Exhibit 99.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the fiscal year ended: December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the transition period from ________ to ________
Commission file number: 1-4850
A. Full title of plan and the address of the plan, if different from that
of the issuer named below: CSC Outsourcing Inc. Hourly Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: Computer Sciences Corporation
2100 East Grand Avenue
El Segundo, California 90245
TABLE OF CONTENTS
-----------------
Description Page
- ----------- ----
(a) Financial Statements:
Independent Auditors' Report..................................... 3
Statements of Net Assets Available for Benefits
As of December 31, 1997 and 1996................................. 4
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1997 and 1996................... 5
Notes to Financial Statements.................................... 6
(b) Exhibit:
Independent Auditors' Consent.................................... E-1
(c) Supplemental Schedules:
Schedule of Assets Held for Investment Purposes.................. S-1
Schedule of Reportable Transactions.............................. S-2
2
INDEPENDENT AUDITORS' REPORT
Employee Retirement Plan Committee
Computer Sciences Corporation
El Segundo, California
We have audited the accompanying statements of net assets available for benefits
of the CSC Outsourcing Inc. Hourly Savings Plan (the "Plan") as of December 31,
1997 and 1996, and the related statements of changes in net assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for benefits
for the years then ended in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in
Section C of the table of contents are presented for the purpose of additional
analysis and are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of
the Plan's management. Such schedules have been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/Deloitte & Touche LLP
June 5, 1998
Los Angeles, California
3
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
STATEMENTS OF NET ASSETS
AVAILABLE FOR BENEFITS
DECEMBER 31
--------------------------------------------
1997 1996
------------------- -------------------
ASSETS
Investments (Notes 2, 5, 8 and 9):
Short-term $ 24,281 $ 4,359
Long-term--at fair value
Mellon Capital Government Bond Fund 972,097 986,754
Brinson U.S. Equity Fund 1,502,152 1,304,881
CSC common stock 438,292 427,707
Employee loans (Note 6) 17,258
Interest in Master Trust 714,880 120,628
Guaranteed investment contracts--at contract value 1,394,969 2,428,333
------------------- -------------------
Total investments 5,063,929 5,272,662
------------------- -------------------
Receivables:
Participants' Contributions 7,172 5,498
Employer Contributions 1,450 20
Accrued income 123
------------------- -------------------
Total receivables 8,745 5,518
------------------- -------------------
Total assets 5,072,674 5,278,180
------------------- -------------------
LIABILITIES
Accrued expenses 1,323 921
Forfeitures payable 904 1,165
Other 486 552
------------------- -------------------
Total Liabilities 2,713 2,638
------------------- -------------------
NET ASSETS AVAILABLE FOR BENEFITS $5,069,961 $5,275,542
=================== ===================
See notes to financial statements
4
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED
DECEMBER 31
---------------------------------------------
1997 1996
------------------- -------------------
ADDITIONS
Investment Income:
Net appreciation in fair value of investments $ 199,727 $ 237,527
Interest 155,032 172,628
Dividends 107,411 92,518
Plan interest in Master Trust investment income 19,303 7,543
------------------- -------------------
481,473 510,216
Investment Management Fees (4,092) (3,639)
------------------- -------------------
477,381 506,577
Contributions:
Employee 183,550 176,912
Employer 79,199 80,725
------------------- -------------------
262,749 257,637
------------------- -------------------
Total Additions 740,130 764,214
------------------- -------------------
DEDUCTIONS
Distributions to Participants (Notes 1 and 7) 945,711 280,454
------------------- -------------------
Total Deductions 945,711 280,454
------------------- -------------------
Net (Decrease) Increase (205,581) 483,760
Net assets available for benefits at beginning of year 5,275,542 4,791,782
------------------- -------------------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $5,069,961 $5,275,542
=================== ===================
See notes to financial statements
5
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Note 1 Description of the Plan
-----------------------
The following brief description of the CSC Outsourcing Inc. Hourly Savings Plan
(the "Plan"), formerly the TMD Hourly Savings Plan, of CSC Outsourcing Inc. (the
"Company") is provided for general information purposes only. Participants
should refer to the Plan document for more complete information.
