ELECTRONIC DATA SYSTEMS CORPORATION
EDS 401(k) PLAN
(formerly the EDS DEFERRED COMPENSATION PLAN)
FORM 11-K
ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 1998
FILED PURSUANT TO SECTION 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1998
OR
TRANSITION REPORT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
- ---
For the transition period from ________ to ________
Commission file number 1-11779
EDS 401(k) PLAN
---------------------------------------------
(formerly the EDS DEFERRED COMPENSATION PLAN)
(Full title of the plan)
Electronic Data Systems Corporation
5400 Legacy Drive
Plano, Texas 75024-3105
(Name of issuer of the securities held pursuant to
the plan and the address of its principal
executive offices)
Registrant's telephone number, including area code: (972) 604-6000
Notices and communications from the Securities and the Exchange Commission
relative to this report should be forwarded to:
H. Paulett Eberhart, Senior
Vice President
Electronic Data Systems Corporation
5400 Legacy Drive
Plano, Texas 75024-3105
<PAGE>
FINANCIAL STATEMENTS AND EXHIBIT
(a) FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES Page No.
EDS 401(k) Plan:
Independent Auditors' Report................................... 4
Basic Financial Statements:
Statements of Net Assets Available for Benefits -
December 31, 1998 and 1997.............................. 5
Statements of Changes in Net Assets Available for
Benefits - Years Ended December 31, 1998 and 1997....... 6
Notes to Financial Statements - December 31,
1998 and 1997........................................... 7
Supplemental schedules:
Line 27(a)-Schedule of Assets Held for
Investment Purposes - December 31, 1998............... 18
Line 27(d)-Schedule of Reportable Transactions -
Year Ended December 31, 1998.......................... 20
Supplemental schedules not listed above are omitted as the required infor-
mation is not applicable or the information is presented in the financial
statements or related notes.
(b) EXHIBIT
Exhibit 23 Consent of Independent Auditors......................... 22
2
<PAGE>
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Trustees of the EDS Deferred Compensation Plan have duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
EDS 401(k) PLAN
------------------------------
(Name of plan)
Electronic Data Systems Corporation
Plan Administrator
Date: June 29, 1999 By: /s/ John Adams
---------------------------------
John Adams, Vice President and
Controller
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Trustee
EDS 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits
of the EDS 401(k) Plan (formerly EDS Deferred Compensation Plan) as of December
31, 1998 and 1997, and the related statements of changes in net assets available
for benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these 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 financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the EDS 401(k)
Plan as of December 31, 1998 and 1997, and the changes in net assets available
for benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ KPMG LLP
Dallas, Texas
June 4, 1999
4
<PAGE>
<TABLE>
<CAPTION>
EDS 401(k) PLAN
Statements of Net Assets Available for Benefits
December 31, 1998 and 1997
1998 1997
--------------------- ----------------------
<S> <C> <C>
Assets:
Investments (note 4):
Income Fund, primarily at contract value $ 217,053,149 $ 203,595,182
Investments in stocks, bonds and mutual
funds, at quoted market prices 1,799,551,407 1,339,960,804
Loan Fund, at unpaid principal balance, which
approximates fair value
55,993,657 54,628,090
------------- -------------
Total assets 2,072,598,213 1,598,184,076
Contribution receivable -- 2,132,002
------------- -------------
Net assets available for benefits $2,072,598,213 $1,600,316,078
============= =============
See accompanying notes to financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
EDS 401(k) PLAN
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 1998 and 1997
1998 1997
--------------------- ----------------------
<S> <C> <C>
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of investments
(note 4) $ 180,354,993 $ 97,554,925
Interest 22,039,112 19,941,958
Dividends 94,928,371 75,205,660
------------- -------------
Total investment income 297,322,476 192,702,543
Contributions 218,531,043 164,546,512
Net assets transferred from other plans (note 1) 68,334,657 17,778,773
------------- -------------
Total additions 584,188,176 375,027,828
Deductions from net assets attributed to benefits paid and
withdrawals (111,906,041) (95,924,703)
------------- -------------
Net increase 472,282,135 279,103,125
Net assets available for benefits at:
Beginning of year 1,600,316,078 1,321,212,953
------------- -------------
End of year $2,072,598,213 $1,600,316,078
============= =============
See accompanying notes to financial statements.
