<PAGE>
PROSPECTUS
[LOGO]
$200,000,000
6 1/4% NOTES DUE MARCH 15, 2009
INTEREST PAYABLE MARCH 15 AND SEPTEMBER 15
ISSUE PRICE: 99.484%
The notes will mature on March 15, 2009. Interest will accrue from March 8,
1999. We may redeem the notes in whole or part at any time at the redemption
price described on page 12.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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<TABLE>
<CAPTION>
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS THE COMPANY
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per note 99.484% .650% 98.834%
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Total $ 198,968,000 $ 1,300,000 $ 197,668,000
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</TABLE>
The notes will not be listed on any national securities exchange. Currently,
there is no public market for the notes.
It is expected that delivery of the notes will be made to investors on or about
March 8, 1999.
J.P. MORGAN & CO.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
March 3, 1999
<PAGE>
No person is authorized to give any information or to make any representations
other than those contained or incorporated by reference in this prospectus, and,
if given or made, such information or representations must not be relied upon as
having been authorized. This prospectus does not constitute an offer to sell or
the solicitation of an offer to buy any securities other than the securities
described in this prospectus or an offer to sell or the solicitation of an offer
to buy such securities in any circumstances in which such offer or solicitation
is unlawful. Neither the delivery of this prospectus, nor any sale made
hereunder, shall, under any circumstances, create any implication that there has
been no change in our affairs since the date hereof or that the information
contained or incorporated by reference herein is correct as of any time
subsequent to the date of such information.
TABLE OF CONTENTS
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PAGE
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Where You Can Find More Information........................................................................ 3
Forward-Looking Statements................................................................................. 4
The Company................................................................................................ 5
Recent Developments........................................................................................ 7
Use of Proceeds............................................................................................ 8
Capitalization............................................................................................. 9
Selected Financial Data.................................................................................... 10
Description of the Notes................................................................................... 12
Underwriting............................................................................................... 21
Legal Matters.............................................................................................. 22
Experts.................................................................................................... 22
</TABLE>
WITHIN THIS PROSPECTUS, WE SOMETIMES REFER TO YEARS WITHOUT SPECIFYING A MONTH
OR DAY. IN ALL SUCH CASES, UNLESS WE SPECIFICALLY REFER TO A CALENDAR YEAR, THE
REFERENCE IS TO OUR FISCAL YEAR ENDED ON THE FRIDAY CLOSEST TO MARCH 31 OF SUCH
YEAR. WHENEVER WE REFER TO THE "COMPANY" OR TO "US," OR USE THE TERMS "WE" OR
"OUR" IN THIS PROSPECTUS, WE ARE REFERRING TO COMPUTER SCIENCES CORPORATION AND
ITS SUBSIDIARIES. HOWEVER, FOR PURPOSES OF THE SECTION ENTITLED "DESCRIPTION OF
THE NOTES," WHENEVER WE REFER TO THE "COMPANY" OR TO "US," OR USE THE TERMS "WE"
OR "OUR," WE ARE REFERRING ONLY TO COMPUTER SCIENCES CORPORATION.
2
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). You may
read and copy any document we file at the SEC's public reference rooms in
Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-732-0330 for further information on the public reference rooms. You may
also obtain copies of these materials from the public reference section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Our
SEC filings are also available to the public from the SEC's web site at
http://www.sec.gov. You may also read and copy reports and other information we
file at the office of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005. Information about our company is also available to the
public from our website at http://www.csc.com.
We have filed a registration statement on Form S-3 with the SEC under the
Securities Act of 1933, as amended. This prospectus does not contain all of the
information set forth in the registration statement. You should read the
registration statement for further information about us and the notes. You may
inspect the registration statement and its exhibits without charge at the office
of the SEC at 450 Fifth Street, N.W., in Washington, D.C. 20549, and you may
obtain copies from the SEC at prescribed rates.
The SEC allows us to "incorporate by reference" the information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus. The information filed by us with the
SEC in the future will update and supersede this information. We incorporate by
reference the documents listed below and any future filings made by us with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, until we sell all the notes:
1. Our Annual Report on Form 10-K for the fiscal year ended April 3,
1998;
2. Our Quarterly Report on Form 10-Q for the quarterly period ended
July 3, 1998;
3. Our Quarterly Report on Form 10-Q for the quarterly period ended
October 2, 1998; and
4. Our Quarterly Report on Form 10-Q for the quarterly period ended
January 1, 1999.
You may request a copy of these filings, at no cost, by writing or calling us at
the following address or telephone number:
Investor Relations
Computer Sciences Corporation
2100 East Grand Avenue
El Segundo, California 90245
(310) 615-0311
3
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FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference statements that do not
directly or exclusively relate to historical facts. Such statements are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. You can typically identify forward-looking
statements by the use of forward-looking words, such as "may," "will," "could,"
"project," "believe," "anticipate," "expect," "estimate," "continue,"
"potential," "plan," "forecasts," and the like. These statements represent our
intentions, plans, expectations and beliefs and are subject to risks,
uncertainties and other factors. Many of these factors are outside our control
and could cause actual results to differ materially from such forward-looking
statements. These factors include, among others:
- general economic conditions in countries in which we do business
- competitive pressures
- changes in the financial condition of our major commercial customers
- changes in the demand for information technology outsourcing and business
process outsourcing
- changes in U.S. federal government spending levels for information
technology services
- the future profitability of our customer contracts
- our ability to consummate strategic acquisitions and alliances
- our ability to attract and retain key personnel
- our ability to continue to develop and expand our service offerings to
address emerging business demands and technological trends
- our ability to become Year 2000 ready and the ability of our customers and
suppliers to become Year 2000 ready
4
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THE COMPANY
GENERAL
We are one of the world leaders in the information technology ("IT") services
industry. For forty years, we have helped our clients use IT more efficiently,
thus improving their operations and profitability. We do not have exclusive
agreements with hardware or software providers, and we believe that our "vendor
neutrality" enables us to better identify and manage solutions specifically
tailored to each client's needs.
