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 September 30, 1999.
[ ] 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 [ ]
Number of shares of Common Stock outstanding as of September 30, 1999:
309,905,309.
2
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Millions)
September 30, December 31,
1999 1998
----------- ------------
Assets
- ------
Current assets
Cash and cash equivalents $ 374.0 $ 616.4
Accounts and notes receivable, net 1,262.0 1,239.0
Inventories
Parts and finished equipment 227.9 264.1
Work in process and materials 178.6 206.9
Deferred income taxes 477.4 428.8
Other current assets 110.8 88.9
-------- --------
Total 2,630.7 2,844.1
-------- --------
Properties 1,723.7 1,734.6
Less-Accumulated depreciation 1,137.3 1,149.2
-------- --------
Properties, net 586.4 585.4
-------- --------
Investments at equity 191.4 184.6
Software, net of accumulated amortization 248.0 247.7
Prepaid pension cost 917.6 833.8
Deferred income taxes 721.4 694.4
Other assets 269.7 223.2
-------- --------
Total $5,565.2 $5,613.2
======== ========
Liabilities and stockholders' equity
- ------------------------------------
Current liabilities
Notes payable $ 43.4 $ 52.2
Current maturities of long-term debt 26.3 4.1
Accounts payable 993.4 928.5
Other accrued liabilities 1,098.5 1,308.2
Dividends payable 26.6
Estimated income taxes 345.1 277.0
-------- --------
Total 2,506.7 2,596.6
-------- --------
Long-term debt 950.9 1,106.7
Other liabilities 351.7 374.3
Stockholders' equity
Preferred stock 1,444.7
Common stock, issued: 1999, 311.8;
1998, 259.4 3.1 2.6
Accumulated deficit (1,198.7) (1,532.2)
Other capital 3,547.6 2,152.1
Accumulated other comprehensive
loss (596.1) (531.6)
-------- --------
Stockholders' equity 1,755.9 1,535.6
-------- --------
Total $5,565.2 $5,613.2
======== ========
See notes to consolidated financial statements.
3
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Millions, except per share data)
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
Revenue $1,865.4 $1,792.3 $5,584.7 $5,185.6
-------- -------- -------- --------
Cost and expenses
Cost of revenue 1,195.2 1,186.4 3,581.8 3,429.9
Selling, general and
administrative 354.8 331.1 1,034.9 998.6
Research and development expenses 86.2 76.9 251.4 225.0
-------- -------- -------- --------
1,636.2 1,594.4 4,868.1 4,653.5
-------- -------- -------- --------
Operating income 229.2 197.9 716.6 532.1
Interest expense 34.1 42.7 103.0 131.8
Other income (expense), net 1.0 (7.6) (65.3) (19.7)
-------- -------- -------- --------
Income before income taxes 196.1 147.6 548.3 380.6
Estimated income taxes 45.6 53.8 169.9 139.9
-------- -------- -------- --------
Income before extraordinary item 150.5 93.8 378.4 240.7
Extraordinary item (12.1) (12.1)
-------- -------- -------- --------
Net income 138.4 93.8 366.3 240.7
Dividends on preferred shares 1.9 26.6 36.7 79.9
-------- -------- -------- --------
Earnings on common shares $ 136.5 $ 67.2 $ 329.6 $ 160.8
======== ======== ======== ========
Earnings per common share - basic
Before extraordinary item $ .49 $ .26 $ 1.22 $ .64
Extraordinary item (.04) (.04)
-------- -------- -------- --------
Total $ .45 $ .26 $ 1.18 $ .64
======== ======== ======== ========
Earnings per common share - diluted
Before extraordinary item $ .47 $ .25 $ 1.17 $ .60
Extraordinary item (.04) (.04)
-------- -------- -------- --------
Total $ .43 $ .25 $ 1.13 $ .60
======== ======== ======== ========
See notes to consolidated financial statements.
4
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Millions)
Nine Months Ended
September 30
------------------
1999 1998
-------- --------
Cash flows from operating activities
Income before extraordinary item $ 378.4 $ 240.7
Add (deduct) items to reconcile income before
extraordinary item to net cash provided by
operating activities:
Extraordinary item (12.1)
Depreciation 105.3 108.3
Amortization:
Marketable software 83.6 85.0
Goodwill 10.2 7.2
(Increase)decrease in deferred income taxes, net (70.3) .6
(Increase)decrease in receivables, net (47.1) 14.8
Decrease in inventories 64.4 18.4
(Decrease) in accounts payable and
other accrued liabilities (224.0) (106.5)
Increase in estimated income taxes 68.1 72.0
(Decrease)increase in other liabilities (16.2) 17.0
(Increase) in other assets (94.4) ( 16.4)
Other 74.2 ( 8.9)
------- -------
Net cash provided by operating activities 320.1 432.2
------- -------
Cash flows from investing activities
Proceeds from investments 803.6 1,448.3
Purchases of investments (778.2) (1,444.8)
Proceeds from sales of properties 21.7 1.1
Investment in marketable software (83.7) ( 79.1)
Capital additions of properties (139.0) (112.3)
Purchases of businesses (53.9)
------- -------
Net cash used for investing activities (229.5) (186.8)
------- -------
Cash flows from financing activities
Redemption of preferred stock (197.0)
Proceeds from issuance of long-term debt 30.3 195.2
Payments of long-term debt (161.5) (438.9)
Net (reduction in )proceeds from short-term
borrowings (9.1) 6.5
Dividends paid on preferred shares (59.4) ( 79.9)
Proceeds from employee stock plans 74.4 61.5
------- -------
Net cash used for financing activities (322.3) (255.6)
------- -------
Effect of exchange rate changes on
cash and cash equivalents (10.7) ( 18.1)
------- -------
(Decrease) in cash and cash equivalents (242.4) ( 28.3)
Cash and cash equivalents, beginning of period 616.4 824.2
-------- --------
Cash and cash equivalents, end of period $ 374.0 $ 795.9
======== ========
See notes to consolidated financial statements.
