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FOR RELEASE 3:05 P.M. CST, THURSDAY, FEBRUARY 4, 1999
EDS 1998 REVENUES HIT $16.9 BILLION
CONTACT:
Reed Byrum - EDS
(+1) (972) 605-6790
reed.byrum@eds.com
PLANO, Texas - EDS announced today that for the year ended December 31,
1998, revenues reached $16.9 billion, exceeding the 1997 level of $15.2
billion by 11 percent. Net income for the year was $840.1 million and
diluted earnings per share were $1.70, prior to certain pre-tax charges,
gains and adjustments totaling a negative $178.9 million. Including these
charges, gains and adjustments, net income for 1998 was $743.4 million and
diluted earnings per share were $1.50.
Net income for 1997 was $941.6 million and diluted earnings per share were
$1.91, prior to certain pre-tax charges of $329.6 million. Including these
charges, net income for 1997 was $730.6 million and diluted earnings per
share were $1.48.
For the fourth quarter of 1998, revenues increased 9 percent to $4.6
billion, excluding a negative adjustment of $200.0 million primarily related
to the contract dispute described below, compared with 1997 fourth-quarter
revenues of $4.2 billion. Including this adjustment, revenues for the
fourth quarter of 1998 were $4.4 billion, which represented a 4 percent
increase compared with 1997.
Net income for the fourth quarter of 1998 was $264.1 million and diluted
earnings per share were $0.53, prior to certain pre-tax charges and
adjustments totaling $190.5 million. Including all charges and adjustments,
net income for the fourth quarter of 1998 was $142.2 million compared with
$283.4 million in 1997. Including these charges and adjustments, diluted
earnings per share for the fourth quarters of 1998 and 1997 were $0.29 and
$0.57, respectively.
New-contract sales for the fourth quarter of 1998 were $2.5 billion,
bringing the year's total to $11.8 billion.
"As 1999 unfolds, we're focused on how we may more effectively and
efficiently deliver shareholder value, while serving our clients and
employees," said Dick Brown, chairman and chief executive officer. "EDS is
fundamentally well-positioned with the range of services and breadth needed
to compete in today's marketplace. During the coming months we are
undertaking steps aimed at strengthening the company's leadership in the IT
services industry."
During 1998, the company recorded certain charges and adjustments
principally related to senior executive retirements, including $12.7 million
for the retirement of Vice Chairman Gary Fernandes in the fourth quarter,
asset writedowns, a write-off associated with acquired in-process research
and development, and the customer contract in litigation described below.
The negative impact of these items was partially offset by gains associated
with the sales of certain assets and positive adjustments in the fourth
quarter of $22.2 million to reverse residual accruals related to previously
recorded restructuring charges.
The company said that the adjustment to revenues in the fourth quarter is
primarily related to a legal dispute with Xerox. EDS filed suit against
Xerox in New York State Court over Xerox's obligation to pay for certain
infrastructure services. The suit does not specify a damage amount and
involves only part of the contract. EDS is continuing to perform under the
contract. A confidentiality agreement precludes the disclosure of details.
EDS said it regrets having to take this unusual step with respect to a
customer, but under the circumstances, believed this action to be the only
available option. Efforts to resolve the issue failed after more than a
year of negotiations.
EDS has been a leader in the global information services industry for more
than 35 years. The company delivers systems and technology expertise,
management consulting, business process management and electronic business
leadership. EDS offers solutions to improve the performance of more than
9,000 business and government clients in about 50 countries. The company's
stock is traded on the New York Stock Exchange (NYSE:EDS) and the London
Stock Exchange. Visit EDS via the Internet at eds.com.
Editors' Note: Analysts' consensus earnings-per-share estimates for the
1998 year-end and 1998 fourth-quarter results were $1.68 and $0.52,
respectively. EDS reported $1.70 in earnings per share for 1998 and $0.53
earnings per share for the fourth quarter, before certain charges, gains and
adjustments. Analysts' consensus estimates do not include the charges,
gains and adjustments.
The statements in this news release regarding the future 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, please see EDS' filings with the Securities and Exchange
Commission. 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. |
