<PAGE>
EXHIBIT 99(a)
CONTACT:
--------
Jeff Baum
(+1) (972) 797-9495
[email protected]
FOR RELEASE 3:05 P.M. CDT, THURSDAY, OCTOBER 26, 2000
EDS THIRD QUARTER EARNINGS PER SHARE UP 16 PERCENT TO 59 CENTS
DIGITAL ECONOMY LEADER SIGNS RECORD $6.2 BILLION IN THIRD QUARTER CONTRACTS
BEGINS FOURTH QUARTER WITH $6.9 BILLION NAVY/MARINE INTRANET WIN
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PLANO, Texas - EDS today reported third quarter earnings per share of 59 cents,
an increase of 16 percent over the comparable result of 51 cents a year ago.
Base (non-GM) revenue grew by 5 percent on a constant currency basis, and 8
percent on an organic basis.
During the third quarter, EDS signed contracts totaling $6.2 billion, a record
for the seventh consecutive quarter. For the first nine months of 2000,
contract signings increased 23 percent over the comparable prior year period to
$16.8 billion. Signings were strong across EDS' lines of business and across
geographic regions.
"EDS continues to gain momentum and capitalize on opportunities around the
world," said Dick Brown, chairman and CEO. "Our global infrastructure, broad
intellectual capital and ability to provide innovative end-to-end solutions
position EDS at the center of the digital economy."
On October 6, the Navy and Marine Corps awarded a landmark $6.9 billion intranet
contract to EDS. The contract is the largest in U.S. federal government history
and the second largest ever for EDS.
During the third quarter, EDS won a multi-billion contract with the UK
Department of Social Security. This award, among the 10 largest contracts in
company history, further reinforces EDS' position as the No. 1 information
technology services supplier in the United Kingdom.
"These historic wins and a seventh consecutive quarter of record new business
signings show that EDS is building a foundation for sustainable, long-term
profitable growth," Brown said.
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EDS THIRD QUARTER EPS INCREASES 16 PERCENT
ADD 1
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In addition to record contract signings in the quarter, EDS continued to improve
its operational effectiveness and efficiency. Operating margin increased to
9.7 percent in the quarter from 8.7 percent a year ago, and return on net assets
improved to 13.7 percent from 11.8 percent a year ago. EDS remains on course to
achieve its goal of a 10 percent operating margin run rate by year-end.
FINANCIAL HIGHLIGHTS
. Third quarter earnings per share increased by 16 percent over comparable
third quarter 1999 results. For the year-to-date, earnings per share have
increased 21 percent over the comparable prior year results.
. Operating margin, at 9.7 percent in the third quarter, was 100 basis points
higher than in the period a year ago and 20 basis points higher than in the
second quarter of 2000. Reflecting a continuing emphasis on productivity,
this was the sixth consecutive quarter EDS has recorded comparable year-over-
year improvement in operating margin. For the year-to-date, operating margin
improved to 9.2 percent compared to 7.6 percent in the prior year period.
. Base (non-GM) revenue grew by 2 percent (5% constant currency) in the third
quarter and 3 percent (6% constant currency) on a year-to-date basis. GM
revenues were down 4 percent in the quarter and 5 percent for the first nine
months of 2000, consistent with expectations.
. On an organic basis, base revenue grew by 8 percent in the third quarter,
reflecting management's expectations of an improving trend. Organic revenue
growth excludes the impact of currency, acquisitions and divestitures.
Divestitures reflect the impact of contract pruning activities instituted in
1999 to improve margins.
. Third quarter return on net assets was 13.7 percent, a 190 basis point
improvement over the same period in 1999. Year-to-date return on net assets
was 12.9 percent, an increase of 200 basis points over the year-ago period.
. The third quarter debt-to-capital ratio improved to 36 percent from 38
percent in the second quarter of 2000.
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EDS THIRD QUARTER EPS INCREASES 16 PERCENT
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BUSINESS HIGHLIGHTS
During the third quarter, EDS signed more than 1,000 contracts. For the year-
to-date, the total value of contract signings increased to $16.8 billion from
$13.7 billion a year ago. Nineteen of those contracts have an expected value of
more than $100 million. For the third quarter, EDS' contract signings in
Europe/Africa rose more than 132 percent over the year-ago period and are up
more than 110 percent for the year. The company's E.solutions unit also
continued its strong momentum. The value of E.solutions contract signings
increased 80 percent versus the year-ago quarter and is up 74 percent for the
year-to-date.
Since the end of the last quarter, EDS continued to build its presence in some
of the fastest growing areas of the digital economy. Highlights include the
following:
In information assurance/cyber security:
. Leveraging nearly 40 years of expertise, EDS inaugurated a new Global
Information Assurance Services Group to help clients combat cyber crime,
intellectual property theft, credit card fraud and other security issues
related to electronic commerce.
