ELECTRONIC DATA SYSTEMS CORP /DE/, 10-Q, 1996-11-13

ELECTRONIC DATA SYSTEMS CORP /DE/
10-Q, 1996-11-13
COMPUTER PROGRAMMING, DATA PROCESSING, ETC.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1996
-------------------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to
------------------- ----------------------

Commission file number 01-11779
--------------

Electronic Data Systems Corporation
-----------------------------------
(Exact name of registrant as specified in its charter)

Delaware 75-2548221
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

5400 Legacy Drive, Plano, Texas 75024-3199
-------------------------------------------
(Address of principal executive offices)
(Zip Code)

(972) 604-6000
--------------
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---

As of October 23, 1996, there were outstanding 486,478,744 shares of the
registrant's Common Stock, $.01 par value per share.
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

INDEX

PAGE NO.
--------
Part I -- Financial Information (Unaudited)

Item 1. Financial Statements

Condensed Consolidated Statements of Operations............... 3

Condensed Consolidated Balance Sheets......................... 4

Condensed Consolidated Statements of Cash Flows............... 5

Notes to Condensed Consolidated Financial Statements.......... 6

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 8

Part II -- Other Information

Item 1. Legal Proceedings......................................... 14

Item 6. Exhibits and Reports on Form 8-K.......................... 14

Signatures.............................................................. 15

Exhibit 10(n) First Amendment to Revolving Credit and Term Loan Agreement dated
September 25, 1996 among EDS and the Lenders identified therein.
Exhibit 10(o) First Amendment to Multi-Currency Revolving Credit Agreement
dated September 25, 1996 among EDS and the Lenders identified
therein.
Exhibit 27 Financial Data Schedule (for SEC information only)

2
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PART I

ITEM 1. FINANCIAL STATEMENTS

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------

<S> <C> <C> <C> <C>
Systems and other contracts revenues $3,570.5 $3,073.7 $10,435.2 $8,800.1
-------- -------- --------- --------

Costs and expenses
Cost of revenues 2,811.1 2,386.1 8,354.9 6,857.4
Selling, general, and administrative 345.4 307.0 963.4 872.4
Restructuring charge -- -- 285.6 --
Asset writedowns -- -- 503.9 --
-------- -------- --------- --------
Total costs and expenses 3,156.5 2,693.1 10,107.8 7,729.8
-------- -------- --------- --------

Operating income 414.0 380.6 327.4 1,070.3
One-time split-off costs -- -- (45.5) --
Interest and other income, net 2.2 3.4 (34.0) (24.3)
-------- -------- --------- --------
Income before income taxes 416.2 384.0 247.9 1,046.0
Provision for income taxes 149.8 138.3 89.2 376.6
-------- -------- --------- --------
Net income $ 266.4 $ 245.7 $ 158.7 $ 669.4
======== ======== ========= ========

Earnings per share $ 0 .55 $ 0.51 $ 0.33 $ 1.40
======== ======== ========= ========
</TABLE>

See accompanying Notes to Condensed Consolidated Financial Statements.

3
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 613.1 $ 548.9
Accounts receivable 3,175.1 3,169.0
Other current assets 653.1 663.6
--------- ---------
Total current assets 4,441.3 4,381.5
--------- ---------

Property and equipment, net 3,088.5 3,242.4
--------- ---------

Operating and other assets
Land held for development, at cost 95.3 105.1
Investment in leases and other 1,527.3 1,573.5
Software, goodwill, and other 1,458.1 1,529.9
intangibles, net --------- ---------
Total operating and other assets 3,080.7 3,208.5
--------- ---------
Total Assets $10,610.5 $10,832.4
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 540.5 $ 603.9
Accrued liabilities 1,617.9 1,704.5
Deferred revenue 562.5 629.3
Income taxes 44.7 75.9
Notes payable, current portion 220.6 247.8
--------- ---------
Total current liabilities 2,986.2 3,261.4

Deferred income taxes 517.3 739.7
Notes payable, less current portion 2,410.7 1,852.8

Redeemable preferred stock of
subsidiary and minority interests 160.0 --

Stockholders' equity
Common stock, without par value;
authorized 1,000 shares; issued and
outstanding 483.7 shares at
December 31, 1995 -- 517.7
Common stock, $.01 par value; 2,000
shares authorized; 487.6 shares
issued at September 30, 1996 4.9 --
Additional paid-in capital 648.1 --
Retained earnings 3,896.3 4,460.8
Less - cost of treasury shares,
1.2 shares at September 30, 1996,
none at December 31, 1995 (13.0) --
--------- ---------
Total stockholders' equity 4,536.3 4,978.5
--------- ---------
Total Liabilities and Stockholders'
Equity $10,610.5 $10,832.4
========= =========
</TABLE>

See accompanying Notes to Condensed Consolidated Financial Statements.

4
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ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ---------------------
1996 1995 1996 1995
------- --------- --------- ---------
<S> <C> <C> <C> <C>

NET CASH PROVIDED BY OPERATING ACTIVITIES $ 521.9 $ 287.1 $ 1,142.2 $ 713.1
-------- --------- --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of marketable securities 14.9 38.6 52.3 128.5
Proceeds from investment in leases and other
assets 26.7 9.1 130.5 81.9
Payments for purchase of property and equipment (326.3) (270.7) (817.8) (879.1)
Payments for investments in leases and other
assets (72.1) (49.9) (214.6) (277.6)
Payments related to acquisitions, net of cash
acquired (9.9) (99.4) (46.9) (226.5)
Payments for purchase of software and other
intangibles (58.9) (17.4) (85.5) (71.4)
Payments for purchase of marketable securities (21.5) (25.8) (67.7) (73.6)
Other 11.1 6.9 28.5 9.6
-------- --------- --------- ---------
Net cash used in investing activities (436.0) (408.6) (1,021.2) (1,308.2)
-------- --------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 4,249.6 1,608.1 8,186.9 5,961.7
Payments on notes payable (4,426.3) (1,401.7) (7,741.7) (5,228.5)
Net increase (decrease) in current notes
payable with maturities less than 90 days 91.0 (41.5) 91.0 --
Proceeds from sale of redeemable preferred
stock of subsidiary and minority interests 103.5 -- 103.5 --
Employee stock transactions and related tax
benefits 17.3 5.7 34.8 25.2
Cash dividends paid (72.8) (62.8) (718.5) (188.3)
-------- --------- --------- ---------
Net cash provided by (used in) financing
activities (37.7) 107.8 (44.0) 570.1
-------- --------- --------- ---------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents (0.2) (5.7) (12.8) (2.4)
-------- --------- --------- ---------
Net Increase (Decrease) in Cash and Cash
Equivalents 48.0 (19.4) 64.2 (27.4)
Cash and Cash Equivalents at Beginning of Period 565.1 600.2 548.9 608.2
-------- --------- --------- ---------
Cash and Cash Equivalents at End of Period $ 613.1 $ 580.8 $ 613.1 $ 580.8
======== ========= ========= =========

</TABLE>

See accompanying Notes to Condensed Consolidated Financial Statements.

