SECUTITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _____________.
Commission file number 1-8729
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
UNISYS SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
UNISYS CORPORATION
Unisys Way
Blue Bell, Pennsylvania 19424
REQUIRED INFORMATION
Financial Statements and Supplemental Schedule
Unisys Savings Plan
Years ended December 31, 2002 and 2001
with Report of Independent Auditors
CONTENTS
Report of Independent Auditors 1
Audited Financial Statements:
Statements of Assets Available for Benefits 2
Statements of Changes in Assets Available for Benefits 3
Notes to Financial Statements 4
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 10
Exhibit Index 12
1
Report of Independent Auditors
Unisys Corporation
Employee Benefits Administrative Committee
We have audited the accompanying statements of assets available for
benefits of the Unisys Savings Plan (the Plan) as of December 31, 2002
and 2001, and the related statements of changes in assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the assets available for benefits of
the Plan at December 31, 2002 and 2001, and the changes in its assets
available for benefits for the years then ended, in conformity with
accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental
schedule of assets (held at end of year) as of December 31, 2002, is
presented for purposes of additional analysis and is not a required
part of the financial statements but is supplementary information
required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security
Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the
auditing procedures applied in our audits of the financial statements
and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
Ernst & Young LLP
Philadelphia, Pennsylvania
May 23, 2003
2
Unisys Savings Plan
Statements of Assets Available for Benefits
December 31
2002 2001
----------------------------------
(In Thousands)
Investments at fair value:
Fidelity Mutual Funds $ 1,423,184 $ 1,776,829
Unisys Common Stock Funds 177,975 211,510
Unisys Interest Income Fund 398,727 391,456
Participants' Loans 14,906 17,372
Frozen Investment Contracts 13 23
----------------------------------
Assets available for benefits $ 2,014,805 $ 2,397,190
==================================
See accompanying notes.
3
Unisys Savings Plan
Statements of Changes in Assets Available for Benefits
Year ended December 31
2002 2001
-----------------------------------
(In Thousands)
Additions:
Interest and dividend income $ 51,398 $ 69,014
Contributions:
Employer 17,895 18,305
Employee 84,179 83,766
-----------------------------------
102,074 102,071
-----------------------------------
Total additions 153,472 171,085
-----------------------------------
Deductions:
Benefit payments 225,040 230,419
Administrative and other expenses 115 109
-----------------------------------
Total deductions 225,155 230,528
-----------------------------------
Net depreciation in fair value of
Investments (310,702) (263,400)
-----------------------------------
Net decrease (382,385) (322,843)
Assets available for benefits:
Beginning of year 2,397,190 2,720,033
-----------------------------------
End of year $ 2,014,805 $ 2,397,190
===================================
See accompanying notes.
4
Unisys Savings Plan
Notes to Financial Statements
December 31, 2002
1. PLAN DESCRIPTION
The Unisys Savings Plan (the Plan) is a defined contribution plan that
covers nonbargaining employees paid from a United States payroll of
Unisys Corporation (the Company) and bargaining unit employees whose
collective bargaining agreement provides for participation in the Plan.
The Employee Benefits Administrative Committee is the Plan
administrator. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
Participants should refer to the Plan document, summary plan
description and their respective bargaining unit agreement, if
applicable, for complete information.
CONTRIBUTIONS
Each plan year, participants may contribute up to 20% or 18% of their
pretax compensation, depending on their classification as a non-highly
compensated or highly compensated employee, respectively. Participants
may also make after-tax contributions up to 5% of their eligible
compensation. The Company makes a non-discretionary matching
contribution in Company Common Stock equal to 50% of the first 4% of
compensation deferred by the participant during 2002 and 2001. The Plan
also allows for rollover contributions from other qualified defined
contribution plans.
INVESTMENT OPTIONS
Participants may elect to have their current contributions and existing
account balances invested in any one or more of the investment options
offered and managed by Fidelity Management & Research Company and
Fidelity Management Trust Company (Fidelity). Information regarding the
investment options is provided to each participant through electronic
media and prepared materials provided by the Company and in each
investment fund's prospectus made available by Fidelity.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contributions, matching contributions from the Company and allocations
of Plan earnings, and is charged with an allocation of administrative
expenses. Allocations are based on participant earnings or account
balances, as determined. The benefit to which a participant is entitled
is equal to the vested portion of their account.
5
1. PLAN DESCRIPTION (continued)
VESTING AND FORFEITURES
Plan participants are immediately vested in their account balances at
all times.