</TABLE>
6
<PAGE>
EDS 401(k) PLAN
Notes to Financial Statements
December 31, 1998 and 1997
1. Description of Plan
The EDS 401(k) Plan (the Plan) (formerly EDS Deferred Compensation Plan)
became effective July 1, 1983, with employees admitted to the Plan October 1,
1983. As used herein, the terms "EDS", "the Company", and "Employer" refer to
Electronic Data Systems Corporation and its adopting subsidiaries which
participate in the Plan. The following description of the Plan reflects all Plan
amendments as of December 31, 1998 and is provided for general purposes only.
Participants should refer to the Plan document, as amended, for more complete
information.
(a) General
The Plan is a defined contribution plan covering eligible employees of the
Company. An employee becomes eligible to participate in the Plan upon the
commencement of service with the Employer.
During 1998, net assets totaling $68,334,657 were transferred into the
Plan. Significant transfers related to the transition of employees during 1998
were BellSouth, Chevron, Intergraph, Digital, Bethlehem Steel and Motorola with
$24,187,909, $18,783,061, $5,623,584, $4,305,514, $2,635,782 and $2,221,033 of
net assets transferred, respectively. For financial statement purposes, the fair
values of the assets transferred from or to the plans are reflected as of the
dates of transfer.
The Vanguard Fiduciary Trust Company (Vanguard) is the asset custodian,
record-keeper and trustee for the Plan. The Vanguard Group of Investment
Companies manages 13 of the 15 investment funds of the Plan. The Plan's
Investment Committee has responsibility for managing the Income Fund and EDS
Stock Fund and for selecting the investment funds available for employee
directed investments.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA), as amended and the Internal Revenue Code (IRC), as
amended. The Plan was created to provide additional incentive and retirement
security for eligible employees. The Plan allows for fifteen active investment
funds (ten in 1997), fourteen of which are available for participant investment
(nine in 1997):
Income Fund, which is a fixed income fund;
EDS Stock Fund, which consists of EDS common stock;
Vanguard Money Market Reserves-Prime Portfolio (Vanguard Money Market),
a short-term investment fixed income fund;
Vanguard Federal Money Market Fund (new in 1998), a short-term
investment fixed income fund;
Vanguard Wellington Fund (Vanguard Wellington), a stock and bond mutual
fund;
Vanguard Growth and Income Portfolio (Vanguard Growth and Income), for-
merly the Vanguard Quantitative Portfolios, a growth and income stock
mutual fund;
Vanguard U.S. Growth Portfolio (Vanguard U.S.), a growth stock mutual
fund;
Vanguard International Growth Portfolio (Vanguard International), a
growth stock mutual fund investing in foreign companies;
Vanguard Explorer Fund, an aggressive growth stock fund;
Vanguard Bond Index Fund, which is an intermediate-term bond fund;
7
<PAGE>
EDS 401(k) PLAN
Notes to Financial Statements
Vanguard 500 Index Fund (new in 1998), an index fund based on the
Standard & Poor's 500 Composite Stock Price Index;
Vanguard LifeStrategy Conservative Growth Fund (new in 1998), a
conservative mix of stocks, bonds and cash reserves;
Vanguard LifeStrategy Moderate Growth Fund (new in 1998), a moderate
mix of stocks, bonds and cash reserves; and
Vanguard LifeStrategy Growth Fund (new in 1998), a more aggressive mix
of stocks, bonds and cash reserves.
All of the administrative expenses of the Plan are paid by the Company with
the exception of loan application fees. All investment expenses are paid from
the investment funds.
In order to preserve any protected benefits, rights or features under any
plans which are merged into the EDS 401(k) Plan, the Plan was amended, effective
December 30, 1988, to specifically prohibit the reduction or elimination of any
benefit, right or feature protected under IRC Section 411 (d) (6).
(b) Contributions
Each year, contributions to the Plan are made on a pre-tax basis.
Participants may elect to defer between one percent and twenty percent of their
total compensation subject to: (1) a maximum annual contribution of $10,000 in
1998 and 1997, (2) a maximum annual eligible compensation of $160,000 per
participant beginning January 1, 1994, and (3) EDS limitations imposed to ensure
a fair mix of participation among employees. The total annual additions to a
participant's individual account may not exceed the lesser of $30,000 or 25
percent of the participant's total compensation as defined in the Plan. Annual
additions for purposes of this test are defined as contributions less any
rollover contributions made during the year. If the participant is enrolled in
other Company employee benefit plans sponsored by the Company, the annual
additions are subject to other limitation tests.
Effective January 1, 1991, a participant may elect, up to four times
annually, to change his/her designated percentage of compensation deferred.
Effective July 1, 1998, the Company matches 25% of employee contributions
up to 6% of an employee's salary. The matching contributions will be made in EDS
stock which is restricted from trade for two-years, based on the trade date.
