Stronger Unisys

1
Stronger Unisys

• On October 15, Franklin Business Practices
  Incorporated (FBPI) sent a letter to Edward
  Coleman (CEO of Unisys) requesting Seven
  Changes that would make Unisys a stronger
  company and add value for its shareholders
• Seven Changes to make Unisys stronger
• Build stronger management team adopt matrix
  structure by customer and by product
• Reduce size of Board give shareholders say on
  executive pay
• Adopt successful business model core business
  is IT services
• Improve EPS growth and ROIC spinoff Technology
  Segment improve operating performance and cash
  allocations lower SGA by 10 lower RD lower
  capex return to optimal capital structure
• Sell other non-core assets (real estate) and
  renegotiate leases
• Expand international markets
• Strengthen partnerships and open new partnerships
  in IT/office solutions area leverage existing
  customer relationships attract retain best
  salespeople

2
Overview

• Leading IT services company in niche areas for
  check processing, public welfare systems, airline
  reservations, and communications messaging
• Major partners IBM, Cisco, HP, Microsoft,
  Oracle, SAP, Intel, NEC and EMC
• 232M market cap Forward P/E 4.3x
• 800M enterprise value EV/EBITDA 1.8x
• In three years after better operating performance
  and improved capital structure, significantly
  better investment with higher takeout multiple on
  higher earnings base

3
Poor Performance

• Poor Operating and Stock Price Performance
• TTM Revenues 5.49B
• TTM EBITDA 442M
• 9/30/08 Cash Balance 494M
• 9/30/08 Net PPE 295M
• Diluted EPS growth NA
• ROIC 5
• Unisys stock price 0.64 (11/15/08)

4
SWOT Analysis

• SWOT Analysis
• Strengths 1 in niche areas, new CEO, active
  investor on Board, broad-based customer
  relationships, solid financials (cash flows, cash
  balance and recurring revenue streams)
• Weaknesses purchasing power, compensation
  practices, organizational structure, lackluster
  growth, low operating margins
• Opportunities organic growth (new customers/new
  products), new markets (SaaS), global expansion,
  strategic acquisitions
• Threats poor performance, angry shareholders

5
Risk Factors

• Risk Factors
• Market Risks
• New competitors
• Failure to innovate
• Operational Risks
• Quality service (?)
• Weak internal controls
• Low employee morale
• Financial Risks
• Non-functioning credit markets
• Weak U.S. economy
• Higher interest rates
• Legal/Regulatory Risks

6
Stronger Unisys (Pg. 1 of 2)

• Actions
• Assign investor relations function to Treasurer
  and reduce size of treasury operation to 2
  people reduce auditor costs
• CFO focus on improving UIS' capital structure
• Invest 494M cash in UIS debt for better return
  on investment
• Defease portion of UIS debt due in 2009
• Borrow under credit line to invest in UIS debt
  swap high cost debt for lower cost debt
• Reduce UIS Board to 5 members
• Focus business on its core IT services and IT
  solutions
• Spin off to investors technology/hardware segment
• Build on 1 niches (check processing, public
  welfare systems, airline/cargo reservations, and
  communications messaging) sell non-core assets
  (real estate)

7
Stronger Unisys (Pg. 2 of 2)

• Actions
• Improve operating performance
• Cut SGA costs by 67M reduce RD spending and
  capital expenditures
• Leverage customer relationships by becoming
  independent reseller of IT/office equipment
• Old IKON business model is profitable and has a
  high ROIC attract and retain best salespeople
• Keep expanding UIS' core business in
  international markets
• Good time to be buying market share

8
Operating Results

• 2007 Actual 2008 Proj. 2009 Pro Forma
• Sales 5,652 5,266 4,638
• CGS (4,365) (4,085) (3,822)
• SGA (1,201) (1,055) (606)
• Op. Income 86 126 211
• Int. Expense (76) (86) (45)
• Taxes (82) (117) (58)
• Net Income (79) (107) 107
• Diluted EPS (0.23) (0.30) 0.30
• Valuation per share 5.96