<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __ to __
Commission File No. 01-11779
ELECTRONIC DATA SYSTEMS CORPORATION
a Delaware corporation
IRS Employer Identification No. 75-2548221
5400 Legacy Drive, Plano, Texas 75024-3199
(972) 604-6000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].
As of May 10, 2000, there were outstanding 465,813,331 shares of the
registrant's Common Stock, $.01 par value per share.
===============================================================================
<PAGE>
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
INDEX
Page No.
--------
Part I -- Financial Information (Unaudited)
Item 1. Financial Statements
Unaudited Condensed Consolidated Statements of Operations........ 3
Unaudited Condensed Consolidated Balance Sheets.................. 4
Unaudited Condensed Consolidated Statements of Cash Flows........ 5
Notes to Unaudited Condensed Consolidated Financial Statements... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................ 9
Part II -- Other Information
Item 6. Exhibits and Reports on Form 8-K................................. 13
Signatures................................................................. 14
Exhibit 27 Financial Data Schedule (for SEC information only)
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
2000 1999
---------- ----------
<S> <C> <C>
Revenues $ 4,530.4 $ 4,326.3
---------- ----------
Costs and expenses
Cost of revenues 3,736.3 3,608.7
Selling, general and administrative 419.8 443.9
Restructuring and other charges -- 379.8
---------- ----------
Total costs and expenses 4,156.1 4,432.4
---------- ----------
Operating income (loss) 374.3 (106.1)
Interest expense and other, net 77.1 73.9
---------- ----------
Income (loss) before income taxes 451.4 (32.2)
Provision (benefit) for income taxes 162.5 (11.6)
---------- ----------
Net income (loss) $ 288.9 $ (20.6)
========== ==========
Earnings (loss) per share
Basic $ 0.62 $ (0.04)
========== ==========
Diluted $ 0.60 $ (0.04)
========== ==========
Cash dividends per share $ 0.15 $ 0.15
========== ==========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions except share and per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 558.0 $ 537.2
Marketable securities 267.7 191.5
Accounts receivable, net 4,185.2 4,423.4
Prepaids and other 821.5 725.6
--------- ---------
Total current assets 5,832.4 5,877.7
--------- ---------
Property and equipment, net 2,377.9 2,459.8
--------- ---------
Operating and other assets
Investments and other assets 1,515.6 1,483.6
Software, goodwill, and other intangibles, net 2,762.5 2,701.2
--------- ---------
Total operating and other assets 4,278.1 4,184.8
--------- ---------
Total Assets $12,488.4 $12,522.3
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 377.3 $ 378.1
Accrued liabilities 3,174.3 3,312.6
Deferred revenue 686.6 718.3
Income taxes 120.8 93.4
Current portion of long-term debt 381.0 493.6
--------- ---------
Total current liabilities 4,740.0 4,996.0
--------- ---------
Deferred income taxes 191.4 268.2
--------- ---------
Long-term debt, less current portion 2,485.5 2,215.7
--------- ---------
Redeemable preferred stock of subsidiaries, minority interests, and
other long-term liabilities 466.4 507.8
--------- ---------
Shareholders' equity
Preferred stock, $.01 par value; authorized 200,000,000 shares, none
issued -- --
Common stock, $.01 par value; 2,000,000,000 shares authorized;
493,420,519 shares issued at March 31, 2000; 493,415,265 shares
issued at December 31, 1999 4.9 4.9
Additional paid-in capital 912.3 971.9
Retained earnings 5,398.0 5,179.2
Accumulated other comprehensive income (67.1) (79.7)
Treasury stock, at cost, 28,012,893 shares at
March 31, 2000; 27,222,631 shares at
December 31, 1999 (1,643.0) (1,541.7)
--------- ---------
Total shareholders' equity 4,605.1 4,534.6
--------- ---------
Total Liabilities and Shareholders' Equity $12,488.4 $12,522.3
