1
EXHIBIT 28.B
Securities and Exchange Commission
Washington, D.C., 20549
Form 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the calendar year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
(Full Title of Plan)
Science Applications International Corporation
10260 Campus Point Drive, San Diego, California 92121
(Name of issuer of the securities held pursuant to
the Plan and the address of its principal executive office)
2
SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Science Applications International Corporation Retirement Plans
Committee duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
DATE 4-15-98 /s/ DANIEL W. BALDWIN
------------------ ----------------------------------------
Daniel W. Baldwin
Senior Vice President
and Treasurer
Retirement Plans Committee
3
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
INDEX TO FINANCIAL STATEMENTS
PAGE
Report of Independent Accountants F-2
Financial Statements:
Statement of Net Assets Available for Benefits F-3
Statement of Changes in Net Assets Available for Benefits F-4
Notes to Financial Statements F-5 - F-13
Additional Information:*
Schedule I - Schedule of Assets Held for Investment Purposes F-14
Schedule II - Schedule of Loans or Fixed Income Obligations F-15
Schedule III- Schedule of Reportable Transactions F-16
* Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
F-1
4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Retirement Plans Committee
and Participants of the Science Applications
International Corporation Cash or Deferred Arrangement
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the net assets available for benefits
of the Science Applications International Corporation Cash or Deferred
Arrangement (the Plan) at 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. 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 of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules I through III is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is additional
information required by ERISA. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
PRICE WATERHOUSE LLP
San Diego, California
April 3, 1998
F-2
5
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
- --------------------------------------------------------------------------------
December 31,
1997 1996
------------ ------------
Assets
Investments, at fair market value:
Mutual funds $412,896,000 $310,573,000
SAIC Common Stock 264,309,000 159,670,000
Short-term investments 296,000 348,000
Participant loans 21,569,000 17,000,000
------------ ------------
699,070,000 487,591,000
------------ ------------
Receivables:
Participant contributions 2,599,000 2,161,000
Company contributions 1,362,000 650,000
Interest income 4,000
------------ ------------
3,961,000 2,815,000
------------ ------------
Total assets 703,031,000 490,406,000
------------ ------------
Liabilities
Accrued Plan expenses 88,000 52,000
------------ ------------
Net assets available for benefits $702,943,000 $490,354,000
============ ============
See accompanying notes to financial statements.
F-3
6
Science Applicatons International Corporation
Cash or Deferred Arrangement
Statement of Changes in Net Assets Available for Benefits
- --------------------------------------------------------------------------------
Year ended
December 31,
1997 1996
------------ ------------
Additions to net assets Investment income:
Mutual funds:
Dividends and interest $ 34,349,000 $ 19,708,000
Realized gain 8,726,000 4,722,000
Unrealized appreciation 19,930,000 18,677,000
SAIC Common Stock:
Realized gain -- --
Unrealized appreciation 87,106,000 30,082,000
Interest 1,405,000 1,218,000
Participant contributions 77,427,000 66,555,000
Company contributions 15,168,000 9,625,000
------------ ------------
Total additions 244,111,000 150,587,000
------------ ------------
Deductions from net assets
Distributions to participants 31,371,000 25,164,000
Plan expenses 151,000 163,000
------------ ------------
Total deductions 31,522,000 25,327,000
------------ ------------
Net increase 212,589,000 125,260,000
Net assets at beginning of year 490,354,000 365,094,000
------------ ------------
Net assets at end of year $702,943,000 $490,354,000
============ ============
See accompanying notes to financial statements.
F-4
7
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - PLAN DESCRIPTION
GENERAL
The Science Applications International Corporation Cash or Deferred Arrangement
(the "Plan" or "CODA") was established on September 18, 1982 and became
effective January 1, 1983. The authority to administer the Plan is vested in the
Retirement Plans Committee (the "Committee") whose members are the Named
Fiduciaries for purposes of Section 402(a) of the Employee Retirement Income
Security Act of 1974, as amended. Generally, employees of Science Applications
International Corporation (the "Company" or "SAIC") and its subsidiaries are
eligible to participate in the Plan upon commencing employment, except for
employees in groups or units designated as ineligible. The following description
of the Plan provides only general information. Participants should refer to the
Plan document for a more complete description of the Plan's provisions.
The Plan consists of a Deferred Fund which is the fund in which assets acquired
by the Plan in its function as a qualified Cash or Deferred Arrangement are held
and accounted for. The Plan permits participants to elect to defer up to 18% of
their eligible compensation, as defined, for the Plan year and to have such
deferred amount contributed directly by the Company to the Deferred Fund for the
benefit of the participants. Such contributions are limited under Section 402(g)
of the Internal Revenue Code (the "Code") to $9,500 for the years ended December
31, 1997 and 1996. Amounts deferred by participants, including rollovers from
qualified plans, totaled $77,427,000 and $66,555,000 for the years ended
December 31, 1997 and 1996, respectively.
In addition to amounts deferred by participants, the Company, at its discretion,
may make a matching contribution equal to a specified percentage of the
aggregate amounts deferred by participants. The match is only provided on
eligible participant deferrals of up to 10% of compensation. In 1997 and 1996,
the Company contributed 50% and 30%, respectively, of the first $2,000 of a
participant's annual deferred compensation and 15% of such deferred compensation
above $2,000 for an annual total of $15,168,000 and $9,625,000, respectively.
