l:\secfiles\10_q\1stqtr94\exhib99a.doc6
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EXHIBIT 99(a)
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND
MANAGEMENT'S DISCUSSION AND ANALYSIS
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Consolidated Statements of Income
Three Months Ended
March 31,
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1994 1993
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(in millions except
per share amounts)
Revenues
Systems and other contracts
GM and affiliates $841.7 $845.9
Outside customers 1,375.5 1,213.9
Interest and other income 22.1 13.4
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Total revenues 2,239.3 2,073.2
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Costs and expenses
Cost of revenues 1,710.6 1,569.7
Selling, general, and administrative 250.8 257.6
Interest 9.6 9.3
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Total costs and expenses 1,971.0 1,836.6
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Income before income taxes 268.3 236.6
Provision for income taxes 96.6 85.2
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Separate Consolidated Net Income $171.7 $151.4
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Available Separate Consolidated
Net Income (Note 1)
Average number of shares of GM
Class E common stock outstanding
(in millions) (Numerator) 257.9 234.7
Class E dividend base (in millions)
(Denominator) 481.2 479.7
Available Separate Consolidated Net Income $92.1 $74.1
==== ====
Earnings Attributable to GM Class E
Common Stock on a Per Share Basis
(Note 1) $0.36 $0.32
==== ====
See accompanying notes to consolidated financial statements.
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ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, December 31,
1994 1993
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(in millions)
Assets
Current assets
Cash and cash equivalents $559.7 $383.4
Marketable securities 194.2 224.1
Accounts receivable 1,397.3 1,412.5
Accounts receivable from GM and affiliates 88.1 112.6
Inventories 149.9 130.7
Prepaids and other 275.9 243.5
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Total current assets 2,665.1 2,506.8
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Property and equipment, at cost less accumulated
depreciation of $2,502.4 at March 31, 1994
and $2,405.7 at December 31, 1993
Land 122.1 121.6
Buildings and facilities 529.5 532.0
Computer equipment 1,317.9 1,275.5
Other equipment and furniture 184.0 185.6
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Total property and equipment, net 2,153.5 2,114.7
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Operating and other assets
Land held for development, at cost 95.8 94.4
Investment in leases and other 1,319.0 1,159.9
Software, goodwill, and other intangibles, net 1,056.2 1,066.3
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Total operating and other assets 2,471.0 2,320.6
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Total Assets $7,289.6 $6,942.1
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Liabilities and Stockholder's Equity
Current liabilities
Accounts payable $364.1 $359.8
Accrued liabilities 1,013.7 996.0
Deferred revenue 421.9 429.7
Income taxes 214.5 202.2
Notes payable 124.1 172.7
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Total current liabilities 2,138.3 2,160.4
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Deferred income taxes 679.0 641.5
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Notes payable 710.4 522.8
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Stockholder's equity
Common stock, without par value; authorized
1,000.0 shares. Issued and outstanding 481.7
shares at March 31, 1994 and 480.9 shares
at December 31, 1993 446.3 421.2
Retained earnings 3,315.6 3,196.2
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Total stockholder's equity 3,761.9 3,617.4
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Total Liabilities and Stockholder's Equity $7,289.6 $6,942.1
======= =======
See accompanying notes to consolidated financial statements.