We offer a broad array of professional services to industry and government,
including:
- OUTSOURCING--Operating all or a portion of a client's technology
infrastructure, including systems analysis, applications development,
network operations, desktop computing and data center management
- SYSTEMS INTEGRATION--Designing, developing, implementing and integrating
complete information systems
- CONSULTING--Advising clients on the acquisition and strategic use of IT,
and on business strategy, operations, change management and business
process reengineering
For the fiscal year ended April 3, 1998, we had revenues of $6.6 billion and net
income of $260 million. For the first nine months of fiscal 1999, we had
revenues of $5.5 billion and net income of $224 million.
We derive our revenues from four market sectors:
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<CAPTION>
1998 1997 1996
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U.S. Commercial.......................................................... 42% 39% 37%
U.S. Federal Government.................................................. 25 29 33
Europe................................................................... 27 26 24
Other International...................................................... 6 6 6
--- --- ---
Total Revenues......................................................... 100% 100% 100%
--- --- ---
--- --- ---
</TABLE>
We provide services to commercial clients in a number of industries, including
the following:
- aerospace
- automotive
- chemical, oil and gas
- consumer goods
- energy
- financial services
- healthcare
- manufacturing
- media
- retail/distribution
- telecommunications
- traffic and transportation
- travel and hospitality
- utilities
5
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Because of the size of our service offerings within the financial services,
healthcare and chemical, oil and gas industries, we have established vertical
groups to deliver integrated solutions to our clients in these industries.
We have also formed practice groups dedicated to advancing key technical
solutions with broad application to both our commercial and governmental
clients. These solutions include:
- CSC LYNX-SM---CSC Lynx provides a framework that enables our clients to
rapidly develop component-based systems. Distributed IT systems allow
people to access information more quickly and process business
transactions via the Internet. With CSC Lynx, we have developed a
framework that not only includes components, but also an architecture, a
process and tools for creating these systems quickly.
- DATA WAREHOUSING--Data warehousing allows our clients to collect, store
and organize their data from information systems throughout their
organizations in a central repository. Data warehousing enables our
customers to undertake complex analysis and decision making based on
historical enterprise data. Our customers are able to "test drive"
solutions in our data warehouse applications lab, which illustrates
potential frameworks based on successful warehouses we have developed for
various industries.
- ELECTRONIC COMMERCE--Our global initiative for developing and delivering
electronic commerce solutions is called CSC e~Wave-SM-. CSC e~Wave
leverages Internet technology to deliver digital solutions for transacting
business on the Internet.
- ENTERPRISE RESOURCE PLANNING ("ERP")--ERP products are enterprise-wide
applications that can integrate disparate business functions, such as
finance, manufacturing and human resources, into one cohesive system. ERP
products make data easier to find, update and analyze. We have global
alliances with four software companies which comprise approximately 70% of
the ERP market, and have developed a customized methodology to implement
ERP systems more quickly.
- INFORMATION SECURITY (INFOSEC-SM-)--Our INFOSEC practice develops and
tests new world-class solutions to information security problems for both
government and commercial clients. We developed our INFOSEC capabilities
through our security contracts with the Department of Defense and other
U.S. federal agencies.
- SUPPLY CHAIN MANAGEMENT--Our supply chain management process captures
efficiencies throughout the business and logistics functions that move
goods and information between an organization and its suppliers,
manufacturers, distributors and customers. We designed this process to
provide greater value, quicker time to market and reduced costs to our
clients.
- YEAR 2000 COMPLIANCE--Our Year 2000 compliance practice focuses on
providing solutions to enable computers to function effectively when
processing dates after 1999. Computer programs with two-digit, rather than
four-digit, date fields are unable to recognize the difference between
dates beginning 19XX and dates beginning 20XX. This inability may cause
computer systems to make errors or fail. Our Year 2000 compliance practice
targets issues and methodologies addressing all aspects of Year 2000
compliance.
We have approximately 50,000 employees, and operate from over 700 offices in 32
countries. The Company is incorporated under the laws of Nevada. Our principal
executive offices are located at 2100 East Grand Avenue, El Segundo, California
90245, and our telephone number is (310) 615-0311.
- ------------------------
INFOSEC-SM- is a registered service mark of the National Security Agency.
6
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RECENT DEVELOPMENTS
RECENT CONTRACT AWARDS
In December 1998, the Internal Revenue Service selected the CSC PRIME Alliance
to enter into a strategic partnership with the IRS to modernize the United
States tax system. We lead the CSC PRIME Alliance, which includes six other
companies: International Business Machines Corporation, KPMG Peat Marwick LLP,
Lucent Technologies Inc., Northrop Grumman Corporation, Science Applications
International Corporation and UNISYS Corporation. The CSC PRIME Alliance
combines our global capabilities with the specialized business, technical and
consulting capabilities of the other alliance members.
In January 1999, the United States General Service Administration selected us as
one of ten companies to provide IT services and support for the Federal
Technology Service, Federal Information Systems Support program under an
indefinite delivery/indefinite quantity contract. Under an indefinite delivery/
indefinite quantity contract, a group of service providers is selected to
provide as yet unspecified services to a U.S. federal agency or department,
which then assigns each required project within the specified scope of work to
one of the service providers within the selected group. Our contract calls for
the ten selected companies to provide services and support for a two-year base
period, with eight one-year extension options.
In January 1999, Budget Group, Inc., the parent of Budget Rent a Car
Corporation, announced that it had signed a letter of intent with us to enter
into a five-year global IT outsourcing agreement. Budget expects the agreement
to be finalized in March 1999.
In January 1999, AT&T Corp. hired us to manage a portfolio of approximately 50
systems applications that support AT&T consumer services, including software
systems for telemarketing and customer support, provisioning and provisioning
support, and sales and marketing compensation and commissions. The contract
becomes effective in March 1999.
In February 1999, the United States Postal Service awarded us a professional
services ordering agreement to support the development and implementation of
enterprise-wide IT solutions for its payroll function.
RECENT ACQUISITIONS
We have recently acquired several international IT services companies.
- In the quarter ended January 1, 1999, we acquired KPMG Peat Marwick SA, a
Paris-based management consulting and IT services firm. When we combine
the firm with our existing operations in France, the combined organization
will employ approximately 1,100 professionals.
- In the quarter ended January 1, 1999, we acquired SYS-AID, a Dutch
management consulting and IT services company. SYS-AID employs more than
200 professionals at its operations in the Netherlands and at subsidiaries
in Germany and Belgium.
