SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission File No. 1-4850
COMPUTER SCIENCES CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 95-2043126
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2100 East Grand Avenue
El Segundo, California 90245
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (310) 615-0311
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
167,333,575 shares of Common Stock, $1.00 par value, were outstanding on
January 28, 2000.
COMPUTER SCIENCES CORPORATION
Index to Form 10-Q
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income, Third Quarter and
Nine Months Ended December 31, 1999 and January 1, 1999 ........ 3
Consolidated Condensed Balance Sheets,
December 31, 1999 and April 2, 1999 ............................ 4
Consolidated Condensed Statements of Cash Flows,
Nine Months Ended December 31, 1999 and January 1, 1999 ........ 5
Notes to Consolidated Condensed Financial Statements .............. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............ 10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk .............................................. 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................. 16
2
PART I, ITEM 1. FINANCIAL STATEMENTS
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited)
Third Quarter Ended Nine Months Ended
---------------------- ----------------------
(In thousands except Dec. 31, Jan. 1, Dec. 31, Jan. 1,
per-share amounts) 1999 1999 1999 1999
---------- ---------- ---------- ----------
Revenues $2,360,071 $2,054,691 $6,795,469 $5,856,355
---------- ---------- ---------- ----------
Costs of services 1,843,141 1,600,699 5,353,732 4,600,890
Selling, general
and administrative 192,565 191,023 581,748 546,391
Depreciation and
amortization 145,381 116,104 393,805 331,392
Interest expense 14,413 12,320 42,644 36,024
Interest income (4,345) (3,741) (13,665) (9,968)
Special items 41,065 41,065
---------- ---------- ---------- ----------
Total costs and expenses 2,232,220 1,916,405 6,399,329 5,504,729
---------- ---------- ---------- ----------
Income before taxes 127,851 138,286 396,140 351,626
Taxes on income 45,522 46,590 136,100 117,938
---------- ---------- ---------- ----------
Net income $ 82,329 $ 91,696 $ 260,040 $ 233,688
========== ========== ========== ==========
Earnings per share
(note A):
Basic $ .49 $ .56 $ 1.57 $ 1.43
========== ========== ========== ==========
Diluted $ .48 $ .55 $ 1.54 $ 1.39
========== ========== ========== ==========
[FN]
See accompanying notes.
3
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
Dec. 31, April 2,
(In thousands) 1999 1999
----------- -----------
(unaudited)
ASSETS
Cash and cash equivalents $ 239,430 $ 617,879
Receivables 2,151,510 1,890,461
Prepaid expenses and other current assets 338,767 296,352
----------- -----------
Total current assets 2,729,707 2,804,692
----------- -----------
Goodwill 823,599 726,951
Software and other assets 768,014 616,503
Property and equipment, net of accumulated
depreciation and amortization of
$1,430,683 and $1,256,556 1,258,193 1,112,207
----------- -----------
Total assets $5,579,513 $5,260,353
=========== ===========
LIABILITIES
Short-term debt and current
maturities of long-term debt $ 308,357 $ 603,939
Accounts payable 290,306 403,154
Accrued payroll and related costs 457,019 405,160
Other accrued expenses 566,163 460,938
Deferred revenue 124,316 138,340
Income taxes payable 171,031 131,673
----------- -----------
Total current liabilities 1,917,192 2,143,204
----------- -----------
Long-term debt, net 656,916 399,672
----------- -----------
Other long-term liabilities 117,741 128,957
----------- -----------
STOCKHOLDERS' EQUITY (note B)
Common stock issued, par value $1.00 per share 167,300 165,520
Additional paid in capital 884,059 823,286
Earnings retained for use in business 1,918,210 1,667,733
Accumulated other comprehensive income (note D) (65,875) (53,235)
Less common stock in treasury (15,852) (14,413)
Unearned restricted stock and other (178) (371)
----------- -----------
Total stockholders' equity 2,887,664 2,588,520
----------- -----------
Total liabilities and stockholders' equity $5,579,513 $5,260,353
=========== ===========
[FN]
See accompanying notes.