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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. 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 shares used in the computations of earnings per share are as
follows (in thousands):
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
1999 1998 1999 1998
------- ------- ------- -------
Basic 302,183 254,876 279,678 252,458
Diluted 314,541 271,740 292,733 268,840
b. A summary of the company's operations by business segment for the
three and nine month periods ended September 30, 1999 and 1998 is presented
below(in millions of dollars):
Total Corporate Services Technology
Three Months Ended ----- --------- -------- ----------
September 30, 1999
------------------
Customer revenue $1,865.4 $1,318.5 $ 546.9
Intersegment $(151.7) 17.7 134.0
-------- -------- -------- --------
Total revenue $1,865.4 $(151.7) $1,336.2 $ 680.9
======== ======== ======== ========
Operating income(loss) $ 229.2 $ (13.5) $ 104.9 $ 137.8
======== ======== ======== ========
Three Months Ended
September 30, 1998
------------------
Customer revenue $1,792.3 $1,268.9 $ 523.4
Intersegment $(118.4) 16.3 102.1
-------- -------- -------- --------
Total revenue $1,792.3 $(118.4) $1,285.2 $ 625.5
======== ======== ======== ========
Operating income(loss) $ 197.9 $( 1.5) $ 92.3 $ 107.1
======== ======== ======== ========
Nine Months Ended
September 30, 1999
------------------
Customer revenue $5,584.7 $3,901.3 $1,683.4
Intersegment $(415.6) 49.0 366.6
-------- -------- -------- --------
Total revenue $5,584.7 $(415.6) $3,950.3 $2,050.0
======== ======== ======== ========
Operating income(loss) $ 716.6 $ (21.6) $ 288.7 $ 449.5
======== ======== ======== ========
Nine Months Ended
September 30, 1998
------------------
Customer revenue $5,185.6 $3,561.5 $1,624.1
Intersegment $(366.8) 47.3 319.5
-------- -------- -------- --------
Total revenue $5,185.6 $(366.8) $3,608.8 $1,943.6
======== ======== ======== ========
Operating income(loss) $ 532.1 $( 28.6) $ 224.6 $ 336.1
======== ======== ======== ========
6
Presented below is a reconciliation of total business segment operating
income to consolidated income before taxes (in millions of dollars):
Three Months Nine Months
Ended Sept 30 Ended Sept 30
--------------- -------------
1999 1998 1999 1998
---- ---- ------ ------
Total segment operating income $242.7 $199.4 $738.2 $560.7
Interest expense ( 34.1) ( 42.7) (103.0) (131.8)
Other income (expense), net 1.0 ( 7.6) ( 65.3) ( 19.7)
Corporate and eliminations ( 13.5) ( 1.5) ( 21.6) ( 28.6)
------ ------ ------ ------
Total income before income taxes $196.1 $147.6 $548.3 $380.6
====== ====== ====== ======
c. Comprehensive income for the three and nine months ended September 30,
1999 and 1998 includes the following components (in millions of dollars):
Three Months Nine Months
Ended Sept 30 Ended Sept 30
--------------- -------------
1999 1998 1999 1998
------ ------ ------ ------
Net income $138.4 $ 93.8 $366.3 $240.7
Other comprehensive
income (loss)
Foreign currency
translation adjustment (19.9) (35.6) (63.0) (90.3)
Related tax expense
(benefit) 1.0 ( .1) 1.5 ( 2.3)
------ ----- ------ ------
Total other comprehensive
income (loss) (20.9) (35.5) (64.5) (88.0)
------ ----- ------ ------
Comprehensive income $117.5 $ 58.3 $301.8 $152.7
====== ====== ====== ======
Accumulated other comprehensive income (loss), (all of which
relates to foreign currency translation adjustments) as of
September 30, 1999 and December 31, 1998 is as follows (in millions of
dollars):
September 30, December 31,
1999 1998
-------------- - ------------
Balance at beginning of period $(531.6) $(448.1)
Translation adjustments ( 64.5) ( 83.5)
------- -------
Balance at end of period $(596.1) $(531.6)
======= =======
d. In August of 1999, the company acquired PulsePoint Communications, Tech
Hackers, Inc. and Publishing Partners International, Inc. Approximately
2.9 million shares of the company's common stock were exchanged for all of
the outstanding shares of these companies. The transactions were accounted
for as poolings of interests; therefore, all prior periods presented were
restated.
7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
- ---------------------
For the three months ended September 30, 1999, the company reported net income
of $138.4 million, or $.43 per diluted common share, compared to $93.8 million,
or $.25 per share, for the three months ended September 30, 1998. Income in the
current quarter includes a one-time tax benefit of $22.0 million, or $.07 per
diluted common share, related to a recently issued U.S. Treasury income tax
regulation, as well as an extraordinary charge of $12.1 million, or $.04 per
diluted share, for the early extinguishment of debt. Excluding these items,
third quarter earnings per share rose 60% to $.40 per share compared to $.25 per
share in the year-ago quarter.
Total revenue for the quarter ended September 30, 1999 was $1.87 billion, up 4%
from revenue of $1.79 billion for the quarter ended September 30, 1998.
Excluding the negative impact of foreign currency fluctuations, revenue in the
quarter rose 7%. Total gross profit percent increased to 35.9% in the third
quarter of 1999 from 33.8% in the year-ago period.
For the three months ended September 30, 1999, selling, general and
administrative expenses were $354.8 million (19.0% of revenue) compared to
$331.1 million (18.5% of revenue) for the three months ended September 30, 1998.
Research and development expenses were $86.2 million compared to $76.9 million a
year earlier.
For the third quarter of 1999, the company reported an operating income percent
of 12.3% compared to 11.0% for the third quarter of 1998.
Information by business segment is presented below (in millions):
Elimi-
Total nations Services Technology
------- ------- -------- ----------
Three Months Ended
September 30, 1999
- ------------------
Customer revenue $1,865.4 $1,318.5 $546.9
Intersegment $(151.7) 17.7 134.0
-------- ------- -------- ------
Total revenue $1,865.4 $(151.7) $1,336.2 $680.9
======== ======= ======== ======
Gross profit percent 35.9% 25.8% 48.5%
======== ======== ======
Operating income percent 12.3% 7.8% 20.2%
======== ======== ======
Three Months Ended
September 30, 1998
- ------------------
Customer revenue $1,792.3 $1,268.9 $523.4
Intersegment $(118.4) 16.3 102.1
-------- ------- -------- ------
Total revenue $1,792.3 $(118.4) $1,285.2 $625.5
======== ======= ======== ======
Gross profit percent 33.8% 24.5% 47.4%
======== ======== ======
Operating income percent 11.0% 7.2% 17.1%
======== ======== ======
8
In the Services segment, customer revenue increased by 4% to $1.32 billion in
the third quarter of 1999 from $1.27 billion in the third quarter of 1998 due
principally to growth in outsourcing revenue. Excluding proprietary maintenance
revenue, which continues to decline industry-wide, revenue increased 6% in the
quarter. Services revenue growth in the quarter was constrained by weakness in
network services, particularly in the Federal government business, due to
intense competitive pricing pressures and delays in the expected rollout of some
large networking projects; however, this is not materially impacting
profitability because of the lower-margin nature of this business. Revenue from
enterprise Windows NT services business was also lower than expected as the
market for these services is developing more slowly than anticipated in the
short term as companies evaluate the NT operating environment for mission-
critical performance.
In the third quarter of 1999, services gross profit increased to 25.8% from
24.5% in 1998, and operating profit was 7.8% compared to 7.2% in 1998. The
increase in services operating profit was largely due to ongoing cost reduction
programs as well as stringent cost controls over discretionary expenditures.
In the Technology segment, customer revenue increased 4% to $547 million in the
third quarter of 1999 from $523 million in the prior-year period as some
customers shifted technology spending from the fourth quarter into the third
quarter as they prepare for the year 2000 transition. This shift more than
offset the expected declines in personal computer revenue. The shift of
technology revenue from the fourth quarter to the third quarter is expected to
result in a decline in technology revenue in the fourth quarter of 1999 when
compared to the prior year quarter. The gross profit percent was 48.5% in 1999,
compared to 47.4% in 1998. Operating profit in this segment was 20.2% in 1999
compared to 17.1% in 1998. The increase in operating profit, above the increase
in gross profit, was largely due to the ongoing cost reduction efforts.
The company expects that the issues in its network and NT services businesses,
the impact of foreign currency exchange rates, the year 2000 transition, and
organizational changes to be made in the fourth quarter will have a negative
impact on its revenue for the next two quarters.
Interest expense for the three months ended September 30, 1999 declined to $34.1
million from $42.7 million for the three months ended September 30, 1998. The
decline was principally due to the company's debt reduction program.
Other income (expense), net, which can vary from quarter to quarter, was income
of $1.0 million in the current quarter compared to an expense of $7.6 million in
the year-ago quarter. The change was mainly due to lower foreign exchange
losses and gains on the sale of certain investments in the current quarter
offset in part by lower interest income.
Income before income taxes was $196.1 million in the third quarter of 1999
compared to $147.6 million last year. The provision for income taxes was $45.6
million in the current period compared to $53.8 million in the year-ago period.
The tax provision in the current period includes a one-time benefit of $22.0
million related to a recently issued U.S. Treasury income tax regulation
pertaining to the use of net operating loss carryforwards of acquired companies.
