<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus supplement is not complete and +
+may be changed. We may not sell these securities until a final prospectus +
+supplement is delivered. This preliminary prospectus supplement and the +
+accompanying prospectus are not an offer to sell these securities, and we are +
+not soliciting an offer to buy these securities in any state where the offer +
+or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Filed pursuant to Rule 424(b)(5)
SEC File No. 333-10145
Subject to Completion
Preliminary Prospectus Supplement dated September 29, 1999
(To Prospectus dated August 14, 1996)
PROSPECTUS SUPPLEMENT
$1,500,000,000 [EDS LOGO APPEARS HERE]
Electronic Data Systems Corporation
$ % Notes due 2004
$ % Notes due 2009
$ % Notes due 2029
------------
The 2004 Notes bear interest at the rate of % per year, the 2009 Notes
bear interest at the rate of % per year, and the 2029 Notes bear interest at
the rate of % per year. Interest on the Notes is payable on and
of each year beginning , 2000. The 2004 Notes will mature on
, 2004, the 2009 Notes will mature on , 2009, and the 2029 Notes will
mature on , 2029. We may redeem some or all of the Notes at any time. The
redemption prices of the Notes are described under the heading "Description of
the Notes--Optional Redemption" beginning on page S-14 of this Prospectus
Supplement. The Notes are unsecured and rank equally with all of our other
unsecured senior indebtedness. We will issue the Notes in minimum denominations
of $1,000 increased in integral multiples of $1,000.
We have applied to list the Notes on the Luxembourg Stock Exchange.
<TABLE>
<CAPTION>
Per Per Per
2004 Note Total 2009 Note Total 2029 Note Total
--------- ----- --------- ----- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Public Offering Price......... % $ % $ % $
Underwriting Discount......... % $ % $ % $
Proceeds, before expenses, to
EDS.......................... % $ % $ % $
</TABLE>
Neither the United States Securities and Exchange Commission, state
securities regulators, the Luxembourg Stock Exchange nor any foreign
governmental agencies have approved or disapproved of these securities or
determined if this Prospectus Supplement or the accompanying Prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
We expect that the Notes will be ready for delivery to investors in
registered book-entry form only through The Depository Trust Company, the
Euroclear System or Cedelbank S.A. on or about , 1999.
------------
Joint Book-Running Managers
Merrill Lynch & Co. Salomon Smith Barney
------------
Banc of America Securities LLC
Chase Securities Inc.
Credit Suisse First Boston
Goldman, Sachs & Co.
J.P. Morgan & Co.
Morgan Stanley Dean Witter
------------
The date of this Prospectus Supplement is , 1999
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<S> <C>
Forward-Looking Statements................................................. S-2
Where You Can Find More Information........................................ S-3
Information We Incorporate by Reference.................................... S-4
The Company................................................................ S-6
Directors and Executive Officers........................................... S-11
Ratio of Earnings to Fixed Charges......................................... S-12
Use of Proceeds............................................................ S-12
Capitalization............................................................. S-13
Summary Financial Information.............................................. S-14
Description of the Notes................................................... S-16
Material United States Federal Income Tax Considerations................... S-22
Underwriting............................................................... S-26
Validity of the Securities................................................. S-28
Experts.................................................................... S-28
General Information........................................................ S-28
</TABLE>
Prospectus
<TABLE>
<S> <C>
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 2
The Company................................................................. 3
Use of Proceeds............................................................. 3
Ratio of Earnings to Fixed Charges.......................................... 3
Description of Debt Securities.............................................. 4
Plan of Distribution........................................................ 16
Legal Matters............................................................... 16
Experts..................................................................... 16
</TABLE>
----------------
FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and the accompanying Prospectus contain or
incorporate by reference statements that do not directly or exclusively relate
to historical facts. These types of statements are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. You
can typically identify forward-looking statements by the use of forward-looking
words, such as "may," "will," "could," "project," "believe," "anticipate,"
"expect," "estimate," "continue," "potential," "plan" and "forecast." Those
statements represent EDS' intentions, plans, expectations, assumptions and
beliefs about future events and are subject to risks, uncertainties and other
factors. Many of those factors are outside of EDS' control and could cause
actual results to differ materially from the results expressed or implied by
the forward-looking statements. Those factors include:
. competition in our lines of business and the effect of competition
on pricing, revenues, and margins;
. the financial performance of current and future client contracts;
. with respect to client contracts accounted for under the
percentage-of-completion method of accounting, the performance of
such contracts in accordance with our cost estimates;
S-2
<PAGE>
. our ability to improve productivity and achieve synergies from
acquired businesses;
. the degree to which third parties continue to outsource
information technology and business processes;
. the cost of attracting and retaining highly skilled personnel;
. with respect to Year 2000 exposure, the successful remediation of
our internal systems and the interpretation of information
technology contracts with clients;
. the successful implementation of the recently announced
realignment of our business organization;
. changes in interest rates and foreign currency exchange rates; and
. the effect of accounting policies issued periodically by
accounting standard-setting bodies.
In light of these risks, uncertainties and assumptions, the forward-
looking events referred to in this Prospectus Supplement and the accompanying
Prospectus might not occur. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
----------------
You should rely only on the information contained or incorporated by
reference in this Prospectus Supplement and the accompanying Prospectus. We
have not, and the Underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
Underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information in this Prospectus Supplement and the accompanying Prospectus
is accurate as of the respective dates on the front of those documents only.
Our business, financial condition, results of operations and prospects may have
changed since those dates.
The distribution of this Prospectus Supplement and the accompanying
Prospectus and the offering of the Notes in certain jurisdictions may be
restricted by law. This Prospectus Supplement and the accompanying Prospectus
do not constitute an offer, or an invitation on our behalf or on behalf of the
Underwriters or any of them, to subscribe to or purchase any of the Notes, and
may not be used for or in connection with any offer or solicitation by anyone,
in any jurisdiction in which such an offer or solicitation is not authorized or
to any person to whom it is unlawful to make such an offer or solicitation. See
"Underwriting."
This Prospectus Supplement and the accompanying Prospectus include
particulars given in compliance with the rules governing the listing of
securities on the Luxembourg Stock Exchange for the purpose of giving
information about us. We accept full responsibility for the accuracy of the
information contained in this Prospectus Supplement and the accompanying
Prospectus and confirm, having made all reasonable inquiries, that, to the best
of our knowledge and belief, there are no other facts the omission of which
would make any statement herein misleading in any material respect.
We cannot guarantee that listing will be obtained on the Luxembourg Stock
Exchange. Inquiries regarding our listing status on the Luxembourg Stock
Exchange should be directed to our Luxembourg listing agent, Paribas
Luxembourg, 10A boulevard Royal, 2093 Luxembourg.
In this Prospectus Supplement "we," "our," "us," and "EDS" refer to
Electronic Data Systems Corporation. All references in this Prospectus
Supplement and the accompanying Prospectus to "$" and "dollars" are to the
currency of the United States of America. If we use a capitalized term in this
Prospectus Supplement and do not define the term in this document, it is
defined in the Prospectus.
S-3
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Securities and Exchange Commission. Our SEC filings are also available over
the Internet at the SEC's web site at www.sec.gov. You may also read and copy
any document we file with the SEC at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for more information on the public reference rooms and
their copy charges. You may also inspect our SEC reports and other information
at the New York Stock Exchange, 20 Broad Street, New York, New York 10005, or
from our web site at www.eds.com.
This Prospectus Supplement and the accompanying Prospectus are part of a
registration statement on Form S-3 we have filed with the SEC relating to the
securities we may offer. As permitted by SEC rules, this Prospectus Supplement
does not contain all of the information we have included in the registration
statement and the accompanying exhibits and schedules we file with the SEC.
For further information on EDS and the Notes, you should refer to our
registration statement and its exhibits.
INFORMATION WE INCORPORATE BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means:
. incorporated documents are considered part of the Prospectus
Supplement,
. we can disclose important information to you by referring you to
those documents, and
. information that we file with the SEC will automatically update
and supersede this Prospectus Supplement.
We incorporate by reference the documents listed below which were filed
with the SEC under the Securities Exchange Act of 1934;
. Annual Report on Form 10-K for the year ended December 31, 1998,
. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999, and June 30, 1999, and
. Current Reports on Form 8-K dated April 29, 1999, May 6, 1999, and
September 7, 1999.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this Prospectus Supplement but before
the end of the Notes offering:
. Reports filed under Sections 13(a) and (c) of the Exchange Act,
. Definitive proxy or information statements filed under Section 14
of the Exchange Act in connection with any subsequent stockholders
meeting, and
. Any reports filed under Section 15(d) of the Exchange Act.
S-4
<PAGE>
You may request a copy of any filings referred to above (other than an
exhibit to those filings unless we have specifically incorporated that exhibit
by reference into the filing), at no cost, by telephoning or writing us at the
following address:
EDS Investor Relations--Mailstop H1-2D-05
5400 Legacy Drive
Plano, Texas 75024-3105
Telephone number: (972) 605-8933
In addition, these documents are also available free of charge at the
offices of Paribas Luxembourg, 10A boulevard Royal, 2093 Luxembourg.
S-5
<PAGE>
THE COMPANY
EDS, a leader in the global information technology services industry for
more than 35 years, delivers high-value consulting, electronic business
solutions, business process management, and systems and technology expertise to
thousands of business and government clients around the world.
In September 1999, we announced the realignment of our organization on a
global basis along the following four lines of business: information technology
(IT) outsourcing, served by our Information Solutions unit; business process
management, served by our Business Process Management unit; solutions
consulting, served by our E.solutions unit; and high-value consulting, served
by our A.T. Kearney subsidiary. These changes are designed to drive future
growth by simplifying our approach to the market, improving client focus, and
creating fully integrated, global businesses. We believe these changes will
also enable us to significantly reduce our expenses by removing management
layers and eliminating duplicate capabilities, resources and platforms.
As part of this realignment, we have designated global industry groups to
provide a consistent, current repository of global industry knowledge across
all four business lines. These industry groups are: financial services; travel
and transportation; healthcare; energy and chemicals; government; products and
retailing; and communications, entertainment and media. We expect this to
enhance our ability to develop client and industry specific solutions and more
effectively integrate our industry experts across the company. We have also
created a new position of Client Executive to serve as a single point of client
contact for service delivery and management across all lines of business on a
global scope. We expect this to enhance our ability to manage and deepen client
relationships, understand client needs, improve client value, and better
leverage our capabilities and knowledge.
As of August 31, 1999, we employed approximately 125,000 persons in the
United States and approximately 50 other countries. We are incorporated under
the laws of the State of Delaware. Our principal executive offices are located
at 5400 Legacy Drive, Plano, Texas 75024, telephone number: (972) 604-6000.
Information Solutions
Information Solutions, our largest line of business, encompasses our
traditional information technology outsourcing business. Information Solutions
includes network and system operations, data management, applications
development, and field services, as well as Internet hosting environments and
web site management. Our capabilities help clients align IT and operations with
business strategy while ensuring predictable performance and costs. We have
been a leader in the IT services industry for over 35 years.
Our Information Solutions services include:
. Centralized Systems Management. We offer data processing services
for stand-alone, midrange or high-end systems physically located
in one or more controlled environments. This includes management
services for traditional application processing environments, as
well as specialized services such as web site hosting and data
warehousing. These services help clients reduce risk, facilitate
cost-effective growth, improve delivery, efficiency and quality,
and enhance client-to-customer relationships.
. Distributed Systems Management. We offer end-to-end services to
plan, deploy, operate and refresh an enterprise's total
distributed environment. This includes traditional laptop and
desktop environments, as well as the emerging thin client model
supported by network-based applications (often referred to as apps
on taps). Benefits to clients for these services may include
reduced cost of ownership, increased return on investment,
transformation of PCs
S-6
<PAGE>
into information tools, increased speed to market and enhanced
flexibility in business operations.
. Communications Management. We define, develop and manage
consistent voice, video, data, multi-service and other global
communications services. These services facilitate electronic
commerce, increase competitiveness and market opportunities, and
improve information sharing through a client's supply and demand
chain.
. Application Services. We offer applications development and
management services on an outsourced or out-tasked basis. These
services range from outsourcing of all application development and
management to implementation and management of EDS-owned or third
party industry applications. Benefits to clients for these
services include reduced costs, extended value of technology
investments, information sharing and enhanced ability to adapt to
market changes.
We operate large-scale service management centers, or SMCs, throughout
the United States and in Australia, Brazil, Canada, France, Germany, the
Netherlands, Spain and the United Kingdom. We also operate smaller service
delivery centers at customer locations or EDS facilities throughout the world.
These processing centers generally support a single or small number of
customers with more specialized requirements than those supported at SMCs.
Information Solutions accounted for a substantial majority of our
revenues in 1998, and we expect Information Solutions to continue to account
for a majority of our revenues in 1999.
Business Process Management
Business Process Management, or BPM, is the outsourcing of one or more
business processes or functions to an external provider to improve overall
business performance. EDS is a leader in the BPM market, offering services
designed to help clients enter new global markets, get products to market
faster, manage customer and supplier relationships, and reduce costs.
Our BPM services include:
. Enterprise Customer Management. A client may outsource customer
care or relationship management to EDS to develop individual
customer relationships, build brand loyalty, and improve customer
acquisition, retention, and lifetime value. We are a leader in
this industry, offering total enterprise customer management
solutions, including call centers, client loyalty programs,
product fulfillment, data mining, and database marketing services.
We also offer document processing services.
. Claims Processing. We develop key processes to help governments
and insurance companies manage claims payments and other
transactions. With more than 30 years experience in this area, we
provide end-to-end service for state health and Medicare programs.
Additional services include fraud and abuse detection systems,
drug rebate programs, utilization review, and decision support
systems. We also support state programs for children and the
elderly, as well as public safety, law enforcement, and student
loan programs.
. Settlement Processing. We offer a full range of scalable services
that enable clients to bridge the gap between paper and electronic
banking environments. Services are aimed at merchants, banks, loan
institutions, and credit card issuers. Offerings include ATM and
kiosk transaction processing, check processing, remittance
processing, relocation services, debit authorizations and gateway
services.
S-7
<PAGE>
E.solutions
We established the E.solutions line of business in May 1999 to combine
our electronic business capabilities into a single business unit to address
this growing market. E.solutions, a global unit with approximately
6,000 employees, includes the consulting, implementation, and solutions
management capabilities of our former electronic business, CIO Services, human
performances, enterprise solutions, and business intelligence services units,
as well as elements of the Systemhouse business that we acquired in April 1999.
We offer e.strategy, solutions consulting, systems integration, implementation
and hosting services on a global basis.
Our E.solutions services include:
. Internet Solutions. We provide web-enabled solutions for business-
to-business and business-to-consumer activities, including
e.strategy, e.sales, e.marketing, portals, e.procurement, and
security services.