The Plan became effective May 2, 1992, as a result of the Company acquiring the
Data Systems Division of General Dynamics Corporation. The Plan is administered
by a committee consisting of four members who are appointed by the Board of
Directors of the Company and serve without compensation, being reimbursed by the
Company for all expenditures incurred in the discharge of their duties as
members of the committee. The committee has the power to interpret, construe
and administer the Plan and to decide any dispute which may arise under the
Plan. The Bank of New York (the "Trustee") administers the Plan pursuant to a
Trust Agreement entered into with the Company. Certain administrative expenses
(including Trustee fees) incurred for services rendered to the Plan are paid by
the Company.
The Plan is a voluntary, contributory, defined contribution plan and is intended
to satisfy the requirements of Section 401(a) and 401(k) of the Internal Revenue
Code (the "Code"). It is also subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
The Company reserves the right to discontinue contributions and to terminate the
Plan subject to the provisions of ERISA. Upon such termination, the
participants' rights to the Company's contributions vest immediately and the
account balances are fully paid to the participants.
Eligibility and Participation
- -----------------------------
Employees are eligible to participate on specified enrollment dates if they
satisfy the Plan's service requirements, are hourly paid employees of CSC
Outsourcing Inc. and are members of a collective bargaining unit for which
participation in this Plan has been provided by negotiated agreement. A rehired
eligible employee may receive service credit for his or her previous employment
and is eligible to rejoin the Plan on the next enrollment date.
There were approximately 121 participating employees at December 31, 1997.
6
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Employee and Company Contributions
- ----------------------------------
A participant may authorize before-tax and after-tax contributions to the Plan
subject to a maximum level of contributions (a certain percentage of base
earnings), as specified by the bargaining agreement covering the employee.
Depending on the investment election option the participant elects, the Company
will contribute, and forward to the trust fund $0.50 for each $1.00 of the
employee matched contribution together with the participant's before-tax and
after-tax contribution.
Participants in certain bargaining units who direct 100 percent of their
contributions to the Plan's stock fund will receive a monthly matching
contribution of $1.00 for each $1.00 of employee matched contributions.
Participants under certain bargaining units may contribute additional unmatched
contributions at various percentages of base earnings to a maximum specified by
the union agreement covering the employee, but only if a participant contributes
the maximum matched percentage for which he or she is eligible. The employee's
base earnings deferred and contributed to the Trust fund cannot exceed $9,500
for calendar year 1997, the maximum allowable under the Code. Annual after-tax
contributions to the Plan (including employee and Company matching
contributions) are limited to $30,000 for each participant. Any compensation
deferral in excess of $9,500 and any after-tax contributions with matching
Company contributions in excess of $30,000, together with income allocable to
those excess contributions will be returned to a participant. Any matching
Company contributions attributable to any excess contribution, and income
allocable thereto, will either be returned to the Company or applied to reduce
future matching Company contributions.
Participants may change their investment elections as of any enrollment date if
at least a 30 day prior notice is given. However, participants under certain
circumstances may be eligible to change their investment elections within a 30
day window period. Participants may transfer their existing account balances in
25 percent increments. Transfer elections are effective on the first quarterly
enrollment date following receipt of a 30 day prior notice from the participant.
Company contributions - In accordance with the provisions of the Plan, the
Trustee must promptly invest matching Company contributions paid into the trust
fund in the same funds as the participant contributions.
The Plan does not permit employees to rollover a qualified distribution from
another plan.
7
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Participant Accounts
- --------------------
Each participant's account is credited with the participant's contribution and
the Company's matching contribution and allocations of Plan earnings, and is
charged with an allocation of investment management fees. Allocations are based
on participant earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
Vesting of Participants' Interests/Forfeitures
- ----------------------------------------------
Participants are 100 percent vested at all times in their before-tax and after-
tax contribution accounts. Each participant has a vested interest in the value
of his or her Company matching contributions account and investment earnings
thereon equal to 100 percent after completing five full years of service.
The five-year cliff vesting schedule is overridden under extraordinary
circumstances as specified in the Plan document, in which the participant (or
beneficiary(ies)) immediately becomes fully vested in all employer contributions
and earnings, regardless of his or her number of years of service.
Any nonvested balances will be immediately forfeited from the participant's
account at termination.