For the nine months ended September 30, 1999, net income was $366.3 million, or
$1.13 per diluted common share, compared to net income of $240.7 million, or
$.60 per diluted common share, last year. The current period income includes
the tax benefit of $22.0 million, or $.07 per diluted common share, discussed
above and an extraordinary item for the early extinguishment of debt of $12.1
million, or $.04 million per diluted common share. Excluding these items,
diluted earnings per share was $1.10 for the nine months ended September 30,
1999 compared to $.60 in the year-ago period. Revenue was $5.58 billion
compared to $5.19 billion for the first nine months of 1998.
9
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement,
which is effective for the year beginning January 1, 2001, establishes
accounting and reporting standards for derivative instruments and for hedging
activities. SFAS No. 133 requires a company to recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. Management is evaluating the impact this
statement may have on the company's financial statements.
Financial Condition
- -------------------
Cash and cash equivalents at September 30, 1999 were $374.0 million compared to
$616.4 million at December 31, 1998. During the nine months ended September 30,
1999, cash provided by operations was $320.1 million compared to $432.2 million
a year ago principally reflecting a decrease in working capital. The company's
days of sales outstanding increased, primarily reflecting late quarter-end
technology sales that were not able to be collected in September.
Cash used for investing activities during the first nine months of 1999 was
$229.5 million compared to $186.8 million during the first nine months of 1998.
The increase was principally due to the purchase of Datamec, a Brazilian
application outsourcing company, in June of 1999.
Cash used for financing activities during the first nine months of 1999 was
$322.3 million compared to $255.6 million in the year-ago period. Included in
the current period were payments of $197.0 million for redemptions of preferred
stock and $161.5 million related to the early redemption of long-term debt. In
the year-ago period $438.9 million of payments on long-term debt were offset by
proceeds of $195.2 million for issuances of long-term debt.
At September 30, 1999, total debt was $1.0 billion, a decrease of $142.4 million
from December 31, 1998. The decrease was principally due to the early
extinguishment, by means of open market purchases in the current quarter, of
$115.8 million principal amount of the company's 11 3/4% senior notes due 2004,
and $25.5 million of 12% senior notes due 2003. The decrease also reflects the
March 15, 1999 conversion into common stock of the remaining $27 million of the
8 1/4% convertible subordinated notes due 2006, which were called during the
first quarter. Approximately 3.9 million common shares were issued for the
conversion of the 8 1/4% notes.
During the nine months ended September 30, 1999, all shares of the company's
Series A cumulative convertible preferred stock were either converted into the
company's common stock or redeemed for cash in response to various calls by the
company. These actions have eliminated all $1.4 billion of Series A preferred
stock (28.4 million shares) and $106.5 million of annual dividend payments.
Overall in 1999, of the 28.4 million shares of Series A preferred stock that
were outstanding at the beginning of the year, 24.5 million shares were
converted into 40.8 million shares of common stock and 3.9 million shares were
redeemed for $197.0 million in cash.
As part of the company's ongoing program to reduce interest expense, in the
third quarter of 1999, the company entered into interest rate and currency swaps
for Japanese yen and euro. In these arrangements, the company receives payments
based on a U.S. fixed rate of interest and pays interest based on a foreign
currency denominated floating rate. The company is obligated to deliver, on
April 1, 2008, 23.2 billion yen in exchange for $200 million and is obligated
to deliver, on October 15, 2004, 194.4 million euro in exchange for $200
million. These currency swaps have been designated as hedges of the company's
net investments in entities measured in these currencies.
The company has a $400 million credit agreement which expires June 2001. As of
September 30, 1999, there were no borrowings under the agreement.
The company may, from time to time, redeem, tender for, or repurchase its debt
securities in the open market or in privately negotiated transactions depending
upon availability, market conditions, and other factors.
10
The company has on file with the Securities and Exchange Commission an effective
registration statement covering $700 million of debt or equity securities, which
enables the company to be prepared for future market opportunities.
On July 2, 1999, Moody's Investors Service increased its rating on the company's
senior long-term debt to Bal from Ba3; on August 2, 1999, Standard & Poor's
Corporation increased its rating on the company's senior long-term debt to BB+
from BB-; and on August 10, 1999, Duff & Phelps Credit Rating Co. increased its
rating on the company's senior long-term debt to BBB- from BB+.
At September 30, 1999, the company had deferred tax assets in excess of deferred
tax liabilities of $1,457 million. For the reasons cited below, management
determined that it is more likely than not that $1,136 million of such assets
will be realized, therefore resulting in a valuation allowance of $321 million.
The company evaluates quarterly the realizability of its net deferred tax assets
by assessing its valuation allowance and by adjusting the amount of such
allowance, if necessary. The factors used to assess the likelihood of
realization are the company's forecast of future taxable income, which is
adjusted by applying probability factors, and available tax planning strategies
that could be implemented to realize deferred tax assets.
Failure to achieve forecasted taxable income might affect the ultimate
realization of the net deferred tax assets. See "Factors that may affect future
results" below. The combination of these factors is expected to be sufficient
to realize the entire amount of net deferred tax assets. Approximately $3.4
billion of future taxable income (predominantly U.S.) is needed to realize all
of the net deferred tax assets.
Stockholders' equity increased $220.3 million during the nine months ended
September 30, 1999, principally reflecting net income of $366.3 million,
issuance of stock under stock option and other plans of $87.2 million, $53.8
million of tax benefits related to employee stock plans, and $26.4 million from
conversion of the remaining 8 1/4% convertible notes, offset in part by the
redemption of $197.0 million of preferred stock, translation adjustments of
$64.5 million, and preferred stock dividends declared of $32.8 million.
In August of 1999, the company acquired PulsePoint Communications, Tech Hackers,
Inc. and Publishing Partners International, Inc. Approximately 2.9 million
shares of the company's common stock were exchanged for all of the outstanding
shares of these companies. The transactions were accounted for as poolings of
interests; therefore, all prior periods presented were restated.
Year 2000 Readiness Disclosure
- ------------------------------
Many computer systems and embedded technology may experience problems handling
dates beyond the year 1999 and therefore may need to be modified prior to the
year 2000.
As part of its development efforts, the company's current product offerings have
been designed or are being redesigned to be year 2000 ready, as defined by the
company. However, certain of the company's hardware and software products
currently used by customers will require upgrades or other remediation to become
year 2000 ready. Some of these products are used in critical applications where
the impact of non-performance to these customers and other parties could be
significant. The company has taken steps to notify customers of the year 2000
issue, provide information and resources on the company's year 2000 web site,
emphasize the importance of customer testing of their own systems in their own
unique business environments and offer consulting services to assist customers
in assessing their year 2000 risk.
11
The company continues to assess the year 2000 readiness of its key suppliers.
The company's reliance on suppliers, and therefore, on the proper functioning of
their products, information systems, and software, means that their failure to
address year 2000 issues could affect the company's business. The potential
impact and related costs are not known at this time. The company has inquired
about the year 2000 readiness of its key suppliers and, whenever possible, has
obtained year 2000 readiness warranties or statements as to their readiness.
The company expects to identify alternate sources or strategies where necessary
if significant exposure is identified.
The company's year 2000 internal systems effort involves three stages:
inventory and assessment of its hardware, software and embedded systems,
remediation or replacement of those that are not year 2000 ready, and testing
the systems. In 1997, the company completed an inventory and year 2000
assessment of its internal information technology ("IT") systems, and developed
a work plan to remediate non-compliant systems or replace or consolidate these
systems as part of the company's efforts to reduce and simplify, on a worldwide
basis, its IT systems.
The company initially focused on the IT systems that are critical to running its
business. As of September 30, 1999, the company has completed the remediation,
integrated testing and replacement of its major mission critical IT
applications. The company expects to eliminate any remaining non-compliant,
non-critical IT systems by December 1, 1999.
