<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 10-K/A NO. 1
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 31, 1995
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 NUMBER: 0-12771
------------
SCIENCE APPLICATIONS INTERNATIONAL
CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-3630868
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10260 CAMPUS POINT DRIVE, SAN DIEGO, CALIFORNIA 92121
(Address of Registrant's principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 546-6000
------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of class)
------------
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
As of March 10, 1995, the aggregate market value of the voting stock
held by non-affiliates of Registrant was $349,902,079. For the purpose of this
calculation, it is assumed that the Registrant's affiliates include the
Registrant's Board of Directors and certain of the Registrant's employee
benefit plans. The Registrant disclaims the existence of any control
relationship between it and such employee benefit plans.
As of March 10, 1995, there were 45,179,231 shares of Registrant's
Class A Common Stock and 341,822 shares of Registrant's Class B Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
<PAGE> 2
The following information is filed as a part of this Form 10-K/A No. 1:
Item 10. Directors and Executive Officers of the Registrant.
DIRECTORS
The Certificate of Incorporation of Science Applications International
Corporation, a Delaware corporation (the "Company") provides for a "classified"
Board of Directors consisting of three classes which shall be as equal in
number as possible. The number of authorized Directors is currently fixed at 22
Directors of which 8 are Class II Directors and the remaining are evenly
divided between Class I and Class III Directors.
Set forth below is a brief biography of each member of the Board of
Directors as of May 31, 1995:
CLASS I DIRECTORS, TERM ENDING 1997
J.R. Beyster, age 70 Director since 1969
Chairman of the Board and
Chief Executive Officer
Dr. Beyster founded the Company in 1969 and has served as Chairman of
the Board and Chief Executive Officer since that time. Dr. Beyster also served
as President of the Company until 1988.
V.N. Cook, age 60 Director since 1990
Director
Mr. Cook joined the Company in July 1991 and served as a Vice Chairman
of the Board from 1992 to 1994. Mr. Cook was associated with IBM for 26 years
until his retirement in 1989. Mr. Cook held several executive positions at IBM,
including Vice President of IBM's Asia Pacific Corporation and President of IBM
Federal System Division. He is also the Chairman of Visions International,
Inc., an industry consulting firm.
W.H. Demisch, age 50 Director since 1990
Director
Mr. Demisch is a Managing Director of BT Securities Corp., a position
he has held since August 1993. From 1988 to 1993, he was Managing Director of
UBS Securities, Inc.
J.E. Glancy, age 49 Director since 1994
Corporate Executive Vice President
and Director
Dr. Glancy joined the Company in 1976 and has served in various
capacities since that time. He was elected as a Corporate Executive Vice
President in January 1994.
1
<PAGE> 3
D.A. Hicks, age 70 Director since 1984(1)
Chairman of the Board of Hicks
& Associates, Inc. and Director
Dr. Hicks has served as Chairman of the Board of Hicks & Associates,
Inc. ("HAI"), a government and industry consulting company, since 1986. In July
1991, the Company acquired HAI and HAI has been a wholly-owned subsidiary of
the Company since that time. Dr. Hicks was the Under Secretary of Defense for
Research and Engineering from 1985 to 1986. Prior thereto, he was a Senior Vice
President of Northrop Corporation, an aerospace company, with which he was
associated from 1961 through 1985. Dr. Hicks is also a member of the Board of
Directors of Pilkington Aerospace, Inc.
C.B. Malone, age 59 Director since 1993
Director
Ms. Malone has served as the President of Financial & Management
Consulting, Inc., a consulting company, since 1982. Ms. Malone is also a
member of the Board of Directors of Dell Computer Corporation, Hannaford Bros.
Co., Hasbro, Inc., Houghton Mifflin Company, The Limited Inc., Lafarge
Corporation, Mallinckrodt Group and Union Pacific Corporation.
J.A. Welch, age 64 Director since 1984
Director
Dr. Welch became an employee of the Company in July 1990 and is
involved in a number of scientific endeavors and strategic planning issues. Dr.
