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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
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Commission file number 01-11779
ELECTRONIC DATA SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2548221
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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5400 Legacy Drive, Plano, Texas 75024-3199
(Address of principal executive offices)
(Zip Code)
(972) 604-6000
(Registrant's telephone number, including area code)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].
As of October 31, 1997, there were outstanding 490,964,230 shares of the
registrant's Common Stock, $.01 par value per share.
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<PAGE>
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
INDEX
Page No.
Part I -- Financial Information (Unaudited)
Item 1. Financial Statements
Consolidated Statements of Operations......................... 3
Consolidated Balance Sheets................................... 4
Condensed Consolidated Statements of Cash Flows............... 5
Notes to Condensed Consolidated Financial Statements.......... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 7
Part II -- Other Information
Item 6. Exhibits and Reports on Form 8-K........................ 12
Signatures............................................................. 13
Exhibit 10(g) Amended and Restated Revolving Credit and Term Loan Agreement
entered into as of September 23, 1997 among EDS and the Lenders
identified therein.
Exhibit 10(i) Amended and Restated Multi-Currency Revolving Credit Agreement
entered into as of September 23, 1997 among EDS and the Lenders
identified therein.
Exhibit 27 Financial Data Schedule (for SEC information only)
2
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PART I
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Systems and other contracts revenues $3,733.7 $3,570.5 $11,007.4 $10,435.2
-------- -------- --------- ---------
Costs and expenses
Cost of revenues 2,945.1 2,811.1 8,824.9 8,354.9
Selling, general, and administrative 358.2 345.4 1,108.1 963.4
Restructuring charge -- -- 125.3 285.6
Asset writedowns 25.9 -- 165.6 503.9
-------- -------- --------- ---------
Total costs and expenses 3,329.2 3,156.5 10,223.9 10,107.8
-------- -------- --------- ---------
Operating income 404.5 414.0 783.5 327.4
One-time split-off costs -- -- -- (45.5)
Interest expense and other, net (44.8) 2.2 (84.8) (34.0)
-------- -------- --------- ---------
Income before income taxes 359.7 416.2 698.7 247.9
Provision for income taxes 129.5 149.8 251.5 89.2
-------- -------- --------- ---------
Net income $ 230.2 $ 266.4 $ 447.2 $ 158.7
======== ======== ========= =========
Earnings per share $ 0.47 $ 0.55 $ 0.91 $ 0.33
======== ======== ========= =========
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
3
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<TABLE>
<CAPTION>
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in millions except share and per share amounts)
September 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 860.4 $ 879.9
Marketable securities 64.2 82.6
Accounts receivable, net 3,365.6 3,513.0
Inventories 123.5 141.6
Prepaids and other 337.0 391.2
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Total current assets 4,750.7 5,008.3
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Property and equipment, net 2,973.1 3,097.0
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Operating and other assets
Land held for development, at cost 87.7 89.1
Investments and other assets 1,613.1 1,591.7
Software, goodwill, and other intangibles, net 1,540.3 1,406.8
--------- ---------
Total operating and other assets 3,241.1 3,087.6
--------- ---------
Total Assets $10,964.9 $11,192.9
========= =========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 315.1 $ 317.1
Accrued liabilities 2,000.9 1,992.3
Deferred revenue 395.1 592.6
Income taxes 114.8 127.5
Current portion of long-term debt 126.2 133.3
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Total current liabilities 2,952.1 3,162.8
--------- ---------
Deferred income taxes 457.9 429.4
Long-term debt 2,161.5 2,324.3
Redeemable preferred stock of subsidiaries and minority
interests 352.4 493.3
Stockholders' equity
Preferred stock, $.01 par value; authorized 200,000,000
shares, none issued -- --
Common stock, $.01 par value; 2,000,000,000 shares
authorized; 490,954,443 issued and outstanding
at September 30, 1997, and 487,590,995 shares
issued at December 31, 1996 4.9 4.9
Additional paid-in capital 823.8 682.8
Retained earnings 4,391.9 4,200.6
Currency translation adjustments and other (179.6) (98.2)
Treasury stock, at cost,
440,488 shares at December 31, 1996 -- (7.0)
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Total stockholders' equity 5,041.0 4,783.1
--------- ---------
Total Liabilities and Stockholders' Equity $10,964.9 $11,192.9
========= =========
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
4
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<TABLE>
<CAPTION>
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net cash provided by operating activities $ 725.0 $ 481.3 $1,464.4 $1,060.2
-------- -------- -------- --------
Cash Flows from Investing Activities
Proceeds from sale of marketable securities 19.3 14.2 66.7 51.6
Proceeds from investments and other assets 61.7 26.7 160.7 130.5
Proceeds from divestiture 24.6 -- 24.6 --
Payments for purchase of property and equipment (250.0) (329.7) (621.7) (842.6)
Payments for investments and other assets (80.8) (52.7) (246.6) (153.8)
Payments related to acquisitions, net of cash acquired (69.9) (9.9) (143.1) (46.9)
Payments for purchase of software and other intangibles (40.8) (58.9) (100.6) (85.5)
Payments for purchase of marketable securities (15.1) (20.8) (45.2) (67.0)
Other 24.3 35.7 69.4 74.5
-------- -------- -------- --------
Net cash used in investing activities (326.7) (395.4) (835.8) (939.2)
-------- -------- -------- --------
Cash Flows from Financing Activities
Proceeds from long-term debt 1,488.7 4,249.6 5,466.1 8,186.9
Payments on long-term debt (1,148.6) (4,426.3) (5,848.9) (7,741.7)
Net increase in current portion of long-term debt
with maturities less than 90 days -- 91.0 -- 91.0
Proceeds from sale of stock of subsidiaries 140.5 103.5 553.3 103.5
Redemption of preferred stock (653.3) -- (653.3) --
Employee stock transactions and related tax benefit 12.6 17.3 61.9 34.8
One-time intercompany payment to GM -- -- -- (500.0)
Dividends paid (73.5) (72.8) (220.1) (218.5)
-------- -------- -------- --------
Net cash used in financing activities (233.6) (37.7) (641.0) (44.0)
-------- -------- -------- --------
Effect of exchange rate changes on cash and cash equivalents (3.0) (0.2) (7.1) (12.8)
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents 161.7 48.0 (19.5) 64.2
Cash and cash equivalents at beginning of period 698.7 565.1 879.9 548.9
-------- -------- -------- --------
Cash and cash equivalents at end of period $ 860.4 $ 613.1 $ 860.4 $ 613.1
======== ======== ======== ========
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
5
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ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
of Electronic Data Systems Corporation ("EDS" or the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information. In the opinion of management, all adjustments (consisting
of only normal recurring items) which are necessary for a fair presentation have
been included. The results for interim periods are not necessarily indicative of
results which may be expected for any other interim period or for the full year.
For further information, refer to the consolidated financial statements and
notes thereto included in the Company's 1996 Annual Report on Form 10-K.
Certain reclassifications have been made to the 1996 unaudited condensed
consolidated financial statements to conform to the 1997 presentation.
Note 2. Earnings per Share
Earnings per share for the three and nine months ended September 30,
1997 is computed using the weighted average number of EDS common shares
outstanding during the period of 490.4 million and 489.4 million shares,
respectively. Common-equivalent shares consisting of incremental shares issuable
upon the exercise of stock options and awards are excluded from the weighted
average share computation as their effect is immaterial. On June 7, 1996, GM
Class E common stock was exchanged for EDS common stock on a one-for-one basis.