========= =========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE>
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
------- --------
<S> <C> <C>
Net cash provided by operating activities $ 290.0 $ 369.0
------- --------
Cash Flows from Investing Activities
Proceeds from sales of marketable securities 166.7 69.2
Proceeds from investments and other assets 10.8 270.7
Payments for purchases of property and equipment (127.1) (148.5)
Payments for investments and other assets (221.5) (53.5)
Payments for purchases of software and other intangibles (25.4) (30.0)
Payments for purchases of marketable securities (13.5) (25.1)
Other 1.7 20.3
------- --------
Net cash provided by (used in) investing activities (208.3) 103.1
------- --------
Cash Flows from Financing Activities
Proceeds from commercial paper and long-term debt 434.9 19.0
Payments on commercial paper and long-term debt (214.3) (23.0)
Purchase of treasury stock (210.0) (144.9)
Employee stock transactions and related tax benefits 24.2 (3.0)
Dividends paid (70.0) (73.6)
------- --------
Net cash used in financing activities (35.2) (225.5)
------- --------
Effect of exchange rate changes on cash and cash equivalents (25.7) (39.8)
------- --------
Net increase in cash and cash equivalents 20.8 206.8
Cash and cash equivalents at beginning of period 537.2 1,038.8
------- --------
Cash and cash equivalents at end of period $ 558.0 $1,245.6
======= ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
5
<PAGE>
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Electronic Data Systems Corporation ("EDS" or the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information. In the opinion of management, all adjustments (consisting
of only normal recurring items) which are necessary for a fair presentation have
been included. The results for interim periods are not necessarily indicative of
results which may be expected for any other interim period or for the full year.
These statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's 1999 Annual Report on
Form 10-K.
Certain reclassifications have been made to the 1999 unaudited condensed
consolidated financial statements to conform to the 2000 presentation.
NOTE 2. EARNINGS PER SHARE
The weighted-average number of shares outstanding used to compute basic and
diluted earnings per share for the three months ended March 31, 2000 were 466.8
million and 481.2 million, respectively. The weighted-average number of shares
outstanding used to compute basic and diluted loss per share for the three
months ended March 31, 1999 was 492.2 million. Had the Company reported income
from continuing operations for the three months ended March 31, 1999, diluted
earnings per share would have been computed using 501.9 million shares.
Securities which were outstanding but were not included in the computation
of diluted earnings per share because their effect was antidilutive include
restricted stock units of 16.2 million shares for the three months ended March
31, 1999 and options to purchase 0.5 million shares and 40.9 million shares for
the three months ended March 31, 2000 and 1999, respectively. Had the Company
reported income from continuing operations for the three months ended March 31,
1999, securities outstanding that would not have been included in the
computation of earnings per share because their effect would have been
antidilutive included restricted stock units of 0.2 million shares and options
to purchase 1.3 million shares.
NOTE 3. DEPRECIATION AND AMORTIZATION
Property and equipment is stated net of accumulated depreciation of $4.2
billion at both March 31, 2000 and December 31, 1999. Additionally, software,
goodwill, and other intangibles are stated net of accumulated amortization of
$1.4 billion at both March 31, 2000 and December 31, 1999. Depreciation and
amortization expense for the three months ended March 31, 2000 and 1999 was
$354.6 million and $312.0 million, respectively.