The company has completed an inventory and assessment of its key non-IT systems,
such as data and voice communications, building management, and manufacturing
systems. The company has completed remediation of those systems that were not
year 2000 ready, with the exception of some telecommunications equipment and
voice mail systems in a few locations, which are expected to be completed in the
last quarter of 1999.
The company estimates that, as of September 30, 1999, the cost of
remediating/replacing its internal systems has been approximately $26
million. Any remaining expenditures in 1999 are expected to be minimal. The
company has funded this effort through normal working capital. This estimate
does not include the cost of replacing or consolidating IT systems in
connection with the company's worldwide IT simplification project, which was
undertaken for reasons unrelated to year 2000 issues, potential costs related to
any customer or other claims, the costs associated with making the company's
product offerings year 2000 ready, and the costs of any disruptions caused by
suppliers not being year 2000 ready. This estimate is based on a current
assessment of the year 2000 projects and is subject to change as the projects
progress.
Although the company does not believe that it will incur material costs or
experience material disruptions in its business associated with the year 2000,
there can be no assurance that the company will not experience serious
unanticipated negative consequences and/or material costs. The company may see
increased customer satisfaction costs related to year 2000 over the next few
years. In addition some commentators have stated that a significant amount of
litigation may arise out of year 2000 compliance issues, and the company is
aware of a growing number of lawsuits against information technology and
solutions providers. Although the company believes it has taken adequate
measures to address year 2000 issues, because of the unprecedented nature of
such litigation, it is uncertain to what extent the company may be affected by
it. Customer spending patterns have also been, and may continue to be, impacted
by the year 2000 issue, although the company is unable to quantify the impact.
Efforts by customers to address year 2000 issues may absorb a substantial part
of their IT budgets in the near term, and customers may either accelerate or
delay the purchase of new applications and systems. While this behavior may
increase demand for certain of the company's products and services, it could
also soften demand. In the three months ended September 30, 1999, the company
has experienced such a shift in revenue patterns as some customers have shifted
technology spending from the fourth quarter of 1999 into the third quarter as
they prepare for the year 2000 transition. In addition, there can be no
assurance that the company's current product offerings do not contain undetected
errors or defects associated with year 2000 date functions that may result in
increased costs to the company.
12
With respect to its internal systems, the worst case scenarios might include
corruption of data contained in the company's internal IT systems, hardware
failures, the failure of the company's significant suppliers, and the failure of
infrastructure services provided by utilities and other third parties such as
electricity, phone service, water transport and internet services.
The company continues to assess and refine the contingency plans it is
developing in the event it does not complete all phases of its year 2000 program
and to respond to year 2000 related events outside its control.
Conversion to the Euro Currency
- -------------------------------
On January 1, 1999, certain member countries of the European Union established
fixed conversion rates between their existing currencies and the European
Union's common currency, the euro. The transition period for the
introduction of the euro began on January 1, 1999. Beginning January 1, 2002,
the participating countries will issue new euro-denominated bills and coins for
use in cash transactions. No later than July 1, 2002, the participating
countries will withdraw all bills and coins denominated in the legacy
currencies, so that the legacy currencies no longer will be legal tender for any
transactions, making the conversion to the euro complete.
The company is addressing the issues involved with the introduction of the euro.
The more important issues facing the company include converting information
technology systems, reassessing currency risk, and negotiating and amending
agreements. Based on progress to date, the company believes that the use of the
euro will not have a significant impact on the manner in which it conducts its
business. Accordingly, conversion to the euro is not expected to have a
material effect on the company's consolidated financial position, consolidated
results of operations, or liquidity.
Factors that May Affect Future Results
- --------------------------------------
From time to time, the company provides information containing "forward-looking"
statements, as defined in the Private Securities Litigation Reform Act of 1995.
All forward-looking statements rely on assumptions and are subject to risks,
uncertainties, and other factors that could cause the company's actual results
to differ materially from expectations. In addition to changes in general
economic and business conditions and natural disasters, these include, but are
not limited to, the factors discussed below.
The company operates in an industry characterized by aggressive competition,
rapid technological change, evolving technology standards, and short product
life-cycles.
Future operating results will depend on the company's ability to design,
develop, introduce, deliver, or obtain new products and services on a timely and
cost-effective basis; on its ability to successfully implement its fourth
quarter organizational realignments; on its ability to mitigate the effects of
competitive pressures and volatility in the information services and technology
industry on revenues, pricing and margins; on its ability to effectively manage
the shift of its business mix away from traditional high-margin product and
services offerings; and on its ability to successfully attract and retain highly
skilled people. In addition, future operating results could be impacted by
market demand for and acceptance of the company's service and product offerings.
Certain of the company's systems integration contracts are fixed-price contracts
under which the company assumes the risk for delivery of the contracted services
at an agreed-upon price. Future results will depend on the company's ability to
profitably perform these services contracts and bid and obtain new contracts.
Approximately 55% of the company's total revenue derives from international
operations. The risk of doing business internationally include foreign currency
exchange rate fluctuations, changes in political or economic conditions, trade
protection measures, and import or export licensing requirements.
13
In the course of providing complex, integrated solutions to customers, the
company frequently forms alliances with third parties that have complementary
products, services, or skills. Future results will depend in part on the
performance and capabilities of these third parties, including their ability to
deal effectively with the year 2000 issue. Future results will also depend upon
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.
Future results may also be adversely affected by a delay in, or increased costs
associated with, the implementation of the year 2000 actions discussed above, or
by the company's inability to implement them.
14
Part II - OTHER INFORMATION
- ------- -----------------
Item 1. Legal Proceedings
- ------- -----------------
A number of purported class actions seeking unspecified compensatory damages
have been filed against Unisys and two current and one former officer in the
U.S. District Court for the Eastern District of Pennsylvania by persons who
purchased Unisys common stock during the period May 4, 1999 through October
14, 1999. The plaintiffs in these actions allege violations of the Federal
securities laws in connection with statements made by the Company concerning
certain of its services contracts. These actions, which are in the early
stages, include the following: Frances W. Smith, et al v. Unisys Corporation,
Larry Weinbach, Jack McHale and Gerald Gagliaradi (filed on October 28,
1999); Sam Wietschner, et al v. Unisys Corporation, et al (filed on November
1, 1999); Larry Morrison, et al v. Unisys Corporation, et al (filed on
November 4, 1999) and Alex Igdalski and Michael Sayegh, et al v. Unisys
Corporation, et al (filed on November 9, 1999). The Company believes it has
meritorious defenses to these actions and intends to defend them vigorously.
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits
See Exhibit Index
(b) Reports on Form 8-K
During the quarter ended September 30, 1999, the Company filed one
Current Report on Form 8-K dated July 15, 1999 to report under Items 5 and 7
of such Form.
15
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: November 12, 1999 By: /s/ Robert H. Brust
----------------------------
Robert H. Brust
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Janet M. Brutschea Haugen
-----------------------------
Janet M. Brutschea Haugen
Vice President and Controller
(Chief Accounting Officer)
16
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
3.1 Restated Certificate of Incorporation of Unisys Corporation
10.1 Amendment, effective September 24, 1999, to the Director Stock
Unit Plan
10.2 Amendments, effective September 24, 1999, to the Deferred
Compensation Plan for Executives of Unisys Corporation
10.3 Amendment, effective September 24, 1999, to the Deferred
Compensation Plan for Directors of Unisys Corporation
11.1 Statement of Computation of Earnings Per Share for the nine
months ended September 30, 1999 and 1998
11.2 Statement of Computation of Earnings Per Share for the three
months ended September 30, 1999 and 1998
12 Statement of Computation of Ratio of Earnings to Fixed Charges
27.1 Financial Data Schedule for the period ended September 30, 1999
27.2 Restated Financial Data Schedule for the year ended December 31, 1996
27.3 Restated Financial Data Schedule for the year ended December 31, 1997
27.4 Restated Financial Data Schedule for the period ended March 31, 1998
27.5 Restated Financial Data Schedule for the period ended June 30, 1998
27.6 Restated Financial Data Schedule for the period ended September 30,
1998
27.7 Restated Financial Data Schedule for the year ended December 31, 1998
27.8 Restated Financial Data Schedule for the period ended March 31, 1999
27.9 Restated Financial Data Schedule for the period ended June 30, 1999
RESTATED
CERTIFICATE OF INCORPORATION
OF
UNISYS CORPORATION
ARTICLE I
The name of the corporation (hereinafter called the "Corporation") is
Unisys Corporation.
