EDS now counts as revenue only what's actually been paid by a customer. Under its previous accounting system, the company estimated revenue based on the percentage of work it had completed on a contract. In last year's third quarter, when it used the old system, the company posted net income of $86 million, or 18 cents per share. EDS said it would have posted a loss of $88 million, or 18 cents per share, in the July-September period of 2002 if the new accounting rule had been in effect.
New contract signings for the period totaled $3.4 billion, compared with $3.0 billion a year ago, driven by what EDS said was increased activity in the government and manufacturing sectors. For the nine months ended Sept. 30, new signings totaled $9.7 billion, compared with $16.4 billion in the comparable period a year ago. Revenue from General Motor Corp.--EDS's largest customer--declined 7% from a year ago to $546 million.
EDS said its liquidity position improved in the third quarter, as it ended the period with $2.6 billion in unrestricted cash and securities. The company has been suffering a cash crunch of late because of large up-front costs associated with several major contracts, including the build-out of an intranet for the Navy and Marine Corps.
Looking ahead, EDS said it's on track to meet its second-half earnings guidance of 17 cents per share.