During 1997 and 1996, the Company matching contribution was allocated to the
SAIC Stock Fund. Also, the Company, at its discretion, may make an additional
contribution to the Deferred Fund for the benefit of non-highly compensated
participants in order to comply with Section 401(k)(3) of the Code. The Company
made no additional contributions for the benefit non-highly compensated
participants during 1997 and 1996.
The Company's contribution to the Deferred Fund is to be paid in cash unless the
Company's Board of Directors determines to make the contribution in shares of
Class A Common Stock or another form. Contributions to the Deferred Fund shall
not exceed the maximum amount deductible by the Company for Federal income tax
purposes.
Employees hired prior to January 1, 1995 are immediately eligible for the
Company matching contributions. Employees hired on or after January 1, 1995, who
have elected to participate, are eligible for Company matching contributions if
they have attained age 21 and have both twelve calendar months of employment and
850 hours of service, as defined.
Participants may elect to borrow up to 50% of their vested plan balance, up to a
maximum of $50,000, excluding amounts included in the SAIC Stock Fund. Upon this
election, the loan balance is transferred from the applicable investment fund(s)
to a separate loan fund (participant loans) until repayment. Participants are
permitted to transfer to the Plan their account balances from a previous
employer's qualified retirement plan.
F-5
8
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The participant's interest in the Deferred Fund account will be paid in a single
distribution to the participant or their designated beneficiary upon termination
of employment with the Company, retirement, permanent disability or death. A
participant may not make withdrawals from the Deferred Fund accounts while
employed with the Company prior to attaining age 59 1/2 unless the Committee
determines the participant is incurring financial hardship. After attaining age
59 1/2, a participant may make withdrawals even if still employed with the
Company. Distributions from the Deferred Fund are paid in cash.
VESTING
A participant's interest in the employee deferral portion of the Deferred Fund
account is 100% vested at all times. A participant's interest in the Company
matching contribution is 100% vested if the participant was hired prior to
January 1, 1995. If the participant was hired on or after January 1, 1995, the
participant's interest in the Company matching contribution vests at the rate of
25% per year in years three through six, becoming fully vested after six years
of service, as defined. Participants are deemed fully vested upon reaching age
59 1/2, permanent disability or death. Forfeitures, arising from participants
withdrawing from the Plan prior to achieving 100% vesting, are applied to the
Company's matching contribution. There were no Plan forfeitures applied against
Company matching contributions in 1997 or 1996.
INVESTMENT PROGRAMS
The investment programs offered to participants in the Deferred Fund allow
participants to choose among thirteen investment funds offered by the Vanguard
Group of Investment Companies. Participants are also allowed to direct a portion
of their investment into Class A Common Stock of the Company. Such investment
into the SAIC Stock Fund can be exchanged into one of the Vanguard Funds subject
to certain restrictions.
THE VANGUARD FUNDS OFFERED WERE AS FOLLOWS:
1) Vanguard Fixed Income Securities Fund - GNMA Portfolio, which invests in
fixed income securities guaranteed by the U.S. Government; 2) Vanguard Index
Trust - 500 Portfolio, which invests in common stocks; 3) Vanguard Money Market
Reserves - Prime Portfolio, which invests in money market instruments; 4)
Vanguard Fixed Income Securities Fund - Short Term Federal Portfolio, which
invests in U.S. government obligations; 5) Vanguard/ Wellesley Income Fund,
which invests in fixed income securities and common stocks; 6) Vanguard/Windsor
Fund, which invests in common stocks; 7) Vanguard International Growth
Portfolio, which invests in common stocks of companies based outside the United
States; 8) Vanguard U.S. Growth Portfolio, which invests in common stocks; 9)
Vanguard Fixed Income Securities Fund - Intermediate - Term Corporate Portfolio,
which invests primarily in investment grade corporate bonds; 10) Vanguard
LIFEStrategy Income Portfolio, which invests in common stocks, bonds and short
term reserves; 11) Vanguard LIFEStrategy Conservative Growth Portfolio, which
invests in common stocks, bonds and short term reserves; 12) Vanguard
LIFEStrategy Moderate Growth Portfolio, which invests in common stocks and
bonds; and 13) Vanguard LIFEStrategy Growth Portfolio, which invests in common
stocks and bonds. Separate Deferred Fund accounts are established for each
investment program selected by a participant. Participants may elect to transfer
their existing account balances at any time among the Vanguard investment funds
and/or alter the allocations of future contributions among any of the investment
alternatives under rules prescribed by the Committee.
PLAN TERMINATION
Although the Company has not expressed any intent to terminate the Plan, it
reserves the right to suspend or discontinue contributions to the Plan or to
terminate the Company's participation in the Plan at any time. In the event of
termination, a distribution of the participants' Deferred Fund account balances
will be made in accordance with the Plan provisions.
F-6
9
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements are prepared on the accrual basis of
accounting.
INVESTMENT VALUATION AND INCOME, GAINS AND LOSSES
Vanguard Funds
Deposits to the Vanguard Funds are used to buy shares from the respective
investment fund. Vanguard Fund shares are valued at the net asset value per
share as of each valuation date.
Investment transactions are accounted for on the date the shares in the fund are
purchased or sold. Realized and unrealized gains and losses are computed based
on the market value at the beginning of the year or purchase price if purchased
during the year.