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name
of the Corporation's registered agent at such address is The Corporation Trust
Company.
ARTICLE III
The purpose or purposes for which the Corporation is organized are:
To engage in the business of designing, manufacturing and marketing of
components, products, systems and forms and supplies for the recording, storing,
handling, computing, processing and communicating of information and data, and
of providing related services; and
To engage in any other lawful act or activity for which a corporation may
be organized under the General Corporation Law of Delaware.
ARTICLE IV
SECTION 1. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 760,000,000 shares, divided into
two classes consisting of 720,000,000 shares of Common Stock, par value $.01 per
share ("Common Stock"), and 40,000,000 shares of Preferred Stock, par value $1
per share ("Preferred Stock"). The Board of Directors shall have authority by
resolution to issue the shares of Preferred Stock from time to time on such
terms as it may determine and to divide the Preferred Stock into one or more
series and, in connection with the creation of any such series, to determine and
fix by the resolution or resolutions providing for the issuance of shares
thereof:
A. the distinctive designation of such series, the number of
shares which shall constitute such series, which number may be increased or
decreased (but not below the number of shares then outstanding) from time
to time by action of the Board of Directors, and the stated value thereof,
if different from the par value thereof;
B. the dividend rate, the times of payment of dividends on the
shares of such series, whether dividends shall be cumulative, and, if so,
from what date or dates, and the preference or relation which such dividends
will bear to the dividends payable on any shares of stock of any other class
or any other series of this class;
C. the price or prices at which, and the terms and conditions on
which, the shares of such series may be redeemed;
D. whether or not the shares of such series shall be entitled to
the benefit of a retirement or sinking fund to be applied to the purchase or
redemption of such shares and, if so entitled, the amount of such fund and
the terms and provisions relative to the operation thereof;
E. whether or not the shares of such series shall be convertible
into, or exchangeable for, any other shares of stock of the Corporation or
any other securities and, if so convertible or exchangeable, the conversion
price or prices, or the rates of exchange, and any adjustments thereof, at
which such conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
F. the rights of the shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up or upon any
distribution of the assets, of the Corporation;
G. whether or not the shares of such series shall have priority
over or parity with or be junior to the shares of any other class or series
in any respect, or shall be entitled to the benefit of limitations
restricting (i) the creation of indebtedness of the Corporation, (ii) the
issuance of shares of any other class or series having priority over or
being on a parity with the shares of such series in any respect, or (iii)
the payment of dividends on, the making of other distributions in respect
of, or the purchase or redemption of shares of any other class or series on
parity with or ranking junior to the shares of such series as to dividends
or assets, and the terms of any such restrictions, or any other restriction
with respect to shares of any other class or series on parity with or
ranking junior to the shares of such series in any respect;
H. whether such series shall have the voting rights, in addition
to any voting rights provided by law and, if so, the terms of such voting
rights, which may be general or limited; and
I. any other powers, preferences, privileges, and relative
participating, optional, or other special rights of such series, and the
qualifications, limitations or restrictions thereof, to the full extent now
or hereafter permitted by law.
The powers, preferences and relative participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of
such series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall be cumulative.
SECTION 2. Each holder of Common Stock shall be entitled to one vote for
each share of Common Stock held of record on all matters on which stockholders
generally are entitled to vote. Subject to the provisions of law and the rights
of the Preferred Stock and any other class or series of stock having a
preference as to dividends over the Common Stock then outstanding, dividends
may be paid on the Common Stock at such times and in such amounts as the Board
of Directors shall determine. Upon the dissolution, liquidation or winding up
of the Corporation, after any preferential amounts to be distributed to the
holders of the Preferred Stock and any other class or series of stock having a
preference over the Common Stock then outstanding have been paid or declared and
set apart for payment, the holders of the Common Stock shall be entitled to
receive all the remaining assets of the Corporation available for distribution
to its stockholders ratably in proportion to the number of shares held by them,
respectively.
SECTION 3. JUNIOR PREFERRED STOCK:
A. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Junior Participating Preferred Stock" (the "Junior Preferred
Stock") and the number of shares constituting such series shall be
1,500,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall
reduce the number of shares of Junior Preferred Stock to a number less than
the number of shares then outstanding plus the number of shares issuable
upon exercise of outstanding rights, options or warrants or upon conversion
of outstanding securities issued by the Corporation.
B. DIVIDENDS AND DISTRIBUTIONS.
(i) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior
to the shares of Junior Preferred Stock with respect to dividends, the
holders of shares of Junior Preferred Stock, in preference to the
holders of Common Stock and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Junior Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $15 or (b)
subject to the provision for adjustment hereinafter set forth, 300
times the aggregate per share amount of all cash dividends, and 300
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in
shares of Common Stock, or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Preferred Stock. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(ii) The Corporation shall declare a dividend or
distribution on the Junior Preferred Stock as provided in Paragraph
(i) of this Subsection immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $15 per
share on the Junior Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Junior Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Junior Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Junior Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of
shares of Junior Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be
not more than 60 days prior to the date fixed for the payment thereof.
C. VOTING RIGHTS. The holders of shares of Junior Preferred Stock
shall have the following voting rights:
(i) Subject to the provision for adjustment hereinafter set
forth, each share of Junior Preferred Stock shall entitle the holder
thereof to 300 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall
at any time declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Junior Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(ii) Except as otherwise provided herein or by law, the
holders of shares of Junior Preferred Stock and the holders of shares
of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(iii) The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Junior
Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds of the outstanding shares
of Junior Preferred Stock, voting together as a single series.
(iv) Except as set forth herein, holders of Junior Preferred
Stock shall have no voting rights.
D. CERTAIN RESTRICTIONS.
(i) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Preferred Stock as provided in
Subsection B are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares
of Junior Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
(a) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Junior Preferred Stock;
(b) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Junior Preferred Stock, except dividends
paid ratably on the Junior Preferred Stock and all such parity
stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all
such shares are then entitled; or
(c) purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock, or any shares of stock
ranking on a parity with the Junior Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith
will result in fair and equitable treatment among the
respective series or classes.
(ii) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
Paragraph (i) of this Subsection (D) purchase or otherwise acquire
such shares at such time and in such manner.
E. REACQUIRED SHARES. Any shares of Junior Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock, subject to the conditions and restrictions on issuance set
forth herein.
F. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made
(1) to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution, or winding up) to the Junior Preferred
Stock unless, prior thereto, the holders of shares of Junior Preferred Stock
shall have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, provided that the holders of shares of Junior
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 300
times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Junior
Preferred Stock, except distributions made ratably on the Junior Preferred
Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Junior Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
G. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares
of Junior Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 300 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay
any dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of
shares of Junior Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
H. NO REDEMPTION. The shares of Junior Preferred Stock shall not
be redeemable.
I. RANK. Nothing herein shall preclude the Board of Directors
from creating or authorizing any class or series of Preferred Stock ranking on a
parity with or prior to the Junior Preferred Stock as to the payment of
dividends or the distribution of assets.