- During January 1999, we launched a tender offer to acquire all shares of
CSA Holdings Ltd, a publicly traded Singaporean IT services company which
employs approximately 2,000 people. As of February 9, 1999, we had
purchased or received irrevocable tenders of approximately 51% of the
outstanding shares, including the 10% owned by the management of CSA
Holdings. The tender offer will remain open for acceptance until March 5,
1999, at which time we will purchase all shares tendered.
7
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USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the notes (after
deducting the Underwriters' discounts and commissions and estimated expenses
payable by the Company) are estimated to be $197,192,400. We intend to use the
net proceeds from the sale of the notes to repay the $150,000,000 principal
amount and approximately $5,100,000 of accrued interest on the 6.80% Guaranteed
Notes due April 15, 1999 issued by CSC Enterprises and guaranteed by the
Company. We intend to use the remainder of the net proceeds for general
corporate purposes, including, without limitation, capital requirements incurred
in connection with the acquisition of CSA Holdings, Ltd.
8
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CAPITALIZATION
The following table summarizes our debt and stockholders' equity (referred to as
"capitalization") as of January 1, 1999: (1) on a historical basis and (2) as
adjusted to reflect the sale by the Company of the notes and the application of
the estimated net proceeds as described under "Use of Proceeds." You should read
this table in conjunction with the consolidated financial statements and related
notes of the Company included in our Annual Report on Form 10-K for the fiscal
year ended April 3, 1998 and our Quarterly Report on Form 10-Q for the quarterly
period ended January 1, 1999, both of which are incorporated herein by
reference.
<TABLE>
<CAPTION>
AS OF JANUARY 1, 1999
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ACTUAL AS ADJUSTED
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(IN THOUSANDS OF DOLLARS)
<S> <C> <C>
CURRENT DEBT:
Commercial paper.................................................................... $ 424,220 $ 424,220
Notes payable....................................................................... 34,487 34,487
6.80% Guaranteed Notes due April 15, 1999........................................... 150,000
Current maturities of long-term debt................................................ 9,719 9,719
Current maturities of capitalized lease liabilities................................. 8,762 8,762
------------ ------------
Total current debt................................................................ 627,188 477,188
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LONG-TERM DEBT:
6.50% Guaranteed Notes, due November 15, 2001....................................... 150,000 150,000
6 1/4% Notes, due March 15, 2009.................................................... 200,000
Other notes payable................................................................. 42,389 42,389
Capitalized lease liabilities....................................................... 6,224 6,224
------------ ------------
Total long-term debt.............................................................. 198,613 398,613
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, par value $1 per share; authorized 1,000,000 shares; none issued...
Common stock, par value $1 per share; authorized 275,000,000 shares; issued
159,074,144 shares................................................................ 159,074 159,074
Additional paid-in capital.......................................................... 720,067 720,067
Earnings retained for use in business............................................... 1,461,368 1,461,368
Accumulated other comprehensive income.............................................. (25,652) (25,652)
------------ ------------
2,314,857 2,314,857
Less common stock in treasury, at cost, 367,050 shares................................ (14,250) (14,250)
Unearned restricted stock and other................................................... (455) (455)
------------ ------------
Stockholders' equity, net......................................................... 2,300,152 2,300,152
------------ ------------
Total capitalization.............................................................. $ 3,125,953 $ 3,175,953
------------ ------------
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9
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SELECTED FINANCIAL DATA
The selected consolidated financial data below has been derived from our audited
consolidated financial statements, except for the financial data for the nine
months ended January 1, 1999 and December 26, 1997 which are derived from our
unaudited consolidated financial statements. You should read the financial data
presented below in conjunction with the consolidated financial statements and
accompanying notes of the Company which are included in our Annual Report on
Form 10-K for the fiscal year ended April 3, 1998 and our Quarterly Report on
Form 10-Q for the quarterly period ended January 1, 1999, both of which are
incorporated herein by reference.
The Company's consolidated financial statements for the fiscal year ended March
29, 1996 were restated to include consolidated financial data of the Company and
The Continuum Company, Inc. ("Continuum") on a pooled basis to give retroactive
effect to the merger of the Company and Continuum on August 1, 1996. The
unaudited consolidated financial statements for the nine months ended January 1,
1999 and December 26, 1997 include all normal recurring adjustments we consider
necessary for a fair presentation of the consolidated financial data. The "Other
Data" are unaudited.
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEARS ENDED
-------------------------- --------------------------------------------
JANUARY 1, DECEMBER 26, APRIL 3, MARCH 28, MARCH 29,
1999 1997 1998 1997 1996
------------ ------------ ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND PERCENTAGES)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME INFORMATION:
Revenues................................ $ 5,529,587 $4,731,666 $ 6,600,838 $ 5,616,048 $ 4,740,760
------------ ------------ ------------ ------------ ------------
Cost of services........................ 4,329,380 3,704,273 5,149,218 4,413,173 3,692,267
Selling, general and administrative..... 515,344 432,317 602,708 485,113 471,309
Depreciation and amortization........... 322,536 283,312 386,854 333,247 272,058
Interest expense........................ 35,499 37,593 50,951 40,268 37,925
Interest income......................... (9,572) (5,595) (8,855) (7,995) (5,782)
Special charges (1)..................... 208,393 229,093 48,929 76,053
------------ ------------ ------------ ------------ ------------
Total costs and expenses................ 5,193,187 4,660,293 6,409,969 5,312,735 4,543,830
------------ ------------ ------------ ------------ ------------
Income before taxes..................... 336,400 71,373 190,869 303,313 196,930
Taxes on income......................... 112,000 (108,900)(1) (69,500)(1) 110,900 87,499
------------ ------------ ------------ ------------ ------------
Net income.............................. $ 224,400 $ 180,273 $ 260,369 $ 192,413 $ 109,431
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Earnings per share
Basic................................. $ 1.42 $ 1.17 $ 1.68 $ 1.27 $ 0.74
Diluted............................... 1.39 1.14 1.64 1.23 0.71
OTHER DATA:
Capital expenditures.................... 304,925 236,397 349,316 322,434 275,841
Ratio of earnings to fixed charges
(2)................................... 4.92x 1.86x 2.70x 4.21x 3.26x
Debt as a percentage of total
capitalization........................ 26.4% 28.9% 27.7% 28.4% 26.2%
BALANCE SHEET INFORMATION:
Cash and cash equivalents............... $ 167,967 $ 94,008 $ 274,688 $ 110,726 $ 113,873
Working capital......................... 318,475 700,892 767,820 533,915 430,484
Total assets............................ 4,586,060 4,002,626 4,046,795 3,493,087 2,936,019
Total debt.............................. 825,801 775,647 764,975 660,775 504,973
Stockholders' equity.................... 2,300,152 1,904,435 2,001,275 1,669,560 1,420,113
</TABLE>
FOOTNOTES TO APPEAR ON FOLLOWING PAGE.