SAIC Common Stock
A general public market for the Company's Common Stock does not exist;
therefore, the fair market value of the Common Stock is determined pursuant to a
stock price formula and valuation process which includes an appraisal prepared
by an independent appraisal firm. Periodic determinations of fair market value
of the Common Stock are made by the Board of Directors, with the assistance of
the independent appraisal firm. The Board of Directors reserves the right to
alter the formula.
The gains or losses realized on distributions of investments and the increases
or decreases in unrealized appreciation are calculated as the difference between
the current fair market value and the fair market value of the investments at
the beginning of the year or purchase price if purchased during the year. As of
December 31, 1997 and 1996, the fair market value of the Company's Class A
Common Stock was $34.78 per share and $22.83 per share and the Plan held
approximately 7,599,000 shares and 6,994,000 shares, respectively.
It is the policy of the Committee to keep the SAIC Stock Fund invested primarily
in Common Stock, except for estimated reserves for use in distributions and
investment exchanges by participants. Such reserves are invested in the Vanguard
Money Market Reserves - Prime Portfolio mutual fund. If reserves in the SAIC
Stock Fund are less than the amount required at any given time to make requested
distributions and investment changes, investment exchanges out of the SAIC Stock
Fund by participants may have to be deferred.
Short-term investments
Short-term investments consist primarily of State Street Bank and Trust
Short-Term Investment Fund, which invests in short-term money market
instruments. State Street Bank and Trust Company is the Plan's Trustee.
CONTRIBUTIONS
Participant contributions and Company matching contributions are accrued based
upon the amounts deferred by participants at year end which are received by the
Trustee subsequent to year end. Additional Company contributions are accrued
based upon the amounts determined by the Company's Board of Directors (Note 1).
F-7
10
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO PARTICIPANTS
Distributions to participants are recorded when paid. Generally, upon
termination or retirement, participants will receive their vested account
balance in a single lump sum payment following their termination or retirement
date. Benefits to be paid at a future date as elected by terminated or retired
participants are as follows:
DECEMBER 31,
1997 1996
------------ ------------
INVESTMENT FUND
Vanguard GNMA $ 4,465,000 $ 2,816,000
Vanguard Index 12,396,000 6,816,000
Vanguard Prime 7,514,000 4,598,000
Vanguard STFED 3,453,000 1,926,000
Vanguard Wellesley 5,011,000 2,727,000
Vanguard Windsor 21,776,000 12,725,000
Vanguard Intl. Growth 5,179,000 2,687,000
Vanguard U.S. Growth 4,276,000 2,171,000
Vanguard Int. Corporate Bond 265,000 124,000
Vanguard LS Income 94,000 91,000
Vanguard LS Cons. Growth 166,000 31,000
Vanguard LS Mod. Growth 367,000 173,000
Vanguard LS Growth 891,000 381,000
SAIC CODA Stock 36,053,000 19,290,000
Participant Loans 2,771,000 871,000
------------ ------------
Total $104,677,000 57,427,000
============ ============
These amounts are reflected as liabilities in the Plan's Form 5500.
ADMINISTRATIVE EXPENSES OF THE PLAN
All expenses incurred in the administration of the Plan are paid out of Plan
assets unless the Company elects to pay such costs. Fees totaling $88,000 and
$52,000 were paid or accrued to the Trustee by the Plan during 1997 and 1996,
respectively. Other Plan expenses totaling $63,000 and $111,000 were paid or
accrued by the Plan during 1997 and 1996, respectively.
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 reporting period.
Actual results could differ from those estimates.
F-8
11
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 3 - TAX STATUS
The Plan is intended to qualify under Section 401(a) of the Code. In addition,
the Deferred Fund of the Plan is intended to be a "Qualified Cash or Deferred
Arrangement" under Section 401(k) of the Code. Accordingly, the Plan is not
subject to Federal income taxes.
The Plan received a favorable determination letter from the Internal Revenue
Service during January 1997 indicating that the Plan and related trust, as
amended, are designed in accordance with applicable sections of the Code.
NOTE 4 - PARTY-IN-INTEREST TRANSACTIONS
Transactions involving cash, securities or assets of the Company, the Trustee or
other affiliated persons are considered to be party-in-interest transactions
under Section 2520.103-10 of the Department of Labor Rules and Regulations for
Reporting and Disclosure. Reportable party-in-interest transactions for the
years ended December 31, 1997 and 1996, are summarized below:
YEAR ENDED DECEMBER 31, 1997
---------------------------------------------------
NUMBER NUMBER
INVESTMENT SALES OF UNITS OF SALES COST PROCEEDS
State Street Bank & Trust
Short-Term Investment Fund 627,000 64 $ 62,659,000 $62,659,000
INVESTMENT PURCHASES
State Street Bank & Trust
Short-Term Investment Fund 626,000 66 $62,618,000
SAIC Class A Common Stock 612,000 4 $17,713,000
YEAR ENDED DECEMBER 31, 1996
---------------------------------------------------
NUMBER NUMBER
INVESTMENT SALES OF UNITS OF SALES COST PROCEEDS
State Street Bank & Trust
Short-Term Investment Fund 812,000 69 $81,180,000 $81,180,000
INVESTMENT PURCHASES
State Street Bank & Trust
Short-Term Investment Fund 805,000 72 $80,542,000
SAIC Class A Common Stock 621,000 4 $13,156,000
NOTE 5 - FINANCIAL INFORMATION BY INVESTMENT FUND
Financial information by investment fund as of December 31, 1997 and 1996, and
for the years then ended are shown on the following pages.
