SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998.
[ ] 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.)
Township Line and Union Meeting Roads
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 June 30, 1998:
254,321,522.
2
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEET
(Millions)
June 30,
1998 December 31,
(Unaudited) 1997
----------- ------------
Assets
- ------
Current assets
Cash and cash equivalents $ 711.7 $ 803.0
Accounts and notes receivable, net 921.6 967.3
Inventories
Finished equipment and supplies 286.5 289.7
Work in process and raw materials 266.7 271.1
Deferred income taxes 464.3 461.4
Other current assets 106.7 94.0
--------- --------
Total 2,757.5 2,886.5
--------- --------
Properties 1,759.8 1,774.1
Less-Accumulated depreciation 1,200.5 1,192.9
--------- --------
Properties, net 559.3 581.2
--------- --------
Investments at equity 198.8 215.7
Software, net of accumulated amortization 264.8 259.0
Prepaid pension cost 791.9 762.4
Deferred income taxes 665.7 665.7
Other assets 199.0 220.8
--------- --------
Total $5,437.0 $5,591.3
========= ========
Liabilities and stockholders' equity
- ------------------------------------
Current liabilities
Notes payable $ 64.0 $ 40.6
Current maturities of long-term debt 14.8 213.1
Accounts payable 822.7 817.1
Other accrued liabilities 1,194.5 1,307.2
Dividends payable 26.6 26.6
Estimated income taxes 208.4 172.8
--------- --------
Total 2,331.0 2,577.4
--------- --------
Long-term debt 1,431.4 1,438.3
Other liabilities 350.6 369.7
Stockholders' equity
Preferred stock 1,420.1 1,420.1
Common stock, issued: 1998, 255.5
1997, 250.2 2.6 2.5
Accumulated deficit (1,637.3) (1,736.8)
Other capital 1,538.6 1,520.1
--------- --------
Stockholders' equity 1,324.0 1,205.9
--------- --------
Total $5,437.0 $5,591.3
========= ========
See notes to consolidated financial statements.
3
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
(Millions, except per share data)
Three Months Six Months
Ended June 30 Ended June 30
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
Revenue $1,728.5 $1,585.3 $3,378.2 $3,116.0
-------- -------- -------- --------
Costs and expenses
Cost of revenue 1,145.6 1,046.9 2,236.1 2,061.9
Selling, general and
administrative 328.6 341.8 658.8 670.6
Research and development 70.0 67.4 142.9 147.7
-------- -------- -------- --------
1,544.2 1,456.1 3,037.8 2,880.2
-------- -------- -------- --------
Operating income 184.3 129.2 340.4 235.8
Interest expense 42.6 59.5 89.1 119.9
Other income (expense), net (.9) (3.2) (12.5) (18.8)
-------- -------- -------- --------
Income before income taxes 140.8 66.5 238.8 97.1
Estimated income taxes 50.7 24.6 86.0 35.9
-------- -------- -------- --------
Net income 90.1 41.9 152.8 61.2
Dividends on preferred shares 26.6 27.8 53.3 57.9
-------- -------- -------- --------
Earnings on common shares $ 63.5 $ 14.1 $ 99.5 $ 3.3
======== ======== ======== =========
Earnings per common share
Basic $ .25 $ .08 $ .40 $ .02
======== ======== ======== =========
Diluted $ .24 $ .08 $ .38 $ .02
======== ======== ======== =========
See notes to consolidated financial statements.
