##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2009
 or
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from       to
 Commission File Number 1-14773
 PEROT SYSTEMS CORPORATION
  DELAWARE
(State or other jurisdiction of incorporation or organization)
    
    75-2230700
(IRS Employer Identification No.)
 
 
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o(Do not check if a smaller reporting
company)
    
    Smaller reporting company o
 o þ




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##### 



PagePART I: FINANCIAL INFORMATIONItem 1: Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008
    
    
    1Condensed Consolidated Income Statements for the three and six months ended June 30, 2009 and
2008
    
    
    2Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3: Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4: Controls and Procedures
    
    
    21PART II: OTHER INFORMATIONItem 1: Legal Proceedings
    
    
    21Item 1A: Risk Factors
    
    
    22Item 4: Submission of Matters to a Vote of Security Holders
    
    
    22Item 6: Exhibits
    
    
    23SIGNATURES
    
    
    24EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



Item 1: Financial Statements (Unaudited)
 PEROT SYSTEMS CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 AS OF JUNE 30, 2009 AND DECEMBER 31, 2008
  June 30, 2009
    
    
    December 31, 2008(Dollars in millions)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    291
    
    
    $
    234Short-term investments
    
    
    38
    
    
    
    36Accounts receivable, net
    
    
    400
    
    
    
    443Prepaid expenses and other
    
    
    116
    
    
    
    93Total current assets
    
    
    845
    
    
    
    806Property, equipment and purchased software, net
    
    
    221
    
    
    
    221Goodwill
    
    
    729
    
    
    
    730Deferred contract costs, net
    
    
    120
    
    
    
    112Identifiable intangible assets, net
    
    
    46
    
    
    
    54Other non-current assets
    
    
    51
    
    
    
    55Total assets
    
    $
    2,012
    
    
    $
    1,978LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    54
    
    
    $
    54Deferred revenue
    
    
    61
    
    
    
    60Accrued compensation
    
    
    70
    
    
    
    98Income taxes payable
    
    
    13
    
    
    
    11Accrued and other current liabilities
    
    
    120
    
    
    
    138Total current liabilities
    
    
    318
    
    
    
    361Long-term debt
    
    
    179
    
    
    
    181Non-current deferred revenue
    
    
    68
    
    
    
    80Other non-current liabilities
    
    
    52
    
    
    
    51Total liabilities
    
    
    617
    
    
    
    673Commitments and contingenciesStockholders equity:Common stock
    
    
    1
    
    
    
    1Additional paid-in capital
    
    
    597
    
    
    
    587Retained earnings
    
    
    874
    
    
    
    815Treasury stock
    
    
    (64
    )
    
    
    (73
    )Accumulated other comprehensive loss
    
    
    (13
    )
    
    
    (25
    )Total stockholders equity
    
    
    1,395
    
    
    
    1,305Total liabilities and stockholders equity
    
    $
    2,012
    
    
    $
    1,978
  1




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PEROT SYSTEMS CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED INCOME STATEMENTS
   Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in millions, except per share data)Revenue
    
    $
    628
    
    
    $
    705
    
    
    $
    1,249
    
    
    $
    1,385Direct cost of services
    
    
    503
    
    
    
    585
    
    
    
    1,006
    
    
    
    1,147Gross profit
    
    
    125
    
    
    
    120
    
    
    
    243
    
    
    
    238Selling, general and administrative expenses
    
    
    77
    
    
    
    73
    
    
    
    156
    
    
    
    147Operating income
    
    
    48
    
    
    
    47
    
    
    
    87
    
    
    
    91Interest income
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    3Interest expense
    
    
    (1
    )
    
    
    (2
    )
    
    
    (3
    )
    
    
    (5
    )Other income, net
    
    
    
    
    
    
    1
    
    
    
    2
    
    
    
    3Income before taxes
    
    
    48
    
    
    
    47
    
    
    
    88
    
    
    
    92Provision for income taxes
    
    
    17
    
    
    
    17
    
    
    
    29
    
    
    
