<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 2)
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/X/ Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Computer Sciences Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Computer Associates
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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Computer
Associates
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<PAGE>
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Presentation to
Shareholders
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Computer
======================================================================Associates
<PAGE>
Agenda
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Strategic Rationale for
Proposed Combination
----------------------------
CA's Performance and Outlook
----------------------------
CA's Offer Is Fair to
CSC Shareholders
----------------------------
Entrenchment Actions
by CSC's Board
----------------------------
CA's Legal Strategy
----------------------------
Conclusion
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Computer
======================================================================Associates
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Strategic Rationale for
Proposed Combination
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Computer
======================================================================Associates
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Strategic Rationale
================================================================================
The combination of CA and CSC would create the premier systems integration and
software company, solidifying existing relationships while giving the Company a
significant competitive advantage in attracting new clients
o CA is the world's leading provider of IT management software
o CA's products are used on virtually all platforms, including mainframes,
midrange, and client / server systems
Computer
======================================================================Associates
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Strategic Rationale
================================================================================
o CSC is a leading provider of large-scale outsourcing, systems integration,
applications development, consulting, transaction processing and other
professional services to commercial and government customers
o Historically a provider of IT services to the federal government, CSC has
become one of the top three providers of commercial outsourcing services
The combined company intends to provide a full range of bundled computer
software and services, capitalizing on cross-selling opportunities within its
corporate clients
Computer
======================================================================Associates
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Strategic Rationale
================================================================================
The Company is positioning itself to become the premier end-to-end solutions
provider, offering its clients a full range of bundled IT software and services
o CA currently offers superior end-to-end software
o Systems integration, management consulting and IT outsourcing services will
strengthen existing customer relationships and allow for cross-selling of
software and services
o With increasingly complex technological requirements and intense global
competition, companies are seeking broad solutions to their IT problems
- Clients are looking to outsource much, if not all, of their IT systems,
including hardware, software and management
Computer
======================================================================Associates
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Strategic Rationale
================================================================================
o Shift towards IT outsourcing is altering the software distribution paradigm
- IT consultants managing entire systems will become the salesmen and
purchasers of enterprise management software
- Clients are less concerned with specific software brands and more focused on
solutions to IT problems
- Bundling software with implementation and management will be critical for
large multinational customers
Computer
======================================================================Associates
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Strategic Rationale
================================================================================
Acquisition of CSC will combine the premier systems management software company
with one of the largest providers of IT outsourcing, systems integration and
consulting services
o CSC's 40,000 consultants will provide a worldwide distribution network
uniquely positioned to cross-sell CA's high margin systems management software
o IT outsourcing and other services can be sold through CA's large and
diversified customer base
- Service revenues generally exceed 2-3x software revenues
- Long-term systems management service contracts strengthen existing software
relationships
Computer
======================================================================Associates
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Strategic Rationale
================================================================================
o The combination of CA and CSC will create the only company capable of
providing end-to-end software and services solutions across a full range of
hardware and software operating systems
- The only other company capable of providing a broad range of software and
services is IBM, which is tied to its own hardware and operating systems
- The acquisition will enhance existing relationships with hardware and
software manufacturers such as Microsoft, Hewlett-Packard, NCR and Sun
Microsystems
Computer
======================================================================Associates
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CA's Performance
and Outlook
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Computer
======================================================================Associates
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CA's History
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o Founded in 1976, CA initially focused on providing systems management software
for mainframe computers
o In the early 1990s, management undertook a strategic review of the business
- Extensive discussions with clients to determine the direction of the
industry
- Evaluation of CA's core strengths and market positioning
o Management recognized the growth in the client / server market, as well as
customers' desires for client / server systems management software comparable
to mainframe software
- Contrary to the then prevailing opinion, management also believed in the
stability of the mainframe market
o CA developed a strategy focused on obtaining a full line of enterprise
management software for use on mainframe, midrange and client / server
platforms
- Acquisitions and internal development were used to broaden the Company's
product portfolio
Computer
======================================================================Associates
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CA's Current Environment
================================================================================
o Over the past 5 years CA has made a number of key acquisitions designed to
broaden the applications and platforms of its software products
- Acquisitions included ASK / Ingres (relational database and tools), Legent
(mainframe utilities), and Cheyenne (client / server utilities)
o The Company also internally developed Unicenter, a systems management software
line targeted toward the client / server market
- Unicenter revenues have grown to over $1 billion annually in four years
o CA now has the premier line of enterprise management software
- Over 500 software products running on over forty operating systems and
hardware platforms
o With LTM December 1997 revenues of $4.5 billion, CA is the third largest
independent software company in the world (behind Microsoft and Oracle)
- CA's products are used by 95% of the Fortune 500 companies
Computer
======================================================================Associates
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CA's Revenues Have Grown At A Rapid Pace(a)
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($ in Millions)
[The following table was represented as a bar graph in the printed material.]