NOTE 4. RESTRUCTURING AND OTHER CHARGES
Beginning in the first quarter of 1999, the Company began the
implementation of initiatives designed to reduce costs, streamline its
organizational structure, and exit certain operating activities. As a result of
these initiatives, the Company recorded restructuring charges and related asset
writedowns totaling $1,067.7 million for the year ended December 31, 1999,
including $379.8 million in the first quarter of 1999. In the fourth quarter of
1999, the Company reversed residual accruals of $29.4 million related to
previously recorded restructuring charges resulting in a net charge of $1,038.3
million for the year ended December 31, 1999. Amounts recorded for restructuring
activities during 1999 provide for planned workforce reductions of approximately
15,300 employees, consisting of approximately 3,200 employees who accepted the
Company's early retirement offer and the involuntary termination of
approximately 12,100 individuals employed throughout the Company in managerial,
professional, clerical, consulting and technical positions. Total involuntary
termination and early retirement offer charges amounted to $866.5 million,
$146.2 million of which pertains to the expense associated with special
termination
6
<PAGE>
benefits related to the early retirement offer (net of a curtailment gain),
including amounts under our defined benefit pension plan, and $51.3 million of
which pertains to changes in the vesting conditions for unvested restricted
stock units and options. In addition, these initiatives resulted in the exit of
certain business activities, the consolidation of facilities, and the writedown
of certain assets to net realizable value. Charges associated with these actions
include $93.9 million related to business exit and facilities consolidation
costs, and asset writedowns of $107.3 million.
Through March 31, 2000, approximately 9,100 employees have left the Company
through involuntary termination as a result of the 1999 initiatives, and
approximately $358.4 million of termination benefits have been charged to the
accrual. In addition, approximately $40.9 million has been paid in connection
with the exit activities described above. The Company expects that remaining
cash expenditures relating to this charge will be incurred primarily in 2000.
The following table depicts activity in the 1999 restructuring accrual for
the three months ended March 31, 2000 (in millions):
Involuntary
Termination Exit
Costs Costs Total
----- ----- -----
Balance at December 31, 1999 $ 399.3 $ 51.3 $ 450.6
Payments (99.5) (5.9) (105.4)
-------- ------ --------
Balance at March 31, 2000 $ 299.8 $ 45.4 $ 345.2
======== ====== ========
NOTE 5. COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) for the three months ended March 31, 2000 and
1999 was $301.5 million and $(110.4) million, respectively. The primary
differences between comprehensive income and net income for the three months
ended March 31, 2000 was related to net unrealized holding gains on certain
investments. The primary difference between comprehensive loss and net loss for
the three months ended March 31, 1999 was related to foreign currency
translation adjustments.
NOTE 6. SEGMENT INFORMATION
Effective January 1, 2000, the Company reorganized its business on a global
basis along the following four lines of business: Information Solutions,
Business Process Management, E.solutions, and A.T. Kearney. The Company's
segment information is stated in accordance with the new organizational
structure. Revenue and operating income (loss) from E.solutions and A.T. Kearney
have been combined to produce the "Consulting" segment.
Prior to the reorganization, the Company disclosed segment information by
aggregating its client contracts along the following three lines of business:
Systems and Technology Services, Business Process Management, and Management
Consulting Services. Prior period segment data has been restated to reflect the
new reporting structure.
7
<PAGE>
The following is a summary of certain financial information by reportable
segment (in millions):
<TABLE>
<CAPTION>
For the Three
Months Ended March 31, 2000 1999
- ---------------------- --------------------------- ---------------------------
Operating Operating
Revenue Income (Loss) Revenue Income (Loss)
------- ------------- ------- ------------
<S> <C> <C> <C> <C>
Information Solutions $ 3,405.1 $ 539.9 $ 3,220.6 $ 476.9
Business Process Management 621.7 95.4 603.7 81.2
Consulting 523.1 39.9 433.5 (0.5)
All other (19.5) (300.9) 68.5 (283.9)
--------- ---------- -------- -------
4,530.4 374.3 4,326.3 273.7
Restructuring and other charges - - - (379.8)
--------- ---------- --------- -------
Totals $ 4,530.4 $ 374.3 $ 4,326.3 $ (106.1)
========= ========== ========= ==========
</TABLE>
The Company currently uses operating income, which consists of segment
revenues less segment costs and expenses (before restructuring and other
charges), to measure segment profit or loss. The Company had previously measured
segment performance using gross profit, which consists of segment revenues less
segment cost of revenues. Revenue and operating income of non-U.S. operations
are measured using fixed currency exchange rates with differences between fixed
and actual exchange rates being included in the "all other" category. In
addition, the "all other" category includes the results of the Company's
Unigraphics Solutions Inc. and EDS CoNext, Inc. subsidiaries, and corporate
expenses. Certain historical financial information is not readily available
under the new reporting structure, accordingly, certain group overhead cost
allocations have been made to present 1999 operating income (loss) under the new
reporting structure.