    34Net income
    
    $
    31
    
    
    $
    30
    
    
    $
    59
    
    
    $
    58Earnings per share of common stock:Basic
    
    $
    0.26
    
    
    $
    0.25
    
    
    $
    0.49
    
    
    $
    0.49Diluted
    
    $
    0.25
    
    
    $
    0.24
    
    
    $
    0.49
    
    
    $
    0.48Weighted average number of common shares
outstanding (in thousands):Basic
    
    
    120,036
    
    
    
    119,283
    
    
    
    119,745
    
    
    
    119,547Diluted
    
    
    121,426
    
    
    
    121,378
    
    
    
    120,974
    
    
    
    121,267
  2




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Six Months Ended June 30,2009
    
    
    2008(Dollars in millions)Cash flows from operating activities:Net income
    
    $
    59
    
    
    $
    58Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    56
    
    
    
    56Stock-based compensation
    
    
    9
    
    
    
    9Change in deferred taxes
    
    
    5
    
    
    
    2Other non-cash items
    
    
    4
    
    
    
    5Changes in assets and liabilities (net of effects from acquisitions of businesses):Accounts receivable, net
    
    
    44
    
    
    
    (10
    )Prepaid expenses
    
    
    (18
    )
    
    
    (25
    )Deferred contract costs, net
    
    
    (23
    )
    
    
    (29
    )Accounts payable and accrued liabilities
    
    
    (20
    )
    
    
    2Accrued compensation
    
    
    (30
    )
    
    
    16Deferred revenue
    
    
    (10
    )
    
    
    16Income taxes
    
    
    2
    
    
    
    (13
    )Other current and non-current assets
    
    
    3
    
    
    
    (7
    )Other current and non-current liabilities
    
    
    (5
    )
    
    
    Net cash provided by operating activities
    
    
    76
    
    
    
    80Cash flows from investing activities:Purchases of property, equipment and software
    
    
    (29
    )
    
    
    (27
    )Acquisitions of businesses, net
    
    
    
    
    
    
    (20
    )Purchases of short-term investments
    
    
    (64
    )
    
    
    (40
    )Net proceeds from sale of short-term investments
    
    
    62
    
    
    
    63Other
    
    
    1
    
    
    
    Net cash used in investing activities
    
    
    (30
    )
    
    
    (24
    )Cash flows from financing activities:Repayment of long-term debt
    
    
    (1
    )
    
    
    (33
    )Proceeds from issuance of common stock
    
    
    4
    
    
    
    6Proceeds from issuance of treasury stock
    
    
    6
    
    
    
    5Purchases of treasury stock
    
    
    
    
    
    
    (24
    )Net cash provided by (used in) financing activities
    
    
    9
    
    
    
    (46
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    2
    
    
    
    (1
    )Net increase in cash and cash equivalents
    
    
    57
    
    
    
    9Cash and cash equivalents at beginning of period
    
    
    234
    
    
    
    187Cash and cash equivalents at end of period
    
    $
    291
    
    
    $
    196
  3




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1. General
  Adoption of significant accounting standards
    2. Fair Value Measurements
  4




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Financial assets and financial liabilities measured at fair value on a recurring basis
  
    
    Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for
identical assets or liabilities.
    
    Level 2: Inputs other than quoted prices that are observable for the asset or liability,
either directly or indirectly. These include quoted prices for similar assets or liabilities
in active markets and quoted prices for identical or similar assets or liabilities in markets
that are not active.
    
    Level 3: Unobservable inputs that reflect the reporting entitys own assumptions.
  Basis of Fair Value MeasurementsQuoted PricesIn Active
    
    SignificantMarkets for
    
    Other
    
    SignificantBalance at
    
    Identical
    
    Observable
    
    UnobservableJune 30,
    
    Items
    
    Inputs
    
    Inputs2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)(in millions)Cash equivalents  money market funds
    
    $
    164
    
    
    $
    164
    
    
    $
    
    
    
    $
    Short-term investments
    
    $
    38
    
    
    $
    38
    
    
    $
    
    
    
    $
    Interest rate swaps
    
    $
    (2
    )
    
    $
    
    
    
    $
    (2
    )
    
    $
    Foreign currency derivative financial instruments:Forward contracts
    
    $
    (11
    )
    
    $
    
    
    
    $
    (11
    )
    
    $
    Options
    
    $
    (3
    )
    