5
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. BASIS OF PRESENTATION AND SPLIT-OFF FROM GENERAL MOTORS

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, all adjustments
(consisting of only normal recurring items) which are necessary for a fair
presentation have been included. The results for interim periods are not
necessarily indicative of results which may be expected for any other interim
period or for the full year. For further information, refer to the Company's
1995 audited consolidated financial statements and notes thereto included in the
Current Report on Form 8-K filed April 23, 1996.

General Motors Corporation ("GM") acquired all of the capital stock of
Electronic Data Systems Corporation ("EDS") in October 1984. Prior to that
time, EDS had been an independent, publicly held corporation. On June 7, 1996,
GM split-off (the "Split-Off") EDS to the holders of GM's Class E Common Stock
in a transaction that was tax-free for U.S. federal income tax purposes. In
connection therewith, EDS paid GM a one-time inter-company payment of $500.0
million. Under the terms of the Split-Off, one share of EDS common stock was
exchanged for each share of GM Class E Common Stock. In addition, General Motors
and EDS entered into a new 10-year agreement under which EDS will continue to be
GM's principal provider of information technology services.

The effects of purchase accounting adjustments reflected in GM's
Consolidated Financial Statements that are applicable to EDS were not material
to the Consolidated Statements of Operations for the three and nine month
periods ended September 30, 1996 and 1995. At September 30, 1996, the remaining
carrying value of such purchase accounting adjustments would not be material to
EDS' Consolidated Financial Statements.

Certain reclassifications have been made to the 1995 consolidated financial
statements to conform to the 1996 presentation.

NOTE 2. EARNINGS PER SHARE

Earnings per share for the three and nine months ended September 30, 1996,
have been calculated in accordance with Accounting Principles Board Opinion
(APB) No. 15, Earnings Per Share. Weighted average shares outstanding were 485.9
million and 485.5 million for the three and nine months ended September 30,
1996, respectively. Earnings per share for the three and nine months ended
September 30, 1995, represent earnings attributable to GM Class E Common Stock,
and were calculated based on the relative amounts available for the payment of
dividends to holders of such stock. Amounts calculated under this method are not
materially different from amounts calculated utilizing the weighted average
shares of EDS stock outstanding during those periods, including common stock
equivalents.

NOTE 3. NEW ACCOUNTING STANDARDS

Effective January 1, 1996, EDS adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The effects of
initially adopting SFAS No. 121 at January 1, 1996, were not material to EDS'
unaudited condensed consolidated financial statements.

6
<PAGE>

NOTE 4. RESTRUCTURING ACTIVITIES AND ONE-TIME CHARGES

During the three months ended June 30, 1996, the Company completed reviews
of its worldwide business operations and market opportunities. Based on these
reviews, the Company identified certain actions necessary to maintain and
improve operating efficiencies and accelerate its move towards "user-centered"
computing. In order to effect these actions, the Company adopted formal
restructuring plans that consist of workforce reductions, asset writedowns, the
exit of certain business activities, and the consolidation of facilities. The
one-time charges included in the accompanying unaudited condensed consolidated
financial statements have been recorded in connection with the restructuring and
exit strategies that have been proposed and committed to by management.

Restructuring Charge

The restructuring charge of approximately $286 million primarily includes
costs associated with workforce reductions announced in April 1996. Expected
workforce reductions of 4,700-5,000 employees consist of employees who accepted
the Company's early retirement offer and employees who have been identified for
involuntary termination under a planned workforce realignment. This workforce
realignment affected a broad base of the Company's managerial, clerical,
consulting and technical employees. The total employee-related termination and
early retirement offer charges amounted to approximately $275 million, $136
million of which relates to special termination benefits under the Company's
defined benefit pension plan. As of September 30, 1996, 1,743 employees accepted
the early retirement offer and approximately 1,341 employees have been
involuntarily terminated. Approximately $56 million has been paid in termination
benefits related to the involuntary termination plan. A majority of all employee
terminations will be completed by December 1996. The balance of the
restructuring charge relates to other exit costs resulting from the closure and
consolidation of facilities.

Asset Writedowns

As part of its plan to maintain and improve operating efficiencies, EDS has
written down certain of its assets by approximately $504 million during the
quarter ended June 30, 1996. Of this amount, approximately $262 million relates
to computer and other assets which have been written down to their estimated
fair values, determined by external market quotes. These assets have been
written down pursuant to SFAS No. 121 as a direct result of the Company's formal
plans to consolidate four of its information processing centers and 15 stand-
alone data centers, and to accelerate the refreshment of certain information
technology assets. Such writedowns are required when the carrying value of
assets currently held for use exceed their expected future undiscounted cash
flows, including expected cash flows resulting from eventual disposition. Also,
included in this charge are asset writedowns of approximately $69 million
incurred as a direct result of the Company's decision to ultimately discontinue
certain business activities in the communications business sector.
Additionally, the Company has written down certain of its inventory by
approximately $32 million to net realizable value as a direct result of its
decision to exit the computer product reseller market and to broker the sale of
such inventory.

In addition to the items above, certain equipment and other assets have been
written down based on the projected use of such assets. Approximately $21
million of these assets are related to a customer in reorganization and in the
process of being acquired by a third party. The remaining balance of the charge
for asset writedowns consists primarily of fixed assets, software licenses and
other assets which no longer will be used to support the Company's operations
because of its exit decisions.

Other Charges

Also included in the accompanying unaudited condensed consolidated financial
statements is approximately $60 million charged to cost of revenues during the
quarter ended June 30, 1996, the largest portion of which relates to current
assets written down in connection with the Company's decision to exit

7
<PAGE>

certain business activities. The balance of the charge to cost of revenue
relates to changes in estimated contract costs. In addition, all costs directly
associated with the Split-Off activities, amounting to $45.5 million, have been
charged to expense.

NOTE 5. ACCUMULATED DEPRECIATION AND AMORTIZATION

Property and equipment is stated net of accumulated depreciation of $3,761.9
million and $3,319.4 million at September 30, 1996 and December 31, 1995,
respectively. Additionally, software, goodwill, and other intangibles are stated
net of accumulated amortization of $1,050.8 million and $908.1 million at
September 30, 1996 and December 31, 1995, respectively.

