Good day and welcome to the Unisys Third Quarter 2010 Results Conference Call. At this time I will turn the conference over to Mr. Niels Christensen, Vice President of Investor Relations at Unisys Corporation. Please go ahead, sir.

Thank you, Operator. Good morning, everyone, and thank you for joining us. Earlier today Unisys released its Third Quarter 2010 Financial Results. With us this morning to discuss our results are Ed Coleman, our CEO and Janet Haugen, our CFO. Before we begin I want to cover just a few housekeeping details. First, today's conference call and the Q&A session are being webcast via the Unisys investor website. Second, you can find the earnings press release on our investor website. The presentation slides will be available later today. These materials are available for viewing as well as downloading and printing. Third, today's presentation, which is complementary to the earnings press release, include some non-GAAP financial measures. These have been provided in an effort to give investors additional information. The non-GAAP measures have been reconciled to the related GAAP measures and we provided reconciliation charts at the end of the presentation. Finally, I'd like to remind you that all forward-looking statements made during this conference call are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. These factors are discussed more fully in the earnings release and in the company's SEC filings. Copies of these SEC reports are available from the SEC and from the Unisys investor website. Now, I will turn the call over to Ed.

Thanks, Niels. Hello, everyone. Thank you for joining us today to discuss our Third Quarter 2010 Financial Results. The third quarter was another profitable quarter for Unisys; one where we met a significant milestone, achieving a 8% operating margin in our services business, putting us in our targeted range of an 8 to 10% services operating margin. Reaching this margin threshold is the result of first, the continued reshaping of our services business to focus on IT outsourcing, and systems integration services, while de-emphasizing our BPO and infrastructure services. Second, the continued shifting of our service delivery model to take advantage of lower-cost labor pools which now accounts for 27% of our employees. Third, our implementation of a consistent high quality, idle-based global-delivery model, where we believe we’re the first global player to achieve ISO 2000 certification in all its major operational centers around the globe. And fourth, intense focus on services operational management. While services revenue was down in the quarter, services backlog remained flat with the year ago period. And we continue to see sequential increases in services operating profit driven by improved gross margins in our IT outsourcing and systems integration services, and continued effective cost management. On the technology front, both revenue and operating profit were down in the quarter, but I should note that this comes after three strong quarters of year-over-year growth. On a year-to-year basis, technology revenue is up slightly, and operating profit margin is up more than 14 percentage points. We also had another strong quarter of cash generation with free cash flow of $81 million, up from $46 million a year ago. And our adjusted net debt declined to $138 million from $555 million a year ago; a reduction of $417 million. While the quarter showed important progress in key areas,…

Thanks, Ed, and hello everyone. Our results this quarter showed our continued progress in improving our services operating margin, improving our free cash flow and strengthening our balance sheet. We made this progress despite lower overall revenue, including lower high-margin ClearPath revenue. This morning I will provide more details on our financial results, including expenses, margin trends, and cash flow. Before commenting our continuing operation, I want to discuss our divested Unisys Insurance Services Limited business, UYSL in the U.K. As previously disclosed, we sold this business in the quarter. We recognized that pre-tax gain of $4.5 million on the transaction. The company’s financial statement has been retroactively restated to report the UYSL business as a discontinued operation. As a result, UYSL operating result, as well as the gain on the sale, are reported in one line, income from discontinued operations, on the income statement, along with the results of our Health Information Management, or HIM, discontinued operation which was sold in the second quarter of 2010. Additionally, UYSL assets and liabilities are reported as assets or liabilities of discontinued operation on the December 31, 2009 balance sheet. We closed the quarter with $5.8 billion in services backlog, which is a similar level as a year ago. September 30, 2010 backlog was up from June 30, 2010 backlog of $5.5 billion, principally due to the impact of translating the backlog at different quarter and currency rate. Approximately $800 million of the September 30, 2010 services backlog is anticipated to be converted into fourth quarter 2010 services revenue. We typically have between 87 to 93% of our quarterly services revenue in our opening backlog. The balance of our services revenue in a quarter comes from sale-and-build business during the quarter. Excluding the $500 million third quarter 2009 BPO, contract expansion in…

Thanks Janet, very much. Operator, we’d like to open the call up to questions at this point, if we may.

Thank you. (Operator Instructions) We’ll go first to Joseph Vafi of Jefferies & Company. Joseph Vafi – Jefferies & Company: Hi. Good morning, thanks for taking my question. First question on services operating margins, a nice list there. I was wondering if we could get a little bit more color as to what percentage of that list – and maybe especially on the gross line, was due to efficiencies and how much due to mix change? And what do you expect on Mix change relative to that margin moving forward?

