<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K/A
AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 29, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
---------- -----------
Commission File No.: 1-4850
[LOGO OF COMPUTER SCIENCES CORPORATION]
COMPUTER SCIENCES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 95-2043126
(STATE OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)
2100 EAST GRAND AVENUE
EL SEGUNDO, CALIFORNIA 90245
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (310) 615-0311
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS: ON WHICH REGISTERED
-------------------- -----------------------------------
Common Stock, $1.00 par value per share New York Stock Exchange
Preferred Stock Purchase Rights Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of May 15, 1996, the aggregate market value of stock held by non-
affiliates of the Registrant was approximately $4,319,000,000. A total of
56,090,734 shares of common stock was outstanding as of such date.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for its 1996 Annual
Meeting of Stockholders, which was filed with the Securities and Exchange
Commission on June 25, 1996, are incorporated by reference into Part III
hereof.
<PAGE>
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
ITEM PAGE
---- ----
<C> <S> <C>
1. Business.......................................................... 1
2. Properties........................................................ 3
3. Legal Proceedings................................................. 4
4. Submission of Matters to a Vote of Security Holders............... 4
PART II
5. Market for the Registrant's Common Equity and Related Stockholder
Matters........................................................... 6
6. Selected Financial Data........................................... 6
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 7
8. Financial Statements and Supplementary Data....................... 11
9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.............................................. 32
PART III
10. Directors and Executive Officers of the Registrant................ 32
11. Executive Compensation............................................ 32
12. Security Ownership of Certain Beneficial Owners and Management.... 32
13. Certain Relationships and Related Transactions.................... 32
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K... 33
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
INTRODUCTION AND HISTORY
GENERAL
Computer Sciences Corporation ("CSC" or the "Company") was founded in 1959
and is among the world leaders in the information technology ("IT") services
industry. CSC offers a broad array of professional services to industry and
government and specializes in the application of advanced and complex
information technology to achieve its customers' strategic objectives. CSC's
services include:
Outsourcing--Operating all or a portion of a customer's technology
infrastructure, including systems analysis, applications development, network
operations and data center management.
Systems Integration--Designing, developing, implementing and integrating
complete information systems.
IT and Management Consulting and Other Professional Services--Advising
clients on a wide range of issues, including how to shape their strategies and
operations to become market leaders, the strategic acquisition and utilization
of IT, and "business process reengineering"--redesigning operations to achieve
efficiencies and improve competitive position.
CSC has further enhanced its breadth of service offerings through expansion
in outsourcing and strategic acquisitions across a number of geographic and
vertical industry markets.
RECENT DEVELOPMENTS
On April 28, 1996, the Company entered into an Agreement and Plan of Merger
with The Continuum Company, Inc. ("Continuum") and Continental Acquisition,
Inc., a subsidiary of the Company ("Sub"), pursuant to which Sub will be
merged with and into Continuum and Continuum will become a wholly owned
subsidiary of CSC. Each outstanding share of common stock of Continuum will be
converted into 0.79 of a share of CSC common stock.
Continuum is a consulting and computer services firm serving the needs of
the global financial services industry for computer software and services.
Consummation of the merger is expected to occur during the summer of 1996 and
is subject to various conditions including, but not limited to, approval by
the stockholders of CSC and Continuum.
REVENUES BY MAJOR MARKET
The Company's principal markets served are the U.S. commercial markets,
international markets and the United States federal government, with revenues
composed as follows for the last three fiscal years, shown as a percentage of
total Company revenue:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
U.S. Commercial......................................... 36% 35% 40%
International........................................... 27 21 12
--- --- ---
Global Commercial..................................... 63 56 52
U.S. Federal Government................................. 37 44 48
--- --- ---
Total Revenue......................................... 100% 100% 100%
=== === ===
</TABLE>
U.S. COMMERCIAL MARKETS
CSC is a major provider of outsourcing services, including systems analysis,
applications development, network operations and data center management.
Current outsourcing activities include recent contracts with Hughes Aircraft
Company, Scott Paper Company, Southern New England Telecommunications
Corporation, James River Corporation and San Diego Gas & Electric.
<PAGE>
The Company also provides consulting and technical services in the
development and integration of computer and communications systems to
commercial organizations, as well as various industry-specific IT services.
The Company's experience includes business process reengineering, the setting
of information technology strategy, the development of information systems for
a wide range of applications and the operation of computer facilities.
The Company has expertise in information-systems development for the
vertical-industry markets of consumer goods, distribution, financial services,
publishing, utilities, manufacturing, pharmaceuticals, communications and
insurance, and for state and local governments. Other capabilities, such as
office automation and communications network engineering, operation and
management, range across industry needs in general.
The Company is one of the leading suppliers of large-scale claims processing
and other insurance-related services to clients in the public sector. It has
extensive expertise in the development and operation of automated systems that
efficiently manage and process the large volumes of data associated with such
programs. CSC serves as the fiscal agent for the Medicaid program of New York,
and processes the health claims of coal miners for the black-lung program of
the U.S. Department of Labor. It also acts as statistical agent for the
Federal Emergency Management Agency's (FEMA) National Flood Insurance Program.
For the insurance and financial services industries, the Company provides
services for administering life and disability insurance for credit loans and
mortgages, collateral-protection insurance and warranty insurance. In
addition, CSC markets business information systems, software and services to
the managed healthcare industry, clinics and physicians.
Also in the financial services arena, the Company provides consumer credit
reports and account-management services to thousands of credit grantors
nationwide. Through an agreement with Equifax Inc., another major credit
services company, the Company offers retail chains and other large credit
grantors the benefits of a national file of consumer credit histories. The
national file enables customers to obtain credit information from a single
source, instead of dealing with multiple reporting services.
INTERNATIONAL MARKETS
The Company's international operations, with major offices in the United
Kingdom, France, Germany, Belgium, the Netherlands, and Australia, provide a
wide range of information technology services to commercial and public sector
clients. CSC provides substantially the same services to its international
customers that it provides to U.S. customers. These services span the range of
consulting, systems integration and outsourcing. Current activities include
major outsourcing contracts with British Aerospace, Anglian Water, Guinness
PLC, the National Health Service in Scotland, ICI Paints and Lucas Industries
PLC. Also, as part of the fiscal 1995 acquisition of Ploenzke A.G., CSC
significantly expanded its European consulting operations.
U.S. FEDERAL MARKET
For more than three decades, CSC has provided the United States federal
government with IT services, ranging from traditional systems integration and
outsourcing to advanced technical undertakings and complex project management.
CSC has extensive experience in the development of software for mission-
critical systems for defense and civil agency applications, and also provides
systems engineering and technical assistance in network management, satellite
communications, intelligence, aerospace, logistics and related high-technology
fields.
Typical current activities include: supporting the Federal Aviation
Administration's National EnRoute Software system, developing the next
generation of NAVSTAR Global Positioning System satellites for the Air Force
and operating the computer center and supporting management information
systems for the Air Force's flight simulation test facilities at the Arnold
Engineering Development Center. Federal activities also include providing
command, control, and communication technical engineering and integration to
the U.S. Army Communications Electronics Command, upgrading the Navy's Aegis
Combat Weapons Systems and providing technical information systems security
applications to the Department of Defense, among other federal agencies and
departments.
2
<PAGE>
COMPETITION
The information technology market in which CSC competes is not dominated by
a single company or a small number of companies. A substantial number of
companies offer services that overlap and are competitive with those offered
by CSC. Some of these are large industrial firms, including computer
manufacturers and major aerospace firms that have greater financial resources
than CSC and in some cases may have greater capabilities to perform services
similar to those provided by CSC.
The Company's ability to obtain business is dependent upon its ability to
offer better strategic concepts and technical solutions, lower prices, a
quicker response, or a combination of these factors. CSC believes that its
technology and systems expertise and large project management skills gained
through years of experience in providing IT services to the federal government
position it to compete effectively in U.S. and international commercial
markets. CSC also believes that its competitive position is enhanced by its
leadership position in management consulting and the full spectrum of services
that it provides.
EMPLOYEES
The Company employs approximately 33,850 persons, of which 24,300 are highly
trained professionals. The services provided by CSC require proficiency in
many fields, such as computer sciences, mathematics, physics, engineering,
astronomy, geology, operations research, economics, statistics and business
administration.
ITEM 2. PROPERTIES
<TABLE>
<CAPTION>
APPROXIMATE
OWNED PROPERTIES SQUARE FOOTAGE GENERAL USAGE
- ---------------- -------------- -------------
<S> <C> <C>
El Segundo, California.. 206,000 Office Facility
San Diego, California... 178,000 Computer and General Office Facility
Norwich, Connecticut.... 149,000 Computer and General Office Facility
Falls Church, Virginia.. 146,000 General Office
Meriden, Connecticut.... 119,000 Computer and General Office Facility
Moorestown, New Jersey.. 99,000 General Office
Herndon, Virginia....... 87,000 General Office
St. Leonards, NSW
Australia............... 60,000 Office Facility
Sterling, Virginia...... 45,000 Office Facility
Various other U.S.
locations............... 51,000 Primarily General Office
<CAPTION>
LEASED PROPERTIES
- -----------------
<S> <C> <C>
Washington, D.C. area... 1,177,000 Computer and General Office Facilities
Houston and Dallas/Ft.
Worth, Texas............ 385,000 Computer and General Office Facilities
Germany................. 348,000 General Office
Boston, Massachusetts
area.................... 292,000 General Office
Mt. Laurel/Moorestown,
New Jersey.............. 286,000 General Office
Dayton/Cleveland, Ohio.. 274,000 General Office
United Kingdom.......... 264,000 General Office
Los Angeles/San
Diego/San Francisco..... 206,000 General Office
Chicago/Champaign, IL... 170,000 General Office
Albany, New York........ 164,000 General Office
New Jersey.............. 123,000 General Office
Various other U.S. and
foreign locations....... 858,000 Computer and General Office Facilities
</TABLE>
Upon expiration of its leases, the Company does not anticipate any
difficulty in obtaining renewals or alternative space. Lease expiration dates
range from fiscal 1997 through 2018.
3
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company is currently party to a number of disputes which involve or may
involve litigation. After consultation with counsel, it is the opinion of
Company management that the ultimate liability, if any, with respect to these
disputes will not be material to the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED AS TERM AS FAMILY
NAME AGE AN OFFICER OFFICER POSITION HELD WITH THE REGISTRANT RELATIONSHIP
- ---- --- ---------- ---------- --------------------------------- ------------
<S> <C> <C> <C> <C> <C>
Van B. Honeycutt* 51 1987 Indefinite President and Chief Executive Officer None
Leon J. Level* 55 1989 Indefinite Vice President and None
Chief Financial Officer
Harvey N. Bernstein 49 1988 Indefinite Vice President None
Edward P. Boykin 57 1995 Indefinite Vice President None
James A. Champy 54 1993 Indefinite Vice President None
Milton E. Cooper 57 1992 Indefinite Vice President None
Denis M. Crane 62 1981 Indefinite Vice President and Controller None
Hayward D. Fisk 53 1989 Indefinite Vice President, General Counsel None
and Secretary
Ronald W. Mackintosh 47 1993 Indefinite Vice President None
Thomas R. Madison, Jr. 50 1995 Indefinite Vice President None
John M. Mickel 56 1995 Indefinite Vice President None
Lawrence Parkus 59 1985 Indefinite Vice President None
C. Bruce Plowman 59 1989 Indefinite Vice President None
L. Scott Sharpe 57 1981 Indefinite Vice President None
Thomas Williams 60 1993 Indefinite Vice President None
</TABLE>
- --------
* Director of the Company.
BUSINESS EXPERIENCE OF OFFICERS
Van B. Honeycutt was appointed Chief Executive Officer of the Company
effective April 1, 1995. He joined the Company in 1975 and was elected
President and Chief Operating Officer during 1993. Prior to his election he
was a Vice President of CSC and President of the Industry Services Group. He
formerly was President of CSC Credit Services, Inc., where he directed the
growth of this wholly owned subsidiary into one of the Company's major
commercial units. He has held a variety of other positions with the Company,
including Vice President and General Manager of its Business Services Division
and regional marketing manager for Infonet.
Leon J. Level joined the Company in 1989 as Vice President and Chief
Financial Officer of CSC. Former positions include Vice President and
Treasurer of Unisys Corporation and Chairman of Unisys Finance Corporation;
Assistant Corporate Controller and Executive Director of The Bendix
Corporation; and Principal with the public accounting firm of Deloitte &
Touche LLP. He is a Certified Public Accountant.
Harvey N. Bernstein joined the Company as Assistant General Counsel in 1983.
He became Deputy General Counsel and was elected a Vice President in 1988.
Prior to joining the Company, he specialized in government procurement law at
the firm of Fried, Frank, Harris, Shriver and Jacobson in Washington, D.C.
4
<PAGE>
Edward P. Boykin joined the Company in 1966. In the intervening years, he
held numerous positions with several divisions of the Company and became
President of the Technology Management Group in October, 1993. He was elected
a Vice President in 1995.
James A. Champy joined the Company during 1988 as a result of the
acquisition of Index, where he served as President. Before joining Index, he
was executive vice president of the Massachusetts Institute of Technology
Alumni Association. He was elected a Vice President of the Company and
appointed Chairman of its Consulting Group during 1993.
Milton E. Cooper joined the Company in 1984 as group vice president of
program development. He was named President of Systems Group in December 1991
and a Corporate Vice President in January 1992. A veteran of 33 years in the
information industry, he has held senior sales and marketing positions with
IBM Corporation and Telex Corporation. He is a graduate of the United States
Military Academy at West Point.
Denis M. Crane joined the Company in 1973 with prior experience in public
accounting. He was named Vice President, Finance for the Systems Group and
held that position until his election as Vice President and Controller of the
Company in 1981. He is a Certified Public Accountant and is responsible for
corporate-wide policy matters of general accounting, operational analysis,
systems and procedures.
Hayward D. Fisk joined the Company in 1989 as Vice President, General
Counsel and Corporate Secretary. Prior to joining the Company, he was
associated for 21 years with Sprint Corporation (formerly United
Telecommunications, Inc.), in various legal and executive officer positions,
most recently as Vice President and Associate General Counsel.
Ronald W. Mackintosh joined the Company as a result of the Index
acquisition, where he was Managing Director of its London office. Previously
he was a partner in the London office of Nolan, Norton & Company. In 1991, he
was named Chief Executive Officer of the Company's UK Operations and,
subsequently, President of the European Group. In 1993 he was elected a Vice
President of the Company.
Thomas R. Madison, Jr. joined the Company in 1994 as President of the
Commercial Outsourcing Division of the Technology Management Group. He became
President of Integrated Business Services and was elected a Vice President in
1995. He held numerous executive positions with IBM Corporation, was a partner
at The United Research Company, was Managing Director of Gemini Consulting,
and a member of the Executive Committee of the Sogeti Group in Paris.
John M. Mickel joined the Company in 1993. He was appointed President of the
Consulting Group in 1994 and was elected a Vice President in 1995. Prior to
joining the Company, he held various positions with IBM Corporation, co-
founded Decimus Corporation, became Executive Vice President, Bank of America
and a member of the Managing Committee, was a partner at McKinsey & Co. and
was President and Chief Executive Officer of Automation Partners
International.
Lawrence Parkus joined the Company in 1985 and was elected Vice President
for Corporate Development, where he is responsible for planning and executing
acquisitions and other projects related to the Company's growth and
development strategies. Prior to joining the Company, he was division manager
for international business development for AT&T Consumer Products and held
prior assignments in business development and strategic planning.
C. Bruce Plowman joined the Company in 1982 as Director of Corporate
Communications. In 1989, he was elected a Vice President with responsibility
for investor relations, marketing communications, public relations and
employee communications. Prior to joining CSC, he spent 16 years at
Continental Airlines, where he was Director of Public Information.
L. Scott Sharpe joined the Company in 1968. He progressed through four
divisions of the Company before moving to the Company's headquarters in 1978.
He was elected a Vice President of the Company in 1981. He is responsible for
all human resource programs, including benefits and compensation, recruitment,
employee relations, management development, and organization and staffing.
5
<PAGE>
Thomas Williams joined the Company in 1970 and has held a number of
managerial and technical positions within the Company. Previously he served as
President of the Technology Management Group, President of the Applied
Technology Division and Vice President, Engineering and Range Operations, and
associate project manager of CSTA. In 1993 he was elected a Vice President of
the Company and named President of the Aerospace Systems Division and Deputy
Chief Executive Officer of the European Group.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Common stock of Computer Sciences Corporation is listed and traded on the
New York Stock Exchange and Pacific Stock Exchange. The ticker symbol is
"CSC."
As of May 28, 1996, the number of registered shareholders of Computer
Sciences Corporation's common stock was 7,666. The table shows the high and
low intra-day prices of the Company's common stock as reported on the
composite tape of the New York Stock Exchange for each quarter during the last
two calendar years, and to date in 1996. No cash dividends have been paid
during this period. Per share prices have been adjusted for a 200% stock
dividend distributed January 13, 1994.
<TABLE>
<CAPTION>
1996 1995 1994
-------------- ------------- -------------
CALENDAR QUARTER HIGH LOW HIGH LOW HIGH LOW
---------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1st............................ 80 3/4 65 1/8 52 1/4 47 1/4 41 3/4 31 5/8
2nd............................ 79 1/2* 68 1/8* 56 7/8 46 1/2 44 35 1/4
3rd............................ 65 3/8 52 45 1/4 39 3/4
4th............................ 75 1/4 62 1/2 52 5/8 41
</TABLE>
- --------
* Through May 20, 1996.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FIVE-YEAR REVIEW
------------------------------------------------------
MARCH 29, MARCH 31, APRIL 1, APRIL 2, APRIL 3,
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Total assets............ $2,595,790 $2,333,660 $1,806,380 $1,460,922 $1,375,386
Debt:
Long-term............. 405,471 310,317 273,344 295,316 349,410
Short-term............ 64,421 126,317 17,772 6,220 17,963
Current maturities.... 5,887 11,111 32,685 10,503 22,337
---------- ---------- ---------- ---------- ----------
Total............... 475,779 447,745 323,801 312,039 389,710
Stockholders' equity.... 1,305,694 1,148,559 805,680 695,380 606,810
Working capital......... 383,811 303,593 195,875 332,273 265,563
Property and equipment:
At cost............... 1,147,448 905,469 695,796 525,742 435,332
Accumulated
depreciation and
amortization....... 506,646 375,330 302,760 241,990 165,165
---------- ---------- ---------- ---------- ----------
Property and
equipment, net.......... 640,802 530,139 393,036 283,752 270,167
Current assets to
current liabilities..... 1.5:1 1.4:1 1.3:1 1.8:1 1.7:1
Debt to total
capitalization.......... 26.7% 28.0% 28.7% 31.0% 39.1%
Return on equity, before
accounting change...... 11.5 12.2 12.1 12.0 12.0
Book value per share.... $23.30 $20.82 $15.92 $13.94 $12.33
Stock price range
(high).................. 80.75 52.63 41.75 26.83 28.00
(low)....... 46.50 35.25 23.33 19.00 17.42
Year-end price/earnings
ratio................... 28 24 20 16 16
</TABLE>
6
<PAGE>
FIVE-YEAR REVIEW (CONTINUED)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues................ $4,242,422 $3,372,502 $2,582,670 $2,479,847 $2,113,351
---------- ---------- ---------- ---------- ----------
Costs of services....... 3,349,706 2,685,603 2,065,023 2,006,449 1,723,973
Selling, general and
administrative......... 378,873 311,177 227,003 210,217 179,578
Depreciation and
amortization........... 252,084 172,625 130,704 118,668 81,701
Interest, net........... 30,367 25,645 10,857 15,804 15,626
Other items, net........ 3,740 460 3,250
---------- ---------- ---------- ---------- ----------
Total costs and
expenses............... 4,011,030 3,198,790 2,433,587 2,351,598 2,004,128
---------- ---------- ---------- ---------- ----------
Income before taxes..... 231,392 173,712 149,083 128,249 109,223
Taxes on income......... 89,700 62,973 58,153 50,100 41,046
---------- ---------- ---------- ---------- ----------
Income before cumulative
effect of accounting
change................. 141,692 110,739 90,930 78,149 68,177
Cumulative effect of
accounting change for
income taxes........... 4,900
---------- ---------- ---------- ---------- ----------
Net income.............. $ 141,692 $ 110,739 $ 95,830 $ 78,149 $ 68,177
========== ========== ========== ========== ==========
Earnings per common
share before cumulative
effect of accounting
change................. $2.48 $2.09 $1.77 $1.55 $1.37
Cumulative effect of
accounting change for
income taxes........... 0.09
---------- ---------- ---------- ---------- ----------
Earnings per common
share.................. $2.48 $2.09 $1.86 $1.55 $1.37
========== ========== ========== ========== ==========
Shares used to compute
earnings per share..... 57,214,384 52,974,949 51,385,204 50,275,506 49,646,760
</TABLE>
Note:Per-share amounts are restated for a three-for-one stock split,
distributed in the form of a 200% stock dividend on January 13, 1994.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUE
The Company derived its revenues for fiscal years 1996, 1995 and 1994 from
the following market sectors (dollars in millions):
<TABLE>
<CAPTION>
PERCENT PERCENT
1996 CHANGE 1995 CHANGE 1994
-------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
U.S. Commercial..................... $1,531.9 31% $1,169.8 13% $1,038.8
International....................... 1,139.0 60 713.3 122 320.7
-------- -------- --------
Global Commercial................. 2,670.9 42 1,883.1 39 1,359.5
U.S. Federal Government............. 1,571.5 6 1,489.4 22 1,223.2
-------- -------- --------
Total............................. $4,242.4 26% $3,372.5 31% $2,582.7
======== ======== ========
</TABLE>
The Company's 26% overall revenue growth for fiscal 1996 over 1995 was
fueled principally by its global commercial operations. International
commercial operations provided over one-half of the global commercial growth.
The expansion of outsourcing business in the United Kingdom and acquisition of
Ploenzke A.G. in
7
<PAGE>
Germany accounted for the bulk of the Company's international growth. During
the year, the Company announced international outsourcing contracts with Lucas
Industries PLC, Anglian Water, Guinness PLC and the National Health Service in
Scotland. The majority of fiscal 1995 international revenue growth also came
from significant increases in outsourcing and consulting. Important
international outsourcing clients adding to fiscal 1995 revenue included
British Aerospace, Ford of Europe, ICI Paints and Toyota of Belgium.
U.S. commercial revenue increased 31% for fiscal 1996 versus 1995. More than
70% of this growth was the result of an increase in commercial outsourcing,
notably the award of contracts with the Hughes Aircraft Company, Southern New
England Telecommunications Corporation, Scott Paper Company and James River
Corporation. The Company's U.S. consulting operations also contributed to the
growth, with fiscal 1996 revenue 25% over fiscal 1995 revenue. CSC's U.S.
commercial revenue growth for fiscal 1995 was led by large increases in
commercial outsourcing, including contracts with American Medical Response,
the Mutual Life Insurance Company of New York and Polaroid.
The Company's federal revenues were derived from the following agencies
(dollars in millions):
<TABLE>
<CAPTION>
PERCENT PERCENT
1996 CHANGE 1995 CHANGE 1994
-------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
DOD.................................. $ 961.6 17% $ 823.8 19% $ 693.2
NASA................................. 292.9 (6) 312.4 41 222.0
Civil................................ 317.0 (10) 353.2 15 308.0
-------- -------- --------
Total U.S. Federal................... $1,571.5 6% $1,489.4 22% $1,223.2
======== ======== ========
</TABLE>
Revenue from the U.S. Federal government increased 6% during fiscal 1996
versus fiscal 1995 due principally to additional tasking on delivery order
contracts, such as with the Defense Enterprise Integration Systems Agency
(DEIS), and the win of the Air Force contract at the Arnold Engineering
Development Center. Revenue gains during 1996 were partially offset by the
loss of two civil contracts and federal government spending reductions. During
fiscal 1995, the Company's 22% revenue increase was led by the award of a NASA
contract valued at $1.1 billion over eight years if all options are exercised.
The higher federal revenue also included the effect of an acquisition at the
end of the third quarter of fiscal 1994. During fiscal 1996, CSC announced
winning federal contracts with a value of $2.4 billion, compared with the $1.3
billion announced during 1995.