The following is a summary of total assets by reportable segment
(in millions):
March 31, December 31,
2000 1999
---- ----
Information Solutions $ 7,473.2 $ 7,308.7
Business Process Management 1,668.4 1,729.1
Consulting 1,636.2 1,710.2
All other 1,710.6 1,774.2
--------- ---------
Total $12,488.4 $12,522.2
========= =========
Total assets in the "all other" category include unallocated assets,
primarily corporate cash, fixed assets and investments, and foreign exchange
rate differences.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
Electronic Data Systems Corporation, or EDS, is a professional services
firm that offers its clients a portfolio of related services worldwide within
the broad categories of information technology outsourcing, business process
management and consulting. This discussion refers to EDS and its consolidated
subsidiaries and should be read in conjunction with the discussion included in
our 1999 Annual Report on Form 10-K.
Forward-Looking Statements
The statements in this discussion which are not historical statements are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include
statements regarding estimated cost savings from our productivity and
repositioning initiatives, future operating margins, the impact of the
renegotiation of certain sector agreements with GM, future performance of our
base, or non-GM business, total contract values for new business and other
forward-looking financial information. In addition, we have made in the past and
may make in the future other written or oral forward-looking statements,
including statements regarding future operating performance, short- and long-
term revenue and earnings growth, backlog and the value of new contract
signings, business pipeline, and industry growth rates and our performance
relative thereto. Any forward-looking statement may rely on a number of
assumptions concerning future events and be subject to a number of uncertainties
and other factors, many of which are outside our control, that could cause
actual results to differ materially from such statements. These include, but are
not limited to: competition in the industries in which we conduct business and
the impact 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 and revenue
estimates; the impact of acquisitions and divestitures and 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; and the cost of attracting and retaining highly skilled personnel. We
are not obligated to update or revise any forward-looking statements whether as
a result of new information, future events or otherwise.
Results of Operations
Revenues. Total revenues for the quarter ended March 31, 2000, rose $204.1
million, or 5%, over the corresponding quarter in 1999 to $4.5 billion. Revenues
from non-GM clients for the quarter ended March 31, 2000, rose $239.8 million,
or 7%, to $3.7 billion from $3.4 billion for the same period in 1999. The
increase in non-GM revenues was primarily the result of new contracts signed in
1999, and from revenues associated with the acquisition of Systemhouse in April
1999. This increase was partially offset by decreases resulting from the
divestiture of certain business units and the discontinuation of certain
contracts during 1999 in order to align service offerings with our four global
lines of business to capture synergies and further leverage our delivery
platforms. As a result of these strategic divestitures, we expect revenue
growth, when compared to the corresponding periods in 1999, to be stronger in
the latter half of 2000 than in the first half of the year. Revenues from GM
decreased $35.7 million, or 4%, to $856.0 million during the three months ended
March 31, 2000 compared with $891.7 million for the corresponding period in
1999. Delphi Automotive Systems Corporation, or Delphi, previously a wholly
owned subsidiary of GM, was spun off from GM on May 28, 1999. For comparative
purposes, revenues from Delphi have been excluded from the computation of
revenues from GM for the first quarter of 1999. We estimate that revenues from
GM for calendar year 2000 will be lower than in 1999.
Effective January 1, 2000, the Company reorganized its operations on a
global basis along the following four lines of business: Information Solutions,
Business Process Management, E.solutions, and A.T. Kearney. The Company's
segment information displayed below is in accordance with the new organizational
structure. Revenue and operating income (loss) from E.solutions and A.T. Kearney
have been combined to produce the "Consulting" segment.
