<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission File No. 1-4850
COMPUTER SCIENCES CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 95-2043126
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2100 East Grand Avenue
El Segundo, California 90245
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (310) 615-0311
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
167,333,575 shares of Common Stock, $1.00 par value, were outstanding on
January 28, 2000.
<PAGE>
COMPUTER SCIENCES CORPORATION
Index to Form 10-Q
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Statements of Income, Third Quarter and
Nine Months Ended December 31, 1999 and January 1, 1999 ........ 3
Consolidated Condensed Balance Sheets,
December 31, 1999 and April 2, 1999 ............................ 4
Consolidated Condensed Statements of Cash Flows,
Nine Months Ended December 31, 1999 and January 1, 1999 ........ 5
Notes to Consolidated Condensed Financial Statements .............. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............ 10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk .............................................. 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................. 16
2
<PAGE>
<TABLE>
PART I, ITEM 1. FINANCIAL STATEMENTS
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited)
<CAPTION>
Third Quarter Ended Nine Months Ended
---------------------- ----------------------
(In thousands except Dec. 31, Jan. 1, Dec. 31, Jan. 1,
per-share amounts) 1999 1999 1999 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $2,360,071 $2,054,691 $6,795,469 $5,856,355
---------- ---------- ---------- ----------
Costs of services 1,843,141 1,600,699 5,353,732 4,600,890
Selling, general
and administrative 192,565 191,023 581,748 546,391
Depreciation and
amortization 145,381 116,104 393,805 331,392
Interest expense 14,413 12,320 42,644 36,024
Interest income (4,345) (3,741) (13,665) (9,968)
Special items 41,065 41,065
---------- ---------- ---------- ----------
Total costs and expenses 2,232,220 1,916,405 6,399,329 5,504,729
---------- ---------- ---------- ----------
Income before taxes 127,851 138,286 396,140 351,626
Taxes on income 45,522 46,590 136,100 117,938
---------- ---------- ---------- ----------
Net income $ 82,329 $ 91,696 $ 260,040 $ 233,688
========== ========== ========== ==========
Earnings per share
(note A):
Basic $ .49 $ .56 $ 1.57 $ 1.43
========== ========== ========== ==========
Diluted $ .48 $ .55 $ 1.54 $ 1.39
========== ========== ========== ==========
</TABLE>
[FN]
See accompanying notes.
3
<PAGE>
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
Dec. 31, April 2,
(In thousands) 1999 1999
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 239,430 $ 617,879
Receivables 2,151,510 1,890,461
Prepaid expenses and other current assets 338,767 296,352
----------- -----------
Total current assets 2,729,707 2,804,692
----------- -----------
Goodwill 823,599 726,951
Software and other assets 768,014 616,503
Property and equipment, net of accumulated
depreciation and amortization of
$1,430,683 and $1,256,556 1,258,193 1,112,207
----------- -----------
Total assets $5,579,513 $5,260,353
=========== ===========
LIABILITIES
Short-term debt and current
maturities of long-term debt $ 308,357 $ 603,939
Accounts payable 290,306 403,154
Accrued payroll and related costs 457,019 405,160
Other accrued expenses 566,163 460,938
Deferred revenue 124,316 138,340
Income taxes payable 171,031 131,673
----------- -----------
Total current liabilities 1,917,192 2,143,204
----------- -----------
Long-term debt, net 656,916 399,672
----------- -----------
Other long-term liabilities 117,741 128,957
----------- -----------
STOCKHOLDERS' EQUITY (note B)
Common stock issued, par value $1.00 per share 167,300 165,520
Additional paid in capital 884,059 823,286
Earnings retained for use in business 1,918,210 1,667,733
Accumulated other comprehensive income (note D) (65,875) (53,235)
Less common stock in treasury (15,852) (14,413)
Unearned restricted stock and other (178) (371)
----------- -----------
Total stockholders' equity 2,887,664 2,588,520
----------- -----------
Total liabilities and stockholders' equity $5,579,513 $5,260,353
=========== ===========
</TABLE>
[FN]
See accompanying notes.
4
<PAGE>
COMPUTER SCIENCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------
(In thousands, increase (decrease) Dec. 31, Jan. 1,
in cash and cash equivalents) 1999 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 260,040 $ 233,688
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 393,805 331,392
Provision for losses on accounts receivable 1,650 5,648
Special items, net of tax 19,207
Changes in assets and liabilities, net of
effects of acquisitions:
Increase in assets (230,255) (433,683)
Increase in liabilities 48,740 184,038
---------- ----------
Net cash provided by operating activities 493,187 321,083
---------- ----------
Investing activities:
Purchases of property and equipment (409,314) (314,585)
Acquisitions, net of cash acquired (193,051) (161,846)
Dispositions 37,947
Outsourcing contracts (157,327) (59,054)
Software (60,908) (60,429)
Other investing cash flows 14,939 15,311
---------- ----------
Net cash used in investing activities (805,661) (542,656)
---------- ----------
Financing activities:
Borrowings under commercial paper, net 86,186 49,068
Borrowings under lines of credit, net 2,627 41,899
Principal payments on long-term debt (171,732) (17,825)
Proceeds from stock option transactions 42,850 39,593
Other financing cash flows (10,231) 3,363
---------- ----------
Net cash (used in) provided by financing activities (50,300) 116,098
---------- ----------
Effect of exchange rate changes on cash
and cash equivalents (3,554) 5,527
---------- ----------
Net decrease in cash and cash equivalents (366,328) (99,948)
Cash and cash equivalents at beginning of year 617,879 285,964
Effect of pooling restatement (12,121)
---------- ----------
Cash and cash equivalents at end of period $ 239,430 $ 186,016
========== ==========
</TABLE>
[FN]
See accompanying notes.
5
<PAGE>
COMPUTER SCIENCES CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited)
(A) Basic and diluted earnings per share are calculated as follows (in
thousands except per share amounts):
<TABLE>
<CAPTION>
Third Quarter Ended
--------------------------------
Dec. 31, 1999 Jan. 1, 1999
------------- ------------
<S> <C> <C>
Net income for basic and diluted EPS $ 82,329 $ 91,696
======== ========
Common share information:
Average common shares outstanding
for basic EPS 166,574 164,464
Dilutive effect of stock options 3,330 3,570
-------- --------
Shares for diluted EPS 169,904 168,034
======== ========
Basic EPS $ .49 $ .56
Diluted EPS .48 .55
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------
Dec. 31, 1999 Jan. 1, 1999
------------- ------------
<S> <C> <C>
Net income for basic and diluted EPS $260,040 $233,688
======== ========
Common share information:
Average common shares outstanding
for basic EPS 165,972 163,857
Dilutive effect of stock options 3,376 3,907
-------- --------
Shares for diluted EPS 169,348 167,764
======== ========
Basic EPS $ 1.57 $ 1.43
Diluted EPS 1.54 1.39
</TABLE>
In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 128, the computation of diluted EPS did not include stock options
which were antidilutive, as their exercise price was greater than the
average market price of the common stock of Computer Sciences Corporation
("CSC" or the "Company") during the year. The number of such options was
219,738 and 82,334 at December 31, 1999 and January 1, 1999,
respectively.
(B) No dividends were paid during the periods presented. At December 31, 1999
and April 2, 1999, there were 167,300,143 and 165,520,547 shares,
respectively, of $1.00 par value common stock issued, and 391,497 and
369,607 shares, respectively, of treasury stock.
6
<PAGE>
(C) Cash payments for interest on indebtedness were $43.7 million and $39.5
million for the nine months ended December 31, 1999 and January 1, 1999,
respectively. Cash payments (refunds) for taxes on income were $43.4
million and $(40.8) million for the nine months ended December 31, 1999
and January 1, 1999, respectively.