COSTS AND EXPENSES
The Company's costs and expenses in dollars and as a percentage of revenue
are as follows (dollars in millions):
<TABLE>
<CAPTION>
DOLLAR AMOUNT PERCENTAGE OF REVENUE
-------------------------- -------------------------
1996 1995 1994 1996 1995 1994
-------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Costs of services....... $3,349.7 $2,685.6 $2,065.0 79.0% 79.6% 80.0%
Selling, general &
administrative.......... 378.9 311.2 227.0 8.9 9.2 8.8
Depreciation and
amortization............ 252.1 172.6 130.7 5.9 5.1 5.1
Interest expense, net... 30.3 25.7 10.9 .7 .8 .4
Other items, net........ 3.7 .1
-------- -------- -------- ------- ------- -------
Total................... $4,011.0 $3,198.8 $2,433.6 94.5% 94.8% 94.2%
======== ======== ======== ======= ======= =======
</TABLE>
COSTS OF SERVICES
The Company's costs of services as a percent of revenue improved to 79.0%
during fiscal 1996 from 79.6% during fiscal 1995. The decrease in costs of
services during fiscal 1996 and 1995 is primarily related to the shift in the
mix of business toward outsourcing, which is generally more capital intensive
than the Company's federal
8
<PAGE>
consulting and systems integration operations. The decrease in costs of
services is generally offset by increases in depreciation and amortization
expense.
SELLING, GENERAL AND ADMINISTRATIVE
As noted in the table above, selling, general and administrative (SG&A)
expenses improved as a percent of revenue during fiscal 1996 to 8.9% from 9.2%
for fiscal 1995. Improvements in SG&A during 1996 were achieved across all
market sectors served by CSC. During fiscal 1995, the expansion of the
Company's commercial activities was the most significant contributor to the
increase in SG&A as a percent of revenue.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense during fiscal 1996 was 5.9% of the
Company's total revenue. This is an increase from fiscal 1995 and 1994, when
depreciation and amortization expenses were 5.1% of revenue. The increase
during fiscal 1996 reflects the Company's investments in computer equipment
and software, especially from CSC's outsourcing activities, as described
above.
INTEREST AND OTHER ITEMS
Interest expense, net of interest income, was $30.3 million for fiscal 1996,
up from $25.7 million for fiscal 1995 and $10.9 million for fiscal 1994. The
higher interest expense for fiscal 1996 and 1995 is due principally to higher
borrowing to fund the Company's investment in computer equipment and software
mentioned above.
Other items for fiscal 1995 include a loss on the sale of the Company's tax
processing operation during January 1995. The sale resulted in a pre-tax loss
of $3.7 million. This loss was reduced by related income tax effects of $2.8
million, yielding a net loss of $0.9 million. The Company also completed the
phase-out of certain unprofitable operations in Belgium during fiscal 1995.
INCOME BEFORE TAXES
The company's income before taxes for the most recent three fiscal years is
as follows (dollars in millions):
<TABLE>
<CAPTION>
DOLLAR AMOUNT MARGIN
-------------------- ----------------
1996 1995 1994 1996 1995 1994
------ ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Income before taxes........................ $231.4 $173.7 $149.1 5.5% 5.2% 5.8%
</TABLE>
Income before taxes improved during fiscal 1996 as a percentage of revenue.
The 0.3% improvement in margin to 5.5% during fiscal 1996 relates principally
to improvements in costs of services and SG&A expenses as a percent of
revenue, partially offset by the increase in depreciation and amortization.
During 1995, income before taxes decreased as a percentage of revenue
because of proportionately higher SG&A costs, higher net interest expense, and
the adverse effect on earnings of ending certain consulting activities in the
Far East. The adverse effect was largely offset by the favorable resolution of
sales tax issues in the Company's U.S. operations.
TAXES
The provision for income taxes as a percentage of pre-tax earnings was
38.8%, 36.3% and 39.0% for fiscal 1996, 1995 and 1994, respectively. The
fiscal 1995 tax rate was reduced most significantly by the favorable tax
treatment of the loss on sale of TACS, the Company's tax processing subsidiary
and by lower amounts of non-deductible foreign operating losses.
NET INCOME
The Company's net income for fiscal years 1996,1995, and 1994 is as follows
(dollars in millions):
<TABLE>
<CAPTION>
DOLLAR AMOUNT MARGIN
------------------- ----------------
1996 1995 1994 1996 1995 1994
------ ------ ----- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net income................................. $141.7 $110.7 $90.9* 3.3% 3.3% 3.5%
</TABLE>
- --------
* Before the effect of the adoption of SFAS 109.
9
<PAGE>
During fiscal 1996, the Company's net income margin remained constant at
3.3%. The increase in the Company's 1996 tax rate offset the improvement in
income before taxes as a percent of revenue. The decline in the Company's net
income margin during fiscal 1995 is due primarily to the higher percentages of
SG&A costs, depreciation, and net interest expense.
CASH FLOWS
<TABLE>
<CAPTION>
PERCENT PERCENT
1996 CHANGE 1995 CHANGE 1994
------- ------- ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Cash from operations............... $ 365.2 60 % $ 227.3 19% $ 191.8
Net cash used in investing......... (465.4) 16 (402.8) 30 (309.7)
Net cash provided by financing..... 49.8 (76) 204.0 53 133.3
------- ------- -------
Net (decrease) increase in cash and
cash equivalents................... (50.4) 28.5 15.4
Cash at beginning of year.......... 155.3 126.8 111.4
------- ------- -------
Cash at end of year.............. $ 104.9 (32)% $ 155.3 22% $ 126.8
======= ======= =======
</TABLE>
Historically, the majority of the Company's cash has been provided from
operating activities. The increases in cash from operations during fiscal 1996
and 1995 are primarily due to higher earnings and non-cash charges
(depreciation and amortization), offset in part by higher working capital
requirements.
The Company's investments principally relate to purchases of computer
equipment and software that support the Company's expanding commercial
operations. Investments in computer equipment occur at the inception of an
outsourcing contract and during performance on the contract as equipment
upgrades or replacements. The Company has also made a significant number of
acquisitions from fiscal 1994 to 1996.
The Company received $196.3 million in cash from a four million common share
offering during fiscal 1995. During fiscal 1994, a $250 million bank borrowing
was replaced with a commercial paper program of the same amount, with no net
change in principal outstanding.
LIQUIDITY AND CAPITAL RESOURCES
The balance of cash, cash equivalents and short-term investments was $104.9
million at March 29,1996, $155.3 million at March 31, 1995 and $126.8 million
at April 1, 1994. During this period, the Company's earnings have added
substantially to equity. During fiscal 1995, equity was augmented by the
$196.3 million net proceeds from the Company's public offering noted above.
For fiscal 1994 through 1996, equity growth--mainly through retained earnings,
in excess of additional borrowings--enabled the Company to strengthen its
financial position. At the end of fiscal 1996, CSC's ratio of debt to total
capitalization was 27%.
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Debt.............................................. $ 475.8 $ 447.7 $ 323.8
Equity............................................ 1,305.7 1,148.6 805.7
-------- -------- --------
Total capital..................................... $1,781.5 $1,596.3 $1,129.5
======== ======== ========
Debt to total capital............................. 27% 28% 29%
</TABLE>
In the opinion of management, CSC will be able to meet its liquidity and
cash needs for the foreseeable future through the combination of cash flows
from operating activities, unused borrowing capacity, and other financing
activities. If these resources need to be augmented, major additional cash
requirements would likely be financed by the issuance of debt and/or equity
securities.
10
<PAGE>
DIVIDENDS
It has been the Company's policy to invest earnings in the growth of the
Company rather than distribute earnings as dividends. This policy, under which
dividends have not been paid since fiscal 1969, is expected to continue, but
is subject to regular review by the Board of Directors.
RECENT DEVELOPMENTS
On April 28, 1996, the Company entered into an Agreement and Plan of Merger
with The Continuum Company, Inc. ("Continuum") and Continental Acquisition,
Inc., a subsidiary of the Company ("Sub") pursuant to which Sub will be merged
with and into Continuum and Continuum will become a wholly owned subsidiary of
CSC. Each outstanding share of common stock of Continuum will be converted
into 0.79 of a share of CSC common stock.
Continuum is a consulting and computer services firm serving the needs of
the global financial services industry for computer software and services.
Consummation of the merger is expected to occur during the summer of 1996 and
is subject to various conditions including, but not limited to, approval by
the stockholders of CSC and Continuum.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements and Financial Statement Schedules
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report............................................. 12
Consolidated Statements of Income for the fiscal years ended March 29,
1996, March 31, 1995 and April 1, 1994.................................. 13
Consolidated Balance Sheets as of March 29, 1996 and March 31, 1995...... 14
Consolidated Statements of Cash Flows for the fiscal years ended March
29, 1996, March 31, 1995 and April 1, 1994.............................. 16
Consolidated Statements of Stockholders' Equity for the fiscal years
ended March 29, 1996, March 31, 1995, and April 1, 1994................. 17
Notes to Consolidated Financial Statements............................... 18
Quarterly Financial Information (Unaudited).............................. 31
</TABLE>
SCHEDULES
<TABLE>
<S> <C>
Additional Note to Consolidated Financial Statements........................ 37
Schedule VIII--Valuation and Qualifying Accounts............................ 39
</TABLE>
Schedules other than that listed above have been omitted since they are
either not required, are not applicable, or the required information is shown
in the financial statements or related notes.
Separate financial statements of the Registrant have been omitted since it
is primarily an operating company, and the minority interests in subsidiaries
and long-term debt of the subsidiaries held by other than the Registrant are
less than five percent of consolidated total assets.
Financial statements (or summarized financial information) for
unconsolidated subsidiaries and 50%-owned companies accounted for by the
equity method have been omitted because they are inapplicable, or do not,
considered individually or in the aggregate, constitute a significant
subsidiary.
11
<PAGE>
INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS,
ADDITIONAL NOTE AND FINANCIAL STATEMENT SCHEDULE
Board of Directors and Stockholders
Computer Sciences Corporation
El Segundo, California
We have audited the accompanying consolidated balance sheets of Computer
Sciences Corporation and Subsidiaries as of March 29, 1996 and March 31, 1995,
and the related consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended March 29, 1996. Our
audits also included the additional note and financial statement schedule
listed in the Index at Item 8. These financial statements, additional note and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements, additional note and financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. 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 consolidated financial statements present fairly, in
all material respects, the financial position of Computer Sciences Corporation
and Subsidiaries at March 29, 1996 and March 31, 1995, and the results of
their operations and their cash flows for each of the three years in the
period ended March 29, 1996, in conformity with generally accepted accounting
principles. Also, in our opinion, such additional note and financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
As discussed in Note 1 to the consolidated financial statements, in fiscal
1994 the Company changed its method of accounting for income taxes and for
postretirement benefits other than pensions to conform with pronouncements of
the Financial Accounting Standards Board.
Deloitte & Touche LLP
Los Angeles, California
May 24, 1996
12
<PAGE>
COMPUTER SCIENCES CORPORATION CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------
MARCH 29, MARCH 31, APRIL 1,
1996 1995 1994
---------- ---------- ----------
(IN THOUSANDS EXCEPT PER-
SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues................ $4,242,422 $3,372,502 $2,582,670
---------- ---------- ----------
Costs of services....... 3,349,706 2,685,603 2,065,023
Selling, general and
administrative......... 378,873 311,177 227,003
Depreciation and
amortization........... 252,084 172,625 130,704
Interest expense........ 35,021 28,841 17,219
Interest income......... (4,654) (3,196) (6,362)
Other items, net (note
4)..................... 3,740
---------- ---------- ----------
Total costs and
expenses............... 4,011,030 3,198,790 2,433,587
---------- ---------- ----------
Income before taxes..... 231,392 173,712 149,083
Taxes on income (note
6)..................... 89,700 62,973 58,153
---------- ---------- ----------
Income before cumulative
effect of
accounting change...... 141,692 110,739 90,930
Cumulative effect of
accounting change for
income taxes (note 1).. 4,900
---------- ---------- ----------
Net income.............. $ 141,692 $ 110,739 $ 95,830
========== ========== ==========
Earnings per common
share before
cumulative effect of
accounting change...... $ 2.48 $ 2.09 $ 1.77
Cumulative effect of
accounting change for
income taxes........... 0.09
---------- ---------- ----------
Earnings per common
share (note 1)......... $ 2.48 $ 2.09 $ 1.86
========== ========== ==========
</TABLE>
(See notes to consolidated financial statements)
13
<PAGE>
COMPUTER SCIENCES CORPORATION CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 29, MARCH 31,
ASSETS 1996 1995
------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1)..................... $ 104,867 $ 155,310
Receivables, net of allowance for doubtful accounts of
$36,086 (1996) and $30,432 (1995) (note 2).......... 943,355 824,963
Prepaid expenses and other current assets.............. 96,032 101,232
---------- ----------
Total current assets................................. 1,144,254 1,081,505
---------- ----------
Investments and other assets (note 1):
Purchased and internally developed software, net of
accumulated amortization of $73,298 (1996) and
$48,904 (1995)...................................... 71,704 45,473
Purchased credit information files, net of accumulated
amortization of $31,154 (1996) and $28,508 (1995)... 24,131 26,768
Excess of cost of businesses acquired over related net
assets, net of accumulated amortization of $59,779
(1996) and $44,349 (1995)........................... 420,775 431,074
Other assets........................................... 294,124 218,701
---------- ----------
Total investments and other assets................... 810,734 722,016
---------- ----------
Property and equipment--at cost (note 3):
Land, buildings and leasehold improvements............. 168,302 152,675
Computers and related equipment........................ 887,292 673,366
Furniture and other equipment.......................... 91,854 79,428
---------- ----------
1,147,448 905,469
Less accumulated depreciation and amortization......... 506,646 375,330
---------- ----------
Property and equipment, net.......................... 640,802 530,139
---------- ----------
$2,595,790 $2,333,660
========== ==========
</TABLE>
(See notes to consolidated financial statements)
14
<PAGE>
<TABLE>
<CAPTION>
MARCH 29, MARCH 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
------------------------------------ -------------- --------------
(IN THOUSANDS EXCEPT SHARES)
<S> <C> <C>
Current liabilities:
Short-term debt and current maturities of long-term debt (note 3).. $ 70,308 $ 137,428
Accounts payable................................................... 151,361 181,983
Accrued payroll and related costs (note 5)......................... 196,221 152,438
Other accrued expenses............................................. 290,372 258,181
Federal, state and foreign income taxes (note 6)................... 52,181 47,882
-------------- --------------
Total current liabilities........................................ 760,443 777,912
-------------- --------------
Long-term debt, net of current maturities (note 3)................... 405,471 310,317
-------------- --------------
Deferred income taxes (note 6)....................................... 72,011 52,601
-------------- --------------
Other long-term liabilities.......................................... 52,171 44,271
-------------- --------------
Commitments and contingencies (note 7)...............................
Stockholders' equity (notes 1 and 8).................................
Preferred stock, par value $1 per share; authorized 1,000,000
shares;
none issued.....................................................
Common stock, par value $1 per share; authorized 75,000,000 shares;
issued 56,341,855 (1996) and 55,385,555 shares (1995)........... 56,342 55,386
Additional paid-in capital......................................... 348,507 316,241
Earnings retained for use in business.............................. 911,872 770,180
Foreign currency translation and unfunded pension adjustments...... (539) 11,931
-------------- --------------
1,316,182 1,153,738
Less common stock in treasury, at cost, 311,928 shares (1996) and
215,047 shares (1995)........................................... 10,488 5,179
-------------- --------------
Stockholders' equity, net........................................ 1,305,694 1,148,559
-------------- --------------
$ 2,595,790 $ 2,333,660
============== ==============
</TABLE>
(See notes to consolidated financial statements)
15
<PAGE>
COMPUTER SCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------
MARCH 29, MARCH 31, APRIL 1,
1996 1995 1994
-------------- -------------- --------------
(IN THOUSANDS, INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS)
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income ................. $ 141,692 $ 110,739 $ 95,830
Adjustments to reconcile net
income to net cash provided:
Depreciation and
amortization.................. 252,084 172,625 130,704
Provision for losses on
accounts receivable........... 13,237 7,658 10,123
Cumulative effect of
accounting change for income
taxes......................... (4,900)
Changes in assets and
liabilities, net of effects of
acquisitions:
Increase in
receivables................... (117,964) (129,017) (69,397)
Decrease (increase) in
prepaid expenses.............. 8,127 (25,461) (6,497)
Decrease (increase) in
other assets.................. 3,074 (4,602) 3,829
Increase in accounts
payable and accruals.......... 21,806 78,304 17,969
Increase in income taxes
payable....................... 39,201 10,032 12,946
Other changes, net...... 3,898 7,079 1,182
-------------- -------------- --------------
Net cash provided by
operating activities.......... 365,155 227,357 191,789
-------------- -------------- --------------
Cash flows from investing
activities:
Short-term investments...... 43,590
Purchases of property and
equipment..................... (259,834) (193,325) (118,635)
Outsourcing contracts....... (114,144) (103,280) (114,403)
Acquisitions, net of cash
acquired...................... (33,057) (76,924) (92,961)
Dispositions................ 7,380
Purchased and internally
developed software............ (51,149) (23,906) (18,793)
Other investing cash flows.. (14,555) (5,397) (8,526)
-------------- -------------- --------------
Net cash used in investing
activities.................... (465,359) (402,832) (309,728)
-------------- -------------- --------------
Cash flows from financing
activities:
Net repayment of commercial
paper......................... (587)
Borrowings under lines of
credit........................ 78,457 209,778 105,273
Repayment of borrowings
under lines of credit......... (38,376) (215,667) (93,549)
Proceeds from term debt
issuance...................... 150,000
Principal payments on long-
term debt..................... (12,536) (40,525) (11,276)
Outsourcing contract
financing..................... (114,403) 114,403
Proceeds from equity
offering...................... 196,290
Proceeds from stock option
transactions.................. 12,788 17,449 17,200
Other financing cash flows.. 10,015 1,043 1,231
-------------- -------------- --------------
Net cash provided by
financing activities.......... 49,761 203,965 133,282
-------------- -------------- --------------
Net (decrease) increase in
cash and cash equivalents..... (50,443) 28,490 15,343
Cash and cash equivalents at
beginning of year............. 155,310 126,820 111,477
-------------- -------------- --------------
Cash and cash equivalents at
end of year................... $ 104,867 $ 155,310 $ 126,820
============== ============== ==============
</TABLE>
(See notes to consolidated financial statements)
16
<PAGE>
COMPUTER SCIENCES CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOREIGN
CURRENCY
EARNINGS AND
COMMON STOCK ADDITIONAL RETAINED UNFUNDED COMMON
------------------ PAID-IN FOR USE IN PENSION STOCK IN
SHARES AMOUNT CAPITAL BUSINESS ADJUSTMENTS TREASURY
---------- ------- ---------- ---------- ----------- --------
(IN THOUSANDS EXCEPT SHARES)
<S> <C> <C> <C> <C> <C> <C>
Balance at April 2, 16,811,831 $16,812 $ 89,029 $597,248 $ (3,740) $ (3,969)
1993....................
Stock option 358,639 358 17,468 (626)
transactions............
Net income ............. 95,830
Currency translation (2,840)
adjustment..............
Unfunded pension 110
obligation..............
Effect of 3-for-1 stock 33,636,982 33,637 (33,637)
split...................
---------- ------- -------- -------- -------- --------
Balance at April 1, 50,807,452 50,807 106,497 659,441 (6,470) (4,595)
1994....................
Issuance of common 4,000,000 4,000 192,290
stock...................
Stock option 578,103 579 17,454 (584)
transactions............
Net income.............. 110,739
Currency translation 19,037
adjustment..............
Unfunded pension (636)
obligation..............
---------- ------- -------- -------- -------- --------
Balance at March 31, 55,385,555 55,386 316,241 770,180 11,931 (5,179)
1995....................
Stock option 956,300 956 32,266 (5,309)
transactions............
Net income.............. 141,692
Currency translation (10,822)
adjustment..............
Unfunded pension (1,648)
obligation..............
---------- ------- -------- -------- -------- --------
Balance at March 29, 56,341,855 $56,342 $348,507 $911,872 $ (539) $(10,488)
1996....................
========== ======= ======== ======== ======== ========
</TABLE>
(See notes to consolidated financial statements)
17
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include those of Computer
Sciences Corporation, its subsidiaries, and those joint ventures and
partnerships over which it exercises control, hereafter referred to as "CSC"
or "the Company." All material intercompany transactions and balances have
been eliminated.
INCOME RECOGNITION
The Company provides services under fixed price, cost-based, time and
materials, and level of effort contracts. For fixed price contracts, income is
recorded on the basis of the estimated percentage of completion of services
rendered. Losses, if any, on fixed price contracts are recognized during the
period in which the loss is determined. For cost-based contracts, income is
recorded by applying an estimated factor to costs as incurred, such factor
being determined by the contract provisions and prior experience. For time and
materials and level of effort types of contracts, income is recorded as the
costs are incurred, income being the difference between such costs and the
agreed-upon billing amounts.
Revenues from certain information processing services are recorded at the
time the service is utilized by the customer. Revenues from sales of
proprietary software are recognized when delivered.
DEPRECIATION AND AMORTIZATION
The Company's depreciation and amortization policies are as follows:
<TABLE>
<S> <C>
Property and Equipment:
Buildings......................... 10 to 40 years
Computers and related equipment... 3 to 10 years
Furniture and other equipment..... 2 to 10 years
Leasehold improvements............ Shorter of lease term or useful life
Investments and Other Assets:
Purchased and internally developed
software............................ 2 to 10 years
Credit information files.......... 10 to 20 years
Excess of cost of businesses
acquired over related net
assets......................... Up to 40 years
Deferred contract costs........... Contract life
</TABLE>
For financial reporting purposes, computer equipment is depreciated using
either the straight-line or sum-of-the-years'-digits method depending on the
nature of the equipment's use. The cost of other property and equipment, less
applicable residual values, is depreciated on the straight-line method.
Depreciation commences when the specific asset is complete, installed and
ready for normal use. Investments and other assets are amortized on a
straight-line basis over the years indicated above. Included in purchased and
internally developed software are unamortized capitalized software development
costs of $30,031,000 and $19,326,000 for fiscal years 1996 and 1995,
respectively. The related amortization expense was $14,126,000, $6,659,000,
and $7,485,000, for fiscal years 1996, 1995, and 1994, respectively.
Included in other assets are deferred contract costs related to the initial
purchase of assets under outsourcing contracts. The balance of such costs, net
of amortization, was $99,551,000 and $91,324,000 for fiscal 1996 and 1995,
respectively. The related amortization expense was $12,764,000, $11,601,000,
and $6,169,000 for fiscal 1996, 1995 and 1994, respectively.
18
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company evaluates at least annually the recoverability of its excess
cost of businesses acquired over related net assets. In assessing
recoverability, the current and future profitability of the related operations
are considered, along with management's plans with respect to the operations
and the projected undiscounted cash flows.
ACQUISITIONS
During the three years ended March 29, 1996, the Company made a number of
acquisitions which, either individually or collectively, are not material. In
conjunction with these purchases, the Company acquired assets with an
estimated fair value of $27,255,000, $63,102,000, and $125,912,000; and
assumed liabilities of $14,663,000, $85,465,000, and $76,815,000, for fiscal
1996, 1995, and 1994, respectively. The excess of cost of businesses acquired
over related net assets was $14,902,000, $103,626,000, and $54,531,000 for
fiscal 1996, 1995, and 1994, respectively.
CASH FLOWS
Cash payments for interest on indebtedness and taxes on income are as
follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-----------------------
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest........................................... $33,418 $23,733 $17,513
Taxes on income.................................... 45,217 54,800 56,404
</TABLE>
For purposes of reporting cash and cash equivalents, the Company considers
all investments purchased with an original maturity of three months or less to
be cash equivalents. The Company's investments consist of high quality
securities issued by a number of institutions having high credit ratings,
thereby limiting the Company's exposure to concentrations of credit risk. With
respect to financial instruments, the Company's carrying amounts of its other
current assets and liabilities were deemed to approximate their market values
due to their short maturity.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions, in particular estimates of anticipated contract costs utilized in
the revenue recognition process, that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
EARNINGS PER SHARE
Primary earnings per common share are computed on the basis of the weighted
average number of shares of common stock plus common stock equivalents (stock
options) outstanding during the year. Fully diluted earnings per common share
are not presented since dilution is less than three percent.
During February 1995, the Company issued an additional 4,000,000 shares of
common stock through a public offering, resulting in net proceeds of
$196,290,000. The proceeds were used to reduce short-term indebtedness and for
general corporate purposes, including the financing of working capital needs
and capital expenditures. If the reduction of indebtedness and the offering of
related shares had occurred at the beginning of fiscal 1995, the corresponding
effect on earnings per share for the year would not have been significant.
During December 1993, the Board of Directors declared a three-for-one stock
split in the form of a 200 percent stock dividend distributed January 13, 1994
on the Company's common stock, with no change in par value.
19
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Shares used to compute earnings per share, restated for the stock split, are
as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Average shares outstanding................ 55,568,121 51,425,723 50,234,161
Common stock equivalents.................. 1,646,263 1,549,226 1,151,043
---------- ---------- ----------
57,214,384 52,974,949 51,385,204
========== ========== ==========
</TABLE>
ACCOUNTING CHANGES
Effective April 3, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" and SFAS 109, "Accounting for Income Taxes."