4
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(Millions)
Six Months Ended
June 30
-------------------
1998 1997
-------- --------
Cash flows from operating activities
Net income $ 152.8 $ 61.2
Add (deduct) items to reconcile net income
to net cash provided by (used for)
operating activities:
Depreciation 70.2 80.2
Amortization:
Marketable software 52.8 43.9
Goodwill 3.4 23.2
(Increase) in deferred income taxes, net (2.8)
Decrease in receivables, net 36.9 32.5
Decrease in inventories 7.6 35.9
(Decrease) in accounts payable and
other accrued liabilities (126.2) (414.3)
Increase (decrease)in estimated income taxes 35.6 ( 9.2)
Increase (decrease)in other liabilities 1.2 ( 52.4)
(Increase) decrease in other assets (13.6) 14.6
Other 8.7 8.1
------- --------
Net cash provided by (used for) operating
activities 226.6 (176.3)
------- --------
Cash flows from investing activities
Proceeds from investments 913.8 754.4
Purchases of investments (906.7) (734.7)
Proceeds from sales of properties 3.2
Investment in marketable software (58.5) ( 59.1)
Capital additions of properties (63.3) ( 90.5)
Purchases of businesses ( 13.7)
------- --------
Net cash used for investing activities (114.7) (140.4)
------- --------
Cash flows from financing activities
Redemption of redeemable preferred stock (150.0)
Proceeds from issuance of debt 195.2
Principal payments of debt (408.2)
Net proceeds from (reduction in)
short-term borrowings 23.4 ( 4.3)
Dividends paid on preferred shares (53.3) ( 59.8)
Proceeds from employee stock plans 52.6 .1
------- --------
Net cash used for financing activities (190.3) (214.0)
------- --------
Effect of exchange rate changes on
cash and cash equivalents (12.9) ( 18.4)
------- --------
Net cash used for continuing operations (91.3) (549.1)
Net cash used for discontinued operations ( 8.1)
------- --------
(Decrease) in cash and cash equivalents (91.3) (557.2)
Cash and cash equivalents, beginning of period 803.0 1,029.2
------- --------
Cash and cash equivalents, end of period $ 711.7 $ 472.0
======= ========
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 Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
------- ------- ------- ------
Basic 251,134 173,230 249,704 173,115
Diluted 266,473 175,078 264,497 174,724
b. Comprehensive income for the three and six months ended June 30,
1998 and 1997, includes the following components (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
Net income $ 90.1 $ 41.9 $152.8 $ 61.2
Other comprehensive
income (loss)
Foreign currency
translation adjustment ( 25.4) ( 37.0) ( 54.7) ( 62.6)
Related tax expense
(benefit) ( 1.7) 2.6 ( 2.2) 9.0
------- ------- ------- -------
Total other comprehensive
income (loss) ( 23.7) ( 39.6) ( 52.5) ( 71.6)
------- ------- ------- -------
Comprehensive income
(loss) $ 66.4 $ 2.3 $ 100.3 $( 10.4)
======== ======= ======== =======
Accumulated other comprehensive income (loss), (all of which
relates to foreign currency translation adjustments) as of
June 30, 1998 and December 31, 1997 is as follows (in millions):
Six Months Ended Year Ended
June 30, December 31,
1998 1997
---------------- ------------
Balance at beginning of period $(448.1) $(390.1)
Translation adjustments ( 52.5) ( 58.0)
------- -------
Balance at end of period $(500.6) $(448.1)
======= =======
c. Certain prior year balance sheet amounts have been reclassified
to conform to the 1998 presentation.
6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
- ---------------------
For the three months ended June 30, 1998, the Company reported net income of
$90.1 million, or $.24 per common share on a diluted basis, compared to $41.9
million, or $.08 per common share on a diluted basis, for the three months ended
June 30, 1997.
Total revenue for the quarter ended June 30, 1998 was $1.73 billion, up 9% from
revenue of $1.59 billion for the quarter ended June 30, 1997. Excluding the
negative impact of foreign currency fluctuations, revenue in the current quarter
rose 12%. Total gross profit percent was 33.7% in the second quarter of 1998
compared to 34.0% in the year-ago period.
For the three months ended June 30, 1998, selling, general and administrative
expenses were $328.6 million compared to $341.8 million for the three months
ended June 30, 1997. The decline was largely due to the Company's cost
reduction programs. Research and development expenses were $70.0 million
compared to $67.4 million a year earlier.
For the second quarter of 1998, the Company reported an operating income percent
of 10.7% compared to 8.1% for the second quarter of 1997.