9
<PAGE>
Prior to the reorganization, the Company disclosed segment information by
aggregating its client contracts along the following three lines of business:
Systems and Technology Services, Business Process Management, and Management
Consulting Services.
We evaluate our operating segment revenue growth on a constant foreign
currency basis. On this basis, operating segment revenues from non-GM clients
increased 10% for the three months ended March 31, 2000 as compared to the
corresponding period in 1999. The following table displays revenue growth by
segment on a constant foreign currency basis for the three months ended March
31, 2000 as compared to the corresponding period in 1999:
Total
-----
Information Solutions 6 %
Business Process Management 3 %
Consulting 21 %
E.solutions 35 %
A.T. Kearney 13 %
Revenue growth is attributable primarily to new contract signings and to
revenues associated with the acquisition of Systemhouse in April 1999. The
divestiture of certain business units in 1999 had the largest impact on revenue
growth in the Business Process Management segment.
The following table displays the percentage of total revenue by segment:
For the Three Months Ended March 31, 2000 1999
------------------------------------ ---- ----
Information Solutions 75% 74%
Business Process Management 14 14
Consulting 11 10
All other -- 2
---- ----
Total 100% 100%
==== ====
Revenues from non-GM clients comprised 81% and 79% of total revenues for
the three months ended March 31, 2000 and 1999, respectively.
Costs and expenses. The gross margin percentage [(revenues less cost of
revenues)/revenues] increased to 17.5% for the three months ended March 31,
2000, compared with 16.6% for the corresponding period in 1999. This increase
was due primarily to company-wide productivity and repositioning initiatives
implemented in 1999, and was partially offset by a decline in the gross margin
on our GM business resulting from the previously announced renegotiation of our
sector agreements with GM covering its North American operations and GMAC, which
became effective January 1, 2000. In addition, EDS CoNext, our business-to-
business (B2B) net markets offering subsidiary, incurred approximately $27
million in start-up costs for the three months ended March 31, 2000. Although we
expect to continue to incur start-up costs for EDS CoNext for the remainder of
the year, these incremental costs are expected to be more than offset by
continued savings, as compared to the prior year, from the productivity and
repositioning initiatives discussed above.
Selling, general and administrative expenses as a percentage of revenues
decreased to 9.3% for the three months ended March 31, 2000 compared to 10.3% in
the corresponding period in 1999. This decrease resulted primarily from the
cost-saving initiatives implemented in 1999. Savings from these initiatives were
partially offset by increased spending for sales, corporate systems, training
and other areas of strategic importance.
Restructuring and other charges
Beginning in the first quarter of 1999, we began the implementation of
initiatives designed to reduce costs, streamline our organizational structure,
and exit certain operating activities. As a result of these initiatives, we
recorded restructuring charges and related asset writedowns totaling $1,067.7
million for the year ended December 31, 1999, including $379.8 million in the
first quarter of 1999. In the fourth quarter of 1999, the Company reversed
residual accruals of $29.4 million related to previously recorded restructuring
charges resulting in a net charge of
10
<PAGE>
$1,038.3 million for the year ended December 31, 1999. Amounts recorded for
restructuring activities during 1999 provide for planned workforce reductions of
approximately 15,300 employees, consisting of approximately 3,200 employees who
accepted our early retirement offer and the involuntary termination of
approximately 12,100 individuals employed throughout the Company in managerial,
professional, clerical, consulting and technical positions. Total involuntary
termination and early retirement offer charges amounted to $866.5 million,
$146.2 million of which pertains to the expense associated with special
termination benefits related to the early retirement offer (net of a curtailment
gain), including amounts under our defined benefit pension plan, and $51.3
million of which pertains to changes in the vesting conditions for unvested
restricted stock units and options. In addition, these initiatives resulted in
the exit of certain business activities, the consolidation of facilities, and
the writedown of certain assets to net realizable value. Charges associated with
these actions include $93.9 million related to business exit and facilities
consolidation costs, and asset writedowns of $107.3 million.
