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 March 31, 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 March 31, 1999:
269,632,256.
<PAGE> 2
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Millions)
<CAPTION>
March 31,
1999 December 31,
1998
----------- ------------
<S> <C> <C>
Assets
- ------
Current assets
Cash and cash equivalents $ 423.5 $ 604.3
Accounts and notes receivable, net 1,159.6 1,232.0
Inventories
Parts and finished equipment 255.0 263.6
Work in process and materials 192.3 199.7
Deferred income taxes 449.1 428.8
Other current assets 100.5 88.3
--------- --------
Total 2,580.0 2,816.7
--------- --------
Properties 1,647.5 1,720.5
Less-Accumulated depreciation 1,097.5 1,139.6
--------- --------
Properties, net 550.0 580.9
--------- --------
Investments at equity 176.6 184.6
Software, net of accumulated amortization 248.1 246.6
Prepaid pension cost 861.6 833.8
Deferred income taxes 694.4 694.4
Other assets 213.7 220.7
--------- --------
Total $5,324.4 $5,577.7
========= ========
Liabilities and stockholders' equity
- ------------------------------------
Current liabilities
Notes payable $ 55.2 $ 50.6
Current maturities of long-term debt 3.9 4.0
Accounts payable 891.1 922.7
Other accrued liabilities 1,189.8 1,301.9
Dividends payable 18.9 26.6
Estimated income taxes 292.4 276.7
--------- --------
Total 2,451.3 2,582.5
--------- --------
Long-term debt 1,077.5 1,105.2
Other liabilities 359.9 373.0
Stockholders' equity
Preferred stock 1,008.9 1,420.0
Common stock, issued: 1999,271.5;
1998, 257.9 2.7 2.6
Accumulated deficit (1,365.6) (1,456.3)
Other capital 2,380.0 2,082.3
Accumulated other comprehensive
loss (590.3) (531.6)
--------- --------
Stockholders' equity 1,435.7 1,517.0
--------- --------
Total $5,324.4 $5,577.7
========= ========
See notes to consolidated financial statements.
</TABLE>
<PAGE> 3
<TABLE>
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Millions, except per share data)
<CAPTION>
Three Months Ended March 31
---------------------------
1999 1998
-------- --------
<S> <C> <C>
Revenue $1,812.4 $1,649.7
-------- --------
Costs and expenses
Cost of revenue 1,149.8 1,090.5
Selling, general and administrative 331.0 330.2
Research and development expenses 77.2 72.9
-------- --------
1,558.0 1,493.6
-------- --------
Operating income 254.4 156.1
Interest expense 34.2 46.5
Other income (expense), net (49.2) (11.6)
-------- --------
Income before income taxes 171.0 98.0
Estimated income taxes 59.8 35.3
-------- --------
Net income 111.2 62.7
Dividends on preferred shares 22.8 26.7
-------- --------
Earnings on common shares $ 88.4 $ 36.0
======== ========
Earnings per common share
Basic $ .34 $ .14
======== ========
Diluted $ .32 $ .14
======== ========
See notes to consolidated financial statements.