SECTION 4. At the effective time of the amendment to Article IV, Section 1
of this Restated Certificate of Incorporation authorizing the Corporation to
issue shares of Common Stock, par value $.01 per share, each share of Common
Stock, par value $5 per share, of the Corporation issued and outstanding or held
in the treasury of the Corporation immediately prior to such effective time,
shall be changed into and reclassified as one share of Common Stock, par value
$.01 per share. To reflect such change and reclassification, each certificate
representing shares of Common Stock, par value $5 per share, theretofore issued
and outstanding or held in the treasury of the Corporation shall, from and after
such effective time, represent a like number of shares of Common Stock, par
value $.01 per share.
ARTICLE V
SECTION 1. VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS.
A. HIGHER VOTE FOR CERTAIN BUSINESS COMBINATIONS. In addition to
any affirmative vote required by law or this Restated Certificate of
Incorporation, and except as otherwise expressly provided in Section 2 of
this Article V:
(i) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (a) any Interested
Stockholder (as hereinafter defined) or (b) any other corporation
(whether or not itself an Interested Stockholder) which is, or after
such merger or consolidation would be, an Affiliate (as hereinafter
defined) of an Interested Stockholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of transactions)
to or with any Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the Corporation or any
Subsidiary having an aggregate Fair Market Value of $50,000,000 or
more; or
(iii) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in exchange
for cash, securities or other property (or a combination thereof)
having an aggregate Fair Market Value of $50,000,000 or more; or
(iv) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or on behalf
of an Interested Stockholder or any Affiliate of any Interested
Stockholder; or
(v) any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with or into or
otherwise involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class or equity or convertible securities of
the Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder or any Affiliate of any Interested
Stockholder;
shall require the affirmative vote of the holders of at least 80% of the
voting power of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (the
"Voting Stock"), voting together as a single class (it being understood that
for purposes of this Article V, each share of the Voting Stock shall have
the number of votes granted to it pursuant to Article IV of this Restated
Certificate of Incorporation). Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
B. DEFINITION OF "BUSINESS COMBINATION". The term "Business
Combination" as used in this Article V shall mean any transaction which is
referred to in any one or more of clauses (i) through (v) of Paragraph A of
this Section I.
SECTION 2. WHEN HIGHER VOTE IS NOT REQUIRED. The provisions of Section
1 of this Article V shall not be applicable to any particular Business
Combination, and such Business Combination shall require only such affirmative
vote as is required by law and any other provisions of this Restated Certificate
of Incorporation, if all of the conditions specified in either the following
Paragraphs A and B are met:
A. APPROVAL BY DISINTERESTED DIRECTORS. The Business Combination
shall have been approved by a majority of the Disinterested Directors (as
hereinafter defined).
B. PRICE AND PROCEDURE REQUIREMENTS. All of the following
conditions shall have been met:
(i) The aggregate amount of the cash and the Fair Market
Value (as hereinafter defined) as of the date of the consummation of
the Business Combination of consideration other than cash to be
received per share by holders of Common Stock in such Business
Combination shall be at least equal to the higher of the following:
(a) (if applicable) the highest per share price
(including any brokerage commission, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder
for any shares of Common Stock (or for any shares of common
stock of Burroughs Corporation, a Michigan corporation, the
predecessor to the Corporation) acquired by it (1) within the
two-year period immediately prior to the first public
announcement of the proposal of the Business Combination (the
"Announcement Date") or (2) in the transaction in which it
became an Interested Stockholder, whichever is higher; and
(b) the Fair Market Value per share of Common Stock
(or for any shares of common stock of Burroughs Corporation, a
Michigan corporation, the predecessor of the Corporation) on
the Announcement Date or on the date on which the Interested
Stockholder became an Interested Stockholder (such latter date
is referred to in this Article V as the "Determination Date"),
whichever is higher.
(ii) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business Combination
of consideration other than cash to be received per share by holders
of shares of any other class of outstanding Voting Stock shall be at
least equal to the highest of the following (it being intended that
the requirements of this paragraph B(ii) shall be required to be met
with respect to every class of outstanding Voting Stock, whether or
not the Interested Stockholder has previously acquired any shares of a
particular class of Voting Stock):
(a) (if applicable) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder
for any shares of such class of Voting Stock acquired by it (1)
within the two-year period immediately prior to the
Announcement Date or (2) in the transaction in which it became
an Interested Stockholder, whichever is higher;
(b) (if applicable) the highest preferential amount
per share to which the holders of shares of such class of
Voting Stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation; and
(c) the Fair Market Value per share of such class of
Voting Stock on the Announcement Date or on the Determination
Date, whichever is higher.
(iii) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Common Stock)
shall be in cash or in the same form as the Interested Stockholder has
previously paid for shares of such class of Voting Stock. If the
Interested Stockholder has paid for shares of any class of Voting
Stock with varying forms of consideration, the form of consideration
for such class of Voting Stock shall be either cash or the form used
to acquire the largest number of shares of such class of Voting Stock
previously acquired by it.
(iv) After such Interested Stockholder has become an
Interested Stockholder and prior to the consummation of such Business
Combination: (a) except as approved by a majority of the Disinterested
Directors, there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or not
cumulative) on the outstanding Preferred Stock; (b) there shall have
been (1) no reduction in the annual rate of dividends paid on the
Common Stock (except as necessary to reflect any subdivision of the
Common Stock), except as approved by a majority of the Disinterested
Directors, and (2) an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding shares of
the Common Stock, unless the failure so to increase such annual rate
is approved by a majority of the Disinterested Directors; and (c) such
Interested Stockholder shall have not become the beneficial owner of
any additional shares of Voting Stock except as part of the
transaction which results in such Interested Stockholder becoming an
Interested Stockholder.
(v) After such Interested Stockholder has become an
Interested Stockholder, such Interested Stockholder shall not have
received the benefit, directly or indirectly (except proportionately
as a stockholder), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(vi) A proxy or information statement describing the
proposed Business Combination and complying with the requirements of
the Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) shall be mailed to public stockholders of the Corporation
at least 30 days prior to the consummation of such Business
Combination (whether or not such proxy or information statement is
required to be mailed pursuant to such Act or subsequent provisions).
SECTION 3. CERTAIN DEFINITIONS. For the purpose of this Article V:
A. A "person" shall mean any individual or firm, corporation,
partnership, limited partnership, joint venture, trust, unincorporated
association or other entity.
B. "Interested Stockholder" shall mean any person (other than the
Corporation or any Subsidiary) who or which:
(i) is the beneficial owner, directly or indirectly, of more
than 20% of the voting power of the outstanding Voting Stock; or
(ii) is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date in question
was the beneficial owner, directly or indirectly, of 20% or more of
the voting power of then outstanding Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any
shares of Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially owned by
any Interested Stockholder, if such assignment or succession shall
have occurred in the course of a transaction or series of transactions
not involving a public offering within the meaning of the Securities
Act of 1933.
C. A person shall be a "beneficial owner" of any Voting Stock:
(i) which such person or any of its Affiliates or Associates
(as hereinafter defined) beneficially owns, directly or indirectly; or
(ii) which such person or any of its Affiliates or
Associates has (a) the right to acquire (whether such right is
exercisable immediately or only after the passage of time), pursuant
to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
or (b) the right to vote pursuant to any agreement, arrangement or
understanding; or
(iii) which are beneficially owned, directly or indirectly,
by any other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
D. For the purpose of determining whether a person is an Interested
Stockholder pursuant to Paragraph B of this Section 3, the number of shares
of Voting Stock deemed to be outstanding shall include shares deemed owned
through application of Paragraph C of this Section 3, but shall not include
any other shares of Voting Stock which may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
E. "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on February 24,
1984.
F. "Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in Paragraph B of this Section 3, the term
"Subsidiary" shall mean only a corporation of which a majority of each class
of equity security is owned, directly or indirectly, by the Corporation.