Information by business unit is presented below (in millions):
Global
Elimi- Information Customer Computer
Total nations Services Services Systems
-------- ------- ----------- -------- --------
Three Months Ended
June 30, 1998
- ------------------
Customer revenue $1,728.5 $623.5 $582.5 $522.5
Intercompany $(132.0) 4.4 20.5 107.1
-------- ------- ------ ------ ------
Total revenue $1,728.5 $(132.0) $627.9 $603.0 $629.6
======== ======= ====== ====== ======
Gross profit percent 33.7% 23.9% 24.8% 45.4%
======== ====== ====== ======
Operating income
percent 10.7% 3.9% 10.3% 17.0%
======== ====== ====== ======
Three Months Ended
June 30, 1997
- ------------------
Customer revenue $1,585.3 $484.1 $542.2 $559.0
Intercompany $(110.4) 2.0 19.0 89.4
-------- ------- ------ ------ ------
Total revenue $1,585.3 $(110.4) $486.1 $561.2 $648.4
======== ======= ====== ====== ======
Gross profit percent 34.0% 21.3% 28.9% 43.3%
======== ====== ====== ======
Operating income
percent 8.1% (3.7)% 11.2% 13.5%
======== ====== ====== ======
7
Customer revenue in the quarter from Information Services was $623.5 million, up
29% from $484.1 million in 1997 principally as a result of growth in systems
integration. The gross profit percent was 23.9% in the current quarter compared
to 21.3% in the year-ago period. This increase reflects improved quality and
discipline in proposals and service delivery, continued benefits from completing
problem contracts, and the continued focus on higher-growth, higher-margin
solution programs. Information Services operating income percent (operating
income as a percent of total revenue) was 3.9% for the second quarter of 1998
compared to a negative 3.7% for the second quarter of 1997.
In Global Customer Services, customer revenue for the three months ended June
30, 1998 was $582.5 million, up 7% from $542.2 million for the three months
ended June 30, 1997. The increase was due to growth in distributed computing
support services revenue, which more than offset a continuing decline in core
maintenance revenue. The gross profit percent for Global Customer Services was
24.8% compared to 28.9% in the year-ago quarter. Margins in this business
continue to be impacted by the commoditization of hardware components within
network integration projects and the ongoing shift from higher margin
proprietary maintenance toward lower margin distributed computing support
services. The operating income percent for the second quarter of 1998 was 10.3%
compared to 11.2% last year.
Computer Systems customer revenue for the second quarter of 1998 was $522.5
million, down 7% from $559.0 million in the second quarter of 1997. In the
quarter, an increase in ClearPath revenue and software revenue was offset by a
decline, as expected, in personal computer revenue. This reflects the Company's
previously announced decision to focus its technology resources on enterprise-
class servers and outsource the supply of notebooks, PCs, and entry-level
servers. Computer Systems gross profit percent was 45.4% compared to 43.3% last
year. The operating income percent for the second quarter of 1998 was 17.0%
compared to 13.5% last year.
Interest expense for the three months ended June 30, 1998 was $42.6 million
compared to $59.5 million for the three months ended June 30, 1997. 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 $.9 million in the current quarter compared to an expense of $3.2
million in the year-ago quarter. The change was mainly due to lower goodwill
amortization due to the December 1997 write-off of goodwill related to the
Sperry/Burroughs merger.
Income before income taxes was $140.8 million, or 8.1% of revenue, in the
second quarter of 1998 compared to $66.5 million, or 4.2% of revenue, last
year. The provision for income taxes was $50.7 million in the current period
compared to $24.6 million in the year-ago period.
For the six months ended June 30, 1998, net income was $152.8 million, or $.38
per diluted common share, compared to net income of $61.2 million, or $.02 per
diluted common share, last year. Revenue was $3.38 billion compared to $3.12
billion for the first six months of 1997.
Effective January 1, 1998, the Company changed the functional currency of its
Brazilian operations from the U.S. dollar to the Brazilian local currency
because the Brazilian economy is no longer considered highly inflationary.
This change did not have a material effect on the Company's consolidated
financial position, consolidated results of operations, or liquidity.