. Enterprise Application Services. We offer solutions that leverage
internet technology and leading enterprise business software to
increase our clients' efficiency throughout their value chain,
helping our clients communicate with their suppliers and customers
more efficiently. These services include enterprise application
integration, enterprise resource planning (ERP), supply chain
management, customer relationship management, application hosting
and management, and knowledge solutions/business intelligence.
. Performance Services. We provide consulting services in the
following areas: IT infrastructure planning, program management,
and enterprise management software services.
. E.communities. We provide trading partners with the capabilities
for electronic exchange of information, trading transactions and
financial settlement. Our Automotive Network eXchange offers a
secure communications network for use within the automotive
industry, enabling suppliers and manufacturers to exchange
business data more efficiently.
A.T. Kearney
A.T. Kearney, a leading global management consultancy, which became a
subsidiary of EDS in 1995, provides clients with high value-added management
consulting services, including strategy, strategic information technology,
organization and operations consulting, as well as executive search services.
A.T. Kearney addresses top management and CEO issues through delivery of
leading-edge solutions to complex problems.
The firm serves clients through practice teams focused on major
industries, including automotive, consumer products and retail, financial
institutions, and communications/high technology, as well as aerospace and
defense, transportation, utilities, energy, health care and pharmaceuticals.
A.T. Kearney's services include:
. Strategy Consulting. A.T. Kearney's global Strategy Practice
includes a broad spectrum of services from traditional corporate
and business unit strategy and industry restructuring to
experience in performance measurement and e.business strategy. The
practice helps clients turn strategy into action, viewing strategy
as the design of the entire business system and an integrated set
of actions to continuously create and redefine competitive
advantage.
. Strategic Information Technology Consulting. A.T. Kearney's
Strategic IT Consulting Practice provides insight, planning and
operational improvement/implementation services for clients. The
practice focuses on technology enabled business transformation. It
assists
S-8
<PAGE>
clients in achieving business results by improving their ability
to leverage and use IT or formulating results-oriented business
strategies in which IT plays a central role.
. Organization Consulting. The Organization Consulting Practice
focuses on change management, enterprise transformation, business
reengineering and HR management.
. Operations Consulting. A.T. Kearney's Operations Consulting
Practice involves all phases of operations, including sourcing,
manufacturing, supply chain management, and negotiations. It is
linked with A.T. Kearney's strategy, IT and industry practices.
Revenues
Our fees are generally paid pursuant to contracts with our clients, which
may provide for both fixed and variable fee arrangements. The terms of our
client contracts range from less than one year in the high-value consulting
business to up to ten years in our IT outsourcing business. Other than General
Motors Corporation, no one client accounted for more than 5% of our total
revenues in 1996, 1997 or 1998. Approximately 39% of our 1998 revenues were
generated outside the United States.
Services for General Motors
We provide substantially all of the worldwide data processing and
telecommunications services for GM and certain of its affiliates, including
integrated information systems for payroll, health and benefits, office
automation, communications, and plant automation functions. The loss of GM as
an ongoing major customer of EDS would have a material adverse effect on EDS.
Immediately prior to our split-off from GM in June 1996, we entered into
a new Master Service Agreement, or MSA, with GM that serves as a framework for
the negotiation and operation of service agreements for certain "in-scope" IT
services to be provided to GM on a worldwide basis. MSA services accounted for
approximately $3.5 billion of the approximately $4.2 billion of our revenues
from GM in 1998. The balance was attributable to goods and services provided
outside the MSA. The MSA will continue for a period of ten years from the
split-off. It may be terminated by GM if there is a change of control of EDS
and certain additional conditions are met, including a determination by GM's
Board of Directors that there exists substantial uncertainty about our ability
to perform our obligations thereunder.
We have entered into a number of Service Agreements with GM business
units setting forth the terms and provisions applicable to specific services or
projects undertaken pursuant to the MSA. At the time of the split-off, the
terms of the Service Agreements then in effect with GM's North American
Operations, General Motors Acceptance Corporation (U.S. and Canada) and Motors
Insurance Corporation (U.S. and Canada) were each extended through December 31,
1999. We are currently negotiating the terms of the successors to these
services agreements. In addition, we entered into a successor Service Agreement
covering GMs International Operations with a term ending on December 31, 2000.
Under the terms of the MSA, our Service Agreement with Delphi Automotive
Systems (U.S.) terminated at the time of its spin-off from GM in May 1999. We
have entered into new master service and U.S. service agreements with Delphi
under which we will continue to provide services to Delphi.
Approximately 21% of our total revenues in 1998, and 20% of total
revenues for the first half of 1999, were attributable to GM and its affiliates
(as adjusted to exclude Delphi for such periods). We expect revenues
attributable to GM to continue to decline as a percentage of our total revenues
principally as a result of the anticipated increase in revenues from non-GM
clients.
S-9
<PAGE>
Other Recent Developments
Before our decision to proceed with the realignment of our business
organization, we began an initiative to reduce our costs, streamline our
organizational structure and exit certain operating activities. As a result of
this initiative, we recorded restructuring charges and related asset writedowns
totaling $379.8 million in the first quarter of 1999. We expect that any
remaining cash expenditures relating to these charges will be incurred
primarily in the remainder of 1999. In addition, during July 1999, we announced
a voluntary early retirement program available to employees meeting certain
eligibility requirements. This program will result in a charge in the third
quarter of 1999. The amount of this charge, which may be material, will depend
upon the extent to which employees participate in the plan. As we take
advantage of opportunities for organizational improvements and cost reductions
in connection with our realignment, we expect to take further actions that will
result in additional charges in 1999.
On September 7, 1999, we announced that our Board of Directors had
authorized the repurchase of up to 27 million shares of common stock from time
to time, as well as the incurrence of debt to finance the repurchase. We intend
to use the net proceeds of this offering to provide long-term financing for
this stock repurchase program, including the repayment of short-term borrowings
incurred to fund the repurchase program. As of September 28, 1999, we had
issued approximately $720 million of commercial paper to fund our repurchases
through that date. On September 15, 1999, we entered into a $1.5 billion, 364
day loan facility with Citibank, N.A., and Merrill Lynch Capital Corporation.
Although borrowings under this facility may be used for other purposes, we
intended to use this facility as an alternative source of financing for our
stock repurchases if we were unable to issue commercial paper on terms
acceptable to us. No amounts have been drawn under this facility. This facility
will be terminated upon completion of the offering.
During the second quarter of 1999, we acquired Systemhouse from MCI
Worldcom for $1.65 billion in cash. This acquisition was one of four elements
contemplated in our framework agreement with MCI Worldcom announced in February
1999. We are continuing negotiations with MCI Worldcom to finalize the terms of
the IT and network outsourcing and joint marketing arrangements contemplated by
the framework agreement. These arrangements are subject to negotiation and
signing of definitive agreements, and no assurances can be given as to whether
or when such agreements will be finalized.
S-10
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers are as follows:
<TABLE>
<CAPTION>
DIRECTORS PRINCIPAL OCCUPATION
- --------- --------------------
<S> <C>
Richard H. Brown Chairman of the Board and Chief Executive Officer of EDS
James A. Baker, III Senior Partner of Baker & Botts, L.L.P.
Chairman of the Board and Chief Executive Officer, Halliburton
Richard B. Cheney Company
William H. Gray, III President and Chief Executive Officer, The College Fund/UNCF
Ray J. Groves Retired Chairman, Ernst & Young, LLP
Jeffrey M. Heller President and Chief Operating Officer, EDS
Ray L. Hunt Chairman and Chief Executive Officer, Hunt Oil Company
C. Robert Kidder Chairman and Chief Executive Officer, Borden, Inc.
Judith Rodin President, University of Pennsylvania
Enrique J. Sosa Retired as President, Chemicals, of BP Amoco p.l.c.
</TABLE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS TITLE
- ------------------ -----
<S> <C>
Richard H. Brown Chairman of the Board and Chief Executive Officer
Jeffrey M. Heller President and Chief Operating Officer
James E. Daley Executive Vice President and Chief Financial Officer
Paul J. Chiapparone Executive Vice President
Douglas L. Frederick Executive Vice President
Troy W. Todd Executive Vice President
John W. McCain Senior Vice President
Kim L. McMann Senior Vice President
Fred Steingraber Chairman and Chief Executive Officer of A.T. Kearney
</TABLE>
Of the Directors, only Messrs. Brown and Heller are full-time employees
of EDS. All of the Executive Officers are full-time employees of EDS. The
business address of each, in their capacity as Executive Officer or Director,
is c/o Electronic Data Systems Corporation, 5400 Legacy Drive, Plano, Texas
75024.
S-11
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to our fixed
charges for the periods presented. The ratio has been computed by dividing the
sum of earnings before income taxes, undistributed equity in income (losses) of
affiliates and fixed charges by fixed charges. Fixed charges consist of total
interest expense, including capitalized interest, dividends on redeemable
preferred stock of subsidiaries and a portion of rentals for real and personal
property deemed to be representative of the interest component of rent expense.
<TABLE>
<CAPTION>
For the Years Ended December 31
------------------------------------------- For the Six Months Ended
1994 1995 1996 1997 1998 June 30, 1999
---- ------ ------ ------ ------ ------------------------
<S> <C> <C> <C> <C> <C>
6.6x 5.2x 2.8x 3.8x 3.9x 2.6x
</TABLE>
USE OF PROCEEDS
The net proceeds to us from the sale of the Notes are estimated to be
approximately $ billion after deducting underwriting discounts and estimated
offering expenses. We intend to use the net proceeds to provide long-term
financing for the stock repurchase program discussed below, including the
repayment of short-term borrowings incurred to fund the repurchase program. If
the net proceeds of the offering exceed the amounts needed to provide this
long-term financing, we will use the balance for general corporate purposes,
which may include the reduction of short-term and other indebtedness, the
financing of acquisitions and capital expenditures, and the financing of our
operations.
On September 7, 1999, we announced that our Board of Directors had
authorized the repurchase of up to 27 million shares of our common stock from
time to time in open market or other transactions. As of September 28, 1999, we
had borrowed approximately $720 million through the issuance of commercial
paper to fund our repurchases through that date. These amounts accrued interest
at an average annual rate of 5.3% and had an average remaining maturity of four
days. We intend to use a portion of the net proceeds from the offering to repay
these borrowings. On September 15, 1999, we entered into a $1.5 billion, 364
day loan facility with Citibank, N.A., and Merrill Lynch Capital Corporation.
Although borrowings under this facility may be used for any purpose, we
intended to use this facility as an alternative source of financing for our
repurchases if we were unable to issue commercial paper on terms acceptable to
us. No amounts have been drawn under this facility. This facility will be
terminated upon completion of the offering.
S-12
<PAGE>
CAPITALIZATION
The following table presents our capitalization on an unaudited
consolidated basis as of June 30, 1999, and as adjusted to give effect to the
offering of the Notes and the repurchase of 27 million shares of common stock
at an assumed total purchase price of $1.5 billion. No other change in our
consolidated capitalization since June 30, 1999, is reflected in this table.
Since June 30, 1999, there has not been any material adverse change in the
information set forth below, except as may be described elsewhere in this
Prospectus Supplement, in the accompanying Prospectus or in any of the
documents incorporated by reference in these documents. You should read this
table together with our consolidated financial statements, including the notes
to such financial statements, which are incorporated by reference in this
Prospectus Supplement and the accompanying Prospectus.
<TABLE>
<CAPTION>
June 30, 1999
------------------------
Actual As Adjusted(1)
-------- --------------
(In millions)
<S> <C> <C>
Long-term debt, less current portion.................. $2,136.8 $ 3,636.8
Redeemable preferred stock of subsidiaries and
minority interests................................... 429.7 429.7
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; 493,758,250 shares issued, actual,
466,758,250 shares issued, as adjusted............... 4.9 4.9
Additional paid-in capital............................ 961.1 961.1
Retained earnings..................................... 5,122.3 5,122.3
Accumulated other comprehensive income................ (229.6) (229.6)
Treasury stock, at cost, 620,836 shares, actual,
27,620,836 shares, as adjusted....................... (34.1) (1,534.1)
-------- ---------
Total stockholders' equity.......................... 5,824.6 4,324.6
-------- ---------
Total capitalization................................ $8,391.1 $ 8,391.1
======== =========
</TABLE>
- --------
(1) Adjusted to give effect to the sale of $1.5 billion in aggregate principal
amount of the Notes at par, and the application of the estimated proceeds
therefrom, excluding underwriting discounts and offering expenses, to
repurchase 27 million shares of common stock at an assumed total purchase
price of $1.5 billion, or an average purchase price of $55.56 per share.
S-13
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following information is unaudited and was derived from our financial
statements. The information is only a summary and does not provide all of the
information contained in our consolidated financial statements, including the
related notes and Management's Discussion and Analysis, which are part of our
Annual Report on Form 10-K for the year ended December 31, 1998, and our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, and June
30, 1999. You should read our financial statements and other information filed
with the SEC.
