the liability of $1.1 million was 
recognized as part of the company's income tax provision during the six 
months ended June 30, 2007.

As of December 31, 2006, the company had $38.3 million of a liability for 
unrecognized tax benefits.  In March 2007, the company settled an income tax 
audit in the Netherlands and as a result, recorded a tax benefit of $39.4 
million and received a refund, including interest, of approximately $58 
million during the second quarter of 2007.  

After the settlement discussed above, the company had $13.4 million of a 
liability for unrecognized tax benefits as of June 30, 2007, all of which, 
if recognized, would affect the company's effective tax rate.  The company 
does not currently expect that the total amount of unrecognized tax benefits 
at June 30, 2007 will significantly increase or decrease within the next 12 
months.



<PAGE> 15


I
tem 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations.

Overview

For the six months ended June 30, 2007, the company reported a net loss of $61.9
million, or $.18 per share, compared with a net loss of $222.5 million, or $.65 
per share, for the six months ended June 30, 2006.  The current six-month period
includes pretax charges relating to cost reduction actions of $66.0 million 
compared with $287.1 million in the prior six-month period.

During the first half of 2007, the company: 

*     recorded cost reduction charges of $66.0 million for 1,517 personnel 
reductions and idle facility costs (see note (b)); 

*     continued its program to divest non-core assets by selling its media 
business for cash proceeds of approximately $28 million (see note (d)); 
and

*     settled a Netherlands income tax audit and, as a result, recorded a tax 
benefit of approximately $39 million and received a cash refund, 
including interest, of approximately $58 million (see note (l)).

Results of operations

Company results
     
For the three months ended June 30, 2007, the company reported a net loss of 
$65.5 million, or $.19 per share, compared with a net loss of $194.6 million, or
$.57 per share, for the three months ended June 30, 2006.  The current period 
includes pretax charges relating to cost reduction actions of $33.3 million 
compared with $141.2 million in the prior-year period.

Revenue for the quarter ended June 30, 2007 was $1.38 billion compared with 
$1.41 billion for the second quarter of 2006, a decrease of 2% from the prior 
year.  This decrease was principally due to a decrease of 9% in Technology 
revenue and a decrease of 1% in Services revenue.  Foreign currency had a 3-
percentage-point positive impact on revenue in the current period compared with 
the year-ago period.  U.S. revenue declined 7% in the quarter compared with the 
year-ago period, principally driven by continued weakness in systems integration
and consulting.  Revenue in international markets increased 2% due to increases 
in Europe, Latin America (excluding Brazil), South Pacific and Asia, offset in 
part by decreases in Japan and Brazil.  On a constant currency basis, 
international revenue declined 4% in the three months ended June 30, 2007 
compared with the three months ended June 30, 2006.

As part of the company's continuing repositioning plan to right size its cost 
structure, during the three months ended June 30, 2007, the company consolidated
facility space and committed to an additional reduction of 551 employees.  This 
resulted in a pretax charge in the quarter of $33.3 million.  The $19.8 million 
charge related to work force reductions is broken down as follows: (a) 425 
employees in the U.S. for a charge of $12.0 million and (b) 126 employees 
outside the U.S. for a charge of $7.8 million.  The facility charge of $13.5 
million principally relates to leased property that the company ceased using as 
of June 30, 2007.  The facility charge represents the fair value of the 
liability at the cease-use date and was determined based on the remaining lease 
rental payments, reduced by estimated sublease rentals that could be reasonably 
obtained for the property.  The pretax charge was recorded in the following 
statement of income classifications: cost of revenue-services, $6.8 million; 
cost of revenue-technology, $.5 million; selling, general and administrative 
expenses, $16.5 million; research and development expenses, $9.7 million; and 
other income (expense), net, $.2 million.  The income recorded in other income 
(expense), net relates to minority shareholders' portion of the charge related 
to majority owned subsidiaries which are fully consolidated by the company.

The cost reduction actions taken in the first half of 2007, when combined with 
the 2006 actions, bring the total pretax charge to $396.1 million, comprised of 
$382.6 million for 7,182 work force reductions and $13.5 million for idle lease 
cost. The combined employee reduction actions are expected to be substantially 
completed by the end of 2007.  Net of investments in offshore resources and 
outsourcing of certain internal, non-client facing functions, the company 
anticipates that these combined actions will yield, on a run-rate basis, 
annualized cost savings in excess of $340 million by the second half of 2007 and
in excess of $365 million by the first half of 2008. During the current quarter,
the company took the first steps to consolidate lease space around the world to 
reflect its recent headcount reductions and its continued move to an 
increasingly mobile services delivery work force.  The company is currently 
looking at other potential opportunities and may take additional actions later 
in the year to further consolidate facility space.  



<PAGE> 16

During the three months ended June 30, 2006, the company committed to a 
reduction of approximately 1,900 employees.  This resulted in a pretax charge in
the second quarter of 2006 of $141.2 million, principally related to severance 
costs.  The charge is broken down as follows: (a) approximately 650 employees in
the U.S. for a charge of $22.1 million and (b) approximately 1,250 employees 
outside the U.S. for a charge of $119.1 million.  The pretax charge was recorded
in the following statement of income classifications: cost of revenue-services, 
$101.4 million; selling, general and administrative expenses, $28.3 million; 
research and development expenses, $11.8 million; and other income (expense), 
net, $.3 million.  