Welch also serves as President of Jasper Welch Associates, a consulting firm
which he founded in 1983. Prior thereto, Dr. Welch was a Major General in the
United States Air Force, from which he retired in 1983 after serving for 31
years. Dr. Welch is also a member of the Board of Directors of Millitech Corp.
CLASS II DIRECTORS, TERM ENDING 1998
A.L. Alm, age 58 Director since 1989
Sector Vice President and Director
Mr. Alm joined the Company in 1989 as a Director and Senior Vice
President and was elected as a Sector Vice President in April 1993. Prior to
joining the Company and since 1987, Mr. Alm was the Chief Executive Officer and
President of Alliance Technologies Corporation, an environmental consulting and
engineering firm. Prior thereto and since 1985, Mr. Alm served as Chairman of
the Board and Chief Executive Officer of Thermo Analytical Corporation, a
company in the environmental laboratory business. Prior thereto and since 1983,
Mr. Alm was Deputy Administrator of the Environmental Protection Agency.
____________________
(1) Dr. Hicks did not serve as a Director from July 1985 through December 1986.
2
<PAGE> 4
B.R. Inman, age 64 Director since 1982
Director
Admiral Inman, USN (Ret.) joined the Company in April 1990 as a
part-time employee and, in that capacity, advises the Company on a wide variety
of strategic planning issues. Admiral Inman was the Chairman of the Board,
President and Chief Executive Officer of Westmark Systems, Inc., an electronics
industry holding company, from 1986 through 1989. From 1983 to 1986, Admiral
Inman served as Chairman, President and Chief Executive Officer of
Microelectronics and Computer Technology Corporation. Admiral Inman retired
from the United States Navy in 1982. During his career as a United States Naval
Officer, Admiral Inman served in a number of high-level positions in the U.S.
Government, including Director of the National Security Agency from 1977 to
1981. For the last year and one-half of his active naval service, he served as
Deputy Director of Central Intelligence. Admiral Inman is also a member of the
Board of Directors of Fluor Corporation, Southwestern Bell Corporation,
Temple-Inland, Inc. and Xerox Corporation.
W.M. Layson, age 60 Director since 1970
Senior Vice President and Director
Dr. Layson joined the Company in 1970 as a Director and Vice
President. He was elected as a Senior Vice President in 1975.
E.A. Straker, age 57 Director since 1992
Executive Vice President and Director
Dr. Straker joined the Company in 1971 and has served in various
capacities since that time. He was elected as an Executive Vice President in
1994.
M.E. Trout, age 64 Director since
Director January 1995
Dr. Trout was associated with American Healthcare Systems, Inc. from
1986 until his retirement in 1995. Prior to his retirement, Dr. Trout served as
Chairman, President and Chief Executive Officer and is currently serving as
Chairman Emeritus of American Healthcare Systems, Inc. He is also a member of
the Board of Directors of Baxter International, Gensia, Inc., West Co. and the
UCSD Foundation.
J.H. Warner, Jr., age 54 Director since 1988
Executive Vice President and Director
Dr. Warner joined the Company in 1973 and has served in various
capacities since that time. He was elected as an Executive Vice President in
1989.
J.B. Wiesler, age 67 Director since 1989
Director
Mr. Wiesler was associated with the Bank of America National Trust and
Savings Association from 1949 until his retirement in 1987. For more than five
years prior to his retirement, Mr. Wiesler served in a number of executive
capacities, including Vice Chairman, Head of Retail Banking and Executive Vice
President, Head of North American Division. Mr. Wiesler is also a member of the
Board of Directors of Wahlco Environmental Systems, Inc.
3
<PAGE> 5
A.T. Young, age 57 Nominee for Director
Mr. Young has served as an Executive Vice President of Lockheed Martin
Corp. since March 1995. Prior to its merger with Lockheed Corporation, Mr.