In customer relationship management, which is expected to be a $125 billion
market by 2004 (source: IDC):
. EDS launched its Digital CRM (Customer Relationship Management) Solutions.
These front to back office solutions enable businesses to use sales and
contact information to broaden customer relationships. As part of this
initiative, EDS created alliances with Avaya, Siebel, NCR, ServiceWare,
Servicesoft, Retek, McHugh, Chordiant and Xchange. EDS expects this digital
CRM strategy to provide hundreds of millions of dollars in revenue
opportunities over the next few years.
In the managed storage market, which is expected to grow to $40 billion by 2002
(source: IDC):
. EDS enacted a cross-selling agreement with Akamai Technologies in Internet
content delivery and managed storage, and won a three-year contract with
FreeDrive for pay-as-you-go Web hosting and managed data storage services.
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EDS THIRD QUARTER EPS INCREASES 16 PERCENT
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In Internet/e-commerce:
. EDS' Unigraphics Solutions subsidiary (NYSE:UGS) recently completed its
acquisition of Engineering Animation Inc., creating a leader in collaborative
product design over the Internet.
. In France, EDS launched Kearney Interactive, a new professional services unit
combining e-business consulting and implementation solutions.
. EDS and A.T. Kearney built and invested in Cyberlynx, a participant-owned net
market in Australia that will provide cross-market online procurement. In
addition to EDS Australia, shareholding participants include Commonwealth
Bank Australia, Woolworths, Lion Nathan, Telecom New Zealand and AAPT.
Targeting the online shopping market, which is expected to grow from $23 billion
in 2000 to $78 billion by 2003 in the U.S. alone (source: Jupiter
Communications):
. EDS unveiled E.store Xpress, offering packaged and customized solutions that
get clients up and running on the Web with e-commerce storefronts in 30 days
or less. E.store Xpress is the result of an alliance with Microsoft.
. EDS teamed with Sun Microsystems to create the first EDS eSpace competency
center to provide clients with one-stop shopping for e-business strategy,
infrastructure building, integration and operations.
In business process management:
. EDS was awarded a $79 million multi-year agreement to design and operate a
new Medicaid management system in Delaware. EDS is the leading provider of
Medicaid administrative services, managing programs in 17 states.
EDS, the leading pure-play global services company, provides strategy,
implementation and hosting for clients managing the complexities of the digital
economy. EDS brings together the world's best technologies to address critical
client business imperatives. It helps clients eliminate boundaries, collaborate
in new ways, establish their customers' trust and continuously seek improvement.
EDS serves the world's leading companies and governments in 55 countries
globally. EDS reported revenues of $18.5 billion in 1999. The company's stock
is traded on the New York Stock Exchange (NYSE: EDS) and the London Stock
Exchange. Learn more at eds.com.
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EDS THIRD QUARTER EPS INCREASES 16 PERCENT
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The statements in this news release that are not historical statements,
including statements regarding future revenue and earnings growth, operating
margins, and the value of the company's new contract signings, backlog and
business pipeline, are forward-looking statements within the meaning of the
federal securities laws. These statements are subject to numerous risks and
uncertainties, many of which are beyond EDS' control, that could cause actual
results to differ materially from such statements. For information concerning
these risks and uncertainties, see EDS' most recent Form 10-Q. EDS disclaims any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
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EDS THIRD QUARTER EPS INCREASES 16 PERCENT
ADD 5
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SUMMARY OF RESULTS OF OPERATIONS
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- -------------------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
-------- -------- --------- ---------
REVENUES (1) $4,749.8 $4,714.8 $13,896.4 $13,656.8
-------- -------- --------- ---------
COSTS AND EXPENSES
Cost of revenues 3,844.6 3,854.4 11,335.8 11,264.8
Selling, general & administrative 442.5 451.5 1,286.6 1,353.0
Restructuring and other charges -- 236.3 -- 616.1
-------- -------- --------- ---------
TOTAL COSTS AND EXPENSES 4,287.1 4,542.2 12,622.4 13,233.9
-------- -------- --------- ---------
OPERATING INCOME 462.7 172.6 1,274.0 422.9
INTEREST EXPENSE AND OTHER, NET (2) (27.3) 74.6 10.2 168.1
-------- -------- --------- ---------
INCOME BEFORE INCOME TAXES 435.4 247.2 1,284.2 591.0
PROVISION FOR INCOME TAXES 156.7 89.0 462.3 212.8
-------- -------- --------- ---------
NET INCOME $ 278.7 $ 158.2 $ 821.9 $ 378.2
======== ======== ========= =========
EARNINGS PER SHARE (2)
BASIC $ 0.60 $ 0.32 $ 1.76 $ 0.77
DILUTED $ 0.59 $ 0.31 $ 1.72 $ 0.75
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING
BASIC 466.3 490.8 466.2 491.8
DILUTED 472.6 503.7 476.7 503.2
CASH DIVIDENDS PER SHARE $ 0.15 $ 0.15 $ 0.45 $ 0.45
</TABLE>
(1) Revenues from General Motors Corporation ("GM") and its affiliates amounted
to $836.6 million and $869.7 million, respectively, for the three months
ended September 30, 2000 and 1999, and $2,506.8 million and $2,647.5
million, respectively, for the nine months ended September 30, 2000 and
1999. Delphi Automotive Systems Corporation ("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 nine months ended September 30,
1999.