In March 2006, the company adopted changes to its U.S. defined benefit    
pension plans effective December 31, 2006.  The changes affected most U.S. 
employees and senior management and included ending the accrual of future 
benefits in the company's defined benefit pension plans for employees 
effective December 31, 2006.  No new entrants to the plans are allowed after 
that date.  The changes do not affect the vested accrued pension benefits of 
current and former employees, including retirees. In addition, effective  
January 1, 2007, the company increased its matching contribution for its 
U.S. defined contribution plan to 100 percent of the first 6 percent of 
eligible pay contributed by plan participants.  As a result of the 
amendment to stop accruals for future benefits in its U.S. defined benefit 
pension plans, the company recorded a pretax curtailment gain of $45.0 
million in the first quarter of 2006.  

Pension expense for the three months ended June 30, 2007 was $11.4 million 
compared with $40.5 million for the three months ended June 30, 2006.  The 
decrease was principally due to the change in the U.S. defined benefit pension 
plans.  The company records pension income or expense, as well as other 
employee-related costs such as payroll taxes 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 category is based on where the salaries 
of active employees are charged.

Total gross profit margin was 21.8% in the three months ended June 30, 2007 
compared with 11.6% in the three months ended June 30, 2006.  Included in the 
gross profit margin in 2007 and 2006 were cost reduction charges of $7.3 million
and $101.4 million, respectively.  The increase in gross profit margin excluding
these charges principally reflects the benefits derived from the cost reduction 
actions as well as a decline in pension expense of $20.8 million ($8.4 million 
for the three months ended June 30, 2007 compared with $29.2 million in the 
year-ago period).

Selling, general and administrative expenses were $247.4 million for the three 
months ended June 30, 2007 (18.0% of revenue) compared with $282.7 million 
(20.1% of revenue) in the year-ago period.  Included in selling, general and 
administrative expense in 2007 and 2006 were cost reduction charges of $16.5 
million and $28.3 million, respectively.  The decrease in selling, general and 
administrative expense excluding these charges principally reflects the benefits
derived from the cost reduction actions as well as a decline in pension expense 
of $5.3 million ($3.2 million for the three months ended June 30, 2007 compared 
with $8.5 million in the year-ago period).  

Research and development (R&D) expenses in the second quarter of 2007 were $49.5
million compared with $63.9 million in the second quarter of 2006.  The company 
continues to invest in proprietary operating systems and in key programs within 
its industry practices.  Included in R&D expense in 2007 and 2006 were cost 
reduction charges of $9.7 million and $11.8 million, respectively.  The 
reduction in R&D in 2007 compared with 2006, excluding these charges, 
principally reflects the benefits derived from the cost reduction actions as 
well as a decline in pension expense of $3.0 million ($.2 million income for the
three months ended June 30, 2007 compared with expense of $2.8 million in the 
year-ago period).  

For the second quarter of 2007, the company reported a pretax operating profit 
of $2.5 million compared with a pretax operating loss of $183.7 million in the 
second quarter of 2006.  The principal items affecting the comparison of 2007 
with 2006 were a $33.5 million and a $141.5 million charge in 2007 and 2006, 
respectively, relating to the cost reduction actions, as well as the benefits 
derived from the cost reduction actions.  Contributing to the increase in 
operating profit was a decline in pension expense of $29.1 million ($11.4 
million for the three months ended June 30, 2007 compared with $40.5 million in 
the year-ago period).


<PAGE> 17

Interest expense for the three months ended June 30, 2007 was $18.7 million 
compared with $19.1 million for the three months ended June 30, 2006.

Other income (expense), net, which can vary from period to period, was expense 
of $8.7 million in the second quarter of 2007, compared with expense of $.7 
million in 2006.  The difference in 2007 from 2006 was principally due to 
expense of $6.1 million in the current quarter compared with expense of $2.2 
million in last year's second quarter related to minority shareholders' portion 
of income of iPSL, a 51% owned subsidiary which is fully consolidated by the 
company.  The change was due to increased profit from iPSL resulting from the 
renegotiated contract in January 2006 and benefits derived from cost 
reduction actions.  Additionally, lower interest income in the current quarter 
($6.5 million compared with $8.7 million in the prior-year quarter) due to 
reduced cash levels contributed to the increase in expense.

Income (loss) before income taxes for the three months ended June 30, 2007 was a
loss of $24.9 million compared with a loss of $203.5 million in 2006.  The 
provision for income taxes was $40.6 million in the current quarter compared 
with a benefit of $8.9 million in the year-ago period.  Due to the establishment
of a full valuation allowance for all of the company's U.S. deferred tax assets 
and certain international subsidiaries in the third quarter of 2005, the company
no longer has a meaningful effective tax rate.  The company will record a tax 
provision or benefit for those international subsidiaries that do not have a 
full valuation allowance against their deferred tax assets.  Any profit or loss 
recorded for the company's U.S. operations will have no provision or benefit 
associated with it.  As a result, the company's provision or benefit for taxes 
will vary significantly quarter to quarter depending on the geographic 
distribution of income.  In the current quarter, income increased in certain 
international jurisdictions where the company still provides for income taxes 
due in large part to profit improvement caused by the company's cost reduction 
actions.