Earnings before June 7, 1996, are attributable to GM Class E common stock. The
computation of earnings per share for EDS common stock is similar to that for GM
Class E common stock. For further information, refer to the consolidated
financial statements and notes thereto included in the Company's 1996 Annual
Report on Form 10-K.
Note 3. Redeemable Preferred Stock of Subsidiaries
In June 1997, a consolidated subsidiary of the Company issued 45.0
million British pounds (73.9 million U.S. dollars) of redeemable preferred stock
to a third party. Dividends on such preferred shares are cumulative from the
effective date of issue at a fixed rate of 6.95%. The preferred shares are
nonvoting and provide the holders with a priority position with respect to any
class of the issuing subsidiary's stock in the event of dissolution.
In July 1997, the Company redeemed 400.0 million British pounds (653.3
million U.S. dollars) of redeemable preferred stock of subsidiaries through the
issuance of commercial paper.
Note 4. Depreciation and Amortization
Property and equipment is stated net of accumulated depreciation of
$3,885.4 million and $3,892.1 million at September 30, 1997 and December 31,
1996, respectively. Additionally, software, goodwill, and other intangibles are
stated net of accumulated amortization of $1,172.4 million and $1,100.9 million
at September 30, 1997 and December 31, 1996, respectively. Depreciation and
amortization expense for the three and nine months ended September 30, 1997 was
$305.4 million and $879.8 million, respectively.
Note 5. Restructuring Activities
In the second quarter of 1997, the Company began implementation of an
enterprise-wide business transformation initiative to reduce its costs,
streamline its organizational structure, and align its strategy, services and
delivery with market opportunities. This initiative involves the elimination of
approximately
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9,500 positions through reassignment of personnel, elimination of open personnel
requisitions, normal attrition and termination of employees. As a result of this
initiative, the Company recorded restructuring charges and asset writedowns
totaling $265.0 million and $25.9 million in the quarters ended June 30, 1997
and September 30, 1997, respectively. Such amounts primarily consisted of
restructuring charges of $111.0 million relating to the severance costs
associated with the planned involuntary termination of approximately 2,600
employees and asset write-offs of $100.0 million and related accruals of $14.0
million relating to operations that the Company plans to sell, exit or
discontinue. These operations primarily consist of several processing centers
which the Company will consolidate and certain product lines and related
services provided to certain industries. In addition, the Company recorded a
write-down of $40.0 million in the second quarter of 1997 relating to operating
assets that it is in the process of selling, thereby reducing such assets to
their estimated net realizable value. During the third quarter of 1997, certain
market events required an additional $25.9 million writedown of these operating
assets to their revised estimated net realizable value. As of September 30,
1997, approximately 1,270 employees have been involuntarily terminated and
approximately $16.2 million has been paid in termination benefits.
In the second quarter of 1996, the Company recorded numerous one-time
charges, including a $286 million charge primarily for expected workforce
reductions of approximately 4,900 employees who accepted early retirement or
were to be involuntarily terminated under a planned workforce realignment. The
total employee-related termination and early retirement offer charges amounted
to approximately $258 million, $137 million of which related to special
termination benefits under the Company's defined benefit pension plan. At the
same time as the restructuring, the Company wrote down certain of its assets by
approximately $564 million, $60 million of which were charged to cost of
revenues, and recognized approximately $45 million of expenses directly
associated with Split-Off activities. As of September 30, 1997 1,743 employees
have accepted the early retirement offer and 2,301 employees have been
involuntarily terminated. As of September 30, 1997, approximately $109.1 million
has been paid in termination benefits related to the involuntary termination
plan and an additional $9.0 million is expected to be paid in the remainder of
1997.
Note 6. Acquisitions and Dispositions
On September 6, 1997, EDS entered into a 10-year contract with the
Commonwealth Bank of Australia to be responsible for all information technology
functions at the bank including operations, desktop, communications and
applications development. In addition, EDS sold a 35% share in EDS' Australia
operations to the Commonwealth Bank of Australia for approximately $140.5
million. The proceeds from the sale were recorded in Minority Interests in the
consolidated financial statements.
On August 29, 1997, EDS acquired all remaining outstanding equity interests
in Neodata Corporation ("Neodata"), a Colorado-based integrated marketing
communications services company, for $61.7 million, net of cash acquired.
Neodata retained $217.1 million of indebtedness, including $163.0 million of
public debentures redeemable as early as May 1998 at 106% of their principal
amount.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
EDS is a provider of information technology ("IT") services, using
computer and communication technologies to meet the business needs of its
clients. EDS offers its clients a portfolio of services worldwide, including the
management of computers, networks, information systems, information processing
facilities, business operations and related personnel.
7
<PAGE>
Forward Looking Statements
All statements other than historical statements contained in thiS
Report on Form 10-Q constitute "forward looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Without limitation,
these forward looking statements include statements regarding the Company's
business transformation initiative and any savings therefrom, the Company's Year
2000 exposure and opportunity, and future revenues from General Motors
Corporation ("GM"). Any Form 10-K, Annual Report to Shareholders, Form 10-Q or
Form 8-K of the Company may include forward looking statements. In addition,
other written or oral statements which constitute forward looking statements
have been made or may in the future be made by the Company, including statements
regarding future operating performance, short- and long-term revenue and
earnings growth, backlog, the value of new contract signings, and industry
growth rates and the Company's performance relative thereto. These forward
looking statements rely on a number of assumptions concerning future events, and
are subject to a number of uncertainties and other factors, many of which are
outside of the Company's control, that could cause actual results to differ
materially from such statements. These include, but are not limited to:
competition in the information technology industry and the impact of such
competition on pricing, revenues and margins; the market acceptance of new
product or service offerings that offer higher margins than traditional product
or service offerings and costs associated with the development and marketing of
such offerings; the financial performance of current and future customer
contracts, including the financial performance of EDS' contracts with GM; the
degree to which the Company can improve productivity; general economic
conditions; the degree to which business entities continue to outsource
information technology and business processes; the cost of attracting and
retaining highly skilled personnel; and, with respect to the Company's Year 2000
exposure and opportunity, the Company's ability to capitalize on new business
opportunities and the interpretation of information technology contracts the
Company has with its clients.
The Company disclaims any intention or obligation to update or revise
any forward looking statements whether as a result of new information, future
events or otherwise.
Split-Off of EDS
On June 7, 1996, GM and EDS consummated a split-off (the "Split-Off")
of EDS to the holders of GM's Class E common stock in a transaction that is
tax-free for U.S. federal income tax purposes. In connection with the Split-Off,
GM and EDS entered into a Master Services Agreement (the "Master Services
Agreement") with respect to IT services to be provided after the Split-Off, and
a special payment of $500.0 million was made by EDS to GM (the "Special
Intercompany Payment").
Restructuring Charges and Asset Writedowns
In the second quarter of 1997, the Company began implementation of an
enterprise-wide business transformation initiative to reduce its costs,
streamline its organizational structure, and align its strategy, services and
delivery with market opportunities. This initiative involves the elimination of
approximately 9,500 positions through reassignment of personnel, elimination of
open personnel requisitions, normal attrition and termination of employees. As a
result of this initiative, the Company recorded restructuring charges and asset
writedowns totaling $265.0 million and $25.9 million in the quarters ended June
30, 1997 and September 30, 1997, respectively. Such amounts primarily consisted
of charges of $111.0 million relating to the severance costs associated with the
planned involuntary termination of approximately 2,600 employees and asset
write-offs of $100.0 million and related accruals of $14.0 million relating to
operations that the Company plans to sell, exit or discontinue. These operations
primarily consist of several processing centers which the Company will
consolidate and certain product lines and related services provided to certain
industries. In addition, the Company recorded a writedown of $40 million in the
second quarter of 1997 relating to operating assets that it is in the process of
selling, thereby reducing such assets to their estimated net realizable value.