(D) The components of comprehensive income, net of tax, are as follows
(in thousands):
<TABLE>
<CAPTION>
Third Quarter Ended
--------------------------------
Dec. 31, 1999 Jan. 1, 1999
------------- ------------
<S> <C> <C>
Net income $ 82,329 $ 91,696
Foreign currency translation
adjustment (14,556) (6,556)
--------- ---------
Comprehensive income $ 67,773 $ 85,140
========= =========
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------------
Dec. 31, 1999 Jan. 1, 1999
------------- ------------
<S> <C> <C>
Net income $260,040 $233,688
Foreign currency translation
adjustment (12,640) 14,039
--------- ---------
Comprehensive income $247,400 $247,727
========= =========
</TABLE>
Accumulated other comprehensive income presented on the accompanying
consolidated condensed balance sheets consists of the accumulated
foreign currency translation adjustment and the minimum pension liability
adjustment.
(E) CSC's business involves operations which provide management and
information technology consulting, systems integration and outsourcing.
Based on the criteria of SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information," CSC has two reportable segments: the
U.S. Federal Sector and the Global Commercial Sector. The U.S. Federal
Sector operates principally within a regulatory environment subject to
governmental contracting and accounting requirements, including Federal
Acquisition Regulations, Cost Accounting Standards and audits by various
U.S. Federal agencies. The U.S. Federal Sector revenues reported below
will vary from U.S. Federal government revenue presented elsewhere in
this report due to overlapping activities between segments. Information
on reportable segments is as follows (in thousands):
7
<PAGE>
<TABLE>
<CAPTION>
Global U.S.
Commercial Federal
Sector Sector Corporate Total
---------- -------- --------- ----------
<S> <C> <C> <C> <C>
Third Quarter Ended
December 31,1999
Revenues $1,789,884 $567,815 $ 2,372 $2,360,071
Earnings before special items
interest and taxes 143,511 34,647 826 178,984
Special items 18,303 11,461 11,301 41,065
Earnings (loss) before
interest and taxes 125,208 23,186 (10,475) 137,919
Third Quarter Ended
January 1,1999
Revenues $1,526,195 $528,097 $ 400 $2,054,692
Earnings before
interest and taxes 113,657 30,492 2,716 146,865
</TABLE>
<TABLE>
<CAPTION>
Global U.S.
Commercial Federal
Sector Sector Corporate Total
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Nine Months Ended
December 31,1999
Revenues $5,088,692 $1,703,586 $ 3,191 $6,795,469
Earnings (loss) before
special items, interest
and taxes 367,139 102,145 (3,100) 466,184
Special items 18,303 11,461 11,301 41,065
Earnings (loss) before
interest and taxes 348,836 90,684 (14,401) 425,119
Nine Months Ended
January 1,1999
Revenues $4,256,738 $1,599,132 $ 485 $5,856,355
Earnings (loss) before
interest and taxes 287,196 92,713 (2,227) 377,682
</TABLE>
8
<PAGE>
(F) CSC adopted the American Institute of Certified Public Accountants
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" as of the first quarter
of fiscal 2000. This statement requires the capitalization of internal
use computer software costs provided that certain criteria are met. These
capitalized software costs are amortized on a straight-line basis over
the useful life of the software. The adoption of SOP 98-1 had no material
impact on the Company's consolidated financial position, results of
operations or cash flows.
(G) In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." This statement requires all derivatives to be recorded on
the balance sheet at fair value and establishes accounting standards for
hedging activities. In June 1999, the FASB issued SFAS No. 137, which
amends SFAS No. 133 by deferring its effective date one year to fiscal
years beginning after June 15, 2000. The Company is currently assessing
the impact this statement will have and, based on preliminary estimates,
does not expect the adoption to have a material impact on its consolidated
financial position or results of operations.
(H) The special items result from merger-related charges and other transaction
costs of $39.1 million ($28.5 million after tax) associated with the
November 16, 1999 acquisition of Nichols Research Corporation (Nichols),
and other costs, net of recoveries, of $2 million ($1.3 million after tax)
associated with the resolution, during the quarter, of the remaining
issues relating to the Company's fiscal 1998 response to a failed
take-over attempt. The Nichols charge is comprised of $9.3 million for
investment banking and other transaction expenses; $23.5 million related
to the write-off of capitalized software attributable to duplicate
market offerings and the write-off of other assets and intangibles; and
$6.3 million related to employee severance costs and elimination of
duplicate facilities. The involuntary termination benefits accrued
and expensed were $5.1 million and related to 60 Nichols employees. As of
December 31, 1999, approximately $1.9 million had been paid.
(I) The financial information reported, which is not necessarily indicative
of the results for a full year, is unaudited but includes all adjustments
which the Company considers necessary for a fair presentation. All such
adjustments are normal recurring adjustments.
(J) The results have been restated to reflect the acquisition of Nichols,
which has been accounted for as a pooling of interests. The restatement
includes Nichols' results for fiscal 1999, which ended August 31 and
results for CSC's fiscal 1999, which ended April 2. Therefore, the
restated third quarter and nine months results for fiscal 1999 reflect
Nichols' three months and nine months ended May 31, 1999. The restated
fiscal 2000 data include Nichols' results based on CSC's fiscal year.
9
<PAGE>
PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Third Quarter and First Nine Months of Fiscal 2000 versus
Third Quarter and First Nine Months of Fiscal 1999
Revenues
During the third quarter ended December 31, 1999, the Company's total revenue
increased 14.9%, or $305.4 million, over the same period last year. The
Company's financial results have been restated and fiscal periods have been
realigned to reflect the merger with Nichols, which was accounted for as a
pooling of interests. Nichols' revenue of $100 million for the third quarter
of fiscal 2000 is compared to Nichols' revenue of $127 million for its fiscal
1999 third quarter ended May 1999. As a result, a seasonally lower quarter
for Nichols is compared to its strongest quarter of the prior year. Before
the pooling of interests, revenues for the third quarter were up 17.3%
compared with the prior-year period.
Global commercial sector revenues grew 17.3%, or $263.7 million over the same
quarter of last year.
U.S. Commercial revenue grew 10.4% or $83.5 million during the third quarter
of fiscal 2000 over the same period last year. The growth was principally
generated from information technology outsourcing contracts.
European revenues grew $45.8 million or 7.5% during the third quarter. The
growth was provided principally from increases in outsourcing activities,
consulting and systems integration activities and revenue generated by last
years acquisitions in Italy. Revenue growth was negatively impacted by 2.5
percentage points due to the effect of European currency fluctuations.
Other international revenue for the third quarter grew 114.9% to $251.2
million. The increase was the result of last year's fourth quarter
acquisition of Singapore-based CSA Holdings, Ltd. and further expansion of
CSC's Australian operations.
U.S. Federal sector revenue increased 7.5% or $39.7 million during the third
quarter. Revenue gains were fueled by increases from civil agency and
Department of Defense business.
For the first nine months of fiscal 2000, the Company's total revenue
increased 16% or $939.1 million and the Company announced a total of $8.9
billion in new Global Commercial and Federal business awards. The Company's
continued growth has created a broad, long-term global revenue base across
numerous customers, industries, geographic regions and service regions.