<TABLE>
<CAPTION>
For the Six
Months Ended
For the Years Ended December 31 June 30
---------------------------------------------------- ------------------
1994 1995 1996 1997 1998 1998 1999
-------- --------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Statement of Income Data (Dollars in millions)
Revenues......................... $9,960.1 $12,422.1 $14,441.3 $15,235.6 $16,891.0 $8,128.1 $8,941.9
EBITDA (1)....................... 2,107.0 2,695.6 2,017.8 2,540.0 2,658.7 1,361.4 1,089.1
Adjusted EBITDA (2).............. 2,107.0 2,695.6 2,912.8 2,869.6 2,837.6 1,382.1 1,378.9
EBIT (1)......................... 1,335.9 1,587.8 837.0 1,331.5 1,265.0 681.7 404.9
Adjusted EBIT (2) ............... 1,335.9 1,587.8 1,732.0 1,661.1 1,443.9 702.4 694.7
Gross interest expense........... 51.7 120.8 162.9 189.9 131.3 75.1 61.2
Net income ...................... 821.9 938.9 431.5 730.6 743.4 406.1 220.0
Selected Cash Flow Data
Net cash provided by
operating activities............ $1,482.9 $ 1,211.5 $ 1,551.8 $ 2,190.1 $ 2,087.6 $ 859.2 $ 686.0
Net cash used in
investing activities............ (1,490.1) (1,734.0) (1,270.8) (1,248.0) (778.8) (566.0) (1,726.6)
Net cash provided by
(used in) financing activities.. 206.5 465.1 66.3 (1,129.8) (941.4) (520.9) 641.5
Selected Balance Sheet Data
Cash and cash equivalents........ $ 608.2 $ 548.9 $ 879.9 $ 677.4 $ 1,038.8 $ 447.0 $ 573.5
Total assets..................... 8,786.5 10,832.4 11,192.9 11,174.1 11,526.1 11,127.1 12,763.2
Current portion of long-term
debt............................ 203.4 247.8 133.3 109.5 47.7 87.7 54.8
Long-term debt, less current
portion......................... 1,021.0 1,852.8 2,324.3 1,790.9 1,184.3 1,404.5 2,136.8
Redeemable preferred stock of
subsidiaries and minority
interests....................... -- 39.9 493.3 341.4 405.9 398.2 429.7
Total shareholders' equity....... 4,232.5 4,978.5 4,783.1 5,309.4 5,916.5 5,624.7 5,824.6
Selected Financial Measures
Ratio of adjusted EBITDA to
interest expense................ 40.8x 22.3x 17.9x 15.1x 21.6x 18.4x 22.5x
Ratio of adjusted EBIT to
interest expense................ 25.8x 13.1x 10.6x 8.7x 11.0x 9.4x 11.4x
Ratio of total debt to adjusted
EBITDA (3)...................... 0.6x 0.8x 1.0x 0.7x 0.5x 0.6x 0.9x
Total debt as a percentage of
book capital (4)................ 22.4% 29.5% 37.5% 27.5% 18.7% 22.2% 28.1%
Adjusted funds from operations as
a percentage of total debt (5).. 131.6% 101.2% 64.7% 105.8% 150.4% 123.9% 83.9%
</TABLE>
- --------
(1) We define "EBITDA" for this purpose as earnings before interest expense,
income taxes, depreciation and amortization. We define "EBIT" for this
purpose as earnings before income taxes and interest expense. Both EBITDA
and EBIT are measures commonly used to analyze companies on the basis of
operating performance. EBITDA and EBIT are not measures of financial
performance under generally accepted accounting principles and should not
be considered as alternatives to net income as a measure of performance,
nor as alternatives to net cash provided by operating activities as a
measure of liquidity.
(2) During several of the periods presented, we recorded certain charges,
adjustments and gains that have been eliminated for the purpose of
calculating "adjusted EBITDA" and "adjusted EBIT." The charges and
adjustments were primarily associated with restructuring activities, asset
writedowns, litigation with a significant client, senior executive
retirements, acquired in-process research and development activities and
S-14
<PAGE>
split-off costs. The gains resulted from the sales of limited partnership
investments, a portion of our leasing portfolio, and stock of a subsidiary.
For the years ended 1996, 1997 and 1998, such items resulted in a net charge
of $895.0 million, $329.6 million, and $178.9 million, respectively. For the
six months ended June 30, 1998 and 1999, such items resulted in a net charge
of $20.7 million and $289.8 million, respectively.
(3) We define "total debt" for this purpose as the sum of long-term debt,
including current portion, and redeemable preferred stock of subsidiaries.
(4) We define "book capital" for this purpose as the sum of total debt,
shareholders' equity, and minority interests.
(5) We define "adjusted funds from operations" for this purpose as income
before income taxes, adjusted for certain charges, adjustments and gains
discussed above in footnote 2, less income tax expense calculated by
multiplying such amount by our effective tax rate of 36%, plus
depreciation, amortization and changes in non-current deferred tax
liabilities.
S-15
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the Notes is only a summary and is not
intended to be comprehensive. The description should be read together with the
description of the general terms and provisions of our Debt Securities provided
under the caption "Description of Debt Securities" in the accompanying
Prospectus. The term "2004 Notes" refers to the % Notes due 2004. The term
"2009 Notes" refers to the % Notes due 2009. The term "2029 Notes" refers to
the % Notes due 2029. The term "Notes" refers to the 2004 Notes, the 2009
Notes and the 2029 Notes, collectively.
General
The 2004 Notes, the 2009 Notes and the 2029 Notes each will be issued as
a separate series of Notes under our Indenture. The 2004 Notes will bear
interest at a rate of % per annum and will mature on , 2004. The 2009
Notes will bear interest at the rate of % per annum and will mature on
, 2009. The 2029 Notes will bear interest at the rate of % per annum
and will mature on , 2029.
We will pay interest on the Notes in arrears on each and ,
beginning , 2000, to the person or persons in whose names the Notes are
registered at the close of business on the fifteenth calendar day before the
relevant interest payment date, except that we will pay interest payable at
maturity or on a redemption date to the person or persons to whom principal is
payable. If any date on which interest is payable is not a Business Day, we
will pay interest on the next Business Day (without any interest or other
payment due on the delay). If the maturity date of the Notes falls on a day
that is not a Business Day, we will pay the interest and principal payable on
the next Business Day (without any interest or other payment due on the delay).
"Business Day," when used with respect to any place of payment for the Notes,
means a day other than (i) a Saturday or a Sunday, (ii) a day on which banking
institutions in that place of payment are authorized or obligated by law or
executive order to remain closed or (iii) a day on which the corporate trust
office of the Indenture Trustee is closed for business.
Interest payments for the Notes will include accrued interest from and
including the date of issue or from and including the last date in respect of
which interest has been paid, as the case may be, to, but excluding, the
interest payment date or the date of maturity, as the case may be.
Ranking
The Notes will be our direct, unsecured and unsubordinated obligations.
The Notes will rank equal in priority with all of our other unsecured and
unsubordinated indebtedness and senior in right of payment to all of our
existing and future subordinated debt. At June 30, 1999, we had outstanding
approximately $1,768.6 million of unsecured, unsubordinated indebtedness
ranking pari passu with the Notes, and approximately $83.0 million of secured
indebtedness, in each case excluding indebtedness of subsidiaries. At June 30,
1999, we had no unsecured, subordinated indebtedness. At June 30, 1999, our
subsidiaries had outstanding approximately $29.0 million of secured
indebtedness, $311.0 million of unsecured indebtedness, and $182.9 million of
redeemable preferred stock, all of which is structurally senior to the Notes.
The Indenture contains no restrictions on the amount of additional indebtedness
that we may issue under it.
Optional Redemption
We will have the right to redeem the Notes, in whole or in part at any
time, on at least 30 days but no more than 60 days prior written notice mailed
to the registered holders of the Notes to be redeemed. The respective
redemption prices will be equal to the greater of (1) 100% of the principal
amount of the Notes to be redeemed and (2) the sum as determined by the
Quotation Agent (as defined below), of the present values of the principal
amount of the Notes to be redeemed and the remaining scheduled payments of
interest thereon
S-16
<PAGE>
from the redemption date to the respective maturity date (the "Remaining Life")
discounted from their respective scheduled payment dates to the redemption date
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate (as defined below) plus basis points (in the
case of the 2004 Notes), basis points (in the case of the 2009 Notes) or
basis points (in the case of the 2029 Notes), plus, in each case, accrued
and unpaid interest on the principal amount being redeemed to the redemption
date.
If money sufficient to pay the redemption price of and accrued interest
on the Notes (or portions thereof) to be redeemed on the redemption date is
deposited with the Indenture Trustee or Paying Agent on or before the
redemption date and certain other conditions are satisfied, then on and after
the redemption date, interest will cease to accrue on such Notes (or such
portion thereof) called for redemption. If any redemption date is not a
Business Day, we will pay the redemption price on the next Business Day without
any interest or other payment due to the delay.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
Remaining Life that would be utilized, at the time of selection, and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity with the Remaining Life.
"Comparable Treasury Price" means, with respect to any redemption date,
the average of two Reference Treasury Dealer Quotations for such redemption
date.
"Quotation Agent" means the Reference Treasury Dealers.
"Reference Treasury Dealer" means each of Merrill Lynch Government
Securities Inc. and Salomon Smith Barney Inc., and their successors; provided,
however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a Primary Treasury Dealer), EDS
shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Indenture Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding the redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual yield to maturity of the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for the redemption date.
EDS may at any time, and from time to time, purchase Notes at any price
or prices in the open market or otherwise.
Defeasance and Covenant Defeasance
The Notes will be subject to legal defeasance and covenant defeasance as
described in the Indenture. See "Description of Debt Securities--Satisfaction
and Discharge of the Indenture; Defeasance" in the accompanying Prospectus.
Book-Entry System; Delivery and Form
The 2004 Notes, the 2009 Notes and the 2029 Notes will each be issued in
the form of one or more full registered global notes ("Global Notes") which
will be deposited with, or on behalf of, The Depository
S-17
<PAGE>
Trust Company ("DTC" or the "Depositary") as the securities depositary, and
registered in the name of Cede & Co., DTC's nominee. Beneficial interests in
the Global Notes will be represented through book-entry accounts of financial
institutions acting on behalf of beneficial owners as direct and indirect
participants in DTC (a "participant"). Investors may elect to hold interests in
the Global Notes through either DTC (in the United States) or Cedelbank S.A. or
Morgan Guaranty Trust Company of New York, Brussels Office, as operator of
Euroclear (in Europe) if they are participants of such systems, or indirectly
through organizations which are participants in such systems. Cedelbank and
Euroclear will hold interests on behalf of their participants through
customers' securities accounts in Cedelbank's and Euroclear's names on the
books of their respective depositaries, which in turn will hold such interest
in customers' securities accounts in the names of their respective depositaries
(the "U.S. Depositaries") on the books of DTC. Chase Bank of Texas, National
Association will act as the U.S. Depositary for Cedelbank and for Euroclear.
Except under circumstances described below, the Notes will not be issuable in
definitive form. The laws of some states of the United States of America
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to transfer beneficial interests in the Global Notes.
So long as the Depositary or its nominee is the registered owner of the
Global Notes, the Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by the Global
Notes for all purposes under the Indenture. Except as provided below, owners of
beneficial interests in the Global Notes will not be entitled to have Notes
represented by the Global Notes registered in their names, will not receive or
be entitled to receive physical delivery of Notes in definitive form, and will
not be considered the owners or holders thereof under the Indenture.
Principal and interest payments on Notes registered in the name of the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of the Global Notes. None of us, the
Indenture Trustee, any Paying Agent or the Registrar for the Notes will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in the Global Notes or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
We expect that the Depositary or its nominee, upon receipt of any payment
of principal or interest, will credit the participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of the Global Notes as shown on the records of the Depositary
or its nominee. We also expect that payments by participants to owners of
beneficial interest in the Global Notes held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form and
registered in street name, and will be the responsibility of such participants.
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor Depositary is not appointed by us within 90 days, we
will issue Notes in definitive form in exchange for the Global Notes. In
addition, we may at any time and in our sole discretion determine not to have
Notes represented by Global Notes and, in that event, will issue Notes in
definitive form in exchange for the Global Notes. In any such instance, an
owner of a beneficial interest in the Global Notes will be entitled to physical
delivery in definitive form of Notes represented by the Global Notes equal in
principal amount to that beneficial interest and to have those Notes registered
in its name. Notes so issued in definitive form will be issued as registered
Notes in denominations of $1,000 and integral multiples thereof, unless we
specify otherwise. Definitive Notes can be transferred by presentation for
registration to the Registrar at its New York or Luxembourg offices and must be
duly endorsed by the holder or its attorney duly authorized in writing, or
accompanied by a written instrument or instruments of transfer in form
satisfactory to us or the Indenture Trustee duly executed by the holder or its
attorney duly authorized in writing. We may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any exchange or registration of transfer of definitive Notes.
S-18
<PAGE>
The Depositary has advised us as follows: the Depositary is a limited-
purpose trust company organized under the New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. The Depositary holds
securities deposited with it by its participants and facilitates the settlement
of transactions among its participants in such securities through electronic
computerized book-entry changes in accounts of participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
The Depositary has also advised us that the Depositary's management is
aware that some computer applications, systems, and the like for processing
data ("Systems") that are dependent upon calendar dates, including dates
before, on and after January 1, 2000, may encounter "Year 2000 problems." The
Depositary has informed participants and other members of the financial
community that it has developed and is implementing a program so that its
Systems, as the same relate to the timely payment of distributions (including
principal and income payments) to securityholders, book-entry deliveries, and
settlement of trades within DTC ("DTC Services"), continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, the Depositary's plan includes a
testing phase, which is expected to be completed within appropriate time
frames. However, the Depositary's ability to perform its services properly is
also dependent upon other parties, including but not limited to issuers and
their agents, as well as third party vendors from whom the Depositary licenses
software and hardware, and third-party vendors on whom the Depositary relies
for information on the provision of services, including telecommunication and
electrical utility service providers, among others. The Depositary has informed
the financial community that it is contacting, and will continue to contact,
third-party vendors from whom the Depositary acquires services to impress upon
them the importance of such services being Year 2000 compliant, and to
determine the extent of their efforts for Year 2000 remediation and, as
appropriate, testing of their services. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate.
According to the Depositary, the foregoing information with respect to
the Depositary has been provided to the financial community for informational
purposes only and is not intended to serve as a representation, warranty or
contract modification of any kind.
Cedelbank has advised us that it is incorporated under the laws of
Luxembourg as a professional depositary. Cedelbank holds securities for its
customers ("Cedelbank Customers") and facilitates the clearance and settlement
of securities transactions between Cedelbank Customers through electronic book-
entry changes in accounts of Cedelbank Customers, thereby eliminating the need
for physical movement of certificates. Cedelbank provides to Cedelbank
Customers, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedelbank interfaces with domestic markets in several
countries. As a bank, Cedelbank is subject to regulation by the Luxembourg
Commission for the Supervision of the Financial Sector (Commission de
Surveillance du Secteur Financier). Cedelbank Customers are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the Underwriters. Indirect access to
Cedelbank is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Cedelbank Customer, either directly or indirectly.
Distributions with respect to Notes held beneficially through Cedelbank
will be credited to cash accounts of Cedelbank Customers in accordance with its
rules and procedures, to the extent received by the U.S. Depositary for
Cedelbank.
S-19
<PAGE>
Euroclear has advised us that it was created in 1968 to hold securities
for participants of Euroclear ("Euroclear Participants") and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need
for physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Euroclear includes various other services,
including securities lending and borrowing, and interfaces with domestic
markets in several countries. Euroclear is operated by the Brussels, Belgium
office of Morgan Guaranty Trust Company of New York ("the Euroclear Operator"),
under contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation ("the Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to Euroclear is also
available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission. Securities clearance accounts and cash accounts with the
Euroclear Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System, and
applicable Belgian law (collectively, the Terms and Conditions). The Terms and
Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments
with respect to securities in Euroclear. All securities in Euroclear are held
on a fungible basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear Operator acts under the Terms and
Conditions only on behalf of Euroclear Participants and has no record of or
relationship with persons holding through Euroclear Participants.
Distributions with respect to Notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary
for Euroclear.