DISTRIBUTIONS/WITHDRAWALS
On termination of service, a participant may receive a lump-sum amount
equal to his or her account, or upon death, disability or retirement,
elect to receive payments in the form of an annuity or annual
installments over the participant's actuarially determined lifetime.
Plan participants also may receive in-service withdrawals in certain
circumstances as defined in the Plan. Loans are also available to Plan
participants in accordance with Plan rules and procedures.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its matching contributions and/or
to terminate the Plan at any time subject to the provisions of ERISA.
In the event of Plan termination, participants remain 100% vested in
their accounts.
2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could
differ from those estimates.
6
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value, except for the Unisys
Interest Income Fund which includes investments in guaranteed
investment contracts issued principally by insurance companies and
financial institutions which are valued at contract value as estimated
by the insurance companies. Contract value represents contributions and
reinvested income, less any withdrawals plus accrued interest, because
these investments have fully benefit responsive features. All
participant initiated transactions with the fund are permitted at
contract value with no conditions, limits or restrictions. However,
withdrawals influenced by Company-initiated events, such as in
connection with the sale of a business, may result in a distribution at
other than contract value. No reserves have been provided or are
considered necessary against contract values for credit risk of
contract issuers or otherwise. Contract value of these investment
contracts approximates their fair value. Interest accrued on the
contract balances, during 2002 and 2001, at rates ranging from 1.35% to
5.95% and from 2.12% to 6.35%, respectively. Interest rates are set at
the time the contract is negotiated and, depending on the terms of the
contract, are fixed through the maturity date or are re-set quarterly,
semi-annually or annually. The average yield on the contracts was 5.69%
and 6.24% for 2002 and 2001, respectively.
As of December 31, 2002 and 2001, the Plan had no significant
concentrations of credit risk.
Shares of registered investment companies are valued at quoted market
prices, which represent net asset values of shares held by the Plan at
year-end. Shares of Unisys common stock are valued at the closing
market price on the last day of the Plan year. Participant loans are
valued at the outstanding principal balance, which approximates fair
value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is reported on the accrual basis. Dividends are
recorded on the ex-dividend date. Realized gains and losses from
securities sold are reported on an average cost basis.
Investments in Frozen Investment Contracts represent the cash balance
from payments made to the Plan from the Conservation Estate of the
Executive Life Insurance Company (ELIC) and from state guaranty
associations in settlement of claims made by the Plan as a result of
the insolvency of ELIC. The remaining cash balance at December 31, 2002
represents amounts that will be allocated to Plan participants or
applied to pay administrative expenses of the Plan.
7
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
RECLASSIFICATIONS
Certain prior-year amounts have been reclassified to conform with the
2002 presentation.
3. INVESTMENTS
The Plan's investments at December 31, 2002 and 2001 were held in
trusts with Fidelity Management Trust Company, Wachovia Bank N.A.
(formerly First Union National Bank), and Oriental Bank & Trust, each
of which was established for the investment of the Plan's assets.
During 2002 and 2001, the Plan's investments (including investments
purchased, sold, as well as held during the year) appreciated
(depreciated) in fair value as follows (in thousands):
2002 2001
------------------------------------
Fidelity Mutual Funds $ (265,217) $ (229,354)
Unisys Common Stock Funds (41,771) (30,740)
Unisys U.S. Equity Index Commingled Pool
Fund (5,386) (3,528)
Frozen Investment Contracts 838 188
------------------------------------
$ (311,536) $ (263,434)
Investments that represent 5% or more of fair value of the Plan's
assets are as follows (in thousands):
2002 2001
------------------------------------
* Unisys Stock Fund $167,700 $197,407
Unisys Interest Income Fund 398,727 391,456
Fidelity Magellan Fund 222,767 320,384
Fidelity Asset Manager Fund 183,673 222,673
Fidelity Asset Manager Growth Fund 178,337 228,110
Fidelity Retirement Money Market Portfolio
Fund 140,230 153,369
* Predominantly nonparticipant-directed
8
3. INVESTMENTS (continued)
The assets and significant components of the changes in assets relating
to the predominantly non-participant-directed investments are as
follows (in thousands):
December 31
2002 2001
-----------------------------------------
Investments, at fair value:
Unisys Stock Fund $ 167,700 $ 197,407
Unisys Common Stock Fund 10,232 14,044
Interest-Bearing Cash 43 59
Frozen Investment Contracts 13 23
-----------------------------------------
Total $ 177,988 $ 211,533
=========================================
Year ended December 31
2002 2001
-----------------------------------------
Changes in assets:
Interest and dividends $ 137 $ 203
Net depreciation in fair value of
Investments (40,918) (30,553)
Contributions 20,143 21,583
Benefit payments (11,063) (13,400)
Administrative and other expenses (10) (12)
Net transfers (1,834) (28,319)
-----------------------------------------
Total $ (33,545) $ (50,498)
=========================================
At December 31, 2002, the Plan held 1,037,857 and 16,932,513 shares of
Unisys Common Stock in the Unisys Common Stock Fund and Unisys Stock
Fund, respectively. At December 31, 2001, the Plan held 1,124,633 and
15,736,804 shares of Unisys Common Stock in the Unisys Common Stock
Fund and Unisys Stock Fund, respectively.