Distributable Amounts, Withdrawals and Refunds
- ----------------------------------------------
The entire balance in all accounts is distributed to participants who retire,
die, become disabled, are laid-off for four consecutive weeks, are discharged
without fault, or who involuntarily enter military service. Participants who
terminate for other reasons receive their vested balances. Nonvested balances
are forfeited immediately. The amounts distributed during 1997 and 1996 totaled
$945,711 and $280,454, respectively.
While still an employee, a participant may make an in-service withdrawal of all
or a portion of his or her after-tax contributions, subject to frequency of
withdrawal penalties, as well as vested Company matching contributions, plus the
earnings on those amounts. Upon at least a 30 day written notice to the
Committee, a participant may make a hardship withdrawal of his or her before-tax
and after-tax contributions, as well as vested Company matching contributions if
the Committee finds, after considering the participant's request, that an
adequate financial hardship and resulting need for such amount has been
demonstrated by the participant. Both types of withdrawals are subject to
certain restrictions as described in the Plan document. No hardship withdrawals
were made in 1997 and 1996.
Note 2 Summary of Significant Accounting Policies
------------------------------------------
The accounting and reporting policies followed in preparation of the financial
statements of the Plan of the Company conform with generally accepted accounting
principles. The following is a summary of the significant policies.
8
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period.
Actual results could differ from those estimates.
Assets of the Plan
- ------------------
The assets of the Plan are held in a trust with four sub-accounts. The
investment income in the respective sub-accounts is allocated to the
participants. Contributions to, and payments from, the Plan are specifically
identified to the applicable sub-accounts within the trust.
Security Transactions
- ---------------------
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Interest income is accounted for on the
accrual basis.
In general, participants in the Stock Fund receive distributions in certificates
for shares of the common stock of the Computer Sciences Corporation.
Valuation of Investment Securities
- ----------------------------------
Investments in common stocks and institutional investment vehicles are stated at
fair value based upon closing sales prices reported on recognized securities
exchanges on the last business day of the plan year or, for the listed
securities having no sales reported and for unlisted securities, upon last
reported bid prices on that date. Investments in short-term securities are
stated at cost which approximates fair value.
Valuation of Guaranteed Investment Contracts
- --------------------------------------------
The Plan holds guaranteed investment contracts, which are considered to be fully
benefit responsive as access to the funds of these contracts is not restricted.
The guaranteed investment contracts are valued at contract value in accordance
with SOP 94-4. Contract value represents contributions made by participants,
plus interest at the contract rates, less withdrawals or transfers by
participants.
Based on treasury yield curves for similar type investments, the fair value of
guaranteed investment contracts at December 31, 1997 and 1996, was approximately
$1,407,371 and $2,480,000, respectively. The average yield and crediting
interest rates were approximately at 7.64% and 7.62% for 1997 and 1996,
respectively. The crediting interest rate is based on an agreed-upon formula
with the issuer, but cannot be less than zero.
9
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Payment of Benefits
- -------------------
Benefits are recorded when paid.
Note 3 Income Tax Status
-----------------
The Internal Revenue Service has determined and informed the Company by a letter
dated June 1, 1995, that the Plan and related trust are designed in accordance
with applicable sections of the Internal Revenue Code (IRC).
The Committee believes that the Plan is designed and operated to qualify under
Section 401(a) of the Code and, with respect to its qualified cash or deferred
arrangement, under Section 401(k) of the Code. Since the requirements of
Section 401(k) of the Code are satisfied, the following tax consequences result:
(i) A participant is not subject to federal income tax on Company
contributions to the Plan or on income or realized gains in Plan Accounts
attributable to the participant until a distribution from the Plan is made to
him or her.
(ii) The participant is able to exclude from his or her income for federal
income tax purposes, the amount of his or her compensation deferral
contributions, subject to a maximum exclusion of $9,500 and $9,500 for 1997 and
1996 taxable years of the participant, respectively.
(iii) On distribution of a participant's vested interest in the Plan, the
participant generally is subject to federal income taxation, except that: (1)
tax on "net unrealized appreciation" on any Computer Sciences Corporation stock
distributed as a part of a "lump sum distribution" generally would be deferred
until the participant disposes of such stock, and (2) tax may be deferred to the
extent the participant is eligible for and complies with certain rules
permitting the "rollover" of a qualifying distribution to another retirement
plan, or individual retirement account.
