EXHIBIT 99.1
Contact: Bill Lackey FOR IMMEDIATE RELEASE
Director, Investor Relations Moved On PR Newswire
Computer Sciences Corporation September 20, 1999
310.615.1700
blackey3@csc.com
Frank Pollare
Director, Public Information
Computer Sciences Corporation
310.615.1601
fpollare@csc.com
Pat L. Hattox
Corporate Vice President, Investor Relations
Nichols Research Corporation
256.885.7447
hattoxp@nichols.com
NICHOLS RESEARCH TO MERGE INTO CSC
Synergies In The U.S. Federal, Healthcare And Commercial Markets
To Be Realized
EL SEGUNDO, CA and HUNTSVILLE, AL, Sept. 20 -- Computer Sciences
Corporation (NYSE: CSC) and Nichols Research Corporation (NASDAQ: NRES) today
announced that they have signed a definitive agreement for Nichols to merge
into CSC in a stock-for-stock transaction accounted for as a pooling of
interests.
The merger with Nichols, a leading information technology (I/T) services
company, enhances CSC's position in the U.S. federal, healthcare and
commercial markets.
Each share of Nichols will be converted into .423 shares of CSC. As
described below, this exchange ratio is subject to adjustment based upon the
average closing price of CSC stock during a specified period prior to the
consummation of the transaction. At an exchange ratio of .423, the
stockholders of Nichols will receive approximately 6,080,000 shares of CSC,
which had a value of $391 million based on CSC's closing
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price on September 17, 1999. CSC will also assume all of Nichols'
outstanding stock options at the same exchange ratio. The merger is expected
to be tax-free to Nichols stockholders.
The transaction, which has been unanimously approved by the boards of
directors of both companies, requires approval by the shareholders of
Nichols, as well as customary regulatory approvals.
At an exchange ratio of .423, the transaction, before synergies and
special merger-related charges, is expected to be accretive to CSC's earnings
per share for the fiscal year ending March 31, 2000. CSC expects to realize
the benefit of the synergies in the following fiscal year.
Nichols, which has approximately 3,000 employees in 30 U.S. locations,
reported revenues of $455 million for the 12 months ended May 31, 1999.
"Nichols Research complements three of our key business sectors," said
Van B. Honeycutt, CSC chairman, president and CEO. "Their services are well
respected in the U.S. federal defense and intelligence areas as well as
within other U.S. civil agencies. In addition, their technology offerings
for the healthcare market expand and complement our Healthcare Group, while
in the commercial consulting area, Nichols' professional staff will augment
our capabilities to develop enterprise-wide solutions for corporate clients."
"Joining CSC benefits our clients, employees and shareholders alike,"
said Chris Horgen, chairman and CEO of Nichols. "The combination provides us
the resources to offer an even higher level of quality services for our
clients, while giving our employees broader opportunities to enrich their
professional growth. It also gives our shareholders an outstanding return on
their Nichols investment."
Complementary Capabilities in Key CSC Markets
In the U.S. federal market, which accounts for approximately 80 percent
of Nichols' revenues, the company provides the U.S. Army, Air Force, Navy and
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intelligence agencies with extensive systems engineering, information
technology and technical assistance for aviation, missile and space defense
systems. In addition, Nichols and CSC have substantial intelligence
activities in the Washington, D.C. area. The combination of the two firms
will result in a large pool of highly qualified individuals with high-level
security clearances. Nichols has a total U.S. federal contract backlog of
over $1.2 billion.
Nichols is a leading provider of defense technology services for the
Huntsville- based Redstone Arsenal, which is home to several major U.S. Army
organizations. Redstone has an aggregate annual budget authorization
exceeding $15 billion, one of the largest in the U.S. government.
CSC already employs more than 2,300 I/T professionals in the Huntsville
region supporting government and commercial customers, while Nichols has over
1,600 professional staff in the region.
"The combined resources will provide us with a powerful workforce in the
region with the depth and breadth to support current and future client
requirements, particularly as the U. S. government considers additional
investments in our missile defense systems," Honeycutt said. "The rate of
I/T spending in the intelligence sector and in some pockets of the defense
area continues to grow and offer good margins. Nichols' systems engineering
capabilities complement and expand our existing Department of Defense
business and enhance our competitiveness in the aviation, missile and space
defense areas of the federal market.
