ELECTRONIC DATA SYSTEMS CORP /DE/, 424B4, 1996-07-17

ELECTRONIC DATA SYSTEMS CORP /DE/
424B4, 1996-07-17
COMPUTER PROGRAMMING, DATA PROCESSING, ETC.

Previous: TURNER FUNDS, 485APOS, 1996-07-17

Next: ELECTRONIC DATA SYSTEMS CORP /DE/, 424B3, 1996-07-17

<PAGE>

PROSPECTUS
- ----------

[LOGO OF EDS APPEARS HERE]
20,000,000 SHARES
ELECTRONIC DATA SYSTEMS CORPORATION
COMMON STOCK

-----------

This Prospectus covers the resale of 20,000,000 shares of Common Stock, par
value $0.01 per share ("Common Stock"), of Electronic Data Systems Corporation,
a Delaware corporation (together with its subsidiaries and predecessors, "EDS"
or the "Company"), by the General Motors Special Hourly Employees Pension Trust
(together with any sub-trusts thereunder, the "Hourly Plan Special Trust" or
the "Selling Stockholder") under the General Motors Hourly-Rate Employees
Pension Plan (the "Hourly Plan"). See "Selling Stockholder." Of the 20,000,000
shares of Common Stock offered hereby, 17,000,000 are being offered in the
United States and Canada by the U.S. Underwriters (the "U.S. Offering") and
3,000,000 are being offered internationally outside the United States and
Canada by the International Underwriters (the "International Offering" and
together with the U.S. Offering, the "Offerings"). See "Underwriting."

EDS will not receive any of the proceeds from the sale of the shares offered
hereby. See "Selling Stockholder" and "Underwriting." The Common Stock is
listed in the United States on the New York Stock Exchange (the "NYSE") under
the symbol "EDS." The last reported sale price of the Common Stock on the NYSE
on July 16, 1996 was $46 5/8 per share. See "Price Range of Common Stock and
Dividends."

United States Trust Company of New York is the trustee for the Hourly Plan
Special Trust and U.S. Trust Company of California, N.A., an affiliate of
United States Trust Company of New York, is the trustee for a sub-trust under
the Hourly Plan Special Trust (together, the "Hourly Plan Trustee").

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES
OFFERED HEREBY.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIESAND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HASTHE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIESCOMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THISPROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS TO
TO PUBLIC DISCOUNT(1) SELLING STOCKHOLDER(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................... $46.625 $1.215 $45.41
- --------------------------------------------------------------------------------
Total(3)....................... $932,500,000 $24,300,000 $908,200,000
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) EDS and, to the extent permitted by applicable law, the Selling
Stockholder, have agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) The expenses of the Offerings, estimated to be $1,045,000, are payable by
EDS.
(3) The Selling Stockholder has granted the U.S. Underwriters and International
Underwriters an option, exercisable within 30 days after the date hereof,
to purchase up to an aggregate of 3,000,000 additional shares of Common
Stock at the Price to Public less the Underwriting Discount for the purpose
of covering overallotments, if any. If the Underwriters exercise such
option in full, the total Price to Public, Underwriting Discount and
Proceeds to Selling Stockholder will be $1,072,375,000, $27,945,000 and
$1,044,430,000, respectively.

-----------
Advisor to United States Trust Company of New York
WASSERSTEIN PERELLA & CO.

-----------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, and subject to
approval of certain legal matters by counsel for the Underwriters. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the
certificates for the shares of Common Stock will be made on or about July 22,
1996, in New York, New York.

-----------

MERRILL LYNCH & CO. MORGAN STANLEY & CO. GOLDMAN, SACHS & CO.
INCORPORATED
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS
J.P. MORGAN & CO.
SALOMON BROTHERS INC
FURMAN SELZ

-----------

Global Coordinators
MERRILL LYNCH & CO. MORGAN STANLEY & CO. GOLDMAN, SACHS & CO.
INCORPORATED

-----------

The date of this Prospectus is July 16, 1996.
<PAGE>

AVAILABLE INFORMATION

In connection with the Split-Off described in this Prospectus, EDS became
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information filed by EDS with the Commission can be inspected, and
copies may be obtained, at the Public Reference Section of the Commission,
Judiciary Plaza, 450 Fifth Street N.W., Washington D.C. 20549, at prescribed
rates, as well as at the following Regional Offices of the Commission: Seven
World Trade Center, New York, New York 10048; and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Such reports, proxy
statements and other information may also be obtained from the web site that
the Commission maintains at http://www.sec.gov. Reports, proxy statements and
other information concerning EDS can also be inspected at the offices of the
New York Stock Exchange, Inc., 11 Wall Street, New York, New York 10005, where
the Common Stock is listed.

Reports, proxy statements, and other information concerning EDS can also be
obtained electronically through a variety of databases, including, among
others, the Commission's Electronic Data Gathering And Retrieval ("EDGAR")
program, Knight-Ridder Information, Inc., Federal Filings/Dow Jones and
Lexis/Nexis.

EDS has filed with the Commission a Registration Statement on Form S-3 (as
amended and including exhibits, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), covering the resale
of the shares of Common Stock offered hereby. Pursuant to the rules and
regulations of the Commission, this Prospectus omits certain information
contained in the Registration Statement. Such information can be inspected at
and obtained from the Commission and the NYSE in the manner set forth above.
For further information pertaining to EDS and the Common Stock, reference is
hereby made to the Registration Statement. Statements contained herein
concerning any document filed as an exhibit to the Registration Statement are
not necessarily complete and, in each instance, reference is made to the copy
of such document filed as an exhibit to the Registration Statement. Each such
statement is qualified in its entirety by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents or, where so stated, portions thereof, which have
been filed by EDS with the Commission, are incorporated herein by reference:

1. Current Reports on Form 8-K dated April 23, 1996, June 7, 1996, June 18,
1996 and July 16, 1996;

2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1996
(the"EDS First Quarter 1996 Form 10-Q"); and

3. The section entitled "Description of Registrant's Securities to be
Registered" contained in the Registration Statement on Form 8-A dated
May 29, 1996.

All documents filed by EDS with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offerings made hereunder shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which is or is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.

EDS will provide without charge to each person, including any beneficial
owner, to whom this Prospectus is delivered, upon the written or oral request
of such person, a copy of any and all of the documents which have been or may
be incorporated by reference in this Prospectus, other than exhibits to such
documents not specifically described above. Requests for such documents should
be directed to Electronic Data Systems Corporation, EDS Investor Relations,
Mail Stop H3-6F-47, 5400 Legacy Drive, Plano, Texas, 75024-3105 (Telephone
Number: (214) 604-6000).

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) contained
elsewhere or incorporated by reference in this Prospectus. Unless otherwise
indicated, the information presented in this Prospectus assumes the
Underwriters' over-allotment option will not be exercised.

THE COMPANY

EDS is a world leader in applying information technology ("IT"), with over 30
years of experience in using advanced computer and communications technologies
to meet its clients' business needs. EDS' total revenues grew from $786 million
in its 1984 fiscal year (the last full fiscal year before the acquisition of
EDS by its former parent corporation, General Motors Corporation ("General
Motors" or "GM")) to $12.4 billion in 1995. Although revenues attributable to
General Motors and its affiliates have increased from 1985 to 1995, they have
decreased as a percentage of total revenues from approximately 70% in 1985 to
approximately 31% in 1995 as a result of the rapid revenue growth of EDS' non-
General Motors business. As of December 31, 1995, EDS employed approximately
96,000 persons and served clients in the United States and approximately 40
other countries. EDS' principal executive offices are located at 5400 Legacy
Drive, Plano, Texas 75024-3105 (Telephone Number (214) 604-6000).

STRATEGY

EDS' strategy is to offer a full range of IT services to enterprises,
government entities and individuals worldwide. These services include
management consulting, systems development, systems integration, systems
management and process management. EDS' organizational structure is designed to
offer the full range of services on a global basis through business units that
focus along the lines of specified industries, such as manufacturing, financial
services, government, communications, health, travel and transportation, and
energy, as well as geographically, such as on the Americas, Europe, and
Asia/Pacific and Japan. Each business unit is further organized into separate,
more focused business units within the relevant industry or geography. EDS
seeks to leverage its knowledge and resources for its individual customers by
drawing from the many industries and skill sets available across a wide range
of geographies. EDS believes its organizational structure enables it to better
focus on and use the knowledge gained from the industries and geographies in
which its customers operate and therefore better serve its customers and its
customers' customers.

EDS seeks to continue its leadership position in the IT industry through
increased globalization and expanded product and service offerings. The
percentage of EDS' revenues outside the United States has increased from 18% in
1990 to 30% in 1995, and the number of countries in which EDS operates has
increased from 28 in 1990 to 40 in 1995. EDS believes that corporations are
becoming increasingly globalized because other companies enter their markets
from other geographies or they desire to expand into additional geographies.
This trend is fostered by advancements in communications technology which
compress time and distance. EDS intends to continue to capitalize on the
general trend toward convergence of the world's markets by enhancing its
capability through expanded service offerings as well as through strategic
alliances with global partners and distributors. The acquisition of A.T.
Kearney in 1995, which expanded EDS' capabilities along a range of industries,
skill sets and regions, is an example of such strategic growth.

SPLIT-OFF OF THE COMPANY FROM GENERAL MOTORS

On June 7, 1996, General Motors, formerly the holder of all of the
outstanding shares of capital stock of the Company, effected a split-off (the
"Split-Off") of the Company from General Motors. As a result of the Split-Off,
(i) the Company became an independent, publicly held company with approximately
485.6 million shares of Common Stock outstanding and listed for trading on the
NYSE and the London Stock Exchange and (ii) each

3
<PAGE>

outstanding share of Class E Common Stock, par value $0.10 per share ("Class E
Common Stock"), of General Motors was converted into one share of Common Stock
of the Company. In connection with the Split-Off, EDS effected a payment (the
"Special Inter-Company Payment") to General Motors in the amount of $500.0
million in cash and General Motors provided EDS a $50.0 million allowance
relating to the resolution of various uncertain, contingent or other matters
arising out of the separation of General Motors and EDS.

The Split-Off was intended to accomplish at least three business objectives:
(i) the removal of limitations on EDS' ability to participate in major
strategic alliances (including mergers and acquisitions which can be effected
using Common Stock); (ii) the removal of limitations on EDS' ability to obtain
additional business from and establish new customer relationships with
companies that compete with General Motors or its subsidiaries, such as Hughes
Electronics Corporation ("Hughes") and General Motors Acceptance Corporation
("GMAC"); and (iii) the enhancement of EDS' access to the capital necessary for
investment in its future growth.

Immediately prior to the Split-Off, EDS and General Motors entered into a new
Master Service Agreement (the "Master Service Agreement") that serves as a
framework for the negotiation and operation of service agreements between GM
and EDS related to certain "in-scope" IT services to be provided by EDS to
General Motors on a worldwide basis (collectively, together with the Master
Service Agreement, the "IT Services Agreements"). The IT Services Agreements
replaced the Master Agreement (the "Prior Master Agreement") that, prior to the
Split-Off, served as a framework for individual services agreements between GM
and EDS (collectively, together with the Prior Master Agreement, the "Prior IT
Services Agreements").

Although General Motors has no continuing equity interest in EDS, GM has an
indirect stake in EDS' financial performance as a result of the Hourly Plan
Special Trust's holdings of Common Stock. On July 15, 1996, the Selling
Stockholder had beneficial ownership of approximately 149.5 million shares of
Common Stock, representing approximately 31% of the Common Stock outstanding.
Immediately following the consummation of the Offerings, the Selling
Stockholder will have beneficial ownership of approximately 129.5 million
shares (or, if the Underwriters' over-allotment option is exercised in full,
approximately 126.5 million shares) of Common Stock. Such shares will represent
approximately 26.7% (or, if the Underwriters' over-allotment option is
exercised in full, 26.1%) of the Common Stock outstanding.

RECENT DEVELOPMENTS

On April 1, 1996, EDS announced that it was taking certain actions and
considering others to maintain and improve operating efficiencies and
accelerate the Company's move toward "user-centered" computing. In connection
therewith, EDS also announced the implementation of a voluntary early
retirement offer and involuntary severance arrangements affecting between 4,000
and 5,000 employees and designed to both reduce labor costs and change the
skill mix of the Company's workforce. It is expected that substantially all of
these workforce reductions will be completed by December 1996. As part of its
overall goal to improve operating efficiencies, EDS also announced at such time
that it was in the process of evaluating certain aspects of its business to
identify any redundant facilities and related assets that were no longer
consistent with its long-term strategic objectives.

4
<PAGE>

the total $850 million charge, EDS expects to make cash expenditures of
approximately $275 million, a substantial portion of which will be incurred in
1996 and 1997. Such cash expenditures, which will be made in connection with
the employee-related actions, will be funded from operations. EDS expects that
the actions discussed above will result in savings commencing in the third
quarter of 1996. The amount and timing of these savings, while difficult to
quantify precisely, are expected to gradually build to approximately $50
million per quarter ($0.07 per share) by 1997 and continue at that approximate
level through 1998. During this period these savings will be available to
offset the anticipated negative impact to earnings per share from changes in
the Master Service Agreement between EDS and GM and for reinvestment to
position the Company for the future. Statements about the effect of EDS'
actions and savings from the charges are forward-looking statements which by
their nature are subject to numerous uncertainties that could cause actual
results to vary.

On July 16, 1996, EDS announced its second quarter 1996 consolidated net loss
of $326.5 million, or $0.67 per share of Common Stock, compared to net income
of $226.9 million, or $0.47 per share of Class E Common Stock for the second
quarter of 1995. Total systems and other contracts revenues for the second
quarter of 1996 were $3,497.8 million, compared to $2,950.1 million for the
second quarter of 1995. Included in 1996 amounts are one-time charges of $850
million ($1.12 per share) and $45.5 million ($0.06 per share) of one-time costs
related to the Split-Off. EDS' non-GM business increased more than 24% during
the second quarter of 1996 compared to the same period of 1995 and accounted
for 70% of EDS' revenues during the second quarter of 1996 compared to 67% in
the same period of 1995. Revenues related to GM and its affiliates amounted to
$1,050.5 million and $982.5 million for the three months ended June 30, 1996
and 1995, respectively. Interim results are not necessarily indicative of the
results which may be expected for any other interim period or for the full
year. See "Recent Development" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Restructuring Activities."

THE OFFERINGS

<TABLE>
<C> <S>
Common Stock Offered Hereby(a)

U.S. Offering.............................. 17,000,000 shares
International Offering..................... 3,000,000 shares
------------------
Total...................................... 20,000,000 shares
==================
Common Stock Outstanding after the Offerings.. 485,591,041 shares(b)

NYSE Symbol................................... EDS
</TABLE>
- --------
(a) Without giving effect to the over-allotment option granted by the Hourly
Plan Special Trust to the Underwriters.
(b) The consummation of the Offerings will not change the number of shares of
Common Stock outstanding.

<PAGE>

SUMMARY CONSOLIDATED HISTORICAL FINANCIAL INFORMATION

The following summary consolidated historical financial information for the
years ended December 31, 1995, 1994, 1993, 1992 and 1991 have been derived from
EDS' Consolidated Financial Statements, which have been audited by KPMG Peat
Marwick LLP, independent auditors. The summary consolidated historical
financial information for the three months ended March 31, 1996 and 1995 have
been derived from unaudited consolidated financial statements, which, in the
opinion of management, reflect all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation of the results of
operations of EDS for those periods. Interim results are not necessarily
indicative of the results which may be expected for any other interim period or
for the full year. This information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the EDS Consolidated Financial Statements, which are included in
this Prospectus, and the EDS First Quarter 1996 Form 10-Q which is incorporated
herein by reference. See "Selected Consolidated Financial Information."

<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDED
MARCH 31, FOR THE YEARS ENDED DECEMBER 31,
-------------------- ----------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Systems and other
contracts revenues
Outside customers...... $ 2,404.7 $ 1,878.3 $ 8,531.0 $6,412.9 $5,183.6 $4,806.7 $3,666.3
General Motors and
affiliates............ 962.2 898.0 3,891.1 3,547.2 3,323.7 3,348.5 3,362.2
--------- --------- --------- -------- -------- -------- --------
Total revenues......... 3,366.9 2,776.3 12,422.1 9,960.1 8,507.3 8,155.2 7,028.5
--------- --------- --------- -------- -------- -------- --------
Costs and expenses
Cost of revenues....... 2,698.1 2,176.1 9,601.6 7,529.4 6,390.6 6,205.8 5,415.1
Selling, general, and
administrative........ 309.9 281.0 1,291.5 1,187.1 1,005.4 969.3 761.9
--------- --------- --------- -------- -------- -------- --------
Total costs and
expenses.............. 3,008.0 2,457.1 10,893.1 8,716.5 7,396.0 7,175.1 6,177.0
--------- --------- --------- -------- -------- -------- --------
Operating income........ 358.9 319.2 1,529.0 1,243.6 1,111.3 980.1 851.5
Interest and other
income, net............ (17.0) (11.7) (62.0) 40.6 20.0 20.7 42.2
--------- --------- --------- -------- -------- -------- --------
Income before income
taxes.................. 341.9 307.5 1,467.0 1,284.2 1,131.3 1,000.8 893.7
Provision for income
taxes.................. 123.1 110.7 528.1 462.3 407.3 365.3 330.7
Cumulative effect of
accounting change(a)... -- -- -- -- -- -- (15.5)
--------- --------- --------- -------- -------- -------- --------
Separate Consolidated
Net Income(b).......... $ 218.8 $ 196.8 $ 938.9 $ 821.9 $ 724.0 $ 635.5 $ 547.5
========= ========= ========= ======== ======== ======== ========
Average number of shares
of Class E Common Stock
outstanding
(Numerator)(b)......... 463.2 300.0 404.6 260.3 243.0 209.1 195.3
Class E Dividend Base
(Denominator)(b)....... 484.4 482.4 483.7 481.7 480.6 479.3 478.1
Available Separate
Consolidated Net
Income(b).............. $ 209.2 $ 122.4 $ 795.5 $ 444.4 $ 367.2 $ 278.4 $ 223.6
Earnings per share
attributable to Class E
Common Stock(b)........ 0.45 0.42 1.96 1.71 1.51 1.33 1.14
Dividends per share of
Class E Common
Stock(b)............... 0.15 0.13 0.52 0.48 0.40 0.36 0.32
</TABLE>
- --------
(a) Effective January 1, 1991, EDS adopted SFAS No. 109, "Accounting for Income
Taxes." The cumulative effect of this accounting change at January 1, 1991
was a charge of $15.5 million, of which $0.03 per share was attributable to
Class E Common Stock.
(b) Calculated for purposes related to the Class E Common Stock, which were
converted into Common Stock on a one-for-one basis pursuant to the Split-
Off.

6
<PAGE>

RISK FACTORS

Prospective purchasers of Common Stock should consider carefully the
following factors relating to the business of the Company and the Offerings,
together with the information and financial data set forth elsewhere in this
Prospectus, prior to purchasing any shares of Common Stock offered hereby.

DIVIDEND POLICY

The payment of dividends on the Common Stock is subject to the policies and
practices of the Board of Directors of the Company (the "EDS Board") and may
be changed from time to time by the EDS Board. Under Delaware law and the
Restated Certificate of Incorporation of EDS (the "Certificate of
Incorporation"), the EDS Board is not required to declare dividends on the
Common Stock. The EDS Board has adopted a policy to continue to pay quarterly
dividends through 1996 in an amount equal to $0.15 per share. The EDS Board
will be free during or after 1996, however, to change its dividend policies
and practices from time to time and to decrease or increase the dividends paid
on the Common Stock on the basis of EDS' financial condition, earnings and
capital requirements and other factors the EDS Board may deem relevant. The
dividend policy of the EDS Board with respect to the Common Stock may be
different than the policy of the Board of Directors of General Motors (the "GM
Board") with respect to the Class E Common Stock. See "Price Range of Common
Stock and Dividends--Dividend Policy."

INCREASED LEVERAGE; NO ASSURANCE OF ACCESS TO CAPITAL

EDS expects that over time it may incur substantially more debt than it did
while a subsidiary of GM. EDS borrowed approximately $500 million under its
existing commercial paper facilities to finance the Special Inter-Company
Payment. In addition, EDS' financial leverage is expected to increase in the
future as it borrows additional funds to meet its growing capital needs. EDS
management believes that EDS' stable revenues should permit it to sustain a
higher debt-to-equity ratio than that which it maintained prior to the Split-
Off as a subsidiary of GM and that such a higher level of debt will be
necessary to provide EDS with the capital it needs to fund future growth. The
degree to which EDS is leveraged, however, could under certain circumstances
limit its financial and operating flexibility. To the extent that EDS becomes
more highly leveraged, it may also be required to pay higher interest rates on
its outstanding borrowings. Furthermore, although EDS believes that the Split-
Off will enhance EDS' access to the capital necessary for investment in its
business growth, there can be no assurance in this regard. See "Split-Off of
the Company from General Motors--Purposes of the Split-Off" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."

DEPENDENCE ON MAJOR CUSTOMER; RECENT CHANGES IN PRICING AND TERMS

Although the percentage of EDS' total revenues attributable to GM and its
affiliates has decreased significantly in recent years as a result of the
revenue growth of EDS' non-GM business, General Motors continues to account
for a substantial portion of EDS' revenues. During the year ended December 31,
1995, the portion of EDS' revenues (excluding interest and other income)
attributable to the performance of IT and other services on behalf of General
Motors and its affiliates was approximately 31%. The loss of General Motors as
an ongoing major customer of EDS would have a material adverse effect on EDS.

Immediately prior to the Split-Off, General Motors and EDS entered into the
Master Service Agreement and certain other related IT Services Agreements. The
IT services provided by EDS under the IT Services Agreements are generally
similar to those provided to General Motors under the Prior IT Services
Agreements. Unlike the Prior Master Agreement (which did not have a fixed
term, but provided that it may be terminated by either party in the event of
the sale of all or substantially all of the assets or stock of EDS to a non-GM
entity), however, the Master Service Agreement provides for an initial term of
10 years from the date upon which the

7
<PAGE>

Split-Off was consummated, which may be extended by agreement of the parties.
Furthermore, the Master Service Agreement provides General Motors with
termination rights under certain circumstances, including upon the occurrence
of certain changes in control of EDS. See "Relationship Between the Company
and General Motors--IT Services Agreements."

In addition, the IT Services Agreements made certain significant changes to
the pricing and terms of services provided by EDS. Among other things, the
parties have agreed that the rates charged by EDS to General Motors for
certain information processing activities and communication services will be
reduced and that the parties will work together to achieve targets for
increased structural cost reductions. General Motors also has been given the
right to competitively bid and, subject to certain restrictions, outsource a
limited portion of its IT service requirements to third party providers. In
addition, commencing in 1997, the payment terms relating to IT services
provided by EDS will be revised over a two-year period to extend the due dates
for payments from General Motors. See "Relationship Between the Company and
General Motors--IT Services Agreements."

Based on currently available information and assuming that the IT Services
Agreements had been effective as of January 1, 1996, EDS believes that
revenues generated from services performed for General Motors in 1996 would be
slightly lower than those generated from such services in 1995. Additionally,
EDS expects that the changes reflected in the IT Services Agreements could
reduce its 1996 earnings per share by as much as $0.07 to $0.14 (including
$0.03 in the first quarter of 1996). The long-term impact of the terms of the
IT Services Agreements cannot be precisely quantified at present, although
such terms may have an adverse effect on operating margins unless EDS is able
to effect reductions in the costs of providing services to General Motors.
Although EDS plans to implement certain cost reduction measures, there can be
no assurance as to the extent, if any, to which such measures will mitigate
the possible adverse impact on its operating margins. In general, 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.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Business--Revenues."

SIGNIFICANT STOCKHOLDER

On July 15, 1996, the Hourly Plan Special Trust owned approximately 149.5
million shares, or 31% of the outstanding shares, of Common Stock and, upon
consummation of the offerings contemplated hereby, will own approximately
26.7% (or, if the Underwriters' over-allotment option is exercised in full,
26.1%) of the outstanding Common Stock. The Hourly Plan Trustee, as the
independent trustee of the Hourly Plan Special Trust, has the authority and
discretion to cause the Hourly Plan Special Trust to hold such shares of
Common Stock or to sell all or any portion thereof from time to time as such
Trustee deems appropriate. The shares owned by the Hourly Plan Special Trust
are subject to certain agreements that restrict the transferability of such
shares and that provide certain registration rights with respect thereto. The
Hourly Plan Special Trust has agreed not to offer, sell or otherwise dispose
of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for Common Stock (other than transfers to or for
the benefit of employee benefit plans of EDS or any of its affiliates) for 90
days following the date of this Prospectus without the prior written consent
of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and Goldman, Sachs & Co. (the "Global Coordinators") on behalf of
the Underwriters. See "Underwriting." Additionally, the Hourly Plan Special
Trust has agreed to certain transfer restrictions intended to preserve the
tax-free status of the Split-Off. Such restrictions generally terminate by
June 7, 1998 and do not apply to sales pursuant to public offerings meeting
certain criteria. See "Selling Stockholder." EDS has been advised that, in
order to discharge its fiduciary duties, the Hourly Plan Trustee continually
looks for attractive opportunities to sell a portion of its holdings of Common
Stock. There can be no assurance as to the timing or size of any offerings of
shares owned by the Hourly Plan Special Trust since, subject to the terms of
the agreements referred to above, the Hourly Plan Trustee has the right to
sell such shares at any time. The sale of shares by the Hourly Plan Special
Trust will depend on, among other things, market conditions, the price of such
shares, the level of and any changes in the demand for such shares, and other
factors outside the control of EDS. Although the Hourly Plan Trustee has
notified EDS and made public statements of its intent to manage the
disposition of shares of Common Stock in a

8
<PAGE>

manner consistent with maintaining an orderly market for the Common Stock,
there can be no assurance in this regard and sales of substantial amounts of
Common Stock by the Hourly Plan Special Trust could adversely affect the then
prevailing market price for the Common Stock and could impair EDS' ability to
raise additional capital through the sale of equity securities. See "Selling
Stockholder."

The Hourly Plan Trustee has the authority and discretion to direct the
voting and exercise of all other rights relating to the shares of Common Stock
held by the Hourly Plan Special Trust. Although the Hourly Plan Trustee has
stated that such stock was not acquired for such purpose, the level of such
ownership will give the Hourly Plan Special Trust sufficient voting power to
influence the direction and policies of EDS, the election of the EDS Board and
the outcome of any other corporate action requiring stockholder approval. As
described under "--Certain Limitations on Changes in Control of the Company,"
the Hourly Plan Special Trust is a party to certain agreements which restrict
its ability to transfer shares of Common Stock and to vote in favor of certain
business combinations involving EDS.

NO ASSURANCE OF STRATEGIC ALLIANCES AND OTHER BUSINESS OPPORTUNITIES

The Split-Off was intended, among other things, to remove limitations on
EDS' ability to participate in major strategic alliances and to obtain
additional business that are believed to have resulted from EDS' prior status
as a subsidiary of General Motors. EDS is not currently a party to any
agreement or understanding with respect to any material strategic alliance or
business combination. Although EDS believes that the Split-Off has enhanced
EDS' ability to enter into major strategic alliances and take advantage of
other growth opportunities, no assurance can be given in this regard.
Furthermore, there can be no assurance as to whether and to what extent any of
the business objectives of the Split-Off will be achieved. See "Split-Off of
the Company from General Motors." The ability of EDS to enter into and
consummate business combinations is limited by the matters described under "--
Certain Limitations on Changes in Control of the Company."

TERMINATION OF SUBSIDIARY RELATIONSHIP WITH GENERAL MOTORS

As a subsidiary of General Motors, EDS was able to benefit from 1984 through
the time of the Split-Off from General Motors' extensive network of business
relationships with companies and government contacts around the world. EDS has
drawn on this resource in developing its own contacts and relationships. As a
result of the Split-Off, EDS became a stand-alone, public company and thus is
no longer able to benefit from General Motors' relationships to the same
extent that it could as a wholly owned subsidiary of GM.

CERTAIN LIMITATIONS ON CHANGES IN CONTROL OF THE COMPANY

The Certificate of Incorporation and the Amended and Restated Bylaws of EDS
(the "Bylaws") contain certain provisions, such as a "fair price" provision
applicable to certain business combinations, a provision prohibiting
stockholder action by written consent unless such action is unanimous, and
provisions limiting the ability of stockholders to call special stockholder
meetings, which could have the effect of delaying, deferring or preventing a
change in control of EDS, even if such a change would be favorable to the
interests of EDS' stockholders, and of limiting any opportunity to realize
premiums over prevailing market prices for Common Stock in connection
therewith. The Rights Agreement (as hereinafter defined) could have the same
effect. See "Description of Capital Stock--Rights Agreement."

On July 15, 1996, the Hourly Plan Special Trust owned approximately 31% of
the outstanding Common Stock. The Hourly Plan Special Trust is a party to the
Registration Rights Agreement (as hereinafter defined), which contains certain
restrictions on its ability to transfer the shares of Common Stock held by it
(including by tendering into any tender offer). General Motors and the Hourly
Plan Special Trust are also parties to the Transfer Agreement (as hereinafter
defined), which is intended to preserve the tax-free status of the Split-Off
and which contains restrictions on the ability of the Hourly Plan Special
Trust to transfer Common Stock and to vote in favor of certain business
combinations involving EDS, which restrictions will apply to the Common Stock

9
<PAGE>

generally until June 7, 1998. See "Background of the Offerings" and "Selling
Stockholder." The contractual restrictions to which the shares of Common Stock
owned by the Hourly Plan Special Trust are subject could have the effect of
making more difficult or discouraging certain change in control transactions
involving EDS, including tender offers for Common Stock, that could give the
holders of Common Stock the opportunity to realize a premium over the then
prevailing market price of such stock.

In addition, in order to preserve the tax-free status of the Split-Off,
under the Separation Agreement (as hereinafter defined), EDS is prohibited,
until after June 7, 1998 and unless certain conditions are satisfied, from
entering into (i) certain secondary capital stock transactions whereby a
person would acquire, from holders of outstanding shares of EDS capital stock,
a number of shares of EDS capital stock that would comprise more than 15% of
the number of issued and outstanding shares of Common Stock; or (ii) any other
transaction that would be reasonably likely to jeopardize the tax-free status
of the Split-Off. In addition, the Separation Agreement will prohibit EDS,
until after December 7, 1998, from entering into any transaction that would
result in any person acquiring from EDS a number of shares of EDS capital
stock that, when aggregated with all other shares of EDS capital stock then
owned by such person, would constitute more than 20% of the total combined
voting power of EDS voting stock or 20% of the total number of outstanding
shares of any class or series of EDS non-voting stock. See "Relationship
Between the Company and General Motors--Separation Agreement." The Master
Service Agreement also provides General Motors with certain termination rights
upon the occurrence of certain changes in control of EDS. See "Relationship
Between the Company and General Motors--IT Services Agreements."

LIMITED PRIOR PUBLIC MARKET FOR COMMON STOCK; NO ASSURANCE AS TO MARKET PRICE

The Class E Common Stock (which was a stock of General Motors designed to
provide holders with financial returns based on the performance of EDS) was
traded publicly from its initial issuance in 1984 until the consummation of
the Split-Off. There was no public market for the Common Stock prior to the
Split-Off. Because, among other things, the Common Stock is a security of EDS
(rather than a security of GM), with different terms than the Class E Common
Stock, there can be no assurance that the public market for Common Stock will
be similar to the public market for Class E Common Stock. Ultimately, the
value of each share of Common Stock will be principally determined in the
trading market and could be influenced by many factors, including the
operations of EDS, the growth and expansion of EDS' business, investors'
expectations of EDS' prospects, trends and uncertainties affecting the IT
industry as a whole, issuances and repurchases of Common Stock, and general
economic and other conditions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations." There can be no assurance that
the trading value of each share of Common Stock will be consistent with the
trading value of each share of Class E Common Stock prior to the Split-Off.
The trading value of Common Stock could be higher or lower than the trading
value of Class E Common Stock, and EDS is unable to estimate whether such
difference (whether favorable or unfavorable) will be material to holders of
Common Stock.

FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE

This Prospectus contains certain forward-looking statements and information
relating to EDS that are based on the beliefs of EDS management as well as
assumptions made by and information currently available to EDS management.
When used in this document, the words "anticipate," "believe," "estimate,"
"expect" and similar expressions, as they relate to EDS or EDS management, are
intended to identify forward-looking statements. Such statements reflect the
current views of EDS with respect to future events and are subject to certain
risks, uncertainties and assumptions, including the risk factors described in
this Prospectus. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described herein as anticipated, believed,
estimated or expected. EDS does not intend to update these forward-looking
statements.