For the six months ended June 30, 2007, the company reported a net loss of $61.9
million, or $.18 per share, compared with a net loss of $222.5 million, or $.65 
per share, for the six months ended June 30, 2006.  The current six-month period
includes pretax charges relating to cost reduction actions of $66.0 million 
compared with $287.1 million in the prior six-month period.

Total revenue for the six months ended June 30, 2007 and 2006 was $2.72 billion 
and $2.80 billion, respectively.  Foreign currency translations had a 3- 
percentage-point positive impact on revenue in the current six months when 
compared with the year-ago period.  In the current six-month period, Services 
revenue decreased 2% and Technology revenue decreased 8%.

U.S. revenue declined 5% in the current six-month period compared with the year-
ago period and revenue in international markets decreased 1%.  On a constant 
currency basis, international revenue decreased 7% in the six months ended June 
30, 2007.

Pension expense for the six months ended June 30, 2007 was $22.0 million 
compared with $48.4 million of pension expense for the six months ended June 30,
2006. The decrease in pension expense in 2007 from 2006 was principally due to 
the change in the U.S. defined benefit pension plans, discussed above.

Total gross profit margin was 20.4% in the six months ended June 30, 2007 
compared with 13.1% in the year-ago period.   Included in the gross profit 
margin in 2007 and 2006 were cost reduction charges of $32.3 million and $186.8 
million, respectively.  The increase in gross profit margin excluding these 
charges principally reflects the benefits derived from the cost reduction 
actions as well as a decline in pension expense of $20.6 million ($16.3 million 
for the six months ended June 30, 2007 compared with $36.9 million in the year-
ago period).

For the six months ended June 30, 2007, selling, general and administrative 
expenses were $492.0 million (18.1% of revenue) compared with $578.1 million 
(20.7% of revenue) for the six months ended June 30, 2006.  Included in selling,
general and administrative expense in 2007 and 2006 were cost reduction charges 
of $18.6 million and $73.7 million, respectively.  The decrease in selling, 
general and administrative expense excluding these charges principally reflects 
the benefits derived from the cost reduction actions as well as a decline in 
pension expense of $4.1 million ($6.2 million for the six months ended June 30, 
2007 compared with $10.3 million in the year-ago period).


<PAGE> 18

R&D expense for the six months ended June 30, 2007 was $91.9 million compared 
with $139.2 million a year ago.  Included in R&D expense in 2007 and 2006 were 
cost reduction charges of $15.9 million and $29.4 million, respectively.  The 
reduction in R&D in 2007 compared with 2006 excluding these charges principally 
reflects the benefits derived from the cost reduction actions as well as a 
decline in pension expense of $1.7 million ($.5 million income for the six 
months ended June 30, 2007 compared with $1.2 million of expense in the year-ago
period).

For the six months ended June 30, 2007, the company reported an operating loss 
of $27.1 million compared with an operating loss of $352.5 million for the six 
months ended June 30, 2006.  The principal items affecting the comparison of 
2007 with 2006 were a $66.8 million and a $289.9 million charge in 2007 and 
2006, respectively, relating to the cost reduction actions, as well as the 
benefits derived from the cost reduction actions.  Contributing to the increase 
in operating profit was a decline in pension expense of $26.4 million ($22.0 
million for the six months ended June 30, 2007 compared with $48.4 million in 
the year-ago period).

Interest expense for the six months ended June 30, 2007 was $37.6 million 
compared with $38.9 million for the six months ended June 30, 2006.

Other income (expense), net was income of $16.8 million in the current six-month
period compared with income of $152.7 million in the year-ago period.  Other 
income (expense) in 2007 principally reflects a gain of $23.1 million on the 
sale of the company's media business and 2006 principally reflects a gain of 
$149.9 million from the sale of all of the company's shares in NUL (see note 
(d)).

Income (loss) before income taxes was a loss of $47.9 million in the six months 
ended June 30, 2007 compared with a loss of $238.7 million last year.  The 
provision for income taxes was $14.0 million in the current period compared with
a benefit of $16.2 million in the year-ago period.  The tax provision in the 
current six-month period includes a $39.4 million benefit related to the 
Netherlands income tax audit settlement (see note (l)). 

In 2002, the company and the Transportation Security Administration (TSA)   
entered into a competitively awarded contract providing for the establishment of
secure information technology environments in airports. The Defense Contract 
Audit Agency (DCAA), at the request of TSA, reviewed contract performance and 
raised some government contracting issues.  The company continues to work to 
address certain contracts administration issues raised by the DCAA.  In 
addition, the company has learned that the Civil Division of the Department of 
Justice, working with the Inspector General's Office of the Department of 
Homeland Security, is reviewing issues raised by the DCAA relating to labor 
categorization and overtime on the TSA contract. The company understands that 
the Civil Division is at an early stage in its review.  The company is working 
cooperatively with the Civil Division.  The company does not know whether the 
Civil Division will pursue the matter, or, if pursued, what effect this might 
have on the company.