Under SFAS 106, the Company changed from the cash basis of accounting for
postretirement benefits other than pensions to the accrual of the estimated
costs of such benefits during the period that covered employees render
services (see Note 5). The adoption of SFAS 109 changed the Company's method
of accounting for income taxes from the "deferred method" to the "asset and
liability method." Under the asset and liability method of SFAS 109, deferred
tax assets and liabilities are recognized for future tax consequences
attributable to differences between financial statement carrying amounts of
existing assets and liabilities and their respective tax bases (see Note 6).
RECENT ACCOUNTING PRONOUNCEMENTS
During fiscal 1996, the Financial Accounting Standards Board issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS No. 121). This statement requires
that such assets be reviewed for impairment whenever events or changes in
circumstances indicate that their carrying amount may not be recoverable and
that such assets be reported at the lower of carrying amount or fair value.
The Company will adopt SFAS No. 121 during fiscal 1997 and, based on current
circumstances, does not expect a material impact on its results of operations
or financial position.
Also during fiscal 1996, Statement of Financial Accounting Standards No 123,
"Accounting for Stock-Based Compensation," was issued, which is effective for
fiscal years beginning after December 15, 1995. This statement requires
footnote disclosure of the pro forma impact on net income and earnings per
share of the compensation cost that would have been recognized if the fair
value of all stock-based awards was recorded in the income statement. The
disclosure provisions of this statement will be adopted during fiscal 1997.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' financial
statements in order for them to conform to the current presentation.
20
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2--RECEIVABLES
Receivables consist of the following:
<TABLE>
<CAPTION>
MARCH 29, MARCH 31,
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Billed trade accounts.................................. $687,508 $637,580
Recoverable amounts under contracts in progress........ 228,099 157,838
Other receivables...................................... 27,748 29,545
-------- --------
$943,355 $824,963
======== ========
</TABLE>
Amounts due under long-term contracts include the following items:
<TABLE>
<CAPTION>
MARCH 29, MARCH 31,
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Included in billed trade accounts receivable--
Amounts retained in accordance with contract terms,
due upon completion or other specified event..... $ 8,764 $ 6,496
======== ========
Included in recoverable amounts under contracts in
progress:
Amounts on fixed price contracts not billable in
accordance with contract terms until some
future date...................................... $107,824 $ 69,807
Excess of costs over provisional billings, awaiting
clearance for final billing or future
negotiation...................................... 18,093 10,786
Accrued award fees.................................. 11,756 9,546
Amounts retained in accordance with contract terms,
due upon completion or other specified event..... 17,412 7,358
Amounts on completed work, negotiated and awaiting
contractual document............................. 3,082 2,754
Unrecovered costs related to claims................. 11,202 9,569
-------- --------
$169,369 $109,820
======== ========
</TABLE>
The recoverable amounts under contracts in progress which have not yet been
billed comprise amounts of contract revenue not billable at the balance sheet
date. Such amounts generally become billable upon completion of a specified
phase of the contract, negotiation of contract modifications, completion of
government audit activities, or upon acceptance by the customer.
All items relating to long-term contracts shown above are expected to be
collected during fiscal 1997 except for $11,202,000 of unrecovered costs
related to claims and $107,386,000 of other items to be collected during 1998
and thereafter. The unrecovered costs related to claims are recorded at net
realizable value and consist primarily of amounts due under long-term
contracts which are pending determination by negotiation or legal proceedings.
21
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3--DEBT
SHORT-TERM
At March 29, 1996, the Company has uncommitted lines of credit of
$80,000,000 with domestic banks. As of March 29, 1996, the Company had no
borrowings outstanding under these lines of credit. The Company also has
committed lines of credit of $140,000,000 with certain foreign banks; as of
March 29, 1996, the Company had $64,421,000 of borrowings outstanding under
these lines of credit. Interest rates approximate the applicable prime rate.
These short-term lines of credit carry no commitment fees or significant
covenants. At March 29, 1996, the weighted average interest rate on these
short-term lines of credit was 5.2%. At March 31, 1995, the rate was 6.1%.
LONG-TERM
<TABLE>
<CAPTION>
MARCH 29, MARCH 31,
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Commercial paper...................................... $246,834 $150,000
6.8% term notes....................................... 150,000 150,000
8.95% Senior Notes.................................... 5,000 10,000
Capitalized lease liabilities, at varying interest
rates, payable in monthly installments through fiscal
2001................................................. 9,313 6,223
Notes payable, at varying interest rates through
fiscal 1999........................................... 211 5,205
-------- --------
Total long-term debt.................................. 411,358 321,428
Less current maturities............................... 5,887 11,111
-------- --------
$405,471 $310,317
======== ========
</TABLE>
During September 1995, CSC Enterprises (see Note 10) entered into a new
credit agreement to provide standby support for the commercial paper program.
The standby $350 million agreement expires during September 1999. At March 29,
1996, the weighted average interest rate on the Company's commercial paper was
5.2%. During April 1994, CSC Enterprises borrowed $150 million through a 144A
Private Placement offering of 6.8% fixed rate term notes due April 15, 1999.
The Senior Notes require repayment September 30, 1996. Any optional
prepayment requires a prepayment premium.
Capitalized lease liabilities shown above represent amounts due under leases
for the use of computers and related equipment. Included in property and
equipment are related assets of $10,362,000 (1996) and $13,439,000 (1995),
less accumulated amortization of $4,396,000 and $7,370,000, respectively.
Certain of the Company's borrowing arrangements contain covenants that
require the Company to maintain certain financial ratios and that limit the
amount of dividend payments. Under the most restrictive requirement,
approximately $334 million of retained earnings were available for cash
dividends at March 29, 1996.
The carrying value of the Company's long-term debt is $411 million at March
29, 1996, as shown above. The corresponding fair value, as defined by
Statement of Financial Accounting Standards No. 107, approximates $418 million
using the current rates available to the Company for debt of the same
remaining maturities.
Maturities of long-term debt are $5,887,000 (1997), $4,961,000 (1998),
$2,853,000 (1999), $397,489,000 (2000) and $168,000 (2001).
22
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4--OTHER ITEMS
During January 1995, the Company sold its tax processing operation and
incurred an after-tax loss on sale of $.9 million. The pre-tax loss of $3.7
million was reduced by related income tax effects of $2.8 million.
NOTE 5--RETIREMENT PLANS
PENSIONS
The Company and its subsidiaries have several pension plans.
A contributory, defined benefit pension plan is generally available to U.S.
employees. The benefits under this plan are based on years of participation
and the employee's compensation over the entire period of participation. It is
the Company's funding policy to make contributions to the plan as required by
applicable regulations. Certain non-U.S. employees are enrolled in defined
benefit pension plans in the country of domicile. The benefits for these plans
generally are based on years of participation and the employee's average
compensation during the final years of employment. In addition, the Company
has a Supplemental Executive Retirement Plan (SERP) and a Nonemployee Director
Retirement Plan, which are nonqualified, noncontributory pension plans. The
SERP is a defined benefit retirement plan for designated officers and key
executives of the Company. It restores benefits limited by tax regulations and
provides for additional benefits based on years of service and the
participant's average compensation during a final period of employment.
Net periodic pension cost for U.S. and non-U.S. pension plans included the
following components:
<TABLE>
<CAPTION>
FISCAL YEAR
----------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned during the
year....................................... $ 32,351 $ 28,016 $ 17,238
Interest cost on projected benefit
obligation................................. 28,590 24,645 14,097
Actual return on assets.................... (68,449) (10,425) (20,036)
Net amortization and deferral:
Amortization of initial net asset gains.. (538) (520) (529)
Amortization of prior service costs...... 1,432 1,393 678
Amortization of net loss................. 518 613 6
Asset gain (loss) deferred............... 37,893 (15,704) 4,520
SFAS 88 curtailment...................... (2,090)
-------- -------- --------
Net periodic pension cost.................. $ 31,797 $ 25,928 $ 15,974
======== ======== ========
</TABLE>
23
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5--RETIREMENT PLANS (CONTINUED)
The following table sets forth the funded status and amounts recognized in
the Company's consolidated balance sheets:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------------------------------
1996 1995
--------------------------- ---------------------------
ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFIT ACCUMULATED BENEFIT
BENEFIT OBLIGATIONS BENEFIT OBLIGATIONS
OBLIGATIONS EXCEED ASSETS OBLIGATIONS EXCEED ASSETS
------------- ------------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value
of benefit obligations:
Vested benefit
obligation.............. $(302,917) $(54,306) $(240,733) $(21,564)
========= ======== ========= ========
Accumulated benefit
obligation......... $(322,233) $(70,626) $(262,550) $(30,281)
========= ======== ========= ========
Projected benefit
obligation.............. $(382,798) $(87,278) $(318,253) $(33,217)
Plan assets at fair
market value............ 419,915 55,292 322,970 8,981
--------- -------- --------- --------
Projected benefit
obligation less than
(in excess of) plan
assets................. 37,117 (31,986) 4,717 (24,236)
Unrecognized net (gain)
loss.................... (20,005) 2,423 13,972 2,654
Prior service cost not
yet recognized in net
periodic pension cost.. 2,514 7,398 2,971 5,778
Unrecognized (net asset)
obligation being
amortized over future
service periods of plan
participants........... 1,095 940 (105) 1,114
Adjustment to reflect
minimum liability...... (9,934) (8,634)
Contribution in fourth
fiscal quarter......... 323
--------- -------- --------- --------
Pension asset
(liability)............. $ 20,721 $(31,159) $ 21,878 $(23,324)
========= ======== ========= ========
</TABLE>
Assumptions used in the accounting for the Company's plans were:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Parent company plan
Discount or settlement
rate.................... 7.50% 8.00% 7.50%
Rate of increase in
compensation levels..... 5.85 6.25 6.00
Expected long-term rate
of return on assets..... 8.50 8.50 8.50
Non-U.S. plans
Discount or settlement
rates................... 7.00-9.00 7.00-9.00 6.00-8.00
Rates of increase in
compensation levels..... 3.50-6.50 3.50-6.50 3.50-6.00
Expected long-term rates
of return on assets..... 7.00-9.25 7.00-9.00 6.00-9.00
</TABLE>
Plan assets include actively managed funds, indexed funds and short-term
investment funds.
The Company sponsors several defined contribution plans for substantially
all U.S. employees and certain foreign employees. The plans allow employees to
contribute a portion of their earnings in accordance with specified
guidelines. For some plans, the Company matches a percentage of the employee's
contribution within limits as defined by each plan. At March 29, 1996, plan
assets included 2,595,452 shares of the Company's common stock. During fiscal
1996, 1995 and 1994, the Company contributed $16,191,000, $14,171,000, and
$11,641,000, respectively.
24
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5--RETIREMENT PLANS (CONTINUED)
OTHER POSTRETIREMENT BENEFITS
The Company provides health care and life insurance benefits for certain
retired U.S. employees, generally for those employed prior to August 1992.
Most non-U.S. employees are covered by government sponsored programs at no
direct cost to the Company other than related payroll taxes.
As discussed in Note 1, the Company adopted SFAS 106 during fiscal 1994.
Under SFAS 106 the net periodic postretirement benefit costs, relating
principally to retiree health care, amounted to $5,100,000, $5,368,000 and
$4,988,000 in 1996, 1995 and 1994, respectively.
Net periodic postretirement benefit cost included the following components:
<TABLE>
<CAPTION>
FISCAL YEAR
----------------------
1996 1995 1994
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost, benefits
earned during the
period.................. $ 831 $ 969 $ 818
Interest cost on
accumulated benefit
obligation.............. 3,018 2,885 2,586
Actual return on plan
assets.................. (1,463) (7) (81)
Amortization of initial
obligation.............. 1,633 1,633 1,633
Amortization of net
(gain) loss............. (42) 78
Asset gain (loss)
deferred................ 1,123 (190) 32
------ ------ ------
Net provision for
postretirement
benefits................ $5,100 $5,368 $4,988
====== ====== ======
</TABLE>
The status of the plan and amounts recognized in the Company's consolidated
balance sheets are as follows:
<TABLE>
<CAPTION>
MARCH 29, MARCH 31,
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligation
applicable to:
Retirees.......................................... $(21,047) $(19,132)
Fully eligible plan participants.................. (4,309) (5,291)
Other active plan participants.................... (16,056) (14,362)
-------- --------
Accumulated postretirement benefit obligation....... (41,412) (38,785)
Plan assets at fair market value.................... 8,582 4,016
-------- --------
Accumulated postretirement benefit obligation in
excess of plan assets.............................. (32,830) (34,769)
Unrecognized net gain............................... (2,105) (843)
Unrecognized transition obligation.................. 26,992 28,625
Prior service cost not yet recognized in net
periodic postretirement benefit cost............... 501
-------- --------
Accrued postretirement benefit liability............ $ (7,442) $ (6,987)
======== ========
</TABLE>
The assumed rate of return on plan assets was 7.0% and the discount rate
used to estimate the accumulated postretirement benefit obligation was 7.5%
and 8.0% for fiscal 1996 and 1995, respectively. Plan assets include actively
managed funds, indexed funds and short-term investment funds. The assumed
health care cost trend rate used in measuring the expected benefit obligation
was 9.5% for fiscal 1996, declining to 5.0% for 2004 and thereafter. A one-
percentage point change in the assumed health care cost trend rate would
increase or decrease the accumulated postretirement benefit obligation as of
March 31, 1996, and the net periodic postretirement benefit cost for fiscal
year 1996 by $4,150,000 and $474,000, respectively.
25
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6--INCOME TAXES
The sources of income (loss) before taxes, classified as between domestic
entities and those entities domiciled outside of the United States, are as
follows:
<TABLE>
<CAPTION>
FISCAL YEAR
---------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic entities............................. $216,952 $177,702 $159,323
Entities outside the United States............ 14,440 (3,990) (10,240)
-------- -------- --------
$231,392 $173,712 $149,083
======== ======== ========
</TABLE>
The provisions for taxes on income, classified as between current and
deferred and as between taxing jurisdictions, consist of the following:
<TABLE>
<CAPTION>
FISCAL YEAR
------------------------
1996 1995 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion:
Federal........................................ $36,746 $46,045 $38,109
State.......................................... 3,400 5,983 5,592
Foreign........................................ 5,564 (142) 164
------- ------- -------
45,710 51,886 43,865
------- ------- -------
Deferred portion:
Federal........................................ 37,568 9,864 13,647
State.......................................... 6,422 1,223 641
------- ------- -------
43,990 11,087 14,288
------- ------- -------
Total provision for taxes........................ $89,700 $62,973 $58,153
======= ======= =======
</TABLE>
The major elements contributing to the difference between the federal
statutory tax rate and the effective tax rate are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
----------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Statutory rate........................................... 35.0% 35.0% 35.0%
State income tax, less effect of federal deduction....... 2.8 2.7 2.7
Goodwill amortization.................................... 1.3 1.4 1.4
Utilization of tax credits............................... (.2) (1.1) (.4)
Tax benefit of loss on sale.............................. (.8)
Foreign losses without tax benefits...................... .1 2.0
Tax-exempt investments................................... (.2) (.1) (1.0)
Effect of U.S. tax law change............................ .9
Other.................................................... .1 (.9) (1.6)
---- ---- ----
Effective tax rate....................................... 38.8% 36.3% 39.0%
==== ==== ====
</TABLE>
26
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6--INCOME TAXES (CONTINUED)
The tax effects of significant temporary differences that comprise deferred
tax balances are as follows:
<TABLE>
<CAPTION>
MARCH 29, MARCH 31,
1996 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets (liabilities)
Deferred income................................... $ 2,572 $ 2,552
Employee benefits................................. 9,691 671
Provisions for contract settlement................ 15,866 7,517
Currency exchange................................. 1,427 (7,429)
Other assets...................................... 479 6,663
Contract accounting............................... (75,925) (53,129)
Depreciation and amortization..................... (68,542) (29,964)
Prepayments....................................... (16,537) (8,064)
Employee benefits................................. (10,452) (11,933)
Other liabilities................................. (6,536) (10,851)
--------- ---------
Total deferred taxes................................ $(147,957) $(103,967)
========= =========
</TABLE>
Of the above deferred amounts, $75,946,000 and $51,366,000 are included in
current income taxes payable at March 29, 1996 and March 31, 1995,
respectively.
During fiscal 1996, the Company received the revenue agent's report
regarding the Internal Revenue Service's audit of fiscal 1987 through 1991.
The Company has filed a protest regarding the substantive issues in that
report with the Appeals Division of the IRS. Management believes that the
results of the appeal will not have a significant effect on the financial
statements.
NOTE 7--COMMITMENTS AND CONTINGENCIES
COMMITMENTS
The Company has operating leases for the use of certain property and
equipment. Substantially all operating leases are noncancelable or cancelable
only by the payment of penalties. All lease payments are based on the lapse of
time but include, in some cases, payments for insurance, maintenance and
property taxes. There are no purchase options on operating leases at favorable
terms, but most leases have one or more renewal options. Certain leases on
real property are subject to annual escalations for increases in utilities and
property taxes. Lease rental expense amounted to $111,157,000 (1996),
$111,812,000 (1995), and $83,113,000 (1994).
Minimum fixed rentals required for the next five years and thereafter under
operating leases in effect at March 29, 1996 are as follows (in thousands):
<TABLE>
<CAPTION>
FISCAL YEAR REAL ESTATE EQUIPMENT
----------- ----------- ---------
<S> <C> <C>
1997................................................. $ 55,411 $47,366
1998................................................. 46,284 21,759
1999................................................. 33,819 9,859
2000................................................. 28,042 4,899
2001................................................. 20,427 1,645
Thereafter to 2018................................... 50,702 855
-------- -------
$234,685 $86,383
======== =======
</TABLE>
27
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7--COMMITMENTS AND CONTINGENCIES (CONTINUED)
CONTINGENCIES
The Company is currently party to a number of disputes which involve or may
involve litigation. After consultation with counsel, it is the opinion of
Company management that ultimate liability, if any, with respect to these
disputes will not be material to the Company's financial position.
NOTE 8--STOCK OPTIONS AND STOCK RIGHTS
The Company currently has seven plans under which options to purchase shares
of the Company's common stock have been or may be granted to officers and key
managerial and technical employees of the Company and its subsidiaries. The
plans authorize the issuance of up to 1,800,000 (for each of the 1978, 1980
and 1984 plans), 2,250,000 (1987 plan), 3,000,000 (for each of the 1990 and
1992 plans), and 2,500,000 shares (1995 plan). Only non-qualified options may
be issued under the 1978 plan. Either incentive stock options or non-qualified
options may be issued under the 1980, 1984, 1987, 1990, 1992 and 1995 plans.
Option exercise prices under all plans other than the 1987, 1990, 1992 and
1995 plans are fixed at 100% of the fair market value of the underlying shares
on the date of grant, except for 600,000 shares under the 1978 plan and
300,000 shares under the 1984 plan, which may be granted at a price of $1.00
per share. The 1987, 1990, 1992 and the 1995 plans authorize the grant of
stock options or stock appreciation rights or the sale of restricted stock, or
any combination thereof, provided that the exercise or purchase price is not
less than the par value ($1.00 per share) of the shares to be purchased.
At March 29, 1996, options to purchase 4,346,915 shares of the Company's
common stock were outstanding, of which 1,741,010 were exercisable, and
3,353,370 shares of common stock remained available for the granting of future
options. The status of all optioned shares is as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Outstanding--beginning of year................ 5,147,185 4,880,938 4,226,475
Granted during year, at prices ranging from
$12.25 to $76.13 (1996), $32.13 to $51.88
(1995), $l.00 to $39.88 (1994)............... 447,605 1,137,900 1,590,500
Exercised during year, at prices ranging from
$1.00 to $50.50 (1996), $1.00 to $39.50
(1995), $l.00 to $24.67 (1994)............... (959,675) (580,353) (795,697)
Canceled during year, at prices ranging from
$12.58 to $65.00 (1996), $1.00 to $46.75
(1995), $12.58 to $24.96 (1994).............. (288,200) (291,300) (140,340)
--------- --------- ---------
Outstanding-end of year, at prices ranging
from $1.00 to $76.13,
all years.................................... 4,346,915 5,147,185 4,880,938
========= ========= =========
Average price of outstanding options.......... $29.97 $25.70 $20.70
========= ========= =========
</TABLE>
As of March 29, 1996, 169,500 shares of the Company's restricted stock were
outstanding under the 1987, 1990 and 1992 stock incentive plans, net of shares
repurchased by the Company from terminated employees and shares for which the
restrictions have lapsed. Restrictions expire seven years from the date of
issuance. Market prices on the dates of award ranged from $12.75 to $34.38.
STOCK RIGHTS
Pursuant to the Company's stockholder rights plan, the Company has issued
one right for each outstanding share of its common stock. These rights, which
are attached to and trade together with the common stock, are not currently
exercisable. On the tenth business day after any person or entity acquires 20%
or more of CSC's
28
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8--STOCK OPTIONS AND STOCK RIGHTS (CONTINUED)
common stock, each right (other than rights held by the 20% stockholder, which
will become void) will become exercisable to purchase one share of CSC common
stock at 10% of the then-current market value. The plan has been amended to
give effect to the 3-for-1 stock split in the form of a 200 percent stock
dividend distributed January 13, 1994.
The rights expire December 21, 1998, and may be redeemed by the Board of
Directors at $.01 per right at any time before they become exercisable.
NOTE 9--SEGMENT REPORTING
The Company's business involves operations in principally one industry
segment, providing information technology consulting, systems integration and
outsourcing. The following data has been segmented between operations within
the United States and operations outside the United States. The non-United
States operations are located primarily in Western Europe and also in
Australia.
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------------------------------------
1996 1995 1994
--------------------- ------------------- -------------------
NON- NON- NON-
UNITED UNITED UNITED UNITED UNITED UNITED
STATES STATES STATES STATES STATES STATES
---------- ---------- ---------- -------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $3,103,426 $1,138,996 $2,659,187 $713,315 $2,261,973 $320,697
Operating income........ 265,991 33,588 228,889 10,514 186,321 5,333
Depreciation and
amortization............ 175,603 76,481 121,246 51,379 112,710 17,994
Identifiable assets at
year-end................ 1,655,332 936,458 1,489,016 844,644 1,179,388 626,992
Additions to property
and equipment.......... 197,943 61,891 131,679 61,646 98,902 19,733
</TABLE>
Operating income is generally calculated as total revenue less operating
expenses, without adding or deducting corporate general and administrative
costs, interest income and expense, income taxes, or other items.
The Company derives a major portion of its revenues from departments and
agencies of the United States government. At March 29, 1996, approximately 37%
of the Company's accounts receivable were due from the federal government.
Federal government revenues by agency/department are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
------------------------------------------------------------
1996 1995 1994
------------------- -------------------- -------------------
PERCENT PERCENT PERCENT
AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL
---------- -------- ---------- --------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Department of Defense... $ 961,587 23% $ 823,812 24% $ 693,172 27%
National Aeronautics and
Space Administration... 292,900 7 312,377 9 221,977 9
Other civil agencies.... 317,012 7 353,206 11 308,041 12
---------- --- ---------- --- ---------- ---
Total................. $1,571,499 37% $1,489,395 44% $1,223,190 48%
========== === ========== === ========== ===
</TABLE>
29
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10--AGREEMENTS WITH EQUIFAX
During fiscal 1989, the Company signed an agreement with Equifax Inc. and
its subsidiary, Equifax Credit Information Services, Inc. ("ECIS"), pursuant
to which certain of the Company's wholly owned subsidiaries (collectively, the
"Bureaus") became affiliated credit bureaus of ECIS and use its credit
reporting system. The Bureaus retain ownership of their credit files and
continue to receive the revenues generated from the sale of the credit
information they contain. The Bureaus pay ECIS a fee for maintaining the files
and for each report supplied.
The agreement also provides the Company with an option to sell its credit
reporting and collection businesses to ECIS. This option requires six months'
advance notice and expires August 1, 2013. The option price is determined by
certain financial formulas if notification is given on or before July 31,
1998, and if notification is given thereafter, is equal to appraised value.
In the opinion of management, the option price, as determined using
consistent methods of calculation under the financial formulas, approached
$500 million at March 29, 1996. In its quarterly report for the quarter ended
March 31, 1996, ECIS stated that the option price is "currently estimated at
approximately $400 million."
The agreement is for a 10-year term, renewable indefinitely at the option of
the Company for successive 10-year periods. In the event the Company does not
renew or does not exercise its option to sell, or if there is a change in
control of the Company, ECIS has the option to purchase the Company's credit
reporting and collection businesses, at the option prices described above.