10
<PAGE>

SPLIT-OFF OF THE COMPANY FROM GENERAL MOTORS

GENERAL

On June 7, 1996, General Motors, formerly the holder of all of the
outstanding shares of capital stock of the Company, effected a Split-Off of
the Company from General Motors. As a result of the Split-Off, (i) the Company
became an independent, publicly held company with approximately 485.6 million
shares of Common Stock outstanding and listed for trading on the New York
Stock Exchange and the London Stock Exchange and (ii) each outstanding share
of Class E Common Stock of General Motors was converted into one share of
Common Stock of the Company.

PURPOSES OF THE SPLIT-OFF

The Split-Off of EDS from General Motors was intended to accomplish at least
three business objectives. First, converting EDS from a wholly owned
subsidiary of GM into an independent, publicly owned company was intended to
remove limitations on EDS' ability to participate in strategic alliances,
particularly in the rapidly growing and converging computing and software,
communication, media and entertainment, and electronic commerce industries,
which are increasingly important to EDS' continued competitiveness. Second,
separating General Motors and EDS was intended to remove limitations on EDS'
ability to obtain additional business and establish new customer relationships
that resulted from GM's ownership of EDS, its common ownership of EDS, Hughes
and GMAC, and the increasing overlap between EDS and the telecommunications
and certain other businesses of Hughes. Finally, causing EDS to become a
stand-alone, public company was intended to better position EDS to meet its
growing capital needs. Each of these business objectives is described in more
detail below. In addition, the Split-Off was intended to allow the EDS Board
and management of EDS to increase their focus on EDS' business operations.

STRATEGIC ALLIANCES

The first purpose of the Split-Off was to eliminate the impediments arising
from General Motors' ownership of EDS that prevented EDS from pursuing and
consummating strategic transactions that are important to its continued
competitiveness. During the decade in which EDS was a subsidiary of General
Motors, there had been an increasing convergence of the computing and
software, communication, media and entertainment, and electronic commerce
industries. Because the ability to offer integrated services within these
fields is widely viewed as necessary to remain competitive and grow, strategic
alliances among service providers in these industries have multiplied.
Consistent with this industry trend, EDS engaged in discussions with leading
telecommunications providers regarding potential strategic combinations on
numerous occasions during the last decade. While some of these negotiations
reached advanced stages (most notably the discussions with Sprint Corporation
in 1994), none resulted in a significant strategic transaction. In each case,
the difficulties associated with EDS' status as a subsidiary of GM, including
the complexities and control issues created by the nature of the Class E
Common Stock, prevented or hindered the consummation of a transaction. EDS
believed that these factors would continue to restrict EDS' ability to expand
into integrated worldwide markets so long as EDS remained a subsidiary of
General Motors.

CERTAIN ADDITIONAL GROWTH OPPORTUNITIES

A second purpose of the Split-Off was to remove certain limitations on EDS'
ability to obtain additional business and establish new customer relationships
that had arisen as a result of EDS' status as a subsidiary of GM. These
limitations had not been imposed by GM, but rather were a result of certain
reactions of potential EDS customers to EDS' affiliation with GM. Such
limitations had become increasingly significant during the 1990s as the
businesses of General Motors and GMAC and the telecommunications and certain
other businesses of Hughes expanded either to present conflicts that limited
EDS' ability to obtain business from certain parties or to overlap with EDS'
activities. In some cases, competitors of General Motors, Hughes or GMAC in
industries that are important target markets for EDS had been reluctant to
become customers or partners of EDS due to

11
<PAGE>

concerns relating to divulging confidential and proprietary information to an
affiliate of one of their competitors. For example, EDS believed that EDS'
affiliation with General Motors and GMAC had limited EDS' ability to expand
its business within the automotive, consumer finance and related industries,
despite EDS' extensive expertise in these important markets. Similarly, EDS
believed that common ownership of EDS and Hughes, which participates in the
direct to home satellite television services and wireless communications
industries, had caused EDS to lose or be disadvantaged in seeking certain
business opportunities with potential customers and partners, including in the
cable television industry, who were concerned by Hughes' competition in these
areas. EDS expected impediments and conflicts like these to intensify in
future years if the Split-Off did not occur.

CAPITAL NEEDS

A third purpose of the Split-Off was to afford EDS more flexible access to
capital markets to meet its growing capital needs without regard to competing
considerations of GM and its affiliates. As a wholly owned subsidiary of GM,
EDS' ability to sell equity and debt securities to meet its rising capital
needs was limited by factors relating to GM. EDS and the remainder of GM's
operations were in industries with different characteristics, and each of them
had substantially different goals and needs with respect to incurrence of debt
and financial leverage. General Motors, which is engaged principally in the
highly cyclical automotive industry, placed great importance on maintaining a
strong reserve of liquid assets and a high credit rating for itself and its
financial subsidiary, GMAC. In contrast, EDS has based its business on long-
term customer contracts, and as a result has experienced stable cash flow and
revenues that should permit it to sustain higher debt-to-equity ratios on a
stand-alone basis than those targeted by GM for GM and its consolidated
subsidiaries. These different business needs created conflicts that EDS
believed would have continued to grow. In addition, as EDS' business has
expanded and evolved in recent years, its capital requirements have increased
significantly. Driven in large part by the convergence among hardware,
software, communication, information content and service providers, EDS has
made tactical acquisitions and capital intensive investments to expand its IT,
hardware and telecommunications capacities. In addition, EDS' customers have
often insisted that EDS expend its own capital to acquire their IT operations,
hire their employees and, in some cases, acquire an equity stake in the
customers themselves. Accordingly, EDS believed that its capital requirements
were likely to continue to increase in the future.

Achievement of each of the foregoing business objectives is dependent on
numerous factors, many of which are beyond the control of EDS. Accordingly,
there can be no assurance as to whether and to what extent any of such
objectives will in fact be achieved.

EFFECTS OF THE SPLIT-OFF

As a result of the Split-Off, EDS became an independent, publicly owned
company rather than a wholly owned subsidiary of General Motors. In connection
with the Split-Off, each outstanding share of Class E Common Stock (which was
a security of General Motors designed to provide financial returns based on
the performance of EDS) was converted into one share of Common Stock.
Additionally, EDS made the Special Inter-Company Payment to General Motors in
the amount of $500.0 million in cash and General Motors provided EDS a $50.0
million allowance relating to the resolution of various uncertain, contingent
or other matters arising out of the separation of General Motors and EDS. EDS
funded the Special Inter-Company Payment through borrowings under its existing
commercial paper facilities. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

General Motors continues to have certain contractual relationships with EDS.
Immediately prior to the Split-Off, General Motors and EDS entered into the
Master Service Agreement and the Separation Agreement. The IT Services
Agreements provide for the continuation of a long-term customer-supplier
relationship and the Separation Agreement established certain transitional and
other arrangements deemed necessary in connection with the Split-Off. See
"Relationship Between the Company and General Motors--IT Services Agreements"
and "--Separation Agreement." Additionally, GM has an indirect stake in EDS'
financial performance as a result of the Hourly Plan Special Trust's holdings
of Common Stock. See "Selling Stockholder."

12
<PAGE>

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

PRICE RANGE OF COMMON STOCK

The range of the reported per share sale prices on the NYSE Composite Tape
for the Common Stock for the period between June 10, 1996 (the first trading
day following consummation of the Split-Off) and July 16, 1996 was a high of
$58 3/8 and a low of $46. During such period there have been no dividends paid
on the Common Stock. As of July 10, 1996, there were approximately 265,000
holders of record of the Common Stock and 485.6 million shares of Common Stock
outstanding. A recent last reported sale price of the Common Stock, as
reported on the NYSE, is set forth on the cover page of this Prospectus.

The Class E Common Stock was listed and traded on the NYSE under the symbol
"GME." The table below shows the range of reported per share sale prices on
the NYSE Composite Tape for the Class E Common Stock for the periods
indicated. The last reported sale price of the Class E Common Stock on the
NYSE Composite Tape on June 7, 1996 (the date of the consummation of the
Split-Off) was $57.00 per share. See "Risk Factors--Limited Prior Public
Market for Common Stock; No Assurance as to Market Price."

<TABLE>
<CAPTION>
CALENDAR YEAR HIGH LOW
- ------------- ------ ------
<S> <C> <C>
1994
First Quarter.................................................. $36.88 $27.50
Second Quarter................................................. 38.00 32.88
Third Quarter.................................................. 38.50 33.00
Fourth Quarter................................................. 39.50 34.75
1995
First Quarter.................................................. $41.38 $36.88
Second Quarter................................................. 45.25 38.38
Third Quarter.................................................. 47.50 41.50
Fourth Quarter................................................. 52.63 43.88
1996
First Quarter.................................................. $58.00 $50.00
Second Quarter (through June 7)................................ 58.63 52.25
</TABLE>

DIVIDEND POLICY

EDS' dividend policy is determined by the EDS Board. Under Delaware law and
the Certificate of Incorporation, the EDS Board will not be required to
declare dividends on any class of EDS capital stock. The EDS Board has adopted
a policy to continue to pay quarterly dividends through 1996 in an amount
equal to $0.15 per share. The EDS Board will be free during or after 1996,
however, to change its dividend policies and practices from time to time and
to decrease or increase the dividends paid on the EDS Common Stock on the
basis of EDS' financial condition, earnings and capital requirements and other
factors the EDS Board may deem relevant. The dividend policy of the EDS Board
with respect to the Common Stock may be different from the policy of the GM
Board with respect to the Class E Common Stock. See "Risk Factors--Dividend
Policy."

The payment of dividends on the Class E Common Stock was subject to the
policies and practices of the GM Board. Subject to the rights of the holders
of General Motors' preferred stock (if any) and General Motors' preference
stock, under General Motors' certificate of incorporation as in effect
immediately prior to the Split-Off, dividends on Class E Common Stock could be
declared and paid out of the assets of General Motors only to the extent of
the sum of (i) the paid in surplus of General Motors attributable to the Class
E Common Stock plus (ii) an allocated portion of the earnings of GM
attributable to EDS earned after General Motors' acquisition of EDS, then
referred to in General Motors' certificate of incorporation as the "Available
Separate Consolidated Net Income" of EDS. See "Selected Consolidated Financial
Information." Immediately prior to the Split-Off, the dividend policy of the
GM Board was to pay quarterly dividends on the Class E Common Stock, when, as

13
<PAGE>

and if declared by the GM Board, at an annual rate equal to approximately 30%
of the Available Separate Consolidated Net Income of EDS for the prior year.
Under this dividend practice of the GM Board, GM paid quarterly dividends on
the outstanding shares of Class E Common Stock in an amount equal to $0.13 per
share during 1995. In February 1996, the GM Board raised the quarterly
dividend on Class E Common Stock to $0.15 per share.

RECENT DEVELOPMENT

On July 16, 1996, EDS announced its second quarter 1996 consolidated net
loss of $326.5 million, or $0.67 per share of Common Stock, compared to net
income of $226.9 million, or $0.47 per share of Class E Common Stock, for the
second quarter of 1995. Total systems and other contracts revenues for the
second quarter of 1996 were $3,497.8 million, compared to $2,950.1 million for
the second quarter of 1995. Included in 1996 amounts are one-time charges of
$850 million ($1.12 per share) and $45.5 million ($0.06 per share) of one-time
costs related to the Split-Off. EDS' non-GM business increased more than 24%
during the second quarter of 1996 compared to the same period of 1995 and
accounted for 70% of EDS' revenues during the second quarter of 1996 compared
to 67% in the same period of 1995. Revenues related to GM and its affiliates
amounted to $1,050.5 million and $982.5 million for the three months ended
June 30, 1996 and 1995, respectively. Interim results are not necessarily
indicative of the results which may be expected for any other interim period
or for the full year. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Restructuring Activities."

SUMMARY UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL DATA

<TABLE>
<CAPTION>
AS OF AND FOR THE
THREE
MONTHS ENDED JUNE
30,
-------------------
1996 1995
--------- --------
(IN MILLIONS)
<S> <C> <C>
OPERATING RESULTS
Systems and other contracts revenues....................... $ 3,497.8 $2,950.1
Cost of revenues........................................... 2,845.7 2,295.2
Selling, general and administrative........................ 308.1 284.4
Restructuring charge....................................... 285.6 --
Asset writedowns........................................... 503.9 --
--------- --------
Operating income (loss).................................... (445.5) 370.5
One-time split-off costs................................... (45.5) --
Interest and other income, net............................. (19.2) (16.0)
--------- --------
Income (loss) before income taxes.......................... (510.2) 354.5
Provision (benefit) for income taxes....................... (183.7) 127.6
--------- --------
Net income (loss)(1)....................................... $ (326.5) $ 226.9
========= ========
BALANCE SHEET DATA
Cash and marketable securities............................. $ 648.0 $ 709.5
Current assets............................................. 4,375.7 3,708.0
Total assets............................................... 10,384.2 9,661.0
Current liabilities........................................ 3,139.5 2,911.7
Long-term debt............................................. 2,474.9 1,528.3
Stockholders' equity....................................... 4,276.7 4,590.1
</TABLE>
- --------
(1) Represents Separate Consolidated Net Income for the three months ended
June 30, 1995.

14
<PAGE>

UNAUDITED PRO FORMA CONSOLIDATED CAPITALIZATION

The following table sets forth the short-term debt and consolidated
capitalization of EDS as of March 31, 1996 and on a pro forma basis after
giving effect to the Split-Off. This table should be read in conjunction with
EDS' Consolidated Financial Statements (including the notes thereto), which
are included in this Prospectus, and with the financial data set forth under
"Unaudited Pro Forma Condensed Consolidated Financial Statements." The pro
forma data are not necessarily indicative of EDS' future short-term debt and
consolidated capitalization or of what EDS' short-term debt and consolidated
capitalization would have been had the Split-Off been consummated as of March
31, 1996.

<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------
HISTORICAL PRO FORMA
---------- ---------
(IN MILLIONS)
<S> <C> <C>
Short-term debt:
Notes payable (current)................................. $ 238.7 $ 238.7
======== ========
Long-term debt:
Notes payable........................................... $2,109.2 $2,609.2
-------- --------
Stockholders' equity:
Preferred stock, $.01 par value; 200 million shares
authorized;
no shares issued and outstanding....................... -- --
Common stock, without par value; one billion shares
authorized;
485.7 million shares issued and outstanding (a)........ 559.9 --
Common stock, $.01 par value; two billion shares
authorized;
487.6 million shares issued (a)........................ -- 4.9
Additional paid-in capital.............................. -- 589.5
Retained earnings....................................... 4,595.9 4,083.7
Less treasury stock, at cost, 2.0 million shares........ -- (20.3)
-------- --------
Total stockholders' equity............................ 5,155.8 4,657.8
-------- --------
Total capitalization.................................. $7,265.0 $7,267.0
======== ========
</TABLE>
- --------
(a) Excludes shares of Common Stock reserved for issuance under the Company's
incentive plans.

15
<PAGE>

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed consolidated financial
statements are based on EDS' Consolidated Financial Statements and give effect
to the Split-Off as if it had been consummated as of January 1, 1995 (in the
case of income statement data) or as of March 31, 1996 (in the case of balance
sheet data). The pro forma condensed consolidated financial statements are
based on the assumptions set forth in the accompanying notes and should be
read in conjunction with EDS' Consolidated Financial Statements (including the
notes thereto), which are included in this Prospectus. The pro forma condensed
consolidated financial statements are not necessarily indicative of EDS'
future consolidated financial position or results of operations or of what
EDS' consolidated financial position would have been had the Split-Off been
consummated as of March 31, 1996 or what the results of operations would have
been had the Split-Off been consummated as of January 1, 1995.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

YEAR ENDED DECEMBER 31, 1995
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Systems and other contracts revenues
Outside customers................... $ 8,531.0 $ -- $ 8,531.0
GM and affiliates................... 3,891.1 (175.8)(a) 3,715.3
--------- ------- ---------
Total revenues.................... 12,422.1 (175.8) 12,246.3
--------- ------- ---------
Costs and expenses
Cost of revenues.................... 9,601.6 3.0 (c) 9,604.6
Selling, general, and
administrative..................... 1,291.5 7.5 (c) 1,299.0
--------- ------- ---------
Total costs and expenses.......... 10,893.1 10.5 10,903.6
--------- ------- ---------
Operating income...................... 1,529.0 (186.3) 1,342.7
Interest and other income, net........ (62.0) (35.0)(b) (97.0)
--------- ------- ---------
Income before income taxes............ 1,467.0 (221.3) 1,245.7
Provision for income taxes............ 528.1 2.3 (a)
(79.7)(d) 450.7
--------- ------- ---------
Separate Consolidated Net Income/Net
Income............................... $ 938.9 $(143.9) $ 795.0 (j)
========= ======= =========
Available Separate Consolidated Net
Income............................... $ 795.5 $ --
========= =========
Average number of shares of Class E
Common Stock outstanding............. 404.6 --
========= =========
Earnings per share attributable to
Class E Common Stock................. $ 1.96 $ --
========= =========
Weighted average number of EDS common
shares outstanding................... -- 483.6 (e)
========= =========
Net income per share.................. $ -- $ 1.64 (e)
========= =========
</TABLE>

The accompanying notes are an integral part of the Unaudited Pro Forma
Condensed Consolidated Financial Statements.

16
<PAGE>

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(CONTINUED)

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

THREE MONTHS ENDED MARCH 31, 1996
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Systems and other contracts revenues
Outside customers...................... $2,404.7 $ -- $2,404.7
GM and affiliates...................... 962.2 -- 962.2
-------- ----- --------
Total revenues(a).................... 3,366.9 -- 3,366.9
-------- ----- --------
Costs and expenses
Cost of revenues....................... 2,698.1 0.8 (c) 2,698.9
Selling, general, and administrative... 309.9 1.9 (c) 311.8
-------- ----- --------
Total costs and expenses............. 3,008.0 2.7 3,010.7
-------- ----- --------
Operating income......................... 358.9 (2.7) 356.2
Interest and other income, net........... (17.0) (8.8)(b) (25.8)
-------- ----- --------
Income before income taxes............... 341.9 (11.5) 330.4
Provision for income taxes............... 123.1 0.6 (a)
(4.1)(d) 119.6
-------- ----- --------
Separate Consolidated Net Income/Net
Income.................................. $ 218.8 $(8.0) $ 210.8 (j)
======== ===== ========
Available Separate Consolidated Net
Income.................................. $ 209.2 --
======== ========
Average number of shares of Class E
Common Stock outstanding................ 463.2 --
======== ========
Earnings per share attributable to Class
E Common Stock.......................... $ 0.45 --
======== ========
Weighted average number of EDS common
shares outstanding...................... -- 484.4 (e)
======== ========
Net income per share..................... $ -- $ 0.44 (e)
======== ========
</TABLE>

The accompanying notes are an integral part of the Unaudited Pro Forma
Condensed Consolidated Financial Statements.

17
<PAGE>

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(CONTINUED)

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

MARCH 31, 1996
(IN MILLIONS)

<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 935.9 $ $ 935.9
Accounts receivable................... 3,122.3 3,122.3
Other current assets.................. 676.3 (13.4)(h) 662.9
--------- ------- ---------
Total current assets................ 4,734.5 (13.4) 4,721.1
Property and equipment, net............. 3,262.0 3,262.0
Investment in leases and other.......... 1,516.9 (6.2)(h) 1,510.7
Software, goodwill, and other
intangibles, net....................... 1,496.6 1,496.6
Other assets............................ 105.8 105.8
--------- ------- ---------
Total assets........................ $11,115.8 $ (19.6) $11,096.2
========= ======= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued liabilities................... $ 1,551.6 $ (33.8)(i) $ 1,563.3
45.5 (k)
Other current liabilities............. 1,550.2 1,550.2
--------- ------- ---------
Total current liabilities........... 3,101.8 11.7 3,113.5
Deferred income taxes................... 749.0 (33.3)(g) 715.7
Notes payable........................... 2,109.2 500.0 (f) 2,609.2
Stockholders' equity.................... 5,155.8(j) (500.0)(f)
33.3 (g)
(19.6)(h)
33.8 (i)
(45.5)(k) 4,657.8
--------- ------- ---------
Total liabilities and stockholders'
equity............................. $11,115.8 $ (19.6) $11,096.2
========= ======= =========
</TABLE>

The accompanying notes are an integral part of the Unaudited Pro Forma
Condensed Consolidated Financial Statements.

18
<PAGE>

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(CONCLUDED)

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements relate to the individual adjustments required to reflect the Split-
Off as if it had occurred on January 1, 1995 (in the case of income statement
data) or as of March 31, 1996 (in the case of balance sheet data). Adjustments
to EDS' consolidated balance sheet are based on EDS' carryover basis as
reported in the Consolidated Financial Statements included in this Prospectus.
EDS' Consolidated Financial Statements exclude the effects of purchase
accounting adjustments arising from the acquisition of EDS by GM in 1984,
including GM's remaining carrying value of such purchase adjustments and the
accumulated amortization of all such adjustments. The remaining carrying value
of such adjustments would be immaterial to EDS' Consolidated Financial
Statements.

(a) Reflects the reductions in revenues from GM and its affiliates, which
represent the effects of reduced unit billings as provided for under the
terms of the IT Services Agreements as applied to actual usage for certain
communications and compute activities for the year ended December 31,
1995, as well as certain reduced tax credits. Systems and other contracts
revenues for the three months ended March 31, 1996, include the first
quarter impact of these reductions due to their retroactive nature.
(b) Reflects additional interest expense attributable to $500.0 million of
debt incurred to make the Special Inter-Company Payment, calculated based
on the borrowing rate expected to be incurred for such debt, which
approximates EDS' average long-term borrowing rate for the year ended
December 31, 1995 and the three months ended March 31, 1996.
(c) Reflects additional costs as a result of operating as a separate public
company, rather than a subsidiary of General Motors. These costs include,
among other items, additional insurance coverages, NYSE fees and transfer
agent fees.
(d) Reflects the tax impact of pretax income statement adjustments at EDS'
effective tax rate of 36%.
(e) Reflects the conversion of each outstanding share of Class E Common Stock
into one share of Common Stock. Pro forma earnings per share have been
calculated based on the weighted average shares of Class E Common Stock
outstanding for the year ended December 31, 1995, and for the three months
ended March 31, 1996, adjusted for the following: (i) GM's contribution of
approximately 173.2 million shares of Class E Common Stock to the Hourly
Plan on March 13, 1995; and (ii) GM's issuance of approximately 44.7
million shares of Class E Common Stock between January 1 and February 22,
1996, to satisfy conversion privileges associated with General Motors'
Series C Preference Stock. For purposes of computing pro forma earnings
per share for 1995 and 1996, each of these transactions was treated as if
it occurred on January 1, 1995.
(f) Reflects payment of the Special Inter-Company Payment and incurrence of
additional debt for the financing thereof.
(g) Reflects the net deferred tax benefits previously allocated to GM.
(h) Reflects the reclassification to EDS treasury stock for Class E Common
Stock held by EDS as an asset prior to the Split-Off. These shares, which
are used to satisfy restricted stock awards as they vest, were converted
to Common Stock in the Split-Off.
(i) Reflects the reclassification of deferred compensation accrued under EDS'
stock incentive plans.
(j) General Motors' equity in its then indirect wholly owned subsidiary, EDS
(excluding the effects of purchase accounting adjustments relating to
General Motors' 1984 acquisition of EDS).
(k) The pro forma balance sheet includes, and the pro forma income statements
exclude, the one-time charges of approximately $45.5 million associated
with the formulation and implementation of the Split-Off. These charges
will be included in EDS' consolidated financial statements for the year
ended December 31, 1996. These expenses could impact EDS' effective tax
rate to the extent that they are non-deductible for tax purposes.

19
<PAGE>

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following selected consolidated historical financial data as of and for
the years ended December 31, 1995, 1994, 1993, 1992 and 1991 have been derived
from EDS' Consolidated Financial Statements, which have been audited by KPMG
Peat Marwick LLP, independent auditors. The selected consolidated historical
financial data as of and for the three months ended March 31, 1996 and 1995
have been derived from unaudited consolidated financial statements which, in
the opinion of management, reflect all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation of the financial
position and results of operations of EDS for those periods. Interim results
are not necessarily indicative of the results which may be expected for any
other interim period or for the full year. This information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the EDS Consolidated Financial Statements,
which are included in this Prospectus, and the EDS First Quarter 1996 Form 10-
Q, which is incorporated herein by reference.

<TABLE>
<CAPTION>
AS OF AND FOR THE
THREE MONTHS ENDED
MARCH 31, AS OF AND FOR THE YEARS ENDED DECEMBER 31,
------------------- ----------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- -------- --------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS
Systems and other
contracts revenues
Outside customers...... $ 2,404.7 $1,878.3 $ 8,531.0 $6,412.9 $5,183.6 $4,806.7 $3,666.3
General Motors and
affiliates............ 962.2 898.0 3,891.1 3,547.2 3,323.7 3,348.5 3,362.2
--------- -------- --------- -------- -------- -------- --------
Total revenues......... 3,366.9 2,776.3 12,422.1 9,960.1 8,507.3 8,155.2 7,028.5
--------- -------- --------- -------- -------- -------- --------
Costs and expenses
Cost of revenues....... 2,698.1 2,176.1 9,601.6 7,529.4 6,390.6 6,205.8 5,415.1
Selling, general, and
administrative........ 309.9 281.0 1,291.5 1,187.1 1,005.4 969.3 761.9
--------- -------- --------- -------- -------- -------- --------
Total costs and
expenses.............. 3,008.0 2,457.1 10,893.1 8,716.5 7,396.0 7,175.1 6,177.0
--------- -------- --------- -------- -------- -------- --------
Operating income........ 358.9 319.2 1,529.0 1,243.6 1,111.3 980.1 851.5
Interest and other
income, net............ (17.0) (11.7) (62.0) 40.6 20.0 20.7 42.2
--------- -------- --------- -------- -------- -------- --------
Income before income
taxes.................. 341.9 307.5 1,467.0 1,284.2 1,131.3 1,000.8 893.7
Provision for income
taxes.................. 123.1 110.7 528.1 462.3 407.3 365.3 330.7
Cumulative effect of
accounting change(a)... -- -- -- -- -- -- (15.5)
--------- -------- --------- -------- -------- -------- --------
Separate Consolidated
Net Income(b).......... $ 218.8 $ 196.8 $ 938.9 $ 821.9 $ 724.0 $ 635.5 $ 547.5
========= ======== ========= ======== ======== ======== ========
Average number of shares
of Class E Common Stock
outstanding
(Numerator)(b)......... 463.2 300.0 404.6 260.3 243.0 209.1 195.3
Class E Dividend Base
(Denominator)(b)....... 484.4 482.4 483.7 481.7 480.6 479.3 478.1
Available Separate
Consolidated Net
Income(b).............. $ 209.2 $ 122.4 $ 795.5 $ 444.4 $ 367.2 $ 278.4 $ 223.6
Earnings per share
attributable to Class E
Common Stock(b)........ 0.45 0.42 1.96 1.71 1.51 1.33 1.14
Dividends per share of
Class E Common
Stock(b)............... 0.15 0.13 0.52 0.48 0.40 0.36 0.32
BALANCE SHEET DATA
Cash and marketable
securities............. $ 1,020.6 $ 641.0 $ 638.6 $ 757.8 $ 607.5 $ 587.9 $ 415.8
Current assets.......... 4,734.5 3,465.5 4,381.5 3,354.1 2,506.8 2,157.0 1,945.6
Total assets(c)......... 11,115.8 9,158.0 10,832.4 8,786.5 6,942.1 6,123.5 5,703.2
Current liabilities..... 3,101.8 2,832.2 3,261.4 2,873.2 2,160.4 1,903.1 2,396.7
Long-term debt.......... 2,109.2 1,198.4 1,852.8 1,021.0 522.8 561.1 281.9
Stockholder's
equity(c)(d)........... 5,155.8 4,414.5 4,978.5 4,232.5 3,617.4 3,063.4 2,610.3
OTHER DATA
Depreciation and
amortization........... $ 282.7 $ 231.0 $ 1,107.8 $ 771.1 $ 626.8 $ 603.2 $ 524.4
Expenditures for
property and
equipment.............. 244.4 259.3 1,261.5 1,186.0 816.4 639.0 673.2
</TABLE>
- --------
(a) Effective January 1, 1991, EDS adopted SFAS No. 109, "Accounting for
Income Taxes." The cumulative effect of this accounting change at January
1, 1991 was a charge of $15.5 million, of which $0.03 per share was
attributable to Class E Common Stock.

20
<PAGE>

(b) Calculated for purposes related to the Class E Common Stock, which was
converted into Common Stock on a one-for-one basis pursuant to the Split-
Off.
(c) Holders of Class E Common Stock, which was converted into Common Stock in
the Split-Off, had no direct rights in the equity or assets of EDS, but
rather had rights in the equity and assets of General Motors (which
included 100% of the stock of EDS).
(d) General Motors' equity in its then indirect wholly owned subsidiary, EDS
(excluding the effects of purchase accounting adjustments relating to
General Motors' 1984 acquisition of EDS).

The portion of EDS' earnings that was included in the amount available for
the payment of dividends on Class E Common Stock (which amount was also used
to calculate earnings per share of Class E Common Stock) was determined by a
fraction, the numerator of which was a number equal to the weighted average
number of shares of Class E Common Stock outstanding (463.2 million for the
first quarter of 1996) and the denominator of which was 484.4 million for the
first quarter of 1996; provided, that such fraction could never be greater
than one. The amount so allocated was referred to in General Motors'
certificate of incorporation as the "Available Separate Consolidated Net
Income" of EDS. For purposes of determining the approximate earnings per share
attributable to Class E Common Stock for financial reporting purposes, an
investor may divide the quarterly EDS earnings allocated to Class E Common
Stock (the "Available Separate Consolidated Net Income of EDS") by the
weighted average number of shares of Class E Common Stock outstanding during
such quarter, which is the numerator of the fraction described above.
Approximately the same mathematical result may be obtained by dividing the
quarterly EDS earnings used for computation of Available Separate Consolidated
Net Income (i.e., net income) by the denominator of the fraction described
above.

21
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

EDS is a provider of IT services using computer and communication
technologies to meet the business needs of its clients. EDS offers its clients
a continuum of services, including the management and operation of computers,
networks, information systems, information processing facilities, business
operations, and related personnel, as well as management consulting services.

EFFECT OF THE SPLIT-OFF

In connection with the Split-Off, the Master Service Agreement was entered
into between EDS and General Motors with respect to IT services to be provided
to GM after the Split-Off and the Special Inter-Company Payment was made by
EDS.

The IT Services Agreements contemplate that EDS will continue to serve as
General Motors' principal supplier of IT services for an initial term of ten
years, which may be extended by agreement of the parties, and that the IT
services to be provided by EDS after the Split-Off will generally be similar
to those provided to General Motors under the Prior IT Services Agreements.
Under the terms of the IT Services Agreements, certain of the Prior IT
Services Agreements applicable to particular units, sectors or other
organizations within General Motors have been extended for additional terms of
between approximately one and three years beyond their current expiration
dates. In addition, EDS will provide certain plant floor automation services
in North America to GM that it has not previously provided. The IT Services
Agreements also made certain significant changes to the pricing and terms
under which EDS will provide IT services to General Motors after the Split-
Off. Among other things, the IT Services Agreements provide that the rates
charged by EDS to General Motors for certain information processing activities
and communications services will be reduced and that the parties will work
together to achieve increased targets for structural cost reductions. General
Motors has also been given the right to competitively bid and, subject to
certain restrictions, outsource a limited portion of its IT service
requirements to third party providers. In addition, beginning in 1997, the
payment terms relating to IT services provided by EDS will be revised over a
two-year period to extend the due dates for payments from General Motors. See
"Relationship Between the Company and General Motors--IT Services Agreements."

Based on currently available information and assuming that the IT Services
Agreements had been effective as of January 1, 1996, EDS believes that
revenues generated from services performed for General Motors in 1996 would be
slightly lower than those generated from such services in 1995. In addition,
EDS expects that the contemplated changes in its arrangements with GM could
reduce its 1996 earnings per share by as much as $0.07 to $0.14 (including
$0.03 in the first quarter of 1996). The long-term impact of the terms of the
IT Services Agreements cannot be precisely quantified at present, although
such terms may have an adverse effect on operating margins unless EDS is able
to effect reductions in the costs of providing services to General Motors.
Although EDS plans to implement certain cost reduction measures, there can be
no assurance as to the extent, if any, to which such measures will mitigate
the possible adverse impact on its operating margins. In general, 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.
For additional information regarding the IT Services Agreements, see
"Relationship Between the Company and General Motors--IT Services Agreements"
and "Business--Revenues."

