3rd Quarter Results

3rd Quarter Results 

    BLUE BELL, Pa.--(BUSINESS WIRE)--Oct. 14, 2002-- 

     Unisys Reports Strong Growth in Third-Quarter 2002 Earnings
               and Reaffirms Outlook for Full-Year 2002

     Company Achieves High End of Earnings Range for Quarter and
                Strong Growth in Orders and Cash Flow

Unisys Corporation (NYSE: UIS) today reported strong growth in its
third-quarter 2002 net income and reaffirmed its earnings outlook for
the full year. The company's third-quarter 2002 net income increased
to $59.0 million, or 18 cents per share, from net income of $20.9
million, or 7 cents per share, in the third quarter of 2001. Unisys
also reported strong growth in orders and operational cash flow in the
quarter. Revenue for the third quarter of 2002 declined 3% to $1.33
billion from $1.38 billion a year ago.

Comments from Chairman and CEO Larry Weinbach

'Our third-quarter results, delivered in a very difficult economic
environment, demonstrate the strength of our business strategy,' said
Unisys Chairman and CEO Lawrence A. Weinbach. 'We have concentrated
our efforts on business process outsourcing, high-end services, and
enterprise server opportunities where we can add value for our
clients, while de-emphasizing low-margin, commodity-based areas of the
market. By staying highly focused and disciplined in the marketplace
and in controlling costs, we nearly tripled our net income over the
year-ago period -- our second consecutive quarter of significant
year-over-year earnings growth. We also showed better-than-expected
cash flow from operations in the quarter.

'Both our services and technology businesses turned in solid profit
performances in the quarter. In services, we improved our operating
margin 3.5 percentage points from the year-ago period. We also saw
continued revenue growth in our outsourcing business, primarily driven
by strategic business process outsourcing (BPO). In our technology
business, while demand for hardware and software products remains weak
industry-wide, we saw continued good acceptance of our new generation
of ClearPath Plus server products, which helped drive higher margins
in our technology business. We also saw modest revenue gains in our
Intel-based ES7000 server line.

'Perhaps the clearest example of the progress we've made is our order
growth in the quarter,' Weinbach said. 'We showed strong double-digit
growth in orders over year-ago levels, driven by a number of
significant long-term services contracts that we signed during the
quarter. In this uncertain economy, clients continue to move
deliberately and methodically in making decisions on large I.T.
projects, focusing on suppliers that can deliver a clear return on
their investment. Unisys, with our end-to-end capabilities in
consulting, systems integration, outsourcing, infrastructure and
security, is increasingly being viewed as one of a select group of
providers that can manage complex, mission-critical engagements and
get the job done.'

Weinbach said that the company signed several major services contracts
during the quarter, including:

- A landmark, multi-year engagement to build an advanced I.T.
infrastructure for the U.S. Transportation Security Administration
that will help ensure the safe transport of people throughout the
nation. The initial work orders under the first 14 months of the
contract are valued at $244 million, of which $23 million were
included in the company's third-quarter orders;

- A three-year contract extension with the Commonwealth of
Pennsylvania, valued at $252 million, under which Unisys will continue
to manage the Commonwealth's data center and provide additional
services and technology;

- A work order from the U.S. General Services Administration, valued
at $36 million over a seven-year period, for business transformation
and systems integration services to help the agency modernize its
systems and provide Internet-based integration with its customers and
suppliers.

In addition, in early October the company received a seven-year
contract valued at approximately $80 million (AUS $146 million) to
provide mortgage processing for RAMS Home Loans, the second-largest
non-bank mortgage originator in Australia.

Weinbach noted that recent wins in such vital areas as homeland
security, business process outsourcing, I.T. outsourcing, systems
modernization, mortgage processing, and I.T. infrastructure services
typify the type of business the company is pursuing. 'We are highly
selective in the engagements we pursue, and structure them so that
both Unisys and the client benefit. We believe this is the best way to
build lasting client relationships and enhance shareholder value over
the long term,' he said.

Overall Company Highlights

Unisys reported that U.S. revenue increased 3% in the third quarter to
$619 million compared to $599 million in the year-ago period. Revenue
in international markets decreased 8% to $713 million from $777
million a year ago, as revenue declines in Latin America and Europe
more than offset gains in the Asia/Pacific market. Currency had a
negligible impact on international revenue in the quarter, with
currency strength in Europe offsetting currency weakness in Latin
America.