</TABLE>
<PAGE> 4
<TABLE>
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Millions)
<CAPTION>
Three Months Ended
March 31
------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net income $ 111.2 $ 62.7
Add (deduct) items to reconcile net income
to net cash provided by
operating activities:
Depreciation 34.4 33.0
Amortization:
Marketable software 25.1 26.8
Goodwill 6.8 1.6
(Increase)decrease in deferred income taxes, net (20.3) 7.9
Decrease in receivables, net 69.3 105.7
Decrease(increase) in inventories 16.1 ( 7.4)
(Decrease) in accounts payable and
other accrued liabilities (158.1) (126.8)
Increase in estimated income taxes 15.7 22.4
(Decrease)increase in other liabilities (4.4) .4
(Increase) in other assets (38.4) ( 5.7)
Other (3.6) 3.9
------- -------
Net cash provided by operating activities 53.8 124.5
------- -------
Cash flows from investing activities
Proceeds from investments 456.3 403.2
Purchases of investments (451.1) (399.4)
Proceeds from sales of properties 6.5
Investment in marketable software (26.6) ( 27.3)
Capital additions of properties (34.8) ( 30.0)
Purchases of businesses (2.5)
------- -------
Net cash used for investing activities (52.2) ( 53.5)
------- -------
Cash flows from financing activities
Redemption of preferred stock (168.3)
Proceeds from issuance of debt 195.2
Payments of long-term debt (401.0)
Net proceeds from short-term borrowings 4.6 11.2
Dividends paid on preferred shares (28.2) ( 26.7)
Proceeds from employee stock plans 14.2 16.9
------- -------
Net cash used for financing activities (177.7) (204.4)
------- -------
Effect of exchange rate changes on
cash and cash equivalents (4.7) ( 14.9)
------- -------
(Decrease) in cash and cash equivalents (180.8) (148.3)
Cash and cash equivalents, beginning of period 604.3 803.0
-------- --------
Cash and cash equivalents, end of period $ 423.5 $ 654.7
======== ========
See notes to consolidated financial statements.
</TABLE>
<PAGE> 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
March 31,
------------------
1999 1998
------- -------
Basic 261,142 248,586
Diluted 274,926 262,833
b. A summary of the company's operations by business segment for the
three-month periods ended March 31, 1999 and 1998 is presented below
(in millions of dollars):
Total Corporate Services Technology
Three Months Ended ----- --------- -------- ----------
March 31, 1999
------------------
Customer revenue $1,812.4 $1,192.3 $620.1
Intersegment $(109.1) 14.6 94.5
-------- -------- -------- ------
Total revenue $1,812.4 $(109.1) $1,206.9 $714.6
======== ======== ======== ======
Operating income(loss) $ 254.4 $( 8.0) $ 70.8 $191.6
======== ======= ======== ======
Three Months Ended
March 31, 1998
------------------
Customer revenue $1,649.7 $1,051.2 $598.5
Intersegment $(125.1) 14.8 110.3
-------- -------- -------- ------
Total revenue $1,649.7 $(125.1) $1,066.0 $708.8
======== ======== ======== ======
Operating income(loss) $ 156.1 $( 17.9) $ 48.2 $125.8
======== ======= ======== ======
Presented below is a reconciliation of total business segment operating
income to consolidated income before taxes (in millions of dollars):
Three Months Ended March 31
---------------------------
1999 1998
---- ----
Total segment operating income $262.4 $174.0
Interest expense (34.2) (46.5)
Other income (expense), net (49.2) (11.6)
Corporate and eliminations (8.0) (17.9)
------ ------
Total income before income taxes $171.0 $ 98.0
====== ======
<PAGE> 6
c. Comprehensive income for the three months ended March 31, 1999 and
1998 includes the following components (in millions of dollars):
1999 1998
---- ----
Net income $ 111.2 $ 62.7
Other comprehensive income (loss)
Foreign currency translation adjustment (58.9) (29.3)
Related tax expense(benefit) (.2) ( .5)
------- -------
Total other comprehensive income (loss) (58.7) (28.8)
------- -------
Comprehensive income $ 52.5 $ 33.9
======= =======
Accumulated other comprehensive income (loss), (all of which
relates to foreign currency translation adjustments) as of
March 31,1999 and December 31, 1998 is as follows (in millions of
dollars):
March 31, December 31,
1999 1998
----------- -----------
Balance at beginning of period $(531.6) $(448.1)
Translation adjustments ( 58.7) ( 83.5)
------- -------
Balance at end of period $(590.3) $(531.6)
======= =======
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
- ---------------------
For the three months ended March 31, 1999, the Company reported net income of
$111.2 million, compared to $62.7 million for the three months ended March 31,
1998. After payment of preferred dividends, the Company earned $.32 per common
share on a diluted basis compared to $.14 a year ago.
Total revenue for the quarter ended March 31, 1999 was $1.81 billion, up 10%
from revenue of $1.65 billion for the quarter ended March 31, 1998. Total gross
profit percent was 36.6% in the first quarter of 1999 compared to 33.9% in the
year-ago period.