The Special Inter-Company Payment was paid by EDS to GM at the time the
Split-Off occurred. The amount of the Special Inter-Company Payment was $500.0
million. 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, EDS expects to incur approximately $45.5
million, or approximately $.06 per share in 1996, of one-time costs in
connection with the formulation and implementation of the Split-Off. In
arriving at the amount of the $500.0 million Special Inter-Company Payment,
the parties took into account the fact that in the

22
<PAGE>

Separation Agreement GM would provide EDS an allowance of $50 million relating
to the resolution of various uncertain, contingent or other matters arising
out of the separation of GM and EDS.

Statements about the effect of the Split-Off and the impact of the IT
Services Agreements after the Split-Off are forward-looking statements which
by their nature are subject to numerous uncertainties that could cause actual
results to vary.

RESTRUCTURING ACTIVITIES

On April 1, 1996, EDS announced that it was taking certain actions and
considering others to maintain and improve operating efficiencies and
accelerate the Company's move toward "user-centered" computing. In connection
therewith, EDS also announced the implementation of a voluntary early
retirement offer and involuntary severance arrangements affecting between
4,000 and 5,000 employees and designed to both reduce labor costs and change
the skill mix of the Company's workforce. It is expected that substantially
all of these workforce reductions will be completed by December 1996. As part
of its overall goal to improve operating efficiencies, EDS also announced at
such time that it was in the process of evaluating certain aspects of its
business to identify any redundant facilities and related assets that were no
longer consistent with its long-term strategic objectives.

In connection with the foregoing, EDS announced on June 18, 1996 that it
estimated it would incur a one-time pre-tax charge in the second quarter of
1996 of approximately $850 million. This represented an increase from the
previous estimate for the second-quarter charge, which EDS earlier had
indicated could reach $750 million. On July 16, 1996, EDS announced that the
actual amount of the second-quarter charge was $850 million, or $1.12 per
share of Common Stock. The charge includes the employee-related actions
discussed above, the write-down of assets in connection with the refreshment
of information technology assets and the consolidation of certain facilities,
the revision of estimates associated with certain customer contracts, and
the decision to exit certain activities. The charge is classified into three
major categories: employee-related, $275 million; technology refreshment,
asset write-downs and facility consolidations, $515 million; and cost
of revenues, $60 million. Of the total $850 million charge, EDS expects to
make cash expenditures of approximately $275 million, a substantial portion of
which will be incurred in 1996 and 1997. Such cash expenditures, which will be
made in connection with the employee-related actions, will be funded from
operations. EDS expects that the actions discussed above will result in
savings commencing in the third quarter of 1996. The amount and timing of
these savings, while difficult to quantify precisely, are expected to
gradually build to approximately $50 million per quarter ($0.07 per share) by
1997 and continue at that approximate level through 1998. During this period
these savings will be available to offset the anticipated negative impact to
earnings per share from changes in the Master Service Agreement between EDS
and GM and for reinvestment to position the Company for the future. See
"Recent Development."

Statements about the effect of EDS' actions and savings from the charges are
forward-looking statements which by their nature are subject to numerous
uncertainties that could cause actual results to vary. See "Risk Factors--
Forward-Looking Information May Prove Inaccurate."

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1996 AND 1995

Revenues. Total systems and other contracts revenues for the quarter ended
March 31, 1996, rose $590.6 million, or 21%, over the corresponding quarter in
1995 to $3,366.9 million. Revenues from outside customers (systems and other
contracts revenues not attributable to GM and its affiliates) for the quarter
ended March 31, 1996, rose 28% to $2,404.7 million compared to $1,878.3
million for the same period in 1995.

Revenues from outside customers comprised 71% and 68% of total revenues for
the three months ended March 31, 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 outside
customers continue to increase.

Costs and Expenses. Cost of revenues as a percentage of systems and other
contracts revenues increased to 80% for the three months ended March 31, 1996,
compared with 78% for the corresponding period in 1995.

23
<PAGE>

Cost as a percentage of revenues has increased due to higher labor costs for
skilled workforce and pricing pressures as a result of the increasingly
competitive environment in which EDS operates. This environment results in
part from a long-term trend of convergence occurring in the computing,
communications and media/entertainment sectors of the information industry.
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. Selling, general and administrative expenses as a
percentage of systems and other contracts revenues were 9% for the three
months ended March 31, 1996, down from 10% in the corresponding period in 1995
due to the fixed nature of certain of these costs.

Operating Income. Operating income increased $39.7 million for the quarter
ended March 31, 1996 compared to the first quarter of 1995. Operating margins
declined from 11.5% for the first quarter of 1995 to 10.7% for the
corresponding period in 1996 due to the aforementioned changes in costs and
expenses.

Interest and other income, net. Interest and other income, net decreased
$5.3 million in the first quarter of 1996 to $(17.0) million, compared with
$(11.7) million in 1995. The primary reason for the decrease in 1996 was
interest associated with the issuance of $350.0 million of 6.85% notes due May
15, 2000 (the "Five-year Notes") and $300.0 million of 7.125% notes due May
15, 2005 (the "Ten-year Notes"), as well as from other borrowings. These notes
were issued in May 1995 and were used for general corporate purposes,
including the repayment of outstanding commercial paper borrowings, property
and equipment expenditures, acquisitions, and other contract-related
investments to support business growth.

Net Income. For the three month period ended March 31, 1996, EDS' separate
consolidated net income increased 11% to $218.8 million when compared to net
income of $196.8 million for the respective period of last year. Earnings per
share of Class E Common Stock rose from $.42 to $.45 for the first quarter of
1996 compared to the first quarter of 1995, based on EDS' Available Separate
Consolidated Net Income as described in Note 1 to EDS' Consolidated Financial
Statements. Earnings per share for the first quarter of 1996 were reduced $.03
per share as a result of the new Master Service Agreement with GM, a portion
of which is retroactive to January 1, 1996.

THREE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

Revenues. EDS conducts its sales, marketing and service activities on a
global basis through business units that focus both geographically and
vertically along the lines of specified industries. The following table
summarizes EDS' systems and other contracts revenues in each geographic
operating segment for each of the years ended December 31, 1995, 1994 and
1993:

SYSTEMS AND OTHER CONTRACTS REVENUES
(IN MILLIONS)

<TABLE>
<CAPTION>
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
Outside Customers:
United States.................................. $ 5,794.9 $4,611.2 $4,004.5
Europe......................................... 2,001.5 1,308.1 911.6
Other.......................................... 734.6 493.6 267.5
--------- -------- --------
Total Outside Customers...................... 8,531.0 6,412.9 5,183.6
--------- -------- --------
GM and Affiliates:
United States.................................. 2,926.1 2,764.4 2,574.5
Europe......................................... 659.2 523.4 511.2
Other.......................................... 305.8 259.4 238.0
--------- -------- --------
Total GM and Affiliates...................... 3,891.1 3,547.2 3,323.7
--------- -------- --------
Total Systems and Other Contracts Revenues....... $12,422.1 $9,960.1 $8,507.3
========= ======== ========
Percentage of Total Revenues:
Outside Customers.............................. 69% 64% 61%
GM and Affiliates.............................. 31 36 39
--------- -------- --------
Total........................................ 100% 100% 100%
========= ======== ========
</TABLE>

24
<PAGE>

Total revenues increased 25% in 1995 to $12,422.1 million from $9,960.1
million in 1994, which represented a 17% increase over 1993 total revenues of
$8,507.3 million. Revenues from customers other than General Motors and its
affiliates (outside customers) grew 33% in 1995 to $8,531.0 million, compared
to a 24% increase in 1994 from $5,183.6 million in 1993. Total revenues
related to GM and its affiliates were $3,891.1 million, $3,547.2 million, and
$3,323.7 million in 1995, 1994 and 1993, respectively. The percentage of EDS'
total revenues generated from GM and its affiliates declined to 31% in 1995
from 36% in 1994 and 39% in 1993. EDS expects this trend to continue as
revenues from outside customers continue to grow.

Total domestic revenues from outside customers increased 26% from $4,611.2
million in 1994 to $5,794.9 million for 1995. This compares with growth rates
of 15% in 1994 and 8% in 1993. The increase in 1995 was attributable to full-
year revenues on contracts which began in late 1994 and to revenues related to
acquisitions, primarily the A.T. Kearney acquisition in August 1995. Domestic
revenues from outside customers in 1994 increased over 1993 results due to
revenues associated with new contracts signed in 1993 and 1994.

During 1995, non-U.S. revenues from outside customers increased $934.4
million compared with an increase of $622.6 million in 1994 from $1,179.1
million in 1993. Growth in revenues from outside customers in Europe increased
$693.4 million in 1995 from revenues associated with new contracts signed
during 1994 and 1995, as well as certain acquisitions which occurred in late
1994 or 1995. In 1994, non-U.S. revenues from outside customers in Europe
increased $396.5 million, or 43%, to $1,308.1 million.

Other non-U.S. revenues from outside customers grew $241.0 million over
1994, to $734.6 million, due to new contracts signed in Asia/Pacific and
Canada, as well as full-year revenues from acquisitions in New Zealand which
occurred in 1994. Other non-U.S. revenues from outside customers in 1994 was
up $226.1 million over 1993 due in part to business in Japan and New Zealand.

The following summary table sets forth the percentage of revenues for each
of the years in the three-year period ended December 31, 1995, derived from
EDS' principal industry areas.

<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------
INDUSTRY AREA 1995 1994 1993
------------- ------- ------- -------
<S> <C> <C> <C>
Manufacturing................................. 47% 49% 51%
Financial Services............................ 14 14 15
Government.................................... 12 10 10
All others individually less than 10%......... 27 27 24
------- ------- -------
100% 100% 100%
======= ======= =======
</TABLE>

Other than General Motors, no one client accounted for more than 5% of EDS'
total revenues in 1995, 1994, or 1993. GM business, which has historically
grown at a slower rate than business from outside customers, is included in
the Manufacturing industry area. The Government industry area has grown due
to, among other reasons, EDS' success in selling to newly privatized sectors
in Europe.

Costs and Expenses. Cost of revenues as a percentage of systems and other
contracts revenues was 77% in 1995, compared with 76% in 1994 and 75% in 1993.
Cost as a percentage of revenues has increased due to higher labor costs for
skilled workforce and pricing pressures as a result of the increasingly
competitive environment in which EDS operates. The increasingly competitive
environment in which EDS operates results in part from a long-term trend of
convergence occurring in the computing, communications and media/entertainment
sectors of the information industry. 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. See "--
Restructuring Activities" and "Business." Selling, general and administrative
expenses increased 9% in 1995 to $1,291.5 million from $1,187.1 million in
1994, which increased 18% from 1993.

25
<PAGE>

Selling, general and administrative expenses were 10% of systems and other
contracts revenues in 1995, down from 12% in 1994 and 1993 due to the fixed
nature of certain of these costs.

Operating Income. Operating income increased $285.4 million to $1,529.0
million in 1995. Operating income was $1,243.6 million and $1,111.3 million
for 1994 and 1993, respectively. Operating margins declined from 12.5% in 1994
to 12.3% in 1995 due to the aforementioned changes in costs and expenses, as
well as increased reserves for certain customer receivables. The 1993
operating margin was 13.1%.

Interest and Other Income, net. Interest and other income, net, decreased
$102.6 million in 1995 to $(62.0) million, compared with $40.6 million in 1994
and $20.0 million in 1993. The primary reason for the decrease in 1995 was due
to increased interest expense. Interest expense increased to $120.8 million in
1995, compared with $51.7 million in 1994 and $34.5 million in 1993. The
increase in 1995 resulted from interest associated with the issuance of the
Five-year Notes and the Ten-year Notes, as well as from other borrowings.
These borrowings were used for general corporate purposes, including the
repayment of outstanding commercial paper borrowings, property and equipment
expenditures, acquisitions, and other contract-related investments to support
business growth. Interest and other income decreased from $92.3 million in
1994 to $58.8 million in 1995 primarily due to lower interest income on notes
receivable and the recognition of other than temporary declines in the fair
value of certain investment securities.

Income Taxes. The effective income tax rate was 36% in 1995, 1994 and 1993.

Net Income. EDS' separate consolidated net income increased 14% to $938.9
million in 1995, compared with $821.9 million for 1994 and $724.0 million in
1993. Earnings per share attributable to Class E Common Stock increased 15% to
$1.96 per share in 1995 and 13% to $1.71 per share in 1994, based on EDS'
Available Separate Consolidated Net Income as described in Note 1 to EDS'
Consolidated Financial Statements.

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 would be 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. EDS believes that inflation generally had
little effect on its results of operations for each of the years ended
December 31, 1995, 1994, and 1993.

FINANCIAL POSITION

Assets. During the three months ended March 31, 1996, EDS' total assets
increased $283.4 million to $11,115.8 million, due primarily to increases in
cash and accounts receivable from GM. In 1995, EDS' total assets increased to
$10,832.4 million, a 23% increase over total assets of $8,786.5 million at
December 31, 1994. This change represents increases in accounts receivable and
property and equipment for contract-related investments and an increase in
intangible assets related to acquisitions, primarily the acquisition of A.T.
Kearney. Accounts receivable from outside customers increased $789.9 million
due to more competitive contract terms, receivables acquired in the A.T.
Kearney acquisition ($149.3 million), and an increase in unbilled receivables
on newer contracts.

At March 31, 1996, EDS had cash and cash equivalents of $935.9 million,
working capital of $1,632.7 million and a current ratio of 1.5-to-1. This
compares with cash and cash equivalents of $548.9 million, working capital of
$1,120.1 million and a current ratio of 1.3-to-1 at December 31, 1995. At
December 31, 1994, the Company had $480.9 million in working capital and a
1.2-to-1 current ratio.

26
<PAGE>

On August 31, 1995, EDS acquired A.T. Kearney, a Chicago-based international
management consulting firm. At the acquisition date, EDS paid approximately
$113 million in cash and $162 million in short and long-term notes to A.T.
Kearney shareholders in connection with this acquisition. Additionally, the
terms included restricted stock grants of approximately 6.6 million shares of
Class E Common Stock (which was converted into Common Stock in connection with
the Split-Off), which will vest over a ten-year period for certain A.T.
Kearney personnel remaining with EDS. Prior to December 31, 1995, EDS retired
$80.9 million of short-term notes related to the acquisition. After the
acquisition, EDS' Management Consulting Services unit was combined with A.T.
Kearney to create a new wholly owned subsidiary operating under the A.T.
Kearney brand.

Return on assets was 9.5% and 10.3% for the twelve month period ended March
31, 1996 and 1995, respectively. For the years ended December 31, 1995, 1994,
and 1993, return on assets was 9.6%, 10.5% and 11.1%, respectively. Return on
assets has declined due to the increasing capital intensity of EDS' business
and increased contract-related investments in computers and telecommunications
equipment, software, and other property and equipment. Additionally, EDS'
results for the year ended December 31, 1995, include the results of A.T.
Kearney's operations only since the acquisition date.

Liabilities and Stockholder's Equity. Total liabilities increased in 1996
and 1995 to support business growth as a result of additional commercial paper
borrowings and the issuance of EDS' Five-year and Ten-year Notes.
Additionally, EDS revised its agreement with a syndicate of banks, which
increased EDS' committed lines of credit to $2,500.0 million. Total debt was
$2,347.9 million, $2,100.6 million and $1,224.4 million at March 31, 1996,
December 31, 1995 and 1994, respectively, which consisted of short- and long-
term notes payable. The total debt-to-capital ratio (which includes current
notes payable as a component of capital) was 31% at March 31, 1996, 30% at
December 31, 1995, and 22% at December 31, 1994. The ratio of noncurrent debt-
to-capital was 29% at March 31, 1996, 27% at December 31, 1995, and 19% at
December 31, 1994. At December 31, 1995, EDS had unused uncommitted short-term
lines of credit totaling $728.2 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 March 31,
1996 and December 31, 1995, EDS had total committed lines of credit of
$2,515.5 million.

Stockholder's equity was $5,155.8 million at March 31, 1996, $4,978.5
million at December 31, 1995, and $4,232.5 million at December 31, 1994.
Return on stockholder's equity was 20.0% for the twelve month period ended
March 31, 1996, compared with 20.7% for the corresponding period in 1995.
Return on stockholder's equity was 20.4%, 20.9% and 21.7% for the years ended
December 31, 1995, 1994 and 1993, respectively.

New Accounting Standards. The Financial Accounting Standards Board (FASB)
has issued 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, which became effective for fiscal years beginning in 1996.
This Statement requires that long-lived assets and certain identifiable
intangibles to be held and used be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable, and for the measurement of loss to be based on the fair value
of the asset. In addition, long-lived assets and certain identifiable
intangibles to be disposed of are generally to be reported at the lower of the
carrying amount or fair value less selling costs. The effects of initially
adopting SFAS No. 121 as of January 1, 1996 were not material to EDS'
consolidated financial statements.

Foreign Exchange Risk Management. The translation effects of changes in
exchange rates on EDS' Consolidated Financial Statements can be found in the
consolidated stockholder's equity currency translation adjustment in Note 10
and in the effect of exchange rate changes on cash and cash equivalents in the
EDS consolidated statements of cash flows. The disclosure of nonfunctional
currency transactions gains (losses) is contained in the "Summary of
Significant Accounting Policies" in Note 1. All other effects of changes in

27
<PAGE>

exchange rates on EDS' consolidated financial statements are immaterial due to
the general nature of EDS' business and its risk management strategies
described below. EDS' foreign subsidiaries conduct nearly all aspects of their
respective operations using their respective functional currencies.
Accordingly, such operations are not expected to yield significant currency
risks.

EDS hedges predominantly all its transaction risk associated with material
monetary assets and liabilities denominated in currencies other than the U.S.
dollar. EDS does not hedge the foreign exchange risk related to either the
translation of foreign earnings into U.S. dollars or the translation of its
net investment in foreign subsidiaries into U.S. dollars. EDS has no material
unhedged monetary assets or liabilities denominated in currencies other than
its foreign operations' functional currencies.

EDS conducts business in the United States and approximately 40 other
countries. EDS' most significant foreign currency transaction exposures relate
to Canada, Western European countries (primarily Germany, the United Kingdom,
Italy, the Netherlands and Switzerland) and New Zealand. EDS manages the
foreign exchange transaction exposure resulting from its multinational
operations primarily by utilizing short-term forward contracts which are used
to hedge the aggregate net exposure in each currency. Derivatives involve, to
varying degrees, elements of credit risk in the event a counterparty should
default and market risk as the instruments are subject to rate and price
fluctuations. Credit risk is managed by dealing solely with major commercial
banks with high quality credit and, therefore, EDS management does not expect
to incur any cost due to counterparty default. Market risk is inherently
limited by the fact that EDS holds offsetting asset or liability positions.
Pursuant to its prescribed policies, EDS does not hold or issue financial
instruments for trading purposes.

LIQUIDITY AND CAPITAL RESOURCES

For the three months ended March 31, 1996, net cash provided by operating
activities was $512.1 million, up $384.2 million from the same period in 1995
due to a decrease in accounts receivable. For the year ended December 31,
1995, net cash provided by operating activities was $1,259.0 million, down
$273.5 million from the same period in 1994 due to increases in accounts
receivable, including an increase in receivables from GM and its affiliates.
For the year ended December 31, 1994, net cash provided by operating
activities was $1,532.5 million, up $111.5 million from 1993, due in part to
increases in accounts payable and accrued liabilities. Net cash provided by
operating activities for 1993 consisted of depreciation and amortization as
well as increases in working capital items.

For the three months ended March 31, 1996, net cash used in investing
activities decreased $73.6 million, to $313.4 million, when compared to the
same period in 1995. For the year ended December 31, 1995, net cash used in
investing activities increased $241.8 million, to $1,781.5 million when
compared to the same period for 1994. Net cash used in investing activities
increased $472.0 million, to $1,539.7 million in 1994, from $1,067.7 million
in 1993. Consistent with the increasing capital intensity of EDS' business,
cash used in investing activities consisted largely of payments for purchases
of property and equipment of $1,261.5 million, $1,186.0 million, and $816.4
million in 1995, 1994, and 1993, respectively. Additionally, EDS used cash for
investments in leases and other assets and for payments related to
acquisitions.

Net cash provided by financing activities was $195.6 million for the three
months ended March 31, 1996, up $26.1 million compared to the corresponding
period in 1995 due to an increase in commercial paper borrowings. Net cash
provided by financing activities was $465.1 million for the year ended
December 31, 1995, up $258.6 million from the corresponding period in 1994 due
in part to the issuance of long-term debt and notes payable, particularly the
issuance of the Five-year Notes and the Ten-year Notes. For the year ended
December 31, 1994, net cash provided by financing activities was $206.5
million, compared with cash used in financing activities of $378.2 million in
1993. EDS paid cash dividends to GM totaling $72.6 million, $251.3 million,
$231.1 million, and $192.1 million in the three months ended March 31, 1996
and in each of the years ended December 31, 1995, 1994, and 1993,
respectively.

28
<PAGE>

EDS expects that its principal uses of funds for the foreseeable future will
be for capital expenditures, debt repayment, working capital and costs
associated with the Split-Off. Capital expenditures may consist of purchases
of computer and telecommunications equipment, buildings and facilities, land,
and software, as well as acquisitions. EDS' projected capital expenditures for
1996 are approximately $1,400.0 to $1,700.0 million. However, actual capital
expenditures will depend to a significant extent on the level of 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 Prior IT Services Agreements 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. See "Relationship Between
General Motors and EDS-IT Services Agreements." These revised payment terms
are expected to result in an increase in EDS' working capital requirements.
EDS obtained the funds for the Special Inter-Company Payment, and will obtain
the funds for this working capital impact, through borrowings under its
existing commercial paper or bank credit facilities. EDS currently anticipates
that it may 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 require investments in computers and telecommunications equipment,
software, and other property, plant and equipment. For these reasons, 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 did while a subsidiary of GM. As a result,
EDS' financial leverage may increase in the future. To the extent that EDS
becomes 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.

29
<PAGE>

BUSINESS

GENERAL

EDS is a world leader in applying IT, with over 30 years of experience in
using advanced computer and communications technologies to meet its clients'
business needs. EDS' total revenues grew from $786 million in its 1984 fiscal
year to $12.4 billion in 1995. Although revenues attributable to General
Motors and its affiliates have increased from 1985 to 1995, they have
decreased as a percentage of total revenues from approximately 70% in 1985 to
approximately 31% in 1995 as a result of the rapid revenue growth of EDS' non-
General Motors business. As of December 31, 1995, EDS employed approximately
96,000 persons and served clients in the United States and approximately 40
other countries. Unless the context otherwise requires, references herein to
EDS include its predecessors and subsidiaries.

STRATEGY

EDS' strategy is to offer a full range of IT services to enterprises,
government entities and individuals worldwide. These services include
management consulting, systems development, systems integration, systems
management and process management. EDS' organizational structure is designed
to offer the full range of services on a global basis through business units
that focus along the lines of specified industries, such as manufacturing,
financial services, government, communications, health, travel and
transportation, and energy, as well as geographically, such as on the
Americas, Europe, and Asia/Pacific and Japan. Each business unit is further
organized into separate, more focused business units within the relevant
industry or geography. EDS seeks to leverage its knowledge and resources for
its individual customers by drawing from the many industries and skill sets
available across a wide range of geographies. EDS believes its organizational
structure enables it to better focus on and use the knowledge gained from the
industries and geographies in which its customers operate and therefore better
serve its customers and its customers' customers.

EDS seeks to continue its leadership position in the IT industry through
increased globalization and expanded product and service offerings. The
percentage of EDS' revenues outside the United States has increased from 18%
in 1990 to 30% in 1995, and the number of countries in which EDS operates has
increased from 28 in 1990 to 40 in 1995. EDS believes that corporations are
becoming increasingly globalized because other companies enter their markets
from other geographies or they desire to expand into additional geographies.
This trend is fostered by advancements in communications technology which
compress time and distance. EDS intends to continue to capitalize on the
general trend toward convergence of the world's markets by enhancing its
capability through expanded service offerings as well as through strategic
alliances with global partners and distributors. The acquisition of A.T.
Kearney in 1995, which expanded EDS' capabilities along a range of industries,
skill sets and regions, is an example of such strategic growth.

EDS seeks to create value by imbedding more information content into the
products and services it delivers. By creating "smart" systems, or systems
with built-in flexibility, EDS can enhance the quantity and type of
information available to a customer, increase the value of that information to
the customer and better enable the customer to take full advantage of that
information for its business needs.

EDS believes that as the trend toward the individualization of products and
services accelerates, the ability to customize the delivery of information to
the individual consumer will become increasingly important. This trend is
evidenced by the growth of the internet and electronic commerce markets. EDS
anticipates building the tools, capabilities and offerings to be a significant
participant in the internet and electronic commerce markets. EDS' delivery of
services to these markets, which include the home banking and home shopping
markets, is generally to the consumer through EDS' customer.

30
<PAGE>

SERVICES

EDS offers its clients a continuum of services worldwide, including the
management of computers, networks, information systems, information processing
facilities, business operations and related personnel, providing to its
clients advantages in cost-effectiveness, speed of implementation and state-
of-the-art technology. In delivering this continuum of services, EDS generally
performs one or more of five basic functions:

. MANAGEMENT CONSULTING SERVICES. Through its A.T. Kearney subsidiary, EDS
offers management consulting services, including business and market
strategy, benchmarking and best practices analysis, business process
reengineering, manufacturing and operations improvement, organizational
effectiveness, global sourcing and logistics and supply chain
management.

. CREATION OF IT SYSTEMS--SYSTEMS DEVELOPMENT. EDS designs, develops and
implements information systems or adds features that may increase the
capabilities of existing systems.

. ASSEMBLY OF IT PLATFORMS--SYSTEMS INTEGRATION. EDS selects technologies
and assembles integrated systems that may include software, hardware,
telecommunications and systems support and maintenance.

. MANAGEMENT OF IT OPERATIONS--SYSTEMS MANAGEMENT. EDS assumes and manages
the operation of part or all of a client's IT operations, which may
include equipment, personnel, information processing systems and
communications networks.

. MANAGEMENT OF BUSINESS OPERATIONS--PROCESS MANAGEMENT. EDS manages an
entire business function within the client's enterprise, which may
include IT operations as well as other activities such as remittance
processing, marketing, sales, customer service and training.

EDS is able to leverage its extensive technical infrastructure and other
numerous resources to offer IT services at clients' sites or through large
scale information processing centers or specialized distributed service
centers located worldwide. EDS' digital telecommunications network,
EDSNET (R), is capable of worldwide transmission of clients' voice, digital
and video data using the integrated fiber optic, microwave and satellite
facilities of what EDS believes is one of the world's largest digital
telecommunications networks, excluding government networks and common
carriers. EDS constantly examines and tests computer hardware and software
offered by suppliers worldwide as part of its efforts to assess and use in its
operations, and offer to EDS' clients, the technological changes that
continuously occur within the computer industry, including developments in
distributed computing and client/server architecture. EDS has developed
computer-aided software engineering ("CASE") tools to assist in generating new
software to keep pace with rapidly evolving strategies involving hardware
technologies and information processing theories and to facilitate the rapid
deployment of its products and services to the market.

BUSINESS AREAS

EDS conducts its sales, marketing and service activities on a global basis
through business units that focus both geographically and vertically along the
lines of specified industries. By combining the skills of an industry-focused
business unit with a geographic business unit, EDS is able to respond to a
client's requirements with people who are knowledgeable about a specific
industry and the client's business.

Additionally, certain services provided by EDS to all clients are
concentrated in specific service units. These service units provide electronic
transfer, microcomputer technology, computer assisted design, manufacturing
and engineering ("CAD," "CAM" and "CAE") and other services to EDS' clients in
coordination with the business units having primary responsibility for a
particular client.

The industry areas to which EDS provides IT services can be broadly
categorized as follows:

. MANUFACTURING. EDS assists numerous manufacturing companies in their
worldwide operations and in their implementation of global competitive
strategies, providing them with advanced capabilities in information
processing, information management and telecommunications. EDS offers
manufacturing

31
<PAGE>

clients expertise in electronic data interchange, engineering
information systems, integrated document processing, inventory control,
materials handling, process control, synchronous manufacturing,
artificial intelligence techniques and capabilities in CAD/CAM/CAE on an
integrated basis.

. FINANCIAL SERVICES. EDS offers a full range of IT services to the global
financial services industry. The industry's expansion of products and
services has led to an unprecedented dependence on IT and its
integration with a financial institution's business processes and
strategy. Through strategic alliances and acquisitions, EDS has
positioned itself to support a wide range of industry segments,
including commercial banks, consumer finance companies, commercial
insurance companies, investment banks, regional and community banks,
credit unions, brokerage and securities firms, thrifts and mortgage
lenders. EDS' services are augmented by a full range of industry-
specific products and services, including data processing, automated
teller machines ("ATMs"), debit and credit card services, voice and
teller automation, item and remittance processing, crossborder funds
transfer and currency exchange, consumer asset management, customer
service technology, remote/home banking and business-process
improvement.

. GOVERNMENT. EDS performs IT services for national, state and local
governments in the U.S. and around the world. At the national level, EDS
targets its services at both civil and defense organizations with
complex, large-scale information needs. Within state and local
governments, key markets of EDS include human services, transportation,
public safety and administration and finance. EDS' core competency for
managing complexity and its proven ability to leverage process
performance improvement techniques and technologies from the private
sector into the public sector has allowed EDS to expand its government
presence worldwide.

. COMMUNICATIONS. EDS offers a full spectrum of IT services to the global
communications market in addition to industry specific technology
platforms tailored to the information needs of each industry segment.
These services include clearinghouse, roaming and billing services and
systems for the wireless industry, information management and billing
systems for the cable television industry, and operational support
systems and billing systems for the telecommunications industry. EDS
also offers multimedia-based services designed to satisfy the predicted
demand of emerging full service network operators within the interactive
multimedia segment.

. HEALTH. EDS offers IT services to companies in the health care industry,
providing the management of information required in this highly
regulated industry in a rapidly-changing, record-intensive environment.
EDS' services go beyond traditional outsourcing and include solution
sets to improve specific business areas, including sales and marketing,
customer service and claims management.

. TRAVEL AND TRANSPORTATION. EDS' travel and transportation group offers
IT services to customers worldwide in the air transportation, freight,
computer reservation system, vehicle rental, travel agency, cruise line
and hospitality industries. EDS' IT services to these industries are
designed to meet customer requirements for reducing operating costs,
improving quality and increasing responsiveness to rapidly changing
market conditions.

. ENERGY. EDS provides IT services on a global basis to companies in the
petroleum, natural gas, chemical, pharmaceutical, mining and utility
industries. EDS' services in the energy industry are intended to improve
inventory control, reduce time to market, lower product cost, improve
rate case approval, improve capacity planning and increase efficiency in
regulatory and environmental compliance.

In certain of these markets, EDS provides services, such as ATM and travel
related services, directly to individual consumers.

ACQUISITIONS AND STRATEGIC ALLIANCES

From time to time EDS has made acquisitions and entered into strategic
alliances in an effort to obtain a competitive advantage or a new or expanded
presence in targeted geographic or service markets. For example,

32
<PAGE>

EDS acquired the domestic and international management consulting business of
A.T. Kearney in August 1995. A.T. Kearney is one of the world's leading
international management consulting and executive search firms serving clients
throughout the world.

EDS believes that a convergence of the computing and software,
communication, media and entertainment and electronic commerce industries is
occurring and will continue. As a result, acquisitions, joint ventures and
strategic alliances are expected to be increasingly important to EDS' ability
to compete effectively. See "Risk Factors--No Assurance of Strategic Alliances
and Other Business Opportunities" and "--Competition."

REVENUES

EDS receives fees for all aspects of its continuum of services. The fees are
generally paid pursuant to predetermined rates set forth in contracts. EDS'
customer contracts generally have terms of one to 10 years.

EDS' total revenues grew from $786 million in its 1984 fiscal year (the last
full fiscal year before General Motors' acquisition of EDS) to $12.4 billion
in 1995. Although revenues attributable to General Motors and its affiliates
have increased from 1985 to 1995, they have decreased as a percentage of total
revenues from approximately 70% in 1985 to approximately 31% in 1995 as a
result of the rapid revenue growth of EDS' non-General Motors business. As a
percentage of total revenues, revenues attributable to EDS' non-General Motors
business have increased from approximately 30% in 1985 to approximately 69% in
1995.