Segment results

The company has two business segments:  Services and Technology.  Revenue 
classifications by segment are as follows:  Services - systems integration and 
consulting, 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 agreements.  The amount of such profit included in operating income of 
the Technology segment for the three and six months ended June 30, 2007 and 2006
was $1.3 million and $2.0 million, and $1.8 million and $3.3 million, 
respectively. The profit on these transactions is eliminated in Corporate.  
            

<PAGE> 19

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.  Therefore, the segment comparisons below exclude the cost reduction 
items mentioned above.  


Information by business segment is presented below (in millions of dollars):

                                       Elimi-    
                            Total      nations      Services    Technology
                           -------     -------      --------    ----------
Three Months Ended
June 30, 2007
------------------
Customer revenue          $1,375.7                  $1,208.6     $167.1
Intersegment                           $(47.4)           3.6       43.8
                          --------     -------      --------     ------
Total revenue             $1,375.7     $(47.4)      $1,212.2     $210.9
                          ========     =======      ========     ====== 
Gross profit percent          21.8 %                    17.3 %     43.3 %
                          ========                  ========     ======
Operating profit            
  (loss) percent                .2 %                     2.5 %      (.6)%
                          ========                  ========     ======

Three Months Ended
June 30, 2006 
------------------
Customer revenue          $1,407.3                  $1,224.5     $182.8
Intersegment                           $(53.2)           3.8       49.4
                          --------     -------      --------     ------ 
Total revenue             $1,407.3     $(53.2)      $1,228.3     $232.2
                          ========     =======      ========     ====== 
Gross profit percent          11.6 %                    14.3 %     37.6 %
                          ========                  ========     ======
Operating loss percent       (13.1)%                    ( .9)%    (12.2)%
                          ========                  ========     ======

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

In the Services segment, customer revenue was $1.21 billion for the three months
ended June 30, 2007 compared with $1.22 billion for the three months ended June 
30, 2006.  Foreign currency translation had a 4-percentage-point positive impact
on Services revenue in the current quarter compared with the year-ago period.  
Revenue in the second quarter of 2007 declined 1% compared with 2006, 
principally due to an 8% decrease in systems integration and consulting revenue 
($370.8 million in 2007 compared with $404.0 million in 2006), a 9% decrease in 
core maintenance revenue ($108.9 million in 2007 compared with $119.8 million in
2006), and a 2% decrease in infrastructure services ($224.2 million in 2007 
compared with $229.5 million in 2006), offset in part by a 7% increase in 
outsourcing ($504.7 million in 2007 compared with $471.2 million in 2006).  
Services gross profit was 17.3% in the second quarter of 2007 compared with 
14.3% in the year-ago period.  Services operating income (loss) percent was 2.5%
in the three months ended June 30, 2007 compared with (.9)% in the three months 
ended June 30, 2006.  The increase in Services operating profit margin 
principally reflects the benefits derived from the cost reduction actions as 
well as a decline in pension expense of $24.1 million ($11.3 million for the 
three months ended June 30, 2007 compared with $35.4 million in the year-ago 
period).  During the quarter, the company continued to experience lower volume 
in systems integration and consulting, and higher temporary contract labor costs
primarily due to changes and disruptions associated with the repositioning 
program. The company is currently addressing these issues.


<PAGE> 20

In the Technology segment, customer revenue was $167 million in the current 
quarter compared with $183 million in the year-ago period.  Foreign currency 
translation had a positive impact of approximately 1-percentage point on 
Technology revenue in the current period compared with the prior-year period.  
Revenue in the three months ended June 30, 2007 was down 9% from the three 
months ended June 30, 2006, due to a 12% decrease in sales of enterprise-class 
servers ($127.5 million in 2007 compared with $145.6 million in 2006) offset in 
part by a 6% increase in sales of specialized technology products ($39.6 million
in 2007 compared with $37.2 million in 2006).  Technology gross profit was 43.3%
in the current quarter compared with 37.6% in the year-ago quarter.  Technology 
operating income (loss) percent was (.6)% in the three months ended June 30, 
2007 compared with (12.2)% in the three months ended June 30, 2006.  The 
increase in Technology operating profit margin principally reflects the benefits
derived from the cost reduction actions as well as a decline in pension expense
of $4.9 million ($.1 million for the three months ended June 30, 2007 compared 
with $5.0 million in the year-ago period).  The decline in revenue in 2007 
compared with 2006 primarily reflected the continuing secular decline in 
enterprise servers. 

New accounting pronouncements

See note (j) of the Notes to Consolidated Financial Statements for a full 
description of recent accounting pronouncements, including the expected dates of
adoption and estimated effects on results of operations and financial condition.


Financial condition

Cash and cash equivalents at June 30, 2007 were $520.7 million compared with 
$719.3 million at December 31, 2006.  