F-9
12
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 5 - FINANCIAL INFORMATION BY INVESTMENT FUND - CONTINUED
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1997
VANGUARD VANGUARD VANGUARD VANGUARD VANGUARD VANGUARD
GNMA INDEX 500 PRIME WELLESLEY WINDSOR INT'L GROWTH
------------ ------------ ------------ ------------ ------------- ------------
ASSETS
Investments:
Mutual funds $ 22,141,000 $ 90,256,000 $ 37,244,000 $ 33,775,000 $ 134,811,000 $ 28,870,000
SAIC Common Stock
Short-term investments
Participant loans
------------ ------------ ------------ ------------ ------------- ------------
22,141,000 90,256,000 37,244,000 33,775,000 134,811,000 28,870,000
------------ ------------ ------------ ------------ ------------- ------------
Receivables:
Participant contributions 81,000 446,000 730,000 165,000 521,000 182,000
Company contributions 1,305,000
Interest income
------------ ------------ ------------ ------------ ------------- ------------
81,000 446,000 2,035,000 165,000 521,000 182,000
------------ ------------ ------------ ------------ ------------- ------------
Total assets 22,222,000 90,702,000 39,279,000 33,940,000 135,332,000 29,052,000
------------ ------------ ------------ ------------ ------------- ------------
LIABILITIES
Accrued Plan expenses
------------ ------------ ------------ ------------ ------------- ------------
Net assets available
for benefits $ 22,222,000 $ 90,702,000 $ 39,279,000 $ 33,940,000 $ 135,332,000 $ 29,052,000
============ ============ ============ ============ ============= ============
VANGUARD VANGUARD
VANGUARD VANGUARD VANGUARD VANGUARD LS CONS. LS MOD.
U.S. GROWTH INT. CORP. STFED LS INCOME GROWTH GROWTH
------------ ----------- ------------ ---------- ------------ ------------
ASSETS
Investments:
Mutual funds $ 30,388,000 $ 2,471,000 $ 15,450,000 $ 676,000 $ 2,615,000 $ 5,675,000
SAIC Common Stock
Short-term investments
Participant loans
------------ ----------- ------------ ---------- ------------ ------------
30,388,000 2,471,000 15,450,000 676,000 2,615,000 5,675,000
------------ ----------- ------------ ---------- ------------ ------------
Receivables:
Participant contributions 217,000 14,000 62,000 21,000 60,000
Company contributions
Interest income
------------ ----------- ------------ ---------- ------------ ------------
217,000 14,000 62,000 21,000 60,000
------------ ----------- ------------ ---------- ------------ ------------
Total assets 30,605,000 2,485,000 15,512,000 676,000 2,636,000 5,735,000
============ =========== ============ ========== ============ ============
LIABILITIES
Accrued Plan expenses
------------ ----------- ------------ ---------- ------------ ------------
Net assets available
for benefits $ 30,605,000 $ 2,485,000 $ 15,512,000 $ 676,000 $ 2,636,000 $ 5,735,000
------------ ----------- ------------ ---------- ------------ ------------
VANGUARD SAIC COMMON PARTICIPANT STATE STREET
LS GROWTH STOCK LOANS STIF TOTAL
------------ -------------- ------------- ------------ -------------
ASSETS
Investments:
Mutual funds $ 8,347,000 $ 177,000 $ 412,896,000
SAIC Common Stock 264,309,000 264,309,000
Short-term investments $ 296,000 296,000
Participant loans $ 21,569,000 21,569,000
------------ -------------- ------------- ------------ -------------
8,347,000 264,486,000 21,569,000 296,000 699,070,000
------------ -------------- ------------- ------------ -------------
Receivables:
Participant contributions 100,000 2,599,000
Company contributions 57,000 1,362,000
Interest income
------------ -------------- ------------- ------------ -------------
100,000 57,000 3,961,000
------------ -------------- ------------- ------------ -------------
Total assets 8,447,000 264,486,000 21,569,000 353,000 703,031,000
------------ -------------- ------------- ------------ -------------
LIABILITIES
Accrued Plan expenses 88,000 88,000
------------ -------------- ------------- ------------ -------------
Net assets available
for benefits $ 8,447,000 $ 264,486,000 $ 21,569,000 $ 265,000 $ 702,943,000
============ ============== ============= ============ =============
F-10
13
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 5 - FINANCIAL INFORMATION BY INVESTMENT FUND - CONTINUED
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1996
VANGUARD VANGUARD VANGUARD VANGUARD VANGUARD VANGUARD
GNMA INDEX 500 PRIME WELLESLEY WINDSOR INT'L GROWTH
------------- ------------ ------------ ------------ ------------- -------------
ASSETS
Investments:
Mutual funds $ 19,620,000 $ 58,841,000 $ 31,364,000 $ 26,138,000 $ 102,219,000 $ 25,170,000
SAIC Common Stock
Short-term investments
Participant loans
------------- ------------ ------------ ------------ ------------- -------------
19,620,000 58,841,000 31,364,000 26,138,000 102,219,000 25,170,000
------------- ------------ ------------ ------------ ------------- -------------
Receivables:
Participant contributions
Company contributions
Interest income
------------- ------------ ------------ ------------ ------------- -------------
------------- ------------ ------------ ------------ ------------- -------------
Total assets 19,620,000 58,841,000 31,364,000 26,138,000 102,219,000 25,170,000
------------- ------------ ------------ ------------ ------------- -------------
LIABILITIES
Accrued Plan expenses
------------- ------------ ------------ ------------ ------------- -------------
Net assets available
for benefits $ 19,620,000 $ 58,841,000 $ 31,364,000 $ 26,138,000 $ 102,219,000 $ 25,170,000
============= ============ ============ ============ ============= =============
VANGUARD VANGUARD
VANGUARD VANGUARD VANGUARD VANGUARD LS CONS. LS MOD.
