Fonterra Signs NZ$590 Mn IT Outsourcing Contract

MEDIA RELEASE
8 DECEMBER 2003

Fonterra Signs NZ$590 Million IT Outsourcing Contract with EDS

Seven-year agreement covers 327 offices in 34 countries

AUCKLAND, New Zealand - Fonterra Co-operative Group and EDS today signed a seven-year, NZ$590 million (USD$380 million at the current currency conversion rate) IT infrastructure outsourcing contract to help streamline the co-operative's global infrastructure and generate cost-savings for its shareholders.

Fonterra's Chief Development Officer, Alexander Töldte said outsourcing enabled Fonterra to achieve its IT vision to establish and manage Fonterra's IT infrastructure as an effective, integrated global services utility, operated on a "pay as you use" basis that would reduce costs and improve IT reliability.

"It delivers a large leap forward in terms of our global IT infrastructure service without a significant capital outlay. This infrastructure will be one of the major tools to support our business and our strategies." Mr Töldte said that the terms of the contract represented significant cost savings for Fonterra over the seven-year term.

"This is very much in line with our overall programme to reduce costs and working capital. The process we followed with constructing our financial base case and the rigorous response to our RFP makes us totally confident this represents a very good outcome for Fonterra."

The contract covers 327 offices in 34 countries in New Zealand, Australia, Europe, Asia, the Middle East, North and South America, and Africa. It encompasses all of Fonterra's IT processes including LAN, midrange servers, networks (voice and data), desktops and laptops, helpdesk services and utility software such as Microsoft Office and e-mail systems such as GroupWise and Lotus Notes. The global outsourcing programme covers over 1,000 utility and application servers.

Mr Töldte said the outsourced infrastructure would replace systems that represented a fixed cost for the co-operative and lagged behind in terms of service requirements and operational economies of scale. The contract ends a year-long process through which Fonterra examined the benefits of outsourcing and the capability of suppliers to meets its global needs.

"EDS was selected for the work after a rigorous, competitive process because it had proven experience and skill in integrating and operating global IT systems, and because it had a complementary global footprint," said Marcel van den Assum, Fonterra's Chief Information Officer.

Under the contract, 127 Fonterra staff and 10 contractors are expected to transition to EDS from March 1 in New Zealand and its offshore operations. EDS New Zealand managing director Rick Ellis said that EDS is pleased about the opportunity to assist New Zealand's largest global company to achieve its objectives through delivering an improved result for its stakeholders.

"The contract recognizes the strength of EDS's global IT service capabilities to deliver to Fonterra's growing global presence, while also acknowledging the company's significant operational base in New Zealand.''

About Fonterra

Fonterra Co-operative Group Ltd is a leading multinational dairy company, owned by 13,000 New Zealand dairy farmers. It is the world's largest exporter of dairy products, exporting 95 percent of production to customers and consumers in 140 countries. Its ingredients business is the largest dairy ingredients operation in the world, manufacturing and marketing 2.3 million metric tonnes in the year to May 31, 2003. New Zealand Milk Limited, the co-operative's consumer business has some of the world's best-known dairy brands, including ANCHOR, ANLENE, ANDEX, ANMUM, CHESDALE, FERNLEAF, MEADOWFRESH and MAINLAND.

About EDS

EDS, the world's most experienced outsourcing services company, delivers superior returns to clients through its cost-effective, high-value services model. EDS' core portfolio comprises information-technology and business process outsourcing services, as well as information-technology transformation services. EDS' two complementary, subsidiary businesses are A.T. Kearney, one of the world's leading high-value management consultancies, and UGS PLM Solutions, a leader in product data management, collaboration and product design software. With 2002 revenue of $21.5 billion, EDS is ranked 80th on the Fortune 500. The company's stock is traded on the New York (NYSE: EDS) and London stock exchanges. Learn more at eds.com.

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The statements in this news release that are not historical statements, including statements regarding the amount of new contract values, 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, which could cause actual results to differ materially from such statements. For information concerning these risks and uncertainties, see EDS' most recent Form 10-Q. 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.

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