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ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended
March 31,
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1994 1993
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(in millions)
Cash Flows from Operating Activities
Net income $171.7 $151.4
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Adjustments to reconcile net income
to net cash provided by operating
activities (net of effects of
acquired companies)
Depreciation and amortization 160.7 143.6
(Increase) decrease in
accounts receivable 21.9 (36.0)
(Increase) decrease in accounts
receivable from GM and affiliates 25.5 (33.6)
Increase in inventories (18.5) (28.5)
(Increase) decrease in prepaids
and other (33.2) 1.6
Increase (decrease) in accounts
payable and accrued liabilities 5.6 (129.7)
Decrease in deferred revenue (11.5) (11.6)
Increase in income taxes 10.5 8.4
Increase in deferred income taxes 35.6 33.8
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Total adjustments 196.6 (52.0)
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Net cash provided by operating activities 368.3 99.4
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Cash Flows from Investing Activities
Payments for purchase of marketable
securities (38.6) (44.2)
Proceeds from sale of marketable
securities 70.3 33.8
Payments related to land held for
development (1.4) (2.8)
Payments for investment in leases
and other (257.2) (77.0)
Proceeds from investment in leases
and other 96.8 91.1
Payments for purchase of software,
goodwill, and other intangibles (4.8) (16.1)
Payments for purchase of property and
equipment (156.3) (130.6)
Payments related to acquisition
of outside companies, net of cash acquired (0.7) (30.0)
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Net cash used in investing activities ($291.9) ($175.8)
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See accompanying notes to consolidated financial statements.
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ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
Three Months Ended
March 31,
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1994 1993
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(in millions)
Cash Flows from Financing Activities
Net increase (decrease) in current
notes payable with maturities less
than 90 days ($43.6) $144.9
Payments on notes payable (32.1) (149.0)
Proceeds from notes payable 205.7 48.9
Proceeds from issuance of common stock 25.1 29.7
Cash dividends paid to GM (57.7) (47.9)
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Net cash provided by financing
activities 97.4 26.6
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Effect of Exchange Rate Changes on Cash and
Cash Equivalents 2.5 (5.5)
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Net Increase (Decrease) in Cash and Cash
Equivalents 176.3 (55.3)
Cash and Cash Equivalents at Beginning
of Period 383.4 421.9
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Cash and Cash Equivalents at End of Period $559.7 $366.6
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See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
In the opinion of management, the interim consolidated financial statements
reflect all adjustments, consisting of only normal recurring items (with the
exception of the accounting change in 1994 to adopt Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities, as described in Note 2), which are necessary for a fair
presentation of the results for the interim periods presented. 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
consolidated financial statements should be read in conjunction with the
consolidated financial statements, the summary of significant accounting
policies, and the other notes to the consolidated financial statements
included in General Motors' 1993 Annual Report to the SEC on Form 10-K.
Note 1.
The consolidated financial statements of EDS do not reflect the purchase
accounting adjustments arising as a result of the acquisition of EDS by GM.
Earnings Attributable to GM Class E Common Stock on a Per Share Basis have
been determined based on the relative amounts available for the payment of
dividends to holders of GM Class E common stock. Holders of GM Class E common
stock have no direct rights in the equity or assets of EDS, but rather have
rights in the equity and assets of GM (which includes 100% of the stock of
EDS). Dividends on the GM Class E common stock are declared out of the
Available Separate Consolidated Net Income of EDS earned since the acquisition
of EDS by GM. The Available Separate Consolidated Net Income of EDS is
determined quarterly and is equal to the separate consolidated net income of
EDS, excluding the effects of purchase accounting adjustments arising from the
acquisition of EDS, multiplied by a fraction, the numerator of which is the
weighted average number of shares of GM Class E common stock outstanding
during the period and the denominator of which was 481.2 million shares during
the first quarter of 1994. The comparable denominator for the first quarter
of 1993 was 479.7 million shares.
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ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
The denominator used in determining the Available Separate Consolidated Net
Income of EDS is adjusted as deemed appropriate by the GM Board of Directors
to reflect subdivisions or combinations of the GM Class E common stock and to
reflect certain transfers of capital to or from EDS. In 1988, EDS initiated a
program to repurchase 11.0 million shares of GM Class E common stock in order
to meet certain future requirements of the Company's employee benefit plans.
The GM Board has generally caused the denominator used in calculating the
Available Separate Consolidated Net Income of EDS to decrease as shares are
purchased and to increase as shares are used for the employee benefit plans.
The current GM Board policy is that the cash dividends on the GM Class E
common stock, when, as, and if declared by the GM Board in its sole
discretion, will equal approximately 30% of the Available Separate
Consolidated Net Income of EDS for the prior year.