    $
    
    
    
    $
    (3
    )
    
    $
    
 Fair value of credit facility
  3. Derivative Financial Instruments
   5




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As of June 30,2009
    
    
    2008(in millions)Derivative financial instruments designated as hedging instruments under FAS 133Interest rate swaps:Accrued and other current liabilities
    
    $
    (2
    )
    
    $
    Other non-current liabilities
    
    
    
    
    
    
    (3
    )Forward contracts:Other non-current assets
    
    
    1
    
    
    
    Accrued and other current liabilities
    
    
    (6
    )
    
    
    (3
    )Other non-current liabilities
    
    
    (6
    )
    
    
    (8
    )Option contracts:Accrued and other current liabilities
    
    
    (3
    )
    
    
    (2
    )Other non-current liabilities
    
    
    
    
    
    
    (2
    )Total derivative financial instruments designated as hedging instruments under FAS 133
    
    $
    (16
    )
    
    $
    (18
    )Total derivative financial instruments not designated as hedging instruments under FAS 133
    
    
    
    
    
    
    Total derivative financial instruments
    
    $
    (16
    )
    
    $
    (18
    )
 6




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Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in millions)Interest rate swaps
    
    $
    
    
    
    $
    (4
    )
    
    $
    
    
    
    $
    (1
    )Forward contracts
    
    
    (4
    )
    
    
    13
    
    
    
    
    
    
    
    13Option contracts
    
    
    (1
    )
    
    
    3
    
    
    
    (1
    )
    
    
    4Total (gain) loss in
accumulated other
comprehensive loss
    
    $
    (5
    )
    
    $
    12
    
    
    $
    (1
    )
    
    $
    16
  Three months ended June 30,
    
    
    Six months ended June 30,Income Statement Location
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008(in millions)Interest rate swaps
    
    Interest expense
    
    $
    1
    
    
    $
    (1
    )
    
    $
    2
    
    
    $
    (1
    )Forward contracts
    
    Revenue
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Option contracts
    
    Revenue
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    Total (gain) loss
reclassified to
earnings
    
    
    
    
    
    $
    2
    
    
    $
    (1
    )
    
    $
    5
    
    
    $
    (1
    )
   4. Goodwill
  Industry
    
    
    GovernmentSolutions
    
    
    Services
    
    
    Total(in millions)Balance as of December 31, 2008
    
    $
    431
    
    
    $
    299
    
    
    $
    730Reduction of goodwill resulting from Tellurian acquisition
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Balance as of June 30, 2009
    
    $
    430
    
    
    $
    299
    
    
    $
    729
  7




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5. Identifiable Intangible Assets
  As of June 30, 2009Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    BookValue
    
    
    Amortization
    
    
    Value(in millions)Service marks
    
    $
    4
    
    
    $
    (4
    )
    
    $
    Customer-based assets
    
    
    83
    
    
    
    (38
    )
    
    
    45Other intangible assets
    
    
    3
    
    
    
    (2
    )
    
    
    1Total
    
    $
    90
    
    
    $
    (44
    )
    
    $
    46
  6. Comprehensive Income
  Three months
    
    
    Six monthsended June 30,
    
    
    ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in millions)Net income
    
    $
    31
    
    
    $
    30
    
    
    $
    59
    
    
    $
    58Foreign currency translation adjustments
    
    
    11
    
    
    
    (7
    )
    
    
    6
    
    
    
    (6
    )Change in fair value of derivative financial instruments
    
    
    5
    
    
    
    (12
    )
    
    
    1
    
    
    
    (16
    )Reclassification of derivative financial instruments into earnings
    
    
    2
    
    
    
    (1
    )
    
    
    5
    
    
    
    (1
    )Total comprehensive income
    
    $
    49
    
    
    $
    10
    
    
    $
    71
    
    
    $
    35
 7. Stockholders Equity
  8. Stock Options and Stock-Based Compensation
 Stock-based compensation
   8




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Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in millions)
    
    
    (in millions)Direct cost of services
    
    $
    1
    
    
    $
    1
    
    
    $
    2
    
    
    $
    2Selling, general and administrative expenses
    
    
    4
    
    
    
    4
    
    
    
    7
    
    
    