Euroclear has also advised us that investors that acquire, hold and
transfer interests in the Notes by book-entry through accounts with the
Euroclear Operator or any other securities intermediary are subject to the laws
and contractual provisions governing their relationship with their
intermediary, as well as the laws and contractual provisions governing the
relationship between such an intermediary and each other intermediary, if any,
standing between themselves and the Global Notes.
Under Belgian law, the Euroclear Operator is required to pass on the
benefits of ownership in any interests in securities on deposit with it (such
as dividends, voting rights and other entitlements) to any person credited with
such securities on its records.
We will maintain a paying and transfer agent in Luxembourg as long as the
Notes are listed on the Luxembourg Stock Exchange. For as long as the Notes are
listed on the Luxembourg Stock Exchange, we will publish any changes as to the
identity or location of the Luxembourg Paying Agent in a leading daily
newspaper in Luxembourg, which is expected to be the Luxemburger Wort.
Clearing and Settlement
Initial settlement for the Notes will be made in immediately available
funds. Secondary market trading between DTC participants will occur in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds using the Depositary's Same-Day Funds Settlement System.
Secondary market trading between Cedelbank Customers and/or Euroclear
Participants will occur in the ordinary way in
S-20
<PAGE>
accordance with the applicable rules and operating procedures of Cedelbank and
Euroclear and will be settled using the procedures applicable to conventional
eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank
Customers or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by the applicable U.S. Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterpart in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to the
applicable U.S. Depositary to take action to effect final settlement on its
behalf by delivering or receiving Notes in DTC, and making or receiving payment
in accordance with normal procedures for same-day funds settlement applicable
to DTC. Cedelbank Customers and Euroclear Participants may not deliver
instructions directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of Notes received in Cedelbank
or Euroclear as a result of a transaction with a DTC participant will be made
during subsequent settlement processing and dated the business day following
DTC settlement date. Such credits or any transactions in Notes settled during
such processing will be reported to the relevant Cedelbank Customers or
Euroclear Participants on such business day. Cash received in Cedelbank or
Euroclear as a result of sales of Notes by or through a Cedelbank Customer or a
Euroclear Participant to a DTC participant will be received with value on the
DTC settlement date but will be available in the relevant Cedelbank or
Euroclear cash account only as of the business day following settlement in DTC.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of the Notes among participants of
DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
We may issue the Notes in definitive form in the limited circumstances
previously set forth in "Description of the Notes--Book-Entry System; Delivery
and Form." If we issue definitive Notes, principal of and interest on the Notes
will be payable in the manner described above, the transfer of the Notes will
be registrable, and the Notes will be exchangeable for the Notes bearing
identical terms and provisions, at the office of Chase Bank of Texas, National
Association, as paying agent (the Paying Agent, which term includes any
successor paying agent), currently located at 1201 Main Street, 18th Floor,
Dallas, Texas 75202, and at the office of Chase Bank, as the Luxembourg paying
agent (a Paying Agent and the Luxembourg Paying Agent), currently located at 5
rue Plaits, Luxembourgville, Luxembourg; provided that payment of interest,
other than interest at maturity or upon redemption, may be made by check mailed
to the address of the person entitled to the interest as it appears on the
security register at the close of business on the regular record date
corresponding to the relevant interest payment date. Notwithstanding the
foregoing, (1) the Depositary (as defined below) as holder of the Notes or
(2) a holder of more than $10 million in aggregate principal amount of Notes in
definitive form, can require the Paying Agent to make payments of interest,
other than interest due at maturity or upon redemption, by wire transfer of
immediately available funds into an account maintained by the holder at a
banking institution in the United States, by sending appropriate written wire
transfer instructions as long as the Paying Agent receives the instructions not
less than 16 days prior to the applicable interest payment date. The principal
and interest payable on the Note at maturity or upon redemption will be paid by
wire transfer of immediately available funds to the person or persons to whom
principal is payable against presentation of the Note at the office of the
Paying Agent or the Luxembourg Paying Agent.
Notices
Notices to holders of the Notes will be published in authorized
newspapers in the City of New York, in London and, so long as the Notes are
listed on the Luxembourg Stock Exchange, in Luxembourg. It is
S-21
<PAGE>
expected that publication will be made in the City of New York in The Wall
Street Journal, in London in the Financial Times and in Luxembourg in the
Luxemburger Wort. If publication in either London or Luxembourg is, in our
opinion, impractical, notices shall be published by such means as will, so far
as may be reasonably practicable, approximate publication in such newspaper. We
will be deemed to have given such notice on the date of each publication or, if
published more than once, on the date of the first such publication.
Trustee and Registrar
Chase Bank of Texas, National Association, successor to Texas Commerce
Bank National Association, will act as Trustee and Registrar with respect to
the Notes. The address of the Trustee and Registrar is 600 Travis, Suite 1150,
Houston, Texas 77002.
Governing Law
The Indenture, the Notes and the Underwriting Agreement will be governed
by, and construed in accordance with, the laws of the State of New York of the
United States of America.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of the material United States
federal income tax consequences of the purchase, ownership and disposition of
Notes by holders that (i) acquire the Notes on their original issue at their
initial offering price and (ii) hold such Notes as capital assets within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the
"Code"). This summary is based on provisions of the Code, final and proposed
Treasury Regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all as in effect as of the date hereof and all of
which are subject to change, possibly on a retroactive basis. This summary does
not address all tax consequences that may be important to a holder in light of
the holder's circumstances or to holders subject to special rules, such as
banks and other financial institutions, real estate investment trusts,
regulated investment companies, insurance companies, tax-exempt organizations,
dealers in securities or currencies, broker-dealers, traders in securities that
elect to mark to market, individual retirement and other tax deferred accounts,
persons whose functional currency is not the U.S. dollar, and persons engaging
in straddles or hedges relating to the Notes. Except as otherwise indicated,
statements of legal conclusion regarding the tax treatment or tax consequences
described below reflect the opinion of Baker & Botts, L.L.P., tax counsel for
EDS. However, EDS has not sought and will not seek any rulings from the IRS
concerning the tax consequences of the purchase, ownership, or disposition of
the Notes and, accordingly, there can be no assurance that the Internal Revenue
Service ("IRS") will not successfully challenge the tax consequences described
below. In addition, this summary does not address foreign, state, or local tax
consequences. ACCORDINGLY, EACH PROSPECTIVE PURCHASER OF NOTES IS URGED TO
CONSULT WITH HIS OWN TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL INCOME TAX
CONSEQUENCES OF HOLDING AND DISPOSING OF NOTES, AS WELL AS THE TAX CONSEQUENCES
UNDER FOREIGN, STATE, LOCAL, AND OTHER U.S. FEDERAL TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN TAX LAWS.
For purposes of this summary, the term "U.S. Holder" means a beneficial
owner of Notes that is, for U.S. federal income tax purposes, (i) an individual
who is a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is subject to United States federal income taxation regardless of its
source, and (iv) a trust if (a) a court within the United States is able to
exercise primary supervision over the administration of the trust and (b) one
or more U.S. persons have the authority to control all substantial decisions of
the trust. The term "Non-U.S. Holder" means a beneficial owner of Notes other
than a U.S. Holder.
S-22
<PAGE>
Certain U.S. Federal Income Tax Considerations Applicable to U.S. Holders
Tax Treatment of Interest on Notes. Interest paid on the Notes will be
taxable to a U.S. Holder as ordinary interest income at the time that such
interest is accrued or received in accordance with the holder's method of tax
accounting for U.S. federal income tax purposes. EDS expects that the Notes
will not be issued with original issue discount within the meaning of the
Code.
Tax Treatment of Sale or Other Taxable Disposition. Upon a sale,
retirement or other taxable disposition of Notes, a U.S. Holder will recognize
ordinary income, and gain or loss, as follows:
(a) The portion of the amount received upon disposition of a Note
that is attributable to accrued interest will be treated as ordinary
interest income to the holder and will not be treated as part of the
amount realized for purposes of determining gain or loss on the
disposition of the Note.
(b) The difference between the amount realized by the U.S. Holder and
the U.S. Holder's adjusted tax basis in the Note will be capital gain
or loss and will be long-term capital gain or loss if the U.S. Holder's
holding period for the Note is more than one year at the time of the
sale, retirement or other disposition.
The Notes will be subject to legal defeasance and covenant defeasance.
See "Description of Debt Securities--Satisfaction and Discharge of the
Indenture; Defeasance" in the accompanying Prospectus. Unless accompanied by
other changes in the terms of the Notes, a covenant defeasance should not be
treated as a taxable exchange. However, under current United States federal
income tax laws, a legal defeasance would be treated as an exchange of the
Notes, with the result that U.S. Holders would recognize income, gain or loss
as described above. In addition, the amount, timing and character of amounts
that U.S. Holders would thereafter be required to include in income might be
different from that which would be includible in the absence of that legal
defeasance.
Information Reporting and Backup Withholding. EDS is required to furnish
to record holders of the Notes, other than corporations and other exempt
holders, and to the IRS, information with respect to "reportable payments" on
the Notes, including interest and, in certain cases, principal payments and
redemption proceeds.
Certain U.S. Holders may be subject to backup withholding at the rate of
31% with respect to "reportable payments" received on the Notes. Generally,
backup withholding applies only if (i) the payee fails to furnish a correct
taxpayer identification number ("TIN") to the payor in the manner required or
fails to demonstrate that it otherwise qualifies for an exemption, (ii) the
IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii)
the payee has failed to report properly the receipt of a "reportable payment"
on one or more occasions and the IRS has notified the payor that withholding
is required, or (iv) under certain circumstances, the payee fails to provide a
certified statement, signed under penalties of perjury, that the TIN furnished
is the correct number and that such holder is not subject to backup
withholding. Backup withholding does not apply, however, if the U.S. Holder
properly establishes its eligibility for an exemption from backup withholding.
Backup withholding is not an additional tax but, rather, is a method of tax
collection. U.S. Holders will be entitled to credit any amounts withheld under
the backup withholding rules against their actual tax liabilities provided the
required information is furnished to the IRS.
Certain U.S. Federal Tax Considerations Applicable to Non-U.S. Holders
Tax Treatment of Interest on Notes. Non-U.S. Holders will not be subject
to U.S. federal income tax or the 30% withholding tax on interest paid on the
Notes, provided that (i) the holder does not actually or constructively own
10% or more of the total combined voting power of all classes of stock of EDS
entitled to vote, is not a controlled foreign corporation related, directly or
indirectly, to EDS through stock ownership, and
S-23
<PAGE>
is not a bank receiving interest on an extension of credit made pursuant to a
loan agreement entered into in the ordinary course of its trade or business,
(ii) the interest is not effectively connected with the conduct of a trade or
business by (or, if a treaty applies, a permanent establishment of) the Non-
U.S. Holder in the United States, and (iii) the certification requirement
described in the following paragraph is fulfilled.
The certification requirement referred to in the preceding paragraph will
be fulfilled if the beneficial owner of a Note provides to the withholding
agent a completed IRS Form W-8 (or, after December 31, 2000, an IRS Form W-
8BEN), or acceptable substitute form, on which the beneficial owner (i)
certifies, under penalties of perjury, that it is not a United States person
and (ii) provides its name and address. If certain requirements are satisfied,
such certification and information may be provided by a securities clearing
organization, bank or other financial institution holding the Note on behalf of
the beneficial owner in the ordinary course of the financial institution's
trade or business. Under recently adopted United States Treasury Regulations,
which generally are effective for payments made after December 31, 2000, the
certification and information may be provided by a qualified intermediary on
behalf of one or more beneficial owners or other intermediaries, provided that
such qualified intermediary has entered into a withholding agreement with the
IRS and certain other conditions are met. Prospective investors should consult
their tax advisors regarding possible additional reporting requirements.
Tax Treatment of Sale or other Taxable Disposition. A Non-U.S. Holder of
a Note will not be subject to United States federal income tax or the 30%
withholding tax on gain realized on the sale, exchange or other disposition of
such Note, unless (i) such holder is an individual who is present in the United
States for 183 days or more in the taxable year of the disposition and has
certain other connections to the United States, (ii) such gain is effectively
connected with the conduct of a trade or business by (or, if a treaty applies,
a permanent establishment of) the Non-U.S. Holder in the United States or (iii)
the Holder is subject to tax pursuant to the provisions of the Code applicable
to certain United States expatriates.
Tax Treatment of Effectively Connected Income. If a Non-U.S. Holder of a
Note is engaged in a trade or business in the United States (or, if a treaty
applies, such holder has a permanent establishment in the United States), and
if interest on the Note or gain realized on the sale, exchange or other
disposition of the Note is effectively connected with the conduct of such trade
or business (or permanent establishment), the Non-U.S. Holder, although exempt
from the withholding tax discussed in the preceding paragraphs, will generally
be subject to regular United States income tax on such effectively connected
income in the same manner as if it were a U.S. Holder. See "--Certain U.S.
Federal Income Tax Considerations Applicable to U.S. Holders" above. In lieu of
the certification requirement described in the second paragraph of "--Tax
Treatment of Interest on Notes" above, such a holder will be required to
provide to the withholding agent a properly executed IRS Form 4224 (or, after
December 31, 2000, a Form W-8ECI) to claim an exemption from withholding tax.
In addition, if such Non-U.S. Holder is a foreign corporation, it may be
subject to a 30% branch profits tax (unless reduced or eliminated by an
applicable treaty) on its earnings and profits for the taxable year
attributable to such effectively connected income, subject to certain
adjustments.
U.S. Federal Estate Tax Treatment. A Note held by an individual who is
not, for United States federal estate tax purposes, a resident or citizen of
the United States at the time of his death generally will not be subject to
United States federal estate tax as a result of such individual's death,
provided that the individual does not own, actually or constructively, 10% or
more of the total combined voting power of all classes of stock of EDS entitled
to vote and, at the time of such individual's death, payments with respect to
the Note would not have been effectively connected with the conduct by such
individual of a trade or business in the United States.
Backup Withholding and Information Reporting. EDS will, where required,
report to Non-U.S. Holders of Notes and the IRS the amount of any interest paid
on the Notes. Backup withholding will not apply to interest payments made on a
Note, provided that (i) the certification requirements described above in "--
Tax
S-24
<PAGE>
Treatment of Interest on Notes" are fulfilled and (ii) EDS or its paying agent,
as the case may be, does not have actual knowledge that the payee is a United
States Person.
Under current Treasury Regulations, payments on the sale, exchange or
other disposition of a Note made to or through a foreign office of a broker
generally will not be subject to backup withholding or information reporting.
However, if such broker is (i) a United States person or (ii) a foreign person
with certain connections to the United States, then information reporting (but
not backup withholding) will be required unless the broker has in its records
documentary evidence that the beneficial owner is not a United States person
and certain other conditions are met or the beneficial owner otherwise
establishes an exemption. Backup withholding may apply to any such payment that
such broker is required to report if the broker has actual knowledge that the
payee is a United States person. Payments to or through the United States
office of a broker will be subject to backup withholding and information
reporting unless the holder certifies, under penalties of perjury, that it is
not a United States person or otherwise establishes an exemption.