Hi, Joe. When we’re looking at the services operating margins improvement, we believe most of that change is driven by the operating efficiencies. We, within services, have some declining revenue within the core maintenance, which is at a higher margin rate than the rest of our services business. So you have that offsetting growth in – that decline in that revenue at higher margin dollars not being replaced, coming at almost a two-for-one type of rate with the rest of the new services portfolio. So as we deal through that reduction, our operating efficiencies and focus on quality services are the main driver for the improvements in the margin.

And I think the efficiencies come from the greater use of lower-cost labor as well, but it’s also, a lot of it is just operational execution. Services business is about doing 1,000 things right every day, and I think we’re just getting better and better at execution of those 1,000 things. So it’s all the things that we talked about, Joe. It’s the consistent delivery on a global basis, a better low-cost, better utilization of low cost, lower-cost labor pools, more automation in our service delivery, and probably be more selective in the opportunities that we pursue. Joseph Vafi – Jefferies & Company: Okay. That’s fair. And then, you know, second kind of quarter here of growth and IT outsourcing, which is nice to see. Maybe a little bit more color there on the types of organizations, maybe verticales where some of your new service offerings are finding – where you’re seeing strength in those new lines of business.

Yeah, from a vertical standpoint, you know, I don’t think you can point to any one vertical that’s really being key to it. I think the way I’m looking at it in terms of where we’ve been most successful is where we’ve been able to work with clients that are interested in integrating the full scope of end-user support. So instead of looking at a deal that’s strictly for field engineering support, or strictly for help-desk support, or strictly network management, where clients are looking to consolidate that full scope of support. Joseph Vafi – Jefferies & Company: And then just a final question, Jan, thanks for the color here on how much the service backlog makes in Q4. I was just kind of looking for maybe some extra color here on the hardware side of the business. By looking at the U.S. decline versus International, I’d probably make a bet that a lot of the clear path business was U.S. based in the second, or in the third quarter. I’m sorry, in the first couple of quarter in the year, and that might have dropped off. Would you expect to see kind of normal seasonal uplifting in Q4 in the hardware business?

I think as we said in the call last quarter, and would continue now, we do think we’d have to look at the technology business on an annual basis. Our first goal, as Ed had mentioned, was to stop the decline. We had a very strong first half of the year. Actually, three strong quarter of growth in that ClearPath business. The geographic makeup of the customer base is pretty consistent with our overall geography and as – we look forward to closing out the quarter strong, but we do recognize that we have had a very strong three quarters in the end of 2009 and the first half of 2010. Joseph Vafi – Jefferies & Company: All right. Thanks very much.

Our next question comes from Jeff Harlib of Barclays Capital Jeff Harlib – Barclays Capital: Hi. Good morning. Just following up on the technology business, can you talk about why the business has been so strong during typically not a seasonally strong period? Does it have to do with product refresh, or what’s been going on with the revenue trends in the business?

Yeah. I think a number of different things. I’m hoping I get your question right, you’re breaking up a little bit. In terms of what are all the different factors that are coming into play in the technology business is the way I heard the question. Jeff Harlib – Barclays Capital: Yeah.

You know, a number of things have been going on over the last year, year and a half. There’s certainly elements of strong performance in the last half of 2009 and early 2010 that are related to a refresh cycle. But I think it’s also related to our recommitment to the ClearPath technology, the platform and reassuring our clients that we are embracing that technology and continuing to invest in it to deliver greater capability now and into the future. I think if we’ve addressed our debt situation, customers that were concerned about us from a viability standpoint and perhaps reluctant to invest in our technology, has resulted that. We’ve seen a retracing of those thought processes and they now are re-embracing our technology. So there’s all those things that are factors into the overall flow, the technology business. And as Janet said, what we’re focused on is making sure that we don’t continue this assumed secular decline in the technology business. We think our platform has continued to be the most innovative, open mainframe platforms in the industry and we’re seeing, I think over the last 12 months, very good uptake in our client’s embracing those enhancements. It continues to be a difficult business though to forecast on a quarter-by-quarter basis because so much of it’s dependent on individual customer decisions and sell and build transactions during the quarter. Jeff Harlib – Barclays Capital: Okay, that’s helpful. And just in services, can you talk a little bit about systems integrations being somewhat soft, down 11%. And just more generally about, you know, how you can reduce some of these year-over-year revenues declines in services?