During the six months ended June 30, 2007, cash used for operations was $81.1 
million compared with cash used of $166.0 million for the six months ended June 
30, 2006.  The current-year period included a tax refund of approximately $58 
million.  Cash expenditures in the current period related to the current year 
and prior-year restructuring actions (which are included in operating 
activities) were approximately $86.7 million compared with $39.6 million for the
prior-year period.  Cash expenditures for the current-year and the prior-year 
restructuring actions are expected to be approximately $75.1 million for the 
remainder of 2007, resulting in an expected cash expenditure of approximately 
$161.8 million in 2007 compared with $198 million in 2006.  In addition, there 
was a reduction in the amount of receivables sold in the company's U.S. 
securitization. At June 30, 2007 and December 31, 2006, receivables of $125 
million and $170 million, respectively, were sold under the company's U.S. 
securitization.

Cash used for investing activities for the six months ended June 30, 2007 was 
$139.7 million compared with $240.5 million of cash provided during the six 
months ended June 30, 2006.  The principal reason for the decrease was that in 
2006, the company received net proceeds of $380.6 million from the sale of the 
NUL shares and other assets.  In the current period, the investment in 
marketable software was $48.9 million compared with $55.3 million in the year-
ago period, capital additions of properties were $39.8 million in 2007 compared 
with $32.7 million in 2006 and capital additions of outsourcing assets were 
$78.5 million in 2007 compared with $50.1 million in 2006.  The increase in 
capital expenditures for outsourcing assets reflects higher expenditures on 
outsourcing projects as the company began new client projects.  During the six 
months ended June 30, 2007, the company financed $22.7 million of internal use 
software licenses.

Cash provided by financing activities during the six months ended June 30, 2007 
was $10.7 million compared with $69.0 million of cash used during the six months
ended June 30, 2006.  The prior-year period includes a cash expenditure of $57.9
million to retire at maturity all of the company's remaining 8 1/8% senior 
notes.  The current-year period includes $11.3 million of cash received due to 
employee exercise of stock options during the six months ended June 30, 2007 
compared with $.9 million in the prior-year period.  

At June 30, 2007, total debt was $1.05 billion, unchanged from December 31, 
2006.


<PAGE> 21

The company has a three-year, secured revolving credit facility which expires in
2009 that provides for loans and letters of credit up to an aggregate of $275 
million.  Borrowings under the facility bear interest based on short-term rates 
and the company's credit rating.  The credit agreement contains customary 
representations and warranties, including no material adverse change in the 
company's business, results of operations or financial condition.  It also 
contains financial covenants requiring the company to maintain certain interest 
coverage, leverage and asset coverage ratios and a minimum amount of liquidity, 
which could reduce the amount the company is able to borrow.  The credit 
facility also includes covenants limiting liens, mergers, asset sales, dividends
and the incurrence of debt.  Events of default include non-payment, failure to 
perform covenants, materially incorrect representations and warranties, 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, discussed 
below.  Also, the credit facility may be terminated if the 7 7/8% senior notes 
due 2008 have not been repaid, refinanced or defeased by payment of amounts due 
to an escrow agent on or prior to January 1, 2008.  The credit facility is 
secured by the company's assets, except that the collateral does not include 
accounts receivable that are subject to the receivable facility, U.S. real 
estate or the stock or indebtedness of the company's U.S. operating 
subsidiaries.  As of June 30, 2007, there were letters of credit of $45.5 
million issued under the facility and there were no cash borrowings.

In addition, the company and certain international subsidiaries have access to 
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.  

At June 30, 2007, the company had an agreement to sell, on an on-going basis, 
through Unisys Funding Corporation I, a wholly owned subsidiary, interests in up
to $300 million of eligible U.S. trade accounts receivable.  The receivables are
sold at a discount that reflects a margin based on, among other things, the 
company's then-current S&P and Moody's credit rating.  The facility is 
terminable by the purchasers if the company's corporate rating is below B by S&P
or B2 by Moody's and requires the maintenance of certain ratios related to the 
sold receivables.  At June 30, 2007, the company's corporate rating was B+ and 
B2 by S&P and Moody's, respectively.  The facility is renewable annually in 
November at the purchasers' option until November 2008.  At June 30, 2007 and 
December 31, 2006, the company had sold $125 million and $170 million, 
respectively, of eligible receivables.

At June 30, 2007, the company has met all covenants and conditions under its 
various lending and funding agreements.  The company expects to continue to meet
these covenants and conditions.  The company believes that it will have adequate
sources and availability of short-term funding to meet its expected cash 
requirements.

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 a 
registration statement covering $650 million of debt or equity securities, which
enables the company to be prepared for future market opportunities.
            
Stockholders' equity increased $62.0 million during the six months ended 
June 30, 2007, principally reflecting a decrease in other comprehensive loss due
to amortization of postretirement losses recognized in accumulated other 
comprehensive income, offset in part by a net loss of $61.9 million.


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," "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. Factors that could affect future results 
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.


<PAGE> 22

Statements in this report regarding the company's cost reduction plan are 
subject to the risk that the company may not implement the planned headcount 
reductions, increase its offshore resources, or reduce its use of third-party 
contract labor as quickly as currently planned.  All of these factors could 
affect the timing of anticipated cost savings.  The amount of anticipated cost 
savings is also subject to currency exchange rate fluctuations with regard to 
actions taken outside the U.S.  