10
<PAGE>
Costs and Expenses
The Company's costs and expenses as a percentage of revenue are as follows
(dollars in millions):
<TABLE>
<CAPTION>
Dollar Amount Percentage of Revenue
-------------- ---------------------------------
Third Quarter Third Quarter First Nine Months
-------------- -------------- -----------------
Fiscal Fiscal Fiscal
-------------- -------------- -----------------
2000 1999 2000 1999 2000 1999
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Costs of services $1,843 $1,601 78.1% 77.9% 78.8% 78.6%
Selling, general & admin. 193 191 8.1 9.3 8.6 9.3
Depreciation and amort. 145 116 6.2 5.7 5.8 5.7
Interest expense, net 10 8 .4 .4 .4 .4
------ ------ ------ ------ ------ ------
Total $2,191 $1,916 92.8% 93.3% 93.6% 94.0%
====== ====== ====== ====== ====== ======
</TABLE>
Comparing both the third quarter and first nine months of fiscal 2000 and
fiscal 1999, total costs and expenses improved as a percentage of revenue.
Lower costs in selling, general and administrative expenses were partially
offset by increases in depreciation and amortization.
Lower selling, general and administrative expenses as a percentage of revenue
were substantially related to lower costs due to efficiencies realized as a
result of last year's reorganization within the Federal sector and the
continued focus on aggressive cost containment given a period of dramatic
demand shifts for information technology services during the third quarter.
The increase in depreciation and amortization as a percentage of revenue was
principally due to additional assets associated with the Company's U.S.
outsourcing operations.
Special Items
The results for the third quarter ended December 31, 1999 include special
items of $41.1 million ($29.8 million after tax), or 18 cents per share
(diluted). The special items result from merger-related charges and other
transaction costs of $39.1 million ($28.5 million after tax) associated with
the November 16,1999 acquisition of Nichols Research Corporation (Nichols),
and legal and other costs, net of recoveries, of $2 million ($1.3 million
after tax) associated with the resolution, during the quarter, of the
remaining issues relating to the Company's fiscal 1998 response to a failed
take-over attempt. The Nichols charge is comprised of $9.3 million for
investment banking and other transaction expenses; $23.5 million related to
the write-off of capitalized software attributable to duplicate market
offerings and the write-off of other assets and intangibles; and $6.3 million
related to employee severance costs and elimination of duplicate facilities.
11
<PAGE>
Income Before Taxes
Due to the Company's revenue growth and improvements in operating performance,
income before special items and taxes increased $30.6 million to $168.9
million, up 22.1% over the same quarter last year. The resulting margin
before special charges was 7.2% compared to 6.7% for last year's third quarter
and was 6.4% versus 6.0% for the nine months of fiscal 2000 and fiscal 1999,
respectively.
Net Income
Earnings before special items were $112.2 million for the third quarter of
fiscal 2000, up $20.5 million, or 22.3% over last year's third quarter. This
year's third quarter diluted earnings per share of 66 cents increased 20% over
last year's third quarter diluted earnings per share of 55 cents, excluding
this quarters special items of $29.8 million or 18 cents per share. On a year
to date basis, diluted earnings per share before special items was $1.71, up
32 cents, or 23% over the same period for the prior year.
Cash Flows
Cash provided by operating activities was $493.2 million for the nine months
ended December 31, 1999, compared with $321.1 million during the same period
last year. The increase of $172.1 million resulted from an increase in
earnings and non-cash depreciation and amortization expenses partially offset
by changes in working capital.
The Company's cash expenditures for investing activities totaled $805.7
million for the most recent nine months versus $542.7 million during the same
period of last year. The increase principally relates to purchases of
outsourcing assets, property and equipment and acquisitions made in Italy,
Austria and the United States.
Cash used for financing activities was $50.3 million for the most recent nine
months versus cash provided by financing activities of $116.1 million for the
same period last year. The change is due to repayment of the Company's $150
million 6.80% notes due April 1999 offset in part by other financing
activities.
Financial Condition
During the first nine months of fiscal 2000, the Company's capital outlays
included $759.7 million of business investments in the form of fixed asset
purchases, acquisitions and outsourcing contracts. These investments as well
as the repayment of the Company's $150 million 6.80% notes due April 1999 were
funded from operating cash flows, additional borrowings and existing cash
balances, which decreased from $617.9 million to $239.4 million. The
Company's debt-to-total capitalization ratio improved to 25.1% at December 31,
1999 from 27.9% at fiscal 1999 year end, principally due to the previously
mentioned debt repayment.
The Company has an option to require a subsidiary of Equifax Inc. to purchase
the Company's credit reporting business as further described in Note 11 of the
Company's Annual Report on Form 10-K for fiscal 1999. The exercise price of
this put option is equal to the appraised value of the business.
12
<PAGE>
It is management's opinion that the Company will be able to meet its liquidity
and cash needs for the foreseeable future through a combination of cash flows
from operating activities, cash balances, unused borrowing capacity and other
financing activities, including the issuance of debt and/or equity securities,
and/or the exercise of the put option described above.
New Accounting Pronouncements
The Company has adopted the American Institute of Certified Public Accountants
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" as of the first quarter of
fiscal 2000. This statement requires the capitalization of internal use
computer software costs provided that certain criteria are met. These
capitalized software costs are amortized on a straight-line basis over the
useful life of the software. The adoption of SOP 98-1 had no material impact
on the Company's consolidated financial position, results of operations or
cash flows.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement requires all
derivatives to be recorded on the balance sheet at fair value and establishes
accounting standards for hedging activities. In June 1999, the FASB issued
SFAS No. 137, which amends SFAS No. 133 by deferring its effective date one
year to fiscal years beginning after June 15, 2000. The Company is currently
assessing the impact this statement will have and, based on preliminary
estimates, does not expect the adoption to have a material impact on its
consolidated financial position or results of operations.
Year 2000 Readiness Disclosure
The Company's transition to the year 2000 went smoothly, with only minor
incidents. As a result, any future year 2000 issues will be addressed as part
of normal operations and will not be tracked or reported separately.
The Company's Year 2000 efforts did not have a material effect on its overall
financial position or results of operations. The total fiscal 1999 and 2000
operating costs associated with making the Company's proprietary products,
systems and infrastructure Year 2000 ready, as well as costs for contingency
planning and monitoring, including the cost of Company personnel diverted to
internal Year 2000 assignments, was approximately $44 million. In addition,
related capital expenditures for fiscal 1999 and 2000 were approximately $11
million.
Some of these capital expenditures represented equipment replacements that had
been accelerated due to Year 2000 issues. The operating costs described above
were generally not incremental, but reflected the reallocation of existing
resources. The Company did not defer any significant information technology
projects as a result of the Year 2000 efforts.
13
<PAGE>
Forward-Looking Statements
All statements contained in this quarterly report, or in any document filed by
the Company with the Securities and Exchange Commission, or in any press
release or other written or oral communication by or on behalf of the Company,
that do not directly and exclusively relate to historical facts constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements represent the Company's
expectations and beliefs, and no assurance can be given that the results
described in such statements will be achieved.
These statements are subject to risks, uncertainties and other factors, many
of which are outside of the Company's control, that could cause actual results
to differ materially from the results described in such statements. These
factors include, without limitation, the following: (i) competitive pressures;
(ii) the Company's ability to attract and retain key personnel; (iii) changes
in the demand for information technology outsourcing and business process
outsourcing; (iv) changes in the financial condition of the Company's major
commercial customers; (v) changes in U.S. federal government spending levels
for information technology services; (vi) the Company's ability to consummate
strategic acquisitions and alliances; (vii) the future profitability of the
Company's customer contracts; (viii) the Company's ability to continue to
develop and expand its service offerings to address emerging business demand
and technological trends; and (ix) general economic conditions in countries in
which the Company does business.
14
<PAGE>
PART I, ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
For a discussion of the Company's market-risk associated with interest rates
and foreign currencies as of April 2, 1999, see "Quantitative and Qualitative
Disclosures about Market Risk" in the Part II, Item 7A, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," of
the Company's Annual Report on Form 10-K for the fiscal year then ended. For
the nine months ended December 31, 1999, there has been no significant change
in related market risk factors.