Note 4 Reconciliation of Financial Statements to Form 5500
---------------------------------------------------
December 31,
1997 1996
-------------------- --------------------
Net assets available for benefits per the financial
statements $5,069,961 $5,275,542
Amounts allocated to withdrawing participants (29,969) (19,591)
-------------------- --------------------
Net assets available for benefits per Form 5500 $5,039,992 $5,255,951
==================== ====================
10
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year Ended
December 31, 1997
-----------------
Benefits paid to participants per the financial statements $945,711
Add: Amounts allocated to withdrawing participants at
December 31, 1997 29,969
Less: Amounts allocated to withdrawing participants at
December 31, 1996 (19,591)
--------
Benefits paid to participants per the Form 5500 $956,089
========
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, 1997 but not yet paid as of that date.
Note 5 Investment Funds
----------------
Participant contributions - Subject to rules the bargaining units have adopted,
each participant has the right to designate one or more of the following
investment funds established by the Committee for the investment of his or her
compensation deferral contributions and after-tax contributions in percentages
determined by the bargaining units.
The Fixed Income Fund
- ---------------------
Approximately 66% of the Fixed Income Fund is invested in contracts with
insurance companies or other financial institutions. These institutions agree to
repay principal with interest at a fixed rate of return for the life of each
contract. This is a commitment by the insurance company or financial institution
to make agreed upon payments and that agreement is not secured, insured or
guaranteed by the Company or any other third party.
Approximately 34% of the Fixed Income Fund represents holdings of units in a
Master Trust investment vehicle and is managed by BlackRock Financial
Management. The investment portfolio is actively managed and consists of short-
term (1-3 year) fixed income instruments which include: U.S. Treasury and agency
securities, corporate bonds, mortgage-backed securities and asset-backed fixed
income securities. All of the Fund's assets are rated single-A or better at the
time of purchase and all securities must be U.S dollar denominated. All new cash
flows into the Fund are invested in this actively managed bond fund. At December
31, 1997 and 1996, the Plan's interest in the net assets of the Master Trust was
approximately 0.44% and 0.12%, respectively. Investment income and
administrative expenses relating to the Master Trust are allocated to individual
plans based upon average monthly balances invested by each plan.
11
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
The following table represents the fair value of investments for the Master
Trust.
December 31,
1997 1996
------------------------- --------------------------
Investments at fair value:
Corporate bonds $105,242,979 $ 20,904,676
U.S. government securities 46,459,080 56,633,626
Other bonds 6,446,213 2,112,040
Short-term investments 1,371,261 21,131,915
Accrued income 1,198,486 1,061,097
------------ ------------
$160,718,019 $101,843,354
============ ============
Investment income for the Master Trust is as follows:
December 31,
1997 1996
--------------------- ---------------------
Investment income:
Net appreciation (depreciation) in fair value of
investments $ 450,257 $(1,007,670)
Interest:
Corporate bonds 4,037,722 1,180,044
U.S. government securities 3,243,205 2,485,788
Other bonds 366,303 139,500
Short-term investments 485,226 627,305
---------- -----------
8,582,713 3,424,967
Less investment management fees (208,306) (61,373)
---------- -----------
$8,374,407 $ 3,363,594
========== ===========
12
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Government Bond Fund
- --------------------
This fund is invested in bonds issued or guaranteed by the U.S. Government or
U.S. Government agencies. The Fund is managed by Mellon Capital with the
objective of tracking to the Intermediate Government Bond Index.
The Active Equity Fund
- ----------------------
The Active Equity Fund is managed by Brinson Partners, Inc. The Fund is broadly
diversified by issue and industry relative to the Wilshire 5000 index. The Fund
is typically invested in 70% large capitalization and 30% intermediate and small
capitalization stocks. The Fund may hold up to 50% in cash equivalents for
portfolio risk management purposes. The Fund's objective is to maximize risk-
adjusted total returns relative to the Wilshire 5000 index over a full economic
cycle.
The Company Stock Fund
- ----------------------
Amounts allocated to this investment alternative will be used to purchase shares
of Computer Sciences Corporation common stock that are held for the benefit of
the participant. The performance of this investment depends upon the
performance of Computer Sciences Corporation's stock. The Trustee may purchase
Computer Sciences Corporation stock on national securities exchanges or
elsewhere.