Effective December 1990, the Company, through affiliates, formed a general
partnership with affiliates of Equifax Inc. and a third party, Merel
Corporation. The partnership was formed to operate the Company's credit
services operations and to carry out other business strategies through
acquisition and investment. The Company, through affiliates, has a 97.1%
interest in the partnership, named CSC Enterprises, and is the managing
general partner. The Company's rights under the 1988 agreement remain
exercisable through the partnership in accordance with the original terms.
NOTE 11--SUBSEQUENT EVENT
On April 28, 1996, the Company entered into an Agreement and Plan of Merger
with The Continuum Company, Inc. ("Continuum") and Continental Acquisition,
Inc., a subsidiary of the Company ("Sub"), pursuant to which Sub will be
merged with and into Continuum and Continuum will become a wholly owned
subsidiary of the Company. Each outstanding share of common stock of Continuum
will be converted into 0.79 of a share of the Company's common stock.
Continuum is a consulting and computer services firm serving the needs of
the global financial services industry for computer software and services.
Consummation of the merger is expected to occur during the summer of 1996, and
is subject to various conditions, including, but not limited to, approval by
the stockholders of the Company and Continuum.
The merger will be accounted for as a pooling of interests. The following
unaudited pro forma data summarizes the combined operating results of the
Company and Continuum as if the merger had occurred at the beginning of the
periods presented.
30
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA*
--------------------------
1996 1995 1994**
-------- -------- --------
<S> <C> <C> <C>
Revenue............................................. $4,740.8 $3,788.0 $2,896.4
Net Income.......................................... 109.4 143.2 67.4
Earnings per common share***........................ $1.43 $1.99 $.99
</TABLE>
- --------
* During fiscal years 1996 and 1994, Continuum recorded nonrecurring charges
of $76.1 million ($61.7 million net of tax benefits) and $48.6 million
($38.9 million net of tax benefits), respectively, related to its
acquisitions. These charges are included in the amounts shown above.
** Net income and earnings per common share are before the effect of CSC's
adoption of SFAS 109 during fiscal 1994.
*** The pro forma earnings per common share are based on the sum of the
historical average common shares outstanding, as reported by CSC, and the
historical average common shares outstanding for Continuum (adjusted to
reflect common stock equivalents) converted to CSC shares at the exchange
ratio of 0.79.
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
COMPUTER SCIENCES CORPORATION
<TABLE>
<CAPTION>
FISCAL 1996
-----------------------------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
(IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues....................... $966,783 $1,004,714 $1,110,416 $1,160,509
Income before taxes............ 44,817 49,553 58,612 78,410
Net income..................... 27,717 30,353 36,012 47,610
Net earnings per share......... 0.49 0.53 0.63 0.83
</TABLE>
<TABLE>
<CAPTION>
FISCAL 1995
-----------------------------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
(IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues....................... $738,145 $788,486 $827,901 $1,017,970
Income before taxes............ 35,196 36,973 43,328 58,215
Net income..................... 21,822 22,923 26,748 39,246
Net earnings per share......... 0.42 0.44 0.51 0.72
</TABLE>
<TABLE>
<CAPTION>
FISCAL 1994
-----------------------------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
(IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues...................... $608,096 $622,310 $621,361 $730,903
Income before taxes........... 29,897 31,390 34,961 52,835
Net income:
Before cumulative effect of
accounting change for
income taxes............. 18,162 18,267 21,676 32,825
Total....................... 23,062 18,267 21,676 32,825
Net earnings per share:
Before cumulative effect of
accounting change for
income taxes............. 0.36 0.36 0.42 0.63
Total....................... 0.45 0.36 0.42 0.63
</TABLE>
31
<PAGE>
PART II--(CONTINUED)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding executive officers of the Company is included in Part
I. For the other information called for by Items 10, 11, 12 and 13, reference
is made to the subsection entitled "Security Ownership of Certain Beneficial
Owners and Management--Certain Stockholders of CSC" and the section entitled
"Additional Matters For Consideration at the CSC Annual Meeting" in the
Registrant's definitive Proxy Statement for its 1996 Annual Meeting of
Stockholders, which will be filed with the Securities and Exchange Commission
within 120 days after March 29, 1996, which subsection and section are
incorporated herein by reference in their entirety, except for the material
included in such section under the captions "Report of Compensation Committee
on Annual Compensation of Executive Officers," "Comparison of Cumulative Total
Return" and "Stockholder Proposals."
32
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) AND (2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
These documents are included in the response to Item 8 of this report. See
the index on page 11.
(3) EXHIBITS
The following exhibits are filed with this report:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S> <C>
2.1 Agreement and Plan of Merger dated as of April 28, 1996 by
and among the Registrant, The Continuum Company, Inc. and
Continental Acquisition, Inc. (p)
3.1 Restated Articles of Incorporation (d)
3.2 Amendment to Restated Articles of Incorporation (l)
3.3 By-Laws, dated and effective January 31, 1993 (h)
10.1 Annual Management Incentive Plan* (a)
10.2 1978 Stock Option Plan* (h)
10.3 Amendment Nos. 1 and 2 to the 1978 Stock Option Plan* (h)
10.4 Amendment No. 3 to the 1978 Stock Option Plan* (c)
10.5 1980 Stock Option Plan* (h)
10.6 Amendment Nos. 1, 2, 3 and 4 to the 1980 Stock Option Plan* (b)
10.7 Amendment No. 5 to the 1980 Stock Option Plan* (c)
10.8 1984 Stock Option Plan* (i)
10.9 Amendment No. 1 to the 1984 Stock Option Plan* (b)
10.10 Amendment No. 2 to the 1984 Stock Option Plan* (c)
10.11 1987 Stock Incentive Plan* (c)
10.12 Schedule to the 1987 Stock Incentive Plan for United Kingdom
personnel* (c)
10.13 1990 Stock Incentive Plan* (j)
10.14 1992 Stock Incentive Plan* (l)
10.15 Amendment No. 1 to the 1992 Stock Incentive Plan* (h)
10.16 1995 Stock Incentive Plan* (n)
10.17 Deferred Compensation Plan, amended and restated effective
February 9, 1996*
10.18 Restated Supplemental Executive Retirement Plan, effective
August 14, 1995* (n)
10.19 Form of Indemnification Agreement for Directors (e)
10.20 Form of Indemnification Agreement for Officers (h)
10.21 Information Technology Services Agreements with General
Dynamics Corporation, dated as of November 4, 1991 (k)
10.22 $100 million Credit Agreement dated as of September 15, 1994 (h)
10.23 $150 million Credit Agreement dated as of September 15, 1994 (h)
10.24 $350 million Credit Agreement dated as of September 6, 1995 (n)
10.25 $100 million Credit Agreement dated as of January 3, 1995 (h)
10.26 Amended and Restated Rights Agreement, effective October 30,
1995 (n)
11 Calculation of Primary and Fully Diluted Earnings Per Share
21 Significant Active Subsidiaries and Affiliates of the
Registrant
23 Independent Auditors' Consent
27 Article 5 Financial Data Schedule
99.1 Annual Report on Form 11-K for the Matched Asset Plan of
Computer Sciences Corporation
99.2 Annual Report on Form 11-K for the Hourly Savings Plan of
CSC Outsourcing Inc.
99.3 Annual Report on Form 11-K for the Employee Savings Plan of
CSC Credit Services, Inc. (to be filed at a later date)
99.4 Annual Report on Form 11-K for the CUTW Hourly Savings Plan
of CSC Outsourcing, Inc. (o)
</TABLE>
- --------
* Management contract or compensatory plan or agreement
33
<PAGE>
(a)-(h) These exhibits are incorporated herein by reference to the Company's
Form 10-K for the fiscal years ended on the respective dates indicated
below:
<TABLE>
<S> <C>
(a) March 30, 1984 (e) April 3, 1992
(b) April 3, 1987 (f) April 2, 1993
(c) April 1, 1988 (g) April 1, 1994
(d) March 31, 1989 (h) March 31, 1995
</TABLE>
(i) Incorporated herein by reference to the Company's Form S-8 filed on
August 17, 1984.
(j) Incorporated herein by reference to the Company's Form S-8 filed on
August 15, 1990.
(k) Incorporated herein by reference to the Company's Form 8-K filed on
November 4, 1991.
(l) Incorporated herein by reference to the Company's Proxy Statement for
its August 10, 1992 Annual Meeting of Stockholders.
(m) Incorporated herein by reference to the Company's Form S-8 filed on
August 12, 1992
(n) Incorporated herein by reference to the Company's Form 10-Q filed on
November 13, 1995.
(o) Incorporated herein by reference to the Form 11-K filed on February 6,
1996.
(p) Incorporated herein by reference to the Company's Form 8-K filed on May
2, 1996
(B) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the fourth quarter of fiscal
1996.
34
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Computer Sciences Corporation
/s/ Denis M. Crane
Dated: June 26, 1996 By: _________________________________
DENIS M. CRANE
VICE PRESIDENT AND CONTROLLER
35
<PAGE>
COMPUTER SCIENCES CORPORATION AND SUBSIDIARIES
ADDITIONAL NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
THREE YEARS ENDED MARCH 29, 1996
NOTE--STOCK OPTIONS AND OTHER STOCK INCENTIVE AWARDS (ADDITIONAL INFORMATION)
Additional information with respect to common stock options as described in
Note 8 to the Consolidated Financial Statements is as follows:
At March 29, 1996, March 31, 1995, and April 1, 1994, 3,353,370, 1,013,392,
and 1,857,742 shares, respectively, were available for the granting of future
options.
The number of shares underlying options and the option exercise prices are
established by a stock option committee appointed by the Board of Directors in
accordance with the terms of the stock option plans (the "Committee"). The
stock option plans also provide whether and under what circumstances such
exercise prices may be modified.
Generally, options have a ten-year term and become exercisable in annual
installments of not more than 20 percent per year, commencing one year after
the date of grant. However, pursuant to the terms of some plans, different
option vesting schedules may be determined by the Committee. No currently
outstanding options have a term which is longer than 10 years plus 30 days.
Transfer restrictions imposed upon shares of common stock granted or sold
pursuant to restricted stock awards lapse in accordance with a schedule
determined by the Committee at the time of the award.
At the end of each of the last three fiscal years, the aggregate number of
shares underlying stock options which were exercisable, but had not been
exercised, was as follows:
<TABLE>
<CAPTION>
NO. OF
SHARES PURCHASE PRICE
--------- --------------
<S> <C> <C>
March 29, 1996......................................... 1,741,010 $1.00-$51.88
March 31, 1995......................................... 1,713,485 1.00- 39.88
April 1, 1994.......................................... 1,224,038 1.00- 26.88
</TABLE>
During the last three fiscal years, options were exercised as follows:
<TABLE>
<CAPTION>
MARKET PRICE ON
PURCHASE PRICE DATE EXERCISED
-------------------- ---------------------
NO. OF
YEAR ENDED SHARES PER SHARE AVERAGE PER SHARE AVERAGE
- ---------- ------- ------------ ------- ------------- -------
<S> <C> <C> <C> <C> <C>
March 29, 1996............... 959,675 $1.00-$50.50 $19.11 $47.63-$79.88 $61.06
March 31, 1995............... 580,353 1.00- 39.50 17.71 37.00- 52.13 45.45
April 1, 1994................ 795,697 1.00- 24.67 15.83 24.17- 41.50 30.91
</TABLE>
All options currently outstanding were granted at or below the fair market
value of the underlying shares on the date of grant. The expiration dates for
these options range from June 23, 1996 through April 8, 2006.
<TABLE>
<CAPTION>
MARKET PRICE AT
PURCHASE PRICE GRANT DATE
-------------------- ---------------------
NO. OF
OPTIONS OUTSTANDING AS OF SHARES PER SHARE AVERAGE PER SHARE AVERAGE
- ------------------------- --------- ------------ ------- ------------- -------
<S> <C> <C> <C> <C> <C>
March 29, 1996............ 4,346,915 $1.00-$76.13 $29.97 $10.00-$76.13 $30.20
March 31, 1995............ 5,147,185 1.00- 51.88 25.70 5.25- 51.88 25.92
April 1, 1994............. 4,880,938 1.00- 39.88 20.70 4.21- 39.88 21.02
</TABLE>
36
<PAGE>
As of March 29, 1996, 169,500 shares of restricted stock of the Company were
outstanding under the 1987, 1990 and 1992 stock incentive plans, net of shares
repurchased by the Company from terminated employees and shares for which the
restrictions have lapsed. Restrictions on such restricted stock expire seven
years from the date of issuance. The market prices on the dates of awards
ranged from $12.75 to $34.38 per share.
An option with an exercise price equal to the market value of the underlying
shares on the date of option grant is not recorded as compensation expense
prior to the exercise of such option. For options with an exercise price below
market value on the option grant date and restricted stock sold for less than
market value on the date of sale, the difference between the exercise or sale
price and market value of such shares is charged to a prepaid compensation
account and credited to a deferred compensation liability account on the date
such options are granted or restricted shares are sold. The prepaid amount for
such options is amortized to expense over 60 months, the period during which
the options become fully exercisable. For such restricted stock, the prepaid
amount is amortized to expense in accordance with the period of restriction as
determined by the Committee at the time of the sale. Upon the exercise of the
option or the lapsing of the restrictions, the related deferred compensation
liability amount is reduced and the offsetting amounts are credited to
stockholders' equity. When options are exercised to purchase the Company's
common stock, the shares purchased are newly-issued shares. Each new share
issued is recorded as an increase to the capital stock account at par value,
and the amount by which the option exercise price exceeds the par value is an
increase to additional paid-in capital. Previously-owned shares submitted in
payment of the purchase price, and exercisable but unexercised options
surrendered in payment of taxes, are valued at the market price on the date of
exercise and recorded as an increase to the treasury stock.
Upon the exercise of non-qualified options, the difference between the
option exercise price and market price as of the date of exercise is available
as a deduction for federal income tax purposes. Upon the lapse of the
restrictions imposed upon restricted stock, the difference between the
restricted stock sale price and the market price as of the date the
restrictions lapse is available as a deduction for federal income tax
purposes. Tax savings resulting therefrom are recorded as additional paid-in
capital.
37
<PAGE>
COMPUTER SCIENCES CORPORATION AND SUBSIDIARIES
SCHEDULE VIII, VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED MARCH 29, 1996
<TABLE>
<CAPTION>
ADDITIONS
-------------------------
BALANCE, CHARGED TO COST BALANCE,
BEGINNING OF PERIOD AND EXPENSES OTHER (1) DEDUCTIONS END OF PERIOD
------------------- --------------- --------- ---------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year ended March 29, 1996
Allowance for doubtful
receivables............... $30,432 $13,237 $ 656 $ 8,239 $36,086
Year ended March 31, 1995
Allowance for doubtful
receivables............... 32,244 7,658 809 10,279 30,432
Year ended April 1, 1994
Allowance for doubtful
receivables............... 20,308 10,123 7,677 5,864 32,244
</TABLE>
- --------
(1) All years include balances from acquisitions, changes in balances due to
foreign currency exchange rates and recovery of prior-year charges.
38
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S> <C>
2.1 Agreement and Plan of Merger dated as of April 28, 1996 by and
among the Registrant, The Continuum Company, Inc. and
Continental Acquisition, Inc. (p)
3.1 Restated Articles of Incorporation (d)
3.2 Amendment to Restated Articles of Incorporation (l)
3.3 By-Laws, dated and effective January 31, 1993 (h)
10.1 Annual Management Incentive Plan* (a)
10.2 1978 Stock Option Plan* (h)
10.3 Amendment Nos. 1 and 2 to the 1978 Stock Option Plan* (h)
10.4 Amendment No. 3 to the 1978 Stock Option Plan* (c)
10.5 1980 Stock Option Plan* (h)
10.6 Amendment Nos. 1, 2, 3 and 4 to the 1980 Stock Option Plan* (b)
10.7 Amendment No. 5 to the 1980 Stock Option Plan* (c)
10.8 1984 Stock Option Plan* (i)
10.9 Amendment No. 1 to the 1984 Stock Option Plan* (b)
10.10 Amendment No. 2 to the 1984 Stock Option Plan* (c)
10.11 1987 Stock Incentive Plan* (c)
10.12 Schedule to the 1987 Stock Incentive Plan for United Kingdom
personnel* (c)
10.13 1990 Stock Incentive Plan* (j)
10.14 1992 Stock Incentive Plan* (l)
10.15 Amendment No. 1 to the 1992 Stock Incentive Plan* (h)
10.16 1995 Stock Incentive Plan* (n)
10.17 Deferred Compensation Plan, amended and restated effective
February 9, 1996*
10.18 Restated Supplemental Executive Retirement Plan, effective
August 14, 1995* (n)
10.19 Form of Indemnification Agreement for Directors (e)
10.20 Form of Indemnification Agreement for Officers (h)
10.21 Information Technology Services Agreements with General Dynamics
Corporation, dated as of November 4, 1991 (k)
10.22 $100 million Credit Agreement dated as of September 15, 1994 (h)
10.23 $150 million Credit Agreement dated as of September 15, 1994 (h)
10.24 $350 million Credit Agreement dated as of September 6, 1995 (n)
10.25 $100 million Credit Agreement dated as of January 3, 1995 (h)
10.26 Amended and Restated Rights Agreement, effective October 30, 1995 (n)
11 Calculation of Primary and Fully Diluted Earnings Per Share
21 Significant Active Subsidiaries and Affiliates of the Registrant
23 Independent Auditors' Consent
27 Article 5 Financial Data Schedule
99.1 Annual Report on Form 11-K for the Matched Asset Plan of
Computer Sciences Corporation
99.2 Annual Report on Form 11-K for the Hourly Savings Plan of CSC
Outsourcing Inc.
99.3 Annual Report on Form 11-K for the Employee Savings Plan of CSC
Credit Services, Inc. (to be filed at a later date)
99.4 Annual Report on Form 11-K for the CUTW Hourly Savings Plan of
CSC Outsourcing, Inc. (o)
</TABLE>
<PAGE>
Notes to Exhibit Index:
*Management contract or compensatory plan or agreement
(a)-(h) These exhibits are incorporated herein by reference to the Company's
Form 10-K for the fiscal years ended on the respective dates indicated
below:
<TABLE>
<S> <C>
(a) March 30, 1984 (e) April 3, 1992
(b) April 3, 1987 (f) April 2, 1993
(c) April 1, 1988 (g) April 1, 1994
(d) March 31, 1989 (h) March 31, 1995
</TABLE>
(i) Incorporated herein by reference to the Company's Form S-8 filed on
August 17, 1984.
(j) Incorporated herein by reference to the Company's Form S-8 filed on
August 15, 1990.
(k) Incorporated herein by reference to the Company's Form 8-K filed on
November 4, 1991.
(l) Incorporated herein by reference to the Company's Proxy Statement for
its August 10, 1992 Annual Meeting of Stockholders.
(m) Incorporated herein by reference to the Company's Form S-8 filed on
August 12, 1992
(n) Incorporated herein by reference to the Company's Form 10-Q filed on
November 13, 1995.
(o) Incorporated herein by reference to the Form 11-K filed on February 6,
1996.
(p) Incorporated herein by reference to the Company's Form 8-K filed on May
2, 1996
<PAGE>
Exhibit 10.17
COMPUTER SCIENCES CORPORATION
DEFERRED COMPENSATION PLAN
<PAGE>
COMPUTER SCIENCES CORPORATION
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I - DEFINITIONS............................................... 1
Section 1.1 - General............................................ 1
Section 1.2 - Account............................................ 1
Section 1.3 - Administrator...................................... 1
Section 1.4 - Board.............................................. 2
Section 1.5 - Change in Control.................................. 2
Section 1.6 - Chief Executive Officer............................ 2
Section 1.7 - Code............................................... 2
Section 1.8 - Committee.......................................... 2
Section 1.9 - Company............................................ 2
Section 1.10- Deferred Compensation.............................. 2
Section 1.11- Election Form...................................... 3
Section 1.12- Eligible Key Executive............................. 3
Section 1.13- Employee........................................... 3
Section 1.14- ERISA.............................................. 3
Section 1.15- Exchange Act....................................... 3
Section 1.16- Hardship........................................... 3
Section 1.17- Key Executive...................................... 4
Section 1.18- Key Executive Plan................................. 4
Section 1.19- Nonemployee Director............................... 4
Section 1.20- Nonemployee Director Plan.......................... 4
Section 1.21- Partial First Plan Year............................ 4
Section 1.22- Participant........................................ 5
Section 1.23- Plan............................................... 5
Section 1.24- Plan Year.......................................... 5
Section 1.25- Predecessor Plan................................... 5
Section 1.26- Retirement......................................... 5
Section 1.27- Separation from Service............................ 5
Section 1.28- Qualified Compensation............................. 5
ARTICLE II - ELIGIBILITY.............................................. 6
Section 2.1 - Requirements for Participation..................... 6
Section 2.2 - Deferral Election Procedure........................ 6
Section 2.3 - Content of Election Form........................... 6
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE III - PARTICIPANTS' DEFERRALS...................................... 7
Section 3.1 - Deferral of Qualified Compensation...................... 7
Section 3.2 - Deferral for Partial First Plan Year.................... 7
ARTICLE IV - DEFERRED COMPENSATION ACCOUNTS................................ 7
Section 4.1 - Deferred Compensation Accounts.......................... 7
Section 4.2 - Crediting of Deferred Compensation...................... 7
Section 4.3 - Crediting of Earnings................................... 8
Section 4.4 - Applicability of Account Values......................... 8
Section 4.5 - Vesting of Deferred Compensation Accounts............... 8
Section 4.6 - Assignments, Etc. Prohibited............................ 8
ARTICLE V - DISTRIBUTIONS OF DEFERRED COMPENSATION ACCOUNTS................ 8
Section 5.1 - Distributions upon a Key Executive's Retirement and a
Nonemployee Director's Separation from Service........ 8
Section 5.2 - Distributions upon a Key Executive's Pre-Retirement
Separation from Service............................... 9
Section 5.3 - Distributions upon a Participant's Death................ 9
Section 5.4 - Optional Distributions.................................. 10
Section 5.5 - Applicable Taxes........................................ 10
ARTICLE VI - WITHDRAWALS FROM DEFERRED COMPENSATION
ACCOUNTS.............................................................. 11
Section 6.1 - Hardship Withdrawals from Accounts...................... 11
Section 6.2 - Withdrawals after a Change in Control................... 11
Section 6.3 - Voluntary Withdrawals................................... 11
Section 6.4 - Applicable Taxes........................................ 12
ARTICLE VII - ADMINISTRATIVE PROVISIONS.................................... 12
Section 7.1 - Administrator's Duties and Powers....................... 12
Section 7.2 - Limitations Upon Powers................................. 12
Section 7.3 - Final Effect of Administrator Action.................... 13
Section 7.4 - Committee............................................... 13
Section 7.5 - Indemnification by the Company; Liability Insurance..... 13
Section 7.6 - Recordkeeping........................................... 13
Section 7.7 - Statement to Participants............................... 14
Section 7.8 - Inspection of Records................................... 14
Section 7.9 - Identification of Fiduciaries........................... 14
Section 7.10- Procedure for Allocation of Fiduciary Responsibilities.. 14
Section 7.11- Claims Procedure........................................ 14
Section 7.12- Conflicting Claims...................................... 16
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 7.13- Service of Process...................................... 16
ARTICLE VIII - MISCELLANEOUS PROVISIONS.................................... 16
Section 8.1 - Termination of the Plan................................. 16
Section 8.2 - Limitation on Rights of Participants.................... 17
Section 8.3 - Consolidation or Merger; Adoption of Plan by
Other Companies....................................... 17
Section 8.4 - Errors and Misstatements................................ 17
Section 8.5 - Payment on Behalf of Minor, Etc......................... 18
Section 8.6 - Amendment of Plan....................................... 18
Section 8.7 - No Funding.............................................. 18
Section 8.8 - Governing Law........................................... 18
Section 8.9 - Pronouns and Plurality.................................. 18
Section 8.10- Titles.................................................. 18
Section 8.11- References.............................................. 19
</TABLE>
iii
<PAGE>
COMPUTER SCIENCES CORPORATION
DEFERRED COMPENSATION PLAN
as Amended and Restated Effective February 9, 1996
Computer Sciences Corporation, a Nevada corporation, by resolution of its
Board of Directors dated August 14, 1995, has adopted the Computer Sciences
Corporation Deferred Compensation Plan (the "Plan"), which constitutes a
complete amendment and restatement of the Computer Sciences Corporation
Nonqualified Deferred Compensation Plan (the "Predecessor Plan"), effective as
of September 30, 1995, for the benefit of its Nonemployee Directors, as defined
below, and certain of its Key Executives, as defined below.
The Plan shall constitute two separate plans, one for the benefit of
Nonemployee Directors and one for the benefit of Key Executives. The plan for
Key Executives is a nonqualified deferred compensation plan which is unfunded
and is maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees, within the
meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as defined below.
The plan for Nonemployee Directors is not subject to ERISA.