The following table sets forth the percentage of revenues for each of the
years in the three-year period ended December 31, 1995 derived by EDS from the
identified principal business areas.

<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES
FOR THE YEARS ENDED
BUSINESS AREA DECEMBER 31,
------------- ---------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Manufacturing.............................. 47% 49% 51%
Financial Services......................... 14 14 15
Government................................. 12 10 10
Communications............................. 8 7 6
Health..................................... 7 8 8
Travel and Transportation.................. 4 4 5
Energy..................................... 3 4 4
Other...................................... 5 4 1
------- ------- -------
Total.................................... 100% 100% 100%
======= ======= =======
</TABLE>

Other than General Motors, no one client accounted for more than 5% of EDS'
total revenues in 1995, 1994 or 1993. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Revenues."

SERVICES FOR GENERAL MOTORS

Approximately 31% of EDS' total revenues in 1995 was attributable to General
Motors and its affiliates. EDS provides substantially all of the worldwide
data processing and telecommunications activities for General Motors and its
affiliates (other than Hughes, with the exception of its subsidiary, Delco
Electronics Corporation ("Delco")), including integrated information systems
for payroll, health and benefits, office automation, communications and plant
automation functions. The loss of General Motors as an ongoing major customer
of EDS would have a material adverse effect on EDS. See "Risk Factors--
Dependence on Major Customer; Recent Changes in Pricing and Terms." The IT
services to be provided by EDS under the IT Services Agreements will generally
be similar to those provided to General Motors under the Existing IT Services
Agreements. See "Relationship Between the Company and General Motors--IT
Services Agreements."

33
<PAGE>

BACKLOG

EDS' backlog represents an estimate of the remaining future revenue from
existing signed contracts. Using the best available information, EDS
determines this estimate on an annual basis as of December 31 of each year.
The estimate includes contracts with non-GM customers which have a term of 12
months or longer and is calculated for each of the next ten years plus a
summary amount for contracts with terms extending beyond such ten-year period.
EDS historically has not included estimates for future revenues from General
Motors and its subsidiaries because of the intercompany relationships with
these entities. The EDS backlog estimate includes revenues expected under
current terms of executed contracts, revenues from government contracts in
which quantities are not definite but estimable, and a risk-adjusted estimate
of renewals and extensions for those contracts which contain renewal or
extension provisions.

Changes in the backlog calculation from year to year result from (i)
additional revenue from the signing of new contracts, (ii) reduction in
revenue from fulfilling contracts during the most recent year, (iii) reduction
in revenue from early termination of contracts, and (iv) adjustments to
estimates of previously included contracts. On an annual basis, EDS reviews
each contract included in the calculation and adjusts estimates for those
contracts based on the latest available information.

At December 31, 1995 and 1994, EDS' firm backlog for services (excluding
services for General Motors) was approximately $39.8 billion and $34.5
billion, respectively.

COMPETITION

EDS experiences competition in the IT industry and in the broader
information industry, which includes the computing, communications and
media/entertainment industries. Today, EDS' principal competitors in the IT
services industry include International Business Machines Corporation,
Andersen Consulting LLP, Computer Sciences Corporation, AT&T Corp. ("AT&T"),
MCI Communications Corporation/SHL Systemhouse Inc. ("MCI") and Cap Gemini
Sogeti S.A.

EDS has historically faced competition principally from other companies
providing information technology systems and services. As the markets for IT
services have grown and as the services demanded by customers have expanded
and increased in complexity, EDS' competitors have expanded from niche-
oriented, geographically-focused companies to include broader-based, global
competitors.

EDS believes that a long-term trend of convergence is occurring in the
computing, communications and media/entertainment sectors of the information
industry. As this trend continues, companies historically involved in the
communications and media/entertainment sectors of the information industry, as
well as companies principally involved in other portions of the IT industry,
will increasingly seek to compete in the businesses in which EDS has
traditionally operated. For example, AT&T and MCI now offer services that
combine computing with communications. Similarly, EDS' strategy includes
continuing to leverage its expertise into other parts of the information
industry. The ability of EDS to remain competitive will depend in part upon
its continued ability to finance and acquire the resources necessary to offer
broad-based services and products on an efficient basis.

In addition, technology in the IT industry is in a rapid and continuing
state of change as new technologies continue to be developed, introduced and
implemented. EDS management believes that its ability to continue to compete
effectively also will depend upon its ability to develop and market services
and products that meet changing user needs and respond to technological
changes on a timely and cost-effective basis.

34
<PAGE>

RELATIONSHIP BETWEEN THE COMPANY AND GENERAL MOTORS

GENERAL

General Motors continues to have certain contractual relationships with EDS.
The IT Services Agreements provide for the continuation of a long-term
customer-supplier relationship and the Separation Agreement established
certain transitional and other arrangements deemed necessary in connection
with the Split-Off, in each case as described below. Additionally, GM has an
indirect stake in EDS' financial performance as a result of the Hourly Plan
Special Trust's holdings of Common Stock. See "Selling Stockholder."

IT SERVICES AGREEMENTS

Immediately prior to the consummation of the Split-Off, General Motors and
EDS entered into the Master Service Agreement and certain related agreements
pursuant to which EDS will continue to serve as General Motors' principal
supplier of IT services on a worldwide basis for an initial term of 10 years
following the Split-Off, which term may be extended by mutual agreement of the
parties. In addition, GM and EDS implemented certain contractual changes which
modified or otherwise affected the provisions of several existing Service
Agreements (as hereinafter defined). GM and EDS also entered into agreements
whereby the rates charged by EDS for certain information processing activities
and communications services were reduced.

The terms of the Master Service Agreement are applicable to all IT Services
Agreements between and among GM and its affiliates, on the one hand, and EDS
and its affiliates, on the other hand, which relate to certain "in-scope"
services as defined in the Master Service Agreement ("MSA Services"). Under
the IT Service Agreements, EDS will provide to General Motors certain plant
floor automation services in North America which had previously been provided
by EDS and other vendors under a variety of agreements. IT services that are
considered to be MSA Services after the Split-Off accounted for approximately
$3.4 billion of the approximately $3.9 billion of revenues in the aggregate
received by EDS from GM in 1995. The balance of EDS' 1995 revenues from GM was
attributable to goods and services provided to GM by EDS which would have been
outside the scope of the Master Service Agreement. The parties expect that EDS
will continue to provide "out-of-scope" goods and services to GM under various
types of contractual agreements other than the Master Service Agreement.

Set forth below is a summary description of certain of the principal
provisions of the IT Services Agreements. Such description does not purport to
be complete, and to the extent it relates to the Master Service Agreement, is
qualified in its entirety by reference to the Master Service Agreement, a copy
of which has been filed with the Commission. For a discussion of certain
financial effects on EDS of the terms of the IT Services Agreements, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

TERM

The term of the Master Service Agreement commenced on June 7, 1996, the date
of consummation of the Split-Off, and will continue until the expiration of
ten years thereafter. The term of the Master Service Agreement may be extended
for an additional period or periods by mutual agreement between General Motors
and EDS. Prior to the Split-Off, the Prior Master Agreement remained in effect
indefinitely, subject to termination by either General Motors or EDS in the
event of the sale of all or substantially all of the assets or stock of EDS to
a non-GM entity. The change in the term of the Master Service Agreement was
deemed appropriate in connection with the Split-Off because GM and EDS desired
to continue the customer-supplier relationship after the Split-Off and
independent IT service providers generally do not have contracts with their
customers for indefinite terms. The length of EDS' largest customer contracts
generally ranges from 8 to 12 years. Although EDS has historically been able
to achieve high renewal rates with its customers upon the expiration of long-
term contracts, there can be no assurance as to whether or to what extent EDS
will continue to provide IT services to GM after the initial term of the
Master Service Agreement.

35
<PAGE>

SERVICE AGREEMENTS

Pursuant to the Prior Master Agreement, GM business units and EDS had
entered into a number of Service Agreements ("Service Agreements") setting
forth the terms and provisions applicable to specific services or projects
undertaken by EDS on behalf of various GM organizations. Such Service
Agreements remain in effect after the Split-Off and, in many cases, were
extended or otherwise modified as provided in the Master Service Agreement. In
addition, it is contemplated that, under the Master Service Agreement, GM
business units and EDS will continue to negotiate and enter into additional
Service Agreements providing for the performance of IT services on mutually
agreed terms. Each future Service Agreement will set forth provisions with
respect to, among other things, (i) the period of time for which EDS will
perform services pursuant thereto, (ii) the nature and scope of the respective
obligations of the parties thereunder and (iii) the pricing structure, method
and amounts of payments to be made to EDS in accordance therewith. In
negotiating future Service Agreements, the parties will endeavor to agree upon
fixed-price service arrangements which meet the standards of competitiveness
described below. See "--Competitiveness" and "--Pricing of Services" below.
The provisions of the Master Service Agreement will apply to all Service
Agreements, whether entered into prior to or after the consummation of the
Split-Off.

In connection with the execution of the Master Service Agreement, the terms
of the largest domestic Service Agreements (accounting for approximately $2.5
billion in annual revenues in 1995) then in effect were extended for
additional terms of between one and three years. In particular, the Service
Agreement with Delphi Automotive Systems was extended through December 31,
1998 and the Service Agreements with GM's North American Operations ("NAO"),
General Motors Acceptance Corporation (U.S. and Canada) and Motors Insurance
Corporation (U.S. and Canada) were each extended through December 31, 1999.
Each other Service Agreement entered into prior to the Split-Off will continue
in effect for the duration of its agreed term.

SCOPE OF SERVICES

The Master Service Agreement established a contractual framework for the
provision on a worldwide basis of the MSA Services by EDS to General Motors
and all entities (i) in which General Motors owns 65% or more of the
outstanding equity and over which it exercises management control (if EDS was
providing services in support of the business operations of that entity as of
August 1, 1995) or (ii) in which General Motors owns 80% or more of the
outstanding equity (if EDS was not providing services in support of the
business operations of that entity as of August 1, 1995). The Master Service
Agreement contains a flexible description of the MSA Services that is based on
functional service categories so as to take into account possible future
changes in business operations or technologies that result in the replacement
of existing processes and technologies. The MSA Services to be provided by EDS
include IT goods and services related to the following functional service
categories: (i) computing and communications infrastructure; (ii) development
of application software and implementation of commercial off-the-shelf
application software; (iii) data management; (iv) cross-functional IT-related
services; and (v) certain services related to specified plant floor
operations.

Under the Master Service Agreement, services for certain GM units or
operations or in certain geographic areas were specifically excluded from the
scope of work to be performed by EDS. In particular, such agreement provides
that General Motors will not be required to obtain from EDS any MSA Services
(i) for Hughes, with the exception of its subsidiary, Delco, (ii) for any
other business or entity acquired by General Motors after January 1, 1985
(other than (x) GMAC Mortgage Corporation, with the exception of its
subsidiary, Residential Funding Corporation, and (y) any other entity which
executed a Service Agreement prior to August 1, 1995), (iii) in any country
where the provision of such services by EDS would violate any national law of
that country, (iv) in specified emerging geographic markets outside of North
America and Western Europe where, as of August 1, 1995, EDS has not previously
provided such services for the same GM business function and line of business
in that emerging market, and (v) with respect to any plant floor services
other than pursuant to the agreement described in "--Plant Floor Agreement"
below or certain other arrangements currently in effect between the parties.
Furthermore, the provisions of the Master Service Agreement relating to the
scope of services to be

36
<PAGE>

provided by EDS are subject to General Motors' right, under certain
circumstances, to competitively bid and award a portion of such services to
third party service providers. See "--Market Testing and Outsourcing" below.

IT STRATEGY AND DIRECTION

The Master Service Agreement provides that General Motors is responsible
for, and will decide and direct, its IT strategies and requirements, including
its computing and communications architecture. EDS is responsible for the
performance of IT services pursuant to the Master Service Agreement in
furtherance of General Motors' IT strategies and requirements.

COMPETITIVENESS

In accordance with the Master Service Agreement, the MSA Services to be
provided by EDS will be competitive with respect to quality, service, price
and technology giving due consideration to General Motors' requirements and
other relevant factors. The provisions of the Master Service Agreement with
respect to competitiveness apply to the negotiation or renegotiation of (i)
new or replacement Service Agreements, (ii) the terms and conditions
applicable to new or replacement MSA Services and (iii) the pricing of any MSA
Services when such negotiation or renegotiation is contractually provided for
in a Service Agreement. When the applicable EDS and GM organizations reach a
mutually acceptable agreement as to the competitiveness of any services, the
standards of competitiveness provided for in the Master Service Agreement will
be deemed satisfied for the term of such agreement.

In situations where the applicable GM and EDS organizations are unable to
reach a mutually acceptable agreement as to the competitiveness of any MSA
Services, the Master Service Agreement provides a procedure whereby the
negotiating impasse will be escalated to senior management, the services of a
standing neutral mediator may (and, in some cases, must) be utilized, and, in
the absence of an agreement, (i) any impasse as to uniform published rates for
applicable items will be resolved by binding arbitration and (ii) any impasse
as to any other services will be resolved by EDS providing the services on the
basis of the standard terms and conditions provided in the Master Service
Agreement and a modified cost-plus pricing methodology.

PRICING OF SERVICES

In general, under the Master Service Agreement, the same methods of pricing
are available as were provided for under the Prior Master Agreement. As a
result, depending on the type of services to be provided by EDS, the parties
may utilize (i) fixed-price arrangements, (ii) cost-based pricing methods or
(iii) uniform published rates for off-the-shelf, commercially available
products and services. However, the parties have agreed to endeavor to
incorporate fixed-price arrangements into new Service Agreements entered into
under the Master Service Agreement to the extent practicable.

With respect to certain information processing services to be performed by
EDS, the parties have agreed to annual reductions in the rates to be charged
by EDS to all GM organizations worldwide, which reduced rates were applied
retroactively as of January 1, 1996 and will be in effect through December 31,
2000. In addition, with respect to certain communication services to be
performed by EDS, the parties have agreed to annual reductions in the rates to
be charged by EDS to all GM organizations in the United States, which reduced
rates were applied retroactively as of January 1, 1996 and will be in effect
through December 31, 1998. During the respective periods that these reduced
rates are in effect, the information processing and communications services to
which the reduced charges apply will not be subject to the provisions of the
Master Service Agreement relating to market testing or outsourcing. See "--
Market Testing and Outsourcing" below.

MARKET TESTING AND OUTSOURCING

The Master Service Agreement provides for certain market testing procedures
in order to test the competitiveness of the MSA Services provided by EDS given
that after the Split-Off the Capital Stock

37
<PAGE>

Committee of the GM Board no longer has the ability to monitor and ensure the
continued fairness of the arrangements between GM and EDS. Under these
procedures, EDS will have the opportunity to bid on any and all MSA Services
and any bid submitted by EDS will be evaluated on the same criteria as bids
submitted by other service providers. In each of 1996 and 1997, GM's
International Operations unit ("GMIO") may expose to competitive bidding MSA
Services that would otherwise be provided by EDS so long as the revenues that
would be reasonably paid to EDS by GM for such MSA Services during each such
year do not exceed $30 million. Following such competitive bidding, GMIO may
award contracts to one or more third party service providers with respect to
any or all of the MSA Services exposed to competitive bidding. Thereafter,
during each year beginning in 1998, GM will be permitted to expose to
competitive bidding specified percentages of the prior year's revenues paid to
EDS for MSA Services. In each year from 1998 through 2000, GM may expose to
competitive bidding and award to third parties contracts for MSA Services for
which GM would otherwise have reasonably paid EDS up to an average of
approximately 6% of the prior year's revenues paid to EDS for MSA Services.
For the years 2001 through 2006, GM may expose to competitive bidding and
award to third parties contracts for MSA Services for which GM would otherwise
have reasonably paid EDS up to an average of approximately 2.4% of the prior
year's revenues paid to EDS for MSA Services. Subject to certain limitations,
GM will select the MSA Services to be exposed to competitive bidding after
consultation with EDS. In addition to the aforementioned annual limitations,
the following aggregate limitations apply: through the year 2000, in no single
calendar year may the amount paid to third parties for MSA Services exceed 15%
of the aggregate amount of revenue paid to EDS for MSA Services performed
during the prior year; and after the year 2000, in no single calendar year may
the amount paid to third parties for MSA Services exceed 25% of the aggregate
amount of revenue paid to EDS for MSA Services performed during the prior
year. Although EDS may bid on any and all of such MSA Services, it is expected
that third party service providers will be awarded some portion of the MSA
Services exposed to competitive bidding. Accordingly, there can be no
assurance as to whether or to what extent EDS will be successful in bidding on
such MSA Services.

STRUCTURAL COST REDUCTIONS

The Master Service Agreement established specified structural cost reduction
targets for the first four years of the Master Service Agreement. In each of
the years 1996 through 1998, the annual cost reduction targets are $100
million. In 1999, the target is $50 million. These cost reduction targets are
generally somewhat higher than the cost reduction targets that were set forth
in the preexisting Service Agreements, which they are intended to replace.
Unlike the cost reduction targets in the preexisting Service Agreements,
however, the targets under the Master Service Agreement are not intended to be
performance guarantees, but rather simply represent firm good faith business
commitments on the part of General Motors and EDS. As such, the Master Service
Agreement does not provide for any gain sharing or similar incentives in the
event that the targets are exceeded and does not impose any penalties or other
liabilities in the event that they are not met. No assurance can be given that
any of the specific targets for structural cost reductions will be achieved.

PAYMENT TERMS

The Prior IT Services Agreements provided for GM to pay EDS on the 15th day
of the month in which services were provided with respect to a substantial
portion of services, especially in North America. International payment terms
in the Prior IT Services Agreements were often more favorable to GM and were
generally governed by the commercial standards prevailing in each particular
country. Under the IT Services Agreements, there will be a transition of
payment terms to the 20th day of the month following service for all
agreements which do not have payment terms at least that favorable to GM
(principally in North America). The transition will be accomplished as
follows: (i) through 1996, no change; (ii) beginning in 1997, payment on the
30th day of the month when services are provided; (iii) beginning in 1998,
payment on the 20th day of the month following service for certain business
units; and (iv) beginning in 1999, payment on the 20th day of the month
following service for all remaining business units, including NAO.

38
<PAGE>

TERMINATION

The Master Service Agreement provides that it may be terminated (i) by
either party, if the other party defaults in any material respect in the
performance of its obligations thereunder and such default is not cured as
provided therein after notice thereof, (ii) by EDS, if General Motors defaults
in the payment when due of any material amount owing to EDS thereunder and
such default is not cured as provided therein after notice thereof, (iii) by
either party, if the other party becomes insolvent or (iv) by General Motors,
if there occurs a "change of control" of EDS and certain additional conditions
are met.

For purposes of the termination provisions of the Master Service Agreement,
a "change of control" means the occurrence of any of the following events: (i)
any person files (or is required to file) a Schedule 13D or 14D-1 under the
Exchange Act disclosing that such person has become the beneficial owner of
Common Stock representing 50% or more of the aggregate voting power of the
outstanding shares of Common Stock; (ii) any person files (or is required to
file) a Schedule 13D or 14D-1 under the Exchange Act disclosing that such
person has become the beneficial owner of Common Stock representing 30% or
more of the aggregate voting power of the outstanding shares of Common Stock,
or commences a proxy solicitation subject to Rule 14a-11 of the Exchange Act
with respect to the election or removal of members of the EDS Board, and,
within two years, individuals who constituted a majority of the members of the
EDS Board at the time of such acquisition or solicitation (as applicable),
together with certain persons elected, recommended or nominated by such
directors, cease to constitute a majority of the EDS Board; or (iii) there is
consummated any transaction (or transactions) resulting in a number of shares
of Common Stock which represents 50% or more of the aggregate voting power of
the outstanding shares of Common Stock being beneficially owned by persons who
did not either own such securities as Common Stock immediately prior to such
transaction or receive such securities in respect of the conversion or
exchange of Common Stock in such transaction.

In the event of a change of control, GM may elect to terminate the Master
Service Agreement if the GM Board determines that there is substantial
uncertainty about EDS' ability to perform its obligations under the IT
Services Agreements in all material respects or any other significant threat
to the business relationship between EDS and the GM units that are provided
MSA Services by EDS. GM may also terminate the Master Service Agreement in the
event of a change of control in which EDS is acquired by a manufacturer of
cars or trucks that competes with GM (a "core competitor") and as a result of
which GM determines that there is a reasonable likelihood of a significant
competitive threat to GM. In addition, if there is a change of control in
which EDS is acquired by a competitor of GM (other than a core competitor) and
there is a reasonable likelihood of a significant competitive threat to one or
more significant GM units that contract with EDS for MSA Services under the
Master Service Agreement, GM may terminate the Service Agreements between EDS
and such units; provided, that EDS may instead elect to terminate the Master
Service Agreement if the revenues associated with those Service Agreements
accounted for more than 60% of the revenues paid to EDS for MSA Services
during the preceding year.

In the event that General Motors elects to terminate the Master Service
Agreement or any Service Agreement as a result of a change in control of EDS,
then General Motors (i) will be obligated to pay EDS for transition services
in accordance with the provisions therefor in the Master Service Agreement,
and (ii) may, under certain circumstances, be obligated to pay for all or a
portion (depending on the status of the party acquiring control of EDS) of
certain cancellation charges intended to reimburse EDS for certain wind-down
expenses, losses relating to capital assets and long-term leases, and
personnel expenses.

PLANT FLOOR AGREEMENT

GM and EDS have also entered into an agreement (the "Plant Floor Agreement")
which covers plant floor systems services for NAO and Delphi North American
entities (excluding Saturn) for an initial term of five years and for
additional renewal periods under the Master Service Agreement (subject to
possible termination at the end of a 2.5 year probationary period). The Plant
Floor Agreement, which is subject to the Master Service Agreement, is expected
to account for approximately $200 million in revenue in 1997. Prior to the
Plant Floor Agreement, GM procured plant floor services from EDS and other
vendors under a variety of agreements.

39
<PAGE>

SEPARATION AGREEMENT

General Motors and EDS also entered into the Separation Agreement (the
"Separation Agreement"), which established certain arrangements between
General Motors and EDS deemed necessary in order to deal with various
business, legal and regulatory issues following the Split-Off. Set forth below
is a summary description of certain of the principal provisions of the
Separation Agreement. Such description does not purport to be complete and is
qualified in its entirety by reference to such agreement, a copy of which has
been filed with the Commission.

The Separation Agreement contains covenants intended to protect the tax-free
status of the Split-Off. EDS has agreed with General Motors that, until after
June 7, 1998, EDS will not (i) enter into certain secondary capital stock
transactions, or permit such transactions to occur, whereby a person would
acquire, from holders of outstanding shares of EDS capital stock, a number of
shares of EDS capital stock that would comprise more than 15% of the number of
issued and outstanding shares of Common Stock, unless either (a) General
Motors has determined that any such proposed transaction would constitute a
tax-free reorganization under the Internal Revenue Code of 1986, as amended
(the "Code"), or would not otherwise jeopardize the tax-free status of the
Split-Off or (b) the IRS has issued a ruling to the effect that any such
proposed transaction would constitute a tax-free reorganization under the
Code; (ii) fail to continue the active conduct of the trade or business
conducted by EDS on the date of the Split-Off (or liquidate, dispose of, or
otherwise discontinue the conduct of any material portion of such trade or
business); (iii) voluntarily dissolve or liquidate or, except in the ordinary
course of business, sell or otherwise dispose of more than 60% of the gross
assets of EDS or more than 60% of the consolidated gross assets of EDS and its
subsidiaries, unless General Motors determines that such transaction would not
jeopardize the tax-free status of the Split-Off; or (iv) take any other action
or enter into any transaction that would be reasonably likely to jeopardize
the tax-free status of the Split-Off, unless GM has determined that such
action or transaction would not jeopardize the tax-free status of the Split-
Off. In addition, EDS has agreed with General Motors that, until after
December 7, 1996, EDS will not enter into any transaction that would result in
any person acquiring from EDS a number of shares of EDS capital stock that,
when aggregated with all other shares of EDS capital stock then owned by such
person, would constitute more than 20% of the total combined voting power of
the voting stock of EDS or 20% of the total number of outstanding shares of
any class or series of non-voting stock of EDS. EDS will indemnify General
Motors and its affiliates from and against tax-related losses incurred by
General Motors to the extent caused by EDS' breach of any of the
representations, warranties or covenants made by EDS in the Separation
Agreement with respect to protecting the tax-free status of the Split-Off.

Under the Separation Agreement, each of General Motors and EDS have agreed
to indemnify the other and its affiliates and their respective directors,
officers and employees from and against losses arising out of (i) breaches of
the provisions of the Separation Agreement, (ii) certain misstatements or
omissions, or alleged misstatements or omissions, in certain filings under the
securities laws, (iii) certain administrative actions in connection with stock
records and the exchange of stock certificates by former holders of Class E
Common Stock and (iv) the conduct of its respective business.

The Separation Agreement provides EDS a $50.0 million allowance relating to
the resolution of various uncertain, contingent or other matters arising out
of the separation of GM and EDS. As of June 7, 1996, the parties had agreed to
the application of $40.7 million of the allowance, principally to various tax,
employee benefit and insurance matters. The remaining $9.3 million of the
allowance will be available to EDS until generally June 7, 1998 for
application against any amounts that are or may become payable by EDS and its
affiliates to GM and its affiliates in connection with any uncertain,
contingent or other matters arising prior to the Split-Off and out of the
separation of GM and EDS. Such allowance generally may not be utilized for
items provided for in the Separation Agreement.

40
<PAGE>

BOARD OF DIRECTORS AND MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The EDS Board currently has 10 members. A majority of the members of the EDS
Board consists of independent directors. Each of the independent directors was
initially elected to the EDS Board effective immediately following the Split-
Off.

Set forth below are the names, ages and positions with EDS of the directors
and executive officers of EDS.

<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Lester M. Alberthal, Jr. ........ 52 Chairman of the Board and Chief Executive
Officer
Gary J. Fernandes................ 52 Vice Chairman and Director
Jeffrey M. Heller................ 56 President, Chief Operating Officer and
Director
Hartmut W. Burger................ 53 Executive Vice President
John R. Castle, Jr............... 53 Executive Vice President
Paul J. Chiapparone.............. 57 Executive Vice President
Joseph M. Grant.................. 57 Executive Vice President and Chief
Financial Officer
Dean Linderman................... 52 Executive Vice President
G. Stuart Reeves................. 56 Executive Vice President
James A. Baker, III.............. 66 Director
Richard B. Cheney................ 55 Director
Ray J. Groves.................... 60 Director
Ray L. Hunt...................... 53 Director
C. Robert Kidder................. 51 Director
Judith Rodin..................... 51 Director
Enrique J. Sosa.................. 56 Director
</TABLE>

The EDS Board is divided into three classes serving staggered terms.
Directors in each class are elected to serve for three-year terms and until
their successors are elected and qualified. Each year, the directors of one
class stand for election as their terms of office expire. Messrs. Groves,
Heller and Hunt are designated as Class I directors, with their terms of
office expiring in 1997; Messrs. Cheney, Fernandes, Kidder and Sosa are
designated as Class II directors, with their terms of office expiring in 1998;
and Messrs. Alberthal and Baker and Dr. Rodin are designated as Class III
directors, with their terms of office expiring in 1999.

The EDS Board has established three standing committees, an Audit Committee,
a Compensation and Benefits Committee and a Governance Committee. The Audit
Committee consists of Messrs. Groves, Hunt and Sosa. The Compensation and
Benefits Committee consists of Messrs. Groves, Hunt and Kidder, who are
"disinterested persons" within the meanings of Rule 16b-3 under the Exchange
Act and section 162(m) of the Code. The Governance Committee consists of
Messrs. Baker and Cheney and Dr. Rodin, with the Chairman of the Board being
an ex-officio, non-voting member.

The Audit Committee recommends to the EDS Board the independent public
accountants to be selected to audit EDS' annual financial statements. The
Audit Committee also reviews the planned scope of the annual external and
internal audits, the independent accountants' and internal auditors' reports
to management and management's responses thereto, possible violations of EDS'
business ethics and conflicts of interest policies and the effectiveness of
EDS' internal audit staff.

41
<PAGE>

The Compensation and Benefits Committee establishes remuneration levels for
senior executives of EDS, reviews the performance of the Chief Executive
Officer, reviews significant employee benefit programs and establishes and
administers executive compensation programs, including bonus plans, stock
option and other equity-based programs, deferred compensation plans and any
other cash or stock incentive programs.

The Governance Committee recommends to the EDS Board the slate of nominees
to be elected to the EDS Board and to be selected for membership on the
various EDS Board committees and recommends a successor to the Chief Executive
Officer when a vacancy occurs through retirement or otherwise.

The EDS Board may, from time to time, establish other committees to
facilitate the management of EDS or for other purposes it may deem
appropriate.

Executive officers serve at the discretion of the EDS Board.

Set forth below is a description of the backgrounds of the directors and
executive officers of EDS.

Mr. Alberthal has been Chief Executive Officer since December 1986 and
Chairman of the Board since June 1989. Mr. Alberthal is chair of EDS'
Executive Council, the Company's chief policy making and strategy group. Mr.
Alberthal joined EDS in 1968. He became responsible for EDS' health care
division in 1974 and was named Senior Vice President with responsibility for
EDS' insurance group in 1979. Following the acquisition of EDS by General
Motors in 1984, Mr. Alberthal led all non-General Motors North American
operating groups. He served as President of EDS from April 1986 through the
consummation of the Split-Off. Mr. Alberthal is on the Board of Directors of
Baker Hughes Incorporated.

Mr. Fernandes has been the Vice Chairman of EDS since the consummation of
the Split-Off and a director of EDS since 1981. Mr. Fernandes had been a
Senior Vice President of EDS from October 1984 until the consummation of the
Split-Off. Mr. Fernandes has oversight responsibility for EDS' worldwide
business development and corporate development (including marketing and
strategic planning) and is Chairman of its A.T. Kearney management consulting
services subsidiary. Mr. Fernandes joined EDS in 1969 and has served in
numerous management capacities in the United States, Europe and Japan. Mr.
Fernandes is a director of The Southland Corporation, Amtech Corporation and
John Wiley & Sons, Inc.

Mr. Heller has been the President and Chief Operating Officer and a director
of EDS since the consummation of the Split-Off and prior to that time had been
a Senior Vice President since October 1984. Mr. Heller is chair of EDS' Global
Operations Council, which is responsible for EDS' operating strategies and
other business issues. Mr. Heller joined EDS in 1968 and has served in
numerous technical management positions.

Mr. Burger has been an Executive Vice President of EDS since the
consummation of the Split-Off and prior to that time had been a Vice President
since October 1992. Mr. Burger has responsibility for EDS' technical
infrastructure and internal information functions as well as for EDS' business
units serving customers in the communications industry. Prior to assuming his
current responsibilities, Mr. Burger was responsible for EDS' business units
serving customers in the manufacturing and commercial services industries.

Mr. Castle has been an Executive Vice President of EDS since the
consummation of the Split-Off and prior to that time had been a Senior Vice
President since October 1988. He has oversight responsibility for EDS'
government affairs, communications and public relations groups and EDS' legal
department. Prior to joining EDS in 1988, Mr. Castle was a partner in the
Dallas law firm of Hughes & Luce.

Mr. Chiapparone has been an Executive Vice President of EDS since the
consummation of the Split-Off and prior to that time had been a Senior Vice
President since April 1986. He has responsibility for business units serving
customers in the manufacturing industry (including General Motors) and the
financial services and travel and transportation industries and for EDS'
Asia/Pacific operations. Mr. Chiapparone joined EDS in 1966 and has served in
numerous management capacities. Mr. Chiapparone is a director of St. Jude
Medical, Inc.

Mr. Grant has been Chief Financial Officer of EDS since December 1990 and an
Executive Vice President since the consummation of the Split-Off. Prior to
that time he had been a Senior Vice President since February 1992. Mr. Grant
has oversight responsibility for EDS' administration and corporate finance
groups. Prior to joining EDS in December 1990, Mr. Grant served as executive
vice president and chief systems officer for

42
<PAGE>

American General Corporation from 1989 to 1990 and as chairman of the board
and chief executive officer of Texas American Bancshares Inc. from 1986 to
1989. Mr. Grant is a director of Heritage Media Corporation, American Eagle
Group, Inc. and NorAm Energy Corp.