During the third quarter of 1997, certain
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market events required an additional $25.9 million writedown of these operating
assets to their revised estimated net realizable value.
In the second quarter of 1996, the Company recorded one-time charges
including a $286 million charge primarily for expected workforce reductions of
approximately 4,900 employees who accepted early retirement or were to be
involuntarily terminated under a planned workforce realignment. The total
employee-related termination and early retirement offer charges amounted to
approximately $258 million, $137 million of which relates to special termination
benefits, including amounts under the Company's defined benefit pension plan. At
the same time as the restructuring, the Company wrote down certain of its assets
by approximately $564 million, $60 million of which were charged to cost of
revenues, and recognized approximately $45 million of expenses directly
associated with Split-Off activities. For further information, reference is made
to the consolidated financial statements and notes thereto in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
New Accounting Standard
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS 128), Earnings per
Share, which establishes new standards for computing and presenting earnings per
share. SFAS 128 is effective for financial statements issued for periods ending
after December 15, 1997 and requires restatement of all prior-period earnings
per share data. Early application of SFAS 128 is not permitted. The Company's
adoption of the provisions of SFAS 128 will result in the dual presentation of
basic and diluted earnings per share on the Company's statement of operations.
Diluted earnings per share as calculated under SFAS 128 is not expected to
materially differ from primary earnings per share amounts previously presented.
Results of Operations
Revenues. Total systems and other contracts revenues for the quarter
ended September 30, 1997, rose $163.2 million, or 5%, over the corresponding
quarter in 1996 to $3,733.7 million. Total revenues for the nine months ended
September 30, 1997 increased $572.2 million, or 5%, to $11,007.4 million.
Revenues from non-GM clients for the quarter ended September 30, 1997, rose 7%
to $2,681.1 million compared to $2,516.2 million for the same period in 1996.
Revenues from non-GM clients for the nine months ended September 30, 1997
increased 6% to $7,802.2 million compared to $7,368.2 million for the same
period in 1996.
Revenues from non-GM clients comprised 72% and 70% of total revenues
for the three months ended September 30, 1997 and 1996, respectively. Revenues
from non-GM clients comprised 71% of total revenues for both the nine month
periods ended September 30, 1997 and 1996. The Company estimates that revenues
from GM in calendar year 1997 will be flat compared with the amount recorded in
1996.
Costs and Expenses. Cost of revenues as a percentage of systems and
other contracts revenues was 79% for each of the three month periods ended
September 30, 1997 and 1996. For each of the nine month periods ended September
30, 1997 and 1996, cost of revenues as a percentage of systems and other
contracts revenues was 80%. Selling, general and administrative expenses as a
percentage of systems and other contracts revenues were 10% for both of the
three month periods ended September 30, 1997 and 1996. Selling, general and
administrative expenses as a percentage of systems and other contracts revenues
for the nine months ended September 30, 1997 and 1996, were 10% and 9%,
respectively. See "Restructuring Charges and Asset Writedowns" above for a
discussion of other components of total costs and expenses.
The Company believes that the Year 2000 issue (the cost of making its
internal systems Year 2000 compliant as well as the cost to the Company of
making its clients' systems Year 2000 compliant where it is obligated to do so)
will not have a material adverse effect on its results of operations. In
addition, the Company believes that the Year 2000 issue presents significant
market opportunities for revenue growth.
9
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Interest Expense and Other, Net. Interest expense and other, net
increased $47.0 million in the third quarter of 1997 to $44.8 million, compared
with $(2.2) million in the corresponding period in 1996 due primarily to the
write-off of $38.7 million of certain of the Company's equity investments that
were deemed unrecoverable as a result of events in the third quarter. Interest
expense for the three months ended September 30, 1997 and 1996 was $39.2 million
and $37.1 million, respectively. For the nine months ended September 30, 1997
interest expense and other, net increased $50.8 million to $84.8 million, and
includes interest expense of $116.8 million for 1997 and $109.4 million for
1996.
Net Income. For the three month period ended September 30, 1997, the
Company reported net income of $230.2 million, or $.47 per share, compared to
net income of $266.4 million, or $.55 per share, for the corresponding period of
1996. For the nine month period ended September 30, 1997, the Company's net
income increased $288.5 million to $447.2 million when compared with the
respective period of 1996. Excluding the restructuring charges and asset
writedowns in both periods ($290.9 million, before taxes, for 1997 and $895.5
million, before taxes, for 1996), net income for the nine months ended September
30, 1997 would have decreased $98.5 million to $633.3 million, or $1.29 per
share, when compared with the respective period of 1996. EDS' effective tax rate
remained constant at 36% for the three months ended September 30, 1997 and 1996.
Return on assets increased to 6.7% for the twelve-month period ended
September 30, 1997, compared with 4.1% for the corresponding period ended
September 30 1996. Return on stockholders' equity increased to 15.0% for the
twelve-month period ended September 30, 1997, compared to 9.2% for the
comparable period ended September 30, 1996. Excluding the restructuring charges
and asset writedowns discussed above for each of the twelve-month periods ended
September 30, 1997 and 1996, return on assets were 8.5% and 9.9%, and return on
stockholders' equity was 18.6% and 20.3%, respectively. Excluding the
restructuring charges and asset writedowns, the decline in return on assets and
return on stockholders' equity was attributable primarily to the decline in net
income over the comparable twelve-month periods.
The Company and its clients 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 in which
the revisions are determined.
Seasonality and Inflation. The Company's 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 clients. In
addition, revenues have generally increased from quarter to quarter as a result
of new business added throughout the year.
Liquidity and Capital Resources
At September 30, 1997, the Company held cash and cash equivalents of
$860.4 million, had working capital of $1,798.6 million, and a current ratio of
1.6-to-1. This compares to cash equivalents of $879.9 million, $1,845.5 million
in working capital and a current ratio of 1.6-to-1 at December 31, 1996.
The Company's capitalization at September 30, 1997 consisted of
$2,161.5 million in long-term debt, less current portion, and $5,041.0 million
in stockholders' equity. Total debt (which includes redeemable preferred stock
of subsidiaries) was $2,462.6 million at September 30, 1997, compared with total
debt of $2,897.9 million at December 31, 1996. The total debt-to-capital ratio
(which includes current portion of long-term debt and redeemable preferred stock
of subsidiaries as components of debt and capital) was 32.8% at September 30,
1997, and 37.7% at December 31, 1996. The ratio of long-term debt to capital was
31.6% at September 30, 1997 and 36.6% at December 31, 1996. At September 30,
1997, the Company had unused uncommitted short-term lines of credit totaling
$645.8 million and unused committed lines of credit of $2,500.0 million. The
unused
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committed lines of credit of $2,500.0 million serve as a backup facility for
commercial paper borrowings. The balance of commercial paper borrowings at
September 30, 1997 was approximately $1,201.5 million. In July 1997, the Company
redeemed 400.0 million British pounds (653.3 million U.S. dollars) of redeemable
preferred stock of subsidiaries through the issuance of commercial paper. At
September 30, 1997, and December 31, 1996, the Company had total committed lines
of credit of $2,521.3 million.