NOTE 6. REDEEMABLE PREFERRED STOCK OF SUBSIDIARY

A consolidated subsidiary of the Company issued 65 million shares of
redeemable preferred stock for approximately $101.2 million, or $1.56 per share,
in the third quarter. Holders of the preferred shares have the right to redeem
such shares in 2003 for cash equal to the issue amount plus cumulative unpaid
dividends. Dividends on such preferred shares are cumulative from the effective
date of issue at a fixed rate of 7.7%. The preferred shares are nonvoting and
provide the holder with a priority position with respect to any class of the
issuing subsidiary's stock in the event of dissolution. The Company may call
such shares for an amount equal to the issue amount plus cumulative unpaid
dividends upon the fifth anniversary of the issue date. Since redemption rights
are provided to the holders of the preferred shares, the Company has classified
such shares as redeemable preferred stock on the accompanying consolidated
condensed balance sheet.

ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

EDS is a provider of information technology ("IT") services using computer
and communication technologies to meet the business needs of its clients. EDS
offers its clients a continuum of services, including management consulting,
systems development, systems integration, systems management and process
management.

FORWARD LOOKING STATEMENTS

All statements other than historical statements contained in this Report on
Form 10-Q constitute "forward looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Without limitation, these
forward looking statements include the estimated impact of certain factors on
EDS' 1996 fourth quarter results, the estimated impact of changes to EDS'
agreements with General Motors Corporation ("GM"), estimates of earnings per
share for the fourth quarter of 1996 and for the year ended December 31, 1996,
and the amount and timing of cost savings expected to be obtained from EDS'
restructuring announced in the second quarter of 1996. Any Form 10-K, Annual
Report to Shareholders, Form 10-Q or Form 8-K of EDS may include forward looking
statements. In addition, other written or oral statements which constitute
forward looking statements have been made or may in the future be made by EDS,
including statements regarding future operating performance, short- and long-
term revenue and earnings growth, backlog, and industry growth rates and EDS'
performance relative thereto. These forward looking statements rely on a number
of assumptions concerning future events, and are subject to a number of
uncertainties and other factors, many of which are outside of EDS' control, that
could cause actual results to differ materially from such statements. These
include, but are not limited to: competition in the information technology
industry, and the impact of such competition on pricing, revenues and margins;
the market acceptance of new product or service offerings that offer higher
margins than
8
<PAGE>

traditional product or service offerings, and costs associated with the
development and marketing of such offerings; the financial performance of
current and future customer contracts, including the financial performance of
EDS' contracts with GM; the degree to which EDS can improve productivity;
general economic conditions; the degree to which business entities continue to
outsource information technology and business processes; and the cost of
attracting and retaining highly skilled personnel.

EDS disclaims any intention or obligation to update or revise any forward
looking statements whether as a result of new information, future events or
otherwise.

SPLIT-OFF OF EDS

On June 7, 1996, GM split-off (the "Split-Off") EDS to the holders of GM's
Class E Common Stock in a transaction that was tax-free for U.S. federal income
tax purposes. In connection therewith, EDS and GM entered into a new Master
Services Agreement (the "Master Services Agreement") with respect to IT services
to be provided to GM, and EDS paid GM a one-time inter-company payment of $500.0
million (the "Special Inter-Company Payment"). Under the terms of the Split-
Off, one share of EDS common stock was exchanged for each share of GM Class E
Common Stock. See Note 1 to the accompanying unaudited financial statements.

The Master Services Agreement and certain related agreements between GM and
EDS with respect to IT services (collectively, the "IT Services Agreements")
stipulate that EDS will continue to serve as GM's principal supplier of IT
services for a term of ten years, which may be extended by agreement of the
parties, and that the IT services to be provided by EDS will generally be
similar to those provided to GM prior to the Split-Off.

Total revenues from GM for 1996 are anticipated to increase over
1995. Although the impact on earnings per share of the changes in EDS'
arrangements with GM cannot be precisely quantified, EDS estimates that
such changes could reduce its 1996 earnings per share by as much
as $0.14. The longer-term impact of the terms of the IT Services Agreements
cannot be precisely quantified, although such terms may have an adverse effect
on revenues and on operating margins unless EDS is able to continue to
effect cost reduction measures in the services provided to GM. There can be no
assurance that the terms of the IT Services Agreements will not have a material
adverse effect in the long-term on the results of operations of EDS.

The Special Inter-Company Payment was paid by EDS to GM at the date of the
Split-Off. Interest costs related to the Special Inter-Company Payment are
expected to be approximately $.03 per share in 1996. In addition to the Special
Inter-Company Payment, in the second quarter of 1996 EDS incurred approximately
$45.5 million, or $.06 per share, of one-time costs in connection with the
formulation and implementation of the Split-Off.

RESTRUCTURING ACTIVITIES AND ONE-TIME CHARGES

During the three months ended June 30, 1996, the Company completed reviews
of its worldwide business operations and market opportunities. Based on these
reviews, the Company identified certain actions necessary to maintain and
improve operating efficiencies and accelerate its move towards "user-centered"
computing. In order to effect these actions, the Company adopted formal
restructuring plans that consist of workforce reductions, asset writedowns, the
exit of certain business activities, and the consolidation of facilities. The
one-time charges totaling $850.0 million recorded in the second quarter of 1996
and included in the accompanying unaudited financial statements have been made
in connection with the restructuring and exit strategies that have been proposed
and committed to by management. See Note 4 to the accompanying unaudited
financial statements.

9
<PAGE>

RESTRUCTURING CHARGE

The restructuring charge of approximately $286 million primarily includes
costs associated with workforce reductions announced in April 1996. Expected
workforce reductions of 4,700-5,000 employees consist of employees who accepted
the Company's early retirement offer and employees who have been identified for
involuntary termination under a planned workforce realignment. This workforce
realignment affected a broad base of the Company's managerial, clerical,
consulting and technical employees and was designed both to reduce labor costs
and change the skill mix of EDS' workforce. The total employee-related
termination and early retirement offer charges amounted to approximately $275
million, $136 million of which relates to special termination benefits under the
Company's defined benefit pension plan. As of September 30, 1996, 1,743
employees had accepted the early retirement offer and approximately 1,341
employees had been terminated. As of such date, approximately $56
million has been paid in termination benefits related to the involuntary
termination plan. A majority of all employee terminations are expected to be
completed by December 1996. The balance of the restructuring charge relates to
other exit costs resulting from the closure and consolidation of facilities.

ASSET WRITEDOWNS

As part of its plan to maintain and improve operating efficiencies, EDS
wrote down certain of its assets by approximately $504 million during the
quarter ended June 30, 1996. As expanded upon in Note 4 to the third quarter
1996 unaudited financial statements, the components of the writedown includes:
$262 million related to computer and other assets; $69 million related to the
exit of certain business activities in the communications business sector; $32
million related to the exit from the computer product reseller market; $21
million related to a customer in reorganization and other writedowns relating to
assets which no longer will be used to support the Company's operations because
of its exit decisions.

