9

P> Total Contracts $456,124,000

http://www.unisys.com/

James McGuirk sits on a $1.5 billion gold mine -- one of the few left at the troubled computer company that built and installed the nation's first commercial computer for the Census Bureau in 1951.

As president of Unisys Corp.'s Federal Systems Division, McLean, Va., McGuirk has reshaped the group's business, which brought in $1.5 billion in new federal contracts last year. That makes McGuirk's division a leading performer at Unisys. Although the dollar value itself is significant, what is more significant is the business mix those contracts represent.

Much of the federal division's business used to come from maintenance of Unisys mainframes. Today, 66 percent of the group's business comes from infotech services such as application development and systems integration -- not maintenance of its aging, proprietary systems.

Formerly a proprietary vendor, Unisys Corp. has forged strategic partnerships with Intel Corp., Santa Clara, Calif.; Microsoft Corp., Redmond, Wash.; and Novell Inc., Provo, Utah, to survive in a marketplace driven by interoperable computer systems.

The shift from proprietary to open systems and from hardware to high-margin infotech services has made Unisys' overall transformation difficult. Revenues for 1995 inched up only 4 percent to $6.2 billion, but the company reported a $624.6 million loss after taking an $846.6 million pretax charge to cover the company's major restructuring. The restructuring charge covered the reduction of Unisys' work force by 7,900 people.

Unisys CEO James Unruh reorganized the company into three business segments: information services, which provides management consulting, systems integration and outsourcing services; computer systems, which sells enterprise systems and servers, desktop systems, parallel processing systems and data communications; and support services, which provides life-cycle desktop support and maintenance for Unisys hardware and software. Federal Systems, however, operates separately from the three segments.

In May, Unisys sold its defense business to New York-based Loral Corp. for $862 million in cash, taking a $9.8 million loss on the transaction. The sale included Unisys' air traffic control, radar, submarine navigation, postal and physical security businesses.

"The key to our division's success was creating autonomous business units to deliver technology services," McGuirk said.

With 3,400 employees scattered across remote locations such as Houston, Cambridge, Mass., Portland, Ore., and Montgomery, Ala., the division has three units: information technologies, which supplies and integrates products; information services, which does programming, and software and application development; and solutions integration, which focuses on new markets such as the Internet.

The group works for more than 1,500 government agencies worldwide, including 50 states and more than 900 city and county governments. Its vertical market strengths are in logistics, weather, personnel, financial, communications, transportation, criminal justice and personal identification systems. When pursuing federal contracts, the group focuses on programs that require extensive systems integration, program management, application development and maintenance, network integration, facilities management and outsourcing, and software support services.

Major contracts include a $2.1 billion contract to modernize Air Force supply and logistics functions, a $350 million contract to provide UNIX-based platforms for Army personnel, logistics, finance and transportation functions, a $385 million contract to supply the 2200 Series mainframes for the Navy Regional Data Processing Centers, a $338 million contract for infotech services for the General Services Administration, and a $520 million contract with the Internal Revenue Service to provide the 2200 Open Enterprise servers to process 200 million income tax returns.

Last year, Unisys Federal also won a $166 million contract to develop a local area network connecting Defense Finance and Accounting Service locations nationwide, and a $100 million award to maintain mid-range computers and PCs from various vendors, including IBM Corp., Armonk, N.Y., and Data General.

Unisys Federal has done so well since McGuirk's reorganization that the division was ranked number one among federal contractors with indefinite-delivery, indefinite-quantity awards. Based on International Data Corp. information, Unisys Federal won $156 million in IDIQ contracts in fiscal 1994, garnering 8.3 percent of the market share.

Revenues by Products and Services

(Year ending 12/31)

19951994

Enterprise systems/servers$1.1B (18)$1.4B (24)

Departmental servers/desktop systems$795.3M (13)$749.6M (12)

Software$732.6M (12)$712.2M (12)

Information services/systems integration$2.2B (35)$1.8B (30)

Equipment maintenance$1.4B (22)$1.3B (22)

Financial Highlights

(Year ending 12/31)

19951994199319921991

Revenues$6.2B$5.98B$5.98B$6.6B$6.8B

Net Income ($624.6M)$100.5M$565.4M$361.2M($1.4B)

EPS($4.37)($0.63)$1.17$0.33($10.16)