    7Stock based compensation expense
    
    
    5
    
    
    
    5
    
    
    
    9
    
    
    
    9Total stock compensation expense, net of tax
    
    
    3
    
    
    
    3
    
    
    
    6
    
    
    
    6
   Six months endedJune 30,2009
    
    2008Weighted average risk free interest rates
    
    
    1.86
    %
    
    
    2.78
    %Weighted average life (in years)
    
    
    4.4
    
    
    
    4.7Volatility
    
    
    34
    %
    
    
    27
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %Weighted average grant-date fair value per share
    
    $
    3.64
    
    
    $
    4.06
 Activity in our stock-based compensation plans
  Six months ended June 30,2009
    
    
    2008Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageOptions/
    
    
    Exercise
    
    
    
    
    
    
    ExerciseSSARs
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding at January 1
    
    
    15,420
    
    
    
    15.25
    
    
    
    16,240
    
    
    
    15.00Granted (1)
    
    
    946
    
    
    
    11.79
    
    
    
    1,625
    
    
    
    14.24Exercised
    
    
    (594
    )
    
    
    10.65
    
    
    
    (534
    )
    
    
    9.87Forfeited
    
    
    (704
    )
    
    
    15.76
    
    
    
    (849
    )
    
    
    15.94Outstanding at June 30
    
    
    15,068
    
    
    
    15.19
    
    
    
    16,482
    
    
    
    15.04Exercisable at June 30
    
    
    9,389
    
    
    
    15.86
    
    
    
    9,519
    
    
    
    15.52
 
 (1)
    
    All awards granted for the six months ended June 30, 2009, were SSARs.  9




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Six months ended June 30,2009
    
    
    2008Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageGrant-Date
    
    
    
    
    
    
    Grant-DateAwards
    
    
    Fair Value
    
    
    Awards
    
    
    Fair ValueOutstanding at January 1
    
    
    1,030
    
    
    
    14.68
    
    
    
    1,010
    
    
    
    14.90Granted
    
    
    1,096
    
    
    
    11.80
    
    
    
    442
    
    
    
    14.28Vested
    
    
    (86
    )
    
    
    11.84
    
    
    
    (3
    )
    
    
    14.78Forfeited
    
    
    (58
    )
    
    
    14.39
    
    
    
    (111
    )
    
    
    14.79Outstanding at June 30
    
    
    1,982
    
    
    
    13.11
    
    
    
    1,338
    
    
    
    14.69
 9. Income Taxes
    10




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10. Segment Data
  Industry
    
    GovernmentSolutions
    
    Services
    
    Other(1)
    
    Total(in millions)For the three months ended June 30, 2009:Revenue
    
    $
    475
    
    
    $
    155
    
    
    $
    (2
    )
    
    $
    628Income before taxes
    
    
    42
    
    
    
    7
    
    
    
    (1
    )
    
    
    48For the three months ended June 30, 2008:Revenue
    
    $
    546
    
    
    $
    161
    
    
    $
    (2
    )
    
    $
    705Income before taxes
    
    
    44
    
    
    
    3
    
    
    
    
    
    
    
    47For the six months ended June 30, 2009:Revenue
    
    $
    942
    
    
    $
    310
    
    
    $
    (3
    )
    
    $
    1,249Income before taxes
    
    
    79
    
    
    
    15
    
    
    
    (6
    )
    
    
    88For the six months ended June 30, 2008:Revenue
    
    $
    1,065
    
    
    $
    322
    
    
    $
    (2
    )
    
    $
    1,385Income before taxes
    
    
    84
    
    
    
    8
    
    
    
    
    
    
    
    92
 
 (1)
    
    Other includes our remaining operating areas and corporate activities, income and expenses
that are not related to the operations of the other reportable segments, and the elimination
of intersegment revenue and direct costs of services of approximately $2 million for the three
months ended June 30, 2009 and 2008, respectively, and $3 million and $2 million for the six
months ended June 30, 2009 and 2008, respectively, related to the provision of services by the
Industry Solutions segment to the Government Services segment. In addition, $6 million of cost
reduction activities are included in this segment in the six months ended June 30, 2009. 11. Earnings Per Share
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(in thousands, except per
    