OTHER CHARGES

Also included in the accompanying unaudited financial statements for the
nine months ended September 30, 1996 is approximately $60 million charged to
cost of revenues in the quarter ended June 30, 1996, the largest portion of
which relates to current assets written down in connection with the Company's
decision to exit certain business activities. The balance of the charge to cost
of revenue relates to changes in estimated contract costs. In addition, $45.5
million of costs directly associated with the Split-Off activities have been
charged to expense.

The implementation of the restructuring actions resulted in savings
commencing in the third quarter of 1996 and, although the amount and timing of
future savings are difficult to quantify precisely, are expected to build to
approximately $50 million per quarter ($.07 per share) by 1997 and continue at
that approximate level through 1998. During this period, these savings are
expected to be available to offset the anticipated negative impact to earnings
per share from the changes in the IT Services Agreements and for reinvestment to
position the Company for the future.

RECENT ANNOUNCEMENT

On November 5, 1996, EDS announced that slower new contract signings in the
first six months of 1996, a reduction in anticipated spending by the U.S.
Department of Defense under certain EDS contracts, and a receivable due
from a customer in bankruptcy proceedings would reduce fourth quarter earnings
per share by $.06 to $.08 per share. EDS also announced that it was comfortable
with 1996 earnings estimates of $2.07 to $2.09 per share, prior to a previously
announced, one-time charge and costs related to its split-off from GM ($.89 to
$.91 earnings per share after the one-time charge and Split-Off costs).

10
<PAGE>

RESULTS OF OPERATIONS

Revenues. Total systems and other contracts revenues for the quarter ended
September 30, 1996, rose $496.8 million, or 16%, over the corresponding quarter
in 1995 to $3,570.5 million. Total revenues for the nine months ended September
30, 1996 increased $1,635.1 million, or 19%, to $10,435.2 million. EDS
anticipates that the impact of slower new contract signings in the first half of
1996 and the reduction in anticipated U.S. Department of Defense spending under
certain EDS contracts may impact the rate of revenue growth into 1997.

Revenues from non-GM customers for the quarter ended September 30, 1996,
rose 19% to $2,516.2 million compared to $2,107.8 million for the same period in
1995. Revenues from non-GM customers for the nine months ended September 30,
1996 increased 24% to $7,368.2 million compared to $5,953.7 million for the same
period in 1995. For both the three and nine months ended September 30, 1996,
revenues from non-GM customers increased principally due to new contract
signings and acquisitions, including the acquisition of A.T. Kearney on August
31, 1995.

Revenues from non-GM customers comprised 70% and 69% of total revenues for
the three months ended September 30, 1996 and 1995, respectively. Revenues from
non-GM customers comprised 71% and 68% of total revenues for the nine months
ended September 30, 1996 and 1995, respectively. While it is anticipated that
GM will continue to contribute a significant portion of total systems and other
contracts revenues, EDS expects the percentage of revenues from GM and its
affiliates to continue to decline as revenues from other customers continue to
increase.

Costs and Expenses. Cost of revenues as a percentage of systems and other
contracts revenues increased to 79% for the three months ended September 30,
1996, compared with 78% for the corresponding period in 1995. For the nine
months ended September 30, 1996, cost of revenues as a percentage of
systems and other contracts revenues increased to 80% from 78% in the
corresponding period in 1995. For the nine month period ended September 30,
1996, cost of revenues includes approximately $60 million in one-time costs.
See "-- Restructuring Activities and One-time Charges" above. Cost as a
percentage of revenues has increased due to higher labor costs for skilled
workforce and pricing pressures for new business as a result of the increasingly
competitive environment in which EDS operates. EDS is addressing this
environment in part through expected efficiencies to be gained from its
restructuring activities described above and its value-added business approach
that includes the development and marketing of new service offerings. Selling,
general and administrative expenses as a percentage of systems and other
contracts revenues was 10% for both the three months ended September 30, 1996
and the corresponding period in 1995. Selling, general and administrative
expenses as a percentage of systems and other contracts revenues for the nine
months ended September 30, 1996 decreased to 9% from 10% in the corresponding
period in 1995 due to the Company's ability to leverage off the fixed nature of
certain of these costs.

Operating Income. Operating income increased $33.4 million for the third
quarter of 1996 when compared to the comparable period in 1995. For the nine
months ended September 30, 1996 operating income decreased $742.9 million
(including certain one-time charges discussed above) to $327.4 million when
compared to the respective period in 1995. Operating margins for the three
months ended September 30, 1996 declined to 11.6% from 12.4% in 1995. For the
nine months ended September 30, 1996 operating margins declined to 3.1%
(including certain one-time charges discussed above) from 12.2% in 1995.
See "-- Costs and Expenses" above.

Interest and Other Income, Net. Interest and other income, net decreased
$1.2 million in the third quarter of 1996 to $2.2 million, compared with $3.4
million in 1995. For the nine months ended September 30, 1996 interest and
other income, net decreased $9.7 million to $(34.0) million, and includes
interest expense of $109.4 million for 1996 and $80.4 million for 1995.
Interest expense for the three months ended September 30, 1996 increased $5.0
million to $37.0 million when compared with the

11
<PAGE>

corresponding period in 1995 primarily due to an increase in outstanding
commercial paper in the second quarter of 1996 which was used principally for
the financing of the Special Inter-Company Payment and the one-time costs
in connection with the formulation and implementation of the Split-Off. The
third quarter of 1996 included gains resulting from the sales of nonoperating
assets, principally real property, of approximately $26.1 million.

Net Income. For the three and nine month periods ended September 30, 1996,
EDS' net income increased 8% to $266.4 million and decreased 76% to $158.7
million, respectively, when compared with net income of $245.7 million and
$669.4 million for the respective periods of last year. Earnings per share for
the nine months ended September 30, 1996 were negatively impacted by $1.18 per
share related to the $850 million one-time charges and $45.5 million of one-time
split-off costs.

In the first nine months of 1996, return on assets and return on
stockholders' equity have been significantly impacted by the $850 million one-
time charges and the $45.5 million one-time split-off costs discussed above.
Overall, the capital intensity of EDS' business is increasing, as customers
frequently require front-end investments in computers and telecommunications
equipment, software, and other property and equipment. These types of
investments have caused return on assets to decline. EDS' effective tax rate
remained constant at 36% for the three months ended September 30, 1996 and 1995.

EDS and its customers may, from time to time, modify their contractual
arrangements. For customer contracts accounted for under the percentage of
completion method, such changes are reflected in results of operations as a
cumulative change in accounting estimate in the period the revisions are
determined.