(c) Withdrawals
Withdrawals may be made from the Plan in certain circumstances. Hardship
withdrawals may be made once a participant has exhausted all other available
financial resources, including Plan loans, and upon the approval of the Plan
Administrator. A participant may then withdraw an amount equal to but not in
excess of the expense of the hardship in accordance with requirements of the
IRC. In order to obtain such approval from the Plan Administrator, a participant
must demonstrate immediate and heavy financial need and meet other plan
requirements for withdrawal. In addition, participants age 59 1/2 or above may
obtain an in-service withdrawal without being subject to an additional 10% tax
penalty. The amount of a participant's withdrawals may not be repaid to the
Plan.
8
<PAGE>
EDS 401(k) PLAN
Notes to Financial Statements
(d) Participant's Individual Account
The Participant's Individual Account is credited with the salary deferral,
rollover, and matching contributions and the amounts of participant earnings
dictated by the number of units held in each investment fund. The benefit to
which a participant is entitled is limited to the amount of the participant's
individual account.
The participant determines the percentage of the investment contributed to
one or more of the investment funds. The percentages may be in any whole
percentage increment.
(e) Vesting
Participants are always 100% vested in their salary deferral and rollover
contributions and in the earnings received thereon. Matching contributions vest
40% at two years of credited service and in 20% increments each year of service
thereafter.
(f) Payments of Benefits
On termination of service, age 59 1/2, death, or retirement, a participant
may elect to receive a distribution for all or part of the value of his/her
account, EDS common stock (for any amount so invested), or in the form of a
joint and survivor 50% non-transferable annuity contract purchased on his/her
behalf from an insurance company. With spousal consent, a participant may elect
a lump sum distribution or periodic payments in monthly, quarterly, or
semi-annual installments. Distributions, except annuity payments, may be rolled
into another qualified plan or to an individual retirement account.
(g) Loans
Upon written application of a participant, the Plan Administrator may
direct the trustee to make a loan to the participant. The amount of any such
loan is limited to fifty percent (50%) of the amount of accumulated
contributions to which the participant would be entitled if employment was
terminated as of the date the loan is made. No loan may be granted for less than
$500. The maximum amount of loans available to a participant is $50,000 reduced
by the highest outstanding loan balances from the Plan during the preceding year
minus the outstanding loan balances on the date a loan is made. Plan loans and
interest must be repaid within five years or upon termination of employment,
whichever is earlier. If the outstanding loan is not repaid in full prior to the
end of the quarter during which the participant separates, the amount
outstanding will be reported to the Internal Revenue Service as income for that
calendar year. Effective July 1, 1991, the Plan was amended to allow no more
than four outstanding loans at any one time. No more than two Plan loans may be
granted in any plan year. At December 31, 1998 and 1997, the interest rate on
new loans was seven and three-fourths percent (7.75%) and eight and one-half
percent (8.5%), respectively.
2. Summary of Significant Accounting Policies
The Plan is accounted for under the accrual method of accounting.
9
<PAGE>
EDS 401(k) PLAN
Notes to Financial Statements
(a) Investments
The Plan's investments are stated at fair value based on quoted market
prices except for its investment contracts with insurance companies which are
stated at contract value, which approximates fair value. The average cost method
is used to calculate gains and losses on the sale of investments. Purchases and
sales of investments are recorded on a trade date basis. Participant loans are
presented in the accompanying financial statements at unpaid principal balance
which approximates fair value.
(b) Investment Income
Income from investments is recorded as it is earned. Dividends are recorded
on the ex-dividend date.
(c) Benefits
Benefits are recorded when paid.
(d) Use of Estimates
The preparation of the 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 financial
statements and the reported amounts of additions and deductions during the
reporting period. Because of the use of estimates inherent in the financial
reporting process, actual results could differ from those estimates.
(e) Contributions Receivable
At December 31, 1997, contributions receivable were allocated as follows:
$275,120 - Income Fund; $266,131 - EDS Stock Fund; $426,710 - Vanguard
Wellington Fund; $322,883 - Vanguard U.S. Growth Portfolio Fund; $185,030
Vanguard International Growth Portfolio Fund; $405,931 - Vanguard Growth and
Income Portfolio; $119,322 - Vanguard Explorer; $92,448 - Vanguard Money Market
Reserves-Prime Portfolio Fund; and $37,427 - Vanguard Total Bond Market
Portfolio Fund.
3. Plan Termination
While it has not expressed any intention to do so, the Company has the
right to terminate the Plan at any time by majority vote of the Company's Board
of Directors subject to the provisions of ERISA.