9
4. TAX STATUS OF THE PLAN
The Plan has received a determination letter from the Internal Revenue
Service dated September 25, 2002, stating that the Plan is qualified
under Section 401(a) of the Internal Revenue Code (the "Code") and,
therefore, the related trusts are exempt from taxation. Subsequent to
this issuance of the determination letter, the Plan was amended and
restated. Once qualified, the Plan is required to operate in conformity
with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan, as
amended and restated, continues to be qualified and the related trusts
are tax-exempt.
10
Supplemental Schedule
Unisys Savings Plan
EIN: 38-0387840 Plan: 004
Schedule H, Line 4i-
Schedule of Assets (Held at End of Year)
December 31, 2002
Description of Investment
Including Maturity Date,
Identity of Issue, Borrower, Rate of Interest, Par or Current
Lessor or Similar Party Maturity Value Cost Value
----------------------------------------------------------------------------------------------------
*Fidelity Mutual Funds:
Fidelity Fund 567,122 shares $ 18,441,228 $ 12,624,136
Puritan Fund 922,974 shares 16,271,186 14,573,759
Trend Fund 63,604 shares 3,652,260 2,457,650
Ginnie Mae Portfolio Fund 1,229,774 shares 13,452,369 13,822,655
Magellan Fund 2,821,270 shares 258,039,487 222,767,480
Contra Fund 1,720,975 shares 78,645,012 66,429,618
Equity Income Fund 287,780 shares 13,286,255 11,416,230
Growth Company Fund 686,124 shares 43,823,783 24,302,518
Investment Grade Bond Fund 1,299,809 shares 9,517,265 9,839,552
Growth & Income Portfolio Fund 1,152,750 shares 41,582,012 34,939,858
Intermediate Bond Fund 777,795 shares 8,017,359 8,345,745
Capital & Income Portfolio Fund 684,255 shares 5,777,999 4,297,119
Value Fund 543,857 shares 26,965,389 25,229,532
Mortgage Securities Portfolio Fund 458,524 shares 5,040,221 5,162,978
Government Securities Fund 1,594,405 shares 16,155,394 16,709,365
Independence Fund 688,953 shares 15,209,822 9,004,619
Over-The-Counter Portfolio Fund 509,040 shares 23,399,492 12,171,144
Overseas Fund 231,123 shares 7,589,979 5,084,698
Europe Fund 282,994 shares 7,907,129 5,184,441
Pacific Fund 264,975 shares 4,593,934 3,381,076
Real Estate Investment
Portfolio Fund 539,669 shares 9,828,568 9,924,521
Balanced Fund 874,796 shares 12,717,226 11,626,041
International Growth & Income Fund 273,042 shares 5,715,344 4,592,571
Capital Appreciation Fund 324,177 shares 6,862,212 5,245,187
Conv. Securities Fund 489,377 shares 10,072,234 7,996,418
Canada Fund 63,956 shares 1,268,488 1,158,877
Utilities Fund 790,921 shares 14,292,724 7,671,936
Blue Chip Fund 1,581,990 shares 62,998,967 50,528,762
Asset Manager Fund 13,309,632 shares 215,513,967 183,672,925
Disciplined Equity Fund 201,785 shares 5,041,210 3,626,071
Low-Priced Fund 1,316,085 shares 33,733,839 33,125,861
Worldwide Fund 347,386 shares 5,311,378 4,126,951
Equity Income II Fund 1,555,703 shares 36,083,589 27,053,680
Stock Selector Fund 354,817 shares 8,712,224 5,882,866
Asset Manager Growth Fund 14,898,690 shares 234,815,185 178,337,318
Emerging Markets Fund 203,128 shares 2,052,484 1,464,556
Aggressive Growth Fund 1,715,256 shares 64,858,020 19,193,715
Diversified International Fund 665,487 shares 12,428,046 11,419,759
Asset Manager Income Fund 2,807,771 shares 32,078,998 30,492,389
Diversified Growth Fund 1,463,905 shares 38,713,798 32,674,354
New Markets Income Fund 555,332 shares 6,243,458 6,291,906
Export & Multinational Fund 236,288 shares 4,191,184 3,248,955
Global Balanced Fund 53,724 shares 815,883 794,035