Well, you know what, I think it’s – on systems integration in particular, it seems to be project oriented and those are discretionary projects in some cases where in a difficult economic climate clients can defer or down scale the size of those projects. But more importantly, we’re also focusing on profitability in that part of our business. I think we’re being more selective in what we pursue and making sure that we can deliver the solutions that we’re proposing in a profitable way. The services business in total, I think we’re moving more to an annuity-based business, as you can see in the relative strength of our IT outsourcing business. And in terms of overall revenue growth as a part of your question on the services side, I think we’re following a fairly logical progression as we improve the company. First is to get the cost structure right. The second is to improve the balance sheet, and third is make sure we have a portfolio of offerings in the market in areas that are of interest to clients. And that builds a strong foundation on which to start focusing on revenue growth. So we’re certainly aware of the challenges and we’re committed. Jeff Harlib – Barclays Capital: Okay. And just on the, you know, you’re generating pretty good free cash flow, you have almost 700 million in cash on the balance sheet. What about the use of that liquidity? You know, you have three bond issues that are not callable now. What are you – what’s your thinking on how to deleverage the company?

As Ed mentioned in his comments, our goal over the next three years is to reduce the dept by 75%. All of our debt instruments that we have outstanding either mature or are callable during that time period and we will continue to look for the appropriate transactions that provide us with the long-term capital improvement that we are working towards that strengthen the balance sheet and help position the company from a financial standpoint and better competitive situations. But I don’t want to speculate on what transaction it may or may not be to have a portfolio debt, as I said, that has either maturity or call provisions happening in that entire three-year window. Jeff Harlib – Barclays Capital: Okay, but you’re still focused on debt reduction as opposed to other use of cash?

Yes, we are. That’s in one of the objects that Ed outlined. Jeff Harlib – Barclays Capital: Thank you.

Our next question comes from John Moore of KDP Investment Advisors. John Moore – KDP Investment Advisors: Hi. Good morning. Just on the technology business, based on orders and such for this quarter, is – while it’s hard to predict on a quarterly basis, is it sort of a restoration of that business? Is that something that could be getting back on track as soon as this quarter is – or say more into 2011 expectations?

Well, again as we said, you know, we believe that we have made some significant improvements in the technology business over the last 18-24 months. As Janet mentioned, it seems to be more of a business that you think of in annual terms opposed to in quarterly terms because there’s so much sell-and-bill activity that occurs within a quarter, so much dependent on individual customer transactions within that quarter, makes it a difficult one to forecast on a quarterly basis. But we’re pleased with the strength that we saw in the back half of 2009 and early in 2010. As we mentioned, on a year-to-date basis, the technology business is up year over year. But again, it’s a difficult one to forecast on a quarterly basis coming off a strong first half this year, and also a comparative very strong fourth quarter of 2009. John Moore – KDP Investment Advisors: Okay. And then for BPO Services, do we expect some sort of stabilization there as the outlook in your view stabilizing for the topline in that particular business?

Just a comment, you know, in the BPO area, the largest BPO operation that we have is in the UK, our IPS L-Joint Venture, which processes check and as you would expect, that would continue to decline over time. It is not an area of focus as Ed mentioned and I’ve mentioned in our comments both this quarter and prior quarters. John Moore – KDP Investment Advisors: Okay.

You know, but I want to add to it that when we say we’re not focusing on it, what we mean is that we’re not investing for further growth in that part of the business. We have a number of engagements that are business-processing outsourcing oriented that we’re quite happy with. John Moore – KDP Investment Advisors: Okay. Then on the TSA, how should we think about that going forward and that transition?

As a TSA, we’re under contract with TSA through the end of November. As I mentioned on the call last quarter, we’re running at about $10 million of revenue a month on that contract and we expect our obligations with TSA to end on November 30th. John Moore – KDP Investment Advisors: And the last one is tough. On restricted versus unrestricted cash, what – how much are the cash balances restricted?

None of the cash balances is restricted. The restricted cash is in prepaid and other current assets. John Moore – KDP Investment Advisors: Okay. Thank you very much.

We’ll take a follow up from Joseph Vafi of Jefferies and Company Joseph Vafi – Jefferies & Company: Hi. Thanks for the follow up. You know, SG&A continues – we continue to get leverage there. How should we think about that moving forward and has there been any pullback or dial back on bidding proposal spend that may be driving lower SG&A?