4. Investments
The trustee of the Plan holds the investments of the Plan in trust on
behalf of the participants and beneficiaries. Consistent with the fiduciary
standards of ERISA, safeguards are adhered to in protecting the interests of
Plan participants and their beneficiaries.
10
<PAGE>
EDS 401(k) PLAN
Notes to Financial Statements
The Income fund also invests in structured investment contracts. Under
these arrangements, the Plan enters into a wrap agreement with a financial
institution at a stated yield on fixed income securities purchased by the Plan.
The wrap agreements are stated at fair value based on fluctuations in the fair
value of the underlying fixed income securities.
The following table presents the fair value/contract value of the Plan's
investments at December 31, 1998 and 1997. Investments that represent five
percent (5.00%) or more of the Plan's net assets are separately identified.
<TABLE>
<CAPTION>
1998 1997
------------------------------------- -----------------------------------
Number of Fair value/ Number of Fair value/
shares or contract shares or contract
units value units value
<S> <C> <C> <C> <C>
--------------- ----------------- ------------ ------------------
Income Fund* -- $ 217,053,149 -- $ 203,595,182
EDS Stock Fund (cost of
$269,432,690 in 1998 and
$266,859,817 in 1997)* 7,694,499 386,648,554 7,761,537 341,022,519
Vanguard/Wellington (cost of
$383,681,277 in 1998 and
$310,817,582 in 1997)* 15,537,181 456,016,252 13,540,616 398,771,147
Vanguard U.S. Growth (cost of
$261,974,804 in 1998 and
$159,377,566 in 1997)* 9,853,601 369,411,518 7,190,690 206,372,797
Vanguard International Growth (cost of
$103,976,006 in 1998 and
$94,026,517 in 1997)* 6,601,223 123,904,947 6,241,600 102,299,832
Vanguard Growth and Income (cost of
$229,820,448 in 1998 and
$149,718,682 in 1997)* 9,407,416 289,372,117 6,827,365 178,808,681
Vanguard Explorer Fund (cost of
$44,803,868 in 1998 and
$35,338,693 in 1997) 824,629 46,764,728 638,580 35,313,463
Vanguard Bond Index Fund (cost of
$24,237,246 in 1998 and
$9,238,431 in 1997) 2,391,965 24,565,476 932,322 9,407,134
Vanguard Money Market Reserves 102,468,700 102,468,700 67,965,231 67,965,231
Vanguard 500 Index Fund, at fair value
(cost of $191,301 in 1998) 1,680 191,467 -- --
Vanguard Federal Money Market Fund
(cost of $14,087 in 1998) 14,087 14,087 -- --
Vanguard LifeStrategy Conservative
Growth Fund (cost of $43 in 1998) 3 43 -- --
Vanguard LifeStrategy Growth Fund
(cost of $78,649 in 1998) 4,188 78,684 -- --
Vanguard LifeStrategy Moderate Growth
Fund (cost of $114,824 in 1998) 6,811 114,834 -- --
Loan Fund (15,848 and 12,225 loans in
1998 and 1997, respectively, loans
outstanding from $4 to $49,324 and
$29 to $47,439 in 1998 and 1997,
respectively, with interest rates
from 7.75% to 8.5% and 6.0% to 11.75%
in 1998 and 1997, respectively) -- 55,993,657 -- 54,628,090
------------- -------------
$2,072,598,213 $1,598,184,076
============= =============
* Represents 5% or more of Plan assets.
</TABLE>
11
<PAGE>
EDS 401(k) PLAN
Notes to Financial Statements
To hedge against adverse foreign currency movements, the Vanguard
International Growth Portfolio may enter into contracts for the purchase or sale
of a specific foreign currency at a fixed price at a future date. The forward
foreign currency rate of the underlying currency and any gains and losses are
recorded for financial statement purposes at fair value and as unrealized until
the contract settlement date, at which point they are realized. To hedge against
anticipated future changes in interest or security prices, the Vanguard Growth
and Income Portfolio may utilize futures contracts to a limited extent. The Fund
receives from or pays to brokers amounts equal to the daily fluctuations in the
values of the contracts. These receipts and payments are recorded as unrealized
gains and losses until the contract settlement dates, at which point they are
realized. The underlying risk to participants is proportional to each
participant's number of shares relative to the total number of shares issued by
each mutual fund.
5. Related Party Transactions
As stated previously in note 1, the EDS Stock Fund consists of EDS common
stock.