U.S. GROWTH INT. CORP. STFED LS INCOME GROWTH GROWTH
------------- ----------- ------------ ------------ ------------ -----------
ASSETS
Investments:
Mutual funds $ 19,558,000 $ 1,538,000 $ 14,494,000 $ 455,000 $ 1,197,000 $ 2,384,000
SAIC Common Stock
Short-term investments
Participant loans
------------- ----------- ------------ ------------ ------------ -----------
19,558,000 1,538,000 14,494,000 455,000 1,197,000 2,384,000
------------- ----------- ------------ ------------ ------------ -----------
Receivables:
Participant contributions
Company contributions
Interest income
------------- ----------- ------------ ------------ ------------ -----------
------------- ----------- ------------ ------------ ------------ -----------
Total assets 19,558,000 1,538,000 14,494,000 455,000 1,197,000 2,384,000
------------- ----------- ------------ ------------ ------------ -----------
LIABILITIES
Accrued Plan expenses
------------- ----------- ------------ ------------ ------------ -----------
Net assets available
for benefits $ 19,558,000 $ 1,538,000 $ 14,494,000 $ 455,000 $ 1,197,000 $ 2,384,000
============= =========== ============ ============ ============ ===========
VANGUARD SAIC COMMON PARTICIPANT STATE STREET
LS GROWTH STOCK LOANS STIF TOTAL
------------ ---------------- ------------ ------------- -------------
ASSETS
Investments:
Mutual funds $ 3,946,000 $ 3,649,000 $ 310,573,000
SAIC Common Stock 159,670,000 159,670,000
Short-term investments $ 348,000 348,000
Participant loans $ 17,000,000 17,000,000
------------ ---------------- ------------ ------------- -------------
3,946,000 163,319,000 17,000,000 348,000 487,591,000
------------ ---------------- ------------ ------------- -------------
Receivables:
Participant contributions 2,161,000 2,161,000
Company contributions 650,000 650,000
Interest income 4,000 4,000
------------ ---------------- ------------ ------------- -------------
650,000 2,165,000 2,815,000
------------ ---------------- ------------ ------------- -------------
Total assets 3,946,000 163,969,000 17,000,000 2,513,000 490,406,000
------------ ---------------- ------------ ------------- -------------
LIABILITIES
Accrued Plan expenses 52,000 52,000
------------ ---------------- ------------ ------------- -------------
Net assets available
for benefits $ 3,946,000 $ 163,969,000 $ 17,000,000 $ 2,461,000 $ 490,354,000
============ ================ ============ ============= =============
F-11
14
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 5 - FINANCIAL INFORMATION BY INVESTMENT FUND - CONTINUED
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997
VANGUARD VANGUARD VANGUARD VANGUARD VANGUARD VANGUARD
GNMA INDEX 500 PRIME WELLESLEY WINDSOR INT'L GROWTH
------------ ------------ ------------- ------------ ------------- -------------
ADDITIONS TO NET ASSETS
Investment income:
Mutual funds:
Dividends and interest $ 1,436,000 $ 1,830,000 $ 1,683,000 $ 3,671,000 $ 21,478,000 $ 1,234,000
Realized gain (loss) 55,000 3,310,000 102,000 468,000 2,702,000 866,000
Unrealized (depreciation)
appreciation 374,000 15,705,000 18,000 1,321,000 (1,003,000) (1,212,000)
SAIC Common Stock:
Realized gain
Unrealized appreciation
Interest
Participant contributions 2,089,000 10,260,000 16,445,000 4,081,000 12,698,000 4,702,000
Company contributions 15,139,000
------------ ------------ ------------- ------------ ------------- -------------
Total additions 3,954,000 31,105,000 33,387,000 9,541,000 35,875,000 5,590,000
------------ ------------ ------------- ------------ ------------- -------------
DEDUCTIONS FROM NET ASSETS
Distributions to participants 1,073,000 3,660,000 3,143,000 1,485,000 5,793,000 1,730,000
Plan expenses
------------ ------------ ------------- ------------ ------------- -------------
Total deductions 1,073,000 3,660,000 3,143,000 1,485,000 5,793,000 1,730,000
------------ ------------ ------------- ------------ ------------- -------------
Net increase prior to exchanges 2,881,000 27,445,000 30,244,000 8,056,000 30,082,000 3,860,000
Exchanges (279,000) 4,416,000 (22,329,000) (254,000) 3,031,000 22,000
------------ ------------ ------------- ------------ ------------- -------------
Net increase (decrease) 2,602,000 31,861,000 7,915,000 7,802,000 33,113,000 3,882,000
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 19,620,000 58,841,000 31,364,000 26,138,000 102,219,000 25,170,000
------------ ------------ ------------- ------------ ------------- -------------
End of year $ 22,222,000 $ 90,702,000 $ 39,279,000 $ 33,940,000 $ 135,332,000 $ 29,052,000
============ ============ ============= ============ ============= =============
VANGUARD VANGUARD
VANGUARD VANGUARD VANGUARD VANGUARD LS CONS. LS MOD.