ARTICLE I
DEFINITIONS
Section 1.1 General
- --------------------
Whenever the following terms are used in the Plan with the first letter
capitalized, they shall have the meaning specified below unless the context
clearly indicates to the contrary.
Section 1.2 Account
- --------------------
"Account" of a Participant shall mean the Participant's individual deferred
compensation account established for his or her benefit under Article IV hereof.
Section 1.3 Administrator
- --------------------------
"Administrator" shall mean Computer Sciences Corporation, acting through
its Chief Executive Officer or his or her delegate, except that if Computer
Sciences Corporation appoints a Committee under Section 7.4, the term
"Administrator" shall mean the Committee as to those duties, powers and
responsibilities specifically conferred upon the Committee.
<PAGE>
Section 1.4 Board
- ------------------
"Board" shall mean the Board of Directors of Computer Sciences Corporation.
The Board may delegate any power or duty otherwise allocated to the
Administrator to any other person or persons, including a Committee appointed
under Section 7.4.
Section 1.5 Change in Control
- ------------------------------
"Change in Control" means, after September 30, 1995, (a) the acquisition by
any person, entity or group (as defined in Section 13(d)3 of the Exchange Act),
as beneficial owner, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting power of the
then outstanding securities of Computer Sciences Corporation, or (b) a change
during any period of two (2) consecutive years of a majority of the Board as
constituted as of the beginning of such period, unless the election of each
director who was not a director at the beginning of such period was approved by
vote of a least two-thirds of the directors then in office who were directors at
the beginning of such period, or (c) any other event constituting a change in
control for purposes of Schedule 14A of Regulation 14A under the Exchange Act.
Section 1.6 Chief Executive Officer
- ------------------------------------
"Chief Executive Officer" shall mean the Chief Executive Officer of
Computer Sciences Corporation.
Section 1.7 Code
- -----------------
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
Section 1.8 Committee
- ----------------------
"Committee" shall mean the Committee, if any, appointed in accordance with
Section 7.4.
Section 1.9 Company
- --------------------
"Company" shall mean Computer Sciences Corporation and all of its
affiliates, and any entity which is a successor in interest to Computer Sciences
Corporation and which continues the Plan under Section 8.3(a).
Section 1.10 Deferred Compensation
- -----------------------------------
"Deferred Compensation" of a Participant shall mean the amounts deferred by
such Participant under Article III of the Plan.
2
<PAGE>
Section 1.11 Election Form
- ---------------------------
"Election Form" shall mean the form of election provided by the
Administrator to each Eligible Executive and Nonemployee Director pursuant to
Section 3.1.
Section 1.12 Eligible Key Executive
- ------------------------------------
"Eligible Key Executive" shall mean any Key Executive who has been
designated as eligible to participate in the Plan with respect to any Plan Year
by the Chief Executive Officer.
Section 1.13 Employee
- ----------------------
"Employee" shall mean any person who renders services to the Company in the
status of an employee as that term is defined in Code Section 3121(d), including
officers but not including directors who serve solely in that capacity.
Section 1.14 ERISA
- -------------------
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
Section 1.15 Exchange Act
- --------------------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
Section 1.16 Hardship
- ----------------------
(a) "Hardship" of a Participant, shall mean any one or more of the
following:
(i) medical expenses described in Code Section 213(d) incurred by the
Participant, the Participant's spouse, or the Participant's dependents (as
described in Code Section 152) if such expenses can not be paid from any
other source;
(ii) purchase (excluding mortgage payments) of a principal residence
for the Participant;
(iii) payment of tuition for the next 12 months of post-secondary
education for the Participant, the Participant's spouse, or the
Participant's dependents who are claimed as such on the Participant's
federal income tax return;
3
<PAGE>
(iv) the need to prevent the Participant's eviction from the
Participant's primary residence, or foreclosure on the mortgage of the
Participant's primary residence; or
(v) any other financial need which the Internal Revenue Service has
approved as a financial hardship which permits distributions to be made to
participants under the financial hardship provisions of the Company's
Matched Asset Plan.
(b) Notwithstanding subsection(a) above, a financial need shall not
constitute a Hardship unless it is for at least $1,000.00 (or the entire
principal amount of the Participant's Accounts, if less).
(c) Whether a Participant has incurred a Hardship shall be determined by
the Administrator in its discretion on the basis of all relevant facts and
circumstances and in accordance with nondiscriminatory and objective standards,
uniformly interpreted and consistently applied.
Section 1.17 Key Executive
- ---------------------------
"Key Executive" shall mean any Employee of the Company who is an officer or
other key executive of the Company and who qualifies as a "highly compensated
employee or management employee" within the meaning of Title I of ERISA.
Section 1.18 Key Executive Plan
- --------------------------------
"Key Executive Plan" shall mean the portion of this Plan which is
maintained or the benefit of the Company's Key Executives.
Section 1.19 Nonemployee Director
- ----------------------------------
"Nonemployee Director" shall mean a member of the Board who is not an
Employee.
Section 1.20 Nonemployee Director Plan
- ---------------------------------------
"Nonemployee Director Plan" shall mean the portion of this Plan which is
maintained for the benefit of the Company's Nonemployee Directors.
Section 1.21 Partial First Plan Year
- -------------------------------------
"Partial First Plan Year" shall mean that portion of the first Plan Year of
the Plan subject to its amendment and restatement effective as of September 30,
1995, which shall begin on September 30, 1995 and end on March 29, 1996.
4
<PAGE>
Section 1.22 Participant
- -------------------------
"Participant" shall mean any person who elects to participate in the Plan
as provided in Article II and who defers Qualified Compensation under the Plan.
Section 1.23 Plan
- ------------------
"Plan" shall mean the Computer Sciences Corporation Deferred Compensation
Plan.
Section 1.24 Plan Year
- -----------------------
"Plan Year" shall mean the fiscal year of the Company.
Section 1.25 Predecessor Plan
- ------------------------------
"Predecessor Plan" shall mean the Computer Sciences Corporation
Nonqualified Deferred Compensation Plan as in effect and maintained by the
Company for the benefit of its Nonemployee Directors prior to the amendment and
restatement of the Plan effective as of September 30, 1995.
Section 1.26 Retirement
- ------------------------
"Retirement" shall mean, with respect to a Key Executive, a Separation from
Service of such Key Executive (a) on or after attainment of age sixty-two (62)
or (b) prior to attainment of age sixty-two (62) if the Chief Executive Officer
shall designate such Separation from Service as Retirement for purposes of the
Plan.
Section 1.27 Separation from Service
- -------------------------------------
(a) "Separation from Service" of a Key Executive shall mean the termination
of his or her employment with the Company by reason resignation, discharge,
death or Retirement. A leave of absence or sick leave authorized by the Company
in accordance with established policies, a vacation period or a military leave
shall not constitute a Separation from Service; provided, however, that failure
to return to work upon expiration of any leave of absence, sick leave, military
leave or vacation shall be considered a resignation effective as of the date of
expiration of such leave of absence, sick leave, military leave or vacation.
(b) "Separation from Service" of a Nonemployee Director shall mean the
Nonemployee Director's ceasing to serve as a member of the Board for any reason.
Section 1.28 Qualified Compensation
- ------------------------------------
(a) "Qualified Compensation" of a Key Executive shall mean the Key
Executive's annual bonus which may be payable to the Key Executive under the
Computer Sciences Corporation Annual Incentive Plan or such other bonus or
5
<PAGE>
incentive compensation plan of the Company which may be designated from time to
time by the Administrator.
(b) "Qualified Compensation" of a Nonemployee Director shall mean the
retainer, consulting fees, committee fees and meeting fees which are payable to
the Nonemployee Director by the Company.
ARTICLE II
ELIGIBILITY
Section 2.1 Requirements for Participation
- -------------------------------------------
Any Eligible Key Executive and any Nonemployee Director shall be eligible
to be a Participant in the Plan.
Section 2.2 Deferral Election Procedure
- ----------------------------------------
For each Plan Year, the Administrator shall provide each Eligible Key
Executive and each Nonemployee Director with an Election Form on which such
person may elect to defer his or her Qualified Compensation under Article III.
Each such person who elects to defer Qualified Compensation under Article III
shall complete and sign the Election Form and return it to the Administrator.
Section 2.3 Content of Election Form
- -------------------------------------
Each Participant who elects to defer Qualified Compensation under the Plan
shall set forth on the Election Form specified by the Administrator:
(a) the amount of Qualified Compensation to be deferred under Article III
and the Participant's authorization to the Company to reduce his or her
Qualified Compensation by the amount of the deferred compensation,
(b) the length of time with respect to which the Participant elects to
defer the Deferred Compensation,
(c) the method under which the Participant's Deferred Compensation shall be
payable, and
(d) such other information, acknowledgments or agreements as may be
required by the Administrator.
6
<PAGE>
ARTICLE III
PARTICIPANTS' DEFERRALS
Section 3.1 Deferral of Qualified Compensation
- -----------------------------------------------
(a) Each Eligible Key Executive and Nonemployee Director may elect to defer
into his or her Account all or any portion of the Qualified Compensation which
would otherwise be payable to him or her for any Plan Year in which he or she
has not incurred a Separation from Service as of the first day of the Plan Year
in question. Such election shall be made by the Eligible Key Executive or
Nonemployee Director completing and delivering to the Administrator his or her
Election Form for such Plan Year no later than the last day of the next
preceding Plan Year, except (i) with respect to the Partial First Plan Year, in
which case such election shall be made not later than September 29, 1995, and
(ii) with respect to a person who first becomes a Nonemployee Director during a
Plan Year, which person may make such election within 30 days after first
becoming a Nonemployee Director.
(b) Except as set forth in Sections 6.2 and 6.3 hereof, any such election
made by a Participant to defer Qualified Compensation shall be irrevocable and
shall not be amendable by the Participant.
Section 3.2 Deferral for Partial First Plan Year
- -------------------------------------------------
For the Partial First Plan Year, Participants may defer any or all of the
Qualified Compensation which is earned by them after September 29, 1995 and
before March 30, 1996. Deferral elections previously made by Nonemployee
Directors for the 1996 Plan Year shall only remain effective with respect to
Qualified Compensation earned prior to September 30, 1995.
ARTICLE IV
DEFERRED COMPENSATION ACCOUNTS
Section 4.1 Deferred Compensation Accounts
- -------------------------------------------
The Administrator shall establish and maintain for each Participant an
Account to which shall be credited the amounts allocated thereto under this
Article IV and from which shall be debited the Participant's distributions and
withdrawals under Articles V and VI.
Section 4.2 Crediting of Deferred Compensation
- -----------------------------------------------
Each Participant's Account shall be credited with an amount which is equal
to the amount of the Participant's Qualified Compensation which such Participant
7
<PAGE>
has elected to defer under Article III at the time such Qualified Compensation
would otherwise have been paid to the Participant.
Section 4.3 Crediting of Earnings
- ----------------------------------
Beginning on September 30, 1995 and subject to amendment by the Board, for
each Plan Year earnings shall be credited to each Participant's Account
(including the Accounts of Nonemployee Directors under the Predecessor Plan), at
a rate equal to 120% of the 120-month rolling average interest payable on 10-
year United States Treasury Notes as of December 31 of the preceding Plan Year,
compounded annually. Earnings shall be credited on such valuation dates as the
Administrator shall determine.
Section 4.4 Applicability of Account Values
- --------------------------------------------
The value of each Participant's Account as determined as of a given date
under this Article, plus any amounts subsequently allocated thereto under this
Article and less any amounts distributed or withdrawn under Articles V or VI
shall remain the value thereof for all purposes of the Plan until the Account is
revalued hereunder.
Section 4.5 Vesting of Deferred Compensation Accounts
- ------------------------------------------------------
Subject to the possible reductions provided for in Section 6.2 and 6.3 with
respect to certain Participant withdrawals, each Participant's interest in his
or her Account shall be 100% vested and non-forfeitable at all times.
Section 4.6 Assignments, Etc. Prohibited
- -----------------------------------------
No part of any Participant's Account shall be liable for the debts,
contracts or engagements of the Participant, or the Participant's beneficiaries
or successors in interest, or be taken in execution by levy, attachment or
garnishment or by any other legal or equitable proceeding, nor shall any such
person have any rights to alienate, anticipate, commute, pledge, incumber or
assign any benefits or payments hereunder in any manner whatsoever except to
designate a beneficiary as provided in Section 5.3.
ARTICLE V
DISTRIBUTIONS OF DEFERRED COMPENSATION ACCOUNTS
Section 5.1 Distributions upon a Key Executive's Retirement and a Nonemployee
- -------------------------------------------------------------------------------
Director's Separation from Service
----------------------------------
(a) The Account of a Key Executive who incurs a Separation from Service
upon his or her Retirement, and the Account of a Nonemployee Director who incurs
a Separation from Service, in each case other than on account of death, shall be
8
<PAGE>
paid to the Participant as specified in any election made by the Participant
pursuant to Section 5.4 hereof. Any remaining balance of the Participant's
Account shall be paid to the Participant, as specified by the Participant in an
election made pursuant to this Section 5.1, in a lump-sum distribution or in
approximately equal annual installments over 5, 10 or 15 years. Payment(s)
shall commence within thirty (30) days following the date of such Separation
from Service.
(b) At the time a Participant first elects to defer Qualified Compensation
under the Plan, he or she shall make an election pursuant to this Section 5.1.
Such election shall remain in effect and shall apply to the Participant's total
Account, as the same may increase or decrease from time to time. An election
pursuant to this Section 5.1 may be superseded by a subsequent election, which
subsequent election shall then apply to the Participant's total Account, as the
same may increase or decrease from time to time. Notwithstanding the foregoing,
no subsequent election pursuant to this Section 5.1 shall be effective unless it
is made at least 13 months prior to the Participant's Separation from Service.
Section 5.2 Distributions upon a Key Executive's Pre-Retirement Separation
- ----------------------------------------------------------------------------
from Service
------------
The Account of a Key Executive who incurs a Separation from Service prior
to his or her Retirement and other than on account of his or her death shall be
paid to the Participant in a lump-sum distribution within thirty (30) days
following the date of such Separation from Service, notwithstanding any election
to the contrary made by the Participant pursuant to Section 5.4 hereof.
Section 5.3 Distributions upon a Participant's Death
- -----------------------------------------------------
(a) Notwithstanding anything to the contrary in the Plan, the remaining
balance of the Account of a Participant who dies (i) shall be paid to the
persons and entities designated by the Participant as his or her beneficiaries
for such purpose and (ii) shall be paid in the manner set forth in this Section
5.3. With respect to a Participant who does not incur a Separation from Service
prior to his or her death, such balance shall be paid, as specified by the
Participant in an election made pursuant to this Section 5.3, in a lump-sum
distribution or in approximately equal annual installments over 5, 10 or 15
years. With respect to a Participant who does incur a Separation from Service
prior to his or her death, such balance shall be paid, as specified by the
Participant in an election made pursuant to this Section 5.3, in a lump-sum
distribution or in approximately equal annual installments over the remaining
term of the 5, 10 or 15-year payment period elected pursuant to Section 5.1
hereof. Payment(s) shall commence within thirty (30) days following the date of
death.
(b) At the time a Participant first elects to defer Qualified Compensation
under the Plan, he or she shall make an election pursuant to this Section 5.3.
Such election shall remain in effect and shall apply to the Participant's total
Account, as the same may increase or decrease from time to time. An election
pursuant to this
9
<PAGE>
Section 5.3 may be superseded by a subsequent election, which subsequent
election shall then apply to the Participant's total Account, as the same may
increase or decrease from time to time. Notwithstanding the foregoing, no
subsequent election pursuant to this Section 5.3 shall be effective unless it
is made at least 13 months prior to the Participant's Separation from Service.
Section 5.4 Optional Distributions
- -----------------------------------
(a) At the time a Participant elects to defer Qualified Compensation for
any Plan Year, he or she may also elect, pursuant to this Section 5.4, to
receive a special, lump-sum distribution of any or all of the amount deferred
for such Plan Year on a date specified by the Participant in such election,
which date must be at least 24 months after the date of such election. Any such
special distribution shall be made within five (5) business days after the date
therefor specified by the Participant, unless the Participant shall have died on
or prior to such date, in which case no such special distribution shall be made.
(b) An election pursuant to this Section 5.4 may be superseded by one
subsequent election; provided, however, that such subsequent election shall not
be effective unless: (i) it is irrevocable; (ii) it is made at least 13 months
prior to the Participant's Separation from Service and at least 24 months prior
to the date upon which the special distribution will be made; and (iii) the date
of the special distribution specified in the subsequent election is earlier than
the date specified in the initial election.
(c) Notwithstanding the foregoing, an election pursuant to this Section 5.4
with respect to the Partial First Plan Year may be superseded by two subsequent
elections; provided, however, that: (i) the first such subsequent election shall
not be effective unless it is made prior to March 30, 1996 and at least 13
months prior to the Participant's Separation from Service and at least 24 months
prior to the date upon which the special distribution will be made; and (ii) the
second such subsequent election satisfies all the requirements set forth in
paragraph (b)(i), (ii) and (iii) of this Section 5.4.
Section 5.5 Applicable Taxes
- -----------------------------
All distributions under the Plan shall be subject to withholding for all
amounts which the Company is required to withhold under federal, state or local
tax law.
10
<PAGE>
ARTICLE VI
WITHDRAWALS FROM DEFERRED COMPENSATION ACCOUNTS
Section 6.1 Hardship Withdrawals from Accounts
- -----------------------------------------------
A Participant may make a withdrawal from the Participant's Account on
account of the Participant's Hardship, subject to all of the following
requirements:
(a) The Participant's withdrawal shall not exceed the amount which is
necessary to satisfy the Hardship;
(b) The denial of the Participant's Hardship withdrawal request would
result in severe financial hardship to the Participant; and
(c) The Participant has not received a Hardship withdrawal within the 12
month period preceding the withdrawal.
Section 6.2 Withdrawals after a Change in Control
- --------------------------------------------------
At any time within three years after the occurrence of a Change in Control,
a Key Executive may elect to withdraw all or any part of the Key Executive's
Account by delivering a written election to such effect to the Administrator,
provided, however, that if a Key Executive makes such an election, (i) the Key
Executive shall forfeit, and the Key Executive's Account shall be debited with,
an amount equal to 5% of the amount of the withdrawal distribution, (ii) the Key
Executive's deferral election for the Plan Year in which the withdrawal
distribution occurs shall be terminated with respect to any Qualified
Compensation which has not yet been deferred and (iii) the Key Executive shall
not be permitted to defer Qualified Compensation under the Plan for the two Plan
Years immediately following the Plan Year of the withdrawal distribution.
Section 6.3 Voluntary Withdrawals
- ----------------------------------
At any time, a Participant may elect to withdraw all or any part of the
Participant's Account by delivering a written election to such effect to the
Administrator, provided, however, that if a Participant makes such an election,
(i) the Participant shall forfeit, and the Participant's Account shall be
debited with, an amount equal to 10% of the amount of the withdrawal
distribution, (ii) the Participant's deferral election for the Plan Year in
which the withdrawal distribution occurs shall be terminated with respect to any
Qualified Compensation which has not yet been deferred and (iii) the Participant
shall not be permitted to defer Qualified Compensation under the Plan for the
two Plan Years immediately following the year of the withdrawal distribution.
11
<PAGE>
Section 6.4 Applicable Taxes
- -----------------------------
All withdrawals under the Plan shall be subject to withholding for all
amounts which the Company is required to withhold under federal, state or local
tax law.
ARTICLE VII
ADMINISTRATIVE PROVISIONS
Section 7.1 Administrator's Duties and Powers
- ----------------------------------------------
The Administrator shall conduct the general administration of the Plan in
accordance with the Plan and shall have all the necessary power, authority and
discretion to carry out that function. Among its necessary powers and duties
are the following:
(a) To delegate all or part of its function as Administrator to others and
to revoke any such delegation.
(b) To determine questions of eligibility of Participants and their
entitlement to benefits, subject to the provisions of Section 7.11.
(c) To select and engage attorneys, accountants, actuaries, trustees,
appraisers, brokers, consultants, administrators, physicians, or other persons
to render service or advice with regard to any responsibility the Administrator
or the Board has under the Plan, or otherwise, to designate such persons to
carry out fiduciary responsibilities under the Plan, and (together with the
Committee, the Company, the Board and the officers and Employees of the Company)
to rely upon the advice, opinions or valuations of any such persons, to the
extent permitted by law, being fully protected in acting or relying thereon in
good faith.
(d) To interpret the Plan and any relevant facts for purpose of the
administration and application of the Plan, in a manner not inconsistent with
the Plan or applicable law and to amend or revoke any such interpretation.
(e) To conduct claims procedures as provided in Section 7.11.
Section 7.2 Limitations Upon Powers
- ------------------------------------
The Plan shall be uniformly and consistently administered, interpreted and
applied with regard to all Participants in similar circumstances. The Plan
shall be administered, interpreted and applied fairly and equitably and in
accordance with the specified purposes of the Plan.
12
<PAGE>
Section 7.3 Final Effect of Administrator Action
- -------------------------------------------------
Except as provided in Section 7.11, all actions taken and all
determinations made by the Administrator in good faith shall be final and
binding upon all Participants, the Company and any person interested in the
Plan.
Section 7.4 Committee
- ----------------------
(a) The Administrator may, but need not, appoint a Committee consisting of
two or more members to hold office during the pleasure of the Administrator.
The Committee shall have such powers and duties as are delegated to it by the
Administrator. Committee members shall not receive payment for their services
as such.
(b) Appointment of Committee members shall be effective upon filing of
written acceptance of appointment with the Administrator.
(c) A Committee member may resign at any time by delivering written notice
to the Administrator.
(d) Vacancies in the Committee shall be filled by the Administrator.
(e) The Committee shall act by a majority of its members in office;
provided, however, that the Committee may appoint one of its members or a
delegate to act on behalf of the Committee on matters arising in the ordinary
course of administration of the Plan or on specific matters.
Section 7.5 Indemnification by the Company; Liability Insurance
- ----------------------------------------------------------------
The Company shall pay or reimburse any of the Company's officers,
directors, Committee members or Employees who are fiduciaries with respect to
the Plan for all expenses incurred by such persons in, and shall indemnify and
hold them harmless from, all claims, liability and costs (including reasonable
attorneys' fees) arising out of the good faith performance of their duties under
the Plan. The Company may obtain and provide for any such person, at the
Company's expense, liability insurance against liabilities imposed on such
person by law.
Section 7.6 Recordkeeping
- --------------------------
(a) The Administrator shall maintain suitable records of each Participant's
Account which, among other things, shall show separately deferrals and the
earnings credited thereon, as well as distributions and withdrawals therefrom
and records of its deliberations and decisions.
(b) The Administrator shall appoint a secretary, and at its discretion, an
assistant secretary, to keep the record of proceedings, to transmit its
decisions, instructions, consents or directions to any interested party, to
execute and file, on
13
<PAGE>
behalf of the Administrator, such documents, reports or other matters as may
be necessary or appropriate under ERISA and to perform ministerial acts.
(c) The Administrator shall not be required to maintain any records or
accounts which duplicate any records or accounts maintained by the Company.
Section 7.7 Statement to Participants
- --------------------------------------
By March 15 of each year, the Administrator shall furnish to each
Participant a statement setting forth the value of the Participant's Account as
of the preceding December 31 and such other information as the Administrator
shall deem advisable to furnish.
Section 7.8 Inspection of Records
- ----------------------------------
Copies of the Plan and records of a Participant's Account shall be open to
inspection by the Participant or the Participant's duly authorized
representatives at the office of the Administrator at any reasonable business
hour.
Section 7.9 Identification of Fiduciaries
- ------------------------------------------
The Administrator shall be the named fiduciary of the Plan and, as
permitted or required by law, shall have exclusive authority and discretion to
operate and administer the Plan.
Section 7.10 Procedure for Allocation of Fiduciary Responsibilities
- --------------------------------------------------------------------
(a) Fiduciary responsibilities under the Plan are allocated as follows:
(i) The sole duties, responsibilities and powers allocated to the
Board, any Committee and any fiduciary shall be those expressly provided in
the relevant Sections of the Plan.
(ii) All fiduciary duties, responsibilities, and powers not allocated
to the Board, any Committee or any fiduciary, are hereby allocated to the
Administrator, subject to delegation.
(b) Fiduciary duties, responsibilities and powers under the Plan may be
reallocated among fiduciaries by amending the Plan in the manner prescribed in
Section 8.6, followed by the fiduciaries' acceptance of, or operation under,
such amended Plan.
Section 7.11 Claims Procedure
- ------------------------------
(a) No distributions under this Plan to a Participant, former Participant
or Participant's beneficiary shall be made except upon a claim filed in writing
with the
14
<PAGE>
Committee, if in existence, or otherwise to a claims official designated by the
Administrator.