Effective January 1, 1998, the Company adopted the American Institute of
Certified Public Accountants Statement of Position ("SOP") 97-2, "Software
Revenue Recognition" and 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". SOP 97-2 provides guidance on
applying generally accepted accounting principles in recognizing revenue on
software transactions and SOP 98-1 provides guidance on accounting for the
costs of computer software developed or obtained for internal use. Adoption
of SOP 97-2 and 98-1 did not have a material effect on the Company's
consolidated financial position, consolidated results of operations, or
liquidity.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("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.
8
Financial Condition
- -------------------
Cash and cash equivalents at June 30, 1998 were $711.7 million compared to
$803.0 million at December 31, 1997. During the six months ended June 30, 1998
cash provided by operations was $226.6 million compared to a year-ago cash
usage of $176.3 million. The increase in cash provided of $402.9 million was
due in large part to higher net income and improved working capital management,
including improvements in inventory turns and accounts receivable days
outstanding.
Cash used for investing activities during the first half of 1998 was $114.7
million compared to $140.4 million during the first half of 1997.
Cash used for financing activities during the six months ended June 30, 1998
was $190.3 million compared to $214.0 million in the year-ago period.
Included in the current period were proceeds of $195.2 million from issuance
of debt, offset by principal payments of debt of $408.2 million. Last year's
usage included $150.0 million for the redemption of Series C Cumulative
Convertible Preferred Stock.
On January 30, 1998, the Company issued $200 million of 7 7/8% senior notes due
2008. The net proceeds from the sale of the notes were used to call $200
million principal amount of the 10 5/8% senior notes due 1999. On February 5,
1998, the Company redeemed all $197.5 million of its 9 1/2% senior notes due on
July 15, 1998.
At June 30, 1998, total debt was $1.5 billion, a decline of $181.8 million from
December 31, 1997.
On July 16, 1998, the Company announced its plan to redeem at par in early
October the remaining $130 million outstanding of its 10 5/8% notes, one year
ahead of the due date in October 1999. Notice of this redemption is expected
to be given in early August. On September 15, 1998, the Company will make a
$30 million sinking fund payment, which includes a $20 million optional
prepayment, on its 9 3/4% sinking fund debentures due 2016.
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.
In June 1998, the Company entered into a $400 million, three-year credit
agreement. The new facility replaced the Company's more restrictive $200
million credit agreement established in June 1997. As of June 30, 1998, there
were no borrowings outstanding under the agreement.
In May 1998, Moody's Investor Service raised its credit rating on the Company's
senior long-term debt to Ba3 from B1. In June 1998, Standard & Poor's
Corporation raised its credit rating on the Company's senior long-term debt to
BB- from B+. The credit rating on the Company's senior long-term debt by
Duff & Phelps Credit Rating Co. is BB.
At June 30, 1998, the Company had deferred tax assets in excess of deferred tax
liabilities of $1,425 million. For the reasons cited below, management
determined that it is more likely than not that $1,038 million of such assets
will be realized, therefore resulting in a valuation allowance of $387 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. The combination of
these factors is expected to be sufficient to realize the $1,038 million of net
deferred tax assets. Approximately $3.0 billion of future taxable income
(predominantly U.S.) is needed to realize all of the net deferred tax assets.
The Company's net deferred tax assets include substantial amounts of net
operating loss and tax credit carryforwards. 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.
Stockholders' equity increased $118.1 million during the six months ended June
30, 1998, principally reflecting net income of $152.8 million and proceeds from
the issuance of stock related to stock option and employee plans of $52.6
million, offset in part by preferred stock dividends declared of $53.2 million
and translation adjustments of $52.4 million.
9
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 technology and services
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 the 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 60% of the Company's total revenue derives from international
operations. The risks of doing business internationally include foreign
currency exchange rate fluctuations, changes in political or economic
conditions, trade protection measures, and import or export licensing
requirements.