Cash flows from operations increased $404.2 million during the nine
months ended September 30, 1997 to $1,464.4 million compared with the comparable
period in 1996 due primarily to decreases in accounts receivable, prepaids and
other, and an increase in taxes payable, all of which were partially offset by a
decrease in deferred revenue. Cash used in investing activities during the nine
months ended September 30, 1997 was $835.8 million compared with $939.2 million
in the corresponding period of last year. Net cash used in financing activities
was $641.0 million for the nine months ended September 30, 1997, compared with
$44.0 million in the corresponding period of last year.
The Company paid cash dividends totaling $73.5 million in the
third quarter of 1997, and $72.8 million for the same period in 1996.
The Company expects that its principal uses of funds for the
foreseeable future will be for capital expenditures, debt repayments and working
capital. Capital expenditures may consist of purchases of computer and
telecommunications equipment, buildings and facilities, land, and software, as
well as acquisitions. Capital expenditures for 1997 are expected to be
approximately $1,000.0 million to $1,300.0 million. However, actual capital
expenditures are somewhat dependent on acquisition and joint venture activities,
as well as capital requirements for new business. The Company 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. On August 29, 1997 EDS acquired the interest that it did not already
own in Neodata Corporation, a Colorado-based integrated marketing communications
services company, for $61.7 million, net of cash acquired. Neodata retained
$217.1 million of indebtedness, including $163.0 million of public debentures
redeemable as early as May 1998 at 106% of their principal amount.
The service agreements between EDS and GM that existed prior to the
Split-Off provided for GM to pay EDS on the 15th day of the month in which
services are provided with respect to a substantial portion of services. Under
the IT Services Agreements, there will be a transition over a two-year period,
beginning in 1997, to payment on the 20th day of the month following service for
all agreements which do not already have payment terms at least that favorable
to GM. These revised payment terms are expected to result in an increase in EDS'
working capital requirements. EDS will obtain the funds for this working capital
impact through borrowings under its existing commercial paper or bank credit
facilities.
The competitive environment and changing market forces are increasing
the capital intensity of the Company's business. Increasing amounts of capital
will be required 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 order to provide the funds necessary for its future
acquisition and expansion goals, the Company 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. In addition, information technology
client contracts frequently now require front-end investments in computers and
telecommunications equipment, software, and other property and equipment. For
these reasons, the Company's ability to continue to access the capital markets
on an efficient basis will become increasingly important to its ability to
compete effectively.
11
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
Exhibit
Number Description
------------- ------------------------------------------------------
10(g) Amended and Restated Revolving Credit and Term Loan
Agreement entered into as of September 23, 1997 among
EDS and the Lenders identified therein.
10(i) Amended and Restated Multi-Currency Revolving Credit
Agreement entered into as of September 23, 1997 among
EDS and the Lenders identified therein.
27 Financial Data Schedule (for SEC information only)
(b) Reports on Form 8-K
-------------------
During the quarter ended September 30, 1997, EDS filed a Current Report
on Form 8-K dated August 7, 1997 reporting a press release under
Item 5 - Other Events and Item 7 - Exhibits.
12
<PAGE>
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ELECTRONIC DATA SYSTEMS CORPORATION
-----------------------------------
(Registrant)
By /s/ Joseph M. Grant
-----------------------------------
(Joseph M. Grant, Executive
Vice President and Chief Financial
Date: November 7, 1997 Officer)
By /s/ H. Paulett Eberhart
-----------------------------------
(H. Paulett Eberhart, Vice President
Date: November 7, 1997 and Controller)
13
EXHIBIT 10(g)
Amended and Restated Revolving Credit and Term Loan Agreement
This Amended and Restated Revolving Credit and Term Loan Agreement is
entered into as of September 23, 1997, by and among Electronic Data Systems
Corporation, a Delaware corporation ("EDS"), the financial institutions listed
on the signature pages of this Amendment and Restatement under the heading
"LENDERS," including Banco Santander - New York Branch, Bank of America National
Trust and Savings Association, The Chase Manhattan Bank, Citibank, N.A., Morgan
Guaranty Trust Company of New York, and NationsBank of Texas, N.A., as
Arrangers, and Citibank, N.A. as Administrative Agent for such Lenders to the
extent and in the manner provided in the Existing Credit Agreement (as defined
below). All capitalized terms used in this Amendment and Restatement and not
defined, have the meaning given to such terms in the Existing Credit Agreement.
EDS, Administrative Agent, and certain Lenders entered into that
certain Revolving Credit and Term Loan Agreement as of October 4, 1995, as same
has been amended by that certain First Amendment to Revolving Credit and Term
Loan Agreement dated as of September 25, 1996 (as amended, the "Existing Credit
Agreemen"). EDS desires to further amend the Existing Credit Agreement to effect
the amendments reflected herein, and to restate the Existing Credit Agreement in
its entirety to read as set forth in the Existing Credit Agreement with the
amendments contained herein, and the Administrative Agent and Lenders are
willing to agree to such amendment and restatement.
Accordingly, in consideration of the mutual promises herein contained,
and for other good and valuable consideration, the parties hereto agree as
follows:
1. Amendments to Existing Credit Agreement.
a. References to Credit Agreement. All references to "the Revolving
Credit and Term Loan Agreement" in the Existing Agreement, the Exhibits thereto,
and the other Loan Documents, shall be deemed to be references to "the Amended
and Restated Revolving Credit and Term Loan Agreement," and each reference in
the Existing Credit Agreement to "this Agreement," "hereunder," "hereof," or
words of like import, and each reference in any Exhibit or other Loan Document
to "thereunder," "thereof," or words of like import referring to the Existing
Credit Agreement shall mean and be a reference to the Amended and Restated
Revolving Credit and Term Loan Agreement as described in this Amendment and
Restatement.
b. Definitions. (i) The definition of "Applicable Margin" is hereby amended
in its entirety to read as follows:
"`Applicable Margin,' with respect to the calculation of the
CD Rate or the Eurodollar Rate, means the applicable
percentage amount set forth in the table below:
Committed Loans:
Eurodollar Loans 0.145%
CD Loans 0.270%
<PAGE>
Term Loans:
Eurodollar Loans 0.145%
CD Loans 0.270%"
(ii) The definition of "Availability Date" is hereby
amended in its entirety to read as follows:
"'Availability Date' means September 23, 1997."
c. Fees. Section 4.1 (Facility Fees) of the Existing Credit Agreement
is hereby amended to replace the number and words "0.045 percent per annum" in
the first sentence thereof with the number and words "0.040 percent per annum."
d. Representations and Warranties. Section 6.1(d) (Financial
Statements) of the Existing Credit Agreement is hereby amended to replace the
date "December 31, 1995" at the end of the first sentence thereof with the date
"December 31, 1996."
e. Notices. Section 11.4 (Communications) of the Existing Credit
Agreement and all exhibits to the Existing Credit Agreement and Section 4.02 of
the Guaranty are hereby amended to change the area code for all telecopy and
telephone numbers for the Borrowers and EDS referenced therein from "214" to
"972."