6. Income Tax Status
The Plan obtained its latest determination letter on July 18, 1995, in
which the Internal Revenue Service stated that the Plan, as then designed, was
in compliance with the applicable requirements of the Internal Revenue Code (the
"Code"). The Plan has been amended since receiving the determination letter to
allow for investments in the EDS Stock Fund, the employer match, changes to
comply with legislative requirements and other amendments. The Plan
Administrator believes that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Code.
12
<PAGE>
EDS 401(k) PLAN
Notes to Financial Statements
7. Allocation of Changes in Plan Assets and Liabilities to Investment Programs
The following table presents the allocation of changes in net assets
available for benefits to investment programs for the year ended December 31,
1998:
<TABLE>
<CAPTION>
Vanguard
Vanguard U.S. International
Vanguard Growth Portfolio Growth
Income Fund EDS Stock Fund Wellington Fund Fund Portfolio Fund
----------- -------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributed to
investment income:
Net appreciation
(depreciation) in fair
value of investments $ -- $ 57,654,544 $ (1,478,076) $ 71,468,102 $ 14,991,363
Interest 12,571,839 -- -- -- --
Dividends -- 4,463,150 50,090,062 22,724,820 2,445,180
----------- ----------- ----------- ----------- -----------
Total 12,571,839 62,117,694 48,611,986 94,192,922 17,436,543
Contributions 21,593,929 44,660,320 47,492,331 49,002,221 20,175,676
Net assets transferred
from other plans 435 34,651 112,071 131,508 22,409
----------- ----------- ----------- ----------- -----------
Total additions 34,166,203 106,812,665 96,216,388 143,326,651 37,634,628
Deductions from net
assets attributed to
withdrawals (16,303,507) (20,684,225) (32,267,620) (22,921,894) (9,807,579)
Interfund transfers (4,679,849) (40,768,536) (7,130,373) 42,310,081 (6,406,964)
----------- ----------- ----------- ----------- -----------
Net increase 13,182,847 45,359,904 56,818,395 162,714,838 21,420,085
Net assets available for
benefits at:
Beginning of year 203,870,302 341,288,650 399,197,857 206,696,680 102,484,862
----------- ----------- ----------- ----------- -----------
End of year $217,053,149 $386,648,554 $456,016,252 $369,411,518 $123,904,947
=========== =========== =========== =========== ===========
</TABLE>
13
<PAGE>
EDS 401(k) PLAN
Notes to Financial Statements
7. Allocation of Changes in Plan Assets and Liabilities to Investment Programs
(continued)
The following table presents the allocation of changes in net assets
available for benefits to investment programs for the year ended December 31,
1998:
<TABLE>
<CAPTION>
Vanguard
Vanguard Growth Vanguard Vanguard Money Federal
and Income Vanguard Bond Market Reserves- Vanguard Money
Portfolio Explorer Index Prime Portfolio 500 Index Market
Fund Fund Fund Fund Fund Fund
-------------- ------------ ---------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to
investment income:
Net appreciation
(depreciation)
in fair value
of investments $ 35,911,761 $ 1,588,708 $ 218,379 $ -- $ 167 $ --
Interest -- -- -- 4,995,690 -- 64
Dividends 13,740,094 399,992 1,065,001 -- 19 --
----------- ---------- ---------- ----------- ------- ------
Total 49,651,855 1,988,700 1,283,380 4,995,690 186 64
Contributions 42,173,629 12,577,647 3,991,419 9,012,535 7,088 --
Net assets transferred
from other plans 70,682 16,643 24 64,692,808 -- --
----------- ---------- ---------- ----------- ------- ------
Total additions 91,896,166 14,582,990 5,274,823 78,701,033 7,274 64
Deductions from net
assets attributed to
withdrawals (18,444,477) (2,995,256) (1,144,514) (13,137,235) -- --
Interfund transfers 36,705,816 (255,791) 10,990,606 (31,152,777) 184,193 14,023
----------- ---------- ---------- ----------- ------- ------
Net increase 110,157,505 11,331,943 15,120,915 34,411,021 191,467 14,087
Net assets available for
benefits at:
Beginning of year 179,214,612 35,432,785 9,444,561 68,057,679 -- --
----------- ---------- ---------- ----------- ------- ------
End of year $289,372,117 $46,764,728 $24,565,476 $102,468,700 $191,467 $14,087