Mr. Linderman has been an Executive Vice President of EDS since the
consummation of the Split-Off and prior to that time had been a Senior Vice
President since April 1986. He has responsibility for EDS' global employee
development units, including the technical and leadership development, sales
leadership, quality and industry leadership and global diversity groups. Mr.
Linderman joined EDS in 1970 and has served in numerous management positions.

Mr. Reeves has been an Executive Vice President since the consummation of
the Split-Off and prior to that time had been a Senior Vice President since
February 1987. Mr. Reeves has responsibility for EDS' business units serving
customers in government and in the energy and healthcare industries as well as
EDS' European, Canadian, Mexican and Central and South American operations.
Mr. Reeves joined EDS in 1967, and has held numerous technical and management
positions.

Mr. Baker has been a director of EDS since the consummation of the Split-
Off. Mr. Baker has been a Senior Partner of Baker & Botts, L.L.P. since March
1993 and a Senior Counselor of The Carlyle Group, a merchant banking firm,
since 1993. He is a director of Houston Industries Incorporated, Princeton
University and Rice University, as well as the Howard Hughes Medical
Institute. Mr. Baker served as Senior Counselor to the President of the United
States and White House Chief of Staff from August 1992 to January 1993, as
United States Secretary of State from January 1989 to August 1992, as United
States Secretary of the Treasury from 1985 to 1988, and as White House Chief
of Staff from 1981 to 1985.

Mr. Cheney has been a director of EDS since the consummation of the Split-
Off. Mr. Cheney has been the President and Chief Executive Officer of
Halliburton Company since October 1995 and its Chairman of the Board since
January 1996. Mr. Cheney was a Senior Fellow at the American Enterprise
Institute, a policy think tank, from January 1993 to October 1995. Mr. Cheney
served as United States Secretary of Defense from January 1989 to January
1993. Mr. Cheney is a director of Halliburton Company, Union Pacific
Corporation and The Procter & Gamble Company.

Mr. Groves has been a director of EDS since the consummation of the Split-
Off. Mr. Groves retired as Chairman and Chief Executive Officer of Ernst &
Young L.L.P. in September 1994, which position he had held since October 1977,
and has served as Chairman of Legg Mason Merchant Banking, Inc. since March
1995. Mr. Groves is a director of Consolidated Natural Gas Company, Marsh &
McLennan Companies, Inc., RJR Nabisco Holdings Corp. and RJR Nabisco, Inc.

Mr. Hunt has been a director of EDS since the consummation of the Split-Off.
Mr. Hunt has been the Chairman of the Board, President and Chief Executive
Officer of Hunt Consolidated Inc. and the Chairman of the Board and Chief
Executive Officer of Hunt Oil Company for more than five years. Mr. Hunt is a
director of Dresser Industries, Inc., Pepsico, Inc., and Ergo Science
Corporation.

Mr. Kidder has been a director of EDS since the consummation of the Split-
Off. Mr. Kidder has been Chairman and Chief Executive Officer of Borden, Inc.
since January 1995. Mr. Kidder was Chairman and Chief Executive Officer of
Duracell International, Inc. from August 1991 through October 1994 and its
President and Chief Executive Officer from June 1988 to August 1991. Mr.
Kidder is a director of Borden, Inc., Duracell International, Inc., and Dean
Witter, Discover & Co.

Dr. Rodin has been a director of EDS since the consummation of the Split-
Off. Dr. Rodin has been President of the University of Pennsylvania, as well
as a professor of psychology and of medicine and psychiatry at the university,
since 1994. Dr. Rodin was Provost of Yale University from 1992 to 1994 and
held various professorial and other positions at Yale from 1972 to 1994,
including Dean of the Graduate School of Arts and Sciences and Chair of the
Department of Psychology. Dr. Rodin is a director of AETNA Life and Casualty
Company and Air Products and Chemicals, Inc.

Mr. Sosa has been a director of EDS since the consummation of the Split-Off.
Since October 1995, Mr. Sosa has been an Executive Vice President of Amoco
Corporation, heading its chemicals sector. For greater than five years prior
to that time, Mr. Sosa was with The Dow Chemical Company, most recently
serving as a Senior Vice President and a director, as well as President of Dow
North America.

43
<PAGE>

BACKGROUND OF THE OFFERINGS

On March 13, 1995, General Motors contributed to the Hourly Plan
approximately 173 million shares of Class E Common Stock. In connection with
making such contribution, General Motors and the Pension Benefit Guaranty
Corporation (the "PBGC") entered into an agreement under which the PBGC agreed
to release EDS and its subsidiaries from all liabilities or obligations, if
any, arising under Title IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), with respect to GM's U.S. pension plans if a
transaction such as the Split-Off were to occur.

All of the above-referenced shares of Class E Common Stock contributed by
General Motors to the Hourly Plan, together with an additional approximately
16.9 million shares of Class E Common Stock then held by the Hourly Plan,
became subject to the restrictions on transfer in and other terms of a
Registration Rights Agreement dated March 12, 1995 between General Motors and
the Hourly Plan Trustee (including the exhibits thereto, the "Registration
Rights Agreement"). Pursuant to the Registration Rights Agreement, on June 12,
1995, General Motors registered under the Securities Act an underwritten
public offering of 42,550,000 shares (including an over-allotment option of
5,550,000 shares, which was exercised in full) of Class E Common Stock owned
by the Hourly Plan Special Trust and a trust under the General Motors
Retirement Plan for Salaried Employees. The Hourly Plan Special Trust sold
40,550,000 of such shares to the public.

Upon consummation of the Split-Off, EDS succeeded to all of the rights and
obligations of General Motors under the Registration Rights Agreement (with
the exception of certain indemnification provisions relating to prior
offerings under the Registration Rights Agreement) and all of the provisions
of the Registration Rights Agreement applicable to the Class E Common Stock
held by the GM Hourly Plan Special Trust became applicable to the Common Stock
into which such Class E Common Stock was converted.

Under the Registration Rights Agreement, the Hourly Plan Special Trust may
only transfer such shares of Common Stock in certain types of transactions and
under certain circumstances, including "demand transfers" (which are defined
under the Registration Rights Agreement to include public offerings and
negotiated transactions, whether registered or not) and certain transfers to
employee benefit plans maintained by General Motors and its subsidiaries. The
Registration Rights Agreement provides that any underwritten public offering
to be effected thereunder by the Hourly Plan Special Trust must be reasonably
designed to achieve a broad public distribution of the securities being
offered. Subject to certain limitations, EDS may postpone the filing or
effectiveness of any registration statement requested by the Hourly Plan
Special Trust or the making of any demand transfer at any time EDS determines
that such action would interfere with any proposal or plan by EDS to engage in
any material acquisition, merger, tender offer, securities offering or other
material transaction or would require EDS to make a public disclosure of
previously non-public material information. The Registration Rights Agreement
prohibits the Hourly Plan Special Trust from making a negotiated transfer (i)
of more than 2% of the shares of Common Stock then outstanding to any person
and (ii) to any person who is then required to file or has filed a Schedule
13D under the Exchange Act with respect to the Common Stock. The Hourly Plan
Special Trust is permitted two demand transfers in any twelve-month period.
Restrictions on the Hourly Plan Special Trust's transfer of shares of Common
Stock under the Registration Rights Agreement will terminate when the Hourly
Plan Special Trust owns less than 2% of the shares of Common Stock then
outstanding.

The Registration Rights Agreement also imposes certain restrictions on the
ability of the Hourly Plan Special Trust to tender its shares of Common Stock
in a third-party tender offer until such Trust owns 7.5% or less of the Common
Stock on a fully diluted basis (after which time it may freely tender into any
tender offer for Common Stock). Until such time, in the event of a tender
offer for Common Stock, the right of the Hourly Plan Special Trust to tender
its shares of Common Stock will depend on whether EDS has in effect a
stockholders rights plan (such as the Rights Agreement, as described under
"Description of Capital Stock"). In general, the Hourly Plan Special Trust may
tender its shares in a tender offer if a stockholders rights plan is in effect
during the pendency of such tender offer, but the rights thereunder have been
redeemed, revoked or invalidated by the EDS Board, or by a final and non-
appealable court order, in connection with such tender offer. The Hourly Plan
Special Trust will also be able to tender its shares in a tender offer if both
(i) a stockholders rights plan is in

44
<PAGE>

effect during the pendency of such tender offer, but the rights thereunder
have been redeemed, revoked or invalidated for any other reason, and (ii)
either the EDS Board, or a majority of EDS' Independent Directors (as defined
in the Registration Rights Agreement), has not recommended rejection of the
tender offer, or there are then fewer than two Independent Directors on the
EDS Board. Additionally, if (i) a stockholders rights plan is in effect during
the pendency of a tender offer, but the rights thereunder have been redeemed,
revoked or invalidated for any reason other than that described above and
other than as a result of a proposal publicly or privately initiated,
recommended, endorsed, supported or voted for by the Hourly Plan Special
Trust, and (ii) the Hourly Plan Special Trust makes a good faith determination
that the tender offer will likely result in the purchase of shares
representing more than 50% of EDS' total voting power (without giving effect
to any securities tendered or to be tendered by the Hourly Plan Special
Trust), then the Hourly Plan Special Trust may tender shares in such tender
offer, unless EDS gives notice to the Hourly Plan Special Trust. If EDS gives
any such notice and the tender offer then results in the purchase of shares
constituting more than 50% of the total voting power of EDS, then the Hourly
Plan Special Trust will have the option to cause EDS to purchase the number of
shares that would have been purchased from the Hourly Plan Special Trust in
the tender offer if the Hourly Plan Special Trust had been permitted to
tender, at the price per share, payable in cash, offered in the tender offer.

45
<PAGE>

SELLING STOCKHOLDER

The Hourly Plan Special Trust is the owner of all of the shares of Common
Stock offered hereby. The Finance Committee of the GM Board is the named
fiduciary of the Hourly Plan pursuant to the provisions of ERISA, and a
portion of the assets of the Hourly Plan (not including the shares of Common
Stock owned by the Hourly Plan Special Trust) is subject to management by or
under the supervision of General Motors Investment Management Corporation, a
wholly owned subsidiary of General Motors.

Prior to General Motors' contribution of approximately 173 million shares of
Class E Common Stock to the Hourly Plan Special Trust as described under
"Background of the Offerings," the Hourly Plan Trustee was appointed to have
ongoing responsibility, as a fiduciary within the meaning of ERISA, to manage
the shares of Class E Common Stock owned by the Hourly Plan Special Trust. The
Hourly Plan Trustee retained Wasserstein Perella & Co., Inc. (the "Financial
Advisor") to serve as its investment advisor regarding the management and
disposition of such shares of Class E Common Stock, and the Financial Advisor
continues to serve in such capacity after the Split-Off with respect to the
Common Stock.

The Hourly Plan Trustee has responsibility to manage prudently the shares of
Common Stock held by the Hourly Plan Special Trust in a manner consistent with
maximizing the value of its investment in Common Stock and in accordance with
its determination of the extent to which it may prudently continue to hold
such shares consistent with the diversification and related fiduciary
requirements of ERISA. In accordance with the foregoing and in a manner
consistent with the limitations and terms of the Registration Rights
Agreement, the Hourly Plan Trustee has the authority and discretion to cause
the Hourly Plan Trust to hold such shares or sell all or any portion thereof
from time to time as it may deem appropriate, and to direct the voting of and
the exercise of all other rights relating to such shares. The Hourly Plan
Trustee intends to manage the disposition of such shares in a manner
consistent with maintaining an orderly market for the Common Stock. The
Department of Labor exemption obtained at the time of the contribution by
General Motors of the shares of Class E Common Stock to the Hourly Plan
Special Trust as described above does not impose any time constraints on the
Hourly Plan Special Trust for any dispositions of such shares. The
compensation of the Hourly Plan Trustee and the Financial Advisor is not
contingent in any way on the sale or continued holding of shares of Common
Stock by the Hourly Plan Special Trust.

The Hourly Plan Special Trust agreed, pursuant to a Transfer Agreement dated
as of March 12, 1995 (the "Transfer Agreement") between General Motors and the
Hourly Plan Trustee, that until generally June 7, 1998, it will vote against
any merger of EDS that would not be a tax-free reorganization under Section
368 of the Code. In the Transfer Agreement, the Hourly Plan Special Trust
additionally agreed to certain transfer restrictions intended to preserve the
tax-free status of the Split-Off. The Hourly Plan Special Trust has agreed
that it will not (i) prior to June 7, 1997, make any transfer of Common Stock
to (a) any person or group of related persons if such shares of Common Stock
constitute more than 2% of the Common Stock then outstanding or (b) any person
or group of related persons if such person or group is then, or as a result of
such transfer will become, to the knowledge of the Hourly Plan Special Trust
after reasonable inquiry, the beneficial owner of 5% of the Common Stock then
outstanding; or (ii) prior to December 9, 1996, make any transfer of Common
Stock to any person or group of related persons if, as a result of such
transfer, such person or group would have acquired shares of Common Stock that
(when aggregated with all other shares so acquired at any time by such person
and counted on a fully diluted basis) would constitute 40% or more of the
total number of shares of Common Stock then outstanding. Such restrictions are
generally inapplicable to transfers pursuant to an underwritten public
offering reasonably designed to achieve a broad public distribution of the
securities being offered; provided that the Hourly Plan causes the lead
underwriter and co-managers of such offering to agree to use their reasonable
best efforts (i) to effect a broad public distribution of such securities and
(ii) not to make any transfer to any one person or group of related persons if
(a) such transfer is of more than 2% of the Common Stock then outstanding or
(b) such person or group of related persons is the beneficial owner of 5% or
more of the Common Stock or, at any time prior to such transfer, has been
designated by General Motors as the beneficial owner of 2% or more of the
total voting power or total value of the Common Stock then outstanding. In
addition, the Hourly Plan Special Trust has agreed that it will not, prior to
June 7, 1998, make any transfer of Common Stock if, after giving effect

46
<PAGE>

to such transfer, the number of shares of Common Stock that would be owned
directly by the Hourly Plan Special Trust would constitute less than 50% of
the number of shares of Common Stock (or Class E Common Stock) owned directly
by the Hourly Plan Special Trust at the time of the initial public
announcement by GM that it intended to effect a Split-Off. The Transfer
Agreement could have the effect of delaying, deterring or preventing a change
in control of EDS. The Separation Agreement provides that General Motors will
not (i) amend or modify the Transfer Agreement in any material respect or (ii)
waive the benefit of any material term of the Transfer Agreement, without the
prior written consent of EDS. See "Relationship Between General Motors and
EDS--Post Split-Off Arrangements--Separation Agreement."

On July 15, 1996, the Hourly Plan Special Trust had beneficial ownership of
approximately 149.5 million shares of Common Stock, representing approximately
31% of the Common Stock outstanding. Immediately following the consummation of
the Offerings, the Hourly Plan Special Trust will have beneficial ownership of
approximately 129.5 million shares (or, if the Underwriters' over-allotment
option is exercised in full, approximately 126.5 million shares) of Common
Stock. Such shares will represent approximately 26.7% (or, if the
Underwriters' over-allotment option is exercised in full, 26.1%) of the Common
Stock outstanding.

The Selling Stockholder has agreed not to offer, sell or otherwise dispose
of any shares of Common Stock or any securities convertible into or
exchangeable for Common Stock (other than transfers to or for the benefit of
employee benefit plans of EDS or any of its affiliates) for 90 days following
the date of this Prospectus without the prior written consent of the Global
Coordinators on behalf of the Underwriters. See "Underwriting."

EDS will not receive any of the proceeds of the sale of any of the shares of
Common Stock offered hereby. All of such proceeds will be for the account of
the Selling Stockholder and for the benefit of employees and retirees of GM
and their beneficiaries participating in the Hourly Plan.

47
<PAGE>

DESCRIPTION OF CAPITAL STOCK

Under the Certificate of Incorporation, the authorized capital stock of EDS
is 2,200,000,000 shares, of which 2,000,000,000 shares are Common Stock, par
value $0.01 per share, and 200,000,000 shares are preferred stock, par value
$0.01 per share (the "Preferred Stock").

The following descriptions are summaries and do not purport to be complete.
Reference is made to the more detailed provisions of, and such descriptions
are qualified in their entirety by reference to, the Certificate of
Incorporation and the Bylaws, copies of which are filed with the Commission.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share with respect to
each matter submitted to a vote of stockholders of EDS, subject to voting
rights that may be established for shares of Preferred Stock, if any. Except
as may be provided in connection with any Preferred Stock or as may otherwise
be required by law or the Certificate of Incorporation, the Common Stock is
the only capital stock of EDS entitled to vote in the election of directors.
The Common Stock does not have cumulative voting rights.

Subject to the prior rights of holders of Preferred Stock, if any, holders
of Common Stock are entitled to receive such dividends as may be lawfully
declared from time to time by the EDS Board. Upon any liquidation, dissolution
or winding up of EDS, whether voluntary or involuntary, holders of Common
Stock will be entitled to receive such assets as are available for
distribution to stockholders after there shall have been paid or set apart for
payment the full amounts necessary to satisfy any preferential or
participating rights to which the holders of each outstanding series of
Preferred Stock are entitled by the express terms of such series.

The outstanding shares of Common Stock are fully paid and nonassessable. The
Common Stock does not have any preemptive, subscription or conversion rights.
Additional shares of authorized Common Stock may be issued, as authorized by
the EDS Board from time to time, without stockholder approval, except as may
be required by applicable stock exchange requirements.

PREFERRED STOCK

The EDS Board is empowered, without approval of the stockholders, to cause
shares of Preferred Stock to be issued in one or more series, with the numbers
of shares of each series and the powers, preferences, rights and limitations
of each series to be determined by it. Among the specific matters that may be
determined by the EDS Board are the rate of dividends, if any; rights and
terms of conversion or exchange, if any; the terms of redemption, if any; the
amount payable in the event of any voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets, dissolution or winding
up of the affairs of EDS; the terms of a sinking or purchase fund, if any; and
voting rights, if any. The Series A Preferred Stock described under "Rights
Agreement" below is a series of Preferred Stock that has been authorized by
the EDS Board.

Although EDS has no current plans to issue Preferred Stock, the issuance of
shares of Preferred Stock, or the issuance of rights to purchase such shares,
could be used to discourage an unsolicited acquisition proposal. For example,
a business combination could be impeded by the issuance of a series of
Preferred Stock containing class voting rights that would enable the holder or
holders of such series to block any such transaction. Alternatively, a
business combination could be facilitated by the issuance of a series of
Preferred Stock having sufficient voting rights to provide a required
percentage vote of the stockholders. In addition, under certain circumstances,
the issuance of Preferred Stock could adversely affect the voting power of the
holders of the Common Stock. Although the EDS Board is required to make any
determination to issue any such stock based on its judgment as to the best
interests of the stockholders of EDS, the EDS Board could act in a manner that
would discourage an acquisition attempt or other transaction that some, or a
majority, of the stockholders might believe to be in their best interests or
in which stockholders might receive a premium for their stock over

48
<PAGE>

prevailing market prices of such stock. The EDS Board does not at present
intend to seek stockholder approval prior to any issuance of currently
authorized stock, unless otherwise required by law or applicable stock
exchange requirements.

RIGHTS AGREEMENT

There is attached to each share of Common Stock offered hereby one right (a
"Right") to purchase from EDS a unit consisting of one one-hundredth of a
share (a "Unit") of Series A Junior Participating Preferred Stock, par value
$0.01 per share (the "Series A Preferred Stock"), at a purchase price of $200
per Unit, subject to adjustment in certain events (the "Purchase Price"). The
following description of the Rights is a summary and does not purport to be
complete. Reference is made to the more detailed provisions of, and such
description is qualified in its entirety by reference to, the Rights
Agreement, dated as of March 12, 1996 (the "Rights Agreement"), by and between
EDS and The Bank of New York, as Rights Agent, a copy of which is filed with
the Commission.

Initially, the Rights will be attached to all certificates representing
outstanding shares of Common Stock, including the shares of Common Stock sold
pursuant to this Prospectus, and no separate certificates for the Rights
("Rights Certificates") will be distributed. The Rights will separate from the
Common Stock and a "Distribution Date" will occur upon the earlier of (i) ten
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the date of the announcement being the "Stock Acquisition
Date"), or (ii) ten business days (or such later date as may be determined by
the EDS Board before the Distribution Date occurs) following the commencement
of a tender offer or exchange offer that would result in a person's becoming
an Acquiring Person. The GM Hourly Plan, and any trustee of or other fiduciary
with respect to such plan (when acting in such capacity), may become an
Acquiring Person if it purchases or otherwise becomes the beneficial owner of
additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock unless the Hourly Plan is not then the
beneficial owner of 10% or more of the then outstanding shares of Common
Stock. Until the Distribution Date, (a) the Rights will be evidenced by the
certificates representing Common Stock and will be transferred with and only
with such certificates, (b) certificates representing Common Stock will
contain a notation incorporating the Rights Agreement by reference and (c) the
surrender for transfer of any certificate for Common Stock will also
constitute the transfer of the Rights associated with the stock represented by
such certificate.

The Rights are not exercisable until the Distribution Date and will expire
at the close of business on March 12, 2006, unless earlier redeemed or
exchanged by EDS as described below.

As soon as practicable after the Distribution Date, Rights Certificates will
be mailed to holders of record of Common Stock as of the close of business on
the Distribution Date and, from and after the Distribution Date, the separate
Rights Certificates alone will represent the Rights. All shares of Common
Stock issued prior to the Distribution Date will be issued with Rights. Shares
of Common Stock issued after the Distribution Date in connection with certain
employee benefit plans or upon conversion of certain securities will be issued
with Rights. Except as otherwise determined by the EDS Board, no other shares
of Common Stock issued after the Distribution Date will be issued with Rights.

In the event (a "Flip-In Event") that a person becomes an Acquiring Person
(except pursuant to a tender or exchange offer for all outstanding shares of
Common Stock at a price and on terms that a majority of the directors of EDS
who are not officers or employees of EDS and who are not representatives,
nominees, affiliates or associates of the Acquiring Person determines to be
fair to and otherwise in the best interests of EDS and its stockholders (a
"Permitted Offer")), each holder of a Right will thereafter have the right to
receive, upon exercise of such Right, a number of shares of Common Stock (or,
in certain circumstances, cash, property or other securities of EDS) having a
Current Market Price (as defined in the Rights Agreement) equal to two times
the Purchase Price of the Right. Notwithstanding the foregoing, following the
occurrence of any Flip-In Event, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned

49
<PAGE>

by any Acquiring Person (or by certain related parties) will be null and void
in the circumstances set forth in the Rights Agreement. However, the Rights
are not exercisable following the occurrence of any Flip-In Event until such
time as the Rights are no longer redeemable by EDS as set forth below.

In the event (a "Flip-Over Event") that, at any time on or after the Stock
Acquisition Date, (i) EDS is acquired in a merger or other business
combination transaction (other than certain mergers that follow a Permitted
Offer), or (ii) 50% or more of EDS' assets or earning power is sold or
transferred, each holder of a Right (except Rights that previously have become
void as set forth above) shall thereafter have the right to receive, upon
exercise, a number of shares of common stock of the acquiring company having a
Current Market Price equal to two times the Purchase Price of the Right. Flip-
In Events and Flip-Over Events are collectively referred to as "Triggering
Events."

The Purchase Price payable, and the number of Units of Series A Preferred
Stock or other securities or property issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of, the Series A Preferred Stock, (ii) if holders of the
Series A Preferred Stock are granted certain rights or warrants to subscribe
for Series A Preferred Stock or certain convertible securities at less than
the current market price of the Series A Preferred Stock, or (iii) upon the
distribution to holders of the Series A Preferred Stock of evidences of
indebtedness, cash or assets (excluding regular quarterly cash dividends) or
of subscription rights or warrants (other than those referred to above).

With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Series A Preferred Stock
on the last trading date prior to the date of exercise. Pursuant to the Rights
Agreement, EDS reserves the right to require prior to the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Series A Preferred Stock will be
issued.

At any time until ten days following the Stock Acquisition Date, EDS may
redeem the Rights in whole, but not in part, at a price of $.01 per Right,
payable, at the option of EDS, in cash, shares of Common Stock or such other
consideration as the EDS Board may determine. Immediately upon the
effectiveness of the action of the EDS Board ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $.01 redemption price.

At any time after the occurrence of a Flip-In Event and prior to a person's
becoming the beneficial owner of 50% or more or the shares of Common Stock
then outstanding, EDS may, at its option, exchange the Rights (other than
Rights owned by an Acquiring Person or an affiliate or an associate of an
Acquiring Person, which will have become void), in whole or in part, at an
exchange ratio of one share of Common Stock and/or other equity securities
deemed to have the same value as one share of Common Stock, per Right, subject
to adjustment.

Other than certain provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by
the EDS Board prior to the Distribution Date. Thereafter, the provisions of
the Rights Agreement may be amended by the EDS Board in order to cure any
ambiguity, defect or inconsistency, to make changes that do not materially
adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to lengthen the time
period governing redemption shall be made at such time as the Rights are not
redeemable. Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of EDS, including, without limitation, the right to
vote or to receive dividends.

Any shares of Series A Preferred Stock that may be issued upon exercise of
the Rights will be entitled to receive, when, as and if declared, preferential
quarterly dividends in cash in an amount per share equal to the greater of
$1.00 per quarter and 100 times the aggregate per share cash dividend paid on
the Common Stock, and noncash dividends payable in kind in an amount per share
equal to 100 times any noncash dividend or other

50
<PAGE>

distribution declared on the Common Stock. In the event of the liquidation,
dissolution or winding up of EDS, holders of any such Series A Preferred Stock
will be entitled to receive (after satisfaction of or provision for
liabilities and any preferential amounts payable with respect to any Preferred
Stock ranking senior to the Series A Preferred Stock) liquidation payments per
share in an amount equal to accrued but unpaid dividends plus the greater of
$100.00 or 100 times the per share amount distributed to holders of Common
Stock. In the event of any merger, consolidation or other transaction in which
shares of Common Stock are exchanged, holders of shares of Series A Preferred
Stock will be entitled to receive a per share amount and type of consideration
equal to 100 times the per share amount received by holders of Common Stock.
Any Series A Preferred Stock will be redeemable at the option of EDS in whole
at any time or in part from time to time, for cash in an amount per share
equal to 100 times the market price of the Common Stock (determined on the
basis of an average closing price over a specified ten trading day period).
Holders of Series A Preferred Stock will have 100 votes per share and, except
as otherwise provided in the Certificate of Incorporation or required by law,
shall vote together with holders of Common Stock as a single class. The rights
of the Series A Preferred Stock as to dividends, liquidation and voting are
protected by anti-dilution provisions. Whenever dividend payments on the
Series A Preferred Stock are in arrears, EDS will not (i) purchase or redeem
any shares of Series A Preferred Stock or shares ranking on a parity with the
Series A Preferred Stock except in accordance with a purchase offer to all
holders, (ii) declare or pay dividends on or purchase or redeem any shares of
stock ranking junior to the Series A Preferred Stock or (iii) declare or pay
dividends on or purchase or redeem any shares of stock ranking on a parity
with the Series A Preferred Stock except dividends paid ratably on the Series
A Preferred Stock and all such parity stock and except purchases or
redemptions of such parity stock in exchange for junior stock. If dividend
payments on any Series A Preferred Stock are in arrears for six quarters, the
holders of the Series A Preferred Stock (together with holders of any other
Preferred Stock with similar rights) will have the right to elect two
directors of EDS.

The Rights will have certain antitakeover effects. The Rights will cause
substantial dilution to any person or group that attempts to acquire EDS
without the approval of the EDS Board. As a result, the overall effect of the
Rights may be to render more difficult or discourage any attempt to acquire
EDS even if such acquisition may be favorable to the interests of EDS'
stockholders. Because the EDS Board can redeem the Rights or approve a
Permitted Offer, the Rights should not interfere with a merger or other
business combination approved by the EDS Board. The Rights have been
distributed to protect EDS' stockholders from coercive or abusive takeover
tactics and to give the EDS Board more negotiating leverage in dealing with
prospective acquirors.

LIMITATION ON DIRECTORS' LIABILITY

The Certificate of Incorporation provides, as authorized by Section
102(b)(7) of the DGCL, that a director of EDS will not be personally liable to
EDS or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to EDS or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.

The inclusion of this provision in the Certificate of Incorporation may have
the effect of reducing the likelihood of derivative litigation against
directors, and may discourage or deter stockholders or management from
bringing a lawsuit against directors for breach of their duty of care, even
though such an action, if successful, might otherwise have benefited EDS and
its stockholders.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

EDS is a Delaware corporation and subject to Section 203 of the DGCL.
Generally, Section 203 prohibits a publicly held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the time such stockholder became an interested
stockholder, unless (i) prior to such time, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (ii) upon
consummation of the

51
<PAGE>

transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced, or (iii)
at or subsequent to such time, the business combination is approved by the
board of directors and authorized by the affirmative vote of at least 66 2/3%
of the outstanding voting stock that is not owned by the interested
stockholder. A "business combination" includes (a) any merger or consolidation
of the corporation with the interested stockholder, (b) any sale, lease,
exchange or other disposition, except proportionately as a stockholder of such
corporation, to or with the interested stockholder of assets of the
corporation having an aggregate market value equal to 10% or more of either
the aggregate market value of all the assets of the corporation or the
aggregate market value of all the outstanding stock of the corporation, (c)
certain transactions resulting in the issuance or transfer by the corporation
of stock of the corporation to the interested stockholder, (d) certain
transactions involving the corporation which have the effect of increasing the
proportionate share of the stock of any class or series of the corporation
which is owned by the interested stockholder or (e) certain transactions in
which the interested stockholder receives financial benefits provided by the
corporation. An "interested stockholder" generally is (i) any person that owns
15% or more of the outstanding voting stock of the corporation, (ii) any
person that is an affiliate or associate of the corporation and was the owner
of 15% or more of the outstanding voting stock of the corporation at any time
within the three-year period prior to the date on which it is sought to be
determined whether such person is an interested stockholder and (iii) the
affiliates or associates of any such person. The EDS Board has approved the
distribution of EDS Common Stock to the GM Hourly Plan Special Trust pursuant
to the Split-Off for purposes of Section 203 so long as the GM Hourly Plan
Special Trust does not purchase or otherwise become the owner of additional
shares of capital stock constituting 1% or more of the aggregate voting power
of the outstanding capital stock of EDS at any time that it is the owner of
15% or more of the outstanding voting stock of EDS. The EDS Board further
provided that such approval would not apply to any transferee of EDS capital
stock from the GM Hourly Plan Special Trust.

LIMITATIONS ON CHANGES IN CONTROL

The Bylaws contain provisions requiring that advance notice be delivered to
EDS of any business to be brought by a stockholder before an annual meeting of
stockholders and providing for certain procedures to be followed by
stockholders in nominating persons for election to the EDS Board. Generally,
such advance notice provisions provide that the stockholder must give written
notice to the Secretary of EDS not less than 90 days nor more than 270 days
before the scheduled date of the annual meeting of stockholders of EDS. The
notice must set forth specific information regarding such stockholder and such
business or director nominee, as described in the Bylaws. Such requirement is
in addition to those set forth in the regulations adopted by the Commission
under the Exchange Act. The 1997 Annual Meeting of Stockholders will be held
on June 5, 1997. In addition to compliance with other applicable legal
requirements, proposals of stockholders to be presented at the 1997 Annual
Meeting should be received at EDS' principal executive offices not later than
December 10, 1996.

The Certificate of Incorporation provides that, except as may be provided by
the Certificate of Incorporation or in the resolution or resolutions providing
for the issuance of any series of Preferred Stock, the number of directors
shall not be fewer than three nor more than fifteen and provides for a
classified Board of Directors, consisting of three classes as nearly equal in
size as practicable. Each class holds office until the third annual
stockholders' meeting for election of directors following the most recent
election of such class, except that the initial terms of the three classes
expire in 1997, 1998 and 1999, respectively. See "Board of Directors and
Management." A director of EDS may be removed only for cause.

The Certificate of Incorporation provides that stockholders may not act by
written consent in lieu of a meeting, unless such written consent is
unanimous. Special meetings of the stockholders may be called by the Chairman
of the EDS Board or by the EDS Board, but may not be called by stockholders.
The Bylaws may be amended by the EDS Board or by the affirmative vote of the
holders of at least 66 2/3% of the aggregate voting power of the outstanding
capital stock of EDS entitled to vote in the election of directors.