Orders in the quarter showed strong double-digit growth over the
year-ago period. On a geographic basis, U.S. orders showed substantial
gains while international orders declined. On a business segment
basis, services orders showed substantial double-digit increases while
technology orders were flat in the quarter.

Unisys reported an overall third-quarter 2002 gross profit margin of
30.3%, up from 27.6% in the year-ago period, and an operating margin
of 7.2%, up from 3.2% in the year-ago quarter. The company attributed
the margin improvement primarily to its focus on higher value-added
business opportunities and continued tight cost control. Unisys
reduced its selling, general, and administrative (SG&A) expenses by 8%
in the third quarter compared to the year-ago period.

Business Segment Highlights

Customer revenue in the company's services business declined 3% in the
third quarter from the year-ago quarter. Double-digit growth in
outsourcing revenue was offset by declines in other services
businesses. Gross profit margins in the services business improved 1.7
percentage points from year-ago levels to 22.5%, and services
operating margins improved 3.5 percentage points from a year ago to
5.7%.

Customer revenue in the company's technology business declined 3% from
prior-year levels. Growth in sales of specialized equipment was offset
by mid single-digit revenue declines in enterprise-class servers.
Gross margins in the technology business increased 4.3 percentage
points from year-ago levels to 46.4% and operating margins increased
2.6 percentage points from a year ago to 10.1%.

Cash Flow and Balance Sheet Highlights

Unisys reported a $132 million increase in its operating cash flow in
the third quarter from the prior-year quarter. The company generated
$57 million of cash from operations in the quarter compared to an
operating cash usage of $75 million in the year-ago period. Cash
payments related to prior restructuring actions were $24 million in
the third quarter of 2002 compared to $13 million in the third quarter
of 2001.

Capital expenditures in the third quarter were $80 million, including
$59 million invested in revenue-generating projects. This compared to
capital expenditures of $83 million, including $47 million in
revenue-generating projects, in the year-ago period. The company had
$166 million of cash on hand at September 30, 2002.

Year-to-Date Results

For the nine months ending September 30, 2002, Unisys reported net
income of $133.9 million, or 41 cents per share, compared to net
income of $102.3 million, or 32 cents per share, for the first nine
months of 2001. The year-ago net income included an after-tax charge
of $17.2 million, or 5 cents per share, for the early retirement of
debt. Revenue for the first nine months of 2002 was $4.05 billion
compared to revenue of $4.46 billion in the comparable period of 2001.

Business Outlook

'I am pleased with the consistency and discipline that we are
demonstrating as we work through a very tough environment for the I.T.
industry,' Weinbach said. 'Despite the continued uncertainty in the
global economy, we remain on track to achieve our goal of about 50%
growth in full-year 2002 earnings per share over the 48 cents we
earned in 2001 excluding special items. Specifically, we look for
full-year 2002 earnings per share in the 67 - 70 cents range on
revenue of $5.5 - $5.6 billion. This would allow us to close out the
year with strength and enter 2003 with momentum.'

Conference Call

Unisys will hold a conference call today from 4:30 - 5:30 p.m. EDT.
The listen-only audiocast can be accessed via a link on the Unisys
Investor Web site at www.unisys.com/investor. An audio replay of the
Webcast will be available for about 10 days following the call.

About Unisys

Unisys is a worldwide information technology services and solutions
company. Our people combine expertise in systems integration,
outsourcing, infrastructure, server technology and consulting with
precision thinking and relentless execution to help clients, in more
than 100 countries, quickly and efficiently achieve competitive
advantage. For more information, visit www.unisys.com

Forward-Looking Statements

Any statements contained in this release that are not historical facts
are 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 various risks and uncertainties that
could cause actual results to differ materially from expectations. The
factors that could affect the company's future financial results are
discussed more fully in the company's latest Form 10-Q as filed with
the Securities and Exchange Commission.