4
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended
-----------------------
(In thousands, increase (decrease) Dec. 31, Jan. 1,
in cash and cash equivalents) 1999 1999
---------- ----------
Cash flows from operating activities:
Net income $ 260,040 $ 233,688
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 393,805 331,392
Provision for losses on accounts receivable 1,650 5,648
Special items, net of tax 19,207
Changes in assets and liabilities, net of
effects of acquisitions:
Increase in assets (230,255) (433,683)
Increase in liabilities 48,740 184,038
---------- ----------
Net cash provided by operating activities 493,187 321,083
---------- ----------
Investing activities:
Purchases of property and equipment (409,314) (314,585)
Acquisitions, net of cash acquired (193,051) (161,846)
Dispositions 37,947
Outsourcing contracts (157,327) (59,054)
Software (60,908) (60,429)
Other investing cash flows 14,939 15,311
---------- ----------
Net cash used in investing activities (805,661) (542,656)
---------- ----------
Financing activities:
Borrowings under commercial paper, net 86,186 49,068
Borrowings under lines of credit, net 2,627 41,899
Principal payments on long-term debt (171,732) (17,825)
Proceeds from stock option transactions 42,850 39,593
Other financing cash flows (10,231) 3,363
---------- ----------
Net cash (used in) provided by financing activities (50,300) 116,098
---------- ----------
Effect of exchange rate changes on cash
and cash equivalents (3,554) 5,527
---------- ----------
Net decrease in cash and cash equivalents (366,328) (99,948)
Cash and cash equivalents at beginning of year 617,879 285,964
Effect of pooling restatement (12,121)
---------- ----------
Cash and cash equivalents at end of period $ 239,430 $ 186,016
========== ==========
[FN]
See accompanying notes.
5
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited)
(A) Basic and diluted earnings per share are calculated as follows (in
thousands except per share amounts):
Third Quarter Ended
--------------------------------
Dec. 31, 1999 Jan. 1, 1999
------------- ------------
Net income for basic and diluted EPS $ 82,329 $ 91,696
======== ========
Common share information:
Average common shares outstanding
for basic EPS 166,574 164,464
Dilutive effect of stock options 3,330 3,570
-------- --------
Shares for diluted EPS 169,904 168,034
======== ========
Basic EPS $ .49 $ .56
Diluted EPS .48 .55
Nine Months Ended
--------------------------------
Dec. 31, 1999 Jan. 1, 1999
------------- ------------
Net income for basic and diluted EPS $260,040 $233,688
======== ========
Common share information:
Average common shares outstanding
for basic EPS 165,972 163,857
Dilutive effect of stock options 3,376 3,907
-------- --------
Shares for diluted EPS 169,348 167,764
======== ========
Basic EPS $ 1.57 $ 1.43
Diluted EPS 1.54 1.39
In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 128, the computation of diluted EPS did not include stock options
which were antidilutive, as their exercise price was greater than the
average market price of the common stock of Computer Sciences Corporation
("CSC" or the "Company") during the year. The number of such options was
219,738 and 82,334 at December 31, 1999 and January 1, 1999,
respectively.
(B) No dividends were paid during the periods presented. At December 31, 1999
and April 2, 1999, there were 167,300,143 and 165,520,547 shares,
respectively, of $1.00 par value common stock issued, and 391,497 and
369,607 shares, respectively, of treasury stock.
6
(C) Cash payments for interest on indebtedness were $43.7 million and $39.5
million for the nine months ended December 31, 1999 and January 1, 1999,
respectively. Cash payments (refunds) for taxes on income were $43.4
million and $(40.8) million for the nine months ended December 31, 1999
and January 1, 1999, respectively.
