​Letter to Shareholders

To Our Shareholders:

Our financial results in 2010 reflect the progress we have made toward creating a more focused, competitive Unisys.

For the second consecutive year, we increased our operating profit, growing our full-year 2010 operating income 14 percent to $376 million on revenue of $4.02 billion. We reported a full-year operating profit margin of 9.3 percent, the highest in years, and hit our targeted 8 to 10 percent operating margin range in our services business in the last two quarters of the year.

At the bottom line, we reported full-year 2010 net income of $236.1 million, or $5.45 per diluted share -- up from net income of $189.3 million, or $4.75 per diluted share, in 2009.

While our revenue declined 8 percent in 2010, we saw progress in key business areas where we are focused for growth. We grew our information technology outsourcing (ITO) revenue 6 percent outside of the U.S. Federal market and added more than twenty new accounts. In our technology business, we grew sales of our flagship ClearPath products 5 percent, which helped to keep overall technology revenue flat for the year.

Importantly, we also made further progress in generating cash and strengthening our balance sheet, ending 2010 with more cash than debt. We increased our cash position by $181 million to $828 million. We did this while reducing long-term debt by an additional $88 million and lowering borrowings under our receivable securitization facility from $100 million to zero.

Our Strategic Positioning: Unisys as a Mission-Critical Solutions Provider

Strategically, too, we have made progress in enhancing our competitiveness in the marketplace.

Having divested a number of non-core businesses and tightened our geographic footprint, we have a sharpened focus in the market, with compelling solutions in the areas of security, data center transformation and outsourcing, end user outsourcing, and application modernization.

Our solutions and capabilities position Unisys to take advantage of major disruptive technology trends that are changing the face of business and government today. From cloud computing, social computing, and mobile computing, to intelligent analytics, IT appliance offerings, and cybersecurity, organizations are struggling to keep pace with rapid advances in technology and apply and integrate these new tools in practical ways within already complex computing environments.

These trends create opportunities for IT companies that have hands-on knowledge of how mission-critical systems work. And few companies have more experience and expertise in mission-critical computing than Unisys.

We've been designing, building and supporting highly secure, reliable, scalable computing systems for decades. Each day organizations around the world rely on Unisys solutions to monitor and protect land border crossings; track and trace military supplies; protect citizen identities; settle trillions of dollars of inter-bank payments; manage cargo transactions; move passengers through airports; process voice mail transactions; support point-of-sale systems and bank branches; direct emergency 911 calls; and many other critical tasks.

Taking what we've learned in recent years working alongside our clients, we have refreshed our portfolio with solutions that address the disruptive trends facing organizations today. These include a growing family of secure cloud computing solutions; solutions for consolidating and virtualizing data centers; and services for supporting mobile end users and devices, for managing Microsoft Windows 7 migrations, and for protecting critical data and operations from sophisticated cyber attacks.

In our technology business, we have enhanced our flagship ClearPath platform to expand the market for what we believe is the most reliable and secure open enterprise server on the market. Recent innovations include secure partitioning for the Intel Xeon platform and integrated support for Apple iPhones.

We have also invested in building a strong global service delivery network through which we deliver our services and solutions. Our network includes some 17,000 experienced service professionals and our operations centers around the globe are ISO 20000-certified. And because our network is based on Information Technology Infrastructure Library (ITIL) standards, we provide consistent levels of service and support to our clients, regardless of where they are located around the world.

These capabilities are enabling us to win exciting client engagements ... such as partnering with Google to build a cloud-based email and collaboration system for the General Services Administration, the first of its kind in the U.S. federal government. For the city of Minneapolis, we are providing cloud-based email services for city employees. In Latin America, we are helping Brazil to enhance the security of its ports and Mexico to create an advanced national identification system using biometrics. In Europe, we are working with Colt Technology Services to bring advanced cloud-based services to businesses. In China, we are providing the services and server technology needed by TravelSky to support that country's rapidly growing aviation sector.

At the end of the day, the true measure of our success is a satisfied client. And I'm pleased to say that our client satisfaction levels are increasing and in the markets where we compete, we are earning a growing reputation for service excellence.

Priorities in 2011

As we look ahead to 2011, we expect to build on this momentum. We will stay focused on executing our business priorities, aiming to further increase our cost efficiency and leverage our stronger foundation to drive profitable revenue growth.

In October, we set financial objectives for the next three years to increase our annual pre-tax profit to $350 million in 2013, assuming no change in pension income or expense from 2010 levels; reduce our debt by 75 percent by the end of 2013; and consistently achieve an annual 8 to 10 percent services operating margin.

We have a vision for Unisys. We want to be a company known for our financial strength and consistency. We want to be a company known in our chosen markets as a leading provider of mission-critical IT solutions, with a differentiated portfolio of solutions. And we want to have a reputation for providing consistently high levels of client service and satisfaction.

We are excited by the opportunity that lies ahead. I look forward to reporting to you on our continued progress.


J. Edward Coleman