RELEASE NO.: 1002/8193  (See accompanying financial information)


Unisys is a registered trademark of Unisys Corporation. All other
brands and products referenced herein are acknowledged to be
trademarks or registered trademarks of their respective holders.
                          UNISYS CORPORATION
                 CONSOLIDATED STATEMENT OF INCOME
                 (Millions, except per share data)

                            Three Months         Nine Months
                         Ended September 30   Ended September 30
                         ------------------   ------------------
                            2002      2001       2002      2001
                         --------  --------   --------  --------
Revenue                  $1,332.3  $1,376.0   $4,054.6  $4,461.2
                         --------  --------   --------  --------
Costs and expenses
  Cost of revenue           929.3     996.1    2,857.8   3,256.3
  Selling, general and
    administrative          241.3     262.7      732.2     784.4
  Research and development   65.5      73.4      192.6     224.6
                         --------  --------   --------  --------
                          1,236.1   1,332.2    3,782.6   4,265.3
                         --------  --------   --------  --------
Operating income             96.2      43.8      272.0     195.9

Interest expense             17.6      16.5       53.2      50.0
Other income
 (expense), net               9.5       3.9      (18.9)     32.6
                         --------  --------   --------  --------
Income before income taxes   88.1      31.2      199.9     178.5
Provision for income taxes   29.1      10.3       66.0      59.0
                         --------  --------   --------  --------
Income before
 extraordinary item          59.0      20.9      133.9     119.5
Extraordinary item                                         (17.2)
                         --------  --------   --------  --------
Net income                  $59.0     $20.9     $133.9    $102.3
                         ========  ========   ========  ========
Earnings per share
Basic
 Before extraordinary item  $ .18     $ .07      $ .41     $ .37
 Extraordinary item                                         (.05)
                         --------  --------   --------  --------
  Total                     $ .18     $ .07      $ .41     $ .32
                         ========  ========   ========  ========
Diluted
 Before extraordinary item  $ .18     $ .07      $ .41     $ .37
 Extraordinary item                                         (.05)
                         --------  --------   --------  --------
  Total                     $ .18     $ .07      $ .41     $ .32
                         ========  ========   ========  ========
Shares used in the per share computations (thousands):
  Basic                   324,075   318,761    322,792   317,576
                         ========  ========   ========  ========
  Diluted                 324,669   320,155    324,079   319,527
                         ========  ========   ========  ========



                          UNISYS CORPORATION
                         SUPPLEMENTAL SUMMARY
                              (Millions)

                                 Elimi-
                       Total     nations    Services  Technology
                      --------   --------   --------  ----------
Three Months Ended
September 30, 2002
-----------------
Customer revenue      $1,332.3              $1,016.3      $316.0
Intersegment                       ($69.4)       6.5        62.9
                      --------   --------   --------    --------
Total revenue         $1,332.3     ($69.4)  $1,022.8      $378.9
                      ========   ========   ========    ========

Gross profit percent     30.3%                 22.5%       46.4%
                      ========              ========    ========
Operating profit
  percent                 7.2%                  5.7%       10.1%
                      ========              ========    ========
Three Months Ended
September 30, 2001
-----------------
Customer revenue      $1,376.0              $1,051.3      $324.7
Intersegment                      ($102.0)      20.3        81.7
                      --------   --------   --------    --------
Total revenue         $1,376.0    ($102.0)  $1,071.6      $406.4
                      ========   ========   ========    ========

Gross profit percent     27.6%                 20.8%       42.1%
                      ========              ========    ========
Operating profit
  percent                 3.2%                  2.2%        7.5%
                      ========              ========    ========

Nine Months Ended
September 30, 2002
-----------------
Customer revenue      $4,054.6              $3,104.8      $949.8
Intersegment                      ($233.0)      32.2       200.8
                      --------   --------   --------    --------
Total revenue         $4,054.6    ($233.0)  $3,137.0    $1,150.6
                      ========   ========   ========    ========

Gross profit percent     29.5%                 22.0%       45.2%
                      ========              ========    ========
Operating profit
  percent                 6.7%                  5.5%       10.0%
                      ========              ========    ========
Nine Months Ended
September 30, 2001
-----------------
Customer revenue      $4,461.2              $3,311.7    $1,149.5
Intersegment                      ($267.0)      51.8       215.2
                      --------   --------   --------    --------
Total revenue         $4,461.2    ($267.0)  $3,363.5    $1,364.7
                      ========   ========   ========    ========

Gross profit percent     27.0%                 19.3%       42.9%
                      ========              ========    ========
Operating profit
  percent                 4.4%                  1.8%       12.1%
                      ========              ========    ========



                          UNISYS CORPORATION
                      CONSOLIDATED BALANCE SHEET
                              (Millions)