15
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
a. Exhibits
<S> <C> <C>
3.1 Restated Articles of Incorporation, effective
October 31, 1988 (c)
3.2 Amendment to Restated Articles of Incorporation,
effective August 10, 1992 (i)
3.3 Amendment to Restated Articles of Incorporation,
effective July 31, 1996 (k)
3.4 Certificate of Amendment of Certificate of Designations
of Series A Junior Participating Preferred Stock,
effective August 1, 1996 (m)
3.5 Bylaws, amended and restated effective December 6, 1999
10.1 1978 Stock Option Plan, amended and restated
effective March 31, 1988* (l)
10.2 1980 Stock Option Plan, amended and restated
effective March 31, 1988* (l)
10.3 1984 Stock Option Plan, amended and restated
effective March 31, 1988* (l)
10.4 1987 Stock Incentive Plan* (b)
10.5 Schedule to the 1987 Stock Incentive Plan for
United Kingdom personnel* (b)
10.6 1990 Stock Incentive Plan* (h)
10.7 1992 Stock Incentive Plan, amended and restated
effective August 9, 1993* (o)
10.8 Schedule to the 1992 Stock Incentive Plan for
United Kingdom personnel* (n)
10.9 1995 Stock Incentive Plan* (j)
10.10 1998 Stock Incentive Plan* (s)
10.11 Form of Stock Option Agreement* (r)
10.12 Form of Restricted Stock Agreement* (r)
10.13 Annual Management Incentive Plan, effective April 2, 1983* (a)
10.14 Supplemental Executive Retirement Plan, amended and
restated effective February 27, 1998* (r)
10.15 Deferred Compensation Plan, amended and restated
effective February 2, 1998* (p)
10.16 Severance Plan for Senior Management and Key Employees,
amended and restated effective February 18, 1998 (q)
10.17 Severance Agreement with Van B. Honeycutt, effective
February 2, 1998* (p)
10.18 Employment Agreement with Van B. Honeycutt, effective
May 1, 1999* (g)
10.19 Form of Indemnification Agreement for Officers (e)
10.20 Form of Indemnification Agreement for Directors (d)
10.21 1997 Nonemployee Director Stock Incentive Plan (o)
10.22 Form of Restricted Stock Unit Agreement (f)
10.23 1990 Nonemployee Director Retirement Plan, amended
and restated effective February 2, 1998 (p)
16
<PAGE>
10.24 Rights Agreement dated February 18, 1998 (q)
10.25 $250 million Credit Agreement (Long Term Facility) dated
as of August 20, 1999 (t)
10.26 $250 million Credit Agreement (Short Term Facility) dated
as of August 20, 1999 (t)
27 Financial Data Schedule
28 Revenues by Market Sector
99.1 Annual Report on Form 11-K for the Matched Asset Plan of the
Registrant for the fiscal year ended December 31, 1998 (g)
99.2 Annual Report on Form 11-K for the Hourly Savings Plan of
CSC Outsourcing, Inc. for the fiscal year ended
December 31, 1998 (g)
99.3 Annual Report on Form 11-K for the CUTW Hourly Savings
Plan of CSC Outsourcing, Inc. for the fiscal year
ended December 31, 1998 (g)
</TABLE>
17
<PAGE>
Notes to Exhibit Index:
*Management contract or compensatory plan or agreement
(a)-(g) These exhibits are incorporated herein by reference to the
Company's Annual Report on Form 10-K for the fiscal years ended
on the respective dates indicated below:
(a) March 30, 1984 (e) March 31, 1995
(b) April 1, 1988 (f) April 3, 1998
(c) March 31, 1989 (g) April 2, 1999
(d) April 3, 1992
(h) Incorporated herein by reference to the Registrant's Registration
Statement on Form S-8 filed on August 15, 1990.
(i) Incorporated herein by reference to the Registrant's Proxy
Statement for its August 10, 1992 Annual Meeting of Stockholders.
(j) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on November 13, 1995.
(k) Incorporated herein by reference to the Registrant's Proxy
Statement for its July 31, 1996 Annual Meeting of Stockholders.
(l) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on August 12, 1996.
(m) Incorporated herein by reference to the Registrant's Current
Report of Form 8-K dated August 1, 1996.
(n) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on February 10, 1997.
(o) Incorporated herein by reference to the Registrant's Proxy
Statement for its August 11, 1997 Annual Meeting of Stockholders.
(p) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on February 9, 1998.
(q) Incorporated herein by reference to the Registrant's
Registration Statement on Form 8-A filed on February 25, 1998
(r) Incorporated herein by reference to Amendment No. 2 to the
Registrant's Solicitation/Recommendation Statement on Schedule
14D-9 filed on March 2, 1998.
(s) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on August 14, 1998
(t) Incorporated herein by reference to the Registrant's Quarterly
Report on Form 10-Q filed on November 15, 1999
b. Reports on Form 8-K:
There was one report on Form 8-K filed during the third quarter of fiscal
2000. On November 16, 1999, the Registrant filed a Current Report on
Form 8-K reporting that it had consummated its acquisition of Nichols
Research Corporation.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMPUTER SCIENCES CORPORATION
Date: February 14, 2000 By: /s/ Bryan Brady
-----------------------------
Bryan Brady
Vice President and Controller
Chief Accounting Officer
19
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------- ----------------------
<S> <C>
3.5 Bylaws of Computer Sciences Corporation, as amended and restated
December 6, 1999
27 Financial Data Schedule
28 Revenues by Market Sector
</TABLE>
20
EXHIBIT 3.5
BYLAWS
OF
COMPUTER SCIENCES CORPORATION
As amended December 6, 1999
<PAGE>
BYLAWS
OF
COMPUTER SCIENCES CORPORATION
ARTICLE I
OFFICES
Section 1. Principal Office.
----------------
The principal office of the corporation in the State of Nevada shall
be in the City of Reno, County of Washoe.
Section 2. Other Offices.
-------------
The corporation may also have offices in such other places, both
within and without the State of Nevada, as the Board of Directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Annual Meetings.
------------------------
Annual meetings of the stockholders shall be held at the office of
the corporation in the City of El Segundo, State of California or at such
other place, within or without the State of California, as shall be designated
by the Board of Directors.
Section 2. Date of Annual Meetings; Election of Directors.
----------------------------------------------
Annual meetings of the stockholders shall be held at such time and
date as the Board of Directors shall determine. At each such annual meeting,
the stockholders of the corporation shall elect a Board of Directors and
transact such other business as has properly been brought before the meeting
in accordance with Section 12 of this Article II.
Section 3. Special Meetings.
----------------
Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, by the Articles of Incorporation or by
these Bylaws, may be called by the Chairman of the Board, the Board of
Directors or the Chief Executive Officer, and shall be called by the president
or secretary at the request in writing of stockholders owning not less than
seventy-five percent (75%) of the entire capital stock of the corporation
issued and outstanding and entitled to vote, and shall not otherwise be called
except as provided in the following sentence. In the event the corporation
shall have failed to hold its annual meeting of stockholders for a period of
18 months from the last preceding annual meeting at which directors were
elected or if such annual meeting shall have been held but directors shall not
have been elected at such annual meeting, a special meeting of the
stockholders shall be called by the president or secretary at the request in
writing of a majority of the Board of Directors or at the
<PAGE>
request in writing of stockholders owning a majority in amount of the entire
capital stock of the corporation issued and outstanding and entitled to vote.