Non-U.S. Holders of Notes should consult their tax advisors regarding the
applicability of information reporting and backup withholding in their
particular situations, the availability of an exemption therefrom, and the
procedure for obtaining such an exemption, if available. Backup withholding is
not an additional tax but, rather, is a method of tax collection. Non-U.S.
Holders will be entitled to credit any amounts withheld under the backup
withholding rules against their actual U.S. federal income tax liabilities, and
may be entitled to a refund, provided that the required information is
furnished to the IRS.
S-25
<PAGE>
UNDERWRITING
We are selling the Notes to the Underwriters named below, for whom
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc.,
Banc of America Securities LLC, Chase Securities Inc., Credit Suisse First
Boston Corporation, Goldman, Sachs & Co., J.P. Morgan Securities Inc., and
Morgan Stanley & Co. Incorporated are acting as representatives, under an
Underwriting Agreement dated as of the date of this Prospectus Supplement. The
Underwriters, and the amount of the Notes each of them has severally agreed to
purchase from us, are as follows:
<TABLE>
<CAPTION>
Principal Amount Principal Amount Principal Amount
Name of 2004 Notes of 2009 Notes of 2029 Notes
---- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Merrill Lynch, Pierce,
Fenner & Smith
Incorporated....... $ $ $
Salomon Smith Barney Inc....
Banc of America Securities
LLC........................
Chase Securities Inc........
Credit Suisse First Boston
Corporation................
Goldman, Sachs & Co.........
J.P. Morgan Securities
Inc........................
Morgan Stanley & Co.
Incorporated...............
---------- ---------- ----------
Total.....................
========== ========== ==========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, if the
Underwriters take any of the Notes, then they are obligated to take and pay for
all of the Notes.
The Underwriters have advised us that they initially propose to offer the
Notes to the public at the prices stated on the cover page of this Prospectus
Supplement and to certain dealers at a price less a concession of % (in the
case of the 2004 Notes), % (in the case of the 2009 Notes) and % (in the case
of the 2029 Notes) of the principal amount of the Notes. The Underwriters may
allow, and such dealers may reallow, a discount of % (in the case of the 2004
Notes), % (in the case of the 2009 Notes) and % (in the case of the 2029
Notes) of the principal amount of the Notes to certain other dealers. After the
initial offering of the Notes, the Underwriters may change the initial public
offering price, the concession to selected dealers and the allowance to other
dealers.
The Notes are offered for sale in those jurisdictions in the United
States and Europe where it is legal to make such offers.
Each Underwriter, severally and not jointly, has represented and agreed
that it will comply with all applicable laws and regulations in force in any
jurisdiction outside of the United States in which it purchases, offers, sells
or delivers the Notes or possesses or distributes this Prospectus Supplement
and the accompanying Prospectus and will obtain any consent, approval or
permission required by it for the purchase, offer or sale by it of the Notes
under the laws and regulations in force in any jurisdiction outside of the
United States to which it is subject or in which it makes such purchases,
offers or sales, and neither we nor any other Underwriter shall have
responsibility therefor.
Each Underwriter, severally and not jointly, has represented and agreed
that:
. it has not offered or sold, and will not offer or sell, any Notes
to persons in the United Kingdom prior to the expiry of the period
of six months from the issue date of the Notes, except to persons
whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for
the purposes of their businesses or
S-26
<PAGE>
otherwise in circumstances which have not resulted, and will not
result in, an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995;
. it has only issued or passed on, and will only issue or pass on,
in the United Kingdom any document received by it in connection
with the issue of the Notes or a person who is of a kind described
in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996, as amended, or is a
person to whom such document may otherwise lawfully be issued or
passed on; and
. it has complied with and will comply with all applicable
provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to any Notes in, from or otherwise
involving the United Kingdom.
Although we have applied to list the Notes on the Luxembourg Stock
Exchange, the Notes are a new issue of securities with no established trading
market. No assurance can be given as to the liquidity of, or the trading
markets for, the Notes. The Underwriters have advised us that they intend to
make a market in the Notes, but they are not obligated to do so and may
discontinue such market-making at any time without notice.
Purchasers of the Notes may be required to pay stamp taxes and other
charges in accordance with the laws and practices of the country of purchase
in addition to the public offering price set forth on the cover page of this
Prospectus Supplement.
In connection with the offering of the Notes, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price
of the Notes. Specifically, the Underwriters may overallot in connection with
the offering of the Notes, creating a short position in the Notes for their
own account. In addition, the Underwriters may bid for, and purchase, Notes in
the open market to cover short positions or to stabilize the price of the
Notes. Finally, the Underwriters may reclaim selling concessions allowed for
distributing the Notes in the offering if the Underwriters repurchase
previously distributed Notes in transactions to cover short positions, in
stabilizing transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Notes above independent market levels. The
Underwriters are not required to engage in any of these activities and may end
any of these activities at any time.
We estimate that our expenses in connection with this offering,
excluding underwriting discounts and commissions, will be approximately
$175,000.
We have agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
On September 15, 1999, we entered into a $1.5 billion, 364 day loan
facility with Citibank, N.A., and Merrill Lynch Capital Corporation. Although
borrowings under this facility may be used for other purposes, we intended to
use this facility as an alternative source of financing for our stock
repurchases if we were unable to issue commercial paper on terms acceptable to
us. No amounts have been drawn under this facility. This facility will be
terminated upon completion of the offering. Merrill Lynch Capital Corporation
and Citibank, N.A., are affiliates of Merrill, Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney Inc., respectively, each of whom are
Underwriters.
Citibank, N.A. is the Administrative Agent and a lender under our
principal bank revolving credit and term loan facilities. Salomon Smith Barney
Inc., one of the Underwriters, is an affiliate of Citibank, N.A. The Chase
Manhattan Bank, an affiliate of Chase Securities Inc., one of the
Underwriters, is also a lender under these facilities. Chase Bank of Texas,
National Association, the Trustee, and Chase Bank, the Paying Agent, are
affiliates of Chase Securities Inc., and William H. Gray, III, one of our
directors, is also a director of The Chase Manhattan Corporation and The Chase
Manhattan Bank, which are affiliates of Chase Securities Inc.
S-27
<PAGE>
Certain of the Underwriters and their affiliates have engaged in, and may
in the future engage in, investment banking and other commercial dealings with
us and our affiliates in the ordinary course of business. They have received
customary fees and commissions for these transactions.
VALIDITY OF THE SECURITIES
D. Gilbert Friedlander, Senior Vice President, General Counsel and
Secretary of EDS, will pass on the validity of the Notes and certain related
matters on behalf of EDS. Vinson & Elkins L.L.P. will pass on the validity of
the Notes for the Underwriters.
EXPERTS
The consolidated financial statements of EDS as of December 31, 1997 and
1998, and for each of the years in the three-year period ended December 31,
1998, have been incorporated by reference in this Prospectus Supplement in
reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
GENERAL INFORMATION
Listing
Application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Restated Certificate
of Incorporation (as amended) and the Amended and Restated Bylaws of EDS and a
legal notice relating to the issuance of the Notes have been deposited prior
to listing with Greffier en Chef du Tribunal d'Arrondissement de et a
Luxembourg, where copies thereof may be obtained upon request. Copies of the
above documents together with this Prospectus Supplement, the accompanying
Prospectus, the Indenture and EDS current annual and quarterly reports, as
well as all future annual reports and quarterly reports, so long as any of the
Notes are outstanding, will be made available at the main office of Paribas
Luxembourg in Luxembourg. Paribas Luxembourg will act as intermediary between
the Luxembourg Stock Exchange and EDS and the holders of the Notes. In
addition, copies of the annual reports and quarterly reports of EDS may be
obtained free of charge at such office.
Material Change
There has been no material adverse change in the financial position of
EDS since December 31, 1998.
Accountants
The independent accountants of EDS are KPMG LLP, Dallas, Texas.
Litigation
Other than as may be disclosed or contemplated in the documents
incorporated herein by reference, neither EDS nor any of its subsidiaries is
involved in litigation, arbitration, or administrative proceedings relating to
claims or amounts that are material in the context of the issue of the Notes,
and EDS is not aware of any such litigation, arbitration, or administrative
proceedings pending or threatened.
S-28
<PAGE>
Authorization
The Board of Directors of EDS adopted resolutions relating to the issue
and sale of the Notes on September 2, 1999.
Identification Numbers
The 2004 Notes have been assigned Euroclear and Cedel Common Code No.
010267129, International Security Identification Number (ISIN) US285659AD06 and
CUSIP No. 285659AD0.
The 2009 Notes have been assigned Euroclear and Cedel Common Code No.
010267200, International Security Identification Number (ISIN) US285659AE88 and
CUSIP No. 285659AE8.
The 2029 Notes have been assigned Euroclear and Cedel Common Code No.
010267234, International Security Identification Number (ISIN) US285659AF53 and
CUSIP No. 285659AF5.
S-29
<PAGE>
PROSPECTUS
[LOGO OF ELECTRONIC DATA SYSTEMS]
Electronic Data Systems Corporation
Debt Securities
----------------
Electronic Data Systems Corporation ("EDS") may offer and sell from time to
time, at prices and on terms to be determined at or prior to the time of sale,
its debt securities consisting of debentures, notes or other unsecured
evidences of indebtedness (the "Debt Securities") with an aggregate initial
offering price not to exceed U.S. $2,000,000,000. The Debt Securities may be
offered separately or together, in separate series, in amounts, at prices and
on terms to be determined at the time of sale. The Debt Securities may be sold
for U.S. dollars or one or more foreign currency units or composite currencies
and the principal of, premium, if any, and interest, if any, on the Debt
Securities may likewise be payable in U.S. dollars or one or more foreign
currency units or composite currencies.
The terms of the Debt Securities, including where applicable the specific
designation, aggregate principal amount, denominations, ranking, maturity,
rate (which may be fixed or variable) and time of payment of interest, if any,
purchase price, any terms for mandatory redemption or redemption at the option
of EDS or the holder, the currency or currency unit in which principal,
premium or interest is payable, any terms for exchangeability, sinking fund
payments, prepayment, the initial public offering price, and the names of any
underwriters or agents, the principal amounts, if any, to be purchased by
underwriters, the compensation, if any, of such underwriters or agents, and
any other terms in connection with the offering and sale of the Debt
Securities in respect of which this Prospectus is being delivered, will be set
forth in an accompanying Prospectus Supplement (the "Prospectus Supplement").
EDS may sell the Debt Securities to underwriters, to or through dealers
acting as principals for their own account or acting as agents, through agents
designated from time to time, or directly to other purchasers. EDS may
indemnify such underwriters, dealers and agents against certain liabilities,
including liabilities under the Securities Act of 1933. See "Plan of
Distribution."
This Prospectus may not be used to consummate sales of the Debt Securities
unless accompanied by a Prospectus Supplement.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
The date of this Prospectus is August 14, 1996
<PAGE>
No dealer, salesperson or other individual has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus or in an applicable Prospectus Supplement in
connection with any offer made by this Prospectus and such Prospectus
Supplement and, if given or made, such information or representation must not
be relied upon as having been authorized by EDS or any underwriter, dealer,
agent or other person. Neither the delivery of this Prospectus or any
Prospectus Supplement nor any sales made hereunder or thereunder shall under
any circumstances create an implication that there has been no change in the
affairs of EDS since the date hereof or thereof or that the information
contained herein or therein is correct as of any time subsequent to its date.
This Prospectus and any Prospectus Supplement do not constitute an offer or
solicitation by anyone in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction.
AVAILABLE INFORMATION
EDS is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information filed by EDS with the Commission can be inspected, and
copies may be obtained, at the Public Reference Section of the Commission,
Judiciary Plaza, 450 Fifth Street N.W., Washington D.C. 20549, at prescribed
rates, as well as at the following Regional Offices of the Commission: Seven
World Trade Center, New York, New York 10048; and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Such reports, proxy
statements and other information may also be obtained from the web site that
the Commission maintains at http://www.sec.gov. Reports, proxy statements and
other information concerning EDS can also be inspected at the offices of the
New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New
York 10005, and can also be obtained electronically through a variety of
databases, including, among others, the Commission's Electronic Data Gathering
And Retrieval ("EDGAR") program, Knight-Ridder Information, Inc., Federal
Filings/Dow Jones and Lexis/Nexis.
This Prospectus constitutes part of a Registration Statement on Form S-3
(together with all amendments, supplements and exhibits thereto, the
"Registration Statement") filed by EDS with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). Pursuant to the
rules and regulations of the Commission, this Prospectus omits certain
information contained in the Registration Statement. Such information can be
inspected at and obtained from the Commission and the NYSE in the manner set
forth above. For further information pertaining to EDS and the Debt
Securities, reference is hereby made to the Registration Statement. Statements
contained herein concerning any document filed as an exhibit to the
Registration Statement are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by EDS with the Commission are hereby
incorporated by reference in this Prospectus: (i) Quarterly Reports on Form
10-Q for the quarters ended March 31, 1996 and June 30, 1996; and (ii) Current
Reports on Form 8-K dated April 23, 1996, June 7, 1996, June 18, 1996, and
July 16, 1996.
All documents filed by EDS with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Debt Securities
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which is or is deemed
2
<PAGE>
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
EDS will provide without charge to each person to whom this Prospectus is
delivered, upon the written or oral request of such person, a copy of any and
all of the documents which have been or may be incorporated by reference in
this Prospectus, other than exhibits to such documents not specifically
described above. Requests for such documents should be directed to Electronic
Data Systems Corporation, Investor Relations, Mail Stop H1-2D-05, 5400 Legacy
Drive, Plano, Texas, 75024-3199 (Telephone Number: (972) 604-6000).
THE COMPANY
EDS is a world leader in applying information technology ("IT"), with over
30 years of experience in using advanced computer and communications
technologies to meet its clients' business needs. EDS offers its clients a
continuum of services worldwide, including the management of computers,
networks, information systems, information processing facilities, business
operations and related personnel, providing to its clients advantages in cost-
effectiveness, speed of implementation and state-of-the-art technology. In
delivering this continuum of services, EDS generally performs one or more of
five basic functions: management consulting services (through EDS' A.T.
Kearney subsidiary); creation of IT systems; assembly of IT platforms;
management of IT operations; and management of business operations. EDS is
able to leverage its extensive technical infrastructure and other numerous
resources to offer IT services at clients' sites or through large scale
information processing centers or specialized distributed service centers
located worldwide.