U.S. GROWTH INT. CORP. STFED LS INCOME GROWTH GROWTH
------------ ----------- ------------ ---------- ----------- -----------
ADDITIONS TO NET ASSETS
Investment income:
Mutual funds:
Dividends and interest $ 1,173,000 $ 119,000 $ 903,000 $ 43,000 $ 128,000 $ 252,000
Realized gain (loss) 980,000 3,000 (14,000) 26,000 34,000 66,000
Unrealized (depreciation)
appreciation 3,364,000 35,000 45,000 29,000 136,000 415,000
SAIC Common Stock:
Realized gain
Unrealized appreciation
Interest
Participant contributions 5,037,000 326,000 1,629,000 141,000 427,000 1,225,000
Company contributions
------------ ----------- ------------ ---------- ----------- -----------
Total additions 10,554,000 483,000 2,563,000 239,000 725,000 1,958,000
------------ ----------- ------------ ---------- ----------- -----------
DEDUCTIONS FROM NET ASSETS
Distributions to participants 1,291,000 106,000 798,000 164,000 217,000 434,000
Plan expenses
------------ ----------- ------------ ---------- ----------- -----------
Total deductions 1,291,000 106,000 798,000 164,000 217,000 434,000
------------ ----------- ------------ ---------- ----------- -----------
Net increase prior to exchanges 9,263,000 377,000 1,765,000 75,000 508,000 1,524,000
Exchanges 1,784,000 570,000 (747,000) 146,000 931,000 1,827,000
------------ ----------- ------------ ---------- ----------- -----------
Net increase (decrease) 11,047,000 947,000 1,018,000 221,000 1,439,000 3,351,000
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 19,558,000 1,538,000 14,494,000 455,000 1,197,000 2,384,000
------------ ----------- ------------ ---------- ----------- -----------
End of year $ 30,605,000 $ 2,485,000 $ 15,512,000 $ 676,000 $ 2,636,000 $ 5,735,000
============ =========== ============ ========== =========== ===========
VANGUARD SAIC COMMON PARTICIPANT STATE STREET
LS GROWTH STOCK LOANS STIF TOTAL
----------- ------------- ------------ ------------- -------------
ADDITIONS TO NET ASSETS
Investment income:
Mutual funds:
Dividends and interest $ 328,000 $ 71,000 $ 34,349,000
Realized gain (loss) 128,000 8,726,000
Unrealized (depreciation)
appreciation 703,000 19,930,000
SAIC Common Stock:
Realized gain -
Unrealized appreciation 87,106,000 87,106,000
Interest $ 1,347,000 $ 58,000 1,405,000
Participant contributions 2,135,000 497,000 183,000 15,552,000 77,427,000
Company contributions 29,000 15,168,000
----------- ------------- ------------ ------------- -------------
Total additions 3,294,000 87,674,000 1,530,000 15,639,000 244,111,000
----------- ------------- ------------ ------------- -------------
DEDUCTIONS FROM NET ASSETS
Distributions to participants 339,000 10,419,000 719,000 31,371,000
Plan expenses 151,000 151,000
----------- ------------- ------------ ------------- -------------
Total deductions 339,000 10,419,000 719,000 151,000 31,522,000
----------- ------------- ------------ ------------- -------------
Net increase prior to exchanges 2,955,000 77,255,000 811,000 15,488,000 212,589,000
Exchanges 1,546,000 23,262,000 3,758,000 (17,684,000) -
----------- ------------- ------------ ------------- -------------
Net increase (decrease) 4,501,000 100,517,000 4,569,000 (2,196,000) 212,589,000
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 3,946,000 163,969,000 17,000,000 2,461,000 490,354,000
----------- ------------- ------------ ------------- -------------
End of year $ 8,447,000 $ 264,486,000 $ 21,569,000 $ 265,000 $ 702,943,000
=========== ============= ============ ============= =============
F-12
15
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 5 - FINANCIAL INFORMATION BY INVESTMENT FUND - CONTINUED
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1996
VANGUARD VANGUARD VANGUARD VANGUARD VANGUARD VANGUARD
GNMA INDEX 500 PRIME WELLESLEY WINDSOR INT'L GROWTH
------------ ------------ ------------ ------------ ------------- ------------
ADDITIONS TO NET ASSETS
Investment income:
Mutual funds:
Dividends and interest $ 1,346,000 $ 1,222,000 $ 1,518,000 $ 2,101,000 $ 9,744,000 $ 1,073,000
Realized gain (loss) 47,000 1,805,000 329,000 1,489,000 586,000
Unrealized (depreciation)
appreciation (430,000) 7,089,000 (204,000) 9,608,000 1,304,000
SAIC Common Stock:
Realized gain
Unrealized appreciation
Interest
Participant contributions 2,432,000 8,039,000 3,254,000 4,432,000 11,661,000 4,362,000
Company contributions
------------ ------------ ------------ ------------ ------------- ------------
Total additions 3,395,000 18,155,000 4,772,000 6,658,000 32,502,000 7,325,000
------------ ------------ ------------ ------------ ------------- ------------
DEDUCTIONS FROM NET ASSETS
Distributions to participants 1,074,000 2,880,000 2,825,000 1,666,000 5,086,000 1,322,000
Plan expenses
------------ ------------ ------------ ------------ ------------- ------------
Total deductions 1,074,000 2,880,000 2,825,000 1,666,000 5,086,000 1,322,000
------------ ------------ ------------ ------------ ------------- ------------
Net increase prior to exchanges 2,321,000 15,275,000 1,947,000 4,992,000 27,416,000 6,003,000
Exchanges (2,011,000) 4,078,000 (265,000) (1,877,000) (2,193,000) 1,082,000
------------ ------------ ------------ ------------ ------------- ------------
Net increase (decrease) 310,000 19,353,000 1,682,000 3,115,000 25,223,000 7,085,000
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 19,310,000 39,488,000 29,682,000 23,023,000 76,996,000 18,085,000
------------ ------------ ------------ ------------ ------------- ------------
End of year $ 19,620,000 $ 58,841,000 $ 31,364,000 $ 26,138,000 $ 102,219,000 $ 25,170,000
============ ============ ============ ============ ============= ============
VANGUARD VANGUARD
VANGUARD VANGUARD VANGUARD VANGUARD LS CONS. LS MOD.