    
    (in thousands, except pershare data)
    
    
    share data)Basic Earnings per Common ShareNet income
    
    $
    30,813
    
    
    $
    29,668
    
    
    $
    59,192
    
    
    $
    58,101Weighted average common shares outstanding
    
    
    120,036
    
    
    
    119,283
    
    
    
    119,745
    
    
    
    119,547Basic earnings per common share
    
    $
    0.26
    
    
    $
    0.25
    
    
    $
    0.49
    
    
    $
    0.49Diluted Earnings per Common ShareNet income
    
    $
    30,813
    
    
    $
    29,668
    
    
    $
    59,192
    
    
    $
    58,101Weighted average common shares outstanding
    
    
    120,036
    
    
    
    119,283
    
    
    
    119,745
    
    
    
    119,547Incremental shares assuming dilution
    
    
    1,390
    
    
    
    2,095
    
    
    
    1,229
    
    
    
    1,720Weighted average diluted common shares outstanding
    
    
    121,426
    
    
    
    121,378
    
    
    
    120,974
    
    
    
    121,267Diluted earnings per common share
    
    $
    0.25
    
    
    $
    0.24
    
    
    $
    0.49
    
    
    $
    0.48
 11




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For the Three Months
    
    For the Six MonthsEnded June 30,
    
    Ended June 30,2009
    
    2008
    
    2009
    
    2008(in thousands)
    
    (in thousands)Common stock options/SSARs
    
    
    10,593
    
    
    
    8,818
    
    
    
    11,286
    
    
    
    9,588Restricted stock units
    
    
    6
    
    
    
    
    
    
    
    3
    
    
    
    
  12. Commitments and Contingencies
 Litigation
   IPO Allocation Securities Litigation
  Other
  12




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##### Table of Contents



DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  RESULTS OF OPERATIONS
 This quarterly report contains forward-looking statements. These statements relate to future events
or our future financial performance. In some cases, you can identify forward-looking statements by
terminology such as may, will, should, could, forecasts, expects, plans,
anticipates, believes, estimates, predicts, potential, see, target, projects,
position, or continue or the negative of such terms and other comparable terminology. These
statements reflect our current expectations, estimates, and projections. These statements are not
guarantees of future performance and involve risks, uncertainties, and assumptions that are
difficult to predict. Actual events or results may differ materially from what is expressed or
forecasted in these forward-looking statements. In evaluating these statements, you should
specifically consider various factors, including the risks described in our Annual Report on Form
10-K for the year ended December 31, 2008, which have not materially changed. These risk factors
describe reasons why our actual results may differ materially from any forward-looking statement.
We disclaim any intention or obligation to update any forward-looking statement.
 
 Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
 RESULTS OF OPERATIONS
  Lines of Business
  Overview of Our Financial Results for the Second Quarter of 2009
   13




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##### Table of Contents



Revenue Growth
  
    
    A reduction in project work caused by project completions and cancellations in excess of new
project starts, projects that did not reach target operating levels in the quarter, and
reduced staffing levels on existing projects.
    
    A reduction of pass-through revenue as a result of transitioning the contract management
function back to a client.
    
    An unfavorable impact from foreign currency movements.
  
    
    Revenue from new contracts signed during the twelve-month period following the second quarter
of 2008.
 Earnings Growth
  Free Cash Flow
  Six Months Ended June 30,2009
    
    
    2008Net cash provided by operating activities
    
    $
    76
    
    
    $
    80Purchases of property, equipment and software
    
    
    (29
    )
    
    
    (27
    )Free cash flow
    
    $
    47
    
    
    $
    53
  14




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##### Table of Contents



TCV of Contracts Signed
   Additional Measurements
  Comparison of the Three Months Ended June 30, 2009 and 2008
 Revenue
  Three Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeIndustry Solutions
    
    $
    475
    
    
    $
    546
    
    
    $
    (71
    )
    
    
    (13.0
    )%Government Services
    
    
    155
    
    
    
    161
    
    
    
    (6
    )
    
    
    (3.7
    )%Elimination of intersegment revenue
    
    
    (2
    )
    
    
    (2
    )
    
    
    
    
    
    
    Total
    
    $
    628
    
    
    $
    705
    
    
    $
    (77
    )
    
    
    (10.9
    )%
 Industry Solutions
  
    
    $80 million net decrease from existing accounts largely resulting from completing task orders
in the normal course of business in excess of new project starts, a reduction of discretionary
project services, and a renegotiated contract with less pass-through revenue as a result of
transitioning a contract management function back to the client. The discretionary services
that we provide, which include short-term project work, can vary from period-to-period
depending on many factors, including specific customer and industry needs and economic
conditions.
 