EDS is incorporated under the laws of the State of Delaware. EDS' principal
executive offices are located at 5400 Legacy Drive, Plano, Texas 75024,
telephone number: (972) 604-6000.
USE OF PROCEEDS
Except as may be set forth in an applicable Prospectus Supplement
accompanying this Prospectus, the net proceeds from the sale of the Debt
Securities offered hereby will be used for general corporate purposes, which
may include the reduction of short-term and other indebtedness, the financing
of acquisitions and capital expenditures, and the financing of EDS'
operations.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
EDS for the periods presented. The ratio has been computed by dividing the sum
of earnings (loss) before income taxes (excluding the cumulative effect of an
accounting change) and fixed charges (excluding capitalized interest) by fixed
charges (including capitalized interest). Fixed charges consist of interest
expense, interest capitalized (except as noted above) and a portion of rentals
for real and personal property deemed to be representative of the interest
component of rent expense.
<TABLE>
<CAPTION>
For the Six For the Years Ended December 31,
Months Ended ------------------------------------------------------------------------------
June 30, 1996 1995 1994 1993 1992 1991
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
(a) 5.24 6.61 5.93 4.67 4.73
</TABLE>
- --------
(a) The deficiency in earnings to fixed charges for the six months ended June
30, 1996 was $162.6 million. Earnings before income taxes for such period
include one-time charges of $850 million.
3
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following description summarizes certain general terms and provisions of
the Debt Securities. The particular terms of the Debt Securities, including
the nature of any variations from the following general provisions, will be
described in the applicable Prospectus Supplement. Accordingly, for a
description of the terms of a particular issue of Debt Securities, reference
must be made to both the Prospectus Supplement relating thereto and to the
following description.
The Debt Securities, which will represent general unsecured obligations of
EDS, may be issued in one or more series under an Indenture dated as of August
12, 1996 (the "Indenture") between EDS and Texas Commerce Bank National
Association, as trustee (the "Trustee"). The Indenture has been filed with the
Commission as an exhibit to the Registration Statement and is incorporated by
reference herein. The following summary of certain provisions of the Indenture
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all provisions of the Indenture, including the
definitions therein of certain terms. Unless otherwise defined herein, all
capitalized terms shall have the definitions set forth in the Indenture.
General
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder. The Debt Securities may be issued
from time to time in one or more series up to the aggregate principal amount
which may be authorized from time to time by EDS. All Debt Securities will be
unsecured and will rank pari passu with all other unsecured unsubordinated
indebtedness of EDS. Except as described below, the Indenture does not limit
the amount of other indebtedness or securities which may be issued by EDS or
any of its subsidiaries or contain financial or similar restrictions on EDS or
any of its subsidiaries. EDS' rights and the rights of its creditors,
including holders of Debt Securities, to participate in any distribution of
assets of any subsidiary upon the latter's liquidation or reorganization or
otherwise are effectively subordinated to the claims of the subsidiary's
creditors, except to the extent that EDS or any of its creditors may itself be
a creditor of that subsidiary.
Reference is made to the applicable Prospectus Supplement for the following
terms of the Debt Securities of the series with respect to which such
Prospectus Supplement is being delivered:
(a) The title of the Debt Securities of the series;
(b) Any limit on the aggregate principal amount of the Debt Securities of
the series that may be authenticated and delivered under the Indenture;
(c) The date or dates on which the principal and premium with respect to
the Debt Securities of the series are payable;
(d) The rate or rates (which may be fixed or variable) at which the Debt
Securities of the series shall bear interest (if any) or the method of
determining such rate or rates, the date or dates from which such interest
shall accrue, the interest payment dates on which such interest shall be
payable or the method by which such dates will be determined, the record
dates for the determination of holders thereof to whom such interest is
payable (in the case of Registered Securities), and the basis upon which
interest will be calculated if other than that of a 360-day year of twelve
30-day months;
(e) The place or places, if any, in addition to or instead of the
corporate trust office of the Trustee (in the case of Registered
Securities) or the principal London office of the Trustee (in the case of
Bearer Securities), where the principal, premium, and interest with respect
to Debt Securities of the series shall be payable;
(f) The price or prices at which, the period or periods within which, and
the terms and conditions upon which Debt Securities of the series may be
redeemed, in whole or in part, at the option of EDS or otherwise;
4
<PAGE>
(g) Whether Debt Securities of the series are to be issued as Registered
Securities or Bearer Securities or both and, if Bearer Securities are to be
issued, whether coupons will be attached thereto, whether Bearer Securities
of the series may be exchanged for Registered Securities of the series, and
the circumstances under which and the places at which any such exchanges,
if permitted, may be made;
(h) If any Debt Securities of the series are to be issued as Bearer
Securities or as one or more Global Securities representing individual
Bearer Securities of the series, whether certain provisions of the payment
of additional interest or tax redemptions shall apply; whether interest
with respect to any portion of a temporary Bearer Security of the series
payable with respect to any interest payment date prior to the exchange of
such temporary Bearer Security for definitive Bearer Securities of the
series shall be paid to any clearing organization with respect to the
portion of such temporary Bearer Security held for its account and, in such
event, the terms and conditions (including any certification requirements)
upon which any such interest payment received by a clearing organization
will be credited to the persons entitled to interest payable on such
interest payment date; and the terms upon which a temporary Bearer Security
may be exchanged for one or more definitive Bearer Securities of the
series;
(i) The obligation, if any, of EDS to redeem, purchase, or repay Debt
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a holder thereof and the price or prices at
which, the period or periods within which, and the terms and conditions
upon which Debt Securities of the series shall be redeemed, purchased, or
repaid, in whole or in part, pursuant to such obligations;
(j) The terms, if any, upon which the Debt Securities of the series may
be convertible into or exchanged for other Debt Securities or indebtedness
or other securities of any kind of EDS or any other issuer or obligor, and
the terms and conditions upon which such conversion or exchange shall be
effected, including the initial conversion or exchange price or rate, the
conversion or exchange period, and any other additional provisions;
(k) If other than denominations of $1,000 or any integral multiple
thereof, the denominations in which Debt Securities of the series shall be
issuable;
(l) If the amount of principal, premium, or interest with respect to the
Debt Securities of the series may be determined with reference to an index
or pursuant to a formula, the manner in which such amounts will be
determined;
(m) If the principal amount payable at the stated maturity of Debt
Securities of the series will not be determinable as of any one or more
dates prior to such stated maturity, the amount that will be deemed to be
such principal amount as of any such date for any purpose, including the
principal amount thereof which will be due and payable upon any maturity
other than the stated maturity or which will be deemed to be outstanding as
of any such date (or, in any such case, the manner in which such deemed
principal amount is to be determined), and if necessary, the manner of
determining the equivalent thereof in United States currency;
(n) Any changes or additions to the provisions of the Indenture dealing
with defeasance, including the addition of additional covenants that may be
subject to EDS' covenant defeasance option;
(o) If other than such coin or currency of the United States as at the
time of payment is legal tender for payment of public and private debts,
the coin or currency or currencies or units of two or more currencies in
which payment of the principal, premium, and interest with respect to Debt
Securities of the series shall be payable;
(p) If other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series that shall be payable
upon declaration of acceleration of the maturity thereof or provable in
bankruptcy;
(q) Any addition to or change in the Events of Default with respect to
the Debt Securities of the series and any change in the right of the
Trustee or the holders to declare the principal, premium, and interest with
respect to such Debt Securities due and payable;
5
<PAGE>
(r) If the Debt Securities of the series shall be issued in whole or in
part in the form of a Global Security, the terms and conditions, if any,
upon which such Global Security may be exchanged in whole or in part for
other individual Debt Securities in definitive registered form, the
Depositary for such Global Security, and the form of any legend or legends
to be borne by any such Global Security in addition to or in lieu of the
legend referred to in the Indenture;
(s) Any addition to or change in the covenants and definitions then set
forth in the Indenture or in the terms then set forth in the Indenture
relating to permitted consolidations, mergers, or sales of assets;
(t) With regard to Debt Securities of the series that do not bear
interest, the dates for certain required reports to the Trustee; and
(t) Any other terms of the Debt Securities of the series (which terms
shall not be prohibited by the provisions of the Indenture).
The Prospectus Supplement will also describe any material United States
federal income tax consequences or other special considerations applicable to
the series of Debt Securities to which such Prospectus Supplement relates,
including those applicable to (a) Bearer Securities, (b) Debt Securities with
respect to which payments of principal, premium, or interest are determined
with reference to an index or formula (including changes in prices of
particular securities, currencies, or commodities), (c) Debt Securities with
respect to which principal, premium, or interest is payable in a foreign or
composite currency, (d) Debt Securities that are issued at a discount below
their stated principal amount, bearing no interest or interest at a rate that
at the time of issuance is below market rates ("Original Issue Discount Debt
Securities"), and (e) variable rate Debt Securities that are exchangeable for
fixed rate Debt Securities.
Payments of interest on Registered Securities may be made at the option of
EDS by check mailed to the registered holders thereof or, if so provided in
the applicable Prospectus Supplement, at the option of a holder by wire
transfer to an account designated by such holder. Except as otherwise provided
in the applicable Prospectus Supplement, no payment on a Bearer Security will
be made by mail to an address in the United States or by wire transfer to an
account in the United States.
Unless otherwise provided in the applicable Prospectus Supplement,
Registered Securities may be transferred or exchanged at the office of the
Trustee at which its corporate trust business is principally administered in
the United States or at the office of the Trustee or the Trustee's agent in
the Borough of Manhattan, the City and State of New York, at which its
corporate agency business is conducted, subject to the limitations provided in
the Indenture, without the payment of any service charge, other than any tax
or governmental charge payable in connection therewith. Bearer Securities will
be transferable only by delivery. Provisions with respect to the exchange of
Bearer Securities will be described in the Prospectus Supplement relating to
such Bearer Securities.
All funds paid by EDS to a payment agent for the payment of principal,
premium, or interest with respect to any Debt Securities that remain unclaimed
at the end of two years after such principal, premium, or interest shall have
become due and payable will be repaid to EDS, and the holders of such Debt
Securities or any coupons appertaining thereto will thereafter look only to
EDS for payment thereof.
Global Securities
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities. A Global Security is a Debt Security
that represents, and is denominated in an amount equal to the aggregate
principal amount of, all outstanding Debt Securities of a series, or any
portion thereof, in either case having the same terms, including the same
original issue date, date or dates on which principal and interest are due,
and interest rate or method of determining interest. A Global Security will be
deposited with, or on behalf of, a Depositary, which will be identified in the
Prospectus Supplement relating to such Debt Securities. Global
6
<PAGE>
Securities may be issued in either registered or bearer form and in either
temporary or definitive form. Unless and until it is exchanged in whole or in
part for the individual Debt Securities represented thereby, a Global Security
may not be transferred except as a whole by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or another
nominee of the Depositary, or by the Depositary or any nominee of the
Depositary to a successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series of
Debt Securities will be described in the Prospectus Supplement relating to
such Debt Securities. EDS anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Debt Securities represented by
such Global Security to the accounts of persons that have accounts with the
Depositary ("participants"). Such accounts shall be designated by the dealers
or underwriters with respect to such Debt Securities or, if such Debt
Securities are offered and sold directly by EDS or through one or more agents,
by EDS or such agents. Ownership of beneficial interests in a Global Security
will be limited to participants or persons that hold beneficial interests
through participants. Ownership of beneficial interests in such Global
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the Depositary (with respect to interests
of participants) or records maintained by participants (with respect to
interest of persons other than participants). The laws of some states require
that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limitations and laws may impair the
ability to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner or holder of such Global Security, such Depositary or
nominee, as the case may be, will be considered the sole owner or holder of
the individual Debt Securities represented by such Global Security for all
purposes under the Indenture. Except as provided below, owners of beneficial
interests in a Global Security will not be entitled to have any of the
individual Debt Securities represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
any of such Debt Securities in definitive form, and will not be considered the
owners or holders thereof under the Indenture.
Subject to the restrictions described under "-- Limitations on Issuance of
Bearer Securities," payments of principal, premium, and interest with respect
to individual Debt Securities represented by a Global Security will be made to
the Depositary or its nominee, as the case may be, as the registered owner or
holder of such Global Security. Neither EDS, the Trustee, any paying agent or
registrar for such Debt Securities, or any agent of EDS or the Trustee will
have any responsibility or liability for (a) any aspect of the records
relating to or payments made by the Depositary, its nominee, or any
participants on account of beneficial interests in the Global Security or for
maintaining, supervising, or reviewing any records relating to such beneficial
interests, (b) the payment to the owners of beneficial interests in the Global
Security of amounts paid to the Depositary or its nominee, or (c) any other
matter relating to the actions and practices of the Depositary, its nominee,
or its participants. Neither EDS, the Trustee, any paying agent or registrar
for such Debt Securities, or any agent of EDS or the Trustee will be liable
for any delay by the Depositary, its nominee, or any of its participants in
identifying the owners of beneficial interests in the Global Security, and EDS
and the Trustee may conclusively rely on, and will be protected in relying on,
instructions from the Depositary or its nominee for all purposes.
EDS expects that the Depositary for a series of Debt Securities or its
nominee, upon receipt of any payment of principal, premium, or interest with
respect to a definitive Global Security representing any of such Debt
Securities, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security, as shown on the records of the
Depositary or its nominee. EDS also expects that payments by participants to
owners of beneficial interests in such Global Security held through such
participants will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of
customers and registered in "street name." Such payments will be the
responsibility of such participants. Receipt by owners of beneficial interests
in a
7
<PAGE>
temporary Global Security of payments of principal, premium, or interest with
respect thereto will be subject to the restrictions described under "--
Limitations on Issuance of Bearer Securities."
If the Depositary for a series of Debt Securities is at any time unwilling,
unable, or ineligible to continue as depositary, EDS shall appoint a successor
depositary. If a successor depositary is not appointed by EDS within 90 days,
EDS will issue individual Debt Securities of such series in exchange for the
Global Security representing such series of Debt Securities. In addition, EDS
may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Debt Securities,
determine no longer to have Debt Securities of a series represented by a
Global Security and, in such event, will issue individual Debt Securities of
such series in exchange for the Global Security representing such series of
Debt Securities. Furthermore, if EDS so specifies with respect to the Debt
Securities of a series, an owner of a beneficial interest in a Global Security
representing Debt Securities of such series may, on terms acceptable to EDS,
the Trustee, and the Depositary for such Global Security, receive individual
Debt Securities of such series in exchange for such beneficial interests,
subject to any limitations described in the Prospectus Supplement relating to
such Debt Securities. In any such instance, an owner of a beneficial interest
in a Global Security will be entitled to physical delivery of individual Debt
Securities of the series represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name (if the Debt Securities are issuable as Registered
Securities). Individual Debt Securities of such series so issued will be
issued (a) as Registered Securities in denominations, unless otherwise
specified by EDS, of $1,000 and integral multiples thereof if the Debt
Securities are issuable as Registered Securities, (b) as Bearer Securities in
the denomination or denominations specified by EDS if the Debt Securities are
issuable as Bearer Securities, or (c) as either Registered Securities or
Bearer Securities as described above if the Debt Securities are issuable in
either form. See, however, "-- Limitations on Issuance of Bearer Securities"
for a description of certain restrictions on the issuance of individual Bearer
Securities in exchange for beneficial interests in a bearer Global Security.