2. Representations and Warranties. To induce Lenders to enter into this
Amendment and Restatement, EDS represents and warrants to Lenders as follows:
a. Corporate Existence and Authority. EDS (i) is duly organized,
validly existing, and in good standing under the Laws of the State of Delaware,
(ii) is duly qualified to transact business and is in good standing in each
jurisdiction where the failure to do so would have a Material Adverse Effect,
and (iii) has all requisite power and authority (A) to own its assets and to
carry on its business, and (B) to execute, deliver, and perform its obligations
under this Amendment and Restatement.
b. Binding Obligations. The execution and delivery of this Amendment
and Restatement has been duly authorized and approved by all necessary corporate
action on the part of EDS, and this Amendment and Restatement constitutes the
legal, valid, and binding obligation of EDS, enforceable against it in
accordance with its terms, except as the enforceability may be limited by
applicable Debtor Relief Laws.
c. Financial Statements. EDS has delivered to Administrative Agent a
copy of the Financial Statements as of the period ended December 31, 1996. Such
Financial Statements were prepared in accordance with GAAP and present fairly
the financial condition and the results of operations of EDS and its
consolidated Subsidiaries as of, and for the portion of the fiscal year ending
on, the date or dates thereof. All material liabilities (direct or indirect,
fixed or contingent) of EDS and its consolidated Subsidiaries as of the date or
dates of such Financial Statements are reflected therein or in the notes
thereto. Between the date or dates of such Financial Statements and the date of
this Amendment and Restatement, there has been no material adverse change in the
financial condition of EDS and its consolidated Subsidiaries.
2
<PAGE>
d. Litigation. Except for the Litigation described on Schedule 6.1 to
the Existing Credit Agreement, EDS and its Subsidiaries are not involved in,
nor, to the best of EDS's knowledge, are they aware of, any Litigation which
could, collectively or individually, have a Material Adverse Effect, if
determined adversely to EDS and its Subsidiaries, nor are there any outstanding
or unpaid judgments against EDS or its Subsidiaries in excess of $25,000,000
(calculated, in the case of judgments denominated in currencies other than
Dollars, by reference to the Dollar Equivalent Value of the amount of such
judgment in such other currency), in the aggregate.
e. Other Representations. All representations and warranties set forth
in Article VI of the Existing Credit Agreement, to the extent applicable to EDS
(other than those contained in Sections 6.1(d) and (e)), and in Article III of
the Guaranty, are true and correct in all material respects on and as of the
date hereof, except for such changes therein otherwise permitted by the terms of
the Existing Credit Agreement or the Guaranty or permitted or waived by Majority
Lenders.
3. Conditions Precedent. The effectiveness of this Amendment is subject to
Administrative Agent's receipt of the following:
a. This Amendment and Restatement. Counterparts of this Amendment and
Restatement executed by EDS, the Administrative Agent, and the other Lenders.
b. Notes. New Notes, executed by EDS, each substantially in the form of
Exhibit A-1 to the Existing Credit Agreement, except for appropriate changes as
to date and amount.
c. Articles of Incorporation. A recent copy of the articles or certificate
of incorporation and all amendments thereto, of EDS, certified by the Secretary
of State of Delaware.
d. Good Standing and Existence. A recent certificate of existence and good
standing of EDS from the Secretary of State of Delaware.
e. Officer's Certificate. An Officer's Certificate of EDS certifying as to:
(i) bylaws; (ii) resolutions; and (iii) incumbency of all officers of EDS who
will be authorized to execute or attest to any Loan Document.
f. Opinion of Counsel. An opinion of counsel to EDS, including, without
limitation, an opinion as to the enforceability under New York law of this
Amendment and Restatement and any documents delivered in connection herewith,
which opinion may be delivered by separate counsel.
4. Miscellaneous.
a. No Other Amendments. Except as expressly amended herein, the terms
of the Existing Credit Agreement shall remain in full force and effect, and all
such terms are hereby incorporated by reference.
3
<PAGE>
b. Amendment as Loan Document. This Amendment and Restatement shall
constitute a Loan Document.
c. Limitation on Agreements. The amendments set forth herein are
limited precisely as written and shall not be deemed: (i) to be a consent under
or waiver of any other term or condition in the Existing Credit Agreement or any
of the other Loan Documents; or (ii) to prejudice any right or rights which
Administrative Agent and Lenders now have or may have in the future under, or in
connection with the Existing Credit Agreement, as amended and restated hereby,
the Notes, the Loan Documents or any of the other documents referred to herein
or therein.
d. Schedule 1. All Lenders and Committed Sums evidenced on Schedule 1
attached hereto hereby replace those Lenders and Committed Sums on the previous
Schedule 1 attached to the Existing Credit Agreement.
e. Terminating Lenders. Those Persons that executed the Existing Credit
Agreement as Lenders, but that are not signatories to this Amendment and
Restatement, are no longer Lenders under the Existing Credit Agreement, as
amended hereby.
f. Counterparts. This Amendment and Restatement may be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract.
g. GOVERNING LAW. THIS AMENDMENT AND RESTATEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (OTHER THAN THE CONFLICT OF LAWS PROVISIONS THEREOF), EXCEPT TO THE EXTENT
THAT FEDERAL LAWS MAY APPLY.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE(S) FOLLOW.
4
<PAGE>
EXECUTED as of the date and year first above written.
Borrower:
ELECTRONIC DATA SYSTEMS CORPORATION
By: /s/ Joseph E. Burns
__________________________________
Name: Joseph E. Burns
Title: Assistant Treasurer
Administrative Agent:
CITIBANK, N.A., in its individual capacity
as a Lender, and as Administrative Agent
By: /s/ Robert D. Wetrus
__________________________________
Name: Robert D. Wetrus
Title: Vice President
Arrangers/Lenders:
BANCO SANTANDER - NEW YORK BRANCH
By: /s/ Robert E. Schlegel
__________________________________
Name: Robert E. Schlegel
Title: Vice President
By: /s/ Valerie Merrin
__________________________________
Name: Valerie Merrin
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Robert D. Wetrus
__________________________________
Name: Michael J. McCutchin
Title: Managing Director
THE CHASE MANHATTAN BANK
By: /s/ Mitchell J. Gervis
__________________________________
Name: Mitchell J. Gervis
Title: Vice President
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ Robert L. Barrett
__________________________________
Name: Robert L. Barrett
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Timothy M. O'Connor
__________________________________
Name: Timothy M. O'Connor
Title: Vice President
Managers/Lenders:
BANQUE NATIONALE DE PARIS, HOUSTON AGENCY
By: /s/ Henry F. Setina
__________________________________
Name: Henry F. Setina
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD.,
NEW YORK BRANCH
By: /s/ Andreas Panteli
__________________________________
Name: Andreas Panteli
Title: Vice President & Group Leader
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Philip K. Kiebscher
__________________________________
Name: Philip K. Kiebscher
Title: Vice President
WACHOVIA BANK, N.A.
By: /s/ Paige D. Mesaros
__________________________________
Name: Paige D. Mesaros
Vice President
Lenders:
BANCA DI ROMA - CHICAGO BRANCH
By: /s/ Steven Paley
__________________________________
Name: Steven Paley
Title: Vice President
By: /s/ Luigi Rocchi
__________________________________
Name: Luigi Rocchi
Title: Vice President
<PAGE>
BANCA MONTE DEI PASCHI DI SIENA, S.p.A
By: /s/
__________________________________
Name:
Title: S.V.P. & General Manager
By: /s/ Brian R. Landy
__________________________________
Name: Brian R. Landy
Title: Vice President
BANKBOSTON, N.A.