Other factors that could affect future results include the following: 

The company's business is affected by changes in general economic and business 
conditions. The company continues to face a highly competitive business 
environment. If the level of demand for the company's products and services 
declines in the future, the company's business could be adversely affected. The 
company's business could also be affected by acts of war, terrorism or natural 
disasters. Current world tensions could escalate, and this could have 
unpredictable consequences on the world economy and on the company's business. 

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 consulting 
and other professional services firms, systems integrators, outsourcing 
providers, infrastructure services providers, computer hardware manufacturers 
and software 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 also may be better able to compete
for skilled professionals. Any of these factors 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 the success of its efforts 
to control and reduce costs through the development and use of low-cost 
subsidiaries and low-cost offshore and global sourcing models.  Future results 
will also depend in part on the success of the company's focused investment and 
sales and marketing strategies.  These strategies are based on various 
assumptions, including assumptions regarding market segment growth, client 
demand, and the proper skill set of and training for sales and marketing 
management and personnel, all of which are subject to change.  

The company's future results will depend in part on its ability to grow 
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.  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.  The 
company will need to have available sufficient financial resources in order to 
take on these obligations and make these investments. 

Recoverability of outsourcing assets is dependent on various factors, including 
the timely completion and ultimate cost of the outsourcing solution, and 
realization of expected profitability of existing outsourcing contracts.  These 
risks could result in an impairment of a portion of the associated assets, which
are tested for recoverability quarterly. 


<PAGE> 23

As long-term relationships, outsourcing contracts provide a base of recurring 
revenue.  However, outsourcing contracts are highly complex and can involve the 
design, development, implementation and operation of new solutions and the 
transitioning of clients from their existing business processes to the new 
environment.  In the early phases of these contracts, gross margins may be lower
than in later years when an integrated solution has been implemented, the 
duplicate costs of transitioning from the old to the new system have been 
eliminated and the work force and facilities have been rationalized for 
efficient operations. Future results will depend on the company's ability to 
effectively and timely complete these implementations, transitions and 
rationalizations.  Future results will also depend on the company's ability to 
continue to effectively address its challenging outsourcing operations through 
negotiations or operationally and to fully recover the associated outsourcing 
assets. 

Future results will also depend in part on the company's ability to drive 
profitable growth in systems integration and consulting. The company's ability 
to grow profitably in this business will depend on the level of demand for 
systems integration projects. It will also depend on an improvement in the 
utilization of services delivery personnel. 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
attain sufficient rates and 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. 

Future results will also depend, in part, on market demand for the company's 
high-end enterprise servers and customer acceptance of the new models introduced
in 2006.  The company continues to apply its resources to develop value-added 
software capabilities and optimized solutions for these server platforms which 
provide competitive differentiation.  Future results will depend, in part, on 
customer acceptance of new ClearPath systems and the company's ability to 
maintain its installed base for ClearPath and to develop next-generation 
ClearPath products that are purchased by the installed base. 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
growth potential in the market for high-end, Intel-based servers running 
Microsoft and Linux operating system software. However, 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.  Future results of the technology business will 
also depend, in part, on the successful implementation of the company's 
arrangements with NEC.

The company frequently enters into contracts with governmental entities. U.S. 
government agencies, including the Defense Contract Audit Agency and the 
Department of Labor, routinely audit government contractors. These agencies 
review a contractor's performance under its contracts, cost structure and 
compliance with applicable laws, regulations and standards. The U.S. government 
also may review the adequacy of, and a contractor's compliance with, its systems
and policies, including the contractor's purchasing, property, estimating, 
accounting, compensation and management information systems. Any costs found to 
be overcharged or improperly allocated to a specific contract will be subject to
reimbursement to the government. If an audit uncovers improper or illegal 
activities, the company may be subject to civil and criminal penalties and 
administrative sanctions, including termination of contracts, forfeiture of 
profits, suspension of payments, fines and suspension or prohibition from doing 
business with the U.S. government. Other risks and uncertainties associated with
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. In addition, if the company's
performance is unacceptable to the customer under a government contract, the 
government retains the right to pursue remedies under the affected contract, 
which remedies could include termination. 



<PAGE> 24

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 customer termination or may impose 
other penalties if the company does not meet the performance levels specified in
the contracts. 

Certain of the company's outsourcing agreements require that the company's 
prices be benchmarked and provide for a downward adjustment to those prices if 
the pricing for similar services in the market has changed.  As a result, 
anticipated revenues from these contracts may decline.

Some of the company's systems integration contracts are fixed-price 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 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. The company 
has announced that alliance partnerships with select IT companies are a key 
factor in the development and delivery of the company's refocused portfolio. 
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.

More than half 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, new tax legislation, and weaker 
intellectual property protections in some jurisdictions. 

The company cannot be sure 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.




<PAGE> 25


I
tem 4.  Controls and Procedures
--------------------------------

The Company's management, with the participation of the Company's Chief 
Executive Officer and Chief Financial Officer, has evaluated the effectiveness 
of the Company's disclosure controls and procedures as of June 30, 2007.  Based 
on this evaluation, the Company's Chief Executive Officer and Chief Financial 
Officer concluded that the Company's disclosure controls and procedures were 
effective for gathering, analyzing and disclosing the 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.  Such 
evaluation did not identify any change in the Company's internal controls over 
financial reporting that occurred during the quarter ended June 30, 2007 that 
has materially affected, or is reasonably likely to materially affect, the 
Company's internal control over financial reporting.