G. "Disinterested Director" means any member of the Board of
Directors of the Corporation (the "Board") who is unaffiliated with the
Interested Stockholder and was a member of the Board prior to the time that
the Interested Stockholder became an Interested Stockholder, and any
successor of a Disinterested Director who is not an affiliate of the
Interested Stockholder and is recommended to succeed a Disinterested
Director by a majority of Disinterested Directors then on the Board.
H. "Fair Market Value" means (i) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date
in question of a share of such stock on the Composite Tape for New York
Stock Exchange - Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such stock is not
listed on the Exchange, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which such stock is
listed, or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the 30-
day period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotation System or any system then in
use, or if no such quotations are available, the fair market value on the
date in question of a share of such stock as determined by the Board in good
faith; and (ii) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined by the
Board in good faith.
I. In the event of any Business Combination in which the
Corporation survives, the phrase "other consideration to be received" as
used in Paragraphs B(i) and (ii) of Section 2 of this Article V shall
include the shares of Common Stock and/or the shares of any other class of
outstanding Voting Stock retained by the holders of such shares.
SECTION 4. POWERS OF THE BOARD OF DIRECTORS. A majority of the
directors of the Corporation shall have the power and duty to determine for the
purposes of this Article V, on the basis of information known to them after
reasonable inquiry, (A) whether a person is an Interested Stockholder, (B) the
number of shares of Voting Stock beneficially owned by any persons, (C) whether
a person is an Affiliate or Associate of another and (D) whether the assets
which are the subject of any Business Combination have, or the consideration to
be received for the issuance or transfer of securities by the Corporation or any
Subsidiary in any Business Combination has, an aggregate Fair Market Value of
$50,000,000 or more.
SECTION 5. NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED
STOCKHOLDERS. Nothing contained in this Article V shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
ARTICLE VI
BOARD OF DIRECTORS
SECTION 1. NUMBER. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors which, subject to any
right of the holders of any series of Preferred Stock then outstanding to elect
additional directors under specified circumstances, shall consist of not less
than 10 nor more than 20 persons. The exact number of directors within the
minimum and maximum limitations specified in the preceding sentence shall be
fixed from time to time by the Board of Directors pursuant to a resolution
adopted by a majority of the entire Board of Directors.
SECTION 2. TERMS. The directors other than those who may be elected by
the holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, shall be divided into three classes,
as nearly equal in number as possible, with the term of office of the first
class to expire at the 1985 Annual Meeting of Stockholders, the term of office
of the second class to expire at the 1986 Annual Meeting of Stockholders and the
term of office of the third class to expire at the 1987 Annual Meeting of
Stockholders. At each Annual Meeting of Stockholders following such initial
classification and election, directors elected to succeed those directors whose
terms expire shall be elected for a term of office to expire at the third
succeeding Annual Meeting of Stockholders after their election.
SECTION 3. STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES. Advance
notice of stockholder nominations for the election of directors shall be given
in the manner provided in the Bylaws of the Corporation.
SECTION 4. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Subject to the
rights of the holders of any series of Preferred Stock then outstanding, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or other cause
shall be filled by a majority vote of the directors then in office, and
directors so chosen shall hold office for a term expiring at the Annual Meeting
of Stockholders at which the term of the class to which they have been elected
expires. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
SECTION 5. REMOVAL. Subject to the rights of the holders of any series
of Preferred Stock then outstanding, any director, or the entire Board of
Directors, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least 80% of the voting power of
all of the shares of the Corporation entitled to vote generally in the election
of directors, voting together as a single class.
ARTICLE VII
STOCKHOLDER ACTION
Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders. Except as otherwise required by law and subject
to the rights of the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation, special meetings of
stockholders of the Corporation may be called only by the Board of Directors
pursuant to a resolution approved by a majority of the entire Board of
Directors.
ARTICLE VIII
BYLAW AMENDMENTS
The Board of Directors shall have power to make, alter, amend and repeal
the Bylaws of the Corporation (except so far as the Bylaws of the Corporation
adopted by the stockholders shall otherwise provide). Any Bylaws made by the
Directors under the powers conferred hereby may be altered, amended or repealed
by the Directors or by the stockholders. Notwithstanding the foregoing and
anything contained in this Restated Certificate of Incorporation or the Bylaws
to the contrary, Sections 2 and 3 of Article I and Sections 1 through 5 of
Article II of the Bylaws shall not be altered, amended or repealed and no
provision inconsistent therewith shall be adopted without the affirmative vote
of the holders of at least 80% of the voting power of all the shares of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.
ARTICLE IX
AMENDMENTS TO
CERTIFICATE OF INCORPORATION
Notwithstanding any other provisions of the Certificate of Incorporation or
the Bylaws of the Corporation (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of Incorporation or the
Bylaws of the Corporation), the affirmative vote of the holders of 80% or more
of the voting power of the shares of the then outstanding voting stock of the
Corporation, voting together as a single class, shall be required to amend or
repeal, or adopt any provisions inconsistent with, Articles V, VI, VII, VIII or
this Article IX of this Restated Certificate of Incorporation.
ARTICLE X
SECTION 1. ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS. A director of
the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
SECTION 2. INDEMNIFICATION AND INSURANCE.
(a) RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a director
or officer, of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided,
however, that, except as provided in Paragraph (b) hereof, the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this Section shall
be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not
in any other capacity in which service was or is rendered by such person
while a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or
on behalf of such director or officer, to repay all amounts so advanced if
it shall ultimately be determined that such director or officer is not
entitled to be indemnified under this Section or otherwise. The Corporation
may, by action of its Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as
the foregoing indemnification of directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Paragraph
(a) of this Section is not paid in full by the Corporation within thirty
days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that
the claimant has not met the standards of conduct which make it permissible
under the Delaware General Corporation Law for the Corporation to indemnify
the claimant for the amount claimed, but the burden of providing such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
(c) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Section shall not be exclusive of any
other right which any person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, Bylaw, agreement,
vote of stockholders or disinterested directors or otherwise.
(d) INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person against such
expense, liability or loss under the Delaware General Corporation Law.
IN WITNESS WHEREOF, said Unisys Corporation has caused this Certificate
to be signed by Harold S. Barron, its Senior Vice President, General Counsel
and Secretary, and attested to by Mary Kay Gould, its Assistant Secretary this
27th day of September, 1999.
UNISYS CORPORATION
By: /s/ Harold S. Barron
---------------------------------------
Senior Vice President,
General Counsel and Secretary
ATTEST:
By: /s/ Mary Kay Gould
--------------------
Assistant Secretary
UNISYS CORPORATION
AMENDMENT
TO THE
DIRECTOR STOCK UNIT PLAN
1. A new Section 4(D) is added to the Plan, effective September
24, 1999, to read as follows:
"(D) Transfer of Previously Deferred Amounts. Upon the
election of a Director, all or any portion of a Director's
Account held under the terms of the Deferred Compensation Plan
for Directors of Unisys Corporation may be transferred and
credited under this Plan as Elective Stock Units, based on the
Fair Market Value on the date of transfer. Payment of a
Director's Stock Units credited to the Plan under this Section
4(D) shall be made in accordance with the Director's original
deferral election, subject to any subsequent elections
permitted under this Plan."
2. Section 8(B)(1) is amended and restated in its entirety,
effective September 24, 1999 to read as follows:
"(B) Revised Election.
(1) Pursuant to a Revised Election, a Director may specify:
(I) a date for the commencement of the payment of the Director's
Account that is after the date specified in the Director's Election;
and/or
(II) a form of payment that calls for a greater number of annual
installment payments than that specified in the Director's Election,
or a number of annual installment payments where the Director specified
a single sum payment in his or her Election; and/or
(III) a mode of payment (cash or stock) that is different than that
specified in the Director's Election.