By: /s/ Howard V. Hennigar
__________________________________
Name: Howard V. Hennigar
Title: Managing Director
BANK OF MONTREAL
By: /s/ Leon H. Sinclair
__________________________________
Name: Leon H. Sinclair
Title: Director
<PAGE>
THE BANK OF NEW YORK
By: /s/ Steven M. Ross
__________________________________
Name: Steven M. Ross
Title: Vice President
THE BANK OF TOKYO - MITSUBISHI, LTD.,
HOUSTON AGENCY
By: /s/ John W. McGhee
__________________________________
Name: John W. McGhee
Title: Vice President & Manager
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Robert Ivosevich
__________________________________
Name: Robert Ivosevich
Title: Senior Vice President
CREDIT SUISSE FIRST BOSTON
By: /s/ Thomas G. Muoio
__________________________________
Name: Thomas G. Muoio
Title: Vice President
By: /s/ Christian Bourqui
__________________________________
Name: Christian Bourqui
Title: Associate
<PAGE>
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN
ISLAND BRANCHES
By: /s/ Stephan A. Wiedemann
__________________________________
Name: Stephan A. Wiedemann
Title: Director
By: /s/ Jean M. Hannigan
__________________________________
Name: Jean M. Hannigan
Title: Vice President
DRESDNER BANK AG, NEW YORK BRANCH AND
GRAND CAYMAN BRANCH
By: /s/ Robert Grella
__________________________________
Name: Robert Grella
Title: Vice President
By: /s/ B. Craig Erickson
__________________________________
Name: B. Craig Erickson
Title: Vice President
THE FIRST NATIONAL BANK OF MARYLAND
By: /s/ Andrew W. Fish
__________________________________
Name: Andrew W. Fish
Title: Vice President
<PAGE>
FIRST UNION NATIONAL BANK
By: /s/
__________________________________
Name:
Title:
THE FUJI BANK, LIMITED - HOUSTON AGENCY
By: /s/ Kenichi Tatara
__________________________________
Name: Kenichi Tatara
Title: Vice President & Manager
ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A.
By: /s/ Robert Wurster
__________________________________
Name: Robert Wurster
Title: First Vice President
By: /s/ Glen Binder
__________________________________
Name: Glen Binder
Title: Vice President
<PAGE>
KREDIETBANK, N.V., GRAND CAYMAN BRANCH
By: /s/ Robert Snauffer/Tod R. Angus
__________________________________
Name: Robert Snauffer/Tod R. Angus
Title: Vice President/Vice President
MELLON BANK, N.A.
By: /s/ Christine Plumb
__________________________________
Name: Christine Plumb
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
NEW YORK BRANCH
By: /s/ Angela Bozorgmir
__________________________________
Angela Bozorgmir
Vice President
NATIONAL WESTMINSTER BANK PLC,
NASSAU BRANCH
By: /s/ Angela Bozorgmir
__________________________________
Angela Bozorgmir
Vice President
<PAGE>
ROYAL BANK OF CANADA
By: /s/ Brian W. Dixon
__________________________________
Name: Brian W. Dixon
Title: Senior Manager
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ Christopher J. Spelz
__________________________________
Name: Christopher J. Spelz
Title: V.P. and Manager
By: /s/ Damien Zinck
__________________________________
Damien Zinck
Assistant Vice President
THE SANWA BANK, LIMITED, DALLAS AGENCY
By: /s/ Eric Reimer
__________________________________
Name: Eric Reimer
Title: Assistant Vice President
<PAGE>
STANDARD CHARTERED BANK
By: /s/ Kristina McDavid
__________________________________
Name: Kristina McDavid
Title: Vice President
By: /s/ Peter G.R. Dodds
__________________________________
Peter G.R. Dodds
Vice President
THE SUMITOMO BANK, LIMITED
By: /s/ Harumitsu Seki
__________________________________
Harumitsu Seki
General Manager
STATE STREET BANK AND TRUST COMPANY
By: /s/ F. Andrew Beise
__________________________________
Name: F. Andrew Beise
Title: Vice President
SUNTRUST BANK, ATLANTA
By: /s/ Trisha E. Hardy
__________________________________
Name: Trisha E. Hardy
Title: Corporate Banking Officer
By: /s/ John A. Fields, Jr.
__________________________________
Name: John A. Fields, Jr.
Title: Vice President
THE TORONTO DOMINION BANK
By: /s/ Jorge A. Garcia
__________________________________
Name: Jorge A. Garcia
Title: Mgr. Gr. Admin.
<PAGE>
WELLS FARGO BANK, N.A.
By: /s/Frieda Youlios
__________________________________
Name: Frieda Youlios
Title: Vice President
By: /s/ Rachel Uyama
__________________________________
Name: Rachel Uyama
Title: Assistant Vice President
FLEET NATIONAL BANK
By: /s/ Frank H. Benesh III
__________________________________
Name: Frank H. Benesh III
Title: Vice President
<PAGE>
SCHEDULE 1
to Amended and Restated Revolving Credit and Term Loan Agreement
[not provided herein]
EXHIBIT 10(i)
Amended and Restated Multi-Currency Revolving Credit Agreement
This Amended and Restated Multi-Currency Revolving Credit Agreement is
entered into as of September 23, 1997, by and among Electronic Data Systems
Corporation, a Delaware corporation ("EDS"), the financial institutions listed
on the signature pages of this Amendment and Restatement under the heading
"LENDERS," including Banco Santander - New York Branch, Bank of America National
Trust and Savings Association, The Chase Manhattan Bank, Citibank, N.A., Morgan
Guaranty Trust Company of New York, and NationsBank of Texas, N.A., as
Arrangers, and Citibank, N.A. as Administrative Agent for such Lenders to the
extent and in the manner provided in the Existing Credit Agreement (as defined
below). All capitalized terms used in this Amendment and Restatement and not
defined, have the meaning given to such terms in the Existing Credit Agreement.
EDS, Administrative Agent, and certain Lenders entered into that
certain Multi-Currency Revolving Credit Agreement as of October 4, 1995, as same
has been amended by that certain First Amendment to Multi-Currency Revolving
Credit Agreement dated as of September 25, 1996 (as amended, the "Existing
Credit Agreement"). EDS desires to further amend the Existing Credit Agreement
to effect the amendments reflected herein, and to restate the Existing Credit
Agreement in its entirety to read as set forth in the Existing Credit Agreement
with the amendments contained herein, and the Administrative Agent and Lenders
are willing to agree to such amendment and restatement.