Through March 31, 2000, approximately 9,100 employees have left the Company
through involuntary termination as a result of the 1999 initiatives, and
approximately $358.4 million of termination benefits have been charged to the
accrual. In addition, approximately $40.9 million has been paid in connection
with the exit activities described above. We expect that remaining cash
expenditures relating to this charge will be incurred primarily in 2000.
The following table depicts activity in the 1999 restructuring accrual for
the three months ended March 31, 2000 (in millions):
Involuntary
Termination
Costs Exit Costs Total
----- ---------- -----
Balance at December 31, 1999 $ 399.3 $ 51.3 $ 450.6
Payments (99.5) (5.9) (105.4)
-------- --------- -------
Balance at March 31, 2000 $ 299.8 $ 45.4 $ 345.2
======== ========= =======
Interest expense and other, net. The components of interest and other
income, net are presented below for the three months ended March 31, 2000 and
1999 (in millions):
2000 1999
---- ----
Interest and other income $ 137.8 $ 95.7
Interest expense (60.7) (21.8)
-------- ---------
Total $ 77.1 $ 73.9
======== =========
Interest expense and other, net increased $3.2 million in the first quarter
of 2000 to $77.1 million, compared with $73.9 million in the corresponding
period in 1999. Interest and other income increased $42.1 million, to $137.8
million from $95.7 million in the comparable period in 1999, due principally to
incremental gains from the sale of certain investments, including a pre-tax gain
of $97.6 million resulting primarily from the sale of our Kinetra subsidiary, an
e-business venture started in 1998. Interest and other income for the three
months ended March 31, 1999 included a pre-tax gain of $63.5 million associated
with the sale of a portion of our limited partnership investments. Interest
expense increased $38.9 million in the first quarter of 2000 to $60.7 million,
compared with $21.8 million in the corresponding period of 1999, primarily as a
result of an increased level of debt.
Income taxes. The effective tax rate remained constant at 36.0% for the
three months ended March 31, 2000 and 1999.
Net income (loss). For the three months ended March 31, 2000, net income
increased $309.5 million to $288.9 million compared to a net loss of $(20.6)
million during the corresponding period of the prior year. Basic and diluted
earnings per share were $0.62 and $0.60, respectively, for the three months
ended March 31, 2000. Both basic and diluted loss per share were $(0.04) for the
three months ended March 31, 1999.
Excluding the pre-tax gain of $97.6 million from the sale of investments,
net income for the three months ended March 31, 2000 would have been $226.4
million, and basic and diluted earnings per share would have been
11
<PAGE>
$0.49 and $0.47, respectively. Excluding the pre-tax charges of $379.8 million
related to the restructuring and other charges, and the pre-tax gain of $63.5
million associated with the sale of a portion of our limited partnership
investments, net income for the three months ended March 31, 1999 would have
been $181.8 million, and basic and diluted earnings per share would have been
$0.37 and $0.36, respectively.
The following table summarizes the adjustments discussed in the preceding
paragraph for the three months ended March 31, 2000 and 1999 (dollars in
millions, except per share amounts):
2000 1999
---- ----
Revenues - as reported $ 4,530.4 $ 4,326.3
--------- ---------
Costs and expenses - as reported 4,156.1 4,432.4
Adjusting item:
Restructuring and other charges -- (379.8)
--------- ---------
Costs and expenses - pro forma 4,156.1 4,052.6
--------- ---------
Operating income - pro forma 374.3 273.7
--------- ---------
Interest expense and other, net - as reported 77.1 73.9
Adjusting item:
Gain on disposition of certain investments (97.6) (63.5)
--------- ---------
Interest expense and other, net - pro forma (20.5) 10.4
--------- ---------
Income before income taxes - pro forma 353.8 284.1
Provision for income taxes - pro forma 127.4 102.3
--------- ---------
Net income - pro forma $ 226.4 $ 181.8
========= =========
Earnings per share - pro forma
Basic $ 0.49 $ 0.37
========= =========
Diluted $ 0.47 $ 0.36
========= =========
Liquidity and Capital Resources
At March 31, 2000, we held cash and cash equivalents of $558.0 million, had
working capital of $1.1 billion, and had a current ratio of 1.2-to-1. This
compares to cash and cash equivalents of $537.2 million, $881.7 million in
working capital, and a current ratio of 1.2-to-1 at December 31, 1999.