(D) The components of comprehensive income, net of tax, are as follows
(in thousands):
Third Quarter Ended
--------------------------------
Dec. 31, 1999 Jan. 1, 1999
------------- ------------
Net income $ 82,329 $ 91,696
Foreign currency translation
adjustment (14,556) (6,556)
--------- ---------
Comprehensive income $ 67,773 $ 85,140
========= =========
Nine Months Ended
--------------------------------
Dec. 31, 1999 Jan. 1, 1999
------------- ------------
Net income $260,040 $233,688
Foreign currency translation
adjustment (12,640) 14,039
--------- ---------
Comprehensive income $247,400 $247,727
========= =========
Accumulated other comprehensive income presented on the accompanying
consolidated condensed balance sheets consists of the accumulated
foreign currency translation adjustment and the minimum pension liability
adjustment.
(E) CSC's business involves operations which provide management and
information technology consulting, systems integration and outsourcing.
Based on the criteria of SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information," CSC has two reportable segments: the
U.S. Federal Sector and the Global Commercial Sector. The U.S. Federal
Sector operates principally within a regulatory environment subject to
governmental contracting and accounting requirements, including Federal
Acquisition Regulations, Cost Accounting Standards and audits by various
U.S. Federal agencies. The U.S. Federal Sector revenues reported below
will vary from U.S. Federal government revenue presented elsewhere in
this report due to overlapping activities between segments. Information
on reportable segments is as follows (in thousands):
7
Global U.S.
Commercial Federal
Sector Sector Corporate Total
---------- -------- --------- ----------
Third Quarter Ended
December 31,1999
Revenues $1,789,884 $567,815 $ 2,372 $2,360,071
Earnings before special items
interest and taxes 143,511 34,647 826 178,984
Special items 18,303 11,461 11,301 41,065
Earnings (loss) before
interest and taxes 125,208 23,186 (10,475) 137,919
Third Quarter Ended
January 1,1999
Revenues $1,526,195 $528,097 $ 400 $2,054,692
Earnings before
interest and taxes 113,657 30,492 2,716 146,865
Global U.S.
Commercial Federal
Sector Sector Corporate Total
---------- ---------- --------- ----------
Nine Months Ended
December 31,1999
Revenues $5,088,692 $1,703,586 $ 3,191 $6,795,469
Earnings (loss) before
special items, interest
and taxes 367,139 102,145 (3,100) 466,184
Special items 18,303 11,461 11,301 41,065
Earnings (loss) before
interest and taxes 348,836 90,684 (14,401) 425,119
Nine Months Ended
January 1,1999
Revenues $4,256,738 $1,599,132 $ 485 $5,856,355
Earnings (loss) before
interest and taxes 287,196 92,713 (2,227) 377,682
8
(F) CSC adopted the American Institute of Certified Public Accountants
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" as of the first quarter
of fiscal 2000. This statement requires the capitalization of internal
use computer software costs provided that certain criteria are met. These
capitalized software costs are amortized on a straight-line basis over
the useful life of the software. The adoption of SOP 98-1 had no material
impact on the Company's consolidated financial position, results of
operations or cash flows.
(G) In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." This statement requires all derivatives to be recorded on
the balance sheet at fair value and establishes accounting standards for
hedging activities. In June 1999, the FASB issued SFAS No. 137, which
amends SFAS No. 133 by deferring its effective date one year to fiscal
years beginning after June 15, 2000. The Company is currently assessing
the impact this statement will have and, based on preliminary estimates,
does not expect the adoption to have a material impact on its consolidated
financial position or results of operations.
(H) The special items result from merger-related charges and other transaction
costs of $39.1 million ($28.5 million after tax) associated with the
November 16, 1999 acquisition of Nichols Research Corporation (Nichols),
and other costs, net of recoveries, of $2 million ($1.3 million after tax)
associated with the resolution, during the quarter, of the remaining
issues relating to the Company's fiscal 1998 response to a failed
take-over attempt. The Nichols charge is comprised of $9.3 million for
investment banking and other transaction expenses; $23.5 million related
to the write-off of capitalized software attributable to duplicate
market offerings and the write-off of other assets and intangibles; and
$6.3 million related to employee severance costs and elimination of
duplicate facilities. The involuntary termination benefits accrued
and expensed were $5.1 million and related to 60 Nichols employees. As of
December 31, 1999, approximately $1.9 million had been paid.