                                        September 30,December 31,
                                           2002         2001
                                        ----------   ----------
Assets
Current assets
 Cash and cash equivalents                  $166.2       $325.9
 Accounts and notes receivable, net          901.7      1,093.7
 Inventories
   Parts and finished equipment              172.8        201.6
   Work in process and materials              84.7        144.2
 Deferred income taxes                       345.1        342.6
 Other current assets                         85.8         96.1
                                        ----------   ----------
 Total                                     1,756.3      2,204.1
                                        ----------   ----------
Properties                                 1,478.3      1,460.4
 Less accumulated depreciation               891.6        910.8
                                        ----------   ----------
 Properties, net                             586.7        549.6
                                        ----------   ----------
Investments at equity                        176.9        212.3
Marketable software, net                     302.8        287.9
Prepaid pension cost                       1,375.8      1,221.0
Deferred income taxes                        747.8        747.8
Goodwill                                     158.5        159.0
Other long-term assets                       375.7        387.4
                                        ----------   ----------
 Total                                    $5,480.5     $5,769.1
                                        ==========   ==========

Liabilities and stockholders' equity
Current liabilities
 Notes payable                              $112.6        $78.9
 Current maturities of long-term debt          1.9          2.2
 Accounts payable                            455.8        694.9
 Other accrued liabilities                 1,159.3      1,302.9
 Income taxes payable                        241.6        234.6
                                        ----------   ----------
 Total                                     1,971.2      2,313.5
                                        ----------   ----------
Long-term debt                               748.9        745.0
Other long-term liabilities                  548.8        597.9
Stockholders' equity
 Common stock                                  3.3          3.2
 Accumulated deficit                        (762.6)      (896.5)
 Other capital                             3,750.7      3,712.8
 Accumulated other comprehensive loss       (779.8)      (706.8)
                                        ----------   ----------
 Stockholders' equity                      2,211.6      2,112.7
                                        ----------   ----------
 Total                                    $5,480.5     $5,769.1
                                        ==========   ==========



                        UNISYS CORPORATION
               CONSOLIDATED STATEMENT OF CASH FLOWS
                              (Millions)

                                              Nine Months Ended
                                                September 30
                                             ------------------
                                               2002       2001
                                             -------    -------
Cash flows from operating activities
Income before extraordinary item              $133.9     $119.5
Add (deduct) items to reconcile
 income before extraordinary item to net cash provided by (used for)
 operating activities:
Extraordinary item                                        (17.2)
Depreciation                                   111.7      100.6
Amortization:
 Marketable software                            90.1       88.3
 Deferred outsourcing contract costs            14.1        9.5
 Goodwill                                                  12.5
(Increase) in deferred income
  taxes, net                                    (2.5)      (3.5)
Decrease in receivables, net                   208.0      161.0
Decrease in inventories                         88.2       27.0
(Decrease) in accounts payable
 and other accrued liabilities                (375.8)    (522.5)
Increase (decrease) in income taxes
 payable                                         7.0      (21.0)
(Decrease) increase in other liabilities       (33.3)     202.7
(Increase) in other assets                    (178.8)    (225.8)
Other                                            7.4        4.2
                                             -------    -------
Net cash provided by (used for)
 operating activities                           70.0      (64.7)
                                             -------    -------
Cash flows from investing activities
 Proceeds from investments                   2,360.1    1,976.6
 Purchases of investments                   (2,384.0)  (1,967.5)
 Investment in marketable software            (105.0)    (100.0)
 Capital additions of properties              (151.8)    (134.8)
 Purchases of businesses                        (4.8)      (2.2)
                                             -------    -------
Net cash used for investing activities        (285.5)    (227.9)
                                             -------    -------
Cash flows from financing activities
 Net proceeds from short-term
   borrowings                                   33.8       68.9
 Proceeds from employee stock plans             21.9       26.2
 Payments of long-term debt                     (1.6)    (354.3)
 Proceeds from issuance of long-term debt                 389.9
                                             -------    -------
Net cash provided by financing activities       54.1      130.7
                                             -------    -------
Effect of exchange rate changes on cash
 and cash equivalents                            1.7        3.6
                                             -------    -------
Decrease in cash and cash equivalents         (159.7)    (158.3)
Cash and cash equivalents, beginning of
 period                                        325.9      378.0
                                             -------    -------
Cash and cash equivalents, end of period      $166.2     $219.7
                                             =======    =======
*T

   Short Name: Unisys Corp
   Category Code: QRT
   Sequence Number: 00000947
   Time of Receipt (offset from UTC): 20021014T190029+0100