Accordingly, in consideration of the mutual promises herein contained,
and for other good and valuable consideration, the parties hereto agree as
follows:
1. Amendments to Existing Credit Agreement.
a. References to Credit Agreement. All references to "the
Multi-Currency Revolving Credit Agreement" in the Existing Agreement, the
Exhibits thereto, and the other Loan Documents, shall be deemed to be references
to "the Amended and Restated Multi-Currency Revolving Credit Agreement," and
each reference in the Existing Credit Agreement to "this Agreement,"
"hereunder," "hereof," or words of like import, and each reference in any
Exhibit or other Loan Document to "thereunder," "thereof," or words of like
import referring to the Existing Credit Agreement shall mean and be a reference
to the Amended and Restated Multi-Currency Revolving Credit Agreement as
described in this Amendment and Restatement.
b. Definitions. (i) The definition of "Applicable Margin" is hereby amended
in its entirety to read as follows:
"'Applicable Margin,' with respect to the calculation of the
CD Rate, the Eurocurrency Rate, or the Eurodollar Rate, means
the applicable percentage amount set forth in the table below:
Committed Loans:
Eurodollar Loans and
Eurocurrency Loans 0.125%
CD Loans 0.250%"
<PAGE>
(ii) The definition of "Availability Date" is hereby amended in its
entirety to read as follows: "'Availability Date' means September 23,
1997."
c. Fees. Section 4.1 (Facility Fees) of the Existing Credit Agreement is
hereby amended to replace the number and words "0.065 percent per annum" in the
first sentence thereof with the number and words "0.060 percent per annum."
d. Representations and Warranties. Section 6.1(d) (Financial Statements) of
the Existing Credit Agreement is hereby amended to replace the date "December
31, 1995" at the end of the first sentence thereof with the date "December 31,
1996."
e. Notices. Section 11.4 (Communications) of the Existing Credit Agreement
and all exhibits to the Existing Credit Agreement and Section 4.02 of the
Guaranty are hereby amended to change the area code for all telecopy and
telephone numbers for the Borrowers and EDS referenced therein from "214" to
"972."
2. Representations and Warranties. To induce Lenders to enter into this
Amendment and Restatement, EDS represents and warrants to Lenders as follows:
a. Corporate Existence and Authority. EDS: (i) is duly organized,
validly existing, and in good standing under the Laws of the State of Delaware;
(ii) is duly qualified to transact business and is in good standing in each
jurisdiction where the failure to do so would have a Material Adverse Effect;
and (iii) has all requisite power and authority: (A) to own its assets and to
carry on its business; and (B) to execute, deliver, and perform its obligations
under this Amendment and Restatement.
b. Binding Obligations. The execution and delivery of this Amendment
and Restatement has been duly authorized and approved by all necessary corporate
action on the part of EDS, and this Amendment and Restatement constitutes the
legal, valid, and binding obligation of EDS, enforceable against it in
accordance with its terms, except as the enforceability may be limited by
applicable Debtor Relief Laws.
c. Financial Statements. EDS has delivered to Administrative Agent a
copy of the Financial Statements as of the period ended December 31, 1996. Such
Financial Statements were prepared in accordance with GAAP and present fairly
the financial condition and the results of operations of EDS and its
consolidated Subsidiaries as of, and for the portion of the fiscal year ending
on, the date or dates thereof. All material liabilities (direct or indirect,
fixed or contingent) of EDS and its consolidated Subsidiaries as of the date or
dates of such Financial Statements are reflected therein or in the notes
thereto. Between the date or dates of such Financial Statements and the date of
this Amendment and Restatement, there has been no material adverse change in the
financial condition of EDS and its consolidated Subsidiaries.
d. Litigation. Except for the Litigation described on Schedule 6.1 to
the Existing Credit Agreement, EDS and its Subsidiaries are not involved in,
nor, to the best of EDS's knowledge, are they aware of, any Litigation which
could, collectively or individually, have a Material Adverse Effect, if
determined adversely to EDS and its Subsidiaries, nor are there any
2
<PAGE>
outstanding or unpaid judgments against EDS or its Subsidiaries in excess of
$25,000,000 (calculated, in the case of judgments denominated in currencies
other than Dollars, by reference to the Dollar Equivalent Value of the amount of
such judgment in such other currency), in the aggregate.
e. Other Representations. All representations and warranties set forth
in Article VI of the Existing Credit Agreement, to the extent applicable to EDS
(other than those contained in Sections 6.1(d) and (e)), and in Article III of
the Guaranty, are true and correct in all material respects on and as of the
date hereof, except for such changes therein otherwise permitted by the terms of
the Existing Credit Agreement or the Guaranty or permitted or waived by Majority
Lenders.
3. Conditions Precedent. The effectiveness of this Amendment is subject to
Administrative Agent's receipt of the following:
a. This Amendment and Restatement. Counterparts of this Amendment and
Restatement executed by EDS, the Administrative Agent, and the other Lenders.
b. Notes. New Notes, executed by EDS, each substantially in the form of
Exhibit A-1 to the Existing Credit Agreement, except for appropriate changes as
to date and amount.
c. Articles of Incorporation. A recent copy of the articles or certificate
of incorporation and all amendments thereto, of EDS, certified by the Secretary
of State of Delaware.
d. Good Standing and Existence. A recent certificate of existence and good
standing of EDS from the Secretary of State of Delaware.
e. Officer's Certificate. An Officer's Certificate of EDS certifying as to:
(i) bylaws; (ii) resolutions; and (iii) incumbency of all officers of EDS who
will be authorized to execute or attest to any Loan Document.
f. Opinion of Counsel. An opinion of counsel to EDS, including, without
limitation, an opinion as to the enforceability under New York law of this
Amendment and Restatement and any documents delivered in connection herewith,
which opinion may be delivered by separate counsel.
4. Miscellaneous.
a. No Other Amendments. Except as expressly amended herein, the terms of
the Existing Credit Agreement shall remain in full force and effect, and all
such terms are hereby incorporated by reference.
b. Amendment as Loan Document. This Amendment and Restatement shall
constitute a Loan Document.
c. Limitation on Agreements. The amendments set forth herein are limited
precisely as written and shall not be deemed: (i) to be a consent under or
waiver of any other
3
<PAGE>
term or condition in the Existing Credit Agreement or any of the other Loan
Documents; or (ii) to prejudice any right or rights which Administrative Agent
and Lenders now have or may have in the future under, or in connection with the
Existing Credit Agreement, as amended and restated hereby, the Notes, the Loan
Documents or any of the other documents referred to herein or therein.
d. Schedule 1. All Lenders and Committed Sums evidenced on Schedule 1
attached hereto hereby replace those Lenders and Committed Sums on the previous
Schedule 1 attached to the Existing Credit Agreement.
e. Terminating Lenders. Those Persons that executed the Existing Credit
Agreement as Lenders, but that are not signatories to this Amendment and
Restatement, are no longer Lenders under the Existing Credit Agreement, as
amended hereby.
f. Counterparts. This Amendment and Restatement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract.
g. GOVERNING LAW. THIS AMENDMENT AND RESTATEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(OTHER THAN THE CONFLICT OF LAWS PROVISIONS THEREOF), EXCEPT TO THE EXTENT THAT
FEDERAL LAWS MAY APPLY.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGE(S) FOLLOW.
4
<PAGE>
EXECUTED as of the date and year first above written.
Borrower:
ELECTRONIC DATA SYSTEMS CORPORATION
By: /s/ Joseph E. Burns
__________________________________
Name: Joseph E. Burns
Title: Assistant Treasurer
Administrative Agent:
CITIBANK, N.A., in its individual
capacity as a Lender, and as
Administrative Agent
By: /s/ Robert D. Wetrus
__________________________________
Name: Robert D. Wetrus
Title: Vice President
<PAGE>
Arrangers/Lenders:
BANCO SANTANDER - NEW YORK BRANCH
By: /s/ Robert E. Schlegel
__________________________________
Name: Robert E. Schlegel
Title: Vice President
By: /s/ Valerie Merrin
__________________________________
Name: Valerie Merrin
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Robert D. Wetrus
__________________________________
Name: Michael J. McCutchin
Title: Managing Director
THE CHASE MANHATTAN BANK
By: /s/ Mitchell J. Gervis
__________________________________
Name: Mitchell J. Gervis
Title: Vice President
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ Robert L. Barrett
__________________________________
Name: Robert L. Barrett
Title: Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Timothy M. O'Connor
__________________________________
Name: Timothy M. O'Connor
Title: Vice President
Managers/Lenders:
BANQUE NATIONALE DE PARIS, HOUSTON AGENCY
By: /s/ Henry F. Setina
__________________________________
Name: Henry F. Setina
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD.,
NEW YORK BRANCH
By: /s/ Andreas Panteli
__________________________________
Name: Andreas Panteli
Title: Vice President & Group Leader
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Philip K. Kiebscher
__________________________________
Name: Philip K. Kiebscher
Title: Vice President
WACHOVIA BANK, N.A.