(I) The financial information reported, which is not necessarily indicative
of the results for a full year, is unaudited but includes all adjustments
which the Company considers necessary for a fair presentation. All such
adjustments are normal recurring adjustments.
(J) The results have been restated to reflect the acquisition of Nichols,
which has been accounted for as a pooling of interests. The restatement
includes Nichols' results for fiscal 1999, which ended August 31 and
results for CSC's fiscal 1999, which ended April 2. Therefore, the
restated third quarter and nine months results for fiscal 1999 reflect
Nichols' three months and nine months ended May 31, 1999. The restated
fiscal 2000 data include Nichols' results based on CSC's fiscal year.
9
PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Third Quarter and First Nine Months of Fiscal 2000 versus
Third Quarter and First Nine Months of Fiscal 1999
Revenues
During the third quarter ended December 31, 1999, the Company's total revenue
increased 14.9%, or $305.4 million, over the same period last year. The
Company's financial results have been restated and fiscal periods have been
realigned to reflect the merger with Nichols, which was accounted for as a
pooling of interests. Nichols' revenue of $100 million for the third quarter
of fiscal 2000 is compared to Nichols' revenue of $127 million for its fiscal
1999 third quarter ended May 1999. As a result, a seasonally lower quarter
for Nichols is compared to its strongest quarter of the prior year. Before
the pooling of interests, revenues for the third quarter were up 17.3%
compared with the prior-year period.
Global commercial sector revenues grew 17.3%, or $263.7 million over the same
quarter of last year.
U.S. Commercial revenue grew 10.4% or $83.5 million during the third quarter
of fiscal 2000 over the same period last year. The growth was principally
generated from information technology outsourcing contracts.
European revenues grew $45.8 million or 7.5% during the third quarter. The
growth was provided principally from increases in outsourcing activities,
consulting and systems integration activities and revenue generated by last
years acquisitions in Italy. Revenue growth was negatively impacted by 2.5
percentage points due to the effect of European currency fluctuations.
Other international revenue for the third quarter grew 114.9% to $251.2
million. The increase was the result of last year's fourth quarter
acquisition of Singapore-based CSA Holdings, Ltd. and further expansion of
CSC's Australian operations.
U.S. Federal sector revenue increased 7.5% or $39.7 million during the third
quarter. Revenue gains were fueled by increases from civil agency and
Department of Defense business.
For the first nine months of fiscal 2000, the Company's total revenue
increased 16% or $939.1 million and the Company announced a total of $8.9
billion in new Global Commercial and Federal business awards. The Company's
continued growth has created a broad, long-term global revenue base across
numerous customers, industries, geographic regions and service regions.
10
Costs and Expenses
The Company's costs and expenses as a percentage of revenue are as follows
(dollars in millions):
Dollar Amount Percentage of Revenue
-------------- ---------------------------------
Third Quarter Third Quarter First Nine Months
-------------- -------------- -----------------
Fiscal Fiscal Fiscal
-------------- -------------- -----------------
2000 1999 2000 1999 2000 1999
------ ------ ------ ------ ------ ------
Costs of services $1,843 $1,601 78.1% 77.9% 78.8% 78.6%
Selling, general & admin. 193 191 8.1 9.3 8.6 9.3
Depreciation and amort. 145 116 6.2 5.7 5.8 5.7
Interest expense, net 10 8 .4 .4 .4 .4
------ ------ ------ ------ ------ ------
Total $2,191 $1,916 92.8% 93.3% 93.6% 94.0%
====== ====== ====== ====== ====== ======
Comparing both the third quarter and first nine months of fiscal 2000 and
fiscal 1999, total costs and expenses improved as a percentage of revenue.
Lower costs in selling, general and administrative expenses were partially
offset by increases in depreciation and amortization.
Lower selling, general and administrative expenses as a percentage of revenue
were substantially related to lower costs due to efficiencies realized as a
result of last year's reorganization within the Federal sector and the
continued focus on aggressive cost containment given a period of dramatic
demand shifts for information technology services during the third quarter.