    
    An unfavorable impact from foreign currency movements of $10 million.
 15




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##### Table of Contents




    
    $15 million increase from new contracts signed during the twelve-month period following the
second quarter of 2008 in the Healthcare group. The services that we are providing to these
new customers are primarily the same services that we provide to the majority of our other
long-term outsourcing customers.
 
    
    $4 million increase from revenue related to an acquisition within our Healthcare group during
the fourth quarter of 2008.
 Government Services
  Gross Margin
  
    
    Increased contract profitability on existing accounts in Industry Solutions resulting from
contract efficiencies on fixed-priced outsourcing contracts, volume increases on unit-priced
contracts, and cost containment activities.
 
    
    Increased gross margin in Industry Solutions due to a reduction of pass-through revenue and
expenses, as a result of transitioning a contract management function back to a customer.
 
    
    Increased gross profit for Government Services related to a contract that was in transition
during first and second quarters of 2008.
  Selling, General and Administrative Expenses
  Other Income Statement Items
  16




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##### Table of Contents



Comparison of the Six Months Ended June 30, 2009 and 2008
 Revenue
  Six Months Ended June 30,2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeIndustry Solutions
    
    $
    942
    
    
    $
    1,065
    
    
    $
    (123
    )
    
    
    (11.5
    )%Government Services
    
    
    310
    
    
    
    322
    
    
    
    (12
    )
    
    
    (3.7
    )%Elimination of intersegment revenue
    
    
    (3
    )
    
    
    (2
    )
    
    
    (1
    )
    
    
    (50.0
    )%Total
    
    $
    1,249
    
    
    $
    1,385
    
    
    $
    (136
    )
    
    
    (9.8
    )%
 Industry Solutions
  
    
    $130 million net decrease from existing accounts largely resulting from completing task
orders in the normal course of business in excess of new project starts, a reduction of
discretionary project services, and a renegotiated contract with less pass-through revenue as
a result of transitioning a contract management function back to the client. The discretionary
services that we provide, which include short-term project work, can vary from
period-to-period depending on many factors, including specific customer and industry needs and
economic conditions.
 
    
    An unfavorable impact from foreign currency movements of $23 million.
  
    
    $22 million increase from new contracts signed during the twelve-month period following the
second quarter of 2008 in the Healthcare group. The services that we are providing to these
new customers are primarily the same services that we provide to the majority of our other
long-term outsourcing customers.
 
    
    $8 million increase from revenue related to an acquisition within our Healthcare group during
the fourth quarter of 2008.
 Government Services
  17




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##### Table of Contents



Gross Margin
  
    
    Increased contract profitability on existing accounts in Industry Solutions resulting from
contract efficiencies on fixed-priced contracts, volume increases on unit-priced contracts,
and cost containment activities.
 
    
    Increased gross margin in Industry Solutions due to a reduction of pass-through revenue and
expenses, as a result of transitioning a contract management function back to a customer.
 
    
    Increased gross profit for Government Services related to a contract that was in transition
during the first and second quarter of 2008.
  Selling, General and Administrative Expenses
  Other Income Statement Items
  Liquidity and Capital Resources
   18




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##### Table of Contents



Operating Activities
  
    
    Cash used due to changes in accrued compensation was $30 million in the six months ending
June 30, 2009, as compared to $16 million cash provided by changes in accrued compensation for
the same period of 2008. The changes in accrued compensation in the six months ended June 30,
2009 were driven by the compensation accrued as of December 31, 2008 that was paid during the
six months ended June 30, 2009, partially offset by our compensation accrual that will be paid
during the first six months of 2010. Bonuses paid to associates under our bonus plans in the
first six months of 2009 and 2008 (including payments of annual bonuses relating to the
previous years bonus plan) were $58 million and $21 million, respectively.
 