(b) If the Committee or claims official wholly or partially denies the
claim, it or he shall, within a reasonable period of time after receipt of the
claim, provide the claimant with written notice of such denial, setting forth,
in a manner calculated to be understood by the claimant:
(i) the specific reason or reasons for such denial;
(ii) specific reference to pertinent Plan provisions on which the
denial is based;
(iii) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why
such material or information is necessary; and
(iv) an explanation of the Plan's claims review procedure.
(c) The Administrator shall provide each claimant with a reasonable
opportunity to appeal a denial of a claim to the Chief Executive Officer or his
or her authorized delegate for a full and fair review. The claimant or his or
her duly authorized representative:
(i) may request a review upon written application to the Chief
Executive Officer or his authorized delegate (which shall be filed with the
Committee or claims official);
(ii) may review pertinent documents; and
(iii) may submit issues and comments in writing.
(d) The Chief Executive Officer or his authorized delegate may establish
such time limits within which a claimant may request review of a denied claim as
are reasonable in relation to the nature of the benefit which is the subject of
the claim and to other attendant circumstances but which shall be not less than
sixty days after receipt by the claimant of written notice of denial of his or
her claim.
(e) The decision by the Chief Executive Officer or his delegate upon review
of a claim shall be made not later than sixty days after receipt by the chief
Executive Officer or his authorized delegate of the request for review, unless
special circumstances require an extension of time for processing, in which case
a decision shall be rendered as soon as possible, but not later than one hundred
twenty days after receipt of such request for review.
(f) The decision on review shall be in writing and shall include specific
reasons for the decision written in a manner calculated to be understood by the
15
<PAGE>
claimant with specific references to the pertinent Plan provisions on which the
decision is based.
(g) To the extent permitted by law, the decision of the Committee or claims
official, if no appeal is filed, or the decision of the Chief Executive Officer
or his delegate on review, when warranted on the record and reasonably based on
the law and the provisions of the Plan, shall be final and binding on all
parties.
Section 7.12 Conflicting Claims
- --------------------------------
If the Administrator is confronted with conflicting claims concerning a
Participant's Account, the Administrator may interplead the claimants in an
action at law, or in an arbitration conducted in accordance with the rules of
the American Arbitration Association, as the Administrator shall elect in its
sole discretion, and in either case, the attorneys' fees, expenses and costs
reasonably incurred by the Administrator in such proceeding shall be paid from
the Participant's Account.
Section 7.13 Service of Process
- --------------------------------
The Secretary of Computer Sciences Corporation is hereby designated as
agent of the Plan for the service of legal process.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Termination of the Plan
- ------------------------------------
(a) While the Plan is intended as a permanent program, the Board shall have
the right at any time to declare the Plan terminated completely as to the
Company or as to any group, division or other operational unit thereof or as to
any affiliate thereof.
(b) Discharge or layoff of any Employees without such a declaration shall
not result in a termination of the Plan.
(c) In the event of any termination, the Board, in its sole and absolute
discretion may elect to:
(i) maintain Participants' Accounts, payment of which shall be made in
accordance with Articles V and VI; or
(ii) liquidate the portion of the Plan attributable to each
Participant as to whom the Plan is terminated and distribute each such
Participant's Account in a lump sum or pursuant to any method which is at
least as rapid as the distribution method elected by the Participant under
Section 5.4.
16
<PAGE>
Section 8.2 Limitation on Rights of Participants
- -------------------------------------------------
The Plan is strictly a voluntary undertaking on the part of the Company and
shall not constitute a contract between the Company and any Employee or any
Nonemployee Director, or consideration for, or an inducement or condition of,
the employment of an Employee or service of a Nonemployee Director. Nothing
contained in the Plan shall give any Employee or Nonemployee Director the right
to be retained in the service of a Company or to interfere with or restrict the
right of the Company, which is hereby expressly reserved, to discharge or retire
any Employee or Nonemployee Director, except as otherwise provided by a written
employment agreement between the Company and the Employee or Nonemployee
Director, at any time without notice and with or without cause. Inclusion under
the Plan will not give any Employee or Nonemployee Director any right or claim
to any benefit hereunder except to the extent such right has specifically become
fixed under the terms of the Plan. The doctrine of substantial performance
shall have no application to Employees, Nonemployee Directors, Participants or
any other persons entitled to payments under the Plan.
Section 8.3 Consolidation or Merger; Adoption of Plan by Other Companies
- -------------------------------------------------------------------------
(a) In the event of the consolidation or merger of the Company with or into
any other entity, or the sale by the Company of substantially all of its assets,
the resulting successor may continue the Plan by adopting it in a resolution of
its Board of Directors. If within 90 days from the effective date of such
consolidation, merger or sale of assets, such successor corporation does not
adopt the Plan, the Plan shall be terminated in accordance with Section 8.1.
(b) There shall be no merger or consolidation with, or transfer of the
liabilities of the Plan to, any other plan unless each Participant in the Plan
would have, if the combined or successor plans were terminated immediately after
the merger, consolidation, or transfer, an account which is equal to or greater
than his or her corresponding Account under the Plan had the Plan been
terminated immediately before the merger, consolidation or transfer.
Section 8.4 Errors and Misstatements
- -------------------------------------
In the event of any misstatement or omission of fact by a Participant to
the Administrator or any clerical error resulting in payment of benefits in an
incorrect amount, the Administrator shall promptly cause the amount of future
payments to be corrected upon discovery of the facts and shall cause the Company
to pay the Participant or any other person entitled to payment under the Plan
any underpayment in cash in a lump sum, or to recoup any overpayment from future
payments to the Participant or any other person entitled to payment under the
Plan in such amounts as the Administrator shall direct, or to proceed against
the Participant or any other person entitled to payment under the Plan for
recovery of any such overpayment.
17
<PAGE>
Section 8.5 Payment on Behalf of Minor, Etc.
- ---------------------------------------------
In the event any amount becomes payable under the Plan to a minor or a
person who, in the sole judgment of the Administrator, is considered by reason
of physical or mental condition to be unable to give a valid receipt therefor,
the Administrator may direct that such payment be made to any person found by
the Administrator in its sole judgment, to have assumed the care of such minor
or other person. Any payment made pursuant to such determination shall
constitute a full release and discharge of the Company, the Board, the
Administrator, the Committee and their officers, directors and employees.
Section 8.6 Amendment of Plan
- ------------------------------
The Plan may be wholly or partially amended by the Board from time to time, in
its sole and absolute discretion, including prospective amendments which apply
to amounts held in a Participant's Account as of the effective date of such
amendment and including retroactive amendments necessary to conform to the
provisions and requirements of ERISA or the Code or regulations pursuant
thereto; provided, however, that no amendment shall decrease the amount of any
Participant's Account as of the effective date of such amendment.
Section 8.7 No Funding
- -----------------------
All benefits payable under the Plan will be paid from the general assets of
the Company and no Participant or beneficiary shall have any claim against any
specific assets of the Company.
Section 8.8 Governing Law
- --------------------------
The Plan shall be construed, administered and governed in all respects
under and by the laws of the State of California, except to the extent such laws
may be preempted by ERISA.
Section 8.9 Pronouns and Plurality
- -----------------------------------
The masculine pronoun shall include the feminine pronoun, and the singular
the plural where the context so indicates.
Section 8.10 Titles
- --------------------
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of the Plan.
18
<PAGE>
Section 8.11 References
- ------------------------
Unless the context clearly indicates to the contrary, a reference to a
statute, regulation or document shall be construed as referring to any
subsequently enacted, adopted or executed statute, regulation or document.
19
<PAGE>
EXHIBIT 11
COMPUTER SCIENCES CORPORATION AND SUBSIDIARIES
Exhibit XI, Calculation of Primary and Fully Diluted Earnings Per Share
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended
-------------------------------------------------------------------------------------------
March 29, March 31, April 1, April 2, April 3,
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
NET INCOME
- ----------
Before cumulative effect
of accounting change $ 141,692 $ 110,739 $ 90,930 $ 78,149 $ 68,277
Cumulative effect of
accounting change 4,900
----------- ----------- ----------- ----------- -----------
After cumulative effect of
accounting change $ 141,692 $ 110,739 $ 95,830 $ 78,149 $ 68,177
=========== =========== =========== =========== ===========
SHARES
- ------
Average shares outstanding 55,568,121 51,425,723 50,234,161 49,436,079 48,739,197
Common stock equivalents 1,646,263 1,549,226 1,151,043 839,427 907,563
----------- ----------- ----------- ----------- -----------
Total for primary calculation 57,214,384 52,974,949 51,385,204 50,275,506 49,646,760
Additional for fully diluted
calculation 124,730 147,190 290,104 146,202
----------- ----------- ----------- ----------- -----------
Total for fully diluted
calculation 57,339,114 53,123,139 51,675,308 50,421,708 49,646,760
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
EXHIBIT 21
COMPUTER SCIENCES CORPORATION
EXHIBIT XXI, Significant Active Subsidiaries and Affiliates
As of March 29, 1996
<TABLE>
<CAPTION>
State or
Country of Percent of
Entity Formation Ownership
- ------------------------------------------------------- -------------- ---------------
<S> <C> <C>
Computer Sciences Corporation Nevada Registrant
- - Aerospace Center Support (Partnership) Tennessee 55.0
- - Artemis Holdings Inc. Nevada 100.0
- CSC Artemis Inc. California 100.0
- Artemis International Limited United Kingdom 55.0
- Autec Range Services (Partnership) Florida 50.0
- Calva Realty Corporation Nevada 100.0
- Century Corporation Nevada 100.0
- CSC Credit Services, Inc. Texas 100.0
- CSC Enterprises, Inc. Nevada 100.0
- CSC Enterprises (Partnership) Delaware 97.1
- CSC Accounts Management, Inc. Texas 100.0
- Credit Bureau of Tulsa, Inc. Oklahoma 100.0
- CSC Credit Services, Inc. California 100.0
- CSC Domestic Enterprises, Inc. Nevada 100.0
- CSC Intelicom, Inc. Delaware 100.0
- CSC Outsourcing Inc. Nevada 100.0
- CSC Professional Services Group, Inc. Maryland 100.0
- CSC Foreign Enterprises, Inc. Nevada 100.0
- CSC Computer Sciences S.A. France 100.0
- CSC Ouroumoff Consultants S.A. France 100.0
- Computer Sciences Raytheon (Partnership) Florida 60.0
- CSC Healthcare Systems, Inc. California 100.0
- CSC Geographic Technologies, Inc. Nevada 100.0
- CSC International Systems Management, Inc. Nevada 100.0
- CSC Logic, Inc. Texas 100.0
- CSC Consulting, Inc. Massachusetts 100.0
- CSC Weston Group, Inc. Nevada 100.0
- CSC Planmetrics, Inc. Nevada 100.0
- CSC Ventures, Inc. Nevada 100.0
- Fairfax Ventures, Inc. Nevada 100.0
- Computer Sciences Canada Inc. Canada 100.0
- CSC Australia Pty. Limited Australia 100.0
- CSC Computer Sciences GmbH Germany 100.0
- CSC Computer Sciences Services Management GmbH Germany 100.0
- CSC Ploenzke AG Germany 75.0
- CSC Computer Sciences N.V./S.A. Belgium 100.0
- Experteam S.A./N.V. Belgium 60.0
- Medical Business Channel Belgium 100.0
- CSC Computer Sciences B.V. Netherlands 100.0
- CSC Services Management B.V. Netherlands 100.0
- CSC Computer Sciences VOF/SNC (Partnership) Belgium 100.0
- CSC Consulting Ltd United Kingdom 100.0
- CSC Index Limited United Kingdom 100.0
- CSC Computer Sciences Limited United Kingdom 100.0
</TABLE>
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in Registration Statement Nos.
33-26977, 33-36379, 33-50746, 333-00733, 333-00749, 333-00755, 333-00757 and
333-00761 of Computer Sciences Corporation on Forms S-8 of our report dated
May 24, 1996, appearing in this Amendment No. 1 to Annual Report on Form 10-K/A
of Computer Sciences Corporation for the year ended March 29, 1996.
DELOITTE & TOUCHE LLP
Los Angeles, California
June 24, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-29-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-29-1996
<CASH> 104,867
<SECURITIES> 0
<RECEIVABLES> 979,441
<ALLOWANCES> 36,086
<INVENTORY> 0
<CURRENT-ASSETS> 1,144,254
<PP&E> 1,147,448
<DEPRECIATION> 506,646
<TOTAL-ASSETS> 2,595,790
<CURRENT-LIABILITIES> 760,443
<BONDS> 405,471
<COMMON> 56,342
0
0
<OTHER-SE> 1,249,352
<TOTAL-LIABILITY-AND-EQUITY> 2,595,790
<SALES> 0
<TOTAL-REVENUES> 4,242,422
<CGS> 0
<TOTAL-COSTS> 3,336,469
<OTHER-EXPENSES> 252,084
<LOSS-PROVISION> 13,237
<INTEREST-EXPENSE> 35,021
<INCOME-PRETAX> 231,392
<INCOME-TAX> 89,700
<INCOME-CONTINUING> 141,692
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 141,692
<EPS-PRIMARY> 2.48
<EPS-DILUTED> 2.48
</TABLE>
<PAGE>
EXHIBIT 99.1
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, 1995
[_] 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: Computer Sciences Corporation Matched Asset 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
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
DESCRIPTION:
<S> <C>
(a) Financial Statement:
Independent Auditors' Report......................................... F-1
Statement of Net Assets Available for Benefits
As of December 31, 1995.............................................. F-2
Statement of Changes in Net Assets Available for Benefits
For the Two Years Ended December 31, 1995............................ F-3
Notes to the Financial Statements.................................... F-4
(b) Exhibit
Independent Auditors' Consent........................................ E-1
(c) Supplemental Schedules
Schedule of Assets Held for Investment Purposes....................... S-1
Schedule of Report Transaction........................................ S-2
</TABLE>
<PAGE>
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 Computer Sciences Corporation Matched Asset Plan (the "Plan") as of
December 31, 1995 and 1994, 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, 1995 and 1994, and the changes in its 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.
Deloitte & Touche LLP
Los Angeles, California
May 22, 1996
F-1
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
STATEMENTS OF NET ASSETS
AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------------------
1995 1994
---------------- ----------------
<S> <C> <C>
ASSETS
Investments (Note 9):
Short-term investments $ 10,365,460 $ 52,314,744
Long-term investments:
Interest in registered investment
companies:
Brinson U.S. Balanced Fund 61,315,171
Brinson U.S. Bond Fund 48,488,514
Brinson U.S. Stock Only Fund 37,038,021
Brinson U.S. Equity Fund 136,221,964 75,400,349
Mellon Stock Index Fund 33,224,815 14,617,738
CSC Company stock 174,584,246 114,509,484
Employee loans 13,707,311 9,635,030
Plan interest in Master Trust 58,741,224 8,291,602
Guaranteed investment contracts
(Notes 2 and 9) 81,854,138 87,931,851
------------ ------------
Total investments 594,225,693 424,015,969
------------ ------------
Receivables:
Employer contribution 454,444 395,663
Participants' contribution 2,491,947 2,129,209
Accrued Income 41,668 83,981
Plan to plan transfer (Note 8) 903 6,840,600
Other 79,569 110,378
------------ ------------
Total Receivables 3,068,531 9,559,831
------------ ------------
Total Assets 597,294,224 433,575,800
------------ ------------
LIABILITIES
Accounts Payable 949,287 614,367
Accrued Expenses 180,915 106,049
Unsettled Trade Payables 1,122,161
Forfeitures Payable 164,431 113,083
------------ ------------
Total Liabilities 1,294,633 1,955,660
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $595,999,591 $431,620,140
============ ============
</TABLE>
See Notes to Financial Statements
F-2
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------------------
1995 1994
--------------- --------------
<S> <C> <C>
ADDITIONS
Contributions:
Employee $ 58,859,224 $ 46,357,663
Employer 11,477,149 8,228,139
Employee Rollovers 14,294,926 7,282,488
Forfeitures and Other (Note 1) (1,120,945) (550,525)
Transfers From Other Plans (Note 8) 3,925,306 73,856,783
------------ ------------
87,435,660 135,174,548
Investment Income:
Net appreciation in fair value of investments (Note 9) 98,167,163 34,030,696
Interest 6,778,781 6,167,286
Dividends 7,935,204 4,792,408
Plan interest in Master Trust investment income 5,143,489 117,075
------------ ------------
118,024,637 45,107,465
Less Investment Management Fees (594,867) (440,000)
------------ ------------
117,429,770 44,667,465
------------ ------------
Total Additions 204,865,430 179,842,013
------------ ------------
DEDUCTIONS
Distributions to Participants (Notes 1 and 7) 40,485,979 18,940,336
------------ ------------
Total Deductions 40,485,979 18,940,336
------------ ------------
Net Increase 164,379,451 160,901,677
Net Assets Available for Benefits at Beginning of Year 431,620,140 270,718,463
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR
$595,999,591 $431,620,140
============ ============
</TABLE>
See Notes to Financial Statements
F-3
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
For the two years ended December 31, 1995
Note 1 Description of the Plan
-----------------------
The following brief description of the Computer Sciences Corporation Matched
Asset Plan (the "Plan") is provided for general information purposes only.
Participants should refer to the Plan documents for more complete information.
The Plan was adopted by the action of the Board of Directors of Computer
Sciences Corporation (the "Company") taken on November 3, 1986, and constitutes
an amendment and restatement of the Employee Stock Purchase Plan ("the Prior
Plan").
The Plan is a continuation of the Prior Plan and is qualified under the Internal
Revenue Code (the "Code"), as amended, Section 401(a) and, effective as of
January 1, 1987, with respect to the portion thereof that qualifies as a
qualified cash or deferred arrangement, to satisfy the requirement of Code
Section 401(k). It is also subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA").
The Company reserves the right to discontinue its contributions and 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
- -----------------------------
Any eligible employee who has satisfied the Plan's age and service requirements,
and is employed by the Company, and who receives a stated compensation in
respect of employment on the payroll of the Company, is eligible to become a
participant, with the exception of a person who is represented by a collective
bargaining unit and whose benefits have been the subject of good faith
bargaining under a contract that does not specify that such person is eligible
to participate in the Plan. In addition, the Company may determine to exempt
all employees of any division, unit, facility or class from coverage under the
Plan. Any person who leaves the employ of the Company and, at a later time
becomes re-employed, must reapply to participate in the Plan, provided he or she
otherwise meets the eligibility requirements.
There were approximately 14,805 participating employees at December 31, 1995.
F-4
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
For the two years ended December 31, 1995
Employee and Company Contributions
- ----------------------------------
Subject to certain limitations described below, an eligible employee who elects
to become a participant may authorize any whole percentage (at least 1% but not
more than 15%) of such employee's monthly compensation (as defined in the Plan)
to be deferred and contributed to the Trust Fund on his or her behalf, up to a
maximum amount of $9,240 for calendar year 1995. Any compensation deferral in
excess of $9,240, together with income allocable to that excess, 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.
In order to qualify for the special tax treatment accorded to plans by Section
401(k) of the Code, contributions on behalf of participants under the Plan must
meet two nondiscrimination tests designed to prevent a disproportionate
compensation deferral election by employees who are highly compensated in
relation to other employees. The Committee may cause the percentage authorized
by the highly compensated participants to be reduced if the Plan does not meet
both of the nondiscrimination tests.
A participant is not permitted to make voluntary after-tax contributions to the
Plan.
The Company will contribute and forward to the Trust Fund, together with a
compensation deferral contribution equal to each participant's qualifying
compensation deferral, an amount equal to 50% of the first 3% of the
participant's compensation deferral except for a small number of participants,
to whom under the terms of their contract agreement the Company will contribute
an amount equal to 50% of the first 4% of the participant's compensation
deferral. Matching contributions will be invested in the Company Stock Fund,
which invests primarily in the common stock of Computer Sciences Corporation.
Participant Accounts
- --------------------
Each participant's account is credited with the participant's contribution and
allocations of the Company's contribution and, 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 provided from the participant's
vested account.
F-5
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
For the two years ended December 31, 1995
Vesting of Participants' Interests/Forfeitures
- ----------------------------------------------
A participant's interest in his or her Compensation Deferral Account, Retirement
Account, After Tax Account, and Rollover Account is at all times fully vested in
the participant or, when appropriate, in the participant's beneficiary or legal
representative.
The vested interest of each participant in the value of his or her Matching
Contributions Account depends on the number of full years of service such
participant has with the Company, as shown below:
<TABLE>
<CAPTION>
Number of Full Years of Service Vested Interest in Matching Contribution
- ------------------------------- ----------------------------------------
<S> <C>
1 0%
2 25%
3 50%
4 75%
5 100% (except for
a small number of participants, who under the terms of their
contract agreement will vest 100% after 2 years or more)
</TABLE>
Any nonvested portion of the Matching Contributions Account will be forfeited
upon withdrawal from the Plan. Forfeitures may be applied to reduce future
matching contributions by the Company. Such forfeitures during 1995 and 1994
amounted to $1,120,945 and $550,525, respectively.
Distributable Amounts, Withdrawals and Refunds
- ----------------------------------------------
A participant may become entitled to a distribution of his or her distributable
benefit by reason of retirement, death, total and permanent disability,
voluntary termination of employment, or dismissal. The rules of payment of a
participant's distributable benefit depend upon age of the participant, the
number of years of service completed by the participant and the type of
severance. The total amounts distributed during 1995 and 1994 were $39,637,011
and $18,631,991, respectively.
F-6
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
For the two years ended December 31, 1995
While still an employee, a participant may, upon at least a 30 day written
notice to the Committee, make a withdrawal of his or her compensation deferral
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. These withdrawals during 1995 and 1994
totaled $848,968 and $308,345, respectively.
In order for the Plan to meet the nondiscrimination tests, the Committee has
caused the compensation deferral percentage for certain highly compensated
employees to be reduced, which has also resulted in the return of excess
compensation deferrals.
Federal Income Tax Consequences
- -------------------------------
The Plan is qualified 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 would not be 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 would be 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 $9,240 for 1995 and 1994
taxable years of the participant.
(iii) On distribution of a participant's vested interest in the Plan, the
participant generally would be subject to federal income taxation, except that:
(1) tax on "net unrealized appreciation" on any Company 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 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.
F-7
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Assets of the Plan
- ------------------
The assets of the Plan are held in a trust with five sub-accounts representing
the investment options. 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 Company.
Valuation of Investment Securities
- ----------------------------------
Investments in common stocks and mutual funds 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 certificates of deposit, money market funds and corporate
debt instruments (commercial paper) are stated at cost which approximates fair
value.
Valuation of Interest in Pooled Separate Accounts
- -------------------------------------------------
The Plan's interest in pooled separate accounts represent guaranteed investment
contracts. These contracts are fully benefit responsive--access to the funds of
these contracts are not restricted. The guaranteed investment contracts are
valued at contract value in accordance with SOP94-4. Contract value represents
contributions made by participants, plus interest at the contract rates, less
withdrawals or transfers by participants.
The fair value of guaranteed investment contracts of December 31, 1995, based on
the treasury yield curve for similar type of investments, was approximately
$83,860,000 at 7.60%. The average yield on these investments was also 7.60% for
the year ended December 31, 1995.
Payment of Benefits
- -------------------
Benefits are recorded when paid.
F-8
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 3 Income Tax Status
-----------------
The Company has applied for a new determination letter from the Internal Revenue
Service due to amendments to the Plan. No response has yet been received from
the Internal Revenue Service. However, the Plan administrator and the Plans tax
counsel believe that the Plan is designed and is currently being operated in
compliance with applicable requirements of the Code.
Note 4 Reconciliation of Financial Statements to Form 5500
----------------------------------------------------
<TABLE>
<CAPTION>
December 31,
1995 1994
------------ ------------
<S> <C> <C>
Net assets available for benefits per the financial statements $595,999,591 $431,620,140
Amounts allocated to withdrawing participants (7,912,936) (4,060,232)
------------ ------------
Net assets available for benefits per Form 5500 $588,086,655 $427,559,908
============ ============
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
Year ended
December 31, 1995
-----------------
<S> <C>
Benefits paid to participants per the financial statements $40,485,979
Add: Amounts allocated to withdrawing participants at December 31, 1995 7,912,936
Less: Amounts allocated to withdrawing participants at December 31, 1994 (4,060,232)
Benefits paid to participants per the Form 5500 $44,338,683
==============
</TABLE>
F-9
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 5 Investment Funds
----------------
Participant contributions - Subject to rules the Committee may from time to time
adopt, 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, in increments of 10%.
The Fixed Income Fund.
The fund is invested in contracts with insurance companies and 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 the 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 half of the fund is invested in contracts with
insurance companies.