The increase in depreciation and amortization as a percentage of revenue was
principally due to additional assets associated with the Company's U.S.
outsourcing operations.
Special Items
The results for the third quarter ended December 31, 1999 include special
items of $41.1 million ($29.8 million after tax), or 18 cents per share
(diluted). The special items result from merger-related charges and other
transaction costs of $39.1 million ($28.5 million after tax) associated with
the November 16,1999 acquisition of Nichols Research Corporation (Nichols),
and legal and other costs, net of recoveries, of $2 million ($1.3 million
after tax) associated with the resolution, during the quarter, of the
remaining issues relating to the Company's fiscal 1998 response to a failed
take-over attempt. The Nichols charge is comprised of $9.3 million for
investment banking and other transaction expenses; $23.5 million related to
the write-off of capitalized software attributable to duplicate market
offerings and the write-off of other assets and intangibles; and $6.3 million
related to employee severance costs and elimination of duplicate facilities.
11
Income Before Taxes
Due to the Company's revenue growth and improvements in operating performance,
income before special items and taxes increased $30.6 million to $168.9
million, up 22.1% over the same quarter last year. The resulting margin
before special charges was 7.2% compared to 6.7% for last year's third quarter
and was 6.4% versus 6.0% for the nine months of fiscal 2000 and fiscal 1999,
respectively.
Net Income
Earnings before special items were $112.2 million for the third quarter of
fiscal 2000, up $20.5 million, or 22.3% over last year's third quarter. This
year's third quarter diluted earnings per share of 66 cents increased 20% over
last year's third quarter diluted earnings per share of 55 cents, excluding
this quarters special items of $29.8 million or 18 cents per share. On a year
to date basis, diluted earnings per share before special items was $1.71, up
32 cents, or 23% over the same period for the prior year.
Cash Flows
Cash provided by operating activities was $493.2 million for the nine months
ended December 31, 1999, compared with $321.1 million during the same period
last year. The increase of $172.1 million resulted from an increase in
earnings and non-cash depreciation and amortization expenses partially offset
by changes in working capital.
The Company's cash expenditures for investing activities totaled $805.7
million for the most recent nine months versus $542.7 million during the same
period of last year. The increase principally relates to purchases of
outsourcing assets, property and equipment and acquisitions made in Italy,
Austria and the United States.
Cash used for financing activities was $50.3 million for the most recent nine
months versus cash provided by financing activities of $116.1 million for the
same period last year. The change is due to repayment of the Company's $150
million 6.80% notes due April 1999 offset in part by other financing
activities.
Financial Condition
During the first nine months of fiscal 2000, the Company's capital outlays
included $759.7 million of business investments in the form of fixed asset
purchases, acquisitions and outsourcing contracts. These investments as well
as the repayment of the Company's $150 million 6.80% notes due April 1999 were
funded from operating cash flows, additional borrowings and existing cash
balances, which decreased from $617.9 million to $239.4 million. The
Company's debt-to-total capitalization ratio improved to 25.1% at December 31,
1999 from 27.9% at fiscal 1999 year end, principally due to the previously
mentioned debt repayment.
The Company has an option to require a subsidiary of Equifax Inc. to purchase
the Company's credit reporting business as further described in Note 11 of the
Company's Annual Report on Form 10-K for fiscal 1999. The exercise price of
this put option is equal to the appraised value of the business.
12
It is management's opinion that the Company will be able to meet its liquidity
and cash needs for the foreseeable future through a combination of cash flows
from operating activities, cash balances, unused borrowing capacity and other
financing activities, including the issuance of debt and/or equity securities,
and/or the exercise of the put option described above.
New Accounting Pronouncements
The Company has adopted the American Institute of Certified Public Accountants
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" as of the first quarter of
fiscal 2000. This statement requires the capitalization of internal use
computer software costs provided that certain criteria are met. These
capitalized software costs are amortized on a straight-line basis over the
useful life of the software. The adoption of SOP 98-1 had no material impact
on the Company's consolidated financial position, results of operations or
cash flows.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement requires all
derivatives to be recorded on the balance sheet at fair value and establishes
accounting standards for hedging activities. In June 1999, the FASB issued
SFAS No. 137, which amends SFAS No. 133 by deferring its effective date one
year to fiscal years beginning after June 15, 2000. The Company is currently
assessing the impact this statement will have and, based on preliminary
estimates, does not expect the adoption to have a material impact on its
consolidated financial position or results of operations.