52
<PAGE>

The Certificate of Incorporation also contains a "fair price" provision that
applies to certain business combination transactions involving any person or
group that beneficially owns at least 10% of the aggregate voting power of the
outstanding capital stock of EDS (a "Related Person"). The "fair price"
provision requires the affirmative vote of the holders of (i) at least 80% of
the voting stock of EDS and (ii) at least 66 2/3% of the voting stock of EDS
not beneficially owned by the Related Person, to approve certain transactions
between the Related Person and EDS or its subsidiaries, including any merger,
consolidation or share exchange, any sale, lease, exchange, pledge or other
disposition of assets of EDS or its subsidiaries having a fair market value of
at least $10 million, any transfer or issuance of securities of EDS or any of
its subsidiaries, any adoption of a plan or proposal by EDS of voluntary
liquidation or dissolution of EDS, certain reclassifications of securities or
recapitalizations of EDS or certain other transactions, in each case involving
the Related Person. This voting requirement will not apply to certain
transactions, including (a) any transaction in which the consideration to be
received by the holders of each class of capital stock of EDS is (x) the same
in form and amount as that paid in a tender offer in which the Related Person
acquired at least 50% of the outstanding shares of such class and which was
consummated not more than one year earlier or (y) not less in amount than the
highest per share price paid by the Related Person for shares of such class or
(b) any transaction approved by EDS' continuing directors (as defined in the
Certificate of Incorporation). The GM Hourly Plan, and any trustee of or other
fiduciary with respect to such plan (when acting in such capacity), may become
a Related Person if it purchases or otherwise becomes the beneficial owner of
additional shares of capital stock constituting 1% or more of the aggregate
voting power of the outstanding capital stock of EDS unless the GM Hourly Plan
is not then the beneficial owner of 10% or more of the aggregate voting power
of the outstanding capital stock of EDS. This provision could have the effect
of delaying or preventing a change in control of EDS in a transaction or
series of transactions that did not satisfy the "fair price" criteria.

The provisions of the Certificate of Incorporation relating to the EDS
Board, the limitation of actions taken by written consent, the calling of
special meetings, the amendment of the Bylaws and the "fair price" provision
may be amended only by the affirmative vote of the holders of at least 80% of
the aggregate voting power of the outstanding capital stock of EDS entitled to
vote for the election of directors.

The foregoing provisions of the Certificate of Incorporation and the Bylaws,
together with the Rights Agreement and the provisions of Section 203 of the
DGCL, could have the effect of delaying, deferring or preventing a change in
control of EDS or the removal of existing management, of deterring potential
acquirors from making an offer to stockholders of EDS and of limiting any
opportunity to realize premiums over prevailing market prices for Common Stock
in connection therewith. For a description of certain other factors that could
limit such changes in control and offers, see "Risk Factors--Certain
Limitations on Changes in Control of the Company." This could be the case
notwithstanding that a majority of EDS' stockholders might benefit from such a
change in control or offer.

TRANSFER AGENT AND REGISTRAR

The Bank of New York serves as the Transfer Agent and Registrar for the
Common Stock.

53
<PAGE>

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

This is a general discussion of certain U.S. federal income and estate tax
consequences of the purchase, ownership and disposition of Common Stock by a
"Non-U.S. Holder." A "Non-U.S. Holder" is a person or entity that, for U.S.
federal income tax purposes, is a nonresident alien individual, a foreign
corporation, a foreign partnership, or a nonresident fiduciary of a foreign
estate or trust.

This discussion is based on the Internal Revenue Code of 1986, as amended
(the "Code"), and administrative interpretations as of the date hereof, all of
which may be changed either retroactively or prospectively. This discussion
does not address all aspects of U.S. federal income and estate taxation that
may be relevant to Non-U.S. Holders under their particular circumstances (such
as, for example, the direct or indirect ownership of more than 5% of the
outstanding Common Stock) and does not address any tax consequences arising
under the laws of any state, local or foreign taxing jurisdiction.

The following summary does not constitute, and should not be considered as,
legal or tax advice to prospective investors. Prospective holders should
consult their tax advisers about the particular tax consequences to them of
holding and disposing of Common Stock.

DIVIDENDS

Subject to the discussion below, dividends paid to a Non-U.S. Holder of
Common Stock generally will be subject to the withholding of U.S. income tax
at a rate of 30% of the amount of the dividend or such lower rate as may be
specified by an applicable income tax treaty. For purposes of determining
whether tax is to be withheld at a 30% rate or at a reduced rate as specified
by an income tax treaty, EDS ordinarily will presume, pursuant to currently
applicable law, that dividends paid to an address in a foreign country are
paid to a resident of such country absent actual knowledge that such
presumption is not warranted. However, under proposed U.S. Treasury
regulations which have not yet been put into effect, the benefits of a tax
treaty may be claimed by a Non-U.S. Holder of Common Stock only upon filing
prescribed forms that must include a taxpayer identification number obtained
from the Internal Revenue Service and may be required to include a
certification of residence in the treaty country by a competent authority of
the treaty country.

If a Non-U.S. Holder files an Internal Revenue Service Form 4224 with EDS,
no withholding tax will be withheld on dividends that are effectively
connected with the Non-U.S. Holder's conduct of a trade or business within the
United States. Instead, the effectively connected dividends will be subject to
regular U.S. income tax in the same manner as if the Non-U.S. Holder were a
U.S. resident. Effectively connected dividends received by a non-U.S.
corporation may be subject to an additional "branch profits tax" at a rate of
30% (or such lower rate as may be specified by an applicable treaty) of its
effectively connected earnings and profits, subject to certain adjustments.

Generally, EDS must report to the U.S. Internal Revenue Service the amount
of dividends paid, the name and address of the recipient, and the amount, if
any, of tax withheld. A similar report is sent to the Non-U.S. Holder.
Pursuant to tax treaties or other agreements, the U.S. Internal Revenue
Service may make its reports available to tax authorities in the recipient's
country of residence. U.S. backup withholding tax generally will not apply to
dividends paid to Non-U.S. Holders at a residence outside the United States
unless the payor has knowledge that the payee is a United States person.

GAIN ON DISPOSITION

A Non-U.S. Holder generally will not be subject to U.S. federal income tax
with respect to gain realized on a sale or other disposition of Common Stock
unless (i) the gain is effectively connected with a trade or business of such
holder in the United States (ii) in the case of certain Non-U.S. Holders who
are nonresident alien individuals and hold Common Stock as a capital asset,
such individuals are present in the United States for 183 or more days in the
taxable year of the disposition, (iii) such holder is subject to tax pursuant
to the provision of

54
<PAGE>

the Code applicable to certain United States expatriates or (iv) EDS is or has
been a "United States real property holding corporation" for United States
federal income tax purposes (which EDS does not believe it is or is likely to
become) and the Non-U.S. Holder holds or has held, directly or indirectly, at
any time during the five year period ending on the date of the disposition,
more than five percent of the Common Stock.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING

If the proceeds of a disposition of Common Stock are paid over by or through
a U.S. office of a broker, the payment is subject to information reporting and
to backup withholding at a rate of 31% unless the disposing holder certifies
as to his name, address, and non-U.S. status under penalty of perjury or
otherwise establishes an exemption. Generally, U.S. information reporting and
backup withholding will not apply to a payment of disposition proceeds if the
payment is made outside the United States through a non-U.S. office of a non-
U.S. broker. However, U.S. information reporting requirements (but not back-up
withholding) will apply to a payment of disposition proceeds outside the
United States if (A) the payment is made through an office outside the United
States of a broker that is either (i) a U.S. person, (ii) a foreign person
which derives 50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States or (iii) a "controlled
foreign corporation" for U.S. federal income tax purposes and (B) the broker
fails to maintain documentary evidence that the holder is a Non-U.S. Holder
and that certain conditions are met, or that the holder otherwise is entitled
to an exemption.

Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the U.S.
Internal Revenue Service.

FEDERAL ESTATE TAX

An individual Non-U.S. Holder who is treated as the owner of or has made
certain lifetime transfers of an interest in Common Stock will be required to
include the value thereof in his gross estate for U.S. federal estate tax
purposes, and may be subject to U.S. federal estate tax (even though the
individual at the time of death is neither a citizen of nor domiciled in the
United States) unless an applicable estate tax treaty provides otherwise.

55
<PAGE>

UNDERWRITING
The U.S. Underwriters named below, acting through their U.S. Representatives,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated, Goldman, Sachs & Co., Bear, Stearns & Co. Inc., Lehman Brothers
Inc., J.P. Morgan Securities Inc., Salomon Brothers Inc and Furman Selz LLC
(the "U.S. Representatives"), have severally agreed, subject to the terms and
conditions of the U.S. Purchase Agreement with EDS and the Selling Stockholder
(the "U.S. Purchase Agreement"), to purchase from the Selling Stockholder the
aggregate number of shares of Common Stock set forth below opposite their
respective names.
<TABLE>
<CAPTION>
NUMBER OF U.S. SHARES
U.S. UNDERWRITER OF COMMON STOCK
---------------- ---------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 2,518,000
Morgan Stanley & Co. Incorporated..................... 2,518,000
Goldman, Sachs & Co. ................................. 2,518,000
Bear, Stearns & Co. Inc. ............................. 1,259,200
Lehman Brothers Inc. ................................. 1,259,200
J.P. Morgan Securities Inc. .......................... 1,259,200
Salomon Brothers Inc ................................. 1,259,200
Furman Selz LLC....................................... 1,259,200
Alex. Brown & Sons Incorporated....................... 105,000
Cowen & Company....................................... 105,000
CS First Boston Corporation........................... 105,000
Dillon, Read & Co. Inc................................ 105,000
Donaldson, Lufkin & Jenrette Securities Corporation... 105,000
A.G. Edwards & Sons, Inc.............................. 105,000
Hambrecht & Quist LLC................................. 105,000
Invemed Associates, Inc............................... 105,000
Lazard Freres & Co. LLC............................... 105,000
Montgomery Securities................................. 105,000
Oppenheimer & Co., Inc................................ 105,000
PaineWebber Incorporated.............................. 105,000
Prudential Securities Incorporated.................... 105,000
Robertson, Stephens & Company LLC..................... 105,000
Schroder Wertheim & Co. Incorporated.................. 105,000
Smith Barney Inc...................................... 105,000
Advest, Inc........................................... 42,000
Robert W. Baird & Co. Incorporated.................... 42,000
M.R. Beal & Company................................... 42,000
Sanford C. Bernstein & Co., Inc....................... 42,000
J.C. Bradford & Co.................................... 42,000
Dain Bosworth Incorporated............................ 42,000
Fahnestock & Co. Inc.................................. 42,000
Ferris, Baker Watts, Incorporated..................... 42,000
First of Michigan Corporation......................... 42,000
Gerard Klauer Mattison & Co. LLC...................... 42,000
Guzman & Company...................................... 42,000
Interstate/Johnson Lane Corporation................... 42,000
Janney Montgomery Scott Inc........................... 42,000
WR Lazard, Laidlaw & Luther........................... 42,000
Legg Mason Wood Walker, Incorporated.................. 42,000
McDonald & Company Securities, Inc.................... 42,000
Morgan Keegan & Company, Inc.......................... 42,000
Nesbitt Burns Securities Inc.......................... 42,000
Piper Jaffray Inc..................................... 42,000
Principal Financial Securities, Inc................... 42,000
Pryor, McClendon, Counts & Co., Inc................... 42,000
Ragen MacKenzie Incorporated.......................... 42,000
Rauscher Pierce Refsnes, Inc.......................... 42,000
Raymond James & Associates, Inc....................... 42,000
The Robinson-Humphrey Company, Inc.................... 42,000
Roney & Co., LLC...................................... 42,000
Rothschild Inc........................................ 42,000
Scott & Stringfellow, Inc............................. 42,000
Muriel Siebert & Co., Inc............................. 42,000
SoundView Financial Group, Inc........................ 42,000
Stephens Inc.......................................... 42,000
UBS Securities LLC.................................... 42,000
Utendahl Capital Partners, L.P........................ 42,000
Wheat, First Securities, Inc.......................... 42,000
William K. Woodruff & Company Incorporated............ 42,000
----------
Total.......................................... 17,000,000
==========
</TABLE>

56
<PAGE>

This offering is part of a worldwide offering that consists of the U.S.
Offering and the International Offering. Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. are
acting as Global Coordinators for the Offerings.

In the U.S. Purchase Agreement, the U.S. Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all of the shares
of Common Stock being sold pursuant to such Agreement if any of the shares of
Common Stock being sold pursuant to such Agreement are purchased. Under
certain circumstances under such Agreement, the commitments of non-defaulting
U.S. Underwriters may be increased.

The U.S. Representatives have advised EDS and the Selling Stockholder that
they propose initially to offer the shares to the public at the Price to
Public set forth on the cover page of this Prospectus, and to certain dealers
at such price less a concession not in excess of $.75 per share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $.10 per share on sales to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.

EDS and the Selling Stockholder have also entered into an International
Purchase Agreement (the "International Purchase Agreement") with certain
underwriters (the "International Underwriters") for whom Merrill Lynch
International, Morgan Stanley & Co. International Limited, Goldman Sachs
International, Bear, Stearns International Limited, Lehman Brothers
International (Europe), J.P. Morgan Securities Ltd., Salomon Brothers
International Limited and Furman Selz LLC are acting as representatives (the
"International Representatives") providing for a concurrent International
Offering. The U.S. Underwriters and the International Underwriters are
collectively referred to as the "Underwriters" and the U.S. Representatives
and the International Representatives are collectively referred to as the
"Representatives." The International Underwriters have agreed, subject to the
terms and conditions set forth in the International Purchase Agreement, to
purchase all of the shares of Common Stock being offered in the International
Offering (other than shares subject to the Underwriters' over-allotment
option) if any are purchased. The closing of each of the Offerings is a
condition to the closing of each of the U.S. Offering and the International
Offering.

The Underwriters have entered into an intersyndicate agreement (the
"Intersyndicate Agreement") that provides for the coordination of their
activities. Under the terms of the Intersyndicate Agreement, the Underwriters
in each geographic area have agreed not to offer to sell any shares of Common
Stock in the other geographic area until the completion of the distribution of
the shares of Common Stock in both of the Offerings. Pursuant to the
Intersyndicate Agreement, each of the U.S. Underwriters has agreed or will
agree that, as part of the distribution of the U.S. shares of Common Stock,
subject to certain exceptions, (i) it is not purchasing any shares of Common
Stock for the account of anyone other than a U.S. Person (as hereinafter
defined) or Canadian Person (as hereinafter defined) and (ii) it has not
offered or sold, and will not offer or sell, directly or indirectly, any
shares of Common Stock or distribute any prospectus relating to the shares of
Common Stock to any person outside the United States or Canada or to anyone
other than a U.S. Person or Canadian Person, or to any dealer who does not so
agree. Each of the International Underwriters has agreed or will agree that,
as part of the distribution of the shares of Common Stock in the International
Offering, subject to certain exceptions, (i) it is not purchasing any shares
of Common Stock for the account of any U.S. Person or Canadian Person and (ii)
it has not offered or sold, and will not offer or sell, directly or
indirectly, any shares of Common Stock or distribute any prospectus relating
to the shares of Common Stock in the United States or Canada or to any U.S.
Person or Canadian Person or to any dealer who does not so agree. The
foregoing limitations do not apply to stabilization transactions or to
transactions between the U.S. Underwriters and the International Underwriters
pursuant to the Intersyndicate Agreement. As used in this section, "United
States" means the United States of America, its territories, possessions and
other areas subject to its jurisdiction; "Canada" means Canada, its provinces,
territories, possessions and other areas subject to its jurisdiction; and
"U.S. Person" and "Canadian Person" mean (i) a citizen or resident of the
United States or Canada, respectively, (ii) a corporation, partnership, trust
or other entity created or organized in or under the laws of the United States
or Canada, respectively (other than a foreign branch of such an entity), or
(iii) an estate or trust, the income of which is subject to United States
federal income taxation or Canadian federal income taxation, respectively,
regardless of its source of income, and includes any United States or Canadian
branch of a person not included in any of clauses (i), (ii) and (iii) of this
sentence.

57
<PAGE>

The Hourly Plan Special Trust has granted the Underwriters an option,
exercisable for 30 days after the date hereof, to purchase up to an additional
3,000,000 shares of Common Stock at the Price to Public less the Underwriting
Discount for the purpose of covering over-allotments, if any. If the
Underwriters exercise such option in full, each of the Underwriters will have
a firm commitment, subject to certain conditions, to purchase approximately
the same percentage thereof which the number of shares of Common Stock to be
purchased by it shown opposite their respective names in the table under
"Underwriting" in the relevant Prospectus is of the 20,000,000 shares of
Common Stock initially offered by the Underwriters hereunder.

EDS and (to the extent permitted under applicable law) the Selling
Stockholder have agreed to indemnify the Underwriters against certain
liabilities including liabilities under the Securities Act.

EDS has agreed not to sell or otherwise dispose of or transfer any shares of
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock for a period of 90 days after the date of this Prospectus,
without the prior written consent of the Global Coordinators on behalf of the
Underwriters, provided that EDS may issue and deliver such securities under
specified exceptions in connection with (i) the conversion, exercise or
exchange of options, warrants or other securities pursuant to their terms,
(ii) any agreement to issue shares of such securities in effect on the date of
the initial filing of the Registration Statement of which this Prospectus is a
part with the Commission, including any such agreement in connection with any
previously disclosed acquisition or other business combination and (iii)
dividend reinvestment plans or employee benefit plans.

The Selling Stockholder has agreed not to offer, sell or otherwise dispose
of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for Common Stock (other than transfers to or for
the benefit of employee benefit plans of EDS or any of its affiliates) for a
period of 90 days after the date of this Prospectus without the prior written
consent of the Global Coordinators on behalf of the Underwriters.

Any prospective purchaser of shares of Common Stock offered hereby that is
an employee benefit plan subject to Title I of ERISA or Section 4975 of the
Code should purchase such shares pursuant to the U.S. Offering unless, upon
the advice of counsel, it concludes that such plan is permitted to purchase
such shares in the International Offering. Accordingly, all such plans are
advised to consult with counsel before purchasing shares of Common Stock
outside the United States and Canada.

Certain of the Underwriters or their affiliates have rendered, and are
expected to continue to render, various investment banking and other advisory
services to EDS, the Selling Stockholder and the Hourly Plan. They have
received, and will continue to receive, customary compensation for such
services.

In connection with the Split-Off, certain of the Underwriters provided
financial advisory services to EDS or General Motors and received fees in
compensation for such services. Pursuant to an engagement letter dated
December 13, 1995 between General Motors and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (the "Merrill Lynch Engagement Letter"), Merrill Lynch,
Pierce, Fenner & Smith Incorporated is entitled to a fee of $12,500,000 in
connection with the Split-Off. In addition, under certain circumstances,
General Motors would be obligated to pay Merrill Lynch, Pierce, Fenner & Smith
Incorporated an additional fee of $10,000,000 in connection with a Business
Combination (as defined below) between EDS and any third party entered into
after the Split-Off but that was agreed to, proposed or as to which
substantive discussions were held prior to consummation of the Split-Off. A
fee of $2,500,000 would become payable upon execution of a definitive
agreement with respect to any such Business Combination, but would be credited
against the first to be paid of the other fees described above. A "Business
Combination" is defined in the Merrill Lynch Engagement Letter as a merger or
other business combination pursuant to which all or a substantial portion of
the business of EDS would be combined with that of another business entity the
value of which exceeds $2.5 billion. A fee in line with compensation paid to
major investment banking firms for similar services would be payable for
transactions, other than a Business Combination, between EDS and a third
party. The Merrill Lynch Engagement Letter also provides that General Motors
will reimburse Merrill Lynch, Pierce, Fenner & Smith Incorporated for its
reasonable out-of-pocket expenses (including reasonable fees and disbursements
of its legal counsel) and will indemnify Merrill Lynch, Pierce, Fenner & Smith
Incorporated and certain related persons against certain liabilities arising
out of its engagement.

58
<PAGE>

Pursuant to separate engagement letters between General Motors and each of
Morgan Stanley & Co. Incorporated and Lehman Brothers Inc., each of Morgan
Stanley & Co. Incorporated and Lehman Brothers Inc. is entitled to a fee of
$7,500,000 in connection with the Split-Off. The engagement letters also
provide for reimbursement of Morgan Stanley & Co. Incorporated and Lehman
Brothers Inc. for certain out-of-pocket expenses, including certain fees and
expenses of legal counsel, and indemnification of Morgan Stanley & Co.
Incorporated and Lehman Brothers Inc. against certain expenses and liabilities
(and EDS has agreed to exculpate Morgan Stanley & Co. Incorporated and Lehman
Brothers Inc.) in connection with their services as financial advisors,
including those arising under the federal securities laws. Under the
Separation Agreement, EDS is obligated to pay the fees and expenses of Morgan
Stanley & Co. Incorporated and Lehman Brothers Inc.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby and certain
matters relating to U.S. federal income tax considerations will be passed upon
for EDS by Baker & Botts, L.L.P. Mr. James A. Baker, III, a director of EDS,
is a member of Baker & Botts, L.L.P. and is the beneficial owner of shares,
including shares subject to options, of Common Stock. Certain legal matters in
connection with the sale of the shares of Common Stock offered hereby will be
passed upon for the Underwriters by Skadden, Arps, Slate, Meagher & Flom and
Vinson & Elkins L.L.P.

EXPERTS

The consolidated financial statements and financial statement schedule of
EDS as of December 31, 1995 and 1994 and for each of the years in the three-
year period ended December 31, 1995, included in the Current Report on Form 8-
K dated April 23, 1996 incorporated herein by reference, and in this
Registration Statement, have been audited by KPMG Peat Marwick LLP,
independent auditors, as stated in their reports appearing therein, and have
been so included in reliance upon such reports given upon the authority of
that firm as experts in accounting and auditing.

59
<PAGE>

CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
INDEX PAGE
----- ----
<S> <C>
Independent Auditors' Report............................................... F-2
Consolidated Statements of Income.......................................... F-3
Consolidated Balance Sheets................................................ F-4
Consolidated Statements of Cash Flows...................................... F-5
Notes to Consolidated Financial Statements................................. F-6
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Electronic Data Systems Corporation:

We have audited the accompanying consolidated balance sheets of Electronic
Data Systems Corporation and subsidiaries as of December 31, 1995 and 1994,
and the related consolidated statements of income and cash flows for each of
the years in the three-year period ended December 31, 1995. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Electronic
Data Systems Corporation and subsidiaries as of December 31, 1995 and 1994,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.

/s/ KPMG Peat Marwick LLP

Dallas, Texas
January 24, 1996

F-2
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
-------------------- ----------------------------
1996 1995 1995 1994 1993
--------- --------- --------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Systems and other contracts
revenues.................. $ 3,366.9 $ 2,776.3 $12,422.1 $9,960.1 $8,507.3
--------- --------- --------- -------- --------
Costs and expenses
Cost of revenues......... 2,698.1 2,176.1 9,601.6 7,529.4 6,390.6
Selling, general, and ad-
ministrative............ 309.9 281.0 1,291.5 1,187.1 1,005.4
--------- --------- --------- -------- --------
Total costs and ex-
penses................ 3,008.0 2,457.1 10,893.1 8,716.5 7,396.0
--------- --------- --------- -------- --------
Operating income........... 358.9 319.2 1,529.0 1,243.6 1,111.3
Interest and other income,
net (Note 20)............. (17.0) (11.7) (62.0) 40.6 20.0
--------- --------- --------- -------- --------
Income before income tax-
es........................ 341.9 307.5 1,467.0 1,284.2 1,131.3
Provision for income taxes
(Note 11)................. 123.1 110.7 528.1 462.3 407.3
--------- --------- --------- -------- --------
Separate Consolidated Net
Income.................... $ 218.8 $ 196.8 $ 938.9 $ 821.9 $ 724.0
========= ========= ========= ======== ========
Earnings Per Share
Attributable to GM Class E
Common Stock.............. $ 0.45 $ 0.42 $ 1.96 $ 1.71 $ 1.51
========= ========= ========= ======== ========
</TABLE>

Revenues related to GM and affiliates amounted to $962.2 million, $898.0
million, $3,891.1 million, $3,547.2 million, and $3,323.7 million for the three
month periods ended March 31, 1996 and 1995 and the years ended December 31,
1995, 1994, and 1993, respectively.

See accompanying notes to consolidated financial statements.

F-3
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
MARCH 31,
1996 1995 1994
----------- --------- --------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents..................... $ 935.9 $ 548.9 $ 608.2
Marketable securities (Note 3)................ 84.7 89.7 149.6
Accounts receivable, net...................... 2,779.2 2,872.0 2,082.1
Accounts receivable from GM and affiliates.... 343.1 297.0 65.4
Inventories................................... 184.9 181.2 137.8
Prepaids and other............................ 406.7 392.7 311.0
--------- --------- --------
Total current assets........................ 4,734.5 4,381.5 3,354.1
--------- --------- --------
Property and equipment, at cost less accumulated
depreciation (Note 4).......................... 3,262.0 3,242.4 2,756.6
--------- --------- --------
Operating and other assets
Land held for development, at cost (Note 5)... 105.8 105.1 97.4
Investment in leases and other (Note 6)....... 1,516.9 1,573.5 1,308.8
Software, goodwill, and other intangibles, net
(Notes 7 and 19)............................. 1,496.6 1,529.9 1,269.6
--------- --------- --------
Total operating and other assets............ 3,119.3 3,208.5 2,675.8
--------- --------- --------
Total Assets................................ $11,115.8 $10,832.4 $8,786.5
========= ========= ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable.............................. $ 530.9 $ 603.9 $ 571.1
Accrued liabilities (Note 8).................. 1,551.6 1,704.5 1,451.0
Deferred revenue.............................. 633.7 629.3 536.7
Income taxes (Note 11)........................ 146.9 75.9 111.0
Notes payable (Note 9)........................ 238.7 247.8 203.4
--------- --------- --------
Total current liabilities................... 3,101.8 3,261.4 2,873.2
--------- --------- --------
Deferred income taxes (Note 11)................. 749.0 739.7 659.8
--------- --------- --------
Notes payable (Note 9).......................... 2,109.2 1,852.8 1,021.0
--------- --------- --------
Commitments and contingent liabilities (Notes 17
and 18)
Stockholder's equity (Notes 10 and 12)
Common stock, without par value; authorized
1,000.0 shares. Issued and outstanding 485.7,
483.7 and 481.7 shares at March 31, 1996,
December 31, 1995 and 1994, respectively..... 559.9 517.7 455.1
Retained earnings............................. 4,595.9 4,460.8 3,777.4
--------- --------- --------
Total stockholder's equity.................. 5,155.8 4,978.5 4,232.5
--------- --------- --------
Total Liabilities and Stockholder's Equity.. $11,115.8 $10,832.4 $8,786.5
========= ========= ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
------------------ -----------------------------
1996 1995 1995 1994 1993
-------- -------- -------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income................ $ 218.8 $ 196.8 $ 938.9 $ 821.9 $ 724.0
-------- -------- -------- --------- --------
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and amorti-
zation................. 282.7 231.0 1,107.8 771.1 626.8
Deferred compensation... 11.0 14.7 58.8 62.0 33.8
Other................... 9.3 (2.4) 33.0 30.9 (17.7)
Changes in assets and
liabilities, net of
effects of acquired
companies:
(Increase) decrease in
accounts receivable.... 143.2 (62.4) (611.5) (605.4) (200.8)
(Increase) decrease in
accounts receivable
from GM and affili-
ates................... (47.2) (123.1) (227.8) 51.1 (56.0)
(Increase) decrease in
inventories............ (4.2) 0.2 (41.9) (1.9) (15.5)
(Increase) in prepaids
and other.............. (18.9) (65.3) (59.7) (57.0) (26.8)
Increase (decrease) in
accounts payable and
accrued liabilities.... (169.8) (176.2) (76.0) 453.2 27.4
Increase in deferred
revenue................ 7.9 68.0 81.0 79.1 137.1
Increase (decrease) in
taxes payable.......... 79.3 46.6 56.4 (72.5) 188.7
-------- -------- -------- --------- --------
Total adjustments..... 293.3 (68.9) 320.1 710.6 697.0
-------- -------- -------- --------- --------
Net cash provided by oper-
ating activities......... 512.1 127.9 1,259.0 1,532.5 1,421.0
-------- -------- -------- --------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from sales of
marketable securities.... 26.0 42.7 163.6 370.0 234.2
Proceeds from investments
in leases and other
assets................... 80.8 5.8 87.8 134.6 217.3
Payments for purchases of
property and equipment... (244.4) (259.3) (1,261.5) (1,186.0) (816.4)
Payments for investments
in leases and other
assets................... (90.4) (130.9) (356.3) (395.7) (170.6)
Payments related to
acquisitions, net of cash
acquired................. (38.0) (40.9) (234.9) (186.6) (122.1)
Payments for purchases of
software and other
intangibles.............. (29.5) 4.0 (92.0) (77.0) (119.0)
Payments for purchases of
marketable securities.... (21.7) (10.8) (100.9) (248.9) (292.5)
Other..................... 3.8 2.4 12.7 49.9 1.4
-------- -------- -------- --------- --------
Net cash used in investing
activities............... (313.4) (387.0) (1,781.5) (1,539.7) (1,067.7)
-------- -------- -------- --------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from notes pay-
able..................... 1,484.9 1,752.5 7,466.7 10,821.0 2,527.7
Payments on notes pay-
able..................... (1,236.8) (1,583.9) (6,776.3) (10,300.7) (2,648.7)
Net decrease in current
notes payable with matu-
rities less than 90
days..................... -- 48.8 -- (102.9) (99.0)
Employee stock
transactions and related
tax benefit.............. 20.1 14.7 26.0 20.2 33.9
Dividends paid to GM...... (72.6) (62.6) (251.3) (231.1) (192.1)
-------- -------- -------- --------- --------
Net cash provided by (used
in) financing activi-
ties..................... 195.6 169.5 465.1 206.5 (378.2)
-------- -------- -------- --------- --------
Effect of Exchange Rate
Changes on Cash and Cash
Equivalents................ (7.3) 3.1 (1.9) 25.5 (13.6)
-------- -------- -------- --------- --------
Net Increase (Decrease) in
Cash and Cash Equivalents.. 387.0 (86.5) (59.3) 224.8 (38.5)
Cash and Cash Equivalents at
Beginning of Period........ 548.9 608.2 608.2 383.4 421.9
-------- -------- -------- --------- --------
Cash and Cash Equivalents at
End of Period.............. $ 935.9 $ 521.7 $ 548.9 $ 608.2 $ 383.4
======== ======== ======== ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.

F-5
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993 AND
THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Electronic Data Systems Corporation is a provider of information technology
using advanced computer and communications technologies to meet the business
needs of its clients. As used herein, the terms "EDS" and the "Company" refer
to Electronic Data Systems Corporation and its consolidated subsidiaries. EDS
offers its clients a continuum of services in over 40 countries worldwide.
This continuum includes the management of computers, networks, information
systems, information processing facilities, business operations, and related
personnel, as well as management consulting services. (See Note 14 for
geographic segment information.)

General Motors Corporation (GM) acquired all of the capital stock of EDS in
October 1984. Prior to that time, EDS had been an independent, publicly held
corporation. Electronic Data Systems Holding Corporation was incorporated in
Delaware in 1994 for the purpose of holding the capital stock of EDS, which
was incorporated in Texas in 1962. (See Note 21.)

INTERIM FINANCIAL INFORMATION

In the opinion of management, the unaudited interim consolidated financial
statements as of March 31, 1996 and for the three months ended March 31, 1996
and 1995, reflect all adjustments, consisting of only normal recurring items,
which are necessary for a fair presentation of the results for the interim
periods presented. 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.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of EDS and all
majority-owned subsidiaries. The Company's investments in companies in which
it has the ability to exercise significant influence over operating and
financial policies are accounted for under the equity method, with the
remaining investments carried at cost.