The second part of your questions, the answer is no. There has been no deliberate dial back in bidding proposal. And on how to think about going forward, I just would reflect back that late 2008, we set ourselves a goal of reducing our overhead by $250 million. And we delivered that by the end of the first half of this year. We have not set, you know, a discrete further goal beyond that, but I think we have an organization that on a continuous basis is looking for further opportunities to become more efficient and more effective. I think you see that in the continued reduction of SG&A in Q3 of this year and we’ll keep at it. Joseph Vafi – Jefferies & Company: Okay. And then just going back to the IT outsourcing business that’s starting to grow here a little bit, can you give us an idea of the length of the average contracts in that business so we can kind of start getting an idea of the visibility in the recurring revenue that you have in that line of business?

Yeah, it’s a good question Joe. I would estimate it’s probably in the three-to-five year range. Joseph Vafi – Jefferies & Company: Okay.

It’s not any closer to the three than to the five. Joseph Vafi – Jefferies & Company: Okay, great. Thanks very much.

Thank you.

We’ll go next to Bill Smith of Lowering, Smith and Company. Bill Smith – Lowering, Smith and Company: Hi, Ed. Could you comment a little bit on the announcement yesterday regarding your relationship with Apple and how you see that developing going forward?

Yeah, thanks, Bill for the question. I read the article yesterday and I would say I think the article suggests that there’s more there than there is. We signed a systems integration agreement with Apple where it provides us the opportunity to be a system’s integrator working with Apple in the marketplace. There is no dollar value associated with that contract. We’re pleased to have it. We’re pleased to have the opportunity to work with Apple. We think they offer some, obviously, some solutions in the marketplace that are quite hot now and we’re working with them on some live opportunities. But there’s really nothing there at this point from a revenue standpoint that you should be reading into that. Bill Smith – Lowering, Smith and Company: Okay. And then could you also comment on the Colt Technology announcement and what that – what those opportunities are with Colt and that Unisys as it relates to Europe and where they’re involved?

Yeah, well, if we put in a press release along with Colt, we’re helping Colt stand up a cloud solution where they can take a set of offerings to their clients in Europe that will be branded under their name. So we’re helping them create the cloud solutions that they’ll be taking to the market for their customers. Bill Smith – Lowering, Smith and Company: Okay. Thank you.

We’ll go next to Frank German of Goldman Sachs. Frank German – Goldman Sachs: Thanks for taking my question. I guess just to follow up on the balance sheet, you know, given your comments about goals of paying down 75% of your debt by 2013, can you provide some more details just around how you plan to go about that? It sounds like you’re primarily focused on calls of natural maturities. But specifically, I wanted to sort of push you on given sort of low returns on cash today as well as your relatively high-carry cost of debt, does it make sense to actually try and proactively tender for some of those bonds at this point and issue at a relatively lower coupon? Thanks.

What I had said in my comments is that our goal to reduce debt by 75% over the next three years that would in our existing debt instrument, they all are mature or call within 2012. So that gives us flexibility. We obviously have a significant cash balance and both with will absolutely come into play as we decide how to reduce that 75% debt overtime, but I’m not going to comment on any specific plan until we announce what we’re intending to do. Frank German – Goldman Sachs: Okay, thanks. And then as I do think about the balance sheet, you know, how much cash do you typically think you need to operate with on a go-forward basis, and how much should I consider as sort of access cash on the balance sheet right now?

We have not commented on that. All I will say is that we have run with substantially less cash than we have right now, and we do have more than sufficient cash on hand to run operations. Frank German – Goldman Sachs: Great. And then I guess the last question I had was just on the CapEx plan, you know, you updated us on, so your 2010 expectations for 200 to 225, can you provide me with any color for CapEx needs in 2011 as well as pension funding needs for 2011? Thanks.

On – we have not provided guidance on either one of those items for 2011 for either the CapEx or for pensions. And so, I think what I want to point you back to is the rate in which we have been funding with great capital expenditures we’ve had in 2010 as well as the funding in 2011. In prior quarters we have comment that in the U.S. Pension Plan, we are not currently funding that plan but as a result of the asset positions and the change in legislation, we do think that we will begin funding into that plan starting in 2012. Frank German – Goldman Sachs: Great. Thanks. That’s all I had. Appreciate it.

Thanks, Frank.

At this time we have no further questions in queue. I’d like to turn the conference back over to the Chairman, Ed Coleman for closing remarks.

Well again, thank you, everyone for joining us on the call today. For all the Unisys employees that are listening to this call, I also want to thank you for all of your hard work and the contributions you’re making. We’ll talk about again soon. Thank you very much.

That does conclude today’s conference, Ladies and Gentlemen. We appreciate everyone’s participation today.