Seasonality and Inflation. EDS' revenues vary over the calendar year, with
the fourth quarter generally reflecting the highest revenues for the year due to
certain EDS services that are purchased more heavily in the fourth quarter as a
result of the spending patterns of several customers. In addition, revenues
have generally increased from quarter to quarter as a result of new business
added throughout the year.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1996, EDS held cash and cash equivalents of $613.1 million,
had working capital of $1,455.1 million, and a current ratio of 1.5-to-1. This
compares to cash equivalents of $548.9 million, $1,120.1 million in working
capital and a current ratio of 1.3-to-1 at December 31, 1995. The increase in
working capital primarily results from increases in cash and cash equivalents
and decreases in accounts payable, accrued liabilities, and deferred revenue.

During the third quarter of 1996, EDS' total outstanding commercial paper
balance decreased by $47.9 million to $1,664.2 million. EDS' capitalization at
September 30, 1996, consisted of $2,410.7 million in noncurrent notes payable
and $4,536.3 million in stockholders' equity. Total debt was $2,631.3 million
at September 30, 1996, which consisted of short- and long-term notes payable.
This compared with total debt of $2,100.6 million at December 31, 1995. The
total debt-to-capital ratio (which includes current notes payable as a component
of capital) was 37% at September 30, 1996, and 30% at December 31, 1995. The
ratio of non-current debt to capital was 35% at September 30, 1996 and 27% at
December 31, 1995. These increases result primarily from an increase in
outstanding commercial paper, which was attributable principally to the
financing of the Special Inter-Company Payment and the one-time costs in
connection with the Split-Off. At September 30, 1996, EDS had unused
uncommitted short-term lines of credit totaling $623.5 million and unused
committed lines of credit of $2,500.0 million. The unused committed lines of
credit of $2,500.0 million serve as a backup facility for EDS' commercial paper
borrowings. At September 30, 1996, and December 31, 1995, EDS had total
committed lines of credit of $2,515.5 million.

Cash flows from operations increased $234.8 million during the third quarter
of 1996 to $521.9 million compared with the third quarter of 1995 due primarily
to decreases in accounts receivable. Cash

12
<PAGE>

used in investing activities during the third quarter of 1996 was $436.0 million
compared with $408.6 million in the corresponding period of last year. Net cash
used in financing activities was $37.7 million in the third quarter of 1996
compared with net cash provided by financing activities of $107.8 million in the
corresponding period of last year. In the third quarter of 1996, one of the
Company's subsidiaries issued approximately $101 million of redeemable preferred
stock. See Note 6 to the accompanying unaudited financial statements.

EDS paid cash dividends totaling $72.8 million for the third quarter of
1996, and $62.8 million for the same period in 1995.

EDS expects that its principal uses of funds for the foreseeable future will
be for capital expenditures, debt repayments and working capital. Capital
expenditures are expected to consist of purchases of computer and
telecommunications equipment, buildings and facilities, land, and software, as
well as acquisitions. EDS' capital expenditures for 1996 are expected to be
approximately $1,200.0 million to $1,500.0 million. However, actual capital
expenditures are somewhat dependent on acquisition and joint venture activities
by EDS, as well as capital requirements for new business. EDS anticipates that
cash flows from operations and unused borrowing capacity under its existing
lines of credit will provide sufficient funds to meet its needs for at least the
next year.

The service agreements between EDS and GM that existed prior to the Split-
Off provided for GM to pay EDS on the 15th day of the month in which services
are provided with respect to a substantial portion of services. Under the IT
Services Agreements, there will be a transition over a two-year period,
beginning in 1997, to payment on the 20th day of the month following service for
all agreements which do not already have payment terms at least that favorable
to GM. These revised payment terms are expected to result in an increase in
EDS' working capital requirements. EDS intends to obtain the funds for this
working capital impact through borrowings under its existing commercial paper or
bank credit facilities. EDS currently anticipates that it will seek to
refinance such commercial paper or bank borrowings as part of its general plan
to extend maturities of its indebtedness.

The competitive environment and changing market forces are increasing the
capital intensity of EDS' business. Increasing amounts of capital will
be required by EDS in order to make investments in acquisitions, joint ventures,
and strategic alliances in other parts of the information industry and in new
product development. In addition, information technology customer contracts
frequently now require front-end investments in computers and telecommunications
equipment, software, and other property and equipment. EDS' ability to continue
to access the capital markets on an efficient basis will become increasingly
important to its ability to compete effectively.

The Split-Off was intended, among other things, to afford EDS more flexible
access to capital markets to meet its growing needs without regard to competing
considerations of GM and its affiliates. EDS may over time incur substantially
more debt than it had while a subsidiary of GM. As a result, EDS' financial
leverage may increase in the future. To the extent that EDS would become more
highly leveraged, EDS may be required to pay higher interest rates on its
outstanding borrowings. In order to provide the funds necessary for EDS' future
acquisition and expansion goals, EDS expects that it might incur, from time to
time, additional bank financing and/or issue equity or debt securities,
depending on market and other conditions.

13
<PAGE>

PART II

ITEM 1. LEGAL PROCEEDINGS

Reference is made to EDS' Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996 for information regarding certain litigation in connection
with the split-off of EDS from GM.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

EXHIBIT
NUMBER DESCRIPTION
---------------------------------------------------------------------------

10(n) First Amendment to Revolving Credit and Term Loan Agreement dated
September 25, 1996 among EDS and the Lenders identified therein.

10(o) First Amendment to Multi-Currency Revolving Credit Agreement
dated September 25, 1996 among EDS and the Lenders identified
therein.

27 Financial Data Schedule (for SEC information only)

(b) Reports on Form 8-K

During the quarter ended September 30, 1996, EDS filed a Current
Report on Form 8-K dated July 16, 1996 reporting a press release under
Item 5 - Other Events and Item 7 - Exhibits.

14
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

ELECTRONIC DATA SYSTEMS
CORPORATION
---------------------------------------
(Registrant)

By /s/ Joseph M. Grant
---------------------------------------
Date November 13, 1996 (Joseph M. Grant, Executive Vice
- ----------------------- President and Chief Financial Officer)

By /s/ H. Paulett Eberhart
---------------------------------------
Date November 13, 1996 (H. Paulett Eberhart, Vice President
- ----------------------- and Controller)

<PAGE>

EXHIBIT 10(n)

FIRST AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT

This FIRST AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT is entered
into as of September 25, 1996, by and among Electronic Data Systems Corporation,
a Delaware corporation ("EDS") and successor by merger to Electronic Data
Systems Corporation, a Texas corporation, the financial institutions listed on
the signature pages of this Amendment under the heading "LENDERS," including
BANCO SANTANDER - NEW YORK BRANCH, BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, THE CHASE MANHATTAN BANK, CITIBANK, N.A., MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, and NATIONSBANK OF TEXAS, N.A., as Arrangers, and CITIBANK,
N.A. as Administrative Agent for such Lenders to the extent and in the manner
provided in the Credit Agreement (as defined below). All capitalized terms used
in this Amendment and not defined, have the meaning given to such terms in the
Credit Agreement.