Many computer systems will experience problems handling dates beyond the year
1999 and therefore need to be modified prior to the year 2000 in order to
remain functional. The Company has been taking actions to ensure both the
internal readiness of its computer systems and the compliance of computer
products and software sold by it to customers for handling dates beginning in
the year 2000. The Company does not believe that the cost of these actions
will have a material adverse effect on the Company's results of operations or
financial condition. However, future results may be adversely affected by a
delay in, or increased costs associated with, the implementation of these
actions, or by the Company's inability to implement them.
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.
10
Part II - OTHER INFORMATION
- ------- -----------------
Item 1. Legal Proceedings
- ------- -----------------
As previously reported in the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1998, the Company is involved in two lawsuits
with Ceska Sporitelna, a savings bank in the Czech Republic (the "Bank"). The
disputes relate to contracts entered into in 1992 and 1994 between the Bank and
certain of the Company's foreign subsidiaries to design and implement a
computer system, including hardware and custom software, for the Bank's
headquarters and branch offices throughout the Czech Republic. In the first
action, the Company is a defendant in Ceska Sporitelna, a.s. v. Unisys
Corporation, filed in the United States District Court for the Eastern
District of Pennsylvania in June, 1996. The Bank alleges that Unisys made a
series of fraudulent misrepresentations in connection with these contracts.
The Bank seeks to recover more than $100 million, together with punitive
damages. The Company believes it has meritorious defenses to these allegations
and intends to defend them vigorously. The Company has filed a counterclaim in
this action alleging fraud, negligent misrepresentation, intentional
interference with prospective business relations and breach of contract by the
Bank, and the Company seeks to recover more than $100 million, together with
punitive damages. Trial is currently scheduled for January, 1999. In the
second action, the Company's subsidiary, Unisys International Services B.V.,
is the plaintiff in an arbitration captioned Unisys International Services
B.V. v. Ceska Sporitelna, filed in March, 1998, in Vienna, Austria. Unisys
International seeks to recover, among other amounts, approximately $21.1
million from the Bank for hardware, software and services delivered to and
used by the Bank.
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
(a) The Company's 1998 Annual Meeting of Stockholders (the "Annual Meeting")
was held on April 23, 1998 in Philadelphia, Pennsylvania.
(b) The following matters were voted upon at the Annual Meeting and received
the following votes:
1. Election of Directors as follows:
Henry C. Duques - 215,064,018 votes for; 4,432,813 votes withheld
Theodore E. Martin - 215,854,714 votes for; 3,642,117 votes
withheld
Lawrence A. Weinbach - 216,201,044 votes for; 3,295,787 votes
withheld
2. A proposal to ratify the selection of the Company's independent
auditors - 217,841,954 votes for; 994,923 votes against; 659,954
abstentions
3. A proposal to amend the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock -
206,649,039 votes for; 11,582,404 votes against; 1,265,388 abstentions
4. A stockholder proposal to act by written consent/call special
meetings - 106,459,220 votes for; 53,627,528 votes against; 5,302,346
abstentions; 53,783,033 broker non-votes
Item 5. Other Information
- ------- -----------------
As set forth in the Company's Proxy Statement for the 1998 Annual Meeting,
stockholder proposals submitted pursuant to Rule 14a-8 for inclusion in the
Company's proxy materials for the 1999 Annual Meeting of Stockholders must be
received by the Company no later than November 12, 1998.
Any stockholder who intends to present a proposal at the 1999 Annual Meeting
and has not sought inclusion of the proposal in the Company's proxy materials
pursuant to Rule 14a-8, must provide the Company with notice of such proposal
no later than January 25, 1999.
11
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits
See Exhibit Index
(b) Reports on Form 8-K
During the quarter ended June 30, 1998, the Company filed no
Current Reports on Form 8-K.