Aggressive International Fund 114,012 shares 1,680,006 1,223,344
Small Capital Stock Fund 759,886 shares 11,294,178 10,106,487
Mid-Capital Stock Fund 1,072,980 shares 24,722,530 17,446,655
Large-Capital Stock Fund 230,723 shares 4,004,245 2,572,565
Europe Capital Appreciation
Stock Fund 150,715 shares 2,751,775 2,084,386
Latin America Fund 69,913 shares 963,805 652,284
Japan Fund 416,025 shares 6,436,265 3,507,087
Southeast Asia Fund 128,639 shares 1,567,186 1,242,653
Freedom Income Fund 26,797 shares 290,708 284,051
Freedom 2000 Fund 36,648 shares 438,100 403,496
Freedom 2010 Fund 292,113 shares 3,824,668 3,341,769
Freedom 2020 Fund 230,615 shares 3,086,844 2,453,741
Freedom 2030 Fund 153,400 shares 2,174,279 1,570,817
Target Timeline 2003 Fund 56,792 shares 538,552 542,365
Spartan Total Market Index Fund 133,441 shares 4,082,722 3,075,824
Spartan Extended Market Index Fund 49,313 shares 1,326,680 948,293
Spartan International Market
Index Fund 24,417 shares 735,354 491,766
Short-Term Bond Fund 488,600 shares 4,296,441 4,392,510
Fifty Fund 312,838 shares 5,800,965 5,017,920
U.S. Bond Index Portfolio Fund 1,852,744 shares 19,896,831 20,824,839
Institutional Short-Intermed.
Gov't. Portfolio 323,064 shares 3,058,798 3,172,493
Contra II 29,668 shares 281,932 257,219
Asset Manager Aggressive 31,700 shares 299,881 219,680
Strat Inc. 281,841 shares 2,586,517 2,649,302
FID Freedom 2040 26,181 shares 173,414 153,419
----------------------------------
1,548,029,277 1,236,528,792
*Fidelity Money Market Funds:
Retirement Money Market
Portfolio Fund 140,229,741 shares 140,229,741 140,229,741
Retirement Gov't. Money
Market Portfolio Fund 28,057,661 shares 28,057,661 28,057,661
----------------------------------
168,287,402 168,287,402
*Fidelity U.S. Equity Index
Commingled Pool Fund 699,224 units 18,408,505 18,368,620
----------------------------------
Total Fidelity Mutual Funds 1,734,725,184 1,423,184,814
*Unisys Common Stock Funds:
Unisys Common Stock Fund 1,033,544 units 9,830,359 10,232,086
Unisys Stock Fund 10,946,454 units 249,716,509 167,699,670
Interest-Bearing Cash 42,638 shares 42,638 42,638
----------------------------------
Total Unisys Common Stock Funds 259,589,506 177,974,394
*Unisys Interest Income Fund:
CDC #BR-137-02; 5.62% 6,018,904 6,018,904
Fidelity Stif Cash Portfolio; 1.35% 4,556,731 4,556,731
Chase Manhattan Bank #430126; 5.95% 96,747,743 96,747,743
Monumental Life
Insurance Company #MDA134TR; 5.94% 97,134,046 97,134,046
Rabobank Nederland #UNI-129901; 5.94% 97,134,866 97,134,866
UBS Warburg #3041; 5.94% 97,134,737 97,134,737
----------------------------------
Total Unisys Interest Income Fund 398,727,027 398,727,027
*Participants' Loans - 14,906,358
Frozen Investment Contracts 12,780 12,780
----------------------------------
Total $2,393,054,497 $2,014,805,373
==================================
* Party-In-Interest.
11
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of
1934, the Plan administrator has duly caused this annual report to be signed
on its behalf by the undersigned hereunto duly authorized.
UNISYS SAVINGS PLAN
UNISYS CORPORATION
Date: June 30, 2003 By: /s/ Janet Brutschea Haugen
--------------------------
Janet Brutschea Haugen
Senior Vice President and
Chief Financial Officer
12
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
23 Consent of Ernst & Young LLP, Independent Auditors
99.1 Certification of Lawrence A. Weinbach pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
99.2 Certification of Janet B. Haugen pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350