"We also expect Huntsville to be one of the first Army organizations to
outsource its I/T infrastructure, and the combination of CSC and Nichols will
place us in a strong position to capture this work."
In the healthcare market, which accounts for approximately 10 percent of
Nichols' revenues, the combination of the companies' expertise will enhance
CSC's strong position in the claims processing and applications outsourcing
areas. Nichols uses
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Computer Sciences Corporation - page 4 September 20, 1999
a software platform for claims processing delivered through an Internet-based
network while CSC has been offering solutions based on its Power MHS mid-
range platform.
"The addition of Nichols' healthcare capabilities supports several of
our growth strategies," Honeycutt explained. "First, it strengthens our
offerings and positions CSC as one of the leading I/T service providers in
the managed care market segment. Second, with these enhanced capabilities,
we continue to capitalize on the growing trend for companies to outsource
their business processes and applications software needs."
Nichols supports a wide array of health insurance and provider
organizations in the managed care and practice management segments of the
healthcare market.
Finally, in the commercial consulting and systems integration sector,
approximately 220 Nichols professionals will join CSC and expand the
company's expertise in developing and implementing enterprise-wide solutions
for corporate and state government clients. These professionals are
currently fully billable on existing long-term projects for a variety of
commercial and state and local government clients. Nichols' commercial
consulting activities represent approximately 10 percent of the company's
revenues.
"At a time when corporations and organizations are exploring ways to
improve their front and back office functions to achieve strategic and
operational objectives, adding highly qualified I/T professionals strengthens
CSC's ability to develop effective solutions for our clients," Honeycutt
said.
The three Nichols units complement CSC's Federal Sector, Healthcare
Group and Consulting Group.
Description of Merger Exchange Ratio Adjustment
As described above, each share of Nichols will be converted into .423
shares of CSC. This exchange ratio is subject to adjustment based upon the
average closing price of CSC stock on 15 randomly chosen days during the 20-
trading day period ending four trading days prior to the meeting of Nichols'
stockholders to vote on the merger. If this
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Computer Sciences Corporation - page 5 September 20, 1999
average CSC stock price is greater than $72.81, the exchange ratio will be
equal to $30.80 divided by such average price. If the average CSC stock
price is between $59.57 and $52.96, the exchange ratio will be equal to
$25.20 divided by such average price. If the average CSC stock price is less
than $52.96, the exchange ratio will be .476 shares of CSC for each share of
Nichols.
About CSC
Computer Sciences Corporation helps clients in industry and government
use information technology to achieve strategic and operational objectives.
With 52,000 employees in more than 700 offices worldwide, the company tailors
solutions from a broad suite of integrated service and technology offerings,
including e-business strategies and technologies; management and I/T
consulting; systems development and integration; application software; and
I/T and business process outsourcing.
Since its formation in 1959, CSC has been known for its flexibility in
its relationships with clients. Through numerous agreements with hardware
and software technology firms, the company is able to identify and manage
solutions specifically tailored to each client's needs. CSC had revenues of
$8 billion for the twelve months ended July 2, 1999. Its headquarters are in
El Segundo, California. For more information, visit the company's web site
at www.csc.com.
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The description of the transaction in this press release is necessarily
incomplete. For a complete description, please refer to the Agreement and
Plan of Merger, which will be attached as an exhibit to the Current Report on
Form 8-K to be filed with the Securities and Exchange Commission today.
All statements in this press release 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 intentions, plans, expectations and beliefs of CSC
and Nichols, and are subject to risks, uncertainties and other factors, many
of which are outside their control. These factors could cause actual results
to differ materially from such forward-looking statements. For a description
of these factors, see the section titled "Management's Discussion and
Analysis of Financial Conditions and Results of Operations" in CSC's Annual
Report on Form 10-K for the fiscal year ended April 2, 1999 and in Nichols'
Annual Report on Form 10-K for the fiscal year ended August 31, 1998.