For the three months ended March 31, 1999, selling, general and administrative
expenses were $331.0 million (18.3% of revenue) compared to $330.2 million
(20.0% of revenue) for the three months ended March 31, 1998. The decrease in
these costs as a percent of revenue was largely due to the company's ongoing
cost reduction programs, as well as stringent controls over discretionary
expenditures. Research and development expenses were $77.2 million compared to
$72.9 million a year earlier.
For the first quarter of 1999, the Company reported an operating income percent
of 14.0% compared to 9.5% for the first quarter of 1998.
Information by business segment is presented below (in millions):
<TABLE>
<CAPTION>
Elimi-
Total nations Services Technology
------- ------- -------- ----------
<S> <C> <C> <C> <C>
Three Months Ended
March 31, 1999
- ------------------
Customer revenue $1,812.4 $1,192.3 $620.1
Intersegment $(109.1) 14.6 94.5
-------- ------- -------- ------
Total revenue $1,812.4 $(109.1) $1,206.9 $714.6
======== ======= ======== ======
Gross profit percent 36.6% 24.0% 53.3%
======== ======== ======
Operating income
percent 14.0% 5.9% 26.8%
======== ======== ======
Three Months Ended
March 31, 1998
- ------------------
Customer revenue $1,649.7 $1,051.2 $598.5
Intersegment $(125.1) 14.8 110.3
-------- ------- -------- ------
Total revenue $1,649.7 $(125.1) $1,066.0 $708.8
======== ======= ======== ======
Gross profit percent 33.9% 24.0% 44.9%
======== ======== ======
Operating income
percent 9.5% 4.5% 17.7%
======== ======== ======
</TABLE>
<PAGE> 8
In the Services segment, customer revenue increased by 13% to $1.19 billion in
the first quarter of 1999 from $1.05 billion in the first quarter of 1998. The
increase was led by growth in systems integration, network services, and
outsourcing revenue. This growth more than offset the decline in proprietary
maintenance revenue. Gross profit was constant at 24% in each period while
operating profit increased to 5.9% in 1999 compared to 4.5% in 1988. The
increase in 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 $620 million in the
first quarter of 1999 from $599 million in the prior-year period. Revenue for
ClearPath enterprise servers remained strong, which offset declines, as
expected, in personal computer revenue. The gross profit percent was 53.3% in
1999, compared to 44.9% in 1998 due in large part to a higher percentage of
enterprise server and software sales. Operating profit in this segment was
26.8% in 1999 compared to 17.7% in 1998. The increase in operating profit,
above the increase in gross profit, was largely due to the ongoing cost
reduction efforts.
Interest expense for the three months ended March 31, 1999 was $34.2 million
compared to $46.5 million for the three months ended March 31, 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 an
expense of $49.2 million in the current quarter compared to an expense of $11.6
million in the year-ago quarter. The change was mainly due to litigation costs
relating to a number of cases, including the recent Czech Bank settlement, as
well as higher equity losses and various other non-operational items.
Income before income taxes was $171.0 million in the first quarter of 1999
compared to $98.0 million last year. The provision for income taxes was $59.8
million in the current period compared to $35.3 million in the year-ago period.
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, 2000, 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 March 31, 1999 were $423.5 million compared to
$604.3 million at December 31, 1998. During the three months ended March 31,
1999 cash provided by operations was $53.8 million compared to $124.5 million a
year ago. This decrease was due in large part to a delay in collection of two
large receivables to early in the second quarter.
Cash used for investing activities during the first three months of 1999 was
$52.2 million compared to $53.5 million during the first quarter of 1998.
Cash used for financing activities during the current quarter was $177.7 million
compared to $204.4 million in the year-ago period. Included in the current
period were payments of $168.3 million for redemptions of preferred stock. In
the year-ago quarter $401.0 million of payments on long-term debt were offset by
proceeds of $195.2 million for issuances of long-term debt.