U.S. GROWTH INT. CORP. STFED LS INCOME GROWTH GROWTH
------------ ----------- ------------ --------- ----------- -----------
ADDITIONS TO NET ASSETS
Investment income:
Mutual funds:
Dividends and interest $ 1,423,000 $ 87,000 $ 874,000 $ 16,000 $ 53,000 $ 105,000
Realized gain (loss) 459,000 (1,000) (20,000) 1,000 2,000 6,000
Unrealized (depreciation)
appreciation 1,245,000 (46,000) (185,000) (4,000) 20,000 79,000
SAIC Common Stock:
Realized gain
Unrealized appreciation
Interest
Participant contributions 3,268,000 256,000 1,914,000 30,000 162,000 473,000
Company contributions
------------ ----------- ------------ --------- ----------- -----------
Total additions 6,395,000 296,000 2,583,000 43,000 237,000 663,000
------------ ----------- ------------ --------- ----------- -----------
DEDUCTIONS FROM NET ASSETS
Distributions to participants 666,000 30,000 1,155,000 21,000 2,000 23,000
Plan expenses
------------ ----------- ------------ --------- ----------- -----------
Total deductions 666,000 30,000 1,155,000 21,000 2,000 23,000
------------ ----------- ------------ --------- ----------- -----------
Net increase prior to exchanges 5,729,000 266,000 1,428,000 22,000 235,000 640,000
Exchanges 5,744,000 187,000 (1,680,000) 433,000 962,000 1,744,000
------------ ----------- ------------ --------- ----------- -----------
Net increase (decrease) 11,473,000 453,000 (252,000) 455,000 1,197,000 2,384,000
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 8,085,000 1,085,000 14,746,000 - - -
------------ ----------- ------------ --------- ----------- -----------
End of year $ 19,558,000 $ 1,538,000 $ 14,494,000 $ 455,000 $ 1,197,000 $ 2,384,000
============ =========== ============ ========= =========== ===========
VANGUARD SAIC COMMON PARTICIPANT STATE STREET
LS GROWTH STOCK LOANS STIF TOTAL
----------- ------------- ------------ ------------ -------------
ADDITIONS TO NET ASSETS
Investment income:
Mutual funds:
Dividends and interest $ 146,000 $ 19,708,000
Realized gain (loss) 19,000 4,722,000
Unrealized (depreciation)
appreciation 201,000 18,677,000
SAIC Common Stock:
Realized gain -
Unrealized appreciation $ 30,082,000 30,082,000
Interest 131,000 $ 1,038,000 $ 49,000 1,218,000
Participant contributions 776,000 11,446,000 14,050,000 66,555,000
Company contributions 9,575,000 50,000 9,625,000
----------- ------------- ------------ ------------ -------------
Total additions 1,142,000 51,234,000 1,038,000 14,149,000 150,587,000
----------- ------------- ------------ ------------ -------------
DEDUCTIONS FROM NET ASSETS
Distributions to participants 15,000 7,916,000 483,000 25,164,000
Plan expenses 163,000 163,000
----------- ------------- ------------ ------------ -------------
Total deductions 15,000 7,916,000 483,000 163,000 25,327,000
----------- ------------- ------------ ------------ -------------
Net increase prior to exchanges 1,127,000 43,318,000 555,000 13,986,000 125,260,000
Exchanges 2,819,000 316,000 4,815,000 (14,154,000) -
----------- ------------- ------------ ------------ -------------
Net increase (decrease) 3,946,000 43,634,000 5,370,000 (168,000) 125,260,000
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year - 120,335,000 11,630,000 2,629,000 365,094,000
----------- ------------- ------------ ------------ -------------
End of year $ 3,946,000 $ 163,969,000 $ 17,000,000 $ 2,461,000 $ 490,354,000
=========== ============= ============ ============ =============
F-13
16
ADDITIONAL INFORMATION
SCHEDULE I
SCIENCE APPLICATION INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
ITEM 27a FORM 5500 - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT DECEMBER 31, 1997
- --------------------------------------------------------------------------------
DESCRIPTION OF COST OF CURRENT
IDENTITY OF ISSUE INVESTMENT SHARES OR UNITS ASSET VALUE
Mutual funds:
The Vanguard Group of
Investment Companies
Vanguard Fixed Income