Such request from stockholders shall be directed to the Chairman of the Board,
the president, the vice president or the secretary. To be in proper written
form, a stockholder's notice must set forth (i) the name and record address of
such stockholder, (ii) the class or series and number of shares of capital
stock of the corporation which are owned beneficially or of record by such
stockholder, (iii) a description of all arrangements or understandings between
such stockholder and any other person or persons (including their names) in
connection with the election of directors and any material interest of such
stockholder in such election and (iv) a representation that such stockholder
intends to appear in person or by proxy at such special meeting to vote on the
election of directors at such meeting. The business transacted at such special
meeting shall be confined to the election of directors.
Section 4. Notices of Meetings.
-------------------
Notices of meetings of the stockholders shall be in writing and
signed by the president, a vice president, the secretary, an assistant
secretary, or by such other person or persons as the directors shall
designate. Such notice shall state the purpose or purposes for which the
meeting is called and the time when, and the place where, it is to be held. A
copy of such notice shall be either delivered personally or shall be mailed,
postage prepaid, to each stockholder of record entitled to vote at such
meeting not less than ten (10) nor more than sixty (60) days before such
meeting. If mailed, it shall be directed to the stockholder at his address as
it appears upon the records of the corporation and upon such mailing of any
such notice, the service thereof shall be complete, and the time of the notice
shall begin to run from the date upon which such notice is deposited in the
mail for transmission to such stockholder. If no such address appears on the
books of the corporation and a stockholder has given no address for the
purpose of notice, then notice shall be deemed to have been given to such
stockholder if it is published at least once in a newspaper of general
circulation in the county in which the principal executive office of the
corporation is located. An affidavit of the mailing or publication of any
such notice shall be prima facie evidence of the giving of such notice.
Personal delivery of any such notice to any officer of a corporation
or association, or to any member of a partnership shall constitute delivery of
such notice to such corporation, association or partnership. If any notice
addressed to the stockholder at the address of such stockholder appearing on
the books of the corporation is returned to the corporation by the United
States Postal Service marked to indicate that it is unable to deliver the
notice to the stockholder at such address, all future notices shall be deemed
to have been duly given to such stockholder, without further mailing, if the
same shall be available for the stockholder upon written demand of the
stockholder at the principal executive office of the corporation for a period
of one year from the date of the giving of the notice to all other
stockholders.
2
<PAGE>
Section 5. Quorum.
------
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business, except as otherwise provided by the statutes of Nevada or by the
Articles of Incorporation. Regardless of whether or not a quorum is present
or represented at any annual or special meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
in person or represented by proxy, provided that when any stockholders'
meeting is adjourned for more than forty-five (45) days, or if after
adjournment a new record date is fixed for the adjourned meeting, notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting. At such adjourned meeting at which a quorum shall be
present or represented by proxy, any business may be transacted which might
have been transacted at the meeting as originally noticed.
Section 6. Vote Required.
-------------
When a quorum is present or represented at any meeting, the holders
of a majority of the stock present in person or represented by proxy and
voting shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of the statutes of Nevada,
the Articles of Incorporation or these Bylaws, a different vote is required,
in which case such express provision shall govern and control the decision of
such question. The stockholders present at a duly called or held meeting at
which a quorum is present may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
Section 7. Cumulative Voting.
-----------------
Except as otherwise provided in the Articles of Incorporation, every
stockholder of record of the corporation shall be entitled at each meeting of
the stockholders to one vote for each share of stock standing in his name on
the books of the corporation. At all elections of directors of this
corporation, each holder of shares of capital stock possessing voting power
shall be entitled to as many votes as shall equal the number of his shares of
stock multiplied by the number of directors to be elected, and he may cast all
of such votes for a single director or may distribute them among the number to
be voted for or any two or more of them, as he may see fit. The stockholders
of this corporation and any proxyholders for such stockholders are entitled to
exercise the right to cumulative voting at any meeting held for the election
of directors if: (a) not less than forty-eight (48) hours before the time
fixed for holding such meeting, if notice of the meeting has been given at
least ten (10) days prior to the date of the meeting, and otherwise not less
than twenty-four (24) hours before such time, a stockholder of this
corporation has given notice in writing to the president or secretary of the
corporation that he desires that the voting at such election of directors
shall be cumulative; and (b) at such meeting, prior to the commencement
3
<PAGE>
of voting for the election of directors, an announcement of the giving of such
notice has been made by the chairman or the secretary of the meeting or by or
on behalf of the stockholder giving such notice. Notice to stockholders of
the requirements of the preceding sentence shall be contained in the notice
calling such meeting or in the proxy material accompanying such notice.
Section 8. Conduct of Meetings.
-------------------
Subject to the requirements of the statutes of Nevada, and the
express provisions of the Articles of Incorporation and these Bylaws, all
annual and special meetings of stockholders shall be conducted in accordance
with such rules and procedures as the Board of Directors may determine and, as
to matters not governed by such rules and procedures, as the chairman of such
meeting shall determine. The chairman of any annual or special meeting of
stockholders shall be designated by the Board of Directors and, in the absence
of any such designation, shall be the president of the corporation.
Section 9. Proxies.
-------
At any meeting of the stockholders, any stockholder may be
represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present, then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of
the persons so designated unless the instrument shall otherwise provide. No
such proxy shall be valid after the expiration of six (6) months from the date
of its execution, unless coupled with an interest, or unless the person
executing it specifies therein the length of time for which it is to continue
in force, which in no case shall exceed seven (7) years from the date of its
execution. Subject to the above, any proxy duly executed is not revoked and
continues in full force and effect until (i) an instrument revoking it or duly
executed proxy bearing a later date is filed with the secretary of the
corporation or, (ii) the person executing the proxy attends such meeting and
votes the shares subject to the proxy, or (iii) written notice of the death or
incapacity of the maker of such proxy is received by the corporation before
the vote pursuant thereto is counted.
Section 10. Action by Written Consent.
-------------------------
Any action, except election of directors, which may be taken by a
vote of the stockholders at a meeting, may be taken without a meeting and
without notice if authorized by the written consent of stockholders holding at
least ninety percent (90%) of the voting power.
Section 11. Inspectors of Election.
----------------------
In advance of any meeting of stockholders, the Board of Directors
may appoint inspectors of election to act at such meeting and any adjournment
thereof. If inspectors of election are not so appointed, or if any persons so
appointed fail to appear or refuse to act, then, unless other persons are
appointed by the Board of Directors prior to the meeting, the chairman of any
such meeting may, and on the request of any stockholder or a stockholder proxy
shall, appoint inspectors of election (or persons to replace those
4
<PAGE>
who fail to appear or refuse to act) at the meeting. The number of inspectors
shall not exceed three.
The duties of such inspectors shall include: (a) determining the
number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, and the authenticity,
validity and effect of proxies; (b) receiving votes, ballots or consents; (c)
hearing and determining all challenges and questions in any way arising in
connection with the right to vote; (d) counting and tabulating all votes or
consents and determining the result; and (e) taking such other action as may
be proper to conduct the election or vote with fairness to all stockholders.
In the determination of the validity and effect of proxies, the dates
contained on the forms of proxy shall presumptively determine the order of
execution of the proxies, regardless of the postmark dates on the envelopes in
which they are mailed. The inspectors of election shall perform their duties
impartially, in good faith, to the best of their ability and as expeditiously
as is practical. If there are three inspectors of election, the decision, act
or certificate of a majority is effective in all respects as the decision, act
or certificate of all. Any report or certificate made by the inspectors of
election is prima facie evidence of the facts stated therein.
Section 12. Action at Meetings of Stockholders.
----------------------------------
No business may be transacted at an annual meeting of stockholders,
other than business that is either (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise properly brought before the annual meeting by or at
the direction of the Board of Directors or (c) otherwise properly brought
before the annual meeting by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 12 and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) who complies with the notice
procedures set forth in this Section 12.
