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DUFF & PHELPS: ELECTRONIC DATA SYSTEMS $400 MILLION COMMERCIAL PAPER PROGRAM RATED DUFF 1

 CHICAGO, June 28 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned an initial credit rating of Duff 1 to Electronic Data Systems' commercial paper program. The program is authorized up to $400 million, essentially all of which was outstanding at the conclusion of EDS's first quarter ended March 31.
 The D&P rating is based upon the success of EDS's business strategy, the company's strong cash flows, and its ample financial flexibility. Demand for EDS's core information technology services has strong long- term growth prospects. However, competition is intensifying within the industry, including hardware manufacturers aiming to diversify into the much more profitable services end of the business. As a result, margins could be pressured over the long run. Moreover, the price/performance advances of personal computers have shifted some growth in computing demand away from EDS's base of mainframe information processing centers. EDS management has responded to the industry's rapid evolution by extending its services outside of traditional data processing areas, including the implementation of client/server technologies. EDS can provide its customers with computer-aided design and manufacturing systems, outsource their customer service operations, and give them access to EDS's extensive communications network (one of the largest in the world).
 EDS's capital requirements are driven primarily by growth opportunities, so the company's investing activities are exceptionally flexible depending upon the business environment. Systems management contracts average over 70 months in length and provide EDS with a stable, high-quality source of cash flow which is diversified across both industrial and geographical lines. Fixed charge coverage stood at 4.7 times and fixed obligations accounted for 39 percent of total capital in 1992.
 The D&P rating also weighs EDS's relationship to its parent company, General Motors Corp. (NYSE: GM). GM's policy has been to allow EDS to operate autonomously, a positive factor in our rating which we believe will continue as long as EDS remains part of GM. A significant uncertainty, however, is the possibility EDS could be partially or completely sold or spun-off in an effort to combine its resources with other computing or telecommunications entities. Such a transaction could provide EDS with important new technology or infrastructure, particularly in the area of communications, as well as give GM a sizable cash infusion. The range of potential structures for such a combination is wide and could have either a positive or negative impact on credit quality.
 -0- 6/28/93
 /CONTACT: Matthew D. Robbins, CFA, of Duff & Phelps Credit Rating Co., 312-368-3120/
 (GM)


CO: Electronic Data Systems; General Motors Corp. ST: Michigan IN: CPR SU: RTG

MP -- NY034 -- 6167 06/28/93 10:44 EDT
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Publication:PR Newswire
Date:Jun 28, 1993
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