Number of Participants
- ----------------------
The approximate number of participants having account balances in each of the
five separate funds at December 31, 1997 were as follows:
Investment Fund Number of Participants
--------------- ----------------------
The Fixed Income Fund......................................... 125
The Government Bond Fund...................................... 65
The Active Equity Fund........................................ 89
The Company Stock Fund........................................ 59
The Loan Fund 1
The sum of the number of participants shown above is greater than the total
number of participants in the Plan because many are participating in more than
one fund.
13
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Note 6 Participant Loans
-----------------
The Plan has a loan provision in place which is available to participants
covered by certain bargaining units. The Plan allows participants to borrow from
their vested account balances from a minimum of $500 up to a maximum of $50,000
or 50% of their vested account, subject to certain limitations. The loans bear
interest at the prime rate quoted in the Wall Street Journal plus 1%, which is
set on a quarterly basis.
Loan terms range from 1-5 years or up to 15 years for purchase of a primary
residence. Loans are recorded at cost, which approximate fair value, on the
Statement of Net Assets Available for Benefits.
The loans (which are accounted for in the Loan Fund) are deducted from the
participants' accounts according to a priority specified in the Plan's loan
rules and, within each account, pro rata from the funds based on their balances
at the time. Loan repayments are reinvested in the participants' funds according
to their current investment election. The repayments are similarly allocated
among participants' accounts according to the priority specified in the Plan's
rules.
Note 7 Benefits Payable
----------------
As of December 31, 1997 and 1996, net assets available for benefits included
benefits of $29,969 and $19,591, respectively, due to participants who have
withdrawn from participation in the Plan.
14
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Note 8 Investments 1997 PRINCIPAL FAIR VALUE
---------------- AMOUNT OR CONTRACT
OR SHARES COST VALUE
------------------ ----------------- -----------------
FIXED INCOME FUND
Guaranteed Investment Contracts:
Hartford Life* $ 1,232,200 $1,232,200 $1,232,200
Canada Life Insurance Company 38,268 38,268 38,268
Pacific Mutual Life Insurance 104,106 104,106 104,106
Prudential Life Insurance Company 20,395 20,395 20,395
Interest in Master Trust* sh. 1,173,484 714,880 714,880
BNY Short-Term Money Market Fund 21,195 21,195 21,195
GOVERNMENT BOND FUND
Mellon Capital:
Government Bond Fund* sh. 7,450 970,317 972,097
Temporary Investment Fund 44 44 44
BNY Short-Term Money Market Fund 780 780 780
ACTIVE EQUITY FUND
Brinson Partners Inc.:
U.S. Equity Portfolio* sh. 4,325 807,043 1,502,152
U.S. Cash Management Fund 2 2 2
BNY Short-Term Money Market Fund 2,211 2,211 2,211
COMPANY STOCK FUND
Computer Sciences Common Stock* sh. 5,249 199,055 438,292
BNY Short-Term Money Market Fund 49 49 49
EMPLOYEE LOAN FUND
Participant Loan $ 17,258 17,258 17,258
----------------- -----------------
$4,127,803 $5,063,929
================= =================
TOTAL LONG-TERM INVESTMENTS $4,103,522 $5,039,648
TOTAL SHORT-TERM INVESTMENTS 24,281 24,281
----------------- -----------------
$4,127,803 $5,063,929
================= =================
*represents investments greater than 5%
of net assets
15
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Note 8 Investments 1996 PRINCIPAL FAIR VALUE
---------------- AMOUNT OR CONTRACT
OR SHARES COST VALUE
----------------- ----------------- -----------------
FIXED INCOME FUND
Guaranteed Investment Contracts:
Hartford Life* $ 1,467,392 $1,467,392 $1,467,392
Canada Life Insurance Company 49,963 49,963 49,963
Providian Corporation 285 285 285
Pacific Mutual Life Insurance 125,125 125,125 125,125
Provident National Assurance* 671,914 671,914 671,914
Protective Life 39,352 39,352 39,352