EDS, Administrative Agent, and certain Lenders entered into that certain
Revolving Credit and Term Loan Agreement as of October 4, 1995 (the "CREDIT
AGREEMENT"). EDS desires to amend the Credit Agreement to effect the amendments
reflected herein, and the Administrative Agent and Lenders are willing to agree
to such amendments.

EDS is a successor by merger to Electronic Data Systems Corporation, a Texas
corporation, and the parties to the Credit Agreement wish to reflect that EDS is
a Delaware corporation in the Credit Agreement and related documentation.

Accordingly, in consideration of the mutual promises herein contained, and
for other good and valuable consideration, the parties hereto agree as follows:

1. AMENDMENTS TO CREDIT AGREEMENT.

a. DEFINITIONS.

i. The definition of "Applicable Margin" is hereby amended in its
entirety to read as follows:

"'APPLICABLE MARGIN," with respect to the calculation of the CD Rate
or the Eurodollar Rate, means the applicable percentage amount set
forth in the table below:

Committed Loans:

Eurodollar Loans 0.155%

CD Loans 0.280%

Term Loans:

Eurodollar Loans 0.155%

CD Loans 0.280%"

ii. The definition of "Availability Date" is hereby amended to mean
the later of (a) the date when sufficient Lenders have executed the First
Amendment so that the Aggregate
<PAGE>

Committed Sum is equal to or greater than $1,250,000,000, or (b) the date when
all of the conditions precedent set forth in SECTION 2 to the First Amendment
have been satisfied in full or waived.

iii. The definition of "EDS" is hereby amended in its entirety to read
as follows:

"'EDS' means Electronic Data Systems Corporation a Delaware
corporation, successor by merger to Electronic Data Systems
Corporation, a Texas corporation."

b. FEES. Section 4.1 (Facility Fees) of the Credit Agreement is hereby
amended to replace the number and words "0.05 percent per annum" in the first
sentence thereof with the number and words "0.045 percent per annum."

c. REPRESENTATIONS AND WARRANTIES. Section 6.1(d) (Financial Statements)
of the Credit Agreement is hereby amended to replace the date "December 31,
1994" at the end of the first sentence thereof with the date "December 31,
1995."

d. COVENANTS.

i. Sections 7.3(a) and (b) (Items to be Furnished; Annual Financial
Statements and Quarterly Financial Statements) of the Credit Agreement are each
hereby amended to delete the words "or the" after the word "Treasurer" in each
such subsection and to replace them with a comma "," and to add the words "or
the Corporate Vice President - Finance" after the words "Chief Financial
Officer" in each such subsection.

ii. Section 7.3(c) (SEC Filings) of the Credit Agreement is hereby
amended in its entirety to read as follows:

"(c) SEC Filings. Promptly upon transmission thereof, copies of
-----------
all financial statements, proxy statements, notices and reports as EDS
shall send to its public stockholders generally and copies of all
registration statements (without exhibits) and all reports which EDS
files with the Securities and Exchange Commission (or any governmental
body or agency succeeding to the functions of the Securities and
Exchange Commission), but excluding any filings relating to shelf
registrations or Debt issuances."

iii. Section 7.8 (Net Worth) of the Credit Agreement is hereby amended
in its entirety to read as follows:

"7.8 NET WORTH. EDS covenants and agrees that, at all times, the
Net Worth of EDS and its consolidated Subsidiaries shall exceed the
sum of (a) $3,273,800,000, plus (b) fifty percent (50%) of the Net
Income of EDS and its consolidated Subsidiaries for each fiscal
quarter commencing after June 30, 1996."

e. NOTICES. Section 11.4 of the Credit Agreement is hereby amended to
change the "Telephone No." and the "Telecopy No." under the heading "Borrowers"
to:

"Telephone No.: (972) 605-3002
Telecopy No.: (972) 605-3204"

2
<PAGE>

to amend the "Telephone No." and the "Telecopy No." for Borrower's General
Counsel to:

"Telephone No.: (972) 605-5500
Telecopy No.: (972) 605-5613"

and to amend the address and contact for notices under Articles II and III and
under Section 4.2 for the Administrative Agent to:

"Citibank, N.A.
Investor Loan Services
One Court Square, 7th Floor
Long Island City, NY 11120
Attention: Ms. Kim Coley
Telecopy No.: 718-248-4844/45
Telephone No.: 718-248-7180"

f. DESIGNATION OF EDS AFFILIATES AS BORROWERS. Section 11.18 of the
Credit Agreement is hereby amended to delete the word "or" after the words
"Assistant Treasurer" and to replace it with a comma "," and to add the words
"or the Corporate Vice President - Finance" after the words "Chief Financial
Officer" in such Section.

2. CONDITIONS PRECEDENT. The effectiveness of this Amendment is subject to
Administrative Agent's receipt of the following:

a. NOTES. New Committed Loan Notes, executed by EDS, each
substantially in the form of EXHIBIT A-1 to the Credit Agreement, attached
hereto.

b. ARTICLES OF INCORPORATION. A recent copy of the articles or
certificate of incorporation and all amendments thereto, of EDS, certified by
the Secretary of State of Delaware.

c. GOOD STANDING AND EXISTENCE. A recent certificate of existence and
good standing of EDS from the Secretary of State of Delaware.

d. OFFICER'S CERTIFICATE. An Officer's Certificate of EDS certifying
as to (i) bylaws, (ii) resolutions, and (iii) incumbency of all officers of EDS
who will be authorized to execute or attest to any Loan Document.

e. OPINION OF COUNSEL. An opinion of counsel to EDS, including,
without limitation, an opinion as to the enforceability under New York law of
this Amendment and any documents delivered in connection herewith, which opinion
may be delivered by separate counsel.

3. REPRESENTATIONS AND WARRANTIES. To induce Lenders to enter into this
Amendment, EDS represents and warrants to Lenders as follows:

a. CORPORATE EXISTENCE AND AUTHORITY. EDS (i) is duly organized,
validly existing, and in good standing under the Laws of the State of Delaware,
(ii) is duly qualified to transact business and is in good standing in each
jurisdiction where the failure to do so would have a Material Adverse Effect,
and (iii) has all requisite power and authority (A) to own its assets and to
carry on its business, and (B) to execute, deliver, and perform its obligations
under this Amendment.