=========== ========== ========== =========== ======= ======
</TABLE>
14
<PAGE>
EDS 401(k) PLAN
Notes to Financial Statements
7. Allocation of Changes in Plan Assets and Liabilities to Investment Programs
(continued)
The following table presents the allocation of changes in net assets
available for benefits to investment programs for the year ended December 31,
1998:
<TABLE>
<CAPTION>
Vanguard LifeStrategy Vanguard Vanguard LifeStrategy
Conservative Growth LifeStrategy Moderate Growth
Fund Growth Fund Fund Loan Fund Total
--------------------- ------------ --------------------- --------- -----
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributed to
investment income:
Net appreciation
(depreciation) in fair
value of investments $ -- $ 35 $ 10 $ -- $ 180,354,993
Interest -- -- -- 4,471,519 22,039,112
Dividends -- 30 23 -- 94,928,371
--- ------ ------- ---------- -------------
Total -- 65 33 4,471,519 297,322,476
Contributions 43 2,443 1,406 (32,159,644) 218,531,043
Net assets transferred
from other plans -- -- -- 3,253,426 68,334,657
--- ------ ------- ---------- -------------
Total additions 43 2,508 1,439 (24,434,699) 584,188,176
Deductions from net
assets attributed to
withdrawals -- -- -- 25,800,266 (111,906,041)
Interfund transfers -- 76,176 113,395 -- --
--- ------ ------- ---------- -------------
Net increase 43 78,684 114,834 1,365,567 472,282,135
Net assets available
or benefits at:
Beginning of year -- -- -- 54,628,090 1,600,316,078
--- ------ ------- ---------- -------------
End of year $ 43 $78,684 $114,834 $55,993,657 $2,072,598,213
=== ======= ======= ========== =============
</TABLE>
15
<PAGE>
EDS 401(k) PLAN
Notes to Financial Statements
7. Allocation of Changes in Plan Assets and Liabilities to Investment Programs
(continued)
The following table presents the allocation of changes in net assets
available for benefits to investment programs for the year ended December 31,
1997:
<TABLE>
<CAPTION>
Vanguard
Vanguard U.S. International
Vanguard Growth Portfolio Growth Portfolio
Income Fund EDS Stock Fund Wellington Fund Fund Fund
----------- -------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Additions to net assets
attributed to
investment income:
Net appreciation
(depreciation) in fair
value of investments $ -- $ 9,651,380 $ 40,295,468 $ 30,219,406 $ (1,352,350)
Interest 12,261,069 -- -- -- --
Dividends -- 4,774,474 33,574,035 7,973,775 4,362,207
----------- ----------- ----------- ----------- -----------
Total 12,261,069 14,425,854 73,869,503 38,193,181 3,009,857
Contributions 16,930,974 29,364,685 34,634,867 30,246,631 17,109,219
Net assets transferred
from other plans 45,879 4,287 22,715 25,652 13,383
----------- ----------- ----------- ----------- -----------
Total additions 29,237,922 43,794,826 108,527,085 68,465,464 20,132,459
Deductions from net
assets attributed to
withdrawals (13,820,354) (14,953,765) (21,165,110) (12,655,272) (7,323,968)
Interfund transfers (13,221,339) (43,989,420) (623,695) 16,648,396 1,321,060
----------- ----------- ----------- ----------- -----------
Net increase (decrease) 2,196,229 (15,148,359) 86,738,280 72,458,588 14,129,551
Net assets available for
benefits at:
Beginning of year 201,674,073 356,437,009 312,459,577 134,238,092 88,355,311
----------- ----------- ----------- ----------- -----------
End of year $203,870,302 $341,288,650 $399,197,857 $206,696,680 $102,484,862
=========== =========== =========== =========== ===========
</TABLE>
16
<PAGE>
EDS 401(k) PLAN
Notes to Financial Statements
7. Allocation of Changes in Plan Assets and Liabilities to Investment Programs
(continued)
The following table presents the allocation of changes in net assets
available for benefits to investment programs for the year ended December 31,
1997:
<TABLE>
<CAPTION>
Vanguard Vanguard
Growth and Vanguard Vanguard Money Market
Income Explorer Bond Reserves-Prime
Portfolio Fund Fund Index Fund Portfolio Fund Loan Fund Total
-------------- ------------- ---------- --------------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to
investment income:
Net appreciation