Prudential Life Insurance Company 74,302 74,302 74,302
Interest in Master Trust sh. 94,264 124,382 120,628
GOVERNMENT BOND FUND
Mellon Capital:
Government Bond Fund* sh. 8,156 990,814 986,754
Temporary Investment Fund sh. 90 90 90
BNY Short-Term Money Market Fund sh. 2,575 2,575 2,575
ACTIVE EQUITY FUND
Brinson Partners Inc.:
U.S. Equity Portfolio* sh. 4,423 768,825 1,304,881
U.S. Cash Management Fund sh. 2 2 2
BNY Short-Term Money Market Fund sh. 1,638 1,638 1,638
COMPANY STOCK FUND
Computer Sciences Common Stock* sh. 5,208 177,468 427,707
BNY Short-Term Money Market Fund sh. 54 54 54
----------------- -----------------
$4,494,181 $5,272,662
================= =================
TOTAL LONG-TERM INVESTMENTS $4,489,822 $5,268,303
TOTAL SHORT-TERM INVESTMENTS 4,359 4,359
----------------- -----------------
$4,494,181 $5,272,662
================= =================
*represents investments greater than 5%
of net assets
16
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Note 9 Statements of Net Assets Available for Benefits by Fund
-------------------------------------------------------
DECEMBER 31, 1997
--------------------------------------------------------------------------------------
FIXED GOVERNMENT ACTIVE COMPANY EMPLOYEE
INCOME BOND EQUITY STOCK LOAN TOTAL
---------- ---------- ---------- ---------- ---------- ----------
ASSETS
Investments
Short-term investments $ 21,195 $ 824 $ 2,213 $ 49 $ 24,281
Long-term investments
At fair value
Interest in registered
investment companies 972,097 1,502,152 2,474,249
CSC Company stock 438,292 438,292
Employee loans $ 17,258 17,258
Interest in Master
Trust 714,880 714,880
At contract value
Guaranteed investment
contracts 1,394,969 1,394,969
Receivables
Participants'
Contributions 2,530 670 2,505 1,467 7,172
Employer
Contributions 738 (100) 469 343 1,450
Accrued Income 60 9 17 37 123
---------- ---------- ---------- ---------- ---------- ----------
TOTAL ASSETS 2,134,372 973,500 1,507,356 440,188 17,258 5,072,674
LIABILITIES
Accrued Expenses 318 78 927 1,323
Forfeitures Payable 297 607 904
Other 486 486
---------- ---------- ---------- ---------- ---------- ----------
TOTAL LIABILITIES 615 78 1,534 486 2,713
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS AVAILABLE
FOR BENEFITS $2,133,757 $ 973,422 $1,505,822 $ 440,188 $ 16,772 $5,069,961
========== ========== ========== ========== ========== ==========
17
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Note 9 Statements of Net Assets Available for Benefits by Fund
-------------------------------------------------------
DECEMBER 31, 1996
------------------------------------------------------------------------------------------
FIXED GOVERNMENT ACTIVE COMPANY EMPLOYEE
INCOME BOND EQUITY STOCK LOAN TOTAL
---------- ----------- ----------- ----------- ---------- ----------
ASSETS
Investments
Short-term investments $ 2,665 $ 1,640 $ 54 $ 4,359
Long-term investments
At fair value
Interest in registered
investment companies 986,754 1,304,881 2,291,635
CSC Company Stock 427,707 427,707
Interest in Master Trust $ 120,628 120,628
At contract value
Guaranteed Investment
Contracts 2,428,333 2,428,333
Receivables
Participants' Contributions 3,045 316 356 1,781 5,498
Accrued Income 8 8 4 20
Interfund Transfers (258) 306 946 (994) -
---------- -------- ---------- -------- --------- ----------
TOTAL ASSETS 2,551,748 990,049 1,307,831 428,552 5,278,180
LIABILITIES
Accrued Expenses 39 97 785 921
Forfeitures Payable 811 354 1,165
Other 463 101 (57) 45 552
---------- -------- ---------- -------- --------- ----------
TOTAL LIABILITIES 1,313 198 728 399 2,638
---------- -------- ---------- -------- --------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS $2,550,435 $989,851 $1,307,103 $428,153 $5,275,542
========== ======== ========== ======== ========= ==========
18
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Note 9 Statements of Changes in Net Assets Available for Benefits by Fund
------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1997
-------------------------------------------------------------------------------------------
FIXED GOVERNMENT ACTIVE COMPANY EMPLOYEE