3
<PAGE>

b. BINDING OBLIGATIONS. The execution and delivery of this Amendment
has been duly authorized and approved by all necessary corporate action on the
part of EDS, and this Amendment constitutes the legal, valid, and binding
obligation of EDS, enforceable against it in accordance with its terms, except
as the enforceability may be limited by applicable Debtor Relief Laws.

c. FINANCIAL STATEMENTS. EDS has delivered to Administrative Agent a
copy of the Financial Statements as of the period ended December 31, 1995. Such
Financial Statements were prepared in accordance with GAAP and present fairly
the financial condition and the results of operations of EDS and its
consolidated Subsidiaries as of, and for the portion of the fiscal year ending
on, the date or dates thereof. All material liabilities (direct or indirect,
fixed or contingent) of EDS and its consolidated Subsidiaries as of the date or
dates of such Financial Statements are reflected therein or in the notes
thereto. Between the date or dates of such Financial Statements and the date of
this Amendment, there has been no material adverse change in the financial
condition of EDS and its consolidated Subsidiaries.

d. LITIGATION. Except for the Litigation described on Schedule 6.1 to
the Credit Agreement, EDS and its Subsidiaries are not involved in, nor, to the
best of EDS's knowledge, are they aware of, any Litigation which could,
collectively or individually, have a Material Adverse Effect, if determined
adversely to EDS and its Subsidiaries, nor are there any outstanding or unpaid
judgments against EDS or its Subsidiaries in excess of $25,000,000 (calculated,
in the case of judgments denominated in currencies other than Dollars, by
reference to the Dollar Equivalent Value of the amount of such judgment in such
other currency), in the aggregate.

e. OTHER REPRESENTATIONS. All representations and warranties set
forth in Article VI of the Credit Agreement, to the extent applicable to EDS
(other than those contained in Sections 6.1(d) and (e)), and in Article III of
the Guaranty, are true and correct in all material respects on and as of the
date hereof, except for such changes therein otherwise permitted by the terms of
the Credit Agreement or the Guaranty or permitted or waived by Majority Lenders.

4. MISCELLANEOUS.

a. NO OTHER AMENDMENTS. Except as expressly amended herein, the terms
of the Credit Agreement shall remain in full force and effect.

b. AMENDMENT AS LOAN DOCUMENT. This Amendment shall constitute a Loan
Document under the Credit Agreement.

c. LIMITATION ON AGREEMENTS. The amendments set forth herein are
limited precisely as written and shall not be deemed (i) to be a consent under
or waiver of any other term or condition in the Credit Agreement or any of the
other Loan Documents, or (ii) to prejudice any right or rights which
Administrative Agent and Lenders now have or may have in the future under, or in
connection with the Credit Agreement, as amended hereby, the Notes, the Loan
Documents or any of the other documents referred to herein or therein. From and
after the date of this Amendment, all references in the Loan Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement after
giving effect to this Amendment, and each reference to "hereof," "hereunder,"
"herein" or "hereby" and each other similar reference and each reference to
"this Agreement" and each other similar reference contained in the Credit
Agreement shall from and after the date hereof refer to the Credit Agreement as
amended hereby.

4
<PAGE>

d. EXHIBITS. All references in the Credit Agreement to Exhibit A-1
shall hereafter be deemed to be references to EXHIBIT A-1 attached hereto.

e. SCHEDULE 1. All Lenders and Committed Sums evidenced on SCHEDULE 1
attached hereto hereby replace those Lenders and Committed Sums on the previous
Schedule 1 attached to the Credit Agreement.

f. SCHEDULE 2. All Designated EDS Affiliates evidenced on SCHEDULE 2
attached hereto hereby replace those Designated EDS Affiliates on the previous
Schedule 2 attached to the Credit Agreement.

g. NOTICE UNDER GUARANTY. In addition to the amendment made to
Section 11.4 hereby, EDS' telecopy number for notice is amended for purposes of
the Guaranty, to be "(214) 605-3204."

h. TERMINATING LENDERS. Those Persons that executed the Credit
Agreement as Lenders, but that are not signatories to this Amendment, are no
longer Lenders under the Credit Agreement, as amended hereby.

i. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract.

j. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (OTHER
THAN THE CONFLICT OF LAWS PROVISIONS THEREOF), EXCEPT TO THE EXTENT THAT FEDERAL
LAWS MAY APPLY.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE(S) FOLLOW.

5
<PAGE>

EXECUTED as of the day and year first above written.

BORROWER:

ELECTRONIC DATA SYSTEMS CORPORATION

By: /s/Joseph E. Burns
---------------------------------------------------
Title: SSU Director and Assistant Treasurer

ADMINISTRATIVE AGENT:

CITIBANK, N.A., in its individual capacity as a Lender,
and as Administrative Agent

By: /s/Robert D. Wetrus
---------------------------------------------------
Title: Vice President

ARRANGERS/LENDERS:

/s/
-------------------------------------------------------

MANAGERS/LENDERS:

/s/
-------------------------------------------------------

LENDERS:

/s/
-------------------------------------------------------

<PAGE>

EXHIBIT 10(o)

FIRST AMENDMENT TO MULTI-CURRENCY REVOLVING CREDIT AGREEMENT

This FIRST AMENDMENT TO MULTI-CURRENCY REVOLVING CREDIT AGREEMENT is
entered into as of September 25, 1996, by and among Electronic Data Systems
Corporation, a Delaware corporation ("EDS") and successor by merger to
Electronic Data Systems Corporation, a Texas corporation, the financial
institutions listed on the signature pages of this Amendment under the heading
"LENDERS," including BANCO SANTANDER - NEW YORK BRANCH, BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, THE CHASE MANHATTAN BANK, CITIBANK, N.A., MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, and NATIONSBANK OF TEXAS, N.A., as
Arrangers, and CITIBANK, N.A. as Administrative Agent for such Lenders to the
extent and in the manner provided in the Credit Agreement (as defined below).
All capitalized terms used in this Amendment and not defined, have the meaning
given to such terms in the Credit Agreement.

EDS, Administrative Agent, and certain Lenders entered into that certain
Multi-Currency Revolving Credit Agreement as of October 4, 1995 (the "CREDIT
AGREEMENT"). EDS desires to amend the Credit Agreement to effect the amendments
reflected herein, and the Administrative Agent and Lenders are willing to agree
to such amendments.

EDS is a successor by merger to Electronic Data Systems Corporation, a
Texas corporation, and the parties to the Credit Agreement wish to reflect that
EDS is a Delaware corporation in the Credit Agreement and related documentation.