At March 31, 1999, total debt was $1.1 billion, a decline of $23.2 million from
December 31, 1998. The decline was principally due to the March 15, 1999
conversion into common stock of the remaining $27 million of the company's
8 1/4% convertible subordinated notes due 2006, which were called during the
quarter. Approximately 3.9 million common shares were issued for this
conversion.
<PAGE> 9
During the three months ended March 31, 1999, approximately 8.2 million 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
two calls by the company. Of the 8.2 million preferred shares, 4.9 million were
converted into 8.1 million shares of common stock and 3.3 million preferred
shares were redeemed for $168.3 million in cash.
The company may, from time to time, redeem, tender for, or repurchase its
securities in the open market or in privately negotiated transactions depending
upon availability, market conditions, and other factors.
The company has on file with the Securities and Exchange Commission an effective
registration statement covering $700 million of debt or equity securities, which
enables the company to be prepared for future market opportunities.
The company has a $400 million credit agreement which expires June 2001. As of
March 31, 1999, there were no borrowings under the agreement.
In February 1999, Duff & Phelps Credit Rating Co. increased its rating on the
company's senior long-term debt to BB+ from BB.
At March 31, 1999, the company had deferred tax assets in excess of deferred tax
liabilities of $1,400 million. For the reasons cited below, management
determined that it is more likely than not that $1,082 million of such assets
will be realized, therefore resulting in a valuation allowance of $318 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 $3.2 billion of future taxable
income (predominantly U.S.) is needed to realize all of the net deferred tax
assets.
Stockholders' equity decreased $81.3 million during the three months ended March
31, 1999, principally reflecting the redemption of $168.3 million of preferred
stock, translation adjustments of $58.7 million, and preferred stock dividends
of $20.5 million, offset in part by net income of $111.2 million, issuance of
stock under stock option and other plans of $22.2 million, and $22.9 million of
tax benefits related to stock plans.
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 environment and offer consulting services to assist customers in
assessing their year 2000 risk.
<PAGE> 10
The company is also in the process of assessing 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. However, the potential impact and related costs are not known at this
time. The company is in the process of inquiring about the year 2000 readiness
of key suppliers providing services to the company. It is also in the process
of trying to obtain year 2000 readiness warranties from key vendors supplying
product to the company for incorporation into the company's products for resale.
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. The company has completed the remediation or replacement/
consolidation of most of these systems and expects to complete integrated
testing of these systems by mid 1999. The company expects to remediate or
replace/ consolidate its other IT systems by mid 1999 and to test these systems
throughout 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 is in the process of remediating those systems that are
not year 2000 ready and expects to have such remediation and testing completed
by mid 1999, with the exception of telecommunications equipment and voice mail
systems in a few locations, which are expected to be completed in the second
half of 1999.
The company estimates that, as of March 31, 1999, the cost of remediating its
internal systems has been approximately $14 million, and it expects to spend
approximately $1 million for the remainder of 1999. The company is funding 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. It is also unknown whether customer spending patterns may be impacted by
the year 2000 issue. 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, including year 2000 offerings, it could also soften demand. These
events could affect the company's revenues or change its revenue patterns. 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.
<PAGE> 11
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 is in the initial stages of developing contingency plans in the
event it does not complete all phases of its year 2000 program. The company
plans to evaluate the status of completion of its year 2000 program in the
second quarter of 1999 and to begin implementing such plans as it deems
necessary.
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 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.
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 57% 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.
<PAGE> 12
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.
Part II - OTHER INFORMATION
- ------- -----------------
Item 1. Legal Proceedings
- ------- -----------------
The company has previously reported, most recently in Item 3 of its Annual
Report on Form 10-K for the year ended December 31, 1998, its involvement in two
lawsuits with Ceska Sporitelna, a savings bank in the Czech Republic. As
disclosed in the company's Current Report on Form 8-K dated April 1, 1999, both
of these matters have been settled. The terms of the settlement are subject to
a confidentiality agreement. The settlement did not have a material adverse
effect on the company's consolidated financial position, consolidated
results of operations or liquidity.
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits
See Exhibit Index
(b) Reports on Form 8-K
During the quarter ended March 31, 1999, the company filed no
Current Reports on Form 8-K.