12
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: July 24, 1998 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)
13
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
11.1 Statement of Computation of Earnings Per Share for the six
months ended June 30, 1998 and 1997
11.2 Statement of Computation of Earnings Per Share for the three
months ended June 30, 1998 and 1997
12 Statement of Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
EXHIBIT 11.1
UNISYS CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
(Millions, except share data)
1998 1997
----------- -----------
Basic Earnings Per Common Share
Net income $ 152.8 $ 61.2
Less dividends on preferred shares ( 53.3) ( 57.9)
----------- -----------
Net income available to common stockholders $ 99.5 $ 3.3
=========== ===========
Weighted average shares 249,703,734 173,114,612
=========== ===========
Basic earnings per share $ .40 $ .02
=========== ===========
Diluted Earnings Per Common Share
Net income available to common stockholders $ 99.5 $ 3.3
Plus impact of assumed conversions
Interest expense on 8 1/4% Convertible Notes
due 2006, net of tax .8
----------- -----------
Net income available to common
stockholders plus assumed conversions $ 100.3 $ 3.3
=========== ===========
Weighted average shares 249,703,734 173,114,612
Plus incremental shares from assumed
conversions
Employee stock plans 10,761,749 1,609,251
8 1/4% Convertible Notes due 2006 4,031,138
----------- -----------
Adjusted weighted average shares 264,496,621 174,723,863
=========== ===========
Diluted earnings per share $ .38 $ .02
=========== ===========
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.
8 1/4% convertible notes due 2006 43,490,909
8 1/4% convertible notes due 2000 33,697,387
Series A preferred stock 47,450,133 47,454,085
EXHIBIT 11.2
UNISYS CORPORATION
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
(Millions, except share data)
1998 1997
----------- -----------
Basic Earnings Per Common Share
Net income $ 90.1 $ 41.9
Less dividends on preferred shares ( 26.6) ( 27.8)
----------- -----------
Net income available to common stockholders $ 63.5 $ 14.1
=========== ===========
Weighted average shares 251,133,830 173,229,674
=========== ===========
Basic earnings per share $ .25 $ .08
=========== ===========
Diluted Earnings Per Common Share
Net income available to common stockholders $ 63.5 $ 14.1
Plus impact of assumed conversions
Interest expense on 8 1/4% Convertible Notes
due 2006, net of tax .4
----------- -----------
Net income available to common
stockholders plus assumed conversions $ 63.9 $ 14.1
=========== ===========
Weighted average shares 251,133,830 173,229,674
Plus incremental shares from assumed
conversions
Employee stock plans 11,317,508 1,848,189
8 1/4% Convertible Notes due 2006 4,021,429
----------- -----------
Adjusted weighted average shares 266,472,767 175,077,863
=========== ===========
Diluted earnings per share $ .24 $ .08
=========== ===========
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.
8 1/4% convertible notes due 2006 43,490,909
8 1/4% convertible notes due 2000 33,697,387
Series A preferred stock 47,449,993 47,454,036
Exhibit 12
UNISYS CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED)
($ in millions)
Six
Months
Ended Years Ended December 31
June 30, -------------------------------------
1998 1997 1996 1995 1994 1993
------- ---- ---- ---- ---- ----
Income (loss) from continuing
operations before income taxes $238.8 $(758.8) $ 93.7 $(781.1) $ 14.6 $370.9
Add (deduct) share of loss
(income) of associated
companies (2.3) 5.9 (4.9) 5.0 16.6 14.5
------ ------ ------ ------- ------ ------
Subtotal 236.5 (752.9) 88.8 (776.1) 31.2 385.4
------ ------ ------ ------- ------ ------
Interest expense (net of
interest capitalized) 89.1 233.2 249.7 202.1 203.7 241.7
Amortization of debt issuance
expenses 2.4 6.7 6.3 5.1 6.2 6.6
Portion of rental expense
representative of interest 28.0 56.2 59.2 65.3 65.0 70.5
------ ------ ------- ------- ------ ------
Total Fixed Charges 119.5 296.1 315.2 272.5 274.9 318.8
------ ------ ------- ------- ------ ------
Earnings (loss) from continuing
operations before income
taxes and fixed charges $356.0 $(456.8) $404.0 $(503.6) $306.1 $704.2
====== ======= ====== ======= ====== ======
Ratio of earnings to fixed
charges 2.98 (a) 1.28 (a) 1.11 2.21
====== ====== ======= ======= ====== ======
(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.
5