1991 $1,301
1992 $1,509
1993 $1,841
1994 $2,148
1995 $2,623
1996 $3,505
1997 $4,040
(a) Fiscal years ended March 31.
Computer
======================================================================Associates
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CA Generates Strong Cash Flows
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($ in Millions)
EBITDA and EBITDA Margin Growth(a)
[The following table was represented as a bar graph in the printed material.]
EBITDA EBITDA Margin
1991 $321 24.6%
1992 $417 27.6%
1993 $595 32.3%
1994 $835 38.9%
1995 $1,212 46.2%
1996 $1,678 47.9%
1997 $2,056 50.9%
(a) Fiscal years ended March 31.
Computer
======================================================================Associates
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CA's Growth Through Acquisitions
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($ in thousands)
CA has demonstrated its ability to rapidly assimilate acquired companies and
enhance operational performance
[The following tables were represented as bar graphs in the printed material.]
Revenue Per Employee Net Income Per Employee(a)
1991 $190 $19
1992 $212 $23
1993 $252 $34
1994 $303 $57
1995 $363 $81
1996 $414 $89
1997 $437 $104
(a) Figures for 1995-1997 exclude non-cash acquisition charges, primarily
write-offs of capitalized software development costs.
Computer
======================================================================Associates
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CA's Growth Through Acquisitions
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Since its inception, CA has completed more than 70 acquisitions, including the
following:
Price Revenue
Year Company ($MM) ($MM) Description
- --------------------------------------------------------------------------------
1987 UCCEL $800 $150 Mainframe utilities and banking
software
1988 Applied Data Research 170 170 Mainframe database
1989 Cullinet 300 203 Mainframe database and
DEC VAX applications
1991 On-Line Software 100 98 Mainframe utilities
1991 Pansophic Systems 280 235 Mainframe systems software
1994 Ask Group 310 400 Ingres relational database and
tools
1995 Legent 1,800 507 Mainframe utilities
1996 Cheyenne Software 1,200 188 Client / server utilities
Computer
======================================================================Associates
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CA's Historical and Projected Financial Performance
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($ in Millions)
1993 1994 1995 1996 1997 1998E(a)
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Revenue $1,841 $2,148 $2,623 $3,505 $4,040 $4,653
Growth 22.0% 16.7% 22.1% 33.6% 15.3% 15.2%
EBITDA(b) $ 595 $ 835 $1,212 $1,678 $2,056 $2,344
Margin 32.3% 38.9% 46.2% 47.9% 50.9% 50.4%
EBIT(b) $ 388 $ 629 $ 954 $1,274 $1,632 $1,995
Margin 21.1% 29.3% 36.4% 36.3% 40.4% 42.9%
Net Income(b) $ 246 $ 401 $ 581 $ 726 $ 725 $1,174
Margin 13.3% 18.7% 22.2% 20.7% 17.9% 25.2%
(a) Source: Analyst estimates.
(b) Figures for fiscal years 1995, 1996 and 1997 exclude expenses for
purchased research and development of $249, $1,303 and $598, respectively;
these figures are tax-effected at a 40% rate for net income.