The remainder of the fund (including the proceeds from maturing insurance
contracts, newly invested money and interest from insurance contracts) is in the
Master Trust which was established for the investment of assets of the Plan and
several other Company sponsored benefit plans. The Master Trust is an actively
managed, short-term (1-3 years) U.S. Bond Fund managed by Payden & Rygel. Each
participating plan has an undivided interest in the Master Trust. The assets of
the Master Trust are held by the Trustee. At December 31, 1995 and 1994, the
Plan's interest in the net assets of the Master Trust was approximately 93% and
90%, 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.
The following table represents the fair value of investments for the Master
Trust.
<TABLE>
<CAPTION>
December 31,
1995 1994
----------- ----------
<S> <C> <C>
Investments at fair value:
Corporate bonds $15,709,394 $ 130,881
U.S. government securities 44,628,463 7,528,733
Short-term investments 2,085,848 1,465,367
Accrued income 648,263 82,653
----------- ----------
$63,071,968 $9,207,634
=========== ==========
</TABLE>
F-10
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Investment income for the Master Trust is as follows:
<TABLE>
<CAPTION>
December 31,
1995 1994
-------------- --------------
<S> <C> <C>
Investment income:
Net appreciation (depreciation) in fair
value of investments $2,230,357 $(178,518)
Interest:
Corporate bonds 659,260 6,880
U.S. government securities 2,234,361 335,616
Short-term investments 241,759 17,571
---------- ---------
5,365,737 181,549
Less investment management fees (17,548) (4,363)
$5,348,189 $ 177,186
========== =========
</TABLE>
The Balanced Fund.
The fund is invested with Brinson Partners Inc. The Brinson Partners Inc. U.S.
Bond and U.S. Stock Only Funds are actively managed portfolios invested in U.S.
stocks, bonds and cash. The stock portfolio consists of large, intermediate and
small companies. The bond portion of the portfolio is primarily invested in U.S.
Treasury, government agency and corporate issues. This fund's investment
objective is to maximize total return, consisting of capital appreciation and
current income.
The Active Equity Fund.
The fund is invested with Brinson Partners Inc. The Brinson Partners Inc. U.S.
Equity Fund is invested in common stocks traded in the U.S. The fund's
objective is to maximize total return which consists of capital appreciation and
current income.
F-11
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
The Stock Index Fund.
The fund is managed by Mellon Capital Management. The objective of the fund is
to exceed the performance of the Standard & Poor's 500 Stock Index. The Stock
Index Fund either invests in a stock portfolio designed to track the performance
of the S&P Stock Index and/or creates a synthetic S&P 500 portfolio using
(unlevered) financial futures and options. Assets used as collateral for
futures/options positions are comprised of various market or debt instruments.
The Company Stock Fund.
Amounts allocated to this investment alternative will be used to purchase shares
of CSC common stock which will be held for the benefit of the participant. The
performance of this investment will depend upon the performance of CSC's stock.
The Trustee may purchase Company stock on national securities exchanges or
elsewhere.
After an initial election has been made, a participant may designate a different
Fund into which future compensation deferral contributions shall be invested as
of the first day of any payroll period that coincides with or immediately
follows the first day of a calendar quarter. In addition, a participant may
elect to redesignate any amounts in his or her accounts as of the last business
day of any calendar quarter to be invested in a different Fund. These elections
may be made by giving such advance notice as may be required by the Plan
administrator.
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 Company Stock Fund. An exception is in the case of a participant
who has (i) attained at least age 59 1/2, or (ii) has been credited with at
least five years of service and has attained at least age 55 and has made an
election to designate different Funds.
F-12
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Number of Participants
- ----------------------
The approximate number of participants having account balances in each of the
six separate funds at December 31, 1995 was as follows:
<TABLE>
<CAPTION>
Investment Fund Number of Participants
--------------- ----------------------
<S> <C>
The Fixed Income Fund.... 11,072
The Balanced Fund........ 10,121
The Active Equity Fund... 11,671
The Stock Index Fund..... 6,331
The Company Stock Fund... 17,390
The Loan Fund............ 2,371
</TABLE>
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.
Note 6 Participant Loans
-----------------
The Plan allows participants to borrow from their vested account balances from a
minimum of $1,000 up to a maximum of $50,000 or 50% of their vested account
balance, 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
primary residence. Loans are recorded at cost, which approximate fair value, on
the Statement of Net Assets.
The loans (which are accounted for in the Loan Fund) are deducted from the
participants' vested account balances based on their investment elections with
respect to the funds described in Note 5. Loan repayments are credited to the
participants' accounts according to their current investment election.
Note 7 Benefits Payable
----------------
As of December 31, 1995 and 1994, net assets available for benefits included
benefits of $7,912,937 and $4,060,232 respectively, due to participants who have
withdrawn from participation in the Plan.
F-13
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 8 Merging of Plans
----------------
During the two years ending December 31, 1995, the Plan merged with First
Chicago Corporation Savings Incentive Plan; James River Corporation of Virginia
Stockplus Investment Plan, The DiBianca-Bergman Group, Inc. Profit Sharing Plan;
CSC Professional Services Group, Inc. Tax Deferred Savings and Retirement Plan;
and CSC Index Savings and Retirement Plan. A detail description of these
mergers is as follows:
The Plan received $1,402,158 on December 1, 1995 and $182,529 on December 21,
1995 from the First Chicago Corporation Savings Incentive Plan. These amounts
represent the balances of 29 participants as of November 30, 1995.
The Plan received $1,335,627 on October 27, 1995, $71,388 on November 6, 1995,
and $15,596 on December 28, 1995 from the James River Corporation of Virginia
Stockplus Investment Plan. These amounts represent the balances of 73
participants as of September 30, 1995.
The Plan received $934,151 on October 27, 1995 and $202 on November 21, 1995
from The DiBianca-Berkman Group, Inc. Profit Sharing Plan. These amounts
represent the balances of 31 participants as of October 27, 1995.
The Plan received $2,300,481 on March 8, 1995, $1,929,791 on March 10, 1995, and
$2,608,494 on May 31, 1995 from the CSC Professional Services Group, Inc. Tax-
Deferred Savings and Retirement Plan (PSG). These amounts were accrued in 1994
and represent the remaining balances for 1,516 participants as of December 30,
1994. On April 24, 1995, the Plan returned $7,981 to Corestate Bank due to
excess transfer from the PSG merger.
The Plan received $37,254,403 on December 30, 1994 from the CSC Professional
Services Group, Inc. Tax-Deferred Savings and Retirement Plan.
The Plan received $5,267,201 on October 31, 1994, $75,742 on November 8, 1994,
$16,944,960 on November 17, 1994, $3,168,175 on November 21, 1994, and $10,683
on November 30, 1994 from the CSC Index Savings and Retirement Plan, a
subsidiary of the Company. These amounts represent the balances of 492
participants as of October 31, 1994.
F-14
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
The Plan received $1,842,274 on October 11, 1994, $1,715,535 on October 24,
1994, $464 on November 3, 1994, $6,226 on November 10, 1994, $85,596 on November
30, 1994, and $241,702 on December 31, 1994 from the Cleveland Consulting
Associates, Inc. Profit Sharing and Savings Plan, a subsidiary of the Company.
These amounts represent the balances of 81 participants as of September 31,
1994.
F-15
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Note 9 Investments 1995 PRINCIPAL
---------------- AMOUNT FAIR
OR SHARES COST VALUE
-------------------- -------------------- -------------------
<S> <C> <C> <C>
FIXED INCOME FUND
Guaranteed Investment Contracts $ 81,854,138 $ 81,854,138 $ 81,854,138
Interest in Master Trust* sh. 57,775,322 57,507,378 58,741,224
BNY Collective Short-Term Invst. Fund sh. 1,186,638 1,186,638 1,186,638
BALANCED FUND
Brinson Partners Inc.:
U.S. Bond Fund* sh. 460,104 46,867,192 48,488,514
U.S. Stock Only Fund* sh. 170,758 34,575,827 37,038,021
U.S. Cash Management Fund sh. 4,620,046 4,620,046 4,620,046
BNY Collective Short-Term Invst. Fund sh. 709,001 709,001 709,001
ACTIVE EQUITY FUND
Brinson Partners Inc.:
U.S. Equity Portfolio* sh. 563,003 98,207,385 136,221,964
U.S. Cash Management Fund sh. 1 1 1
BNY Collective Short-Term Invst. Fund sh. 1,359,310 1,359,310 1,359,310
STOCK INDEX FUND
Mellon Capital:
Mellon Capital Mgmt. Stock Index Fund* sh. 82,951 27,186,835 33,224,815
Mellon Temporary Investment Fund sh. 12 12 12
BNY Collective Short-Term Invst. Fund sh. 1,181,885 1,181,885 1,181,885
COMPANY STOCK FUND
Computer Sciences Common Stock* sh. 2,485,185 62,965,219 174,584,246
BNY Collective Short-Term Invst. Fund sh. 1,308,567 1,308,567 1,308,567
EMPLOYEE LOAN FUND
Participant Loans 13,707,311 13,707,311 13,707,311
------------ ------------
$433,236,745 $594,225,693
============ ============
TOTAL LONG-TERM INVESTMENTS $422,871,285 $583,860,233
TOTAL SHORT-TERM INVESTMENTS 10,365,460 10,365,460
------------ ------------
$433,236,745 $594,225,693
============ ============
</TABLE>
*represents investments
greater than 5% of Plan's net assets
F-16
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Note 9 Investments 1994 PRINCIPAL
---------------- AMOUNT FAIR
OR SHARES COST VALUE
-------------------- -------------------- -------------------
<S> <C> <C> <C>
FIXED INCOME FUND
Guaranteed Investment Contracts $ 87,931,852 $ 87,931,852 $ 87,931,851
Interest in Master Trust 8,375,171 8,416,709 8,291,602
Bank Hapoalim Certificate of Deposit 95,000 95,000 95,000
BNY Short-Term Money Market Fund 50,283,617 50,283,617 50,283,617
BALANCED FUND
Brinson Partners Inc.:
U.S. Balanced Fund* sh. 481,311 60,207,237 61,315,171
U.S. Cash Management Fund 155 155 155
BNY Short-Term Money Market Fund 482,442 482,442 482,442
ACTIVE EQUITY FUND
Brinson Partners Inc.:
U.S. Equity Portfolio* sh. 421,556 67,445,234 75,400,349
U.S. Cash Management Fund 183 183 183
BNY Short-Term Money Market Fund 489,341 489,341 489,341
STOCK INDEX FUND
Mellon Capital:
Mellon Capital Mgmt. Stock Index Fund sh. 108,171 14,432,565 14,617,738
Mellon Temporary Investment Fund 45 45 45
BNY Short-Term Money Market Fund 216,576 216,576 216,576
COMPANY STOCK FUND
Computer Sciences Common Stock* sh. 2,245,284 46,674,522 114,509,484
BNY Short-Term Money Market Fund 747,385 747,385 747,385
EMPLOYEE LOAN FUND
Participant Loans 9,635,030 9,635,030
------------ ------------
$347,057,893 $424,015,969
TOTAL LONG-TERM INVESTMENTS 294,743,149 371,701,225
TOTAL SHORT-TERM INVESTMENTS 52,314,744 52,314,744
------------ ------------
$347,057,893 $424,015,969
============ ============
</TABLE>
*represents investments
greater than 5% of Plan's assets
F-17
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 10 Statement of Net Assets Available for Benefits by Fund
------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------------------------------------------------------------------------------
FIXED ACTIVE STOCK COMPANY EMPLOYEE
INCOME BALANCED EQUITY INDEX STOCK LOANS
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Long-term investments
At fair value
Interest in registered
investment companies $85,526,535 $136,221,964 $33,224,815
CSC Company stock $174,584,246
Plan interest in
Master Trust $ 58,741,224
Employee loans $13,707,311
Guarantee investment
contracts--at contract
value 81,854,138
Short-term investments 1,186,638 5,329,047 1,359,311 1,181,897 1,308,567
Receivables
Employer's contribution 1,133 317 589 181 452,224
Participants' contribution 564,364 470,031 728,796 262,477 466,279
Accrued income 5,448 26,337 3,687 1,776 4,420
Plan to plan transfer (202) 1,105
Interfund transfers (208,078) 42,025 172,270 201,904 (208,121)
Other (126,538) (28,475) 74,600 51,557 51,425 57,000
----------------------------------------------------------------------------------------------------
TOTAL ASSETS 142,018,127 91,365,817 138,561,217 34,924,607 176,660,145 13,764,311
LIABILITIES
Accounts payable 150,899 123,862 149,280 73,133 684,875 (232,762)
Accrued expenses 28,900 60,318 86,098 5,389 210
Forfeitures payable 164,431
----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 179,799 184,180 235,378 78,522 849,516 (232,762)
----------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR
BENEFITS $141,838,328 $91,181,637 $138,325,839 $34,846,085 $175,810,629 $13,997,073
====================================================================================================
</TABLE>
F-18
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 10 Statement of Net Assets Available for Benefits by Fund
------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1994
------------------------------------------------------------------------------------------------------
FIXED ACTIVE STOCK COMPANY EMPLOYEE
INCOME BALANCED EQUITY INDEX STOCK LOANS
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Long-term investments
At fair value
Interest in registered
investment companies $61,315,171 $75,400,349 $14,617,738
CSC Company stock $114,509,484
Plan interest in Master
Trust $ 8,291,602
Employee loans $ 9,635,030
Guarantee investment
contracts--at contract
value 87,931,851
Short-term investments 50,378,619 482,597 489,524 216,621 747,383
Receivables
Employer's contribution 1,459 394 592 276 392,942
Participant's contribution 559,359 466,887 600,569 171,034 331,360
Accrued income 77,594 1,501 2,007 601 2,278
Plan to plan transfer 4,232,106 2,608,494
Interfund transfers (376,879) 7,330 135,777 (15,104) 248,876
Other 110,378
------------------------------------------------------------------------------------------------------
TOTAL ASSETS 151,095,711 62,273,880 76,628,818 14,991,166 116,342,701 12,243,524
LIABILITIES
Accounts payable 504,515 512,095 512,239 56,625 662,352 (511,298)
Accrued expenses 3,563 44,795 53,527 4,164
Forfeitures payable 113,083
------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 508,078 556,890 565,766 60,789 775,435 (511,298)
-----------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR
BENEFITS $150,587,633 $61,716,990 $76,063,052 $14,930,377 $115,567,266 $12,754,822
=======================================================================================================
</TABLE>
F-19
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 10 Statement of Changes in Net Assets Available for Benefits by Fund
-----------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------------------------------------------------------------------------------
FIXED ACTIVE STOCK COMPANY EMPLOYEE
INCOME BALANCED EQUITY INDEX STOCK LOANS
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTABLE TO:
Investment Income
Net (Depreciation)
Appreciation in Fair Value
of Investments $14,762,527 $ 30,074,070 $ 5,852,806 $ 47,477,760
Interest Income $ 6,533,680 100,918 56,177 34,508 53,490 $ 8
Dividend Income 3,739,825 2,730,134 1,465,245
Investment Management Fees (67,999) (215,252) (291,527) (19,880) (210)
Plan interest in Master
Trust investment income 5,143,489
-----------------------------------------------------------------------------------------------------
11,609,170 18,388,018 32,568,854 7,332,679 47,531,040 8
-----------------------------------------------------------------------------------------------------
Contributions
Employee 15,048,897 12,548,910 18,017,448 5,765,258 12,415,545 (4,936,834)
Employer 29,090 7,055 15,919 5,993 11,419,092
Employee Rollovers 4,152,909 2,313,312 3,494,005 1,546,117 2,788,583
Forfeitures & Other (1,896) (1,119,049)
Transfers From Other Plans 1,046,454 629,561 897,177 882,203 398,524 71,388
Interfund Transfers (26,941,864) 2,710,681 16,295,489 6,739,080 1,196,622 (8)
-----------------------------------------------------------------------------------------------------
(6,666,410) 18,209,519 38,720,038 14,938,651 27,099,317 (4,865,454)
-----------------------------------------------------------------------------------------------------
TOTAL ADDITIONS 4,942,760 36,597,537 71,288,892 22,271,330 74,630,357 (4,865,446)
-----------------------------------------------------------------------------------------------------
DEDUCTIONS TO NET ASSETS
ATTRIBUTABLE TO:
Distributions to Participants 13,692,065 7,132,890 9,026,105 2,355,622 14,386,994 (6,107,697)
-----------------------------------------------------------------------------------------------------
TOTAL DEDUCTIONS 13,692,065 7,132,890 9,026,105 2,355,622 14,386,994 (6,107,697)
-----------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE (8,749,305) 29,464,647 62,262,787 19,915,708 60,243,363 1,242,251
-----------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year 150,587,633 61,716,990 76,063,052 14,930,377 115,567,266 12,754,822
-----------------------------------------------------------------------------------------------------
End of Year $141,838,328 $91,181,637 $138,325,839 $34,846,085 $175,810,629 $13,997,073
=====================================================================================================
</TABLE>
F-20
<PAGE>
COMPUTER SCIENCES CORPORATION
MATCHED ASSET PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 10 Statement of Changes in Net Assets Available for Benefits by Fund
-----------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
---------------------------------------------------------------------------------------------------
FIXED ACTIVE STOCK COMPANY EMPLOYEE
INCOME BALANCED EQUITY INDEX STOCK LOANS
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTABLE TO:
Investment Income
Net (Depreciation)
Appreciation in Fair Value
of Investments $(2,626,475) $ (560,772) $ (592,326) $ 37,810,269 $ -
Interest Income $ 6,067,846 27,909 36,005 10,418 25,108
Dividend Income 2,509,596 1,611,421 671,391
Investment Management Fees (10,062) (191,547) (219,035) (19,356)
Plan interest in Master
Trust investment income 117,075
--------------------------------------------------------------------------------------------------
6,174,859 (280,517) 867,619 70,127 37,835,377
--------------------------------------------------------------------------------------------------
Contributions
Employee 13,303,310 11,712,291 13,780,843 4,020,885 6,574,913 (3,034,579)
Employer 43,877 11,192 15,721 7,291 8,150,058
Employee Rollovers 3,104,419 1,297,286 1,452,418 544,440 883,925
Forfeitures & Other (550,525)
Transfers From Other Plans 41,351,343 6,310,988 15,912,705 3,203,633 3,847,923 3,230,191
Interfund Transfers 17,149,895 (5,090,225) (9,834,940) (2,904,367) 677,649 1,988
--------------------------------------------------------------------------------------------------
74,952,844 14,241,532 21,326,747 4,871,882 19,583,943 197,600
--------------------------------------------------------------------------------------------------
TOTAL ADDITIONS 81,127,703 13,961,015 22,194,366 4,942,009 57,419,320 197,600
--------------------------------------------------------------------------------------------------
DEDUCTIONS TO NET ASSETS
ATTRIBUTABLE TO:
Distributions to Participants 7,462,876 3,716,711 3,844,322 1,144,243 7,356,517 (4,584,333)
--------------------------------------------------------------------------------------------------
TOTAL DEDUCTIONS 7,462,876 3,716,711 3,844,322 1,144,243 7,356,517 (4,584,333)
--------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE 73,664,827 10,244,304 18,350,044 3,797,766 50,062,803 4,781,933
--------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year 76,922,806 51,472,686 57,713,008 11,132,611 65,504,463 7,972,889
--------------------------------------------------------------------------------------------------
End of Year $150,587,633 $61,716,990 $76,063,052 $14,930,377 $115,567,266 $12,754,822
==================================================================================================
</TABLE>
F-21
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-00755 of Computer Sciences Corporation Matched Asset Plan on Form S-8 of
our report dated May 22, 1996, appearing in this Annual Report on Form 11-K of
Computer Sciences Corporation Matched Asset Plan for the year ended December 31,
1995.
DELOITTE & TOUCHE LLP
Los Angeles, California
June 24, 1996
E-1
<PAGE>
1995
FORM 5500 ITEM 27(a)
COMPUTER SCIENCES CORPORATION
EIN 95-2043126
MATCHED ASSET PLAN 333
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
<TABLE>
<CAPTION>
(c) DESCRIPTION OF INVESTMENT INCLUDING MATURITY
(a) (b) IDENTITY OF ISSUE, BORROWER, DATE, RATE OF INTEREST, COLLATERAL, PAR
LESSOR OR SIMILAR PARTY OR MATURITY VALUE (d) COST (e) CURRENT VALUE
- ---- -------------------------------- ------------------------------------------------ ------------ ------------
<C> <S> <C> <C> <C> <C> <C>
Hartford Life Insurance Co. Guaranteed Investment Contract 7.80% 6/30/98 $ 1,706,170 $ 1,706,170
Hartford Life Insurance Co. Guaranteed Investment Contract 7.80% 6/30/98 2,498,079 2,498,079
Protective Life Insurance Co. Guaranteed Investment Contract 9.00% 9/30/96 6,781,608 6,781,608
Protective Life Insurance Co. Guaranteed Investment Contract 9.00% 9/30/96 97,538 97,538
Allstate Life Insurance Co. Guaranteed Investment Contract 8.85% 4/1/96 4,742,841 4,742,841
Hartford Life Insurance Co. Guaranteed Investment Contract 8.80% 6/30/97 5,385,842 5,385,842
General American Life Insurance Co. Guaranteed Investment Contract 8.62% 6/30/96 5,529,929 5,529,929
Prudential Life Insurance Co. Guaranteed Investment Contract 7.92% 3/31/97 11,794,197 11,794,197
Pacific Mutual Life Insurance Co. Guaranteed Investment Contract 6.85% 3/31/98 4,175,169 4,175,169
Provident National Assurance Guaranteed Investment Contract 7.80% 9/31/97 5,472,788 5,472,788
Prudential Life Insurance Co. Guaranteed Investment Contract 5.77% 3/31/97 3,744,803 3,744,803
Canada Life Insurance Co. Guaranteed Investment Contract 5.75% 3/31/98 3,389,615 3,389,615
Protective Life Insurance Co. Guaranteed Investment Contract 5.66% 9/31/97 6,962,884 6,962,884
Provident National Assurance Guaranteed Investment Contract 8.01% 3/31/97 4,064,111 4,064,111
Providian Corporation Guaranteed Investment Contract 5.08% 12/31/97 3,954,052 3,954,052
Allstate Life Insurance Co. Guaranteed Investment Contract 7.78% 9/30/97 3,152,438 3,152,438
New York Life Insurance Co. Guaranteed Investment Contract 9.95% 4/1/97 1,843,276 1,843,276
Principal Mutual Life Insurance Co. Guaranteed Investment Contract 8.10% 4/1/97 1,479,547 1,479,547
Massachusetts Mutual Life Insurance Co. Guaranteed Investment Contract 9.25% 3/31/96 2,413,383 2,413,383
Lincoln Life Insurance Co. Guaranteed Investment Contract 6.55% n/a 257,518 257,518
CNA Insurance Co. Guaranteed Investment Contract 4.65% 4/1/96 2,408,350 2,408,350
Brinson Trust Company, Inc. Mutual Fund - U.S. Bond Fund 46,867,192 48,488,514
Brinson Trust Company, Inc. Mutual Fund - U.S. Stock Fund 34,575,827 37,038,021
Brinson Trust Company, Inc. Mutual Fund - U.S. Equity Portfolio 98,207,385 136,221,964
Mellon Capital Management Corp. Mutual Fund - Stock Index Fund 27,186,835 33,224,815
* Computer Sciences Corporation Common Stock 62,965,219 174,584,246
* Computer Sciences Corporation Employee Loan Fund (8.25%-10%)(3/1/95-1/14/11) 13,707,311 13,707,311
Brinson Trust Company, Inc. U.S. Cash Management Fund 4,620,048 4,620,048
Mellon Capital Management Corp. Mellon Temporary Investment Fund 12 12
* Bank of New York BNY Collective Short-Term Invst. Fund 5,745,400 5,745,400
------------ ------------
TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $375,729,367 $535,484,469
============ ============
* represents party in interest
</TABLE>
n/a=not applicable
S-1
<PAGE>
1995
Form 5500 Item 27(d)
Computer Sciences Corporation
EIN 95-2043126
Matched Asset Plan
SINGLE REPORTABLE SECURITY TRANSACTIONS
EXCEEDING 5% OF FUND ASSETS
<TABLE>
<CAPTION>
(f) CURRENT
PRICE OF ASSET
(a) IDENTITY OF PARTY (b) DESCRIPTION (c) PURCHASE (d) SELLING (e) COST OF ON TRANSACTION (h) NET GAIN
INVOLVED OF ASSET PRICE PRICE ASSET DATE OR (LOSS)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Brinson Trust Company, Inc. Mutual Fund -
U.S. Bond Fund
- Purchases $46,322,256 $46,322,256
Brinson Trust Company, Inc. Mutual Fund -
U.S. Stock Only
Fund
- Purchases 33,688,913 33,688,913
- Sales
Brinson Trust Company, Inc. Mutual Fund -
U.S. Balanced
Fund
- Purchases 73,079,954 $73,079,954 73,079,954
- Sales $84,063,621 73,079,954 84,063,621 $10,983,667
Bank of New York BNY Short-Term
Money Market Fund
- Purchases 30,002,664 30,002,664 30,002,664
- Sales 60,002,664 60,002,664 60,002,664
</TABLE>
S-2
<PAGE>
1995
Form 5500 Item 27(d)
Computer Sciences Corporation
EIN 95-2043126
Matched Asset Plan 333
SERIES OF REPORTABLE SECURITY TRANSACTIONS
EXCEEDING 5% OF FUND ASSETS
<TABLE>
<CAPTION>
(f) CURRENT
PRICE OF ASSET
(a) IDENTITY OF PARTY (b) DESCRIPTION (c) PURCHASE (d) SELLING (e) COST OF ON TRANSACTION (h) NET GAIN
INVOLVED OF ASSET PRICE PRICE ASSET DATE OR (LOSS)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Brinson Trust Company, Inc. Mutual Fund -
U.S. Bond
Fund
- Purchases $ 47,169,253 $ 47,169,253 $ 47,169,253
Brinson Trust Company, Inc. Mutual Fund -
U.S. Stock
Fund
- Purchases 34,575,827 34,575,827 34,575,827
Brinson Trust Company, Inc. Mutual Fund -
U.S. Balanced
Fund
- Sales $ 84,360,668 73,341,005 84,360,668 $11,019,664
Brinson Trust Company, Inc. Mutual Fund -
U.S. Equity
Fund
- Purchases 30,814,100 30,814,100 30,814,100
SHORT-TERM INVESTMENTS
Bank of New York BNY Short-Term
Money Market
Fund
- Purchases 187,612,949 187,612,949 187,612,949
- Sales 234,436,117 234,436,117 234,436,117
</TABLE>
S-3
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Act of 1934, the
Computer Sciences Corporation Retirement Committee has duly caused this annual
report to be signed on its behalf by the undersigned thereunto duly authorized.