Year 2000 Readiness Disclosure
The Company's transition to the year 2000 went smoothly, with only minor
incidents. As a result, any future year 2000 issues will be addressed as part
of normal operations and will not be tracked or reported separately.
The Company's Year 2000 efforts did not have a material effect on its overall
financial position or results of operations. The total fiscal 1999 and 2000
operating costs associated with making the Company's proprietary products,
systems and infrastructure Year 2000 ready, as well as costs for contingency
planning and monitoring, including the cost of Company personnel diverted to
internal Year 2000 assignments, was approximately $44 million. In addition,
related capital expenditures for fiscal 1999 and 2000 were approximately $11
million.
Some of these capital expenditures represented equipment replacements that had
been accelerated due to Year 2000 issues. The operating costs described above
were generally not incremental, but reflected the reallocation of existing
resources. The Company did not defer any significant information technology
projects as a result of the Year 2000 efforts.
13
Forward-Looking Statements
All statements contained in this quarterly report, or in any document filed by
the Company with the Securities and Exchange Commission, or in any press
release or other written or oral communication by or on behalf of the Company,
that do not directly and exclusively relate to historical facts constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements represent the Company's
expectations and beliefs, and no assurance can be given that the results
described in such statements will be achieved.
These statements are subject to risks, uncertainties and other factors, many
of which are outside of the Company's control, that could cause actual results
to differ materially from the results described in such statements. These
factors include, without limitation, the following: (i) competitive pressures;
(ii) the Company's ability to attract and retain key personnel; (iii) changes
in the demand for information technology outsourcing and business process
outsourcing; (iv) changes in the financial condition of the Company's major
commercial customers; (v) changes in U.S. federal government spending levels
for information technology services; (vi) the Company's ability to consummate
strategic acquisitions and alliances; (vii) the future profitability of the
Company's customer contracts; (viii) the Company's ability to continue to
develop and expand its service offerings to address emerging business demand
and technological trends; and (ix) general economic conditions in countries in
which the Company does business.
14
PART I, ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
For a discussion of the Company's market-risk associated with interest rates
and foreign currencies as of April 2, 1999, see "Quantitative and Qualitative
Disclosures about Market Risk" in the Part II, Item 7A, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," of
the Company's Annual Report on Form 10-K for the fiscal year then ended. For
the nine months ended December 31, 1999, there has been no significant change
in related market risk factors.
15
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
3.1 Restated Articles of Incorporation, effective
October 31, 1988 (c)
3.2 Amendment to Restated Articles of Incorporation,
effective August 10, 1992 (i)
3.3 Amendment to Restated Articles of Incorporation,
effective July 31, 1996 (k)
3.4 Certificate of Amendment of Certificate of Designations
of Series A Junior Participating Preferred Stock,
effective August 1, 1996 (m)
3.5 Bylaws, amended and restated effective December 6, 1999
10.1 1978 Stock Option Plan, amended and restated
effective March 31, 1988* (l)
10.2 1980 Stock Option Plan, amended and restated
effective March 31, 1988* (l)
10.3 1984 Stock Option Plan, amended and restated
effective March 31, 1988* (l)
10.4 1987 Stock Incentive Plan* (b)
10.5 Schedule to the 1987 Stock Incentive Plan for
United Kingdom personnel* (b)
10.6 1990 Stock Incentive Plan* (h)
10.7 1992 Stock Incentive Plan, amended and restated
effective August 9, 1993* (o)