By: /s/ Paige D. Mesaros
__________________________________
Name: Paige D. Mesaros
Vice President
Lenders:
BANCA DI ROMA - CHICAGO BRANCH
By: /s/ Steven Paley
__________________________________
Name: Steven Paley
Title: Vice President
By: /s/ Luigi Rocchi
__________________________________
Name: Luigi Rocchi
Title: Vice President
<PAGE>
BANCA MONTE DEI PASCHI DI SIENA, S.p.A
By: /s/
__________________________________
Name:
Title: S.V.P. & General Manager
By: /s/ Brian R. Landy
__________________________________
Name: Brian R. Landy
Title: Vice President
BANKBOSTON, N.A.
By: /s/ Howard V. Hennigar
__________________________________
Name: Howard V. Hennigar
Title: Managing Director
BANK OF MONTREAL
By: /s/ Leon H. Sinclair
__________________________________
Name: Leon H. Sinclair
Title: Director
<PAGE>
THE BANK OF NEW YORK
By: /s/ Steven M. Ross
__________________________________
Name: Steven M. Ross
Title: Vice President
THE BANK OF TOKYO - MITSUBISHI, LTD.,
HOUSTON AGENCY
By: /s/ John W. McGhee
__________________________________
Name: John W. McGhee
Title: Vice President & Manager
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Robert Ivosevich
__________________________________
Name: Robert Ivosevich
Title: Senior Vice President
CREDIT SUISSE FIRST BOSTON
By: /s/ Thomas G. Muoio
__________________________________
Name: Thomas G. Muoio
Title: Vice President
By: /s/ Christian Bourqui
__________________________________
Name: Christian Bourqui
Title: Associate
<PAGE>
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN
ISLAND BRANCHES
By: /s/ Stephan A. Wiedemann
__________________________________
Name: Stephan A. Wiedemann
Title: Director
By: /s/ Jean M. Hannigan
__________________________________
Name: Jean M. Hannigan
Title: Vice President
DRESDNER BANK AG, NEW YORK BRANCH AND
GRAND CAYMAN BRANCH
By: /s/ Robert Grella
__________________________________
Name: Robert Grella
Title: Vice President
By: /s/ B. Craig Erickson
__________________________________
Name: B. Craig Erickson
Title: Vice President
THE FIRST NATIONAL BANK OF MARYLAND
By: /s/ Andrew W. Fish
__________________________________
Name: Andrew W. Fish
Title: Vice President
<PAGE>
FIRST UNION NATIONAL BANK
By: /s/
__________________________________
Name:
Title:
THE FUJI BANK, LIMITED - HOUSTON AGENCY
By: /s/ Kenichi Tatara
__________________________________
Name: Kenichi Tatara
Title: Vice President & Manager
ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A.
By: /s/ Robert Wurster
__________________________________
Name: Robert Wurster
Title: First Vice President
By: /s/ Glen Binder
__________________________________
Name: Glen Binder
Title: Vice President
<PAGE>
KREDIETBANK, N.V., GRAND CAYMAN BRANCH
By: /s/ Robert Snauffer/Tod R. Angus
__________________________________
Name: Robert Snauffer/Tod R. Angus
Title: Vice President/Vice President
MELLON BANK, N.A.
By: /s/ Christine Plumb
__________________________________
Name: Christine Plumb
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
NEW YORK BRANCH
By: /s/ Angela Bozorgmir
__________________________________
Angela Bozorgmir
Vice President
NATIONAL WESTMINSTER BANK PLC,
NASSAU BRANCH
By: /s/ Angela Bozorgmir
__________________________________
Angela Bozorgmir
Vice President
<PAGE>
ROYAL BANK OF CANADA
By: /s/ Brian W. Dixon
__________________________________
Name: Brian W. Dixon
Title: Senior Manager
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ Christopher J. Spelz
__________________________________
Name: Christopher J. Spelz
Title: V.P. and Manager
By: /s/ Damien Zinck
__________________________________
Damien Zinck
Assistant Vice President
THE SANWA BANK, LIMITED, DALLAS AGENCY
By: /s/ Eric Reimer
__________________________________
Name: Eric Reimer
Title: Assistant Vice President
<PAGE>
STANDARD CHARTERED BANK
By: /s/ Kristina McDavid
__________________________________
Name: Kristina McDavid
Title: Vice President
By: /s/ Peter G.R. Dodds
__________________________________
Peter G.R. Dodds
Vice President
THE SUMITOMO BANK, LIMITED
By: /s/ Harumitsu Seki
__________________________________
Harumitsu Seki
General Manager
STATE STREET BANK AND TRUST COMPANY
By: /s/ F. Andrew Beise
__________________________________
Name: F. Andrew Beise
Title: Vice President
SUNTRUST BANK, ATLANTA
By: /s/ Trisha E. Hardy
__________________________________
Name: Trisha E. Hardy
Title: Corporate Banking Officer
By: /s/ John A. Fields, Jr.
__________________________________
Name: John A. Fields, Jr.
Title: Vice President
THE TORONTO DOMINION BANK
By: /s/ Jorge A. Garcia
__________________________________
Name: Jorge A. Garcia
Title: Mgr. Gr. Admin.
<PAGE>
WELLS FARGO BANK, N.A.
By: /s/ Frieda Youlios
__________________________________
Name: Frieda Youlios
Title: Vice President
By: /s/ Rachel Uyama
__________________________________
Name: Rachel Uyama
Title: Assistant Vice President
FLEET NATIONAL BANK
By: /s/ Frank H. Benesh III
__________________________________
Name: Frank H. Benesh III
Title: Vice President
<PAGE>
SCHEDULE 1
to Multi-Currency Revolving Credit Agreement
[not provided herein]
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 860
<SECURITIES> 64
<RECEIVABLES> 3,544
<ALLOWANCES> (179)
<INVENTORY> 124
<CURRENT-ASSETS> 4,751
<PP&E> 6,858
<DEPRECIATION> 3,885
<TOTAL-ASSETS> 10,965
<CURRENT-LIABILITIES> 2,952
<BONDS> 2,336
0
0
<COMMON> 829
<OTHER-SE> 4,212
<TOTAL-LIABILITY-AND-EQUITY> 10,965
<SALES> 11,007
<TOTAL-REVENUES> 11,007
<CGS> 0
<TOTAL-COSTS> 8,825
<OTHER-EXPENSES> 1,399
<LOSS-PROVISION> 36
<INTEREST-EXPENSE> 117
<INCOME-PRETAX> 699
<INCOME-TAX> 252
<INCOME-CONTINUING> 447
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 447
<EPS-PRIMARY> .91
<EPS-DILUTED> .91
</TABLE>
