Unisys Shareholders Strongly Reject Proposal to Split-up Company
PHILADELPHIA, PA, APRIL 24, 1997 -- Unisys Corporation shareholders today rejected a proposal by Greenway Partners to split-up the company by a vote of approximately 60 percent against, according to preliminary results. They also strongly supported four directors standing for re-election with 79 percent of the vote despite a Greenway Partners' campaign to withhold votes. A shareholder resolution to declassify the company's Board of directors received 61 percent of the vote and the company said it would seriously consider the recommendation.
Unisys chairman and chief executive officer James A. Unruh told shareholders at the annual meeting in Philadelphia that "we firmly believe that we are on the right track to increase sustainable shareholder value, and we will do everything possible to achieve that objective without sacrificing our long-term prospects for the benefit of a short-term, unsustainable share price increase." He said the company has made "clear and substantial progress" as it "reinvents" the pioneer mainframe computer company.
In discussing progress, Unruh cited: substantial operational and financial progress over the last six quarters; a strong first-quarter performance that exceeded analysts' expectations and put the company on track to meet its goal of full-year profitability in 1997; and increasing employee satisfaction that will drive increases in client satisfaction.
For the quarter ended March 31, 1997, the company reported earlier this week net income of $19 million versus a loss of $13 million a year ago. Revenue grew 8 percent despite a negative currency impact. Gross margins increased three points. Operating income increased substantially to 7 percent of revenue compared to 1.5 percent a year ago.
At the meeting, Unisys opposed the shareholder proposal by Greenway Partners to sell or spin-off its computer business as not a workable idea, and one that was not supported by financial analysts who know the company. Institutional Shareholder Services, a proxy advisory firm, also advised clients not to support it for the second year in a row. Unisys also said that the Greenway campaign to withhold votes for the four directors standing for re-election sent the wrong message to customers, employees and shareholders alike. Unisys said that now was the time to capitalize on momentum, not to change what is working.
Unruh told shareholders that the three-businesses/one-company structure put in place in January 1996 is working. The businesses are the computer hardware/ technology business; an information services business from consulting to systems integration; and a computer support services business. The focus and accountability of the three-businesses/one-company structure is contributing to an accelerated financial performance and the building of momentum.
Unruh said there are clear signs that the overall business portfolio change at Unisys is working. Services are now 62 percent of total revenue, up 15 percentage points over five years. More than 40 percent of Unisys businesses grew at double digits in 1996 versus 15 percent in 1992. He said the company has reengineered a going-out-of-business profile into an emerging growth portfolio.
Unruh said continuing financial performance progress is the most important factor in improving the stock price and the company is on track in 1997 to achieve its goals. He also said that the company has begun to disclose financial performance for each of its three businesses to improve investor visibility. "We believe this kind of visibility will lead to increased market recognition of the earnings and revenue potential of our three businesses, which in turn will help drive corresponding higher P/E ratios for our service businesses and increased shareholder value for the company overall," he said.
In closing the meeting, Unruh said, "Let me conclude by saying that we take today's discussion seriously. We are always open to suggestions from interested parties about how to improve our business and hence our stock price. And when a major shareholder wants to give us such ideas, we listen with extra care. We welcome constructive ideas.
"However, with all due respect, much of the discussion here today, as well as all the publicity preceding it, has not been about improving our business. Virtually every knowledgeable person who has considered the merits of the Greenway proposals, this year and last, to break up the company believes that they are without merit.
"Greenway has also urged shareholders to withhold votes from the directors, ostensibly to 'send a message.' Well, if the message is that the stock price is too low, all of us -- management and the Board -- have the message. This is not news. We are working to transform our complicated business in a rapidly changing environment as quickly as we can. There is no "magic wand" we can wave to accomplish such a large task in an instant.
"If Greenway or others have constructive ideas, we are still open to them. But now is the time for all of us to pull together and do the hard day-to-day work that builds a great franchise. The future is here. Now is the time for us to heighten our resolve to go for it."
Preliminary voting results showed 153,974,761 shares received for voting, 88 percent of the 174,849,472 shares outstanding. The proposal to split-up the company was rejected with 61,629,888 votes against, 59.6 percent of shares voted. There were 38,086,355 votes for, 36.8 percent of shares voted, and 3,725,592 votes abstained, 3.6 percent of the vote. Each of the four directors standing for election received at least 121,382,395 votes, or about 79 percent of shares voted, with 21 percent of shares withheld. The proposal to declassify the Board received 63,442,060 votes for, 61 percent of shares voted. There were 36,483,130 votes against, 35 percent of vote cast, and 3,897,786 votes abstained, about 4 percent of share vote. Stockholders also ratified Ernst & Young LLP as independent auditors of the company's financial statements for 1997 with 139,158,378 votes, 90 percent of the shares voted.
The company expressed satisfaction with the voting results and with shareholders who had spoken in support of the company's strategic direction during a complicated transformation.
RELEASE NO.: 0497/6207
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