Securities Fund -
GNMA Portfolio 2,123,000 $ 21,471,000 $ 22,141,000
Vanguard Index Trust -
500 Portfolio 1,002,000 57,415,000 90,256,000
Vanguard Money Market Reserves-
Prime Portfolio 37,421,000 37,421,000 37,421,000
Vanguard/Wellesley
Income Fund 1,545,000 30,773,000 33,775,000
Vanguard/Windsor Fund 7,939,000 122,383,000 134,811,000
Vanguard Int'l Growth Portfolio 1,761,000 26,713,000 28,870,000
Vanguard U.S. Growth Portfolio 1,059,000 24,945,000 30,388,000
Vanguard Int. Term Corporate
Bond Portfolio 249,000 2,442,000 2,471,000
Vanguard Fixed Income
Securities Fund -
Short-Term Federal
Portfolio 1,525,000 15,457,000 15,450,000
Vanguard LIFEStrategy
Income Portfolio 54,000 651,000 676,000
Vanguard LIFEStrategy
Conservative Growth
Portfolio 195,000 2,460,000 2,615,000
Vanguard LIFEStrategy
Moderate Growth Portfolio 383,000 5,181,000 5,675,000
Vanguard LIFEStrategy
Growth Portfolio 520,000 7,443,000 8,347,000
-------------- --------------
354,755,000 412,896,000
Common Stock:
SAIC* Class A 7,599,000 109,484,000 264,309,000
Short-Term Investment:
State Street Bank & Trust Short-Term Investment Fund 296,000 296,000 296,000
Company*
Participant loans Due Jan. 1998 to Dec. 2022; 6% - 12% 4,000 21,569,000 21,569,000
-------------- --------------
$ 486,104,000 $ 699,070,000
============== ==============
* Represents a party-in-interest.
F-14
17
ADDITIONAL INFORMATION
SCHEDULE II
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
ITEM 27b FORM 5500 - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
AT DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------------------
AMOUNT RECEIVED
ORIGINAL DURING REPORTING YEAR UNPAID
AMOUNT ----------------------------- BALANCE AT
IDENTITY AND ADDRESS OF OBLIGOR OF LOAN PRINCIPAL INTEREST END OF YEAR
Joyce Tremain $ 6,000 - - $ 6,000
8689 Long Hill Rd.
Rome, NY 13440
Kathryn E. Dayan $ 11,000 - - $ 11,000
12015-4 World Trade Drive
San Diego, CA 92128
Kathryn E. Dayan $ 13,000 - - $ 13,000
12015-4 World Trade Drive
San Diego, CA 92128
DETAILED DESCRIPTION OF LOSS INCLUDING DATES OF
MAKING AND MATURITY, INTEREST RATE, THE TYPE AND VALUE AMOUNT OVERDUE*
OF COLLATERAL, ANY REGURGITATION OF THE LOAN AND THE ---------------------------
IDENTITY AND ADDRESS OF OBLIGOR TERMS OF THE RENEGOTIATION AND OTHER MATERIAL ITEMS PRINCIPAL INTEREST
Joyce Tremain Loan date: 4/5/96; Maturity date: 3/23/01; $ 6,000 -
8689 Long Hill Rd. Interest rate: 7%; Collateral: Vested Balance
Rome, NY 13440
Kathryn E. Dayan Loan date: 4/19/96; Maturity date: 4/6/01; $ 11,000 -
12015-4 World Trade Drive Interest rate: 7%; Collateral: Vested Balance
San Diego, CA 92128
Kathryn E. Dayan Loan date: 5/26/95; Maturity date: 4/24/20; $ 13,000 -
12015-4 World Trade Drive Interest rate: 9%; Collateral: Vested Balance
San Diego, CA 92128
* During 1998, the Company instructed the Plan's recordkeeper to issue
Forms 1099 to the obligors listed above in the amount of the principal
balance outstanding at December 31, 1997.
F-15
18
ADDITIONAL INFORMATION
SCHEDULE III
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
CASH OR DEFERRED ARRANGEMENT
ITEM 27d FORM 5500 - SCHEDULE OF REPORTABLE TRANSACTIONS*
YEAR ENDED DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PURCHASE SELLING LEASE
PARTY INVOLVED DESCRIPTION OF ASSET TRANSACTIONS PRICE PRICE RENTAL
State Street Bank Short-Term Investment
& Trust Fund 66 $ 62,618,000
State Street Bank Short-Term Investment
& Trust Fund 64 $ 62,659,000
CURRENT
VALUE ON
EXPENSE COST OF TRANSACTION NET GAIN
PARTY INVOLVED INCURRED ASSET DATE OR LOSS
State Street Bank
& Trust $ 62,618,000
State Street Bank
& Trust $ 62,659,000 $ 62,659,000 $ -
* Transactions or series of transactions in excess of 5 percent of the
current value of the Plan's assets as of December 31, 1996 as defined in
Section 2520.103-6 of the Department of Labor Rules and Regulations for
Reporting and Disclosure under ERISA.
F-16