    
    During the six months ended June 30, 2009, there was a decrease of $10 million in net
deferred revenue received from customers as compared to an increase of $16 million for the
same period in 2008. The decrease is primarily attributable to payments received in 2008
related to transition services on long-term outsourcing contracts.
 
    
    Cash used by changes in accounts payable and accrued liabilities was $20 million for the six
months ended June 30, 2009, as compared to cash provided of $2 million for the same period of
the prior year. This decrease is primarily due to the timing of vendor payments.
  
    
    Cash provided by changes in accounts receivable was $44 million for the six months ended June
30, 2009, as compared to $10 million cash used in accounts receivable for the same period of
the prior year. Our accounts receivable balance at the end of each period can change based on
the amount of revenue for that period and the timing of collection from our customers, which
may vary significantly from period to period.
 
    
    During the six months ended June 30, 2009, we made net cash payments for income taxes of $20
million as compared to $46 million in the six months ended June 30, 2008.
 Investing Activities
  19




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##### Table of Contents



Financing Activities
   Adoption of Significant Accounting Standards
 .
 20




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##### Table of Contents



Item 3: Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4: Controls and Procedures
   
 PART II: OTHER INFORMATION
 
 Item 1: Legal Proceedings
   IPO Allocation Securities Litigation
  21




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##### Table of Contents



Other
  
 Item 1A: Risk Factors
  
 Item 4: Submission of Matters to a Vote of Security Holders
   Nominees
    
    For
    
    WithheldRoss Perot
    
    
    111,877,888
    
    
    
    1,736,833Ross Perot, Jr
    
    
    111,845,608
    
    
    
    1,769,113Peter Altabef
    
    
    112,078,687
    
    
    
    1,536,034Steven Blasnik
    
    
    111,802,466
    
    
    
    1,812,255John S.T. Gallagher
    
    
    112,293,533
    
    
    
    1,321,188Carl Hahn
    
    
    112,208,327
    
    
    
    1,406,394DeSoto Jordan
    
    
    89,187,087
    
    
    
    24,427,634Caroline (Caz) Matthews
    
    
    112,598,345
    
    
    
    1,016,376Thomas Meurer
    
    
    112,573,624
    
    
    
    1,041,097Cecil H. (C. H.) Moore, Jr.
    
    
    112,301,155
    
    
    
    1,313,566Anthony Principi
    
    
    112,586,582
    
    
    
    1,028,139Anuroop (Tony) Singh
    
    
    112,268,515
    
    
    
    1,346,206
   22




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##### Table of Contents



Item 6. Exhibits
  EXHIBITNUMBER
    
    DESCRIPTION OF EXHIBIT3.1
    
    Third Amended and Restated Certificate of Incorporation of Perot Systems Corporation (the Company)
(Incorporated by reference to Exhibit 3.1 of the Companys Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2002.)3.2
    
    Fifth Amended and Restated Bylaws. (Incorporated by reference to Exhibit 3.2 of the Companys Current
Report on Form 8-K filed December 17, 2008).4.1
    
    Specimen of Class A Common Stock Certificate (Incorporated by reference to Exhibit 4.1 of the Companys
Registration Statement on Form S-1, Registration No. 333-60755.)31.1*
    
    Rule 13a-14 Certification dated August 4, 2009, by Peter A. Altabef, President and Chief Executive Officer.31.2*
    
    Rule 13a-14 Certification dated August 4, 2009, by John E. Harper, Vice President and Chief Financial
Officer.32.1**
    
    Section 1350 Certification dated August 4, 2009, by Peter A. Altabef, President and Chief Executive Officer.32.2**
    
    Section 1350 Certification dated August 4, 2009, by John E. Harper, Vice President and Chief Financial
Officer.
 
 *
    
    Filed herewith.**
    
    Furnished herewith. 23




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##### Table of Contents



PEROT SYSTEMS CORPORATION
(Registrant)Date: August 4, 2009
    
    By
    
    /s/ ROBERT J. KELLYRobert J. KellyCorporate Controller and PrincipalAccounting Officer
 24