Total debt increased to $3.0 billion at March 31, 2000, from $2.9 billion
at December 31, 1999. Total debt consists of notes payable, commercial paper and
redeemable preferred stock of subsidiaries. The total debt-to-capital ratio
(which includes total debt and minority interests as a component of capital) was
38.9% at March 31, 2000, and 37.8% at December 31, 1999. At both March 31, 2000,
and December 31, 1999, we had committed lines of credit of approximately $1.3
billion, all unused, which serve as a backup facility for commercial paper
borrowings.
Cash flows provided by operating activities decreased $79.0 million during
the three months ended March 31, 2000 to $290.0 million from $369.0 million in
the corresponding period in the prior year. This decrease was primarily due to
changes in working capital items. Cash used in investing activities during the
three months ended March 31, 2000 increased $311.4 million to $208.3 million
compared to cash provided of $103.1 million in the corresponding period in the
prior year, primarily due to reduced proceeds from the sale of investments and
other assets and increased payments for investments and other assets. Cash flows
used in financing activities decreased $190.3 million to $35.2 million during
the three months ended March 31, 2000 compared to $225.5 million during the
corresponding period of 1999 due primarily to net proceeds from long-term debt.
For the three months ended March 31, 2000 and 1999, EDS paid cash dividends
totaling $70.0 million and $73.6 million, respectively.
12
<PAGE>
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
------------------------------------------------------------------
27 Financial Data Schedule (for SEC information only)
(b) Reports on Form 8-K
During the quarter ended March 31, 2000, EDS filed the following Current
Reports on Form 8-K:
(i) Current Report on Form 8-K dated February 3, 2000 reporting a press
release under Item 5 - Other Events and Item 7 - Exhibits.
(ii) Current Report on Form 8-K dated February 17, 1999 reporting under
Item 5 -Other Events and Item 7 - Exhibits, the Purchase Agreement
dated February 17, 2000 among the Registrant, the General Motors
Hourly Rate Employees Pension Plan (the "Pension Plan"), Morgan
Stanley & Co. Incorporated , Merrill, Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co., and Salomon Smith Barney Inc.
in connection with the offering by the Pension Plan of 15,000,000
shares of the Registrant's Common Stock.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ELECTRONIC DATA SYSTEMS CORPORATION
-----------------------------------
(Registrant)
Dated: May 12, 2000 By: /S/ JAMES E. DALEY
------------------------------------
James E. Daley
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated: May 12, 2000 By: /S/ JOHN ADAMS
------------------------------------
John Adams
Vice President and Controller
(Principal Accounting Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 558
<SECURITIES> 268
<RECEIVABLES> 4,299
<ALLOWANCES> 114
<INVENTORY> 0
<CURRENT-ASSETS> 5,832
<PP&E> 6,539
<DEPRECIATION> 4,161
<TOTAL-ASSETS> 12,488
<CURRENT-LIABILITIES> 4,740
<BONDS> 2,668
0
0
<COMMON> 5
<OTHER-SE> 4,600
<TOTAL-LIABILITY-AND-EQUITY> 12,488
<SALES> 4,530
<TOTAL-REVENUES> 4,530
<CGS> 0
<TOTAL-COSTS> 3,736
<OTHER-EXPENSES> 420
<LOSS-PROVISION> 14
<INTEREST-EXPENSE> 61
<INCOME-PRETAX> 451
<INCOME-TAX> 162
<INCOME-CONTINUING> 289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 289
<EPS-BASIC> 0.62
<EPS-DILUTED> 0.60
</TABLE>