Computer Sciences Corporation Matched Asset Plan
Date: By: /s/ Leon J. Level
-------------------------------------
Leon J. Level
Chairman,
Computer Sciences Corporation
Retirement Plans Committee
<PAGE>
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, 1995
[_] 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: Computer Sciences Corporation 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
<PAGE>
COMPUTER SCIENCES CORPORATION OUTSOURCING, INC.
HOURLY SAVINGS PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
DESCRIPTION:
(a) Financial Statements:
Independent Auditors' Report.......................................... F-1
Statement of Net Assets Available for Benefits
As of December 31, 1995............................................... F-2
Statement of Changes in Net Assets Available for Benefits
For the Two yeas Ended December 31, 1995.............................. F-3
Notes to the Financial Statements..................................... F-4
(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
</TABLE>
<PAGE>
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 Computer Sciences Corporation Outsourcing, Inc. Hourly Savings Plan (the
"Plan") as of December 31, 1995 and 1994, 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, 1995 and 1994, and the changes in its 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
Sections 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.
Deloitte & Touche LLP
Los Angeles, California
May 22, 1996
F-1
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
STATEMENTS OF NET ASSETS
AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Investments
Short-term (Note 8) $ 8,135 $ 46,242
Long-term (Note 8):
Interest in registered investment
companies:
Mellon Capital Government Fund 993,410 1,248,149
Brinson U.S. Equity Fund 1,048,069 747,822
CSC common stocks 340,923 310,947
Interest in Master Trust 131,597 9,146
Guarantee investment contracts 2,257,557 2,572,857
---------- ----------
Total investments 4,779,691 4,935,163
Receivables:
Participants' Contributions 7,916 9,355
Employer Contribution 19,798
Accrued income 119 201
Other 10,371 6,395
---------- ----------
Total receivables 18,406 35,749
---------- ----------
Total assets 4,798,097 4,970,912
---------- ----------
LIABILITIES
Accrued expenses 875 867
Forfeitures payable 1,488
Other 3,952
---------- ----------
Total Liabilities 6,315 867
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $4,791,782 $4,970,045
========== ==========
</TABLE>
See notes to financial statements
F-2
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS
AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
--------------------------------
1995 1994
--------------- --------------
<S> <C> <C>
ADDITIONS
Contributions
Employee $ 235,970 $ 303,453
Employer 110,397 136,174
Forfeitures and Other (Note 1) (4,095) (2,769)
---------- ----------
342,272 436,858
Investment Income
Net realized and unrealized appreciation in
fair value of investments 413,589 14,761
Interest 189,243 204,251
Dividends 111,139 107,513
Plan interest in Master Trust investment income 4,359 (216)
---------- ----------
718,330 326,309
Investment Management Fees (3,581) (17,043)
---------- ----------
714,749 309,266
---------- ----------
Total Additions 1,057,021 746,124
---------- ----------
DEDUCTIONS
Distributions to Participants (Notes 1 and 7) 1,235,284 959,931
---------- ----------
Total Deductions 1,235,284 959,931
---------- ----------
Net Decrease (178,263) (213,807)
Net assets available for benefits at beginning of year 4,970,045 5,183,852
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $4,791,782 $4,970,045
========== ==========
</TABLE>
See notes to financial statements
F-3
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 1 Description of the Plan
-----------------------
The following brief description of the Computer Sciences Corporation
Outsourcing, Inc. Hourly Savings Plan (the "Plan"), formerly the TMD Hourly
Savings Plan, of Computer Sciences Corporation (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 officers 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 Trustee, The Bank of New York, 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 an hourly paid employee of Computer
Sciences Corporation Outsourcing Inc. and are a member 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 142 participating employees at December 31, 1995.
F-4
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCIN INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
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 employees'
base earnings deferred and contributed to the Trust fund cannot exceed $9,240
for calendar year 1995, 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 $9,240 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 fund as the participant contributions.
The Plan does not permit employees to rollover a qualified distribution from
another Plan.
F-5
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Participant Accounts
- --------------------
Each participant's account is credited with the participant's contribution and
allocations the Company's contribution and, 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. Company matching contributions and investment
earnings thereon vest according to a five-year cliff vesting schedule as shown
in the following table:
<TABLE>
<CAPTION>
Number of Full Years of Service Vested Interest in Matching Contribution
- ------------------------------- -----------------------------------------
<S> <C>
1 0%
2 0%
3 0%
4 0%
5 or more 100%
</TABLE>
The 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 1995 and 1994 totaled
$1,235,284 and $959,931, respectively.
F-6
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
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 1995 and 1994.
Federal Income Tax Consequences
- -------------------------------
The Plan is qualified 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 would not be 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 would be 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 $9,240 for 1995 and 1994
taxable years of the participant.
(iii) On distribution of a participant's vested interest in the Plan, the
participant generally would be subject to federal income taxation, except that:
(1) tax on "net unrealized appreciation" on any Company 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 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.
F-7
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
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 Company.
Valuation of Investment Securities
- ----------------------------------
Investments in common stocks and mutual funds 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 certificates of deposit, money market funds and corporate
debt instruments (commercial paper) are stated at cost which approximates fair
value.
Valuation of Interest in Pooled Separate Accounts
- -------------------------------------------------
The Plan's interest in pooled separate accounts represent guaranteed investment
contracts. The guaranteed investments contracts are fully benefit-responsive.
Access to participant's funds are not restricted. These 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.
The fair value of guaranteed investment contracts at December 31, 1995, based on
treasury yield curves for similar type investments, was approximately $2,360,000
at 7.60%. The average yield on these investments was 7.70% for the year ended
December 31, 1995.
Payment of Benefits
- -------------------
Benefits are recorded when paid.
F-8
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
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).
Note 4 Reconciliation of Financial Statement to Form 5500
---------------------------------------------------
<TABLE>
<CAPTION>
December 31,
1995 1994
------------ -------------
<S> <C> <C>
Net assets available for benefits per the
financial statements $4,791,782 $4,970,045
Amounts allocated to withdrawing participants (32,278) (76,362)
---------- ----------
Net assets available for benefits per Form 5500 $4,759,504 $4,893,683
========== ==========
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
Year Ended
December 31, 1995
------------------
<S> <C>
Benefits paid to participants per the financial statements $ 1,235,284
Add: Amounts allocated to withdrawing participants at December 31, 1995 32,278
Less: Amounts allocated to withdrawing participants at December 31, 1994 (76,362)
---------------
Benefits paid to participants per the Form 5500 $ 1,191,200
===============
</TABLE>
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.
F-9
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
The Fixed Income Fund.
The fund is invested in contracts with insurance companies and 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 the financial institution to make agreed upon payments and
that agreement is not secured, insured or guaranteed by the Company or any other
third party.
The remainder of the fund (including the proceeds from maturing insurance
contracts, newly invested money and interest from insurance contracts) is in the
Master Trust which was established for the investment of assets of the Plan and
several other Company sponsored benefit plans. The Master Trust is an actively
managed, short-term (1-3 years) U.S. Bond Fund managed by Payden & Rygel. Each
participating plan has an undivided interest in the Master Trust. The assets of
the Master Trust are held by the Trustee. At December 31, 1995 and 1994, the
Plan's interest in the net assets of the Master Trust was approximately 0.21%
and 0.10%, 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.
The following table represents the fair value of investments for the Master
Trust.
<TABLE>
<CAPTION>
December 31,
1995 1994
----------- ----------
<S> <C> <C>
Investments at fair value:
Corporate bonds $15,709,394 $ 130,881
U.S. government securities 44,628,463 7,528,733
Short-term investments 2,085,848 1,465,367
Accrued income 648,263 82,653
----------- ----------
$63,071,968 $9,207,634
=========== ==========
</TABLE>
F-10
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Investment income for the Master Trust is as follows:
<TABLE>
<CAPTION>
December 31,
1995 1994
------------ ---------------
<S> <C> <C>
Investment income:
Net appreciation (depreciation) in fair value
of investments $2,230,357 $(178,518)
Corporate bonds 659,260 6,880
U.S. government securities 2,234,361 335,616
Short-term investments 241,759 17,571
---------- ---------
5,365,737 181,549
Less investment management fees 17,548 4,363
---------- ---------
$5,348,189 $ 177,186
========== =========
</TABLE>
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 fund is invested with Brinson Partners Inc. The Brinson Partners Inc. U.S.
Equity Portfolio is invested in common stocks traded in the U.S. The fund's
objective is to maximize total return which consists of capital appreciation and
current income.
The Company Stock Fund.
Amounts allocated to this investment alternative will be used to purchase shares
of Computer Sciences Corporation common stock are that 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
Company stock on national securities exchanges or elsewhere.
F-11
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Number of Participants
- ----------------------
The approximate number of participants having account balances in each of the
four separate funds at December 31, 1995 were as follows:
<TABLE>
<CAPTION>
Investment Fund Number of Participants
--------------- ----------------------
<S> <C>
The Fixed Income Fund 123
The Government Bond Fund 64
The Active Equity Fund 75
The Company Stock Fund 19
</TABLE>
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.
Note 6 Participant Loans
-----------------
The Plan has a loan provision in place which is available to participants
covered by certain bargaining units. No loans were outstanding as of December
31, 1995.
Note 7 Benefits Payable
----------------
As of December 31, 1995 and 1994, net assets available for benefits included
benefits of $32,278 and $76,362, respectively, due to participants who have
withdrawn from participation in the Plan.
F-12
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 8 Investments 1995
----------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT FAIR
OR SHARES COST VALUE
----------- --------- ----------
<S> <C> <C> <C>
FIXED INCOME FUND
Guaranteed Investment Contracts:
Hartford Life $1,361,217 $1,361,217 $1,361,217
Canada Life Insurance Company 48,285 48,285 48,285
Providian Corporation 272 272 272
Pacific Mutual Life Insurance 117,103 117,103 117,103
Provident National Assurance 623,190 623,190 623,190
Protective Life 37,242 37,242 37,242
Prudential Life Insurance Company 70,248 70,248 70,248
Interest in Master Trust 128,093 131,987 131,597
BNY Short-Term Money Market Fund 3,700 3,700 3,700
GOVERNMENT BOND FUND
Mellon Capital:
Government Bond Fund sh 8,553. 968,620 993,410
Cash Management Fund 23 23 23
ACTIVE EQUITY FUND
Brinson Partners Inc.:
U.S. Equity Portfolio sh. 4,332. 712,141 1,048,069
U.S. Cash Management Fund 2 2 2
BNY Short-Term Money Market Fund 2,625 2,625 2,625
COMPANY STOCK FUND
Computer Sciences Common Stock sh. 4,853 144,613 340,923
BNY Short-Term Money Market Fund 1,785 1,785 1,785
---------- ----------
$4,223,053 $4,779,691
========== ==========
TOTAL LONG-TERM INVESTMENTS $4,214,918 $4,771,556
TOTAL SHORT-TERM INVESTMENTS 8,135 8,135
---------- ----------
$4,223,053 $4,779,691
========== ==========
</TABLE>
F-13
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 8 Investments 1994
----------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT FAIR
OR SHARES COST VALUE
----------- --------- ----------
<S> <C> <C> <C>
FIXED INCOME FUND
Guaranteed Investment Contracts:
Hartford Life $ 1,547,509 $1,547,509 $1,547,509
Canada Life Insurance Com 57,455 57,455 57,455
Capital Holdings Corporation 259 259 259
Pacific Mutual Life Insurance 134,343 134,343 134,343
Provident National Assurance 708,666 708,666 708,666
Protective Life 43,209 43,209 43,209
Prudential Life Insurance Company 81,416 81,416 81,416
Interest in Master Trust 9,300 10,026 9,146
BNY Short-Term Money Market Fund 42,054 42,054 42,054
GOVERNMENT BOND FUND
Mellon Capital:
Government Bond Fund sh. 12,291 1,288,050 1,248,149
Cash Management Fund 71 71 71
BNY Short-Term Money Market 1,178 1,178 1,178
Fund
ACTIVE EQUITY FUND
Brinson Partners Inc.:
U.S. Equity Portfolio sh. 4,181 645,980 747,822
U.S. Cash Management Fund 86 386 386
BNY Short-Term Money Market 1,571 1,571 1,571
Fund
COMPANY STOCK FUND
Computer Sciences Common Stock sh. 6,097 157,783 310,947
BNY Short-Term Money Market Fund 982 982 982
---------- ----------
$4,720,938 $4,935,163
========== ==========
TOTAL LONG-TERM INVESTMENTS $4,674,696 $4,888,921
TOTAL SHORT-TERM INVESTMENTS 46,242 46,242
---------- ----------
$4,720,938 $4,935,163
========== ==========
</TABLE>
F-14
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 9 Statements of Net Assets Available for Benefits by Fund
-------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-----------------------------------------------------------------
LIQUID FIXED GOVERNMENT ACTIVE COMPANY
RESERVE INCOME BOND EQUITY STOCK
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
Long-term investments
At fair value
Interest in investment registered companies $993,410 $1,048,069
Interest in Master Trust $ 131,597
CSC Common Stock $340,923
At contract value
Guarantee Investment 2,257,557
Contracts
Short-term investments 3,700 23 2,627 1,785
Receivables
Participants' contribution 4,150 826 2,095 845
Accrued income 96 6 12 5
Other 10,371
Interfund transfers (1,564) 61 135 1,368
--------------------------------------------------------------
Total Assets 2,395,536 994,326 1,052,938 355,297
LIABILITIES
Accrued expenses 51 157 667
Forfeitures payable 1,065 423
Other 2,843 551 454 104
--------------------------------------------------------------
Total liabilities 3,959 708 1,544 104
--------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ - $2,391,577 $993,618 $1,051,394 $355,193
==============================================================
</TABLE>
F-15
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 9 Statements of Net Assets Available for Benefits by Fund
-------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-----------------------------------------------------------------
LIQUID FIXED GOVERNMENT ACTIVE COMPANY
RESERVE INCOME BOND EQUITY STOCK
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
Long-term investments
At fair value
Interest in investment registered companies $1,248,149 $747,822
Interest in Master Trust $ 9,146
CSC Common Stock $310,947
At contract value
Guarantee Investment Contracts 2,572,857
Short-term investments $ - 42,054 1,249 1,957 982
Receivables
Employer's contribution 11,286 2,614 4,140 1,758
Participant's contribution 5,397 1,240 1,907 811
Accrued income 160 14 21 6
Other 3,920 5,279 346 (3,150)
Interfund transfers (583) 4 181 398
-------------------------------------------------------------------
Total Assets 2,644,237 1,258,549 756,374 311,752
LIABILITIES
Accrued expenses 4 268 595
-------------------------------------------------------------------
Total liabilities 4 268 595
-------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $ - $2,644,233 $1,258,281 $755,779 $311,752
===================================================================
</TABLE>
F-16
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 10 Statements of Changes in Net Assets Available for Benefits by Fund
------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
------------------------------------------------------------------
LIQUID FIXED GOVERNMENT ACTIVE COMPANY
RESERVE INCOME BOND EQUITY STOCK
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment income
Net Appreciation in Fair Value of Investments $ 74,509 $ 242,798 $ 96,282
Interest in Master Trust Investment Income $ 4,359
Interest Income 188,419 361 316 147
Dividend Income 88,980 22,159
Investment Management Fees (133) (996) (2,452)
------------------------------------------------------------------
192,645 162,854 262,821 96,429
------------------------------------------------------------------
Contributions
Employee 130,083 20,997 58,852 26,038
Employer 61,175 12,550 25,824 10,848
Employee Rollovers
Forfeitures & Other (2,777) (179) (927) (212)
Interfund Transfers (18,753) 2,111 15,722 920
------------------------------------------------------------------
169,728 35,479 99,471 37,594
------------------------------------------------------------------
Total additions 362,373 198,333 362,292 134,023
------------------------------------------------------------------
DEDUCTIONS TO NET ASSETS ATTRIBUTABLE TO:
Distributions to Participants 615,029 462,996 66,677 90,582
------------------------------------------------------------------
Total deductions 615,029 462,996 66,677 90,582
------------------------------------------------------------------
NET (DECREASE) INCREASE (252,656) (264,663) 295,615 43,441
------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 2,644,233 1,258,281 755,779 311,752
------------------------------------------------------------------
End of Year $ - $2,391,577 $ 993,618 $1,051,394 $355,193
==================================================================
</TABLE>
F-17
<PAGE>
COMPUTER SCIENCES CORPORATION
OUTSOURCING INC. HOURLY SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE TWO YEARS ENDED DECEMBER 31, 1995
Note 10 Statements of Changes in Net Assets Available for Benefits by Fund
------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
------------------------------------------------------------------
LIQUID FIXED GOVERNMENT ACTIVE COMPANY
RESERVE INCOME BOND EQUITY STOCK
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS ATTRIBUTABLE TO:
Investment income
Net Appreciation in Fair Value of Investments $ (102,164) $ 2,517 $114,408
Interest in Master Trust Investment Income $ (216)
Interest Income $ 145 201,195 2,139 505 267
Dividend Income 87,851 19,662
Investment Management Fees (3,858) (236) (9,000) (3,949)
------------------------------------------------------------------
(3,713) 200,743 (21,174) 18,735 114,675
------------------------------------------------------------------
Contributions
Employee (93) 183,041 45,022 57,341 18,142
Employer 77,597 17,010 25,326 16,241
Employee Rollovers
Forfeitures & Other (1,546) (1,223)
Interfund Transfers 3,806 (7,239) (2,886) (1,516) 7,835
------------------------------------------------------------------
3,713 251,853 59,146 79,928 42,218
------------------------------------------------------------------
Total additions 452,596 37,972 98,663 156,893
------------------------------------------------------------------
DEDUCTIONS TO NET ASSETS ATTRIBUTABLE
TO:
Distributions to Participants 593,818 113,060 159,639 93,414
------------------------------------------------------------------
Total deductions 593,818 113,060 159,639 93,414
------------------------------------------------------------------
NET (DECREASE) INCREASE (141,222) (75,088) (60,976) 63,479
------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of Year 2,785,455 1,333,369 816,755 248,273
------------------------------------------------------------------
End of Year $2,644,233 $1,258,281 $755,779 $311,752
==================================================================
</TABLE>
F-18
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-00757 of Computer Sciences Corporation Outsourcing Inc. Hourly Savings Plan
on Form S-8 of our report dated May 22, 1996, appearing in this Annual Report on
Form 11-K of Computer Sciences Corporation Outsourcing Inc. Hourly Savings Plan
for the year ended December 31, 1995.
DELOITTE & TOUCHE LLP
Los Angeles, California
June 24, 1996
E-1
<PAGE>
1995
FORM 5500 ITEM 27(a)
COMPUTER SCIENCES CORPORATION
EIN 88-0276684
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
<TABLE>
<CAPTION>
(a) (b) IDENTITY OF ISSUE, BORROWER, (c) DESCRIPTION OF INVESTMENT, INCLUDING MATURITY DATE,
LESSOR OR SIMILAR PARTY RATE OF INTEREST, COLLATERAL, PAR OR MATURITY VALUE (d) COST (e) CURRENT VALUE
- ---- -------------------------------- -------------------------------------------------------- -------- -----------------
<C> <S> <C> <C> <C> <C> <C>
Canada Life Insurance Company Guaranteed Investment Contract 5.75% 3/31/98 $ 48,285 $ 48,285
Pacific Mutual Life Insurance Guaranteed Investment Contract 6.85% 3/31/98 117,103 117,103
Protective Life Insurance Company Guaranteed Investment Contract 5.66% 9/30/98 37,242 37,242
Provident National Assurance Company Guaranteed Investment Contract 7.80% 9/30/97 623,190 623,190
Providian Corporation Guaranteed Investment Contract 5.08% 12/31/97 272 272
Prudential Insurance Company Guaranteed Investment Contract 5.77% 3/31/98 70,248 70,248
The Hartford Life Insurance Company Guaranteed Investment Contract 7.80% 6/30/98 1,361,217 1,361,217
Mellon Bank N.A. Mutual Fund - Government Bond Fund 968,620 993,410
Brinson Trust Company, Inc. Mutual Fund - U.S. Equity Portfolio 712,141 1,048,069
* Computer Sciences Corporation Common Stock 144,613 340,923
Brinson Trust Company, Inc. U.S. Cash Management Fund 1 1
Mellon Bank N.A. Mellon Bank Temporary Investment Fund 23 23
* Bank of New York BNY Short-Term Money Market Fund 8,111 8,111
---------- ----------
TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $4,091,066 $4,648,094
========== ==========
</TABLE>
* represent party in interest
S-1
<PAGE>
1995
FORM 5500 ITEM 27(d)
COMPUTER SCIENCES CORPORATION
EIN 88-0276684
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
SINGLE TRANSACTIONS IN EXCESS OF 5%
<TABLE>
<CAPTION>
(h) CURRENT VALUE
OF ASSET ON
(c) PURCHASE (g) COST TRANSACTION TRANSACTION (i) NET GAIN
(a) IDENTITY OF PARTY INVOLVED (b) DESCRIPTION OF ASSET PRICE OF ASSET DATE DATE OR (LOSS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mellon Capital Management Short-Term Money Market
Fund
- Sales $800,183 $800,183 $800,183
Mellon Capital Management Mutual Fund - Bond Fund
- Purchases $800,183 800,183 800,183
- Sales $835,306 815,289 835,306 $20,017
</TABLE>
S-2
<PAGE>
1995
FORM 5500 ITEM 27(d)
COMPUTER SCIENCES CORPORATION
EIN 88-0276684
CSC OUTSOURCING INC. HOURLY SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
SERIES TRANSACTIONS IN THE AGGREGATE IN EXCESS OF 5%
<TABLE>
<CAPTION>
(h) CURRENT VALUE
OF ASSET ON (i) NET GAIN
(c) PURCHASE (g) COST TRANSACTION TRANSACTION OR (LOSS)
(a) IDENTITY OF PARTY INVOLVED (b) DESCRIPTION OF ASSET PRICE OF ASSET DATE DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bank of New York BNY Short-Term Money
Market Fund
- Purchases $1,006,249 $1,006,249 $1,006,249
- Sales $1,043,924 1,043,924 1,043,924
Mellon Capital Management Short-Term Money Market
Fund
- Purchases 1,010,489 1,010,489 1,010,489
- Sales 1,010,537 1,010,537 1,010,537
Mellon Capital Management Mutual Fund - Bond Fund
- Purchases 909,460 909,460 909,460
- Sales 1,238,708 1,204,623 1,238,708 $34,085
The Hartford Life Guarantee Insurance
Insurance Co. Contract
- Purchases 115,052 115,052 115,052
- Sales 301,344 301,344 301,344
</TABLE>
S-3
<PAGE>
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Act of 1934, the
Computer Sciences Corporation Retirement Committee has duly caused this annual
report to be signed on its behalf by the undersigned thereunto duly authorized.
Computer Sciences Corporation Outsourcing, Inc.
Hourly Savings Plan
Date: June 26, 1996 By: /s/ Leon J. Level
---------------------------------------------
Leon J. Level
Chairman,
Computer Sciences Corporation
Retirement Plans Committee