(IV) Notwithstanding the foregoing, a Director may not elect a time
of benefit commencement and/or a form of payment to the extent that
such an election would cause any payments to be made after the March 31
first following the date that is 20 years after the date of the Director's
termination of service as a Director."
UNISYS CORPORATION
AMENDMENTS
TO THE
DEFERRED COMPENSATION PLAN FOR EXECUTIVES OF UNISYS CORPORATION
1. Section 2.9 is amended and restated in its entirety, effective
September 24, 1999, to read as follows:
"2.9 'Eligible Executive' means, for any calendar year, an
individual whose base salary from the Corporation plus 75% of
target EVC equals or exceeds the maximum amount of compensation
that is permitted to be taken into account under Section
401(a)(17) of the Internal Revenue Code."
2. Section 4.2(b) and (c) are amended and restated in their
entirety, effective September 24, 1999, to read as follows:
"(b) Each Eligible Executive may elect, at the same time as a
Deferral Election is made, to have one or more of the
Investment Measurement Options applied to current deferrals.
Such election with respect to current deferrals may be changed
at any time upon appropriate notice to the Plan recordkeeper.
"(c) Subject to the restrictions described in subsection (e),
a Participant may elect to change the manner in which
Investment Measurement Options apply to existing account
Balances. Such an election will be effective upon appropriate
notice to the Plan recordkeeper."
UNISYS CORPORATION
AMENDMENT
TO THE
DEFERRED COMPENSATION PLAN FOR DIRECTORS OF UNISYS CORPORATION
1. Sections 4.2(b) and(c) are amended and restated in their entirety,
effective September 24, 1999, to read as follows:
"(b) Each Eligible Director may elect, at the same time as a
Deferral Election is made, to have one or more of the Investment
Measurement Options applied to current deferrals. Such election with
respect to current deferrals may be changed at any time upon
appropriate notice to the Corporate Executive Compensation
Department.
(c) Subject to the restrictions described in Subsection (d), a
Participant may elect to change the manner in which Investment
Measurement Options apply to existing Account Balances. In addition,
a Participant may elect to transfer all or any portion of his/her
Account balance to the Director Stock Unit Plan and such amounts will
be credited under that Plan as Elective Stock Units, subject to the
terms and conditions of the Director Stock Unit Plan. Any election
described in this subsection (c) will be effective upon appropriate
notice to the Corporate Executive Compensation Department."
UNISYS CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
(Millions, except share data)
1999 1998
----------- -----------
Earnings per share computation - basic
Income before extraordinary item $ 378.4 $ 240.7
Less dividends on preferred shares ( 36.7) ( 79.9)
----------- -----------
Income available to common stockholders
before extraordinary item 341.7 160.8
Extraordinary item ( 12.1)
----------- -----------
Net income available to common stockholders $ 329.6 $ 160.8
=========== ===========
Weighted average shares 279,677,558 252,458,000
=========== ===========
Earnings per share - basic
Income before extraordinary item $ 1.22 $ .64
Extraordinary item (.04)
----------- -----------
Net income $ 1.18 $ .64
=========== ===========
Earnings per share computation - diluted
Income available to common stockholders
before extraordinary item $ 341.7 $ 160.8
Plus impact of assumed conversions
Interest expense on 8 1/4% Convertible Notes
due 2006, net of tax .3 1.2
----------- -----------
Income available to common stockholders
before extraordinary item 342.0 162.0
Extraordinary item ( 12.1)
----------- -----------
Net income available to common stockholders $ 329.9 $ 162.0
=========== ===========
Weighted average shares 279,677,558 252,458,000
Plus incremental shares from assumed
conversions
Employee stock plans 10,796,201 11,020,766
8 1/4% Convertible Notes due 2006 1,090,473 4,012,508
Preferred stock 1,169,000 1,348,726
----------- -----------
Adjusted weighted average shares 292,733,232 268,840,000
=========== ===========
Earnings per share - diluted
Income before extraordinary item $ 1.17 $ .60
Extraordinary item (.04)
----------- -----------
Net income $ 1.13 $ .60
=========== ===========
The average shares listed below were not included in the computation of diluted
earnings per share because to do so would have been antidilutive for the periods
presented.
Series A preferred stock 25,862,243 47,449,470
UNISYS CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
(Millions, except share data)
1999 1998
----------- -----------
Earnings per share computation - basic
Income before extraordinary item $ 150.5 $ 93.8
Less dividends on preferred shares ( 1.9) ( 26.6)
----------- -----------
Income available to common stockholders
before extraordinary item 148.6 67.2
Extraordinary item ( 12.1)
----------- -----------
Net income available to common stockholders $ 136.5 $ 67.2
=========== ===========
Weighted average shares 302,182,675 254,876,000
=========== ===========
Earnings per share - basic
Income before extraordinary item $ .49 $ .26
Extraordinary item (.04)
----------- -----------
Net income $ .45 $ .26
=========== ===========
Earnings per share computation - diluted
Income available to common stockholders
before extraordinary item $ 148.6 $ 67.2
Plus impact of assumed conversions
Interest expense on 8 1/4% Convertible Notes
due 2006, net of tax - .4
----------- -----------
Income available to common stockholders
before extraordinary item 148.6 67.6
Extraordinary item ( 12.1)
----------- -----------
Net income available to common stockholders $ 136.5 $ 67.6
=========== ===========
Weighted average shares 302,182,675 254,876,000
Plus incremental shares from assumed
conversions
Employee stock plans 11,492,800 11,538,799
8 1/4% Convertible Notes due 2006 - 3,975,247
Preferred Stock 866,000 1,349,954
----------- -----------
Adjusted weighted average shares 314,541,475 271,740,000
=========== ===========
Earnings per share - diluted
Income before extraordinary item $ .47 $ .25
Extraordinary item (.04)
----------- -----------
Net income $ .43 $ .25
=========== ===========
The average shares listed below were not included in the computation of diluted
earnings per share because to do so would have been antidilutive for the periods
presented.
Series A preferred stock 3,895,078 47,448,144
Exhibit 12
UNISYS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)
($ in millions)
Nine
Months
Ended Years Ended December 31
Sept 30, -------------------------------------
1999 1998 1997 1996 1995 1994
------- ---- ---- ---- ---- ----
Income (loss) from continuing
operations before income taxes $548.3 $594.2 $(748.1) $ 80.2 $(786.0) $ 17.4
Add (deduct) share of loss
(income) of associated
companies 14.2 ( .3) 5.9 (4.9) 5.0 16.6
------ ------ ------ ------ ------ ------
Subtotal 562.5 593.9 (742.2) 75.3 (781.0) 34.0
------ ------ ------ ------ ------ ------
Interest expense 103.0 171.7 233.2 249.7 202.1 203.7
Amortization of debt issuance
expenses 3.1 4.6 6.7 6.3 5.1 6.2
Portion of rental expense
representative of interest 36.8 49.1 51.8 59.8 65.9 65.6
------ ------ ------- ------ ------ ------
Total Fixed Charges 142.9 225.4 291.7 315.8 273.1 275.5
------ ------ ------- ------ ------ ------
Earnings (loss) from continuing
operations before income
taxes and fixed charges $705.4 $819.3 $(450.5) $391.1 $(507.9) $309.5
====== ====== ======= ====== ======= ======
Ratio of earnings to fixed
charges 4.94 3.63 (a) 1.24 (a) 1.12
====== ====== ======= ====== ====== ======
(a) Earnings for the years ended December 31, 1997 and 1995 were inadequate
to cover fixed charges by approximately $742.2 and $781.0 million,
respectively.
5
5
5
5
5
5
5
5
5