In addition to any other applicable requirements, for business
properly to be brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written form to
the Chairman of the Board, if any, the President, or the Secretary of the
Corporation.
To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation not less
than one hundred twenty (120) days nor more than one hundred fifty (150) days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
-------- -------
called for a date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely must be so
received not later than the 5:00 o'clock, p.m., Los Angeles, California time
on the tenth (10th) day following the day on which such notice of the date of
the annual meeting was mailed or such
5
<PAGE>
public disclosure of the date of the annual meeting was made, whichever first
occurs.
To be in proper written form, a stockholder's notice must set forth
as to each matter such stockholder proposes to bring before the annual meeting
(i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and record address of such stockholder, (iii) the class
or series and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any other person
or persons (including their names) in connection with the proposal of such
business by such stockholder and any material interest of such stockholder in
such business and (v) a representation that such stockholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 12, provided, however, that, once
business has been brought properly before the annual meeting in accordance
with such procedures, nothing in this Section 12 shall be deemed to preclude
discussion by any stockholder of any such business. If the Chairman of an
annual meeting determines that business was not brought properly before the
annual meeting in accordance with the foregoing procedures, the Chairman shall
declare to the meeting that the business was not brought properly before the
meeting and such business shall not be transacted.
ARTICLE III
DIRECTORS
Section 1. Number of Directors.
-------------------
The exact number of directors that shall constitute the authorized
number of members of the Board shall be nine (9), all of whom shall be at
least 18 years of age. The authorized number of directors may from time to
time be increased to not more than fifteen (15) or decreased to not less than
three (3) by resolution of the directors of the corporation amending this
section of the Bylaws in compliance with Article VIII, Section 2 of these
Bylaws. Except as provided in Section 2 of this Article III, each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
A majority of the directors shall at all times consist of
"Independent Directors." A person shall be considered an "Independent
Director" if he or she:
(i) is not, and has not been within the past three years,
employed by the Corporation in an executive capacity;
6
<PAGE>
(ii) is not, and is not affiliated with an organization that is,
an advisor or consultant to the Corporation, and within the last three years
has not had, and is not affiliated with a company that has had, any business
relationship with the Corporation, in any case for which disclosure is
required pursuant to Item 404 of Regulation S-K of the Securities and Exchange
Commission (or any successor to such rule);
(iii) is not a member of the immediate family of any person
described in clauses (i) or (ii) above; and
(iv) does not have any financial relationship, other than as a
stockholder of the Corporation, that could materially affect the exercise of
his or her judgment as a director.
Section 2. Vacancies.
---------
Vacancies, including those caused by (i) the death, removal, or
resignation of directors, (ii) the failure of stockholders to elect directors
at any annual meeting, and (iii) an increase in the number of directors, may
be filled by a majority of the remaining directors though less than a quorum.
When one or more directors shall give notice of his or their resignation to
the Board, effective at a future date, the acceptance of such resignation
shall not be necessary to make it effective. The Board shall have power to
fill such vacancy or vacancies to take effect when such resignation or
resignations shall become effective, each director so appointed to hold office
during the remainder of the term of office of the resigning director or
directors. The directors of the Corporation may be removed from office by the
vote of stockholders representing not less than two-thirds (2/3) of the voting
power of the issued and outstanding stock entitled to voting power; provided,
however, that any director or directors who constitute fewer than all of the
incumbent directors may not be removed from office at any one time or as the
result of any one transaction except upon the vote of stockholders owning
sufficient shares to prevent each director's election to office at the time of
removal.
Section 3. Authority.
---------
The business of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the Board of Directors.
Section 4. Meetings.
--------
The Board of Directors of the corporation may hold meetings, both
regular and special, at such place, either within or without the State of
Nevada, which has been designated by resolution of the Board of Directors. In
the absence of such designation, meetings shall be held at the office of the
corporation in the City of El Segundo, State of California.
Section 5. First Meeting.
-------------
The first meeting of the newly elected Board of Directors shall be
held immediately following the annual meeting of the stockholders and no
notice of such meeting to the newly elected directors shall be necessary in
order legally to constitute a meeting, provided a quorum shall be present.
7
<PAGE>
Section 6. Regular Meetings.
----------------
Regular meetings of the Board of Directors may be held without
notice at such time and place as shall from time to time be determined by the
Board.
Section 7. Special Meetings.
----------------
Special meetings of the Board of Directors may be called by the
Chairman of the Board, or the president and shall be called by the president
or secretary at the written request of two directors. Notice of the time and
place of special meetings shall be given within 30 days to each director (a)
personally or by telephone, telegraph, facsimile or electronic means, in each
case at least twenty four (24) hours prior to the holding of the meeting, or
(b) by mail, charges prepaid, addressed to him at his address as it is shown
upon the records of the corporation (or, if it is not so shown on such records
and is not readily ascertainable, at the place at which the meetings of the
directors are regularly held) at least three (3) days prior to the holding of
the meeting. Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mails, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient. Oral notice shall be deemed to have been
given at the time it is communicated, in person or by telephone or wireless,
to the recipient or to a person at the office of the recipient who the person
giving the notice has reason to believe will promptly communicate it to the
recipient. Any notice, waiver of notice or consent to holding a meeting shall
state the time, date and place of the meeting but need not specify the purpose
of the meeting.
Section 8. Quorum.
------
Presence in person of a majority of the Board of Directors, at a
meeting duly assembled, shall be necessary to constitute a quorum for the
transaction of business and the act of a majority of the directors present and
voting at any meeting, at which a quorum is then present, shall be the act of
the Board of Directors, except as may be otherwise specifically provided by
the statutes of Nevada or by the Articles of Incorporation. A meeting at
which a quorum is initially present shall not continue to transact business in
the absence of a quorum.
Section 9. Action by Written Consent.
-------------------------
Unless otherwise restricted by the Articles of Incorporation or by
these Bylaws, any action required or permitted to be taken at any meeting of
the Board of Directors may be taken without a meeting if a written consent
thereto is signed by all members of the Board. Such written consent shall be
filed with the minutes of proceedings of the Board of Directors.
Section 10. Telephonic Meetings.
-------------------
Unless otherwise restricted by the Articles of Incorporation or
these Bylaws, members of the Board of Directors or of any committee designated
by the Board of Directors may participate in a meeting of
8
<PAGE>
the Board or committee by means of a conference telephone network or a similar
communications method by which all persons participating in the meeting can
hear each other. Participation in a meeting pursuant to the preceding
sentence constitutes presence in person at such meeting.
Section 11. Adjournment.
-----------
A majority of the directors present at any meeting, whether or not a
quorum is present, may adjourn any directors' meeting to another time, date
and place. If any meeting is adjourned for more than twenty-four (24) hours,
notice of any adjournment to another time, date and place shall be given,
prior to the time of the adjourned meeting, to the directors who were not
present at the time of adjournment. If any meeting is adjourned for less than
twenty-four (24) hours, notice of any adjournment shall be given to absent
directors, prior to the time of the adjourned meeting, unless the time, date
and place is fixed at the meeting adjourned.
Section 12. Committees.
----------
The Board of Directors may, by resolution passed by a majority of
the whole Board, designate one or more committees of the Board of Directors.
Such committee or committees shall have such name or names, shall have such
duties and shall exercise such powers as may be determined from time to time
by the Board of Directors.
Section 13. Committee Minutes.
-----------------
The committees shall keep regular minutes of their proceedings and
report the same to the Board of Directors.
Section 14. Compensation of Directors.
-------------------------
The directors shall receive such compensation for their services as
directors, and such additional compensation for their services as members of
any committees of the Board of Directors, as may be authorized by the Board of
Directors.
Section 15. Mandatory Retirement of Directors.