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FOOTNOTES TO TABLE FROM PREVIOUS PAGE.
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- ------------------------
(1) We recognized a net special credit of $1,707 or 1 cent per share, during the
first quarter of fiscal year 1998 because of developments at CSC
Enterprises, a general partnership of which we, through an affiliate, are
the managing general partner. A tax benefit of $135,000 and an after-tax
special charge of $133,293 ($208,393 before tax) caused the net special
credit.
During the first quarter of fiscal year 1998, certain partners withdrew from
CSC Enterprises. As a result of these withdrawals, CSC Enterprises took
actions that caused us to recognize an increase in the tax basis of certain
assets. As required by Statement of Financial Accounting Standards ("SFAS")
No. 109, this tax basis increase from the previous tax basis resulted in a
deferred tax asset of $135,000 and a corresponding reduction of our
provision for income taxes. The tax basis increase is temporary and will be
realized over time through an increase in depreciation and amortization
expense for income tax purposes.
In connection with these developments, CSC Enterprises reviewed its
operations, its market opportunities and the carrying value of its assets in
accordance with SFAS No. 121, "Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." Based on this review,
in the first quarter of fiscal year 1998 CSC Enterprises initiated a plan to
eliminate certain offerings and write down assets, primarily within its
telecommunications operations. As a result of these plans, we recognized a
pre-tax special charge of $208,393 ($133,293 after tax). This special charge
included goodwill write-offs of $56,300 ($35,000 after tax), contract
termination costs of $54,300 ($33,800 after tax), deferred contract costs
and other assets of $33,093 ($20,493 after tax), telecommunications software
and accruals of $35,800 ($22,300 after tax), telecommunications property,
equipment and intangible assets of $18,900 ($11,700 after tax), and other
non-tax deductible costs of $10,000.
In the fourth quarter of fiscal year 1998, we recorded a before-tax special
charge of $20,700, or 9 cents per share after tax, for costs relating to our
response to a failed take-over attempt. The charge is comprised of $14,000
for investment banking expenses and $6,700 for other expenses such as legal
costs, public relations and shareholder communications.
The fiscal year 1997 special charge represents costs and expenses related to
the August 1, 1996 acquisition of Continuum. The amount of the charge, net
of income tax benefits on the tax-deductible portion, is $35,280 or 23 cents
per share. The charge is composed of $11,040 of non-tax deductible
investment banking and other merger expenses, $11,785 ($7,540 after tax)
related to the write-off of certain capitalized software, other assets and
intangibles, and $26,104 ($16,700 after tax) related to the elimination of
duplicate data processing facilities, employee severance costs and contract
termination costs.
On March 15, 1996, prior to its merger with the Company, Continuum acquired
Hogan Systems, Inc. In connection with the fiscal year 1996 acquisition of
Hogan Systems, Inc., Continuum adopted a plan to integrate, restructure and
realign its expanded business. As a result, Continuum expensed approximately
$50,100 of special charges, including $9,600 of transaction and $9,800 of
restructuring costs. The restructuring costs included costs relating to the
consolidation of facilities and data processing and employee terminations.
In addition, Continuum recorded non-cash adjustments to the carrying value
of certain tangible and intangible assets of $30,700, including $20,200 to
capitalized software.
Fiscal year 1996 charges also included $26,000 related to an acquisition by
Continuum, which Continuum assigned to purchased research and development
and subsequently expensed with no income tax benefit. Continuum recorded
combined fiscal year 1996 after-tax special charges of $61,800, or 40 cents
per share of the Company's restated consolidated results for such year.
(2) We computed the ratio of earnings to fixed charges by dividing the sum of
fixed charges and income before taxes by fixed charges. Fixed charges
consist of interest expense and the estimated interest component of rent
expense.
11
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DESCRIPTION OF THE NOTES
The notes will be issued under an indenture to be dated as of March 8, 1999 (the
"Indenture") by and between us and Citibank, N.A., as trustee. The Indenture is
subject to, and governed by, the Trust Indenture Act of 1939, as amended. The
statements made in this section relating to the notes and the Indenture are
summaries of certain provisions of the notes and the Indenture. These summaries
are not complete. For more detail you should refer to the Indenture, which we
have filed as an exhibit to the registration statement of which this prospectus
is a part. For purposes of this section "Description of the Notes," whenever we
refer to the "Company" or to "us," or use the terms "we" or "our," we are
referring only to Computer Sciences Corporation.
GENERAL
We will issue the notes in an aggregate principal amount of $200,000,000. The
notes will mature on March 15, 2009. The notes are our direct, unconditional,
unsecured and unsubordinated general obligations. The notes will rank equally
among themselves, without any preference of one over the other, and at least
equally with all of our other outstanding unsecured and unsubordinated general
obligations. The notes will be effectively subordinate to the indebtedness of
our subsidiaries. At January 1, 1999, our subsidiaries had outstanding
indebtedness (including capitalized leases) of $825,801,000.
The notes will bear interest at the rate of 6 1/4% from March 8, 1999 or from
the most recent interest payment date to which interest has been paid or
provided for. Interest will be payable on March 15 and September 15 of each
year, commencing September 15, 1999, to the holders of record at the close of
business on the date fifteen days prior to each interest payment date.
The notes will not be subject to any sinking fund.