Part II - OTHER INFORMATION
-------   -----------------


Item 1A.  Risk Factors
-------   ------------

See "Factors that may affect future results" in Management's Discussion and 
Analysis of Financial Condition and Results of Operations for a discussion of 
risk factors.



Item 4.   Submission of Matters to a Vote of Security Holders
-------   ---------------------------------------------------

(a)    The company's 2007 Annual Meeting of Stockholders (the "Annual 
       Meeting") was held on April 26, 2007 in Philadelphia, Pennsylvania.

(b)    The following matters were voted upon at the Annual Meeting and received 
the following votes:

   (1) Election of Directors as follows:

   Henry C. Duques - 309,811,117 votes for; 12,414,882 votes withheld

   Clayton M. Jones - 309,618,973 votes for; 12,607,026 votes withheld

   Theodore E. Martin - 308,556,030 votes for; 13,659,969 votes withheld

   (2) Ratification of the selection of the company's independent registered 
public accounting firm for 2007 - 316,358,692 votes for; 3,488,294 votes 
against; 2,379,015 abstentions.

   (3)  Approval of the Unisys Corporation 2007 Long-Term Incentive and Equity 
Compensation Plan - 211,375,645 votes for; 58,785,518 votes against; 2,885,245 
abstentions; 49,179,593 broker non-votes.

   (4)  Consideration and vote upon a stockholder proposal to provide a report 
concerning political contributions by the company - 110,229,306 votes for; 
105,613,155 votes against; 57,203,947 abstentions; 49,179,593 broker non-votes.

   (5)  Consideration and vote upon a stockholder proposal requesting the Board 
of Directors to issue a sustainability report relating to the company's social 
and environmental practices - 17,267,505 votes for; 200,272,719 votes against; 
55,506,184 abstentions; 49,179,593 broker non-votes. 



Item 5.  Other Information
------   -----------------

See note (b) of the notes to consolidated financial statements for information 
on the restructuring charge taken in the second quarter of 2007.


Item 6.   Exhibits 
-------   --------

(a)       Exhibits

          See Exhibit Index




<PAGE> 26



                               SIGNATURES
                               ----------



     Pursuant to the requirements 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

Date: August 6, 2007                         By: /s/ Janet Brutschea Haugen
                                                -----------------------------
                                                Janet Brutschea Haugen
                                                Senior Vice President and 
                                                Chief Financial Officer 
                                                (Principal Financial Officer)


                                             By: /s/ Joseph M. Munnelly
                                                 ----------------------
                                                 Joseph M. Munnelly
                                                 Vice President and 
                                                 Corporate Controller
                                                 (Chief Accounting Officer)





<PAGE> 27

                             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)

3.2      Bylaws of Unisys Corporation, as amended through February 8, 2007 
         (incorporated by reference to Exhibit 3 to the registrant's Current 
         Report on Form 8-K dated February 8, 2007)

10       Unisys Corporation 2007 Long-Term Incentive and Equity Compensation 
         Plan (incorporated by reference to Appendix A to the registrant's Proxy
         Statement, dated March 15, 2007, for its 2007 annual meeting of 
         stockholders)

12       Statement of Computation of Ratio of Earnings to Fixed Charges

31.1     Certification of Joseph W. McGrath required by Rule 13a-14(a)
         or Rule 15d-14(a)

31.2     Certification of Janet Brutschea Haugen required by Rule 13a-14(a)
         or Rule 15d-14(a)

32.1     Certification of Joseph W. McGrath required by Rule 13a-14(b)
         or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002,
         18 U.S.C. Section 1350

32.2     Certification of Janet Brutschea Haugen required by Rule 13a-14(b)
         or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002,
         18 U.S.C. Section 1350






                                                                      Exhibit 12

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

                                

                                  Six             
                                  Months     
                                  Ended          Years Ended December 31
                                  June 30, -----------------------------------
                                  2007      2006   2005   2004   2003   2002  
                                  --------  ----   ----   ----   ----   ----  
Fixed charges
Interest expense                  $ 37.6   $ 77.2 $ 64.7 $ 69.0 $ 69.6 $ 66.5 
Interest capitalized during 
  the period                         3.8      9.9   15.0   16.3   14.5   13.9 
Amortization of debt issuance
  expenses                           1.9      3.8    3.4    3.5    3.8    2.6 
Portion of rental expense
  representative of interest        28.4     56.7   60.9   61.6   55.2   53.0 
                                   ------  ------ ------ ------ ------  ----- 
    Total Fixed Charges             71.7    147.6  144.0  150.4  143.1  136.0 
                                   ------  ------ ------ ------ ------  -----
Earnings                             
Income (loss) from continuing
 operations before income taxes    (47.9)  (250.9)(170.9) (76.0) 380.5  332.8
Add (deduct) the following:
 Share of loss (income) of
  associated companies               -        4.5   (7.2) (14.0) (16.2)  14.2
 Amortization of capitalized
  interest                           7.1     13.7   12.9   11.7   10.2    8.8 
                                   ------  ------ ------ ------ ------  -----
    Subtotal                       (40.8)  (232.7)(165.2) (78.3) 374.5  355.8 
                                   ------  ------ ------ ------ ------  -----