INCOME BOND EQUITY STOCK LOAN TOTAL
---------- ----------- ------------ ----------- ------------ ------------
ADDITIONS TO NET ASSETS
ATTRIBUTABLE TO:
Investment Income:
Net Appreciation
(Depreciation) in
Fair Value of
Investments $ 374 $ 4,076 $ 197,464 $ (2,187) $ 199,727
Interest in Master
Trust Investment Income 19,303 19,303
Interest 154,354 306 272 100 155,032
Dividends 68,760 29,119 9,532 107,411
Investment Management Fees (282) (339) (3,471) (4,092)
---------- ---------- ----------- ---------- ----------- -----------
173,749 72,803 223,384 7,445 477,381
---------- ---------- ----------- ---------- ----------- -----------
Contributions:
Employee 65,498 23,376 61,263 35,541 (2,128) 183,550
Employer 28,880 9,815 26,452 14,052 79,199
Interfund Transfers (1,345) (444) 826 963 -
---------- ---------- ----------- ---------- ----------- -----------
93,033 32,747 88,541 50,556 (2,128) 262,749
---------- ---------- ----------- ---------- ----------- -----------
TOTAL ADDITIONS 266,782 105,550 311,925 58,001 (2,128) 740,130
---------- ---------- ----------- ---------- ----------- -----------
DEDUCTIONS TO NET ASSETS
ATTRIBUTABLE TO:
Distributions to
Participants 683,460 121,979 113,206 45,966 (18,900) 945,711
---------- ---------- ----------- ---------- ----------- -----------
TOTAL DEDUCTIONS 683,460 121,979 113,206 45,966 (18,900) 945,711
---------- ---------- ----------- ---------- ----------- -----------
NET INCREASE (DECREASE) (416,678) (16,429) 198,719 12,035 16,772 (205,581)
---------- ---------- ----------- ---------- ----------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS:
Beginning of Year 2,550,435 989,851 1,307,103 428,153 5,275,542
---------- ---------- ----------- ---------- ----------- -----------
End of Year $2,133,757 $ 973,422 $ 1,505,822 $ 440,188 $ 16,772 $ 5,069,961
========== ========== =========== ========== =========== ===========
19
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1997
Note 9 Statements of Changes in Net Assets Available for Benefits by Fund
------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------------------
FIXED GOVERNMENT ACTIVE COMPANY EMPLOYEE
INCOME BOND EQUITY STOCK LOAN TOTAL
----------- ---------- ---------- --------- -------- ------------
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment Income:
Net (Depreciation) Appreciation in Fair Value
of Investments $ (2,500) $(28,215) $ 208,203 $ 60,039 $ 237,527
Interest in Master Trust Investment Income 7,543 7,543
Interest 172,227 137 193 71 172,628
Dividends 68,601 23,917 92,518
Investment Management Fees (185) (455) (2,999) (3,639)
---------- -------- ---------- -------- -------- ----------
177,085 40,068 229,314 60,110 506,577
---------- -------- ---------- -------- -------- ----------
Contributions:
Employee 82,094 20,647 46,123 28,048 176,912
Employer 37,052 9,604 21,693 12,376 80,725
Interfund Transfers (2,217) 869 892 456 -
---------- -------- ---------- -------- -------- ----------
116,929 31,120 68,708 40,880 257,637
---------- -------- ---------- -------- -------- ----------
TOTAL ADDITIONS 294,014 71,188 298,022 100,990 764,214
---------- -------- ---------- -------- -------- ----------
DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO:
Distributions to Participants 135,156 74,955 42,313 28,030 280,454
---------- -------- ---------- -------- -------- ----------
TOTAL DEDUCTIONS 135,156 74,955 42,313 28,030 280,454
---------- -------- ---------- -------- -------- ----------
NET INCREASE (DECREASE) 158,858 (3,767) 255,709 72,960 483,760
---------- -------- ---------- -------- -------- ----------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 2,391,577 993,618 1,051,394 355,193 4,791,782
---------- -------- ---------- -------- -------- ----------
End of Year $2,550,435 $989,851 $1,307,103 $428,153 $5,275,542
========== ======== ========== ======== ======== ==========
20
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Act of 1934, the
Computer Sciences Corporation Retirement Plans Committee has duly caused this
annual report to be signed on its behalf by the undersigned thereunto duly
authorized.