REDEMPTION AT OUR OPTION
We may redeem the notes at our option, in whole or in part, at any time, at a
redemption price equal to the greater of:
- 100% of the principal amount of notes then outstanding, and
- as determined by the Quotation Agent, the sum of the present values of the
Remaining Scheduled Payments of principal and interest on such notes (not
including any portion of such interest payments accrued as of the
redemption date) discounted to the redemption date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Adjusted Treasury Rate plus 15 basis points,
plus, in either of the above cases, accrued and unpaid interest on such notes to
the redemption date.
We will mail a notice of redemption at least 30 days but not more than 60 days
before the redemption date to each holder of notes to be redeemed. If we elect
to partially redeem notes, the trustee will select in a fair and appropriate
manner the notes to be redeemed.
Unless we default in payment of the redemption price and accrued and unpaid
interest on the notes, on and after the redemption date, interest will stop
accruing on the notes or portions of the notes called for redemption.
For purposes of this section "Redemption at Our Option," the following terms
have the following meanings:
"ADJUSTED TREASURY RATE" means, with respect to any redemption date, the annual
rate equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the
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Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date.
"COMPARABLE TREASURY ISSUE" means the United States Treasury security selected
by the Quotation Agent as having a maturity comparable to the remaining term of
the notes to be redeemed that would be used, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of such notes.
"COMPARABLE TREASURY PRICE" means, with respect to any redemption date:
- the average of the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or
- if the trustee obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Reference Treasury Dealer Quotations.
"QUOTATION AGENT" means the Reference Treasury Dealer appointed by us.
"REFERENCE TREASURY DEALER" means (1) each of J.P. Morgan Securities Inc.,
Goldman, Sachs & Co., Inc., Merrill Lynch Government Securities Inc., and their
successors; PROVIDED, HOWEVER, that if any of the foregoing cease to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), we shall substitute another Primary Treasury Dealer; and (2) any other
Primary Treasury Dealer selected by us.
"REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by us, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) which such Reference Treasury
Dealer quotes in writing to the trustee at 5:00 p.m., New York City time, on the
third business day before such redemption date.
"REMAINING SCHEDULED PAYMENTS" means, with respect to any notes, the remaining
scheduled payments of the principal of the notes to be redeemed and interest on
the notes that would be due after the related redemption date but for such
redemption; PROVIDED, HOWEVER, that, if such redemption date is not an interest
payment date with respect to such note, the amount of the next succeeding
scheduled interest payment of the note will be reduced by the amount of interest
accrued on the note to such redemption date.
LIMITATION ON OUR ABILITY TO INCUR LIENS
Other than as provided below under "We May Incur Permitted Liens and We May
Enter into Permitted Sale/Leaseback Transactions," neither we nor any of our
Subsidiaries may create, incur, assume or suffer to exist any Lien upon any of
our assets to secure any Indebtedness, except for:
- Liens existing on the date of the Indenture;
- any extension, renewal or replacement (or successive extensions, renewals
or replacements) of any Lien existing on the date of the Indenture;
- Liens on property existing at the time we or any of our Subsidiaries
acquires such property, PROVIDED that such Liens (1) are not incurred in
connection with, or in contemplation of the acquisition of the property
acquired and (2) do not extend to or cover any of our property or assets
or any of our Subsidiaries' property or assets other than the property so
acquired;
- Liens on any property of a corporation or other entity existing at the
time such corporation or entity becomes our Subsidiary or is merged into
or consolidated with us or a Subsidiary or at the time of a sale, lease or
other disposition of the properties of such corporation or entity as an
entirety or substantially as an entirety to us or a Subsidiary; PROVIDED
that such Liens (1) are not
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incurred in connection with or in contemplation of such corporation or
entity becoming a Subsidiary or merging or consolidating with us or a
Subsidiary or are not incurred in connection with or in contemplation of
the sale, lease or other disposition of the properties of such corporation
or other entity and (2) do not extend to or cover any of our property or
assets or any of our Subsidiaries' property or assets other than the
property of such corporation or other entity; and
- purchase money Liens upon or in any real or personal property (including
fixtures and other equipment) we or any of our Subsidiaries hold or have
acquired to secure the purchase price of such property or to secure
Indebtedness incurred solely to finance or refinance the acquisition or
improvement of such property and incurred within 180 days after completion
of such acquisition or improvement, PROVIDED that no such Lien will extend
to or cover any property other than the property being acquired or
improved.
For purposes of this section "Limitation on Our Ability to Incur Liens," the
following terms have the following meanings:
"INDEBTEDNESS" means, with respect to any person, and without duplication:
- any liability of such person
(1) for borrowed money, or
(2) for any letter of credit for the account of such person supporting
obligations of such person or other persons, or
(3) evidenced by a bond, note, debenture or similar instrument
(including a purchase money obligation) given in connection with the
acquisition of any businesses, properties or assets of any kind (other than
a trade payable or a current liability arising in the ordinary course of
business), or
(4) for the payment of money relating to a capitalized lease; and
- any liability of others described in the preceding bullet point that the
person has guaranteed or that is otherwise its legal liability; and
- any amendment, supplement, modification, deferral, renewal, extension or
refunding of any liability of the types referred to in the bullet points
above.
"LIEN" means any lien, security interest, charge, mortgage, pledge or other
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any
security interest other than an agreement to secure Indebtedness equally and
ratably upon the incurrence of other secured Indebtedness).
"SUBSIDIARY" means:
- a corporation a majority of whose capital stock with voting power, under
ordinary circumstances, to elect directors is at the time directly or
indirectly owned by us, by us and our Subsidiary or Subsidiaries, or by
our Subsidiary or Subsidiaries, or
- any other person (other than a corporation) in which we, or we and our
Subsidiary or Subsidiaries, or our Subsidiary or Subsidiaries directly or
indirectly at the date of determination thereof has at least a majority
ownership interest.
LIMITATION ON OUR ABILITY TO ENTER INTO SALE/LEASEBACK TRANSACTIONS
Other than as provided below under "We May Incur Permitted Liens and We May
Enter into Permitted Sale/Leaseback Transactions," neither we nor any of our
Subsidiaries may enter into any Sale/ Leaseback Transaction unless we or such
Subsidiary would be entitled, pursuant to the bullet points
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under "Limitation on Our Ability to Incur Liens" above, to create, incur, assume
or suffer to exist a Lien on the property subject to such Sale/Leaseback
Transaction.