---------------------------------
A director of the Corporation shall not serve beyond, and shall
automatically retire at, the close of the first meeting of the Board of
Directors held during the month in which such director shall become age 70;
provided, however, that any person who was a director on December 6, 1996 and
who was age 65 or older on such date may serve until, but shall automatically
retire at, the close of the first meeting of the Board of Directors held
during the month in which such director shall become age 72. If no meeting of
the Board of Directors is held during such month, the director shall
automatically retire as of the last day of such month. Notwithstanding the
foregoing, if the Board of Directors shall determine that it is in the best
interests of the Corporation and its stockholders for a person to continue to
serve as a director of the Corporation for a period of time not exceeding one
year after the date upon which this Section 15 would otherwise require such
person to retire, then such person shall not be so required to retire until
the end of such period of time.
9
<PAGE>
ARTICLE IV
OFFICERS
Section 1. Principal Officers.
------------------
The officers of the corporation shall be elected by the Board of
Directors and shall be a president, a secretary and a treasurer. A resident
agent for the corporation in the State of Nevada shall be designated by the
Board of Directors. Any person may hold two or more offices.
Section 2. Other Officers.
--------------
The Board of Directors may also elect one or more vice presidents,
assistant secretaries and assistant treasurers, and such other officers and
agents, as it shall deem necessary.
Section 3. Qualification and Removal.
-------------------------
The officers of the corporation mentioned in Section 1 of this
Article IV shall hold office until their successors are elected and qualify.
Any such officer and any other officer elected by the Board of Directors may
be removed at any time by the affirmative vote of a majority of the Board of
Directors.
Section 4. Resignation.
-----------
Any officer may resign at any time by giving written notice to the
corporation, without prejudice, however, to the rights, if any, of the
corporation under any contract to which such officer is a party. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5. Powers and Duties; Execution of Contracts.
-----------------------------------------
Officers of this corporation shall have such powers and duties as
may be determined by the Board of Directors. Unless otherwise specified by
the Board of Directors, the president shall be the chief executive officer of
the corporation. Contracts and other instruments in the normal course of
business may be executed on behalf of the corporation by the president or any
vice president of the corporation, or any other person authorized by
resolution of the Board of Directors.
ARTICLE V
STOCK AND STOCKHOLDERS
Section 1. Issuance.
--------
Every stockholder shall be issued a certificate representing the
number of shares owned by him in the corporation. If the corporation shall be
authorized to issue more than one class of stock or more than one series of
any class, the certificate shall contain a statement setting forth the office
or agency of the corporation from which stockholders may obtain a copy of a
statement or summary of the designations, preferences and relative or other
special rights of the various classes of stock or series thereof and the
qualifications, limitations or restrictions of such rights. The corporation
shall furnish to its stockholders, upon request and without charge, a copy of
such statement or summary.
10
<PAGE>
Section 2. Facsimile Signatures.
--------------------
Whenever any certificate is countersigned or otherwise authenticated
by a transfer agent or transfer clerk, and by a registrar, then a facsimile of
the signatures of the officers of the corporation may be printed or
lithographed upon such certificate in lieu of the actual signatures. In case
any officer or officers who shall have signed, or whose facsimile signature or
signatures shall have been used on, any such certificate or certificates shall
cease to be such officer or officers of the corporation, before such
certificates shall have been delivered by the corporation, such certificates
may nevertheless be issued as though the person or persons who signed such
certificates, had not ceased to be an officer of the corporation.
Section 3. Lost Certificates.
-----------------
The Board of Directors may direct a new stock certificate to be
issued in place of any certificate alleged to have been lost or destroyed, and
may require the making of an affidavit of that fact by the person claiming the
stock certificate to be lost or destroyed. When authorizing such issue of a
new certificate, the Board of Directors may, in its discretion and as a
condition precedent, require the owner of the lost or destroyed certificate to
give the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation with respect to the
certificate alleged to have been lost or destroyed.
Section 4. Transfer of Stock.
-----------------
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed for transfer, it shall
be the duty of the corporation to issue a new certificate, cancel the old
certificate and record the transaction upon its books.
Section 5. Record Date.
-----------
The directors may fix a date not more than sixty (60) days prior to
the holding of any meeting as the date as of which stockholders entitled to
notice of and to vote at such meeting shall be determined; and only
stockholders of record on such day shall be entitled to notice or to vote at
such meeting. If no record date is fixed by the Board of Directors (a) the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be the sixtieth (60th) day preceding the day on
which the meeting is held; (b) the record date for determining stockholders
entitled to give consent to corporate action in writing without a meeting,
when no prior action by the Board has been taken, shall be the day on which
the first written consent is given; and (c) the record date for determining
stockholders for any other purpose shall be the day on which the Board of
Directors adopts the resolution relating thereto, or the sixtieth (60th) day
prior to the date of such action, whichever is later. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting unless the Board of
Directors fixes a new record date for the adjourned meeting, but the Board of
Directors shall fix a new record date if the meeting is adjourned for more
than forty-five (45) days from the date set for the original meeting.
11
<PAGE>
Section 6. Registered Stock.
----------------
The corporation shall be entitled to recognize the exclusive right
of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the statutes of Nevada.
Section 7. Dividends.
---------
In the event a dividend is declared, the stock transfer books will
not be closed but a record date will be fixed by the Board of Directors and
only shareholders of record on that date shall be entitled to the dividend.
ARTICLE VI
INDEMNIFICATION
Section 1. Indemnity of Directors, Officers and Agents.
-------------------------------------------
The corporation shall indemnify and hold harmless any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she is or
was or has agreed to become a director or officer of the corporation or is
serving at the request of the corporation as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise or by reason of actions alleged to have been taken or omitted in
such capacity or in any other capacity while serving as a director or officer.
The indemnification of directors and officers by the corporation shall be to
the fullest extent authorized or permitted by applicable law, as such law
exists or may hereafter be amended (but only to the extent that such amendment
permits the corporation to provide broader indemnification rights than
permitted prior to the amendment). The indemnification of directors and
officers shall be against all loss, liability and expense (including attorneys
fees, costs, damages, judgments, fines, amounts paid in settlement and ERISA
excise taxes or penalties) actually and reasonably incurred by or on behalf of
a director or officer in connection with such action, suit or proceeding,
including any appeals; provided, however, that with respect to any action,
suit or proceeding initiated by a director or officer, the corporation shall
indemnify such director or officer only if the action, suit or proceeding was
authorized by the board of directors of the corporation, except with respect
to a suit for the enforcement of rights to indemnification or advancement of
expenses in accordance with Section 3 hereof.
Section 2. Expenses.
--------
The expenses of directors and officers incurred as a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative shall be paid by the corporation as
they are incurred and in advance of the final disposition of the action, suit
or proceeding; provided, however, that if applicable law so requires, the
advance payment of expenses shall be made only upon receipt by the corporation
12
<PAGE>
of an undertaking by or on behalf of the director or officer to repay all
amounts as advanced in the event that it is ultimately determined by a final
decision, order or decree of a court of competent jurisdiction that the
director or officer is not entitled to be indemnified for such expenses under
this Article VI.
Section 3. Enforcement.
-----------
Any director or officer may enforce his or her rights to
indemnification or advance payments for expenses in a suit brought against the
corporation if his or her request for indemnification or advance payments for
expenses is wholly or partially refused by the corporation or if there is no
determination with respect to such request within 60 days from receipt by the
corporation of a written notice from the director or officer for such a
determination. If a director or officer is successful in establishing in a
suit his or her entitlement to receive or recover an advancement of expenses
or a right to indemnification, in whole or in part, he or she shall also be
indemnified by the corporation for costs and expenses incurred in such suit.