(2) Includes a net pre-tax gain of $97.6 million recorded during the three
months ended March 31, 2000 resulting from the sale of certain e-business
investments. Includes net pre-tax gains of $81.5 million and $171.5
million, respectively, for the three and nine months ended September 30,
1999 primarily resulting from the sale of certain investments.
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EDS THIRD QUARTER EPS INCREASES 16 PERCENT
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SUMMARY OF CONSOLIDATED BALANCE SHEETS
(in millions)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and marketable securities $ 668.3 $ 728.7
Accounts receivable, net 4,443.0 4,423.4
Prepaids and other 723.8 725.6
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TOTAL CURRENT ASSETS 5,835.1 5,877.7
--------- ---------
PROPERTY AND EQUIPMENT, NET 2,459.8 2,459.8
--------- ---------
OPERATING AND OTHER ASSETS
Investments and other assets 1,494.4 1,483.6
Software, goodwill, and other intangibles, net 2,652.0 2,701.2
--------- ---------
TOTAL OPERATING AND OTHER ASSETS 4,146.4 4,184.8
--------- ---------
TOTAL ASSETS $12,441.3 $12,522.3
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities 3,408.2 3,690.7
Deferred revenue 528.0 718.3
Income taxes 6.7 93.4
Current portion of long-term debt 18.6 493.6
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TOTAL CURRENT LIABILITIES 3,961.5 4,996.0
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DEFERRED INCOME TAXES 258.0 268.2
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LONG-TERM DEBT 2,697.1 2,215.7
--------- ---------
REDEEMABLE PREFERRED STOCK OF SUBSIDIARIES,
MINORITY INTERESTS, AND OTHER LONG-TERM
LIABILITIES 539.8 507.8
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 4,984.9 4,534.6
--------- ---------
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $12,441.3 $12,522.3
========= =========
</TABLE>
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EDS THIRD QUARTER EPS INCREASES 16 PERCENT
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SUMMARY OF CONSOLIDATED CASH FLOWS
(in millions)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES (1) $ 403.6 $ 347.9 $ 913.7 $ 1,044.0
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of marketable securities 32.5 24.0 212.3 107.6
Proceeds from investments and other assets 15.6 331.2 64.5 677.4
Payments for purchases of property and equipment (185.9) (147.2) (524.6) (505.3)
Payments for investments and other assets (40.0) (37.8) (299.4) (182.0)
Payments related to acquisitions, net of cash acquired (6.0) (50.0) (6.0) (1,708.7)
Payments for purchases of software and other intangibles (40.6) (24.8) (207.6) (78.3)
Payments for purchases of marketable securities (0.4) (8.3) (39.0) (33.4)
Other 21.0 43.1 30.0 126.3
---------- ---------- ---------- ----------
Net cash provided by (used in) investing activities (203.8) 130.2 (769.8) (1,596.4)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from commercial paper and long-term debt 18,017.0 11,294.2 28,276.5 16,437.7
Payments on commercial paper and long-term debt (18,289.2) (10,821.6) (28,228.5) (15,049.8)
Purchase of treasury stock -- (837.1) (210.0) (1,011.8)
Employee stock transactions 18.9 47.8 68.0 86.1
Dividends paid (69.9) (74.0) (209.8) (221.5)
Other 2.1 -- 2.1 --
---------- ---------- ---------- ----------
Net cash provided by (used in) financing activities (321.1) (390.7) (301.7) 240.7
---------- ---------- ---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (16.2) (30.8) (61.7) (97.0)
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (137.5) 56.6 (219.5) (408.7)
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 455.2 573.5 537.2 1,038.8
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 317.7 $ 630.1 $ 317.7 $ 630.1
========== ========== ========== ==========
</TABLE>
(1) Depreciation and amortization for the three and nine months ended
September 30, 2000, was $344.7 million and $1,063.4 million, respectively.
Depreciation and amortization for the three and nine months ended
September 30, 1999, was $382.2 million and $1,066.4 million, respectively.
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