Earnings Attributable to GM Class E Common Stock on a Per Share Basis have
been determined based on the relative amounts available for the payment of
dividends to holders of GM Class E common stock. Holders of GM Class E common
stock have no direct rights in the equity or assets of EDS, but rather have
rights in the equity and assets of GM (which includes 100 percent of the stock
of EDS). Dividends on the GM Class E common stock are declared out of the
Available Separate Consolidated Net Income of EDS earned since the acquisition
of EDS by GM. The Available Separate Consolidated Net Income of EDS is
determined quarterly and is equal to the Separate Consolidated Net Income of
EDS, excluding the effects of purchase accounting adjustments arising from the
acquisition of EDS, which are not reflected in the accompanying consolidated
financial statements, multiplied by a fraction, the numerator of which is the
weighted average number of shares of GM Class E common stock outstanding
during the quarter, and the denominator of which was 483.7 million EDS common
shares at December 31, 1995 (the Class E Dividend Base). The effects of
purchase accounting adjustments reflected in General Motors' Consolidated
Financial Statements that are applicable to EDS were not material to EDS'
Consolidated Statements of Income for the three months ended March 31, 1996
and 1995, and for each of the three years in the period ended December 31,
1995. At March 31, 1996 and December 31, 1995, the remaining carrying value of
such purchase accounting adjustments would not be material to EDS'
Consolidated Financial Statements.

GM Series C depositary shares represent ownership of one-tenth of a share of
GM Series C convertible preference stock. GM Series C depositary shares and GM
Series C preference stock are convertible into GM

F-6
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Class E common stock and are common stock equivalents for purposes of
computing Earnings Attributable to GM Class E Common Stock on a Per Share
Basis. On November 2, 1992, GM Series E-II and E-III preference stocks,
previously held by the GM pension plans, were converted to GM Class E common
stock. In 1993 and 1992, GM Series E-I preference stock was converted to GM
Class E common stock, or redeemed by GM. The issuances and conversions of such
preference stocks have no dilutive effect on the GM Class E common stock
because, to the extent that shares of GM Class E common stock deemed to be
outstanding would increase, such increased shares would increase the numerator
of the fraction used to determine Available Separate Consolidated Net Income,
but would have no effect on the denominator. Additionally, unvested units in
the Company's stock incentive plan would have no material dilutive effect on
the denominator.

The denominator used in determining the Available Separate Consolidated Net
Income of EDS is adjusted as deemed appropriate by the GM Board of Directors
to reflect subdivisions or combinations of the GM Class E common stock and to
reflect certain transfers of capital to or from EDS. The GM Board's discretion
to make such adjustments is limited by criteria set forth in GM's Certificate
of Incorporation. In 1988, EDS initiated a program to purchase 11.0 million
shares of GM Class E common stock in order to meet certain future requirements
of the Company's employee benefit plans. As of December 31, 1989, the Company
had purchased 11.0 million shares of GM Class E common stock to be distributed
to key employees under the provisions of the 1984 Plan. The GM Board has
generally caused the denominator used in calculating the Available Separate
Consolidated Net Income of EDS to decrease as shares are purchased and to
increase as shares are used for the employee benefit plans.

In March 1995, GM contributed 173 million newly issued shares of GM Class E
common stock to the General Motors Hourly-Rate Employees Pension Plan.

Prior to the Split-Off, the GM Board policy was that the cash dividends on
the GM Class E common stock, when, as, and if declared by the GM Board in its
sole discretion, would equal approximately 30 percent of the prior year's
Available Separate Consolidated Net Income of EDS.

The following table summarizes certain amounts discussed above (in millions,
except per share amounts):

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------- --------------------------
1996 1995 1995 1994 1993
------ ------ -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Separate Consolidated Net Income..... $218.8 $196.8 $ 938.9 $ 821.9 $ 724.0
Available Separate Consolidated Net
Income.............................. 209.2 122.4 795.5 444.4 367.2
Average Number of Shares of GM Class
E Common Stock Outstanding
(Numerator)......................... 463.2 300.0 404.6 260.3 243.0
Class E Dividend Base (Denominator).. 484.4 482.4 483.7 481.7 480.6
Earnings Attributable to GM Class E
Common Stock on a Per Share Basis... $ 0.45 $ 0.42 $ 1.96 $ 1.71 $ 1.51
Cash Dividends Per Share of GM Class
E Common Stock...................... $ 0.15 $ 0.13 $ 0.52 $ 0.48 $ 0.40
</TABLE>

DEBT AND MARKETABLE EQUITY SECURITIES

Marketable securities at December 31, 1995 and 1994, consist of securities
issued by the U.S. Treasury, states, and political subdivisions, as well as
mortgage-backed debt, corporate debt and corporate equity securities. The
Company adopted the provisions of Statement of Financial Accounting Standards
(SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities, effective January 1, 1994. Pursuant to SFAS No. 115, the
provisions of the Statement were not applied retroactively. The change had no
material cumulative

F-7
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
effect on the Company's financial position or results of operations. Under
SFAS No. 115, the Company classifies all of its debt and marketable equity
securities as available-for-sale. Management determines the appropriate
classification of all securities at the time of purchase and reevaluates such
designation as of each balance sheet date. Noncurrent available-for-sale
securities are reported within the balance sheet classification "Investment in
Leases and Other." The Company's available-for-sale securities are recorded at
fair value. Unrealized holding gains and losses, net of the related tax
effect, are excluded from earnings and are reported as a separate component of
stockholder's equity until realized. A decline in the fair value of any
available-for-sale security below cost that is deemed other than temporary is
charged to earnings, resulting in the establishment of a new cost basis for
the security (see Note 3).

INVENTORY VALUATION

Inventories are stated principally at the lower of cost or market using the
first-in, first-out method.

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost. Depreciation of property and
equipment is calculated using the straight-line method over the lesser of the
asset's estimated useful life, the life of the related customer contract or
the term of the lease in the case of leasehold improvements. The ranges of
estimated useful lives are as follows:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings........................................................... 20-40
Facilities.......................................................... 5-20
Computer equipment.................................................. 3-7
Other equipment and furniture....................................... 3-15
</TABLE>

SOFTWARE, GOODWILL, AND OTHER INTANGIBLES

Software purchased by the Company and utilized in designing, installing, and
operating business information and communications systems is capitalized and
amortized on a straight-line basis over a five- to eight-year period. Costs of
developing and maintaining software systems are incurred primarily in
connection with customer contracts and are considered contract costs. Software
development costs that meet the capitalization and recoverability requirements
of SFAS No. 86, Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed, are capitalized and generally amortized on a
straight-line basis over three years. Such amounts were not significant.

The cost of acquired companies is allocated first to identifiable assets
based on estimated fair values. The excess of the purchase price over the fair
value of identifiable assets acquired, net of liabilities assumed, is recorded
as goodwill and amortized on a straight-line basis over the useful life which
is determined based on the individual characteristics of the acquired entity,
generally five to 40 years. Costs allocated to identifiable intangible assets
are amortized on a straight-line basis over the remaining estimated useful
lives of the assets as determined by underlying contract terms or independent
appraisals. Such lives range from five to ten years.

The Company periodically evaluates the carrying amounts of goodwill and
other intangibles, as well as the related amortization periods, to determine
whether adjustments to these amounts or useful lives are required based on
current events and circumstances. The evaluation is based on the Company's
projection of the undiscounted future operating cash flows of the acquired
operation over the remaining useful lives of the related intangible assets. To
the extent such projections indicate that future undiscounted cash flows are
not sufficient to recover the carrying amounts of related intangibles, the
underlying assets are written down by charges to expense so that the carrying
amount is equal to future undiscounted cash flows. The assessment of the
recoverability of goodwill will be impacted if estimated future operating cash
flows are not achieved.

F-8
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

REVENUE RECOGNITION

The Company provides services under level-of-effort and fixed-price
contracts, with the length of the Company's contracts ranging up to ten years.
For level-of-effort types of contracts, revenue is earned based on the agreed-
upon billing amounts as services are provided to the customer. For certain
fixed-price contracts, revenue is recognized on the percentage-of-completion
method. Revenue earned is based on the percentage that incurred contract costs
to date bear to total estimated contract costs after giving effect to the most
recent estimates of total cost. Changes to total estimated contract costs, if
any, are recognized in the period they are determined. Deferred revenue of
$633.7 million, $629.3 million and $536.7 million at March 31, 1996, December
31, 1995 and 1994, respectively, represents billings in excess of costs and
related profits on certain contracts. Included in accounts receivable are
unbilled receivables of $734.5 million, $622.2 million and $448.5 million at
March 31, 1996, December 31, 1995 and 1994, respectively. Such unbilled
receivables for certain contracts in progress represent costs and related
profits in excess of billings, and such amounts were not billable at the
balance sheet date but are recoverable over the remaining life of the
contract. These billings on fixed-price contracts will be made in the future
in accordance with contractual agreements. Of the unbilled receivables at
December 31, 1995, billings to such customers amounting to $108.3 million are
expected to be collected in 1997 and thereafter.

CURRENCY TRANSLATION

Assets and liabilities of non-U.S. subsidiaries whose functional currency is
not the U.S. dollar are translated at current exchange rates. Revenue and
expense accounts are translated using an average rate for the period.
Translation gains (losses) are not included in determining net income but are
reflected as a separate component of stockholder's equity. Nonfunctional
currency transaction gains (losses) are included in determining net income and
were $(3.8) million, $4.5 million, and $(3.7) million, net of income taxes,
for the years ended December 31, 1995, 1994, and 1993, respectively.

INCOME TAXES

The Company provides for deferred taxes under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered. Prior to the Split-Off,
the Company was included in the consolidated federal tax returns filed by GM.
Current federal income taxes were calculated on a separate return basis and
remitted to GM. The deferral method is used to account for investment tax
credits.

STATEMENT OF CASH FLOWS

The Company uses the indirect method to present cash flows from operating
activities and considers certificates of deposit, as well as the following
items with original maturities of three months or less, to be cash
equivalents: commercial paper, repurchase agreements, and money market funds.
(See Note 20.)

F-9
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and fair values of the
Company's financial instruments as defined under SFAS No. 107, Disclosures
about Fair Value of Financial Instruments, at December 31, 1995 and 1994 (in
millions):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
1995 1994
----------------- -----------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Available-for-sale marketable securities
(Notes 3 and 6)........................... $ 93.5 $ 93.5 $ 153.6 $ 153.6
Investment in joint ventures and
partnerships, under the cost method of
accounting (Note 6)....................... 215.1 271.4 149.6 172.0
Other long-term securities (Note 6)........ 263.2 307.4 201.2 192.6
Non-current notes receivable (Note 6)...... 89.6 86.0 158.1 154.4
Notes payable (Note 9)..................... 2,100.6 2,168.4 1,224.4 1,230.3
Foreign exchange forward contracts, net li-
ability (Note 15)......................... (5.4) (5.4) (0.9) (0.9)
</TABLE>

The carrying value of other financial instruments such as cash equivalents,
accounts receivable, and accounts payable approximate their fair value.
Concentrations of credit risk with respect to accounts receivable are limited
due to the large number of customers comprising the Company's customer base
and their dispersion across different industry and geographic areas. Accounts
receivable are shown net of allowances of $99.5 million and $57.9 million as
of December 31, 1995 and 1994, respectively.

DERIVATIVES

Derivative financial instruments are used by the Company in the management
of its interest rate and foreign currency exposures. Net payments or receipts
under the Company's interest rate swap agreements are recorded as adjustments
to interest expense. Foreign exchange forward contracts are recorded in the
Company's Consolidated Balance Sheets at fair value at the reporting date.
Realized and unrealized changes in fair value are recognized in income, as
other income (expense), in the period in which the changes occur.

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Because of the use of estimates inherent
in the financial reporting process, actual results could differ from those
estimates.

SIGNIFICANT CUSTOMERS

The percentage of EDS' total revenues attributable to GM and its affiliates
has decreased significantly since GM's acquisition of EDS in 1984 as a result
of the revenue growth of EDS' non-GM business. During the three months ended
March 31, 1996 and the year ended December 31, 1995, the portion of EDS'
revenues attributable to GM was approximately 28% and 31%, respectively. On
August 7, 1995, GM announced that it intends to pursue a split-off (the
"Split-Off") of EDS to its GM Class E stockholders in a tax-free exchange.
Immediately before the Split-Off, GM and EDS will enter into a new master
services agreement and certain related agreements which would significantly
change the pricing and terms of the services currently provided by EDS. In
addition, it is also expected that at the time of the Split-Off, a Special
Inter-Company Payment will be made to GM by EDS to ensure the fairness of the
Split-Off to all classes of GM common stock. Therefore, EDS does not
anticipate the loss of GM as an ongoing major customer in the near future.
(See Note 21.)

Other than General Motors, no single customer accounted for more than 5% of
the Company's revenues in 1995, 1994, or 1993.

F-10
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

RECLASSIFICATIONS

Certain reclassifications have been made to the 1994 and 1993 consolidated
financial statements to conform to the 1995 presentation.

NOTE 2: NATIONAL HERITAGE INSURANCE COMPANY

National Heritage Insurance Company (NHIC), a wholly owned subsidiary of
EDS, acts as underwriter for claims benefit payments for the Medicaid welfare
program contract for the state of Texas.

The contract provides that payments from the state be deposited in trust
accounts that are not included in the consolidated financial statements. In
accordance with contractual provisions, these funds will be returned to the
state if total benefit claims are less than the amounts received. Of such
payments received for the years ended December 31, 1995, 1994, and 1993,
$3,440.1 million, $4,188.7 million, and $4,453.4 million, respectively, were
designated for the payment of benefit claims or to be returned to the state.
At December 31, 1995 and 1994, $664.7 million and $983.5 million,
respectively, of such designated funds at amortized cost remained in the trust
accounts. Approximate market values of these invested funds at December 31,
1995 and 1994 were $663.3 million and $975.2 million, respectively. These
investments primarily consist of corporate and government bonds. NHIC has the
ability and intent to hold these investments until their full face value can
be realized. Gains and losses from the sale of these investments held in trust
accounts are combined with gains and losses from the Company's other
investments.

NOTE 3: DEBT AND MARKETABLE EQUITY SECURITIES

Following is a summary of available-for-sale securities (in millions):

<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Current:
U.S. government and agency obliga-
tions................................. $33.2 $0.1 $0.1 $33.2
Other debt securities.................. 35.6 0.1 1.8 33.9
----- ---- ---- -----
Total debt securities................ 68.8 0.2 1.9 67.1
Equity securities...................... 23.4 -- 0.8 22.6
----- ---- ---- -----
Total current available-for-sale se-
curities............................ $92.2 $0.2 $2.7 $89.7
===== ==== ==== =====
Noncurrent (Note 6):
Other debt securities.................. $ 0.6 $-- $-- $ 0.6
Equity securities...................... 5.7 -- 2.5 3.2
----- ---- ---- -----
Total noncurrent available-for-sale
securities.......................... $ 6.3 $-- $2.5 $ 3.8
===== ==== ==== =====
</TABLE>

F-11
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31, 1994
--------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Current:
U.S. government and agency obliga-
tions................................ $ 31.9 $-- $0.6 $ 31.3
Other debt securities................. 94.9 0.2 4.7 90.4
------ ---- ---- ------
Total debt securities............... 126.8 0.2 5.3 121.7
Equity securities..................... 29.2 -- 1.3 27.9
------ ---- ---- ------
Total current available-for-sale se-
curities........................... $156.0 $0.2 $6.6 $149.6
====== ==== ==== ======
Noncurrent (Note 6):
Other debt securities................. $ 0.6 $-- $-- $ 0.6
Equity securities..................... 5.8 -- 2.4 3.4
------ ---- ---- ------
Total noncurrent available-for-sale
securities......................... $ 6.4 $-- $2.4 $ 4.0
====== ==== ==== ======
</TABLE>

The amortized cost and estimated fair value of debt securities at December
31, 1995, by contractual maturity, are shown below (in millions). Expected
maturities will differ from contractual maturities because the issuers of the
securities may have the right to repay obligations without prepayment
penalties.

<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------
AMORTIZED FAIR
COST VALUE
---------- --------
<S> <C> <C>
Debt securities
Due in one year or less............................... $ 18.1 $ 18.1
Due after one year through five years................. 30.7 30.7
Due after five years through ten years................ 2.0 2.0
Due after ten years................................... 0.7 0.7
Mortgage-backed securities............................ 17.9 16.2
-------- --------
Total debt securities............................... $ 69.4 $ 67.7
======== ========
</TABLE>

The following table summarizes sales of available-for-sale securities (in
millions):

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------
1995 1994
------ ------
<S> <C> <C>
Proceeds from sales.......................................... $162.5 $374.4
Gross realized gains......................................... $ 0.7 $ 17.4
Gross realized losses........................................ $ (1.1) $ (4.1)
</TABLE>

Specific identification was used to determine cost in computing realized
gain or loss.

F-12
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 4: PROPERTY AND EQUIPMENT (IN MILLIONS)

<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------------
ACCUMULATED
COST DEPRECIATION NET
-------- ------------ --------
<S> <C> <C> <C>
Land...................................... $ 136.9 $ -- $ 136.9
Buildings and facilities.................. 925.1 383.5 541.6
Computer equipment........................ 4,836.2 2,571.3 2,264.9
Other equipment and furniture............. 663.6 364.6 299.0
-------- -------- --------
Total................................... $6,561.8 $3,319.4 $3,242.4
======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1994
------------------------------
ACCUMULATED
COST DEPRECIATION NET
-------- ------------ --------
<S> <C> <C> <C>
Land...................................... $ 125.3 $ -- $ 125.3
Buildings and facilities.................. 878.7 319.5 559.2
Computer equipment........................ 3,967.6 2,096.6 1,871.0
Other equipment and furniture............. 465.9 264.8 201.1
-------- -------- --------
Total................................... $5,437.5 $2,680.9 $2,756.6
======== ======== ========
</TABLE>

NOTE 5: LAND HELD FOR DEVELOPMENT

Land held for development at December 31, 1995, consists of approximately
2,260 acres located throughout the Dallas metropolitan area. Approximately
1,590 acres of land, site of a commercial real estate development, are located
in Plano, Texas. The carrying value of land is periodically compared to
current sales, market analysis and appraisals to determine whether an
adjustment is required.

NOTE 6: INVESTMENT IN LEASES AND OTHER (IN MILLIONS)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1994
-------- --------
<S> <C> <C>
Lease contracts receivable (net of principal and inter-
est on nonrecourse debt)............................... $ 385.9 $ 384.5
Estimated residual values of leased assets (not guaran-
teed).................................................. 335.3 339.0
Unearned income, including deferred investment tax cred-
its.................................................... (246.8) (260.6)
-------- --------
Investment in leveraged leases (excluding deferred taxes
of $303.0 and $284.7 at December 31, 1995 and 1994, re-
spectively)............................................ 474.4 462.9
Investment in securities, joint ventures and partner-
ships.................................................. 602.8 357.2
Investment in direct financing leases, net of unearned
income................................................. 148.2 153.8
Noncurrent notes receivable............................. 89.6 158.1
GM Class E common stock held for benefit plans.......... 33.2 54.7
Investment in tax benefit transfers..................... 36.2 38.6
Long-term prepaid software license fees................. 43.4 16.6
Other................................................... 145.7 66.9
-------- --------
Total................................................. $1,573.5 $1,308.8
======== ========
</TABLE>

The fair values of certain long-term investments are estimated based on
quoted market prices for these or similar investments. For other investments,
a variety of methods is used to estimate fair value, including external
valuations and discounted cash flows. At December 31, 1995, the fair values of
investments in joint ventures and partnerships (accounted for using the cost
method), long-term securities, and noncurrent notes receivable were

F-13
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
estimated to be $271.4 million, $307.4 million, and $86.0 million,
respectively, with carrying amounts of $215.1 million, $263.2 million, and
$89.6 million, respectively. At December 31, 1994, the fair values of
investments in joint ventures and partnerships (accounted for using the cost
method), long-term securities, and noncurrent notes receivable were estimated
to be $172.0 million, $192.6 million, and $154.4 million, respectively, with
carrying amounts of $149.6 million, $201.2 million, and $158.1 million,
respectively. The carrying amount of securities, joint ventures and
partnerships also includes investments accounted for under the equity method,
none of which is material to the Company's consolidated financial statements.
A decline in the market value of any of these investments which is deemed to
be other than temporary would be charged to earnings. At December 31, 1995 and
1994, "Investment in Leases and Other" was net of an allowance of $26.6
million and $17.5 million, respectively. Long-term securities include GM Class
E common stock and other securities. The carrying value of the GM Class E
common stock, which was less than the market value, was utilized as the
investment's fair value shown above, because the stock will be used to satisfy
future benefit plan obligations.

Financing leases that are financed with nonrecourse borrowings at lease
inception are accounted for as leveraged leases. Such borrowings are secured
by substantially all of the lessor's rights under the lease plus the residual
value of the asset. For federal income tax purposes, the Company receives the
investment tax credit (if available) at lease inception and has the benefit of
tax deductions for depreciation on the leased asset and for interest on the
nonrecourse debt. A portion of the Company's leveraged lease portfolio is
concentrated within the airline industry. The Company historically has not
experienced credit losses from these transactions, and the portfolio is
diversified among unrelated lessees.

NOTE 7: SOFTWARE, GOODWILL, AND OTHER INTANGIBLES (IN MILLIONS)

<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------------
ACCUMULATED
COST AMORTIZATION NET
-------- ------------ --------
<S> <C> <C> <C>
Software...................................... $ 966.6 $606.8 $ 359.8
Goodwill...................................... 1,225.6 129.6 1,096.0
Other intangibles............................. 245.8 171.7 74.1
-------- ------ --------
Total....................................... $2,438.0 $908.1 $1,529.9
======== ====== ========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1994
------------------------------
ACCUMULATED
COST AMORTIZATION NET
-------- ------------ --------
<S> <C> <C> <C>
Software...................................... $ 876.0 $462.1 $ 413.9
Goodwill...................................... 833.9 80.4 753.5
Other intangibles............................. 312.8 210.6 102.2
-------- ------ --------
Total....................................... $2,022.7 $753.1 $1,269.6
======== ====== ========
</TABLE>

NOTE 8: ACCRUED LIABILITIES (IN MILLIONS)

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1994
-------- --------
<S> <C> <C>
Contract related.......................................... $1,044.8 $ 880.9
Payroll related........................................... 291.4 196.4
Operating expenses........................................ 157.7 196.1
Property, sales, and franchise taxes...................... 135.1 100.1
Other..................................................... 75.5 77.5
-------- --------
Total................................................... $1,704.5 $1,451.0
======== ========
</TABLE>

F-14
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 9: NOTES PAYABLE (IN MILLIONS)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1994
-------- --------
<S> <C> <C>
Commercial paper, 5.6% to 5.9%............................ $1,078.0 $ 933.0
Lines of credit, variable rate, 5.9% to 9.6%, due 1996.... 118.9 48.7
Notes, variable rate, 3.0% to 11.2%, due 1996 to 2006..... 9.3 91.1
Notes to Banks, fixed rate, 4.9% to 11.7%, due 1996 to
2003..................................................... 121.6 107.2
Notes Payable, fixed rate, 6.85% to 7.125%, due 2000 to
2005, net of discount.................................... 645.8 --
Notes Payable, fixed rate, 1.2% to 10.4%, due 1996 to
2004..................................................... 127.0 44.4
-------- --------
Total................................................... 2,100.6 1,224.4
Less current maturities classified as notes payable..... (247.8) (203.4)
-------- --------
Noncurrent notes payable................................ $1,852.8 $1,021.0
======== ========
</TABLE>

Commercial paper is classified as noncurrent debt, as it is intended to be
maintained on a long-term basis with ongoing credit availability provided by
the Company's revolving, committed lines of credit. During 1995, the Company
revised its agreement with a syndicate of banks, which increased to $2,500.0
million its committed lines of credit, of which $1,250.0 million expires in
1996 with the option to convert any outstanding amounts under these lines into
term loans that mature in 1998. The remaining $1,250.0 million expires in
2000. Upon expiration of the commitment periods, the lenders and EDS have the
option to extend the commitment.

In addition, as of December 31, 1995, the Company had available and had used
another $15.5 million in committed lines of credit. The Company also had
available $831.6 million in uncommitted short-term lines of credit, of which
$728.2 million remained unused at December 31, 1995.

In May 1995, EDS issued $350.0 million of its 6.85% five-year notes and
$300.0 million of its 7.125% ten-year notes in a private placement to
investment banks.

Notes payable relate to land held for development, property and equipment,
acquisitions, and other items. Notes payable are generally unsecured, with
certain notes secured by assets of a majority-owned subsidiary.

Maturities of notes payable for years subsequent to December 31, 1995, are
as follows (in millions):

<TABLE>
<S> <C>
1996.......................................... $ 247.8
1997.......................................... 60.6
1998.......................................... 35.5
1999.......................................... 6.9
2000.......................................... 1,433.1
Thereafter.................................... 316.7
--------
$2,100.6
========
</TABLE>

The Company's credit facilities and the indenture governing its medium term
notes contain certain financial and other covenants, including the maintenance
of a minimum net worth and restrictions on mergers, consolidations and sales
of substantially all of the assets of the Company. As of December 31, 1995,
the Company was in compliance with all of these covenants.

For the years ended December 31, 1994 and 1993, interest costs of $1.2
million and $5.4 million, respectively, were capitalized, which, if charged to
expense, would have resulted in reductions in net income of $0.7 million and
$3.5 million, respectively. During 1995, the Company capitalized no interest
costs.

F-15
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The fair value of notes payable is estimated based on the current rates
offered to the Company for the same remaining maturities. At December 31, 1995
and 1994, the estimated fair value was $2,168.4 million and $1,230.3 million,
respectively.

NOTE 10: CONSOLIDATED STOCKHOLDER'S EQUITY (IN MILLIONS)

<TABLE>
<CAPTION>
COMMON STOCK
-------------
CURRENCY MARKET CONSOLIDATED
TRANSLATION VALUE RETAINED STOCKHOLDER'S
SHARES AMOUNT ADJUSTMENT ADJUSTMENT EARNINGS EQUITY
------ ------ ----------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1992................... 479.3 $365.9 $ (52.7) $ -- $2,750.2 $3,063.4
Net income............ -- -- -- -- 724.0 724.0
Dividends declared.... -- -- -- -- (192.1) (192.1)
Stock award transac-
tions................ 1.6 55.3 -- -- -- 55.3
Currency translation
adjustment........... -- -- (33.2) -- -- (33.2)
----- ------ ------- ----- -------- --------
Balance at December 31,
1993................... 480.9 421.2 (85.9) -- 3,282.1 3,617.4
Net income............ -- -- -- -- 821.9 821.9
Dividends declared.... -- -- -- -- (231.1) (231.1)
Stock award transac-
tions................ 0.8 33.9 -- -- -- 33.9
Currency translation
adjustment........... -- -- (3.0) -- -- (3.0)
Unrealized loss on se-
curities, net (Note
3)................... -- -- -- (6.6) -- (6.6)
----- ------ ------- ----- -------- --------
Balance at December 31,
1994................... 481.7 455.1 (88.9) (6.6) 3,872.9 4,232.5
Net income............ -- -- -- -- 938.9 938.9
Dividends declared.... -- -- -- -- (251.3) (251.3)
Stock award transac-
tions................ 2.0 62.6 -- -- -- 62.6
Currency translation
adjustment........... -- -- (6.6) -- -- (6.6)
Unrealized gain on se-
curities, net (Note
3)................... -- -- -- 2.4 -- 2.4
----- ------ ------- ----- -------- --------
Balance at December 31,
1995................... 483.7 517.7 (95.5) (4.2) 4,560.5 4,978.5
Net income............ -- -- -- -- 218.8 218.8
Dividends declared.... -- -- -- -- (72.6) (72.6)
Stock award transac-
tions................ 2.0 42.2 -- -- -- 42.2
Currency translation
adjustment........... (10.6) -- -- (10.6)
Unrealized loss on se-
curities, net (Note
3)................... -- -- -- (0.5) -- (0.5)
----- ------ ------- ----- -------- --------
Balance at March 31,
1996 (unaudited)....... 485.7 $559.9 $(106.1) $(4.7) $4,706.7 $5,155.8
===== ====== ======= ===== ======== ========
</TABLE>

NOTE 11: INCOME TAXES

The current and deferred income tax liabilities (assets) are summarized as
follows (in millions):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1995 1994
------ ------
<S> <C> <C>
Current payable............................................... $ 4.3 $ 49.3
Current deferred.............................................. 71.6 61.7
------ ------
Total income taxes--current................................. 75.9 111.0
Noncurrent deferred........................................... 739.7 659.8
------ ------
Total current and noncurrent income taxes................... $815.6 $770.8
====== ======
</TABLE>

F-16
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The provision for income tax expense is summarized as follows (in millions):

<TABLE>
<CAPTION>
U.S. NON-
FEDERAL U.S. STATE TOTAL
------- ------ ----- ------
<S> <C> <C> <C> <C>
Year Ended December 31, 1995
Current.................................... $310.3 $117.3 $35.4 $463.0
Deferred................................... 44.5 20.6 -- 65.1
------ ------ ----- ------
Total.................................... $354.8 $137.9 $35.4 $528.1
====== ====== ===== ======
Year Ended December 31, 1994
Current.................................... $279.0 $167.9 $32.6 $479.5
Deferred................................... 15.8 (33.0) -- (17.2)
------ ------ ----- ------
Total.................................... $294.8 $134.9 $32.6 $462.3
====== ====== ===== ======
Year Ended December 31, 1993
Current.................................... $130.1 $ 77.8 $17.0 $224.9
Deferred................................... 161.0 21.4 -- 182.4
------ ------ ----- ------
Total.................................... $291.1 $ 99.2 $17.0 $407.3
====== ====== ===== ======
</TABLE>

Income before income taxes included the following components (in millions):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
U.S. income....................................... $1,131.6 $ 963.5 $ 886.1
Non-U.S. income................................... 335.4 320.7 245.2
-------- -------- --------
Total........................................... $1,467.0 $1,284.2 $1,131.3
======== ======== ========
</TABLE>

A reconciliation of income tax expense using the statutory federal income
tax rate of 35.0 percent for 1995, 1994, and 1993 to the actual income tax
expense follows (in millions):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Income before income taxes..................... $1,467.0 $1,284.2 $1,131.3
Statutory federal income tax................... 513.4 449.5 395.9
Non-U.S. taxes, net of credit.................. 4.1 18.9 13.4
State income tax, net.......................... 23.0 21.2 11.1
Investment tax credit-leveraged leases......... (3.0) (3.1) (4.4)
Research and experimentation credits........... (7.5) (11.3) (8.8)
Other.......................................... (1.9) (12.9) 0.1
-------- -------- --------
Total........................................ $ 528.1 $ 462.3 $ 407.3
======== ======== ========
Effective income tax rate...................... 36.0% 36.0% 36.0%
======== ======== ========
</TABLE>

F-17
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The tax effects of temporary differences and carryforwards, which result in
a significant portion of the deferred tax assets and liabilities, are as
follows (in millions):

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1995 1994
------------------- -------------------
ASSETS LIABILITIES ASSETS LIABILITIES
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
Basis differences attributable to leasing
activities.............................. $ 1.6 $ 488.4 $ 2.5 $ 504.8
Adjustments necessary to convert accruals
to a tax basis.......................... 129.9 246.8 111.9 215.1
Employee benefit plans................... 27.1 57.8 32.0 25.9
Accumulated tax depreciation/amortization
versus accumulated financial statement
depreciation/amortization............... 12.0 259.5 18.7 211.2
Effect on deferred taxes of
carryforwards........................... 122.3 -- 102.9 --
Unpaid claims and unearned premiums
related to NHIC......................... 12.1 72.8 27.6 52.7
Employee related compensation............ 94.0 -- 69.5 --
Allowance for doubtful accounts.......... 19.3 -- 4.8 --
Adjustments from conversion from cash to
accrual basis on open tax years......... 43.5 -- 43.5 --
Book to tax differences on securities.... 17.0 -- 15.0 --
Effect of lower tax rate on distributable
foreign earnings........................ 31.7 -- 29.6 --
Other.................................... 87.6 157.8 42.1 100.8
------ -------- ------ --------
Subtotal............................... 598.1 1,283.1 500.1 1,110.5
Less valuation allowance............... (126.3) -- (111.1) --
------ -------- ------ --------
Total deferred taxes................... $471.8 $1,283.1 $389.0 $1,110.5
====== ======== ====== ========
</TABLE>

The net changes in the total valuation allowance for the years ended
December 31, 1995 and 1994 were increases of $15.2 million and $18.8 million,
respectively. Certain of the Company's foreign subsidiaries have net operating
loss carryforwards which expire over an indefinite period. A majority of such
carryforwards are included in the valuation allowance. In assessing the
realizability of deferred tax assets, the Company considers whether it is more
likely than not that some portion or all of the deferred tax assets will not
be realized.