It shall be a defense to any such suit (other than a suit brought to enforce a
claim for the advancement of expenses under Section 2 of this Article VI where
the required undertaking, if any, has been received by the corporation) that
the claimant has not met the standard of conduct set forth in the Nevada
General Corporation Law. Neither the failure of the corporation to have made
a determination prior to the commencement of such suit that indemnification of
the director or officer is proper in the circumstances because the director or
officer has met the applicable standard of conduct nor a determination by the
corporation that the director or officer has not met such applicable standard
of conduct shall be a defense to the suit or create a presumption that the
director or officer has not met the applicable standard of conduct. In a suit
brought by a director or officer to enforce a right under this Section 3 or by
the corporation to recover an advancement of expenses pursuant to the terms of
an undertaking, the burden of proving that a director or officer is not
entitled to be indemnified or is not entitled to an advancement of expenses
under this Section 3 or otherwise, shall be on the corporation.
Section 4. Non-exclusivity.
---------------
The right to indemnification and to the payment of expenses as they
are incurred and in advance of the final disposition of the action, suit or
proceeding shall not be exclusive of any other right to which a person may be
entitled under these articles of incorporation or any bylaw, agreement,
statute, vote of stockholders or disinterested directors or otherwise. The
right to indemnification under Section 1 hereof shall continue for a person
who has ceased to be a director or officer and shall inure to the benefit of
his or her heirs, next of kin, executors, administrators and legal
representatives.
Section 5. Settlement.
----------
The corporation shall not be obligated to reimburse the amount of
any settlement unless it has agreed to such settlement. If any person shall
unreasonably fail to enter into a settlement of any action, suit or proceeding
within the scope of Section 1 hereof, offered or assented to by the opposing
party or parties and which is acceptable to the corporation, then,
13
<PAGE>
notwithstanding any other provision of this Article VI, the indemnification
obligation of the corporation in connection with such action, suit or
proceeding shall be limited to the total of the amount at which settlement
could have been made and the expenses incurred by such person prior to the
time the settlement could reasonably have been effected.
Section 6. Purchase of Insurance.
---------------------
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this Article VI.
Section 7. Conditions.
----------
The corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification and to the advancement
of expenses to any employee or agent of the corporation or to any director,
officer, employee or agent of any of its subsidiaries to the fullest extent of
the provisions of this Article VI subject to the imposition of any conditions
or limitations as the Board of Directors may deem necessary or appropriate.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Exercise of Rights.
------------------
All rights incident to any and all shares of another corporation or
corporations standing in the name of this corporation may be exercised by such
officer, agent or proxyholder as the Board of Directors may designate. In the
absence of such designation, such rights may be exercised by the Chairman of
the Board or the president of this corporation, or by any other person
authorized to do so by the Chairman of the Board or the president of this
corporation. Except as provided below, shares of this corporation owned by
any subsidiary of this corporation shall not be entitled to vote on any
matter. Shares of this corporation held by this corporation in a fiduciary
capacity and shares of this corporation held in a fiduciary capacity by any
subsidiary of this corporation, shall not be entitled to vote on any matter,
except to the extent that the settler or beneficial owner possesses and
exercises a right to vote or to give this corporation or such subsidiary
binding instructions as to how to vote such shares.
Solely for purposes of Section 1 of this Article VII, a "subsidiary"
of this corporation shall mean a corporation, shares of which possessing more
than fifty percent (50%) of the power to vote for the election of directors at
the time determination of such voting power is made, are owned directly, or
indirectly through one or more subsidiaries, by this corporation.
14
<PAGE>
Section 2. Interpretation.
--------------
Unless the context of a Section of these Bylaws otherwise requires,
the terms used in these Bylaws shall have the meanings provided in, and these
Bylaws shall be construed in accordance with the Nevada statutes relating to
private corporations, as found in Chapter 78 of the Nevada Revised Statutes or
any subsequent statute.
ARTICLE VIII
AMENDMENTS
Section 1. Stockholder Amendments.
----------------------
Bylaws may be adopted, amended or repealed by the affirmative vote
of not less than seventy-five percent (75%) of the outstanding voting shares
of this corporation.
Section 2. Amendments by Board of Directors.
--------------------------------
Subject to the right of stockholders as provided in Section 1 of
this Article VIII, Bylaws may be adopted, amended or repealed by the Board of
Directors; provided, however, that the following provisions may not be amended
or repealed by the Board of Directors until after January 1, 2005: (i) the
percentage appearing in the first sentence of Article II, Section 3; (ii) the
second paragraph of Article III, Section I; and (iii) this Article VIII.
ARTICLE IX
"ACQUISITION OF CONTROLLING INTEREST" PROVISIONS OF
THE NEVADA GENERAL CORPORATION LAW SHALL NOT APPLY
On and after February 16, 1998, the provisions of Section 78.378 to
78.3793, inclusive, of the Nevada Revised Statutes shall not apply to the
corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> Mar-31-2000
<PERIOD-START> Apr-02-1999
<PERIOD-END> Dec-31-1999
<PERIOD-TYPE> 9-MOS
<CASH> 239,430
<SECURITIES> 0
<RECEIVABLES> 2,214,796
<ALLOWANCES> 63,286
<INVENTORY> 0
<CURRENT-ASSETS> 2,729,707
<PP&E> 2,688,876
<DEPRECIATION> 1,430,683
<TOTAL-ASSETS> 5,579,513
<CURRENT-LIABILITIES> 1,917,192
<BONDS> 656,916
<COMMON> 167,300
0
0
<OTHER-SE> 2,720,364
<TOTAL-LIABILITY-AND-EQUITY> 5,579,513
<SALES> 0
<TOTAL-REVENUES> 6,795,469
<CGS> 0
<TOTAL-COSTS> 5,786,952
<OTHER-EXPENSES> 581,748
<LOSS-PROVISION> 1,650
<INTEREST-EXPENSE> 28,979
<INCOME-PRETAX> 396,140
<INCOME-TAX> 136,100
<INCOME-CONTINUING> 260,040
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 260,040
<EPS-BASIC> 1.57
<EPS-DILUTED> 1.54
</TABLE>
<TABLE>
EXHIBIT 28
COMPUTER SCIENCES CORPORATION
REVENUES BY MARKET SECTOR
(Dollars in millions)
<CAPTION>
% of Total
----------------
Dec. 31, Jan. 1, Fiscal Fiscal
1999 1999 2000 1999
-------- -------- ------ ------
<S> <C> <C> <C> <C>
THIRD QUARTER
Global commercial:
U.S. commercial $ 904.6 $ 817.5 38% 40%
Europe 654.3 608.5 28 29
Other International 257.4 120.5 11 6
-------- -------- ------ ------
Total 1,816.3 1,546.5 77 75
-------- -------- ------ ------
U.S. federal government:
Department of Defense 340.7 331.5 14 16
Civil agencies 203.1 176.7 9 9
-------- -------- ------ ------
Total 543.8 508.2 23 25
-------- -------- ------ ------
Total revenues $2,360.1 $2,054.7 100% 100%
======== ======== ====== ======
NINE MONTHS
Global commercial:
U.S. commercial $2,667.7 $2,326.5 39% 40%
Europe 1,845.1 1,640.0 27 28
Other International 660.3 343.9 10 6
-------- -------- ------ ------
Total 5,173.1 4,310.4 76 74
-------- -------- ------ ------
U.S. federal government:
Department of Defense 1,055.2 1,034.8 16 17
Civil agencies 567.2 511.2 8 9
-------- -------- ------ ------
Total 1,622.4 1,546.0 24 26
-------- -------- ------ ------
Total revenues $6,795.5 $5,856.4 100% 100%
======== ======== ====== ======
</TABLE>
</PAGE>