Computer
======================================================================Associates
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CA's Offer Is Fair to
CSC Shareholders
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Computer
======================================================================Associates
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CA's Offer for CSC
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o Cash tender offer for 100% of CSC shares at $108 per share
o CA's bid is fully financed
- $10 billion committed bank credit facility provided by CSFB, B of A, Chase
and NationsBank
o Offer conditions are not unusual, including:
- Minimum Condition: CA must end up with a majority of CSC's shares
- Rights Condition: CSC's poison pill rights must be eliminated
- Business Combination Condition: The acquirer standstill provisions contained
in Nevada law are declared void or inapplicable
Computer
======================================================================Associates
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Selected Comparable M&A Transaction Multiples
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Enterprise Value/ Equity Value/
------------------------ -------------
LTM LTM LTM LTM
Revenues EBITDA EBIT Net Income
-------- ------ ---- ----------
Computer Associates / Computer Sciences 1.52x 11.8x 21.9x 23.3x
Commercial:
Affiliated Computer Services / Genix 1.63 11.7 21.4 37.6
MCI / SHL Systemshouse 1.17 16.0 38.6 NM
ALLTEL / Systematics 2.26 10.8 16.7 26.1
EDS / AT Kearney 1.13 NM NM NM
Government:
Litton / Primark's TASC Unit 1.00 9.6 NA NA
TRW / BDM 0.91 12.2 15.9 36.1
Affiliated Computer / Computer Data 1.29 17.1 20.9 30.5
Northrop Grumman / Logicon 1.11 10.2 11.7 20.8
Litton / Black & Decker's PRC Unit 0.59 NA NA NA
Computer
======================================================================Associates
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Offer Price Per CSC Share
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o CA continues to be prepared to pay up to $114 per CSC share in an expedited,
negotiated transaction
o CA commenced the tender offer at $108 per share only after CSC refused to
enter into negotiations at $114 per CSC share
- Reflects concern about reduction in the value of CSC's business should CSC
continue to refuse to negotiate, forcing the process to become protracted
o Even the $108 price may not be sustainable over a long period of time
Computer
======================================================================Associates
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Selected Wall Street Commentary on Price
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2/17 Tom Masi "I probably would accept $108."
Cowen & Co. "If CA gets this, they'll be an incredible power."
2/17 Duane Eatherly "This is a very untenable position given that
BancOne $108-a-share is pretty fair valuation." "This is
something they should present to shareholders
and, frankly, present an alternative."
2/17 Wall Street "At least two deep-pocketed [white knight]
Journal candidates, [IBM and AT&T], have expressed little
interest in topping CA's old $108-a-share bid."
2/17 Moshe Katri "CSC can't postpone it forever."
UBS
Computer
======================================================================Associates
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Selected Wall Street Commentary on Strategic Fit
================================================================================
2/17 Gary Kaminsky "The likelihood of a white knight coming in here
Cowen & Co. is almost zero."
2/23 Karl Keirstead [From Computer Associates' perspective,
Lehman Brothers the deal would] "make sense."
2/12 Gibbs Moody "Over the long term it's actually a courageous
UBS and very strategic move by Computer
Associates." "This really gives Computer
Associates a global reach."
2/12 Charles Phillips "I think this is a good strategy for Computer
MSDW Associates and one we've been discussing and
urging for several years."
Computer
======================================================================Associates
<PAGE>
Selected Wall Street Commentary on Strategic Fit
================================================================================
2/11 Lou Dobbs "Not one of the analysts...thought it was a
Moneyline bad idea, saying, in fact, that it's a tremendous
strategic step for you to take."
2/11 Scott Gurvey "Analysts say the combination makes sense..."
Nightly Business
Report
2/11 John Faig "...I don't think anybody really doubts that
Paine Webber a combination would be synergistic."