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
Date: June 25, 1998 By: /s/ LEON J. LEVEL
------------------------------------
Leon J. Level
Chairman,
Computer Sciences Corporation
Retirement Plans Committee
21
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Computer Sciences Corporation
Registration Statement No. 333-00757 on Form S-8 of our report dated June 5,
1998, appearing in this Annual Report on Form 11-K of the CSC Outsourcing Inc.
Hourly Savings Plan for the year ended December 31, 1997.
/s/ DELOITTE & TOUCHE LLP
Los Angeles, California
June 25, 1998
E-1
1997
FORM 5500 ITEM 27(a)
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
EIN 88-0276684
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
- -----------------------------------------------
(a) (b) Identity of issue, borrower, (c) Description of investment, including (d) Cost (e) Current
lessor or similar party maturity date, rate of interest, collateral, Value
par or maturity value
- -- --------------------------------------------------------------------------------------- ----------- -----------
The Hartford Life Insurance Guaranteed Investment 7.80% 6/30/98 $1,232,200 $1,232,200
Company Contract
Pacific Mutual Life Insurance Guaranteed Investment 6.85% 3/31/98 104,106 104,106
Contract
Prudential Life Insurance Guaranteed Investment 5.77% 3/31/98 20,395 20,395
Company Contract
Canada Life Insurance Co. Guaranteed Investment 5.75% 3/31/98 38,268 38,268
Contract
Mellon Capital Mutual Fund - Government 970,317 970,317
Bond Fund
Brinson Trust Company, Inc. Mutual Fund - U.S. Equity 807,043 1,502,152
Portfolio
* Computer Sciences Corporation Common Stock 199,055 438,292
* Computer Sciences Corporation Employee Loan Fund (9.25%, 17,258 17,258
3/29/02)
Brinson Trust Company, Inc. U.S. Cash Management Fund 2 2
Mellon Bank N.A. Mellon Bank Temporary 44 44
Investment Fund
* Bank of New York BNY Short-Term Money Market 24,235 24,235
Fund
---------- ----------
TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $3,412,923 $4,349,049
========== ==========
* represents party in interest
S-1
1997
FORM 5500 ITEM 27(d)
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
EIN 88-0276684
SCHEDULE OF REPORTABLE TRANSACTIONS
-----------------------------------
Single Transactions in Excess of 5%
(h) CURRENT
VALUE
OF ASSET ON (i) NET
(c) PURCHASE (d) SELLING (g) COST OF TRANSACTION GAIN OR
(a) IDENTITY OF PARTY INVOLVED (b) DESCRIPTION OF ASSET PRICE PRICE ASSET DATE (LOSS)
- ------------------------------ ----------------------------- ------------- ------------ ------------ ---------------------
Bank of New York Short-Term Money Market Fund
- Purchase $ 312,839 $ 312,839 $ 312,839
- Purchase 8,404,567 8,404,567 8,404,567
- Sale $ 315,734 315,734 315,734 -
- Sale 8,404,567 8,404,567 8,404,567 -
Provident Life Insurance Co. Guaranteed Investment Contract
- Sale 553,568 553,568 553,568 -
S-2
1997
FORM 5500 ITEM 27(d)
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
EIN 88-0276684
SCHEDULE OF REPORTABLE TRANSACTIONS
-----------------------------------
SERIES TRANSACTIONS IN THE AGGREGATE IN EXCESS OF 5%
(h) CURRENT
VALUE
OF ASSET ON (i) NET
(c) PURCHASE (d) SELLING (g) COST OF TRANSACTION GAIN OR
(a) IDENTITY OF PARTY INVOLVED (b) DESCRIPTION OF ASSET PRICE PRICE ASSET DATE (LOSS)
- ------------------------------ ----------------------------- ------------- ------------ ------------ ---------------------
Bank of New York BNY Short-Term Money Market
Fund
- Purchases $9,795,730 $9,795,730 $9,975,730
- Sales $9,775,762 9,775,762 9,775,762 -
Provident Life Insurance Co. Guaranteed Investment Contract
- Purchases 33,920 33,920 33,920
- Sales 705,834 705,834 705,834 -
Hartford Life Insurance Co. Guaranteed Investment Contract
- Purchases 97,340 97,340 97,340
- Sales 332,532 332,532 332,532 -
S-3