(depreciation) in
fair value of
investments $ 18,549,721 $ 12,996 $ 178,304 $ -- $ -- $ 97,554,925
Interest -- -- -- 3,272,335 4,408,554 19,941,958
Dividends 20,691,384 3,437,770 392,015 -- -- 75,205,660
----------- ---------- --------- ---------- ---------- -------------
Total 39,241,105 3,450,766 570,319 3,272,335 4,408,554 192,702,543
Contributions 21,142,593 7,646,001 1,650,241 5,709,911 111,390 164,546,512
Net assets transferred
from other plans 4,053 -- -- 16,520,129 1,142,675 17,778,773
----------- ---------- --------- ---------- ---------- -------------
Total additions 60,387,751 11,096,767 2,220,560 25,502,375 5,662,619 375,027,828
Deductions from net
assets attributed to
withdrawals (9,245,876) (1,973,085) (500,458) (10,561,617) (3,725,198) (95,924,703)
Interfund transfers 31,112,797 5,238,150 3,553,369 1,331,593 (1,370,911) --
----------- ---------- --------- ---------- ---------- -------------
Net increase (decrease) 82,254,672 14,361,832 5,273,471 16,272,351 566,510 279,103,125
Net assets available
for benefits at:
Beginning of year 96,959,940 21,070,953 4,171,090 51,785,328 54,061,580 1,321,212,953
----------- ---------- --------- ---------- ---------- -------------
End of year $179,214,612 $35,432,785 $9,444,561 $68,057,679 $54,628,090 $1,600,316,078
=========== ========== ========= ========== =========== =============
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
EDS 401(k) PLAN
Line 27a-Schedule of Assets Held for Investment Purposes
December 31, 1998
Description of Investment
-------------------------
Rate of Number of Current
Identity of Party Maturity Date Interest Shares or Units Cost Value
----------------- ------------- -------- --------------- ---- -------
<S> <C> <C> <C> <C> <C>
Income Fund:
Synthetic investment contracts:
AIG Financial Products #129863 -- 6.57% -- $ 17,440,842 $ 18,018,070
AIG Financial Products #210411 9/30/01 5.14% -- 9,996,912 9,964,732
Cassie des Depots et Consignations
#338-01 7/31/02 6.23% -- 7,395,511 7,922,625
#338-02 12/31/02 5.96% -- 7,920,341 8,584,059
#1338-01 3/31/00 6.12% -- 34,390,727 30,074,400
#1338-02 6/30/00 7.39% -- 10,756,460 11,009,104
Rabobank
#089501 6.25% -- 18,185,398 18,721,468
#069701 12/31/00 6.42% -- 5,501,957 5,621,354
State Street Bank -- 6.12% -- 11,825,549 12,094,311
Union Bank of Switzerland
#2081 -- 6.66% -- 28,710,905 30,254,910
#2107 -- 6.68% -- 18,884,282 19,532,786
West Landesbank -- 6.31% -- 16,790,237 17,271,007
Wrap agreements -- Various -- 170,573 (1,099,132)
Other investment contracts:
John Hancock Mutual Life Ins. 6/30/99 6.98% -- 10,853,061 10,853,061
Vanguard Money Market
Reserves - Prime Portfolio (no
guaranteed rate) (2) -- -- -- 18,230,394 18,230,394
----------- -----------
Total Income Fund $217,053,149 $217,053,149
(1) The interest rate will be adjusted quarterly.
(2) The interest rate was 4.94% at December 31, 1998
See accompanying independent auditors' report. continued
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
EDS 401(k) PLAN
Line 27a-Schedule of Assets Held for Investment Purposes
December 31, 1998
Description of Investment
-------------------------
Rate of Number of Current
Identity of Party Maturity Date Interest Shares or Units Cost Value
----------------- ------------- -------- --------------- ---- -------
<S> <C> <C> <C> <C> <C>
EDS Stock Fund* -- -- 7,694,499 269,432,690 386,648,554
Vanguard/Wellington Fund* -- -- 15,537,181 383,681,277 456,016,252
Vanguard U.S. Growth Portfolio* -- -- 9,853,601 261,974,804 369,411,518
Vanguard International Growth
Portfolio* -- -- 6,601,223 103,976,006 123,904,947
Vanguard Growth and Income
Portfolio* -- -- 9,407,416 229,820,448 289,372,117
Vanguard Explorer Fund* -- -- 824,629 44,803,868 46,764,728
Vanguard Bond Index Fund* -- -- 2,391,965 24,237,247 24,565,476
Vanguard Money Market Reserves - -- -- 102,468,700 102,468,700 102,468,700
Prime Portfolio*
Vanguard 500 Index Fund* -- -- 1,680 191,301 191,467
Vanguard Federal Money Market Fund* -- -- 14,087 14,087 14,087
Vanguard LifeStrategy Conservative -- -- 3 43 43
Growth Fund*
Vanguard LifeStrategy Growth Fund* -- -- 4,188 78,649 78,684