For purposes of this section "Limitation on Our Ability to Enter Into
Sale/Leaseback Transactions," the following term has the following meaning:
"SALE/LEASEBACK TRANSACTION" means any arrangement with any person (other than
us or any of our Subsidiaries) providing for a capitalized lease by us or any of
our Subsidiaries of any property which has been or is to be sold or transferred
by us or any of our Subsidiaries to such person or to any person (other than us
or any of our Subsidiaries) by whom funds have been or are to be advanced on the
security of the leased property.
WE MAY INCUR PERMITTED LIENS AND WE MAY ENTER INTO PERMITTED SALE/LEASEBACK
TRANSACTIONS
Notwithstanding the restrictions set forth above under "Limitation on Our
Ability to Incur Liens" and "Limitation on our Ability to Enter into
Sale/Leaseback Transactions," we or any of our Subsidiaries may create, incur,
assume or suffer to exist any Lien or enter into any Sale/Leaseback Transactions
not otherwise permitted as described above, PROVIDED that at the time of such
event, and after giving effect to that event, the aggregate amount of all
Indebtedness secured by Liens permitted by this paragraph (excluding the Liens
permitted pursuant to the bullet points under "Limitation on Our Ability to
Incur Liens" above) and the aggregate amount of all Attributable Debt in respect
of Sale/Leaseback Transactions permitted by this paragraph (excluding the
Sale/Leaseback Transactions permitted under "Limitation on Our Ability to Enter
into Sale/Leaseback Transactions" above), measured, in each case, at the time
any such Lien is incurred or any such Sale/Leaseback Transaction is entered
into, by us or any Subsidiary does not exceed 15% of our Consolidated Net
Tangible Assets.
For purposes of this section "We May Incur Permitted Liens and We May Enter into
Permitted Sale/ Leaseback Transactions," the following terms have the following
meanings:
"ATTRIBUTABLE DEBT" with respect to any Sale/Leaseback Transaction means the
present value of the minimum rental payments called for during the term of the
lease (including any period for which such lease has been extended), determined
in accordance with generally accepted accounting principles, discounted at a
rate that, at the inception of the lease, the lessee would have incurred to
borrow over a similar term the funds necessary to purchase the leased assets.
"CONSOLIDATED NET TANGIBLE ASSETS" means, as of any particular time, the
aggregate amount of our assets and the assets of our Subsidiaries (in each case,
less applicable reserves and other properly deductible items) after deducting
from such amount:
- all current liabilities other than (1) notes and loans payable, (2)
current maturities of long-term debt and (3) current maturities of capital
lease obligations, and
- intangible assets, to the extent included in such aggregate assets, all as
set forth on the then most recent consolidated balance sheet of the
Company and its consolidated subsidiaries and computed in accordance with
generally accepted accounting principles.
LIMITATION ON OUR ABILITY TO CONSOLIDATE, MERGE AND SELL ASSETS
We, without the consent of the holders of any of the notes, may consolidate
with, or merge into, or sell, transfer, lease or convey our assets substantially
as an entirety to any domestic corporation, if:
- any successor corporation expressly assumes all of our obligations under
the notes and the Indenture,
- after giving effect to the transaction, no Event of Default and no event
which, after notice or lapse of time or both, would become an Event of
Default, has occurred and is continuing, and
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- the entity formed by or surviving any such consolidation or merger (if
other than us) or to which such sale, transfer, lease or conveyance shall
have been made, is a corporation organized under the laws of the United
States of America, any state, or the District of Columbia.
EVENTS OF DEFAULT
An "Event of Default" under the notes means any of the following:
- we fail to pay any installment of interest upon any of the notes as and
when it becomes due and payable, and such default continues for a period
of 30 days; or
- we fail to pay all or any part of the principal of any of the notes as and
when it becomes due and payable, whether at maturity or otherwise; or
- we fail to observe or perform any other of our other covenants or
agreements contained in the notes or in the Indenture for a period of 30
days after the date on which written notice specifying such failure,
stating that such notice is a "Notice of Default" under the notes and
demanding that we remedy the same, has been given to us by the trustee or
to us and the trustee by the holders of at least 25% in aggregate
principal amount of the notes then outstanding; or
- any of our Indebtedness in the aggregate outstanding principal amount of
$50 million or more either (1) becomes due and payable prior to the due
date for payment of such Indebtedness by reason of acceleration of such
Indebtedness following our default or (2) is not repaid at, and remains
unpaid after, maturity as extended by any applicable period of grace or
any guarantee given by us in respect of Indebtedness of any other person
in the aggregate outstanding principal amount of $50 million or more is
not honored when, and remains dishonored after, becoming due; or
- a court or administrative or other governmental agency or body having
jurisdiction in the premises enters a decree or order for relief relating
to us in an involuntary case under any applicable bankruptcy, insolvency,
reorganization or other similar law in effect on or after the date of the
notes, or appoints a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar officer of us or ordering the winding up,
dissolution or liquidation of our affairs, or otherwise adjudicates or
finds us to be bankrupt or insolvent, and such decree or order remains
unstayed and in effect for a period of 60 consecutive days; or
- a court or administrative or other governmental agency or body having
jurisdiction in the premises enters a decree or order appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar officer for any substantial part of our properties, and such
decree or order remains unstayed and in effect for a period of 60
consecutive days; or
- we commence a voluntary case under any applicable bankruptcy, insolvency,
reorganization or other similar law in effect on or after the date of the
notes, or consent to the entry of an order for relief in an involuntary
case under any such law, or consent to the appointment or taking
possession by our receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar officer, or cease to carry on the whole or
substantially the whole of our business, or make any general assignment
for the benefit of creditors, or take corporate action in furtherance of
any such action; or
- we consent to the appointment or taking possession by our receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar officer
for any substantial part of our property, or take corporate action in
furtherance of any such action.