10.8 Schedule to the 1992 Stock Incentive Plan for
United Kingdom personnel* (n)
10.9 1995 Stock Incentive Plan* (j)
10.10 1998 Stock Incentive Plan* (s)
10.11 Form of Stock Option Agreement* (r)
10.12 Form of Restricted Stock Agreement* (r)
10.13 Annual Management Incentive Plan, effective April 2, 1983* (a)
10.14 Supplemental Executive Retirement Plan, amended and
restated effective February 27, 1998* (r)
10.15 Deferred Compensation Plan, amended and restated
effective February 2, 1998* (p)
10.16 Severance Plan for Senior Management and Key Employees,
amended and restated effective February 18, 1998 (q)
10.17 Severance Agreement with Van B. Honeycutt, effective
February 2, 1998* (p)
10.18 Employment Agreement with Van B. Honeycutt, effective
May 1, 1999* (g)
10.19 Form of Indemnification Agreement for Officers (e)
10.20 Form of Indemnification Agreement for Directors (d)
10.21 1997 Nonemployee Director Stock Incentive Plan (o)
10.22 Form of Restricted Stock Unit Agreement (f)
10.23 1990 Nonemployee Director Retirement Plan, amended
and restated effective February 2, 1998 (p)
16
10.24 Rights Agreement dated February 18, 1998 (q)
10.25 $250 million Credit Agreement (Long Term Facility) dated
as of August 20, 1999 (t)
10.26 $250 million Credit Agreement (Short Term Facility) dated
as of August 20, 1999 (t)
27 Financial Data Schedule
28 Revenues by Market Sector
99.1 Annual Report on Form 11-K for the Matched Asset Plan of the
Registrant for the fiscal year ended December 31, 1998 (g)
99.2 Annual Report on Form 11-K for the Hourly Savings Plan of
CSC Outsourcing, Inc. for the fiscal year ended
December 31, 1998 (g)
99.3 Annual Report on Form 11-K for the CUTW Hourly Savings
Plan of CSC Outsourcing, Inc. for the fiscal year
ended December 31, 1998 (g)
17
Notes to Exhibit Index:
*Management contract or compensatory plan or agreement
(a)-(g) These exhibits are incorporated herein by reference to the
Company's Annual Report on Form 10-K for the fiscal years ended
on the respective dates indicated below:
(a) March 30, 1984 (e) March 31, 1995
(b) April 1, 1988 (f) April 3, 1998
(c) March 31, 1989 (g) April 2, 1999
(d) April 3, 1992
(h) Incorporated herein by reference to the Registrant's Registration
Statement on Form S-8 filed on August 15, 1990.
(i) Incorporated herein by reference to the Registrant's Proxy
Statement for its August 10, 1992 Annual Meeting of Stockholders.
(j) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on November 13, 1995.
(k) Incorporated herein by reference to the Registrant's Proxy
Statement for its July 31, 1996 Annual Meeting of Stockholders.
(l) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on August 12, 1996.
(m) Incorporated herein by reference to the Registrant's Current
Report of Form 8-K dated August 1, 1996.
(n) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on February 10, 1997.
(o) Incorporated herein by reference to the Registrant's Proxy
Statement for its August 11, 1997 Annual Meeting of Stockholders.
(p) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on February 9, 1998.
(q) Incorporated herein by reference to the Registrant's
Registration Statement on Form 8-A filed on February 25, 1998
(r) Incorporated herein by reference to Amendment No. 2 to the
Registrant's Solicitation/Recommendation Statement on Schedule
14D-9 filed on March 2, 1998.
(s) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on August 14, 1998
(t) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on November 15, 1999
b. Reports on Form 8-K:
There was one report on Form 8-K filed during the third quarter of fiscal
2000. On November 16, 1999, the Registrant filed a Current Report on
Form 8-K reporting that it had consummated its acquisition of Nichols
Research Corporation.
18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMPUTER SCIENCES CORPORATION
Date: February 14, 2000 By: /s/ Bryan Brady
-----------------------------
Bryan Brady
Vice President and Controller
Chief Accounting Officer
19
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
- ------- ----------------------
3.5 Bylaws of Computer Sciences Corporation, as amended and restated
December 6, 1999
27 Financial Data Schedule
28 Revenues by Market Sector
20