Accordingly, in consideration of the mutual promises herein contained, and
for other good and valuable consideration, the parties hereto agree as follows:

1. AMENDMENTS TO CREDIT AGREEMENT.

a. DEFINITIONS.

i. The definition of "Applicable Margin" is hereby amended in its entirety
to read as follows:

"'APPLICABLE MARGIN," with respect to the calculation of the CD Rate,
the Eurocurrency Rate, or the Eurodollar Rate, means the applicable
percentage amount set forth in the table below:

Committed Loans:

Eurodollar Loans and
Eurocurrency Loans 0.135%

CD Loans 0.260%"

ii. The definition of "Availability Date" is hereby amended to mean
the later of (a) the date when sufficient Lenders have executed the First
Amendment so that the Aggregate Committed Sum is equal to or greater than
$1,250,000,000, or (b) the date when all of the conditions precedent set forth
in SECTION 2 to the First Amendment have been satisfied in full or waived.
<PAGE>

iii. The definition of "EDS" is hereby amended to in its entirety to
read as follows:

"'EDS' means Electronic Data Systems Corporation a Delaware
corporation, successor by merger to Electronic Data Systems
Corporation, a Texas corporation."

iv. The definition of "Indicated Rate" is hereby amended to add new
subsections "(f)" and "(g)" after the words "relevant Interest Period" in
subsection (e), as follows:

(f) in the case of Australian Dollars, the rate for deposits in
Australian Dollars for a period comparable to the relevant Interest
Period which appears on the Telerate Page 3740 as of 11:00 a.m. London
time two (2) London Business Days preceding the first day of the
relevant Interest Period, or, if Telerate Page 3740 is unavailable at
such time, the rate which appears on the Reuters Screen at "RLIBOR01,"
and, (g) in the case of European Currency Units, the rate for deposits
in European Currency Units for a period comparable to the relevant
Interest Period which appears on the Telerate Page 3750 as of 11:00
a.m. London time two (2) London Business Days preceding the first day
of the relevant Interest Period, or, if Telerate Page 3750 is
unavailable at such time, the rate which appears on the Reuters Screen
at "RLIBOR02."

v. The definition of "Primary Currency" is hereby amended to add to
the list of Primary Currencies in such definition, "European Currency Units and
Australian Dollars."

vi. The following definitions are hereby added to Article I to the
Credit Agreement:

"'AUSTRALIAN DOLLAR' means lawful money of Australia."

"'EUROPEAN CURRENCY UNIT,' and the term "ECU," mean a unit of account
or lawful money of the European Communities."

b. FEES. Section 4.1 (Facility Fees) of the Credit Agreement is hereby
amended to replace the number and words "0.08 percent per annum" in the first
sentence thereof with the number and words "0.065 percent per annum."

d. COVENANTS.

2
<PAGE>

ii. Section 7.3(c) (SEC Filings) of the Credit Agreement is hereby
amended in its entirety to read as follows:

iii. Section 7.8 (Net Worth) of the Credit Agreement is hereby amended
in its entirety to read as follows:

"7.8 NET WORTH. EDS covenants and agrees that, at all times,
the Net Worth of EDS and its consolidated Subsidiaries shall exceed
the sum of (a) $3,273,800,000, plus (b) fifty percent (50%) of the Net
Income of EDS and its consolidated Subsidiaries for each fiscal
quarter commencing after June 30, 1996."

e. NOTICES. Section 11.4 of the Credit Agreement is hereby amended to
change the "Telephone No." and the "Telecopy No." under the heading "Borrowers"
to:

"Telephone No.: (972) 605-3002
Telecopy No.: (972) 605-3204"

to amend the "Telephone No." and the "Telecopy No." for Borrower's General
Counsel to:

"Telephone No.: (972) 605-5500
Telecopy No.: (972) 605-5613"

and to amend the address and contact for notices under Articles II and III and
under Section 4.2 for the Administrative Agent to:

"Citibank, N.A.
Investor Loan Services
One Court Square, 7th Floor
Long Island City, NY 11120
Attention: Ms. Kim Coley
Telecopy No.: 718-248-4844/45
Telephone No.: 718-248-7180"

3
<PAGE>

2. CONDITIONS PRECEDENT. The effectiveness of this Amendment is subject to
Administrative Agent's receipt of the following:

a. NOTES. New Notes, executed by EDS, each substantially in the form
of EXHIBIT A to the Credit Agreement, attached hereto.

b. ARTICLES OF INCORPORATION. A recent copy of the articles or
certificate of incorporation and all amendments thereto, of EDS, certified by
the Secretary of State of Delaware.

c. GOOD STANDING AND EXISTENCE. A recent certificate of existence and
good standing of EDS from the Secretary of State of Delaware.

3. REPRESENTATIONS AND WARRANTIES. To induce Lenders to enter into this
Amendment, EDS represents and warrants to Lenders as follows:

4
<PAGE>

4. MISCELLANEOUS.

a. NO OTHER AMENDMENTS. Except as expressly amended herein, the terms
of the Credit Agreement shall remain in full force and effect.

b. AMENDMENT AS LOAN DOCUMENT. This Amendment shall constitute a Loan
Document under the Credit Agreement.

d. EXHIBITS. All references in the Credit Agreement to Exhibit A
shall hereafter be deemed to be references to EXHIBIT A attached hereto.

e. SCHEDULE 1. All Lenders and Committed Sums evidenced on SCHEDULE 1
attached hereto hereby replace those Lenders and Committed Sums on the previous
Schedule 1 attached to the Credit Agreement.

f. SCHEDULE 2. All Designated EDS Affiliates evidenced on SCHEDULE 2
attached hereto hereby replace those Designated EDS Affiliates on the previous
Schedule 2 attached to the Credit Agreement.

5
<PAGE>

g. NOTICE UNDER GUARANTY. In addition to the amendment made to
Section 11.4 hereby, EDS' telecopy number for notice is amended for purposes of
the Guaranty, to be "(214) 605-3204."

i. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE(S) FOLLOW.

6
<PAGE>

EXECUTED as of the day and year first above written.

BORROWER:

ELECTRONIC DATA SYSTEMS CORPORATION

By: /s/Joseph E. Burns
---------------------------------------------------
Title: SSU Director and Assistant Treasurer

ADMINISTRATIVE AGENT:

CITIBANK, N.A., in its individual capacity as a Lender,
and as Administrative Agent

By: /s/Robert D. Wetrus
---------------------------------------------------
Title: Vice President

ARRANGERS/LENDERS:

/s/
-------------------------------------------------------

MANAGERS/LENDERS:

/s/
-------------------------------------------------------

LENDERS:

/s/
-------------------------------------------------------

<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000,000

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 613
<SECURITIES> 90
<RECEIVABLES> 3,175
<ALLOWANCES> 157
<INVENTORY> 154
<CURRENT-ASSETS> 4,441
<PP&E> 6,850
<DEPRECIATION> 3,762
<TOTAL-ASSETS> 10,611
<CURRENT-LIABILITIES> 2,986
<BONDS> 2,411
0
0
<COMMON> 640
<OTHER-SE> 3,695
<TOTAL-LIABILITY-AND-EQUITY> 10,611
<SALES> 10,435
<TOTAL-REVENUES> 10,435
<CGS> 0
<TOTAL-COSTS> 8,355
<OTHER-EXPENSES> 790
<LOSS-PROVISION> 53
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<INCOME-PRETAX> 248
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<INCOME-CONTINUING> 159
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 159
<EPS-PRIMARY> .33
<EPS-DILUTED> .33

</TABLE>