Vanguard LifeStrategy Moderate -- -- 6,811 114,824 114,834
Growth Fund*
Loan Fund* -- 7.75% to 8.5% -- 55,993,657 55,993,657
------------- -------------
Total Assets Held for Investment Purposes $1,693,840,750 $2,072,598,213
============= =============
* Parties In Interest
See accompanying independent auditors' report.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
EDS 401(k) PLAN
Line 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1998
Identity of Party Number of Purchase
Involved Description of Asset Transactions Price Selling Price
------------------ -------------------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
EDS Company Stock Fund:
EDS Stock Fund
(EDS Common Stock) 252 $141,827,979 $ --
EDS Stock Fund 252 -- 153,724,212
(EDS Common Stock)
Various Fixed Principal Investment Fund:
Income Fund 256 68,017,279 --
Income Fund 252 -- 54,426,271
Mutual Funds:
Vanguard* Vanguard/Wellington Fund
(Stock and Bond Fund) 252 135,797,233 --
Vanguard/Wellington Fund
(Stock and Bond Fund) 252 -- 76,798,826
Vanguard* Vanguard Money Market Reserves-
Prime Portfolio
(Money Market Fund) 256 184,896,968 --
Vanguard Money Market Reserves-
Prime Portfolio
(Money Market Fund) 252 -- 151,159,981
Vanguard* Vanguard U.S. Growth Portfolio
(Stock Fund) 252 167,089,349 --
Vanguard U.S. Growth Portfolio
(Stock Fund) 252 -- 75,414,903
Vanguard* Vanguard International Growth
Portfolio (Stock Fund) 252 44,741,328 --
Vanguard International Growth
Portfolio (Stock Fund) 252 -- 38,086,546
Vanguard* Vanguard Growth and Income
Portfolio (Stock Fund) 252 132,268,267 --
Vanguard Growth and Income
Portfolio (Stock Fund) 252 -- 57,557,049
*Parties in interest
See accompanying independent auditors' report. continued
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
EDS 401(k) PLAN
Line 27d - Schedule of Reportable Transactions
For the Year Ended December 31, 1998
Current Value
Identity of of Asset on Net Gain
Party Involved Description of Asset Cost of Asset Transaction Date or (Loss)
-------------- -------------------- ------------- ---------------- ---------
<S> <C> <C> <C> <C>
EDS* Company Stock Fund:
EDS Stock Fund
(EDS Common Stock) $141,827,979 $141,827,979 $ --
EDS Stock Fund
(EDS Common Stock) 153,724,212 139,248,478 14,475,736
Various Fixed Principal Investment Fund:
Income Fund 68,017,279 68,017,279 --
Income Fund 54,426,271 54,426,271 --
Mutual Funds:
Vanguard* Vanguard/Wellington Fund
(Stock and Bond Fund) 135,797,233 135,797,233 --
Vanguard/Wellington Fund
(Stock and Bond Fund) 76,798,826 62,955,159 13,843,667
Vanguard* Vanguard Money Market Reserves -
Prime Portfolio
(Money Market Fund) 184,896,968 184,896,968 --
Vanguard Money Market Reserves -
Prime Portfolio
(Money Market Fund) 151,159,981 151,159,981 --
Vanguard* Vanguard U.S. Growth Portfolio
(Stock Fund) 167,089,349 167,089,349 --
Vanguard U.S. Growth Portfolio
(Stock Fund) 64,595,993 75,414,903 10,818,920
Vanguard* Vanguard International Growth
Portfolio (Stock Fund) 44,741,328 44,741,328 --
Vanguard International Growth
Portfolio (Stock Fund) 34,783,774 38,086,546 3,302,772
Vanguard* Vanguard Growth and Income
Portfolio (Stock Fund) 132,268,267 132,268,267 --
Vanguard Growth and Income
Portfolio (Stock Fund) 52,180,780 57,557,049 5,376,269
*Parties in interest
See accompanying independent auditors' report.
</TABLE>
21
Exhibit 23
----------
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Electronic Data Systems Corporation:
We consent to the incorporation by reference in the registration statements
(Nos. 33-64681 and 33-36443) on Form S-8 of Electronic Data Systems Corporation
of our report dated June 4, 1999 related to the statements of net assets
available for plan benefits of the EDS 401(k) Plan as of December 31, 1998 and
1997, the related statements of changes in net assets available for plan
benefits for the years then ended and the related supplemental schedules as of
and for the year ended December 31, 1998, which report appears in the December
31, 1998 annual report on Form 11-K of the EDS 401(k) Plan.
/s/ KPMG LLP
Dallas, Texas
June 29, 1999
22