Computer
======================================================================Associates
<PAGE>
CA Is Committed To Completing the CSC Transaction
================================================================================
o The transaction is important to CA's strategy of becoming an end-to-end
software and services solutions provider
o CA has committed significant resources and is resolved to see this acquisition
through to the end
- CA has paid nearly $30 million in bank commitment fees
- The decline in CA's stock price post-announcement will prevent or postpone
the payment of approximately $1.1 billion of incentive compensation to CA
senior management
o The transaction is a win-win for both CA and CSC shareholders
Computer
======================================================================Associates
<PAGE>
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Entrenchment Actions
by CSC's Board
--------------------------
Computer
======================================================================Associates
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Entrenchment Actions by CSC's Board
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o CSC's Board and management have taken entrenchment actions at the expense of
CSC shareholders
o Bylaw amendments - seeking to (1) eliminate CSC shareholder right to call
special meeting and (2) impose extreme (90%) vote as obstacle to fair exercise
of shareholder voting rights
o Opting out of Nevada Control Share Statute - seeking to avoid shareholder
meeting and opportunity for shareholder referendum
o Poison pill amendments
o Golden parachutes for senior management
o "Head in the Sand" attitude
Computer
======================================================================Associates
<PAGE>
Extreme Reaction by CSC's Board
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o The CSC Board's latest bylaw amendments represent an extreme reaction that we
are confident will be dismantled by the courts
- The amplitude of the response makes it easy for the court to see that CSC
management and the Board are trying to entrench themselves
o The bylaw amendments purport to require approval by 90% of the outstanding
stock for every one of CA's proposals
- CSC's Board took this desperate measure because they recognized that the
proposals are legally valid and can be adopted by 2/3 or a majority of the
shares under the existing bylaws
Computer
======================================================================Associates
<PAGE>
Extreme Reaction by CSC's Board
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o The new bylaws are a clear violation of Nevada law as announced in Hilton-ITT
- Once an acquirer launches a proxy fight and tender offer, defensive actions
that touch upon issues of control and purposefully disenfranchise
shareholders are strongly suspect
o Existing bylaws also guarantee shareholders' right to amend bylaws by vote or
consent of 50% of the outstanding shares
Computer
======================================================================Associates
<PAGE>
"Head In The Sand Attitude" of CSC's Management and Board
================================================================================
CSC management is not focused on shareholder value
o Refusal to discuss transaction issues
o Refusal to negotiate price
o Failure to present a credible alternative that would benefit CSC shareholders
Computer
======================================================================Associates
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CA's Legal Strategy
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Computer
======================================================================Associates
<PAGE>
CA's Legal Strategy
================================================================================
CA has a three-pronged approach intended to remove sufficient CSC directors to
elect a new board majority
o Consent solicitation to act in lieu of a shareholders' meeting
o Agent designation solicitation to call a special meeting
o Annual meeting of shareholders
Computer
======================================================================Associates
<PAGE>
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Conclusion
----------------
Computer
======================================================================Associates
<PAGE>
Shareholders Must Take Aggressive Action Promptly
================================================================================
CA is committed to providing CSC shareholders the opportunity to decide whether
to accept its offer in a fair referendum at the earliest possible date
o In support of our efforts, we ask that CSC shareholders do the following:
- Vote FOR all of CA's proposals
- Tender shares
- Force the CSC Board and management to negotiate with CA or provide a
credible alternative to deliver shareholder value
Computer
======================================================================Associates
<PAGE>
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in the preceding solicitation materials, including
any forecasts, projections and descriptions of anticipated synergies referred to
therein, including any statements contained herein regarding the development or
possible assumed future results of operations of Computer Associates'
businesses, the markets for Computer Associates' services and products,