Fixed charges per above             71.7    147.6  144.0  150.4  143.1  136.0 
Less interest capitalized during
  the period                        (3.8)    (9.9) (15.0) (16.3) (14.5) (13.9) 
                                   -----   ------ ------ ------ ------ ------
Total earnings (loss)              $27.1   $(95.0)$(36.2)$ 55.8 $503.1 $477.9 
                                   =====   ====== ====== ====== ====== ======

Ratio of earnings to fixed  
  charges                            *       *      *      *      3.52   3.51 
                                   =====   ====== ====== ====== ======  =====

* Earnings for the six months and years ended June 30, 2007, December 31, 2006, 
2005 and 2004 were inadequate to cover fixed charges by $44.6 million, $242.6 
million, $180.2 million and $94.6 million, respectively.









Exhibit 31.1

                             CERTIFICATION


I, Joseph W. McGrath, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Unisys Corporation;

2.  Based on my knowledge, this 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 report;

3.  Based on my knowledge, the financial statements, and other financial 
information included in this 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 report;

4.  The registrant's other certifying officer and I are responsible for 
establishing and maintaining disclosure controls and procedures (as defined in 
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the 
registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure 
controls and procedures to be designed under our supervision, 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 report is being prepared;

b. Designed such internal control over financial reporting, or caused such 
internal control over financial reporting to be designed under our supervision, 
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance 
with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and 
procedures and presented in this report our conclusions about the effectiveness 
of the disclosure controls and procedures, as of the end of the period covered 
by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal 
quarter that has materially affected, or is reasonably likely to materially 
affect, the registrant's internal control over financial reporting; 
and 

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

a. All significant deficiencies and material weaknesses in the design or 
operation of internal control over financial reporting which are reasonably 
likely to adversely affect the registrant's ability to record, process, 
summarize and report financial information; and 

b. Any fraud, whether or not material, that involves management or other 
employees who have a significant role in the registrant's internal control over 
financial reporting.

Date: August 6, 2007


                                /s/ Joseph W. McGrath 
                                    -------------------------
                            Name:   Joseph W. McGrath
                           Title:   President and Chief
                                    Executive Officer





Exhibit 31.2

                             CERTIFICATION


I, Janet Brutschea Haugen, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Unisys Corporation;

2.  Based on my knowledge, this 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 report;

3.  Based on my knowledge, the financial statements, and other financial 
information included in this 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 report;

4.  The registrant's other certifying officer and I are responsible for 
establishing and maintaining disclosure controls and procedures (as defined in 
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the 
registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure 
controls and procedures to be designed under our supervision, 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 report is being prepared;

b. Designed such internal control over financial reporting, or caused such 
internal control over financial reporting to be designed under our supervision, 
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance 
with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and 
procedures and presented in this report our conclusions about the effectiveness 
of the disclosure controls and procedures, as of the end of the period covered 
by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal 
quarter that has materially affected, or is reasonably likely to materially 
affect, the registrant's internal control over financial reporting; 
and 

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

a. All significant deficiencies and material weaknesses in the design or 
operation of internal control over financial reporting which are reasonably 
likely to adversely affect the registrant's ability to record, process, 
summarize and report financial information; and 

b. Any fraud, whether or not material, that involves management or other 
employees who have a significant role in the registrant's internal control over 
financial reporting.

Date: August 6, 2007

                                /s/ Janet Brutschea Haugen 
                                    -------------------------
                            Name:   Janet Brutschea Haugen
                           Title:   Senior Vice President and
                                    Chief Financial Officer





Exhibit 32.1


                  CERTIFICATION OF PERIODIC REPORT

I, Joseph W. McGrath, President and Chief Executive Officer of Unisys 
Corporation (the "Company"), certify, pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)   the Quarterly Report on Form 10-Q of the Company for the quarterly period 
ended June 30, 2007 (the "Report") fully complies with the requirements of 
Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and 

(2)   the information contained in the Report fairly presents, in all material 
respects, the financial condition and results of operations of the Company.


Dated: August 6, 2007



/s/ Joseph W. McGrath
------------------------
Joseph W. McGrath
President and Chief Executive Officer



A signed original of this written statement required by Section 906 has been 
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.











Exhibit 32.2


                  CERTIFICATION OF PERIODIC REPORT

I, Janet Brutschea Haugen, Senior Vice President and Chief Financial Officer of 
Unisys Corporation (the "Company"), certify, pursuant to Section 906 of the 
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)   the Quarterly Report on Form 10-Q of the Company for the quarterly period 
ended June 30, 2007 (the "Report") fully complies with the requirements of 
Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and 

(2)   the information contained in the Report fairly presents, in all material 
respects, the financial condition and results of operations of the Company.


Dated: August 6, 2007



/s/ Janet Brutschea Haugen
------------------------
Janet Brutschea Haugen
Senior Vice President and 
Chief Financial Officer



A signed original of this written statement required by Section 906 has been 
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.