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In each such case, other than as provided in the next sentence, the trustee, by
notice to us, or the holders of not less than 25% in aggregate principal amount
of the notes then outstanding, by notice to us and the trustee, may declare the
principal of all the notes, and the interest accrued on the notes, to be due and
payable immediately. If an event of default specified in the fifth or seventh
bullet points under the heading "Events of Default" occurs, such an amount shall
IPSO FACTO become and be immediately due and payable without any declaration or
other act on the part of the trustee or any holder of the notes. The holders of
more than 50% in aggregate principal amount of the then outstanding notes by
written notice to the trustee may rescind an acceleration and its consequences
if the rescission would not conflict with any judgment or decree and if all
existing events of default (except nonpayment of principal or interest that has
become due solely because of the acceleration) have been cured or waived. If, at
any time after the principal of the notes has been so declared due and payable,
and before any judgment or decree for the payment of the monies due has been
obtained or entered, we pay or deposit with the trustee a sum sufficient to pay
all monies then due with respect to the notes (other than amounts due solely
because of such declaration) and cure all other Events of Default under the
notes, then the holders of more than 50% in aggregate outstanding principal
amount of the notes may waive all defaults and rescind and annul such
declaration and its consequences.
The holders of more than 50% in principal amount of the then outstanding notes
by notice to us may, on behalf of all the holders, waive an existing default or
Event of Default and its consequences except a continuing default or Event of
Default in the payment of the principal of or interest on any note.
DEFEASANCE AND DISCHARGE
The notes and the Indenture provide that we are not required to comply with
certain covenants ("covenant defeasance") of the notes (including those
described under the caption "Limitation on Our Ability to Incur Liens" and
"Limitation on Our Ability to Enter into Sale/Leaseback Transactions"), if:
- we irrevocably deposit, in trust with a trustee for the benefit of the
holders of the notes,
(a) money in an amount, or
(b) U.S. Government Obligations (as defined in the notes) which through
the payment of interest thereon and principal thereof in accordance with
their terms will provide money in an amount,
in each case, sufficient to pay all the principal of, and interest on the
notes to maturity or redemption, as the case may be, and all other sums
payable by us under the Indenture;
- no Event of Default under the first, second, fourth, fifth, sixth, seventh
or eighth bullet points in the first paragraph under the caption "Events
of Default" has occurred and is continuing, and no event which with notice
or lapse of time or both would become such an Event of Default with
respect to the notes has occurred and is continuing, on the date of such
deposit;
- we deliver to such trustee an opinion of counsel or a ruling received by
the Internal Revenue Service to the effect that the holders of the notes
will not recognize income, gain or loss for federal income tax purposes as
a result of the exercise of such covenant defeasance and will be subject
to federal income tax in the same amount and in the same manner and at the
same times as would have been the case absent such exercise; and
- we have delivered to such trustee a certificate signed by authorized
persons and an opinion of counsel, each stating that all conditions
precedent to satisfaction and discharge of the Indenture have been
complied with.
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MODIFICATION AND AMENDMENT
We and the trustee may amend or supplement the Indenture or the notes without
the consent of any holder:
- to cure any ambiguity, defect or inconsistency;
- to provide for the assumption of our obligations to the holders of the
notes in the case of a consolidation, merger, sale, transfer, lease or
conveyance of substantially all of our assets;
- to comply with the Trust Indenture Act;
- to provide for uncertificated notes in addition to or in place of
certificated notes; or
- to make any change that provides any additional rights or benefits to the
holders of the notes or that does not adversely affect the legal rights of
any holder under the notes or the Indenture.
Modifications and amendments to the Indenture or the notes requiring consent of
holders of the notes may be made, and future compliance or past default by us
may be waived, with our consent and the consent of holders of more than 50% in
aggregate principal amount of the notes at the time outstanding; PROVIDED THAT
no such amendment of the Indenture or any note may, without the consent of each
holder affected thereby:
- change the stated maturity of the principal of or interest on such note;
- reduce the amount of notes whose holders must consent to an amendment or
waiver;
- reduce the rate of or change the time for payment of interest, including
default interest, on any note;
- reduce the principal of or change the fixed maturity of any note or alter
the provisions with respect to redemption;
- waive a default in the payment of principal of or interest on, or
redemption payment with respect to, any note; or
- change the currency of payment of the principal of or interest on such
note.
For purposes of calculating the percentage of holders of the notes entitled to
take any action, any notes we hold will be excluded.
BOOK-ENTRY SYSTEM AND FORM OF NOTES
The notes will be represented by beneficial interests in a single, permanent
global note in fully registered form without interest coupons and will be
deposited with the trustee as custodian for The Depository Trust Company and
registered in the name of a nominee of The Depository Trust Company.
Ownership of beneficial interests in a global note will be limited to The
Depository Trust Company participants or persons that may hold interests through
participants. Ownership of beneficial interests in the global note will be shown
on, and the transfer of these ownership interests will be effected only through,
records maintained by The Depository Trust Company or its nominee (with respect
to interests of participants) and the records of participants (with respect to
interests of persons other than participants).
The Depository Trust Company or its nominee, as the case may be, as registered
holder of such global note will be considered the sole owner or holder of the
notes represented by such global note for all purposes under the notes and the
Indenture. In addition, no beneficial owner of an interest in a global
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note will be able to transfer that interest except in accordance with The
Depository Trust Company's applicable procedures (in addition to those under the
Indenture).
Principal and interest payments on notes represented by a global note registered
in the name of The Depository Trust Company or its nominee will be made to The
Depository Trust Company or its nominee, as the case may be, as the registered
owner of such global note. Neither we, the trustee nor any paying agent for such
notes will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in
such global note or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
We expect that The Depository Trust Company, upon receipt of any payment of
principal or interest, will immediately credit participants' accounts with
payment in amounts proportionate to their respective beneficial interests in the
principal amount of such global note as shown on the records of The Depository
Trust Company. We also expect that payments by participants to owners of
beneficial interests in such global note held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the account of customers registered in "street names,"
and will be the responsibility of such participants.
The Depository Trust Company has advised us as follows: The Depository Trust
Company is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depository Trust Company holds securities that its participants deposit with The
Depository Trust Company and facilitates the settlement among participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. Access to The
Depository Trust Company system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a direct participant, either directly or indirectly.
The rules applicable to The Depository Trust Company and its participants are on
file with the SEC.
TRUSTEE
The trustee may resign at any time and we may remove the trustee at any time in
accordance with the bullet points below.
A resignation or removal of the trustee and appointment of a successor trustee
shall become effective only upon the successor trustee's acceptance of
appointment as provided in the Indenture.