Limitations on Issuance of Bearer Securities
The Debt Securities of a series may be issued as Registered Securities
(which will be registered as to principal and interest in the register
maintained by the registrar for such Debt Securities) or Bearer Securities
(which will be transferable only by delivery). If such Debt Securities are
issuable as Bearer Securities, certain special limitations and considerations
will apply.
In compliance with United States federal income tax laws and regulations,
EDS and any underwriter, agent or dealer participating in an offering of
Bearer Securities will agree that, in connection with the original issuance of
such Bearer Securities and during the period ending 40 days after the issue
date, they will not offer, sell, or deliver any such Bearer Security, directly
or indirectly, to a United States Person (as defined below) or to any person
within the United States, except to the extent permitted under United States
Treasury regulations.
Bearer Securities will bear a legend to the following effect: "Any United
States Person who holds this obligation will be subject to limitations under
the United States federal income tax laws, including the limitations provided
in Sections 165(j) and 1287(a) of the Internal Revenue Code." The sections
referred to in the legend provide that, with certain exceptions, a United
States taxpayer who holds Bearer Securities will not be allowed to deduct any
loss with respect to, and will not be eligible for capital gain treatment with
respect to any gain realized on the sale, exchange, redemption, or other
disposition of, such Bearer Securities.
For this purpose, "United States" includes the United States of America and
its possessions, and "United States Person" means a citizen or resident of the
United States, a corporation, partnership, or other entity created or
organized in or under the laws of the United States, or an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source.
Pending the availability of a definitive Global Security or individual
Bearer Securities, as the case may be, Debt Securities that are issuable as
Bearer Securities may initially be represented by a single temporary Global
Security, without interest coupons, to be deposited with a common depositary
in London for Morgan Guaranty
8
<PAGE>
Trust Company of New York, Brussels Office, as operator of the Euroclear
System ("Euroclear"), or Centrale de Livraison de Valeurs Mobilieres S.A.
("CEDEL") for credit to the accounts designated by or on behalf of the
purchasers thereof. Following the availability of a definitive Global Security
in bearer form, without coupons attached, or individual Bearer Securities and
subject to any further limitations described in the applicable Prospectus
Supplement, the temporary Global Security will be exchangeable for interests
in such definitive Global Security or for such individual Bearer Securities,
respectively, only upon receipt of a "Certificate of Non-U.S. Beneficial
Ownership," which is a certificate to the effect that a beneficial interest in
a temporary Global Security is owned by a person that is not a United States
Person or is owned by or through a financial institution in compliance with
applicable United States Treasury regulations. No Bearer Security will be
delivered in or to the United States and no interest on a Bearer Security will
be paid within the United States. If so specified in the applicable Prospectus
Supplement, interest on a temporary Global Security will be paid to each of
Euroclear and CEDEL with respect to that portion of such temporary Global
Security held for its account, but only upon receipt as of the relevant
interest payment date of a Certificate of Non-U.S. Beneficial Ownership.
Events of Default and Remedies
The following events are defined in the Indenture as "Events of Default"
with respect to a series of Debt Securities:
(a) Default in the payment of any installment of interest on any Debt
Securities of that series or any payment with respect to the related
coupons, if any, as and when the same shall become due and payable and
continuance of such default for a period of 30 days;
(b) Default in the payment of principal or premium with respect to any
Debt Securities of that series as and when the same shall become due and
payable, whether at maturity, upon redemption, by declaration, upon
required repurchase, or otherwise;
(c) Default in the payment of any sinking fund payment with respect to
any Debt Securities of that series as and when the same shall become due
and payable;
(d) Default in the performance, or breach, of any covenant of EDS in the
Indenture (other than a covenant or a default in whose performance or whose
breach is otherwise specifically dealt with or which has expressly been
included in the Indenture solely for the benefit of a series of Debt
Securities other than that series) and continuance of such default or
breach for a period of 90 days after there has been given, by registered or
certified mail, written notice specifying such default and requiring EDS to
remedy the same to EDS by the Trustee or to EDS and the Trustee by the
holders of at least 25% in aggregate principal amount of the Debt
Securities of that series at the time outstanding;
(e) Acceleration of any indebtedness of EDS in excess of $50,000,000
under the terms of the instrument under which that indebtedness is or may
be outstanding, if the acceleration is not annulled or the indebtedness is
not paid within 10 days after written notice to EDS by the Trustee or by
the holders of at least 25% in aggregate principal of the Debt Securities
of that series at the time outstanding;
(f) EDS shall (1) voluntarily commence any proceeding or file any
petition seeking relief under the United States Bankruptcy Code or other
federal or state bankruptcy, insolvency, or similar law, (2) consent to the
institution of, or fail to controvert within the time and in the manner
prescribed by law, any such proceeding or the filing of any such petition,
(3) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, or similar official for EDS or for a substantial
part of its property, (4) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (5) make a general
assignment for the benefit of creditors, (6) admit in writing its inability
or fail generally to pay its debts as they become due, (7) take corporate
action for the purpose of effecting any of the foregoing, or (8) take any
comparable action under any foreign laws relating to insolvency;
(g) The entry of an order or decree by a court having competent
jurisdiction for (1) relief with respect to EDS or a substantial part of
any of its property under the United States Bankruptcy Code or any other
9
<PAGE>
federal or state bankruptcy, insolvency, or similar law, (2) the
appointment of a receiver, trustee, custodian, sequestrator, or similar
official for EDS or for a substantial part of any of its property, or (3)
the winding-up or liquidation of EDS, and such order or decree shall
continue unstayed and in effect for 60 consecutive days, or any similar
relief is granted under any foreign laws and the order or decree stayed in
effect for 60 consecutive days; and
(h) Any other Event of Default provided with respect to Debt Securities
of that series.
An Event of Default with respect to one series of Debt Securities is not
necessarily an Event of Default for another series.
If an Event of Default described in clause (a), (b), (c), (d), (e) or (h)
above occurs and is continuing with respect to any series of Debt Securities,
unless the principal and interest with respect to all the Debt Securities of
such series shall have already become due and payable, either the Trustee or
the holders of not less than 25% in aggregate principal amount of the Debt
Securities of such series then outstanding may declare the principal amount
(or, if Original Issue Discount Debt Securities, such portion of the principal
amount as may be specified in such series) of and interest on all the Debt
Securities of such series due and payable immediately. If an Event of Default
described in clause (f) or (g) above occurs, unless the principal and interest
with respect to all the Debt Securities of all series shall have become due
and payable, the principal amount (or, if any series are Original Issue
Discount Debt Securities, such portion of the principal amount as may be
specified in such series) of and interest on all Debt Securities of all series
then outstanding shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of Debt
Securities.
If an Event of Default occurs and is continuing, the Trustee shall be
entitled and empowered to institute any action or proceeding for the
collection of the sums so due and unpaid or to enforce the performance of any
provision of the Debt Securities of the affected series or the Indenture, to
prosecute any such action or proceeding to judgment or final decree, and to
enforce any such judgment or final decree against EDS or any other obligor on
the Debt Securities of such series. In addition, if there shall be pending
proceedings for the bankruptcy or reorganization of EDS, or if a receiver,
trustee, or similar official shall have been appointed for its property, the
Trustee shall be entitled and empowered to file and prove a claim for the
whole amount of principal, premium, and interest (or, in the case of Original
Issue Discount Debt Securities, such portion of the principal amount as may be
specified in the terms of such series) owing and unpaid with respect to the
Debt Securities. No holder of any Debt Security or coupon of any series shall
have any right to institute any action or proceeding upon or under or with
respect to the Indenture, for the appointment of a receiver or trustee, or for
any other remedy, unless (a) such holder previously shall have given to the
Trustee written notice of an Event of Default with respect to Debt Securities
of that series and of the continuance thereof, (b) the holders of not less
than 25% in aggregate principal amount of the outstanding Debt Securities of
that series shall have made written request to the Trustee to institute such
action or proceeding with respect to such Event of Default and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses, and liabilities to be incurred therein or thereby, and (c)
the Trustee, for 60 days after its receipt of such notice, request, and offer
of indemnity shall have failed to institute such action or proceeding and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to the provisions of the Indenture.
Prior to the acceleration of the maturity of the Debt Securities of any
series, the holders of a majority in aggregate principal amount of the Debt
Securities of that series at the time outstanding may, on behalf of the
holders of all Debt Securities and any related coupons of that series, waive
any past default or Event of Default and its consequences for that series,
except (a) a default in the payment of the principal, premium, or interest
with respect to such Debt Securities or (b) a default with respect to a
provision of the Indenture that cannot be amended without the consent of each
holder affected thereby. In case of any such waiver, such default shall cease
to exist, any Event of Default arising therefrom shall be deemed to have been
cured for all purposes, and EDS, the Trustee, and the holders of the Debt
Securities of that series shall be restored to their former positions and
rights under the Indenture.
10
<PAGE>
The Trustee shall, within 90 days after the occurrence of a default known to
it with respect to a series of Debt Securities, give to the holders of the
Debt Securities of such series notice of all uncured defaults with respect to
such series known to it, unless such defaults shall have been cured or waived
before the giving of such notice; provided, however, that except in the case
of default in the payment of principal, premium, or interest with respect to
the Debt Securities of such series or in the making of any sinking fund
payment with respect to the Debt Securities of such series, the Trustee shall
be protected in withholding such notice if it in good faith determines that
the withholding of such notice is in the interest of the holders of such Debt
Securities.
Certain Covenants
EDS has agreed to certain restrictions in connection with the issuance of
the Debt Securities. The covenants of EDS contained in the Indenture will not
necessarily afford holders of the Debt Securities protection in the event of a
highly leveraged transaction involving EDS, such as a leveraged buyout, or a
change of control of EDS.
Certain Definitions
"Attributable Debt" means, as to any sale and leaseback transaction, at any
date as of which the amount thereof is to be determined, the total amount
determined by multiplying (i) the greater of (a) the fair value of the Real
Property subject to the arrangement (as determined by EDS) or (b) the net
proceeds of the sale of the Real Property to the lender or investor by (ii) a
fraction, the numerator of which is the number of months in the unexpired
initial term of the lease of the Real Property and the denominator of which is
the number of months in the full initial term of such lease. Sale and
leaseback transactions with respect to Real Property financed by obligations
issued by a state or local governmental unit (whether or not tax exempt) will
not be included in any calculation of Attributable Debt.
"Consolidated Net Tangible Assets" means the aggregate amount of assets
(less applicable reserves and other properly deductible items) after deducting
(a) all current liabilities (excluding any current liabilities for money
borrowed having a maturity of less than 12 months but by its terms being
renewable or extendible beyond 12 months from such date at the option of the
borrower) and (b) all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangibles, all as set forth on the
most recent balance sheet of EDS and its consolidated subsidiaries and
computed in accordance with generally accepted accounting principles.
"Debt" means notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed.
"Real Property" means any real property, and any building, structure or
other facility thereon, located in the United States (excluding its
territories and possessions, but including Puerto Rico), that EDS or any
Subsidiary owns or leases and that has a gross book value (without deduction
of any depreciation reserves) on the date as of which the determination is
being made in excess of 1% of Consolidated Net Tangible Assets. The definition
excludes any such real property and any building, structure or other facility
or portion thereof thereon (i) which comprises EDS' former and current
corporate headquarters in Dallas and Plano, Texas, respectively; (ii) that is
financed by obligations issued by a state or local governmental unit (whether
or not tax exempt); and (iii) which if not owned or leased by EDS or any
Subsidiary, in the opinion of the board of directors of EDS, would not have a
material adverse effect on the business conducted by EDS and its Subsidiaries
as an entirety.
"Restricted Subsidiary" means any Subsidiary (except a Subsidiary engaged
principally in financing the operations of EDS or its Subsidiaries, or both,
outside the United States) that owns a Real Property and either (i) has more
than 50% of its net sales and operating revenues during the preceding four
calendar quarters derived from, or more than 50% of its operating properties
located in, the United States (excluding its territories and possessions, but
including Puerto Rico), or (ii) has more than 50% of its assets consisting of
securities of other Restricted Subsidiaries.
11
<PAGE>
"Subsidiary" means a corporation, association, partnership or other entity
of which EDS or one or more Subsidiaries of EDS own, directly or indirectly,
80% or more of the outstanding voting interest.
Restrictions on Secured Debt
EDS will not itself or permit any Restricted Subsidiary to incur, issue,
assume or guarantee any Debt secured by pledge of, or mortgage or other lien
on, any Real Property or on any shares of stock or Debt of any Restricted
Subsidiary (such pledges, mortgages and other liens being hereinafter called
"Mortgage" or "Mortgages"), without providing that the Debt Securities shall
be secured equally and ratably with (or prior to) such secured Debt.
This obligation will not apply if, after giving effect to the secured Debt,
the aggregate amount of all such Debt so secured together with all
Attributable Debt of EDS and its Restricted Subsidiaries in respect of sale
and leaseback transactions (other than sale and leaseback transactions in
which the net proceeds of the Real Property is applied to retire Debt
Securities or certain other Debt) involving Real Properties would not exceed
10% of EDS' Consolidated Net Tangible Assets.
This obligation will not apply to, and there will be excluded in computing
secured Debt for the purpose of the restriction, Debt secured by (i) Mortgages
existing on the date the Indenture is signed, (ii) Mortgages on property,
stock, or Debt of any corporation, partnership, association or other entity
existing at the time that corporation, partnership, association or other
entity becomes a Restricted Subsidiary or obligor under the Indenture, (iii)
Mortgages in favor of EDS or a Restricted Subsidiary by a Restricted
Subsidiary, (iv) Mortgages in favor of the United States of America or any
state thereof, or any agency, department or other instrumentality thereof, to
secure progress, advance or other payments pursuant to any contract or
provision of any statute, (v) Mortgages on property, stock or Debt existing at
the time of acquisition thereof (including acquisition through merger or
consolidation) or to secure the payment of all or any part of the purchase
price, construction cost or development cost created or assumed within 360
days after such acquisition or completion of construction or development, and
(vi) any extension, renewal or refinancing (or successive extensions, renewals
or refinancings), as a whole or in part, of any of the foregoing; provided,
however, that (a) such extension, renewal or refinancing Mortgage will be
limited to all or a part of the same property, shares of stock or Debt that
secured the Mortgage extended, renewed or refinanced (plus improvements on
such property) and (b) the principal amount of Debt secured by such Mortgage
is not increased in an amount exceeding 105% thereof.