Consistent with Delaware law, which governs the amount legally available for
payment of dividends on GM's common stock, the GM Board of Directors has
determined that such amount is materially higher than GM's capital surplus
less accumulated deficit.
Note 2
EDS adopted SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities, on January 1, 1994. This statement requires that certain
investments in debt and equity securities be classified into one of three
categories: held-to-maturity, available-for-sale, or trading. The
implementation of this Standard had an immaterial effect on the consolidated
financial statements.
* * * * *
Management's Discussion and Analysis
Results of Operations
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EDS signed $2.2 billion in new business during the period ended March 31,
1994, compared to $1.1 billion in new business during the same period of 1993.
Total revenues rose $166.1 million over the comparable quarter in the prior
year to $2,239.3 million for the quarter ended March 31, 1994. Systems and
other contract revenue for the quarter ended March 31, 1994 included $841.7
million of revenue related to GM contracts.
The growth of non-GM revenue during the first quarter of 1994, when compared
to the corresponding period in 1993, was 13.9%. This growth results from
several new contracts and improved performance of existing contracts.
GM revenue remained relatively flat for the first quarter of 1994, when
compared with the same period in 1993. While it is anticipated that GM will
continue to contribute a significant portion of systems revenue, the
percentage of revenue from GM and subsidiaries will continue to decline as non-
GM revenues continue to increase.
Total costs and expenses as a percentage of systems and other contracts
revenue improved from 89.2% to 88.9% for the quarters ended March 31, 1993 and
1994, respectively. This reflects continued productivity improvement programs
and cost-reduction efforts.
For the quarter ended March 31, 1994, EDS' separate consolidated net income
increased 13.4% to $171.7 million, compared to $151.4 million for the same
period of last year. Earnings per share of GM Class E common stock rose from
$0.32 to $0.36, or 12.5%, for the first quarter of 1994 when compared to the
period ended March 31, 1993. EDS' effective tax rate remained at 36% for the
quarter.
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ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
Liquidity and Capital Resources
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EDS maintained a strong liquidity and capital structure during the first
quarter. The current ratio improved to 1.25-to-1 at March 31, 1994 from 1.16-
to-1 at December 31, 1993. Return on assets remained relatively flat at 9.7%
compared to 9.9% for the periods ended March 31, 1994 and 1993, respectively.
Return on equity was 18.6% and 19.4% for the first quarters of 1994 and 1993,
respectively. The noncurrent debt-to-capital ratio was 16% at March 31, 1994
and 13% at December 31, 1993. At March 31, 1994, EDS' capital consisted of
$710.4 million in noncurrent notes payable and $3,761.9 million in
stockholder's equity.
Total debt was $834.5 million at March 31, 1994 and represented a 20%
increase from total debt of $695.5 million at December 31, 1993. Debt, which
consists largely of commercial paper, increased primarily to manage working
capital needs. The total debt-to-capital ratio (includes current debt as a
component of capital) was 18.2% at March 31, 1994 and 16.1% at December 31,
1993.
EDS continued to maintain a strong cash position. Overall cash and cash
equivalents increased $176.3 million to $559.7 million from the end of 1993 to
the end of the quarter. Cash provided by operating activities was $368.3
million, an increase of $268.9 million from the first quarter of 1993 to the
first quarter of 1994. This increase principally reflects the timing of
receipts and disbursements. Cash used in investing activities was $291.9 and
$175.8 million for the quarters ended March 31, 1994 and 1993, respectively.
The increased use of cash during the first quarter of 1994 is due to
expenditures supporting the growth of the business. Net cash provided by
financing activities was $97.4 million compared to $26.6 million for the first
quarter of 1994 and 1993, respectively, an increase of $70.8 million due to
the issuance of long-term debt.
During the quarter, EDS made net additions to property and equipment of
$156.9 million and net additions to software, goodwill, and other intangibles
of $10.7 million. EDS paid a cash dividend to GM totaling $57.7 million and
has consistently paid cash dividends since 1974.
* * * * *
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