The trustee may resign and be discharged from the trust created by the Indenture
by so notifying us. The holders of a majority in principal amount of the then
outstanding notes may remove the trustee by so notifying the trustee and us. We
may remove the trustee if:
- the trustee fails to comply with the eligibility requirements provided in
the Indenture;
- the trustee is adjudged a bankrupt or an insolvent or an order for relief
is entered with respect to the trustee under any applicable federal or
state bankruptcy law;
- a receiver, trustee, assignee, liquidator or similar official under any
applicable federal or state bankruptcy law takes charge of the trustee or
its property; or
- the trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if the office of trustee is otherwise
vacant, we will appoint a successor trustee in accordance with the provisions of
the Indenture.
In the ordinary course of its business, Citibank, N.A. and its affiliates have
performed, and may in the future perform, commercial banking and related
services for us and our affiliates and have received customary compensation
therefor. For example, Citibank, N.A. serves as the fiscal agent in connection
with the 6.80% Guaranteed Notes due April 15, 1999 and the 6.50% Guaranteed
Notes due November 15, 2001, each of which was issued by CSC Enterprises and
guaranteed by us, and as issuing and paying agent under two of CSC Enterprises'
commercial paper programs guaranteed by us. In addition, Citicorp USA, Inc., an
affiliate of Citibank, N.A., serves as the agent for the lenders in a commercial
paper backstop credit agreement with CSC Enterprises, under which we are both a
co-borrower and a guarantor. Our affiliate, CSC Australia Pty Ltd, has an
uncommitted master bond and letter of credit facility and an uncommitted master
loan facility with Citibank N.A. (Sydney Branch), an affiliate of Citibank, N.A.
The address of the relevant corporate trust office of the trustee is Citibank,
N.A., 111 Wall Street, 5th Floor, New York, New York 10043.
GOVERNING LAW
The Indenture and the notes will be governed by and construed in accordance with
the laws of the State of New York.
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UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
dated March 3, 1999, the Company has agreed to sell to each of the underwriters
named below (the "Underwriters"), severally, and each of the Underwriters has
severally agreed to purchase, the principal amount of the notes set forth
opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT OF NOTES
- ----------------------------------------------------------------------------- ---------------
<S> <C>
J.P. Morgan Securities Inc................................................... $ 100,000,000
Goldman, Sachs & Co.......................................................... 50,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................................... 50,000,000
---------------
Total...................................................................... $ 200,000,000
---------------
---------------
</TABLE>
Under the terms and conditions of the underwriting agreement, if the
Underwriters take any of the notes, then the Underwriters are obligated to take
and pay for all of the notes.
The notes are a new issue of securities with no established trading market and
will not be listed on any national securities exchange. The Underwriters have
advised the Company that they intend to make a market for the notes, but they
have no obligation to do so and may discontinue market making at any time
without providing any notice. No assurance can be given as to the liquidity of
any trading market for the notes.
The Underwriters initially propose to offer part of the notes directly to the
public at the offering prices described on the cover page and part to certain
dealers at a price that represents a concession not in excess of .40% of the
principal amount of the notes. Any Underwriter may allow, and any such dealer
may reallow, a concession not in excess of .25% of the principal amount of the
notes to certain other dealers. After the initial offering of the notes, the
Underwriters may from time to time vary the offering price and other selling
terms.
The Company has also agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments which the Underwriters may be required to make in
respect of any such liabilities.
In connection with the offering of the notes, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
notes. Specifically, the Underwriters may overallot in connection with the
offering of the notes, creating a syndicate short position. In addition, the
Underwriters may bid for, and purchase, notes in the open market to cover
syndicate short positions or to stabilize the price of the notes. Finally, the
underwriting syndicate may reclaim selling concessions allowed for distributing
the notes in the offering of the notes, if the syndicate repurchases previously
distributed notes in syndicate covering transactions, stabilization transactions
or otherwise. Any of these activities may stabilize or maintain the market price
of the notes above independent market levels. The Underwriters are not required
to engage in any of these activities, and may end any of them at any time.
Expenses associated with this offering (before Underwriters' discounts and
commissions), to be paid by the Company, are estimated to be $475,600.
In the ordinary course of their respective businesses, the Underwriters and
their affiliates have performed, and may in the future perform, commercial,
financial advisory and/or investment banking services for us and our affiliates
and have received customary compensation therefor. For example, Morgan Guaranty
Trust Company of New York, an affiliate of J.P. Morgan Securities Inc., has
entered
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into a contract with the Pinnacle Alliance, a team led by us, to manage key
parts of its global technology structure. Morgan Guaranty Trust Company of New
York is also a member of the syndicate of banks providing standby support for
our commercial paper program. Goldman, Sachs & Co. and J.P. Morgan & Co., an
affiliate of J.P. Morgan Securities Inc., acted as our advisors in connection
with an unsuccessful hostile tender offer to acquire us last year. Merrill Lynch
(Singapore) Pte. Ltd., an affiliate of Merrill Lynch & Co., is currently acting
as our financial advisor in connection with our tender offer to acquire CSA
Holdings Ltd, which is described on page 7.
LEGAL MATTERS
Gibson, Dunn & Crutcher LLP of Los Angeles, California will issue an opinion to
the Company about certain legal matters relating to the notes. Latham & Watkins
of Los Angeles, California will issue an opinion to the Underwriters about
certain legal matters relating to the notes. Latham & Watkins renders certain
legal services to the Company.
EXPERTS
The consolidated financial statements and the related financial statement
schedule of the Company (except The Continuum Company, Inc. for the year ended
March 31, 1996) as of April 3, 1998 and March 28, 1997 and for each of the three
years in the period ended April 3, 1998, incorporated in this prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended April
3, 1998 have been audited by Deloitte & Touche LLP as stated in their report
incorporated herein by reference. The financial statements of The Continuum
Company, Inc. for the year ended March 31, 1996 (consolidated with those of the
Company) have been audited by Ernst & Young LLP as stated in their report
incorporated herein by reference. Such financial statements for the Company are
incorporated herein by reference in reliance upon the respective reports of such
firms given upon their authority as experts in accounting and auditing. All of
the foregoing firms are independent auditors.
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