<PAGE> 13
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: April 26, 1999 By: /s/ Robert H. Brust
----------------------------
Robert H. Brust
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
<PAGE> 14
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
11 Statement of Computation of Earnings Per Share for the three
months ended March 31, 1999 and 1998
12 Statement of Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
EXHIBIT 11
<TABLE>
UNISYS CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
(Millions, except share data)
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Basic Earnings Per Common Share
Net income $ 111.2 $ 62.7
Less dividends on preferred shares ( 22.8) ( 26.7)
----------- -----------
Net income available to common stockholders $ 88.4 $ 36.0
=========== ===========
Weighted average shares 261,142,235 248,586,237
=========== ===========
Basic earnings per share $ .34 $ .14
=========== ===========
Diluted Earnings Per Common Share
Net income available to common stockholders $ 88.4 $ 36.0
Plus impact of assumed conversions
Interest expense on 8 1/4% Convertible Notes
due 2006, net of tax .3 .4
----------- -----------
Net income available to common
stockholders plus assumed conversions $ 88.7 $ 36.4
=========== ===========
Weighted average shares 261,142,235 248,586,237
Plus incremental shares from assumed
conversions
Employee stock plans 10,512,329 10,205,990
8 1/4% Convertible Notes due 2006 3,271,418 4,040,847
----------- -----------
Adjusted weighted average shares 274,925,982 262,833,074
=========== ===========
Diluted earnings per share $ .32 $ .14
=========== ===========
</TABLE>
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 41,865,828 47,450,272
Exhibit 12
<TABLE>
UNISYS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)
($ in millions)
<CAPTION>
Three
Months
Ended Years Ended December 31
Mar.31, -------------------------------------
1999 1998 1997 1996 1995 1994
------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations before income taxes $171.0 $604.7 $(758.8) $ 93.7 $(781.1) $ 14.6
Add (deduct) share of loss
(income) of associated
companies 7.9 ( .3) 5.9 (4.9) 5.0 16.6
------- ------ ------ ------ ------ ------
Subtotal 178.9 604.4 (752.9) 88.8 (776.1) 31.2
------- ------ ------ ------ ------ ------
Interest expense 34.2 171.7 233.2 249.7 202.1 203.7
Amortization of debt issuance
expenses 1.0 4.6 6.7 6.3 5.1 6.2
Portion of rental expense
representative of interest 12.1 48.5 51.2 59.2 65.3 65.0
------ ------ ------- ------ ------ ------
Total Fixed Charges 47.3 224.8 291.1 315.2 272.5 274.9
------ ------ ------- ------ ------ ------
Earnings (loss) from continuing
operations before income
taxes and fixed charges $226.2 $829.2 $(461.8) $404.0 $(503.6) $306.1
====== ====== ======= ====== ======= ======
Ratio of earnings to fixed
charges 4.78 3.69 (a) 1.28 (a) 1.11
====== ====== ======= ====== ====== ======
</TABLE>
(a) Earnings for the years ended December 31, 1997 and 1995 were inadequate
to cover fixed charges by approximately $752.9 and $776.1 million,
respectively.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 424
<SECURITIES> 0
<RECEIVABLES> 1,215
<ALLOWANCES> (44)
<INVENTORY> 447
<CURRENT-ASSETS> 2,580
<PP&E> 1,648
<DEPRECIATION> (1,098)
<TOTAL-ASSETS> 5,324
<CURRENT-LIABILITIES> 2,451
<BONDS> 1,078
0
1,009
<COMMON> 3
<OTHER-SE> 424
<TOTAL-LIABILITY-AND-EQUITY> 5,324
<SALES> 715
<TOTAL-REVENUES> 1,812
<CGS> 334
<TOTAL-COSTS> 1,150
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5
<INTEREST-EXPENSE> 34
<INCOME-PRETAX> 171
<INCOME-TAX> 60
<INCOME-CONTINUING> 111
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111
<EPS-PRIMARY> .34
<EPS-DILUTED> .32
</TABLE>