Restrictions on Sales and Leasebacks
Neither EDS nor any Restricted Subsidiary may enter into any sale and
leaseback transaction involving any Real Property, completion of construction
and commencement of full operation of which has occurred more than 360 days
previously, unless either (i) EDS or the Restricted Subsidiary could create
Debt secured by a Mortgage on the Real Property under the restrictions
described under "--Restrictions on Secured Debt" above in an amount equal to
the Attributable Debt with respect to the sale and leaseback transaction
without equally and ratably securing the Notes or (ii) EDS or the Restricted
Subsidiary, within 120 days, applies to the retirement of the Debt Securities
or other Debt of EDS or any of its Restricted Subsidiaries maturing more than
one year after the sale or transfer of an amount equal to the net proceeds of
the sale of the Real Property sold and leased pursuant to that arrangement.
This restriction will not apply to any sale leaseback transaction between EDS
and a Restricted Subsidiary or between Restricted Subsidiaries or involving
the taking back of a lease for a period of three years or less.
Consolidation, Merger, and Sale of Assets
EDS may not consolidate with, or sell or convey all or substantially all of
its assets to, or merge with or into any other person unless the following
conditions have been satisfied: (a) either (1) EDS shall be the continuing
person in the case of a merger or (2) the resulting, surviving, or transferee
person, if other than EDS (the "Successor Company"), shall be a corporation
organized and existing under the laws of the United States,
12
<PAGE>
any State, or the District of Columbia and shall expressly assume all of the
obligations of EDS under the Debt Securities and coupons and the Indenture;
(b) immediately after giving effect to such transaction, no Default or Event
of Default would occur or be continuing; (c) the Successor Company waives any
right to redeem any Bearer Security under circumstances in which the Successor
Company would be entitled to redeem such Bearer Security but EDS would not
have been so entitled to redeem if the consolidation, merger, conveyance,
transfer, or lease had not occurred; and (d) EDS shall have delivered to the
Trustee an officers' certificate and an opinion of counsel, each stating that
such consolidation, merger, or sale complies with the Indenture.
Modification of the Indenture
EDS and the Trustee may enter into supplemental indentures without the
consent of the holders of Debt Securities for one or more of the following
purposes:
(a) To evidence the succession of another person to EDS pursuant to the
provisions of the Indenture relating to consolidations, mergers, and sales
of assets and the assumption by such successor of the covenants,
agreements, and obligations of EDS in the Indenture and in the Debt
Securities;
(b) To surrender any right or power conferred upon EDS by the Indenture,
to add to the covenants of EDS further covenants, restrictions, conditions,
or provisions for the protection of the holders of all or any series of
Debt Securities, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants,
restrictions, conditions, or provisions a default or an Event of Default
under the Indenture (provided, however, that with respect to any such
additional covenant, restriction, condition, or provision, such
supplemental indenture may provide for a period of grace after default,
which may be shorter or longer than that allowed in the case of other
defaults, may provide for an immediate enforcement upon such default, or
may limit the right of holders of a majority in aggregate principal amount
of any or all series of Debt Securities to waive such default);
(c) To cure any ambiguity or to correct or supplement any provision
contained in the Indenture, in any supplemental indenture, or in any Debt
Securities that may be defective or inconsistent with any other provision
contained therein, to convey, transfer, assign, mortgage, or pledge any
property to or with the Trustee, or to make such other provisions in regard
to matters or questions arising under the Indenture, provided that any such
action shall not adversely affect the interests of any holders of Debt
Securities of any series;
(d) To modify or amend the Indenture in such a manner as to permit the
qualification of the Indenture or any supplemental indenture under the
Trust Indenture Act as then in effect;
(e) To add to or change any of the provisions of the Indenture to provide
that Bearer Securities may be registrable as to principal, to change or
eliminate any restrictions on the payment of principal or premium with
respect to Registered Securities or of principal, premium, or interest with
respect to Bearer Securities, or to permit Registered Securities to be
exchanged for Bearer Securities, so long as any such action does not
adversely affect the interests of the holders of Debt Securities or any
coupons of any series in any material respect or permit or facilitate the
issuance of Debt Securities of any series in uncertificated form;
(f) To comply with the provisions of the Indenture relating to
consolidations, mergers, and sales of assets;
(g) To add guarantees with respect to the Debt Securities or to secure
the Debt Securities;
(h) To make any change that does not adversely affect the rights of any
holder;
(i) To add to, change, or eliminate any of the provisions of the
Indenture with respect to one or more series of Debt Securities, so long as
any such addition, change, or elimination not otherwise permitted under the
Indenture shall (1) neither apply to any Debt Security of any series
created prior to the execution of
13
<PAGE>
such supplemental indenture and entitled to the benefit of such provision
nor modify the rights of the holders of any such Debt Security with respect
to such provision or (2) become effective only when there is no such Debt
Security outstanding;
(j) To evidence and provide for the acceptance of appointment by a
successor or separate Trustee with respect to the Debt Securities of one or
more series and to add to or change any of the provisions of the Indenture
as shall be necessary to provide for or facilitate the administration of
the Indenture by more than one Trustee; and
(k) To establish the form or terms of Debt Securities and coupons of any
series, as described under "Description of Debt Securities--General."
With the consent of the holders of a majority in aggregate principal amount
of the outstanding Debt Securities of each series affected thereby, EDS and
the Trustee may from time to time and at any time enter into a supplemental
indenture for the purpose of adding any provisions to, changing in any manner,
or eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holder of the Debt
Securities of such series; provided, however, that without the consent of the
holders of each Debt Security so affected, no such supplemental indenture
shall (a) reduce the percentage in principal amount of Debt Securities of any
series whose holders must consent to an amendment, (b) reduce the rate of or
extend the time for payment of interest on any Debt Security or coupon or
reduce the amount of any payment to be made with respect to any coupon, (c)
reduce the principal of or change the stated maturity of principal of, or any
installment of principal of or interest on, any Debt Security or reduce the
amount of principal of any Original Issue Discount Security that would be due
and payable upon declaration of acceleration of maturity, (d) reduce the
premium payable upon the redemption of any Debt Security or change the time at
which any Debt Security may or shall be redeemed, (e) make any Debt Security
payable in a currency other than that stated in the Debt Security, (f) release
any security that may have been granted with respect to the Debt Securities,
(g) make any change in the provisions of the Indenture relating to waivers of
defaults or amendments that require unanimous consent, (h) change any
obligation of EDS provided for in the Indenture to pay additional interest
with respect to Bearer Securities, (i) limit the obligation of EDS to maintain
a paying agency outside the United States for payment on Bearer Securities or
limit the obligation of EDS to redeem certain Bearer Securities, (j) change
any place of payment where any Debt Security or any premium or interest
thereon is payable, (k) impair the right to institute suit for the enforcement
of any payment on or after the stated maturity of any Debt Security (or in the
case of redemption, on or after the date fixed for redemption), or (l) modify
any of the provisions of this section of the Indenture, except to increase any
such percentage or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the holder of each
outstanding Debt Security affected thereby.
Satisfaction and Discharge of the Indenture; Defeasance
The Indenture shall generally cease to be of any further effect with respect
to a series of Debt Securities if (a) EDS has delivered to the Trustee for
cancellation all Debt Securities of such series (with certain limited
exceptions) or (b) all Debt Securities and coupons of such series not
theretofore delivered to the Trustee for cancellation shall have become due
and payable and EDS shall have deposited with the Trustee as trust funds the
entire amount sufficient to pay at maturity or upon redemption all such Debt
Securities and coupons (and if, in either case, EDS shall also pay or cause to
be paid all other sums payable under the Indenture by it).
In addition, EDS shall have a "legal defeasance option" (pursuant to which
it may terminate, with respect to the Debt Securities of a particular series,
all of its obligations under such Debt Securities and the Indenture with
respect to such Debt Securities) and a "covenant defeasance option" (pursuant
to which it may terminate, with respect to the Debt Securities of a particular
series, its obligations with respect such Debt Securities under certain
specified covenants contained in the Indenture). If EDS exercises its legal
defeasance option with respect to a series of Debt Securities, payment of such
Debt Securities may not be accelerated because of an Event of Default. If EDS
exercises its covenant defeasance potion with respect to a series of Debt
Securities, payment of such Debt Securities may not be accelerated because of
an Event of Default related to the specified covenants.
14
<PAGE>
EDS may exercise its legal defeasance option or its covenant defeasance
option with respect to the Debt Securities of a series only if (a) EDS
irrevocably deposits in trust with the Trustee cash or U.S. Government
Obligations (as defined in the Indenture) for the payment of principal,
premium, and interest with respect to such Debt Securities to maturity or
redemption, as the case may be, (b) EDS delivers to the Trustee a certificate
from a nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any deposited
money without investment will provide cash at such times and in such amounts
as will be sufficient to pay the principal, premium, and interest when due
with respect to all the Debt Securities of such series to maturity or
redemption, as the case may be, (c) 123 days pass after the deposit is made
and during the 123-day period after a default described in clause (f) or (g)
under "--Events of Default and Remedies" above occurs that is continuing at
the end of such period, (d) no Default has occurred and is continuing on the
date of such deposit and after giving effect thereto, (e) the deposit does not
constitute a default under any other agreement binding on EDS, (f) EDS
delivers to the Trustee an opinion of counsel to the effect that the trust
resulting from the deposit does not constitute, or is qualified as, a
regulated investment company under the Investment Company Act of 1940, (g) EDS
shall have delivered to the Trustee an opinion of counsel addressing certain
federal income tax matters relating to the defeasance, and (h) EDS delivers to
the Trustee an officers' certificate and an opinion of counsel, each stating
that all conditions precedent to the defeasance and discharge of the Debt
Securities of such series as contemplated by the Indenture have been complied
with. The Trustee shall hold in trust cash or U.S. Government Obligations
deposited with it as described above and shall apply the deposited cash and
the proceeds from deposited U.S. Government Obligations to the payment of
principal, premium, and interest with respect to the Debt Securities and
coupons of the defeased series.
The Trustee
Texas Commerce Bank National Association is the Trustee under the Indenture.
The Trustee is also the trustee under a prior indenture between EDS and Texas
Commerce Bank National Association and acts as a depository for funds of,
performs certain other services for, and transacts other banking business with
EDS and certain of its subsidiaries in the normal course of its business.
Chase Manhattan Bank, an affiliate of the Trustee, acts as a depository for
funds of, performs certain other services for, and transacts other banking
business with EDS and certain of its subsidiaries in the normal course of
business. Chase Manhattan Bank is a participating lender under EDS' current
credit facility.
EDS may appoint a separate Trustee for any series of Debt Securities.
Governing Law
The Indenture and the Debt Securities will be governed by the laws of the
State of New York.
15
<PAGE>
PLAN OF DISTRIBUTION
EDS may sell Debt Securities in or outside the United States of America
through underwriters, dealers or agents or directly to one or more purchasers.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Debt Securities, underwriters may receive
compensation from EDS or from purchasers of Debt Securities for whom they may
act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Debt Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents. Underwriters, dealers and agents that participate in the
distribution of Debt Securities may be deemed to be underwriters, and any
discounts or commissions received by them from EDS and any profit on the
resale of Debt Securities by them may be deemed to be underwriting discounts
and commissions, under the Securities Act. Any such underwriter or agent will
be identified, and any such compensation received from EDS will be described
in the applicable Prospectus Supplement. In the event EDS sells directly to
one or more purchasers, EDS' employees will not receive additional
compensation in connection with their participation in such sales, and,
accordingly, EDS will not register any employees as broker/dealers in reliance
upon Rule 3a4-1 as promulgated under the Exchange Act.
Under agreements which may be entered into by EDS, underwriters, dealers and
agents who participate in the distribution of Debt Securities may be entitled
to indemnification by EDS against certain liabilities, including liabilities
under the Securities Act, or to contribution with respect to payments which
the underwriters, dealers or agents may be required to make in respect
thereof.
The Debt Securities may or may not be listed on a national securities
exchange. No assurance can be given that there will be a market for the Debt
Securities.
LEGAL MATTERS
Certain matters with respect to the validity of the Debt Securities offered
hereby will be passed upon for EDS by D. Gilbert Friedlander, Senior Vice
President, General Counsel and Secretary of EDS, and for any underwriters,
dealers or agents by a firm named in the Prospectus Supplement relating to a
particular issue of Debt Securities. Mr. Friedlander is the beneficial owner
of shares of Common Stock of EDS.
EXPERTS
The consolidated financial statements and financial statement schedule of
EDS as of December 31, 1995 and 1994, and for each of the years in the three-
year period ended December 31, 1995, which are incorporated in this Prospectus
by reference to EDS' Current Report on Form 8-K dated April 23, 1996, have
been audited by KPMG Peat Marwick LLP, independent auditors, as stated in
their reports appearing therein and have been so incorporated by reference in
reliance upon such reports given upon the authority of that firm as experts in
accounting and auditing.
16
<PAGE>
PRINCIPAL OFFICE OF THE COMPANY
5400 Legacy Drive
Plano, Texas 75024
TRUSTEE AND REGISTRAR
Chase Bank of Texas, National Association
600 Travis, Suite 1150
Houston, Texas 77002
LUXEMBOURG PAYING AGENT/TRANSFER AGENT
Chase Bank
5 rue Plaits
Luxembourgville, Luxembourg
LISTING AGENT
Paribas Luxembourg
10A boulevard Royal
2093 Luxembourg
LEGAL ADVISERS
To the Underwriters
as to the United States Law
Vinson & Elkins L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
To the Company
as to the United States Law
D. Gilbert Friedlander
Senior Vice President, General Counsel and Secretary
5400 Legacy Drive
Plano, Texas 75024
To the Company
as to the United States Federal Income Tax Law
Baker & Botts, L.L.P.
2001 Ross Avenue, Suite 600
Dallas, Texas 75201
AUDITORS TO THE COMPANY
KPMG LLP
200 Crescent Court, Suite 300
Dallas, Texas 75201
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[EDS LOGO APPEARS HERE]
$1,500,000,000
Electronic Data Systems Corporation
----------------
$ % Notes due 2004
PROSPECTUS SUPPLEMENT
----------------
$ % Notes due 2009
----------------
Joint Book-Running Managers
Merrill Lynch & Co. Salomon Smith Barney
Banc of America Securities LLC ----------------
Chase Securities Inc.
$ % Notes due 2029
Credit Suisse First Boston
Goldman, Sachs & Co.
J.P. Morgan & Co.
Morgan Stanley Dean Witter
----------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