NOTE 12: STOCK PURCHASE AND INCENTIVE PLANS

The 1984 Electronic Data Systems Corporation Employee Stock Purchase Plan
(Purchase Plan) enables EDS employees to purchase up to 80.0 million shares of
GM Class E common stock at 85 percent of the quoted market price through
payroll deductions of up to 10 percent of their compensation. Shares of GM
Class E common stock purchased under the Purchase Plan may not be sold or
transferred within two years of the date of purchase unless they are first
offered to GM or EDS at the lesser of the original purchase price or the fair
market value on the date of sale. The number of shares available for future
sale under the Purchase Plan was 58.1 million shares at December 31, 1995.

The 1984 Electronic Data Systems Corporation Stock Incentive Plan (1984
Plan) covers up to 160.0 million shares of GM Class E common stock and expires
on October 17, 2004. The 1984 Plan permits shares and rights or options to
acquire shares, which may be subject to restrictions, to be granted or sold.
The maximum number of shares for which additional shares, rights or options
may be granted or sold under the provisions of the 1984 Plan was 93.3 million
shares at December 31, 1995.

The EDS Incentive and Compensation Committee (the Committee) granted the
right to purchase a total of 27.6 million shares of GM Class E common stock,
at prices of $0.0125 and $0.025 per share, to key employees under the
provisions of the 1984 Plan. As of December 31, 1995, substantially all of
these shares have vested.

F-18
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The difference between the quoted market price as of the date of grant and the
purchase price of shares granted has been charged to operations over the
vesting period. Expense for these awards amounted to $1.6 million, $13.3
million and $16.3 million for the years ended December 31, 1995, 1994 and
1993, respectively.

In 1995, 1994, 1991 and 1988, the Committee approved restricted stock unit
grants. The 1995 grant, related to the acquisition of A. T. Kearney (see Note
19), totals 6.6 million shares of GM Class E common stock. The 1995 grant and
the 1994 grant, which totaled 9.5 million shares, will be distributed to key
employees under the provisions of the 1984 Plan. The right to receive shares
is a restricted stock unit. All units granted are generally scheduled to vest
over a period of 10 years. The 1995 units are scheduled to vest beginning
September 1996. The 1994, 1991, and 1988 grants began vesting in March 1995,
March 1992, and March 1989, respectively. The quoted market price as of the
date of grant is charged to operations over the vesting period. The total
unvested number of units as of December 31, 1995 was 19.8 million.

The Company has a bonus plan under which awards are granted to key
executives and employees. Bonus expense amounted to $96.9 million, $86.6
million and $49.8 million for the years ended December 31, 1995, 1994, and
1993, respectively. Included in bonus expense is $57.2 million, $48.7 million
and $17.5 million relating to the restricted stock unit grants for the years
ended December 31, 1995, 1994, and 1993, respectively.

NOTE 13: DEFERRED COMPENSATION PLAN

The EDS Deferred Compensation Plan (Plan) provides a long-term savings
program for participants. The Plan allows eligible employees to contribute a
percentage of their compensation to a savings program and to defer income
taxes until the time of distribution.

NOTE 14: SEGMENT INFORMATION

INDUSTRY SEGMENTS

The Company's business involves operations in principally one industry
segment: designing, installing, and operating business information and
communications systems. Revenues from GM contributed approximately 31 percent,
36 percent, and 39 percent of total revenues for the years ended December 31,
1995, 1994, and 1993, respectively.

GEOGRAPHIC SEGMENTS

The following presents information about the Company's operations in
different geographic areas (in millions):

<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1995
------------------------------------
U.S. EUROPE OTHER TOTAL
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Systems and other contracts revenues
Outside customers................... $5,794.9 $2,001.5 $ 734.6 $ 8,531.0
GM and affiliates................... 2,926.1 659.2 305.8 3,891.1
-------- -------- -------- ---------
Total systems and other contracts
revenues......................... $8,721.0 $2,660.7 $1,040.4 $12,422.1
======== ======== ======== =========
Operating income...................... $1,164.0 $ 271.5 $ 93.5 $ 1,529.0
======== ======== ======== =========
Identifiable assets................... $7,566.8 $2,490.1 $ 775.5 $10,832.4
======== ======== ======== =========
</TABLE>

F-19
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1994
---------------------------------
U.S. EUROPE OTHER TOTAL
-------- -------- ------ --------
<S> <C> <C> <C> <C>
Systems and other contracts revenues
Outside customers...................... $4,611.2 $1,308.1 $493.6 $6,412.9
GM and affiliates...................... 2,764.4 523.4 259.4 3,547.2
-------- -------- ------ --------
Total systems and other contracts
revenues............................ $7,375.6 $1,831.5 $753.0 $9,960.1
======== ======== ====== ========
Operating income......................... $1,008.6 $ 168.3 $ 66.7 $1,243.6
======== ======== ====== ========
Identifiable assets...................... $6,618.0 $1,573.8 $594.7 $8,786.5
======== ======== ====== ========
<CAPTION>
AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1993
---------------------------------
U.S. EUROPE OTHER TOTAL
-------- -------- ------ --------
<S> <C> <C> <C> <C>
Systems and other contracts revenues
Outside customers...................... $4,004.5 $ 911.6 $267.5 $5,183.6
GM and affiliates...................... 2,574.5 511.2 238.0 3,323.7
-------- -------- ------ --------
Total systems and other contracts
revenues............................ $6,579.0 $1,422.8 $505.5 $8,507.3
======== ======== ====== ========
Operating income......................... $ 906.5 $ 148.7 $ 56.1 $1,111.3
======== ======== ====== ========
Identifiable assets...................... $5,350.6 $1,185.9 $405.6 $6,942.1
======== ======== ====== ========
</TABLE>

NOTE 15: FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company operates on a global basis receiving revenues and incurring
expenses in many different countries. As a result of these activities, the
Company has exposure to market risks arising from changes in interest rates
and foreign exchange rates. Derivative financial instruments are used by the
Company for the purpose of hedging against these risks, to which the Company
is exposed in the normal course of business, by creating offsetting market
exposures. The Company's use of such instruments in relation to such risks is
explained below. The Company does not hold or issue financial instruments for
trading purposes.

The notional amounts of derivatives contracts are summarized below as part
of the description of the instruments utilized. The notional amounts do not
represent the amounts exchanged by the parties, and thus are not a measure of
the exposure of the Company through its use of derivatives. The amounts
exchanged by the parties are normally based upon the notional amounts and the
other terms of the derivatives. The Company is not a party to leveraged
derivatives.

INTEREST RISK MANAGEMENT

The Company has historically entered into interest rate swap agreements in
order to reduce the impact of changes in interest rates upon its floating-rate
debt. As of December 31, 1995 and 1994, the Company had no outstanding
interest rate swap agreements.

FOREIGN EXCHANGE RISK MANAGEMENT

The Company uses derivative financial instruments, particularly foreign
exchange forward contracts, to hedge transactions denominated in different
currencies on a continuing basis. The purpose of the Company's hedging
activities is to reduce the levels of risk to which it is exposed resulting
from exchange-rate movements. At December 31, 1995 and 1994, the Company had
forward exchange contracts maturing in the following year

F-20
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
to purchase various foreign currencies in the amount of $651.9 million and
$289.0 million, respectively, and to sell $1,380.1 million and $766.5 million,
respectively. The estimated fair value of forward exchange contracts is based
on quoted market prices. At December 31, 1995, the estimated fair value of
outstanding contracts in a gain position was $5.5 million and the estimated
fair value of outstanding contracts in a loss position was $(10.9) million. At
December 31, 1994, the estimated fair value of outstanding contracts in a gain
position was $3.3 million and the estimated fair value of outstanding
contracts in a loss position was $(4.2) million. The Company recognizes
realized and unrealized gains and losses on foreign exchange contracts by
marking to market all outstanding forward exchange contracts. Fair value
represents the cash required to settle foreign exchange forward contracts.

The Company is exposed to credit risk in the event of nonperformance by
counterparties to foreign exchange contracts, but because the Company deals
only with major commercial banks with high quality credit, the Company does
not anticipate nonperformance by any of these counterparties.

NOTE 16: RETIREMENT PLANS

The Company has pension plans (the Plans) covering substantially all of its
employees, the majority of which are noncontributory. In general, employees
become fully vested upon attaining five years of service, and benefits are
based on years of service and earnings. The actuarial cost method currently
used is the projected unit credit cost method. The Company's U.S. funding
policy is to contribute amounts that fall within the range of deductible
contributions for federal income tax purposes.

The weighted average assumptions used for the Plans using a measurement date
of October 1 are as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Discount rate.............................. 8.0% 8.9% 7.7%
Rate of increase in compensation levels.... 5.4% 5.7% 5.9%
Long-term rate of return on assets......... 9.9% 10.0% 9.8%
</TABLE>

Net pension cost consisted of the following components (in millions):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost of the current period........ $ 87.6 $ 96.1 $ 72.6
Interest cost on projected benefit
obligation............................... 97.5 82.3 69.8
Actual return on assets................... (158.6) (22.3) (121.3)
Net amortization and deferral............. 59.9 (37.9) 75.2
-------- -------- --------
Net pension cost.......................... $ 86.4 $ 118.2 $ 96.3
======== ======== ========
</TABLE>

At December 31, 1995 and 1994, the Plans' assets consisted primarily of
equity and fixed income securities, commingled pension trust funds, and U.S.
Government obligations. Accrued and/or prepaid pension cost is included in
Accrued Liabilities or Investment in Leases and Other in the Company's
Consolidated Balance Sheets.

F-21
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following is a reconciliation of the funded status of the Plans (in
millions):

<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------ -----------------
ASSETS ACCUM. ASSETS ACCUM.
EXCEED BENEFITS EXCEED BENEFITS
ACCUM. EXCEED ACCUM. EXCEED
BENEFITS ASSETS BENEFITS ASSETS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Plans' assets at fair value............. $1,242.0 $ 8.2 $918.3 $ --
-------- ------- ------ -------
Actuarial present value of benefit
obligation
Vested benefits....................... 750.7 81.2 485.9 56.1
Nonvested benefits.................... 78.4 13.3 57.6 11.2
-------- ------- ------ -------
Accumulated benefit obligation.......... 829.1 94.5 543.5 67.3
Effect of projected future salary
increases.............................. 462.9 57.9 326.4 25.5
-------- ------- ------ -------
Projected benefit obligation............ 1,292.0 152.4 869.9 92.8
-------- ------- ------ -------
Excess (deficiency) of Plans' assets
over projected benefit obligation...... (50.0) (144.2) 48.4 (92.8)
Unrecognized net (gain) loss............ 126.7 (19.7) (28.3) (35.3)
Unrecognized net (asset) obligation at
date of adoption....................... (3.1) 26.0 (9.6) 23.4
Unrecognized prior service cost......... 11.4 (0.8) 12.8 (1.0)
Additional minimum liability............ -- (0.1) -- --
-------- ------- ------ -------
Net prepaid (accrued) pension cost...... $ 85.0 $(138.8) $ 23.3 $(105.7)
======== ======= ====== =======
</TABLE>

NOTE 17: COMMITMENTS AND RENTAL EXPENSE

Commitments for rental payments under noncancelable operating leases for
each of the next five years ending December 31 and thereafter for computer
equipment, software and facilities are as follows (in millions):

<TABLE>
<S> <C>
1996.................................. $371.5
1997.................................. 273.7
1998.................................. 193.1
1999.................................. 168.7
2000.................................. 142.9
Thereafter............................ 646.5
</TABLE>

Total rentals under cancelable and noncancelable leases, principally
computer equipment, leased facilities, and other leased assets, included in
costs and charged to expenses were $676.1 million, $524.3 million, and $564.9
million for the years ended December 31, 1995, 1994, and 1993, respectively.
Total rentals under cancelable and noncancelable leases for software included
in costs and charged to expenses were $306.8 million, $220.2 million, and
$129.3 million for the years ended December 31, 1995, 1994, and 1993,
respectively.

At December 31, 1995 and 1994, the Company had $43.9 million and $51.5
million, respectively, outstanding under standby letters of credit related to
payment and performance guarantees.

NOTE 18: CONTINGENT LIABILITIES

There are various claims and pending actions against the Company arising in
the ordinary course of the conduct of its business. Certain of these actions
seek damages in significant amounts. The amount of liability on these claims
and actions at March 31, 1996 and December 31, 1995 was not determinable, but
in the opinion of management, the ultimate liability, if any, will not have a
material adverse effect on the Company's consolidated results of operations or
financial position.

F-22
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE 19: ACQUISITIONS

On August 31, 1995, the Company acquired A.T. Kearney, a Chicago-based
international management consulting firm. At the acquisition date, the Company
paid approximately $112.7 million in cash and issued $162.3 million in short
and long-term notes to A.T. Kearney shareholders and principals. The terms of
the acquisition agreement also include a restricted stock grant of
approximately 6.6 million shares of GM Class E common stock, which will vest
over a ten-year period for certain A.T. Kearney personnel remaining with the
Company (see Note 12). Prior to December 31, 1995, $80.9 million of short-term
notes related to the acquisition were retired.

The acquisition was accounted for using the purchase method of accounting.
Accordingly, the excess purchase price over net assets acquired, based upon
the fair value of such assets and liabilities at the date of acquisition, was
$252.1 million and is being amortized to expense over a ten-year period. The
Consolidated Statements of Income include the operations of A.T. Kearney since
the date of acquisition. Pro forma disclosure relating to A.T. Kearney's
results of operations is not presented, as the impact is immaterial to EDS.

In conjunction with acquisitions made during the years ended December 31,
1995 and 1994, assets were acquired and liabilities were assumed as follows
(in millions):

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------
1995 1994
------- -------
<S> <C> <C>
Fair value of assets acquired......................... $ 674.7 $ 427.8
Less:
Cash paid for stock and assets, net of cash
acquired........................................... (234.9) (186.6)
Debt issued for stock and assets.................... (184.9) (94.9)
------- -------
Liabilities assumed................................... $ 254.9 $ 146.3
======= =======
</TABLE>

NOTE 20: SUPPLEMENTARY FINANCIAL INFORMATION

The following summarizes certain costs charged to expense for the years
indicated (in millions):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Depreciation of property and equipment........... $ 808.1 $ 577.5 $ 465.6
======== ======== ========
Amortization..................................... $ 299.7 $ 193.6 $ 161.2
======== ======== ========
</TABLE>

The components of Interest and other income, net, are presented below (in
millions):

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
---------------- ---------------------------
1996 1995 1995 1994 1993
------- ------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest and other income..... $ 18.5 $ 8.7 $ 58.8 $ 92.3 $ 54.5
Interest expense.............. (35.5) (20.4) (120.8) (51.7) (34.5)
------- ------- -------- ------- -------
Total....................... $ (17.0) $ (11.7) $ (62.0) $ 40.6 $ 20.0
======= ======= ======== ======= =======
</TABLE>

F-23
<PAGE>

ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Supplemental cash flow information is presented below (in millions):

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Cash paid for:
Income taxes, net of refunds................... $ 407.8 $ 465.6 $ 183.8
======== ======== ========
Interest, net of amount capitalized............ $ 108.3 $ 49.7 $ 40.2
======== ======== ========
</TABLE>

NOTE 21: SUBSEQUENT EVENTS (UNAUDITED)

On June 7, 1996, GM effected a split-off (the "Split-Off") of the Company.
As a result of the Split-Off, (i) the Company became an independent, publicly
held company with approximately 485.6 million shares of Common Stock
outstanding and listed for trading on the NYSE and the London Stock Exchange
and (ii) each outstanding share of Class E common stock of GM was converted
into one share of Common Stock of the Company. In connection with the Split-
Off, EDS paid GM a "Special Inter-Company Payment" in the amount of $500.0
million in cash and GM provided EDS a $50.0 million allowance relating to the
resolution of various uncertain, contingent or other matters arising out of
the separation of GM and EDS. The Special Inter-Company Payment was included
as one of the terms of the Split-Off in order to enable the GM Board to
determine that the Split-Off was fair to all classes of GM common
stockholders.

Immediately prior to the Split-Off, EDS and GM entered into a new Master
Service Agreement that serves as a framework for the negotiation and operation
of service agreements between GM and EDS related to certain "in-scope" IT
services to be provided by EDS to GM on a worldwide basis (collectively,
together with the Master Service Agreement, the "IT Services Agreements"). The
IT Services Agreements replaced the master agreement that, prior to the Split-
Off, served as a framework for individual services agreements between GM and
EDS.

NOTE 22: QUARTERLY FINANCIAL DATA (UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
---------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Systems and other contracts
revenues....................... $2,776.3 $2,950.1 $3,073.7 $3,622.0 $12,422.1
Gross profit from operations.... 600.2 654.9 687.6 877.8 2,820.5
Income before income taxes...... 307.5 354.5 384.0 421.0 1,467.0
Separate Consolidated Net
Income......................... 196.8 226.9 245.7 269.5 938.9
Earnings Attributable to GM
Class E Common Stock on a Per
Share Basis.................... 0.42 0.47 0.51 0.56 1.96
Stock price range of GM Class E
common
High.......................... 41.38 45.25 47.50 52.63 52.63
Low........................... 36.88 38.38 41.50 43.88 36.88
Cash dividends per share of GM
Class E common................. 0.13 0.13 0.13 0.13 0.52
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
---------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Systems and other contracts
revenues....................... $2,217.2 $2,309.5 $2,522.8 $2,910.6 $ 9,960.1
Gross profit from operations.... 506.6 584.1 602.1 737.9 2,430.7
Income before income taxes...... 268.3 308.2 338.1 369.6 1,284.2
Separate Consolidated Net
Income......................... 171.7 197.3 216.4 236.5 821.9
Earnings Attributable to GM
Class E Common Stock on a Per
Share Basis.................... 0.36 0.41 0.45 0.49 1.71
Stock price range of GM Class E
common
High.......................... 36.88 38.00 38.50 39.50 39.50
Low........................... 27.50 32.88 33.00 34.75 27.50
Cash dividends per share of GM
Class E common................. 0.12 0.12 0.12 0.12 0.48
</TABLE>

F-24
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, THE SELLING STOCKHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM,
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION SET FORTH IN THIS PROSPECTUS IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS
<S> <C>
Available Information.................................................... 2
Incorporation of Certain Documents by Reference.......................... 2
Prospectus Summary....................................................... 3
Risk Factors............................................................. 7
Split-Off of the Company from General Motors............................. 11
Price Range of Common Stock and Dividends................................ 13
Recent Development....................................................... 14
Unaudited Pro Forma Consolidated Capitalization.......................... 15
Unaudited Pro Forma Condensed Consolidated Financial Statements.......... 16
Selected Consolidated Financial Information.............................. 20
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 22
Business................................................................. 30
Relationship Between the Company and General Motors...................... 35
Board of Directors and Management........................................ 41
Background of the Offerings.............................................. 44
Selling Stockholder...................................................... 46
Description of Capital Stock............................................. 48
Certain United States Federal Tax Considerations for Non-U.S. Holders.... 54
Underwriting............................................................. 56
Legal Matters............................................................ 59
Experts.................................................................. 59
Consolidated Financial Statements........................................ F-1
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

20,000,000 SHARES

ELECTRONIC DATA
SYSTEMS CORPORATION

COMMON STOCK

[LOGO OF ELECTRONIC DATA SYSTEMS CORPORATION APPEARS HERE]

-------------

P R O S P E C T U S

-------------

MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS
J.P. MORGAN & CO.
SALOMON BROTHERS INC
FURMAN SELZ

JULY 16, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PROSPECTUS

[LOGO OF ELECTRONIC DATA SYSTEMS CORPORATION APPEARS HERE]
20,000,000 SHARES
ELECTRONIC DATA SYSTEMS CORPORATION
COMMON STOCK

--------------

This Prospectus covers the resale of 20,000,000 shares of Common Stock, par
value $0.01 per share ("Common Stock"), of Electronic Data Systems
Corporation, a Delaware corporation (together with its subsidiaries and
predecessors, "EDS" or the "Company"), by the General Motors Special Hourly
Employees Pension Trust (together with any sub-trusts thereunder, the "Hourly
Plan Special Trust" or the "Selling Stockholder") under the General Motors
Hourly-Rate Employees Pension Plan (the "Hourly Plan"). See "Selling
Stockholder." Of the 20,000,000 shares of Common Stock offered hereby,
3,000,000 shares are being offered outside the United States and Canada by the
International Underwriters (the "International Offering") and 17,000,000 are
being offered in the United States and Canada by the U.S. Underwriters (the
"U.S. Offering" and together with the International Offering, the
"Offerings"). See "Underwriting."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SECURITIES
OFFERED HEREBY.

--------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIESAND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HASTHE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIESCOMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THISPROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS TO
TO PUBLIC DISCOUNT(1) SELLING STOCKHOLDER(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................... $46.625 $1.215 $45.41
- --------------------------------------------------------------------------------
Total(3)....................... $932,500,000 $24,300,000 $908,200,000
- --------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) EDS and, to the extent permitted by applicable law, the Selling
Stockholder, have agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) The expenses of the Offerings, estimated to be $1,045,000, are payable by
EDS.
(3) The Selling Stockholder has granted the International Underwriters and
U.S. Underwriters an option, exercisable within 30 days after the date
hereof, to purchase up to an aggregate 3,000,000 of additional shares of
the Common Stock at the Price to Public less the Underwriting Discount for
the purpose of covering overallotments, if any. If the Underwriters
exercise such option in full, the total Price to Public, Underwriting
Discount and Proceeds to Selling Stockholder will be $1,072,375,000,
$27,945,000 and $1,044,430,000, respectively.

--------------

Advisor to United States Trust Company of New York
WASSERSTEIN PERELLA & CO.

--------------

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, and subject to
approval of certain legal matters by counsel for the Underwriters. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the
certificates for the shares of Common Stock will be made on or about July 22,
1996, in New York, New York.

--------------

Global Coordinators
MERRILL LYNCH & CO. MORGAN STANLEY & CO. GOLDMAN, SACHS & CO.
INCORPORATED

--------------

The date of this Prospectus is July 16, 1996.
<PAGE>

UNDERWRITING

The International Underwriters named below, acting through their
International Representatives, Merrill Lynch International, Morgan Stanley &
Co. International Limited, Goldman Sachs International, Bear, Stearns
International Limited, Lehman Brothers International (Europe), J.P. Morgan
Securities Ltd., Salomon Brothers International Limited and Furman Selz LLC
(the "International Representatives"), have severally agreed, subject to the
terms and conditions of the International Purchase Agreement with EDS and the
Selling Stockholder (the "International Purchase Agreement"), to purchase from
the Selling Stockholder the aggregate number of shares of Common Stock set
forth below opposite their respective names.

<TABLE>
<CAPTION>
NUMBER OF INTERNATIONAL SHARES OF
INTERNATIONAL UNDERWRITER COMMON STOCK
------------------------- ---------------------------------
<S> <C>
Merrill Lynch International.............. 517,000
Morgan Stanley & Co. International Limit-
ed...................................... 516,500
Goldman Sachs International.............. 516,500
Bear, Stearns International Limited...... 200,000
Lehman Brothers International (Europe)... 200,000
J.P. Morgan Securities Ltd. ............. 200,000
Salomon Brothers International Limited... 200,000
Furman Selz LLC.......................... 200,000
Cazenove & Co. .......................... 100,000
ABN AMRO Rothschild...................... 50,000
Credit Lyonnais Securities............... 50,000
Kleinwort Benson Limited................. 50,000
Morgan Grenfell & Co. Limited............ 50,000
NatWest Securities Limited............... 50,000
Swiss Bank Corporation................... 50,000
UBS Limited.............................. 50,000
---------
Total............................. 3,000,000
=========
</TABLE>

This offering is part of a worldwide offering that consists of the U.S.
Offering and the International Offering (collectively, the "Offerings").
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated and Goldman, Sachs & Co. are acting as Global Coordinators for
the Offerings.

In the International Purchase Agreement, the International Underwriters have
agreed, subject to the terms and conditions set forth therein, to purchase all
of the shares of Common Stock being sold pursuant to such Agreement if any of
the shares of Common Stock being sold pursuant to such Agreement are
purchased. Under certain circumstances under such Agreement, the commitments
of non-defaulting International Underwriters may be increased.

The International Representatives have advised EDS and the Selling
Stockholder that they propose initially to offer the shares to the public at
the Price to Public set forth on the cover page of this Prospectus, and to
certain dealers at such price less a concession not in excess of $.75 per
share. The International Underwriters may allow, and such dealers may reallow,
a discount not in excess of $.10 per share on sales to certain other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.

EDS and the Selling Stockholder have also entered into a U.S. Purchase
Agreement (the "U.S. Purchase Agreement") with certain underwriters (the "U.S.
Underwriters") for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co., Bear, Stearns & Co.
Inc., Lehman Brothers Inc., J.P. Morgan Securities Inc., Salomon Brothers Inc
and Furman Selz LLC are acting as representatives (the "U.S. Representatives")
providing for a concurrent U.S. Offering. The U.S. Underwriters and the
International Underwriters are collectively referred to as the "Underwriters,"
and the U.S. Representatives and the International Representatives are
collectively referred to as the "Representatives." The

56
<PAGE>

U.S. Underwriters have agreed, subject to the terms and conditions set forth
in the U.S. Purchase Agreement, to purchase all of the shares of Common Stock
being offered in the U.S. Offering (other than shares subject to the
Underwriters' over-allotment option) if any are purchased. The closing of each
of the Offerings is a condition to the closing of each of the U.S. Offering
and the International Offering.

EDS and (to the extent permitted under applicable law) the Selling
Stockholder have agreed to indemnify the Underwriters against certain
liabilities including liabilities under the Securities Act.

EDS has agreed not to offer, sell or otherwise dispose of any shares of
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock for a period of 90 days after the date of this Prospectus,
without the prior written consent of the Global Coordinators on behalf of the
Underwriters, provided that EDS may issue and deliver such securities under
specified exceptions in connection with (i) the conversion, exercise or
exchange of options, warrants or other securities pursuant to the terms, (ii)
any agreement to issue shares of such securities in effect on the date of the
initial filing of the Registration Statement of which this Prospectus is a
part with the Commission, including any such agreement in connection with any
previously disclosed acquisition or other business combination and (iii)
dividend reinvestment plans or employee benefit plans.

57
<PAGE>

Certain of the Underwriters or their affiliates have rendered, and are
expected to render, various investment banking and other advisory services to
EDS, the Selling Stockholder and the Hourly Plan. They have received, and will
continue to receive, customary compensation for such services.

Pursuant to separate engagement letters between General Motors and each of
Morgan Stanley & Co. Incorporated and Lehman Brothers Inc., each of Morgan
Stanley & Co. Incorporated and Lehman Brothers Inc. received a fee of
$7,500,000 in connection with the Split-Off. The engagement letters also
provide for reimbursement of Morgan Stanley & Co. Incorporated and Lehman
Brothers Inc. for certain out-of-pocket expenses, including certain fees and
expenses of legal counsel, and indemnification of Morgan Stanley & Co.
Incorporated and Lehman Brothers Inc. against certain expenses and liabilities
(and EDS has agreed to exculpate Morgan Stanley & Co. Incorporated and Lehman
Brothers Inc.) in connection with their services as financial advisors,
including those arising under the federal securities laws. Under the
Separation Agreement, EDS has agreed to pay the fees and expenses of the
Morgan Stanley & Co. Incorporated and Lehman Brothers Inc.

SELLING RESTRICTIONS

GENERAL

No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of any shares of Common
Stock or the possession, circulation or distribution of this Prospectus or any
other material relating to EDS or the Common Stock in any jurisdiction where
action for such purpose is required. Accordingly, no shares of Common Stock
may be offered or sold, directly or indirectly, and neither

58
<PAGE>

this Prospectus nor any other offering material or advertisements in
connection with the shares of Common Stock may be distributed or published, in
or from any country or jurisdiction, except in compliance with any applicable
rules and regulations of any such country or jurisdiction.

UNITED KINGDOM

Each International Underwriter has agreed that (i) it has not offered or
sold, and will not offer or sell, in the United Kingdom by means of any
document, any shares of Common Stock offered hereby, other than to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995 (the "Regulations"), (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Regulations with respect to anything done by it in
relation to the Common Stock in, from or otherwise involving the United
Kingdom, and (iii) it has only issued or passed on and will only issue or pass
on to any person in the United Kingdom any document received by it in
connection with the issuance of Common Stock if that person is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements)(Exemptions) Order 1995 or is a person to whom the document may
otherwise lawfully be issued or passed on.

THE NETHERLANDS

The shares of Common Stock offered hereby may not be offered, distributed,
transferred, sold or delivered, directly or indirectly, to any person in the
Netherlands other than professional or institutional investors such as
investment banks, pension funds, insurance companies, security firms,
investment institutions and other similar entities, including treasuries and
finance companies of large enterprises who or which are active on a regular
and professional basis in the financial markets for their own account.

JAPAN

Each International Underwriter has acknowledged and agreed that the shares
of Common Stock have not been registered under the Securities and Exchange Law
of Japan and are not being offered or sold, and will not be offered or sold,
directly or indirectly, in Japan or to or for the account of residents of
Japan or to any persons for reoffering or resale, directly or indirectly, in
Japan or to any resident of Japan except pursuant to an exemption from the
registration requirements of the Securities and Exchange Law and in compliance
with the other relevant laws of Japan.

HONG KONG

Each International Underwriter has acknowledged and agreed that (i) it has
not offered or sold and will not offer or sell in Hong Kong, by means of any
document, any shares of Common Stock other than to persons whose ordinary
business it is to buy or sell shares or debentures whether as principal or
agent, or in circumstances which do not constitute an offer to the public
within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong and (ii)
unless it is a person permitted to do so under the securities laws of Hong
Kong, it has not issued or had in its possession for the purpose of issue and
will not issue or have in its possession the
purpose of issue any invitation, document or advertisement relating to the
shares of Common Stock in Hong Kong other than with respect to shares of
Common Stock intended to be disposed of to persons outside Hong Kong or to be
disposed of in Hong Kong only to persons whose business involves the
acquisition, disposal, or holding of securities, whether as principal or
agent.

SINGAPORE

Each International Underwriter has agreed that the shares of Common Stock
may not be offered or sold, nor may any document or other material in
connection with the shares of Common Stock be distributed, either

59
<PAGE>

directly or indirectly, (i) to persons in Singapore other than in
circumstances in which such offer or sale does not constitute an offer or sale
of the shares of Common Stock to the public in Singapore or (ii) to the public
or any member of the public in Singapore other than pursuant to, and in
accordance with the conditions of, an exemption invoked under Division 5A of
Part IV of the Companies Act, Chapter 50 of Singapore and to persons to whom
the shares of Common Stock may be offered or sold under such exemption.

LEGAL MATTERS

EXPERTS

60
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

---------------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS
Available Information.................................................... 2
Incorporation of Certain Documents by Reference.......................... 2
Prospectus Summary....................................................... 3
Risk Factors............................................................. 7
Split-Off of the Company from General Motors............................. 11
Price Range of Common Stock and Dividends................................ 13
Recent Development....................................................... 14
Unaudited Pro Forma Consolidated Capitalization.......................... 15
Unaudited Pro Forma Condensed Consolidated Financial Statements.......... 16
Selected Consolidated Financial Information.............................. 20
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 22
Business................................................................. 30
Relationship Between the Company and General Motors...................... 35
Board of Directors and Management........................................ 41
Background of the Offerings.............................................. 44
Selling Stockholder...................................................... 46
Description of Capital Stock............................................. 48
Certain United States Federal Tax Considerations for Non-U.S. Holders.... 54
Underwriting............................................................. 56
Legal Matters............................................................ 60
Experts.................................................................. 60
Consolidated Financial Statements........................................ F-1
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

20,000,000 SHARES

ELECTRONIC DATA
SYSTEMS CORPORATION

COMMON STOCK

[LOGO OF ELECTRONIC DATA SYSTEMS CORPORATION APPEARS HERE]

-------------

P R O S P E C T U S

-------------

MERRILL LYNCH INTERNATIONAL
MORGAN STANLEY & CO.
INTERNATIONAL
GOLDMAN SACHS INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
LEHMAN BROTHERS
J.P. MORGAN SECURITIES LTD.
SALOMON BROTHERS INTERNATIONAL LIMITED
FURMAN SELZ
CAZENOVE & CO.
ABN AMRO ROTHSCHILD
CREDIT LYONNAIS SECURITIES
DEUTSCHE MORGAN GRENFELL
DRESDNER KLEINWORT BENSON
NATWEST SECURITIES LIMITED
SBC WARBURG
A DIVISION OF SWISS BANK CORPORATION
UBS LIMITED

JULY 16, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------