anticipated expenditures, regulatory developments and the effects of the
Computer Associates Offer (as such term is defined in Computer Associates'
filing on Schedule 14D-1 dated February 17, 1998, as amended) and the Proposed
Merger (as such term is defined in Computer Associates' filing on Schedule 14D-1
dated February 17, 1998, as amended), any statements preceded by, followed by or
that include the words "believes," "expects," "anticipates," or similar
expressions, and other statements contained or incorporated by reference herein
regarding matters that are not historical facts, are or may constitute
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995). Because such statements are subject to risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. All subsequent written and oral
forward-looking statements attributable to Computer Associates or persons acting
on its behalf are expressly qualified in their entirety by the cautionary
statements set forth or referred to above in this paragraph. Investors are
cautioned not to place undue reliance on such statements, which speak only as of
the date hereof. Computer Associates undertakes no obligations to release
publicly any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Computer
======================================================================Associates
<PAGE>
Proxy Solicitation Language
Computer Associates and the Computer Associates Nominees (as enumerated below)
are participants in the solicitation of consents, proxies and agent designations
from Computer Sciences Corporation shareholders. The Computer Associates
Nominees are Charles B. Wang, Sanjay Kumar, Russell Artzt, Peter A. Schwartz,
Steven M. Woghin, Charles P. McWade, Ira Zar, Michael A. McElroy, David Kaplan,
Robert Toth, Richard Chiarello, Lisa Savino, Gary Quinn, Abraham Poznanski and
Douglas Robinson. None of the Computer Associates Nominees will receive any
additional compensation for their participation in this solicitation.
Computer Associates owns, through a wholly owned subsidiary, 170,000 shares of
common stock of Computer Sciences Corporation ("Computer Sciences" or the
"Company"). None of the Computer Associates Nominees owns any shares of Computer
Sciences common stock.
Computer Associates has also retained Bear, Stearns & Co. Inc. and its
affiliates ("Bear Stearns") to provide certain financial advisory services to
Computer Associates. Bear Stearns is acting as Dealer Manager in connection
with the Offer and as financial advisor to Computer Associates and CAI
Computer Services Corp., a wholly owned subsidiary of Computer Associates, in
connection with the proposed acquisition of the Company, but Bear Stearns has
not been retained to specifically assist in this solicitation. Computer
Associates is obligated to pay to Bear Stearns, if, as more fully described
in the engagement letter relating to Bear Stearns' engagement, during the
term of the engagement or within 12 months thereafter Computer Associates
acquires the Company or more than 50% of its outstanding voting securities, a
fee of $5 million and a fee of $1 million (which will be credited against
such $5 million fee) if Computer Associates requests Bear Stearns to render a
customary fairness opinion.
Computer
======================================================================Associates
<PAGE>
Proxy Solicitation Language (Cont.)
Bear Stearns is also entitled to act as sole lead underwriter, placement agent
and financial advisor in connection with certain debt and equity financings (and
certain refinancings) and certain asset sales for a specified period following
the acquisition and to receive fees in connection therewith. In addition,
Computer Associates has agreed to reimburse Bear Stearns for its reasonable
expenses, including reasonable fees and disbursements of its counsel, incurred
in rendering its services under its engagement agreement with Computer
Associates and has agreed to indemnify Bear Stearns against certain liabilities
and expenses in connection with the Offer and the Proposed Merger, including
certain liabilities under the federal securities laws. Bear Stearns from time to
time renders various investment banking services to Computer Associates and its
affiliates for which it is paid customary fees.
In connection with Bear Stearns' engagement as financial advisor, Computer
Associates anticipates that Michael J. Urfirer, Senior Managing Director of Bear
Stearns, Lisa M. Price, Senior Managing Director of Bear Stearns and Barry J.
Cohen, Senior Managing Director of Bear Stearns, none of whom will receive
additional compensation for such solicitation, may communicate in person, by
telephone or otherwise with a limited number of institutions, brokers or other
persons who are shareholders for the purpose of assisting in this solicitation.
Bear Stearns will not receive any fee for, or in connection with, such
solicitation activities by its employees apart from the fees it is otherwise
entitled to receive as described above. None of the above-named employees of
Bear Stearns own any shares of Computer Sciences Corporation common stock.
Computer
======================================================================Associates
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Computer
Associates
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