Young served as the President and Chief Operating Officer of Martin Marietta
Corp. from 1990 to March 1995. Mr. Young is also on the Board of Directors of
Cooper Industries, the Dial Corporation, the B.F. Goodrich Company and Potomac
Electric Power Company.
CLASS III DIRECTORS, TERM ENDING 1996
S.J. Dalich, age 51 Director since 1990
Executive Vice President and Director
Dr. Dalich joined the Company in 1972 and has served in various
capacities since that time. He was elected as an Executive Vice President in
April 1992.
C.K. Davis, age 63 Director since 1993
Director
Dr. Davis has been an International Health Care Consultant to Ernst &
Young since 1985. From 1981 to 1985, Dr. Davis served as the Administrator of
the Health Care Financing Agency. Dr. Davis is a member of the Board of
Directors of Beckman Instruments, Merck & Co., Inc., Pharmaceutical Marketing
Services, Inc. and The Prudential Insurance Company of America, Inc.
E.A. Frieman, age 69 Director since 1987
Director
Dr. Frieman has served as the Director of Scripps Institution of
Oceanography and Vice Chancellor of Marine Sciences for the University of
California, San Diego since 1986. Prior thereto and since 1981, Dr. Frieman was
an Executive Vice President and Group Manager of the Company. Dr. Frieman is
also a member of the Board of Directors of The Charles Stark Draper Laboratory,
Inc.
D.M. Kerr, age 56 Director since 1993
Corporate Executive Vice President and Director
Dr. Kerr joined the Company in January 1993 and has served in various
capacities since that time. He was elected as a Corporate Executive Vice
President in January 1994. From 1989 through 1992, Dr. Kerr was the President
and a member of the Board of Directors of EG&G, Inc., a NYSE-listed company
providing diversified technical services and products to the U.S. Government
and commercial markets. From 1985 through 1989, Dr. Kerr held various executive
positions with EG&G, Inc.
L.A. Kull, age 57 Director since 1970(1)
President, Chief Operating Officer and Director
Dr. Kull joined the Company in 1970 and has served in various
capacities since that time. He was elected Chief Operating Officer in 1983 and
President of the Company in 1988.
____________________
(1) Dr. Kull did not serve as a Director in 1974 and 1975.
4
<PAGE> 6
J.W. McRary, age 55 Director since 1972(1)
Director
Since July 1994, Dr. McRary has served as the President and Chief
Executive Officer of Microelectronics and Computer Technology Corporation, a
corporation involved in research and development of advanced computer
architecture, software technology, component packaging and computer-aided
design and manufacturing. Dr. McRary was an employee of the Company from 1971
to 1994 and served in various capacities, including serving as an Executive
Vice President from 1979 to July 1994.
M.R. Thurman, age 64 Director since 1993
Director
General Thurman, USA (Ret.) retired from the United States Army in
1991 after having served for 37 years. During his career, General Thurman
served as the Vice Chief of Staff of the United States Army and as the
Commander-in-Chief of the United States Southern Command. General Thurman is a
member of the Board of Directors of Burdeshaw Associates, Ltd. and Military
Professional Resources, Inc., and is also a member of the Board of Visitors of
North Carolina State University.
EXECUTIVE OFFICERS
The information as to Executive Officers was contained in Part I of
the Company's Form 10-K for the fiscal year ended January 31, 1995 ("Fiscal
1995"), which was filed with the Securities and Exchange Commission on April
18, 1995.
Item 11. Executive Compensation.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table (the "Summary Compensation Table") sets forth
information regarding the annual and long-term compensation for services in all
capacities to the Company for the fiscal years ended January 31, 1995, 1994 and
1993, of those persons who were, at January 31, 1995 (i) the chief executive
officer and (ii) the other four most highly compensated executive officers of
the Company (collectively, the "Named Executive Officers"). The Summary
Compensation Table sets forth the annual and long-term compensation earned by
the Named Executive Officers for the relevant fiscal year whether or not paid
in such fiscal year.
- --------------------
(1) Dr. McRary did not serve as a Director in 1973.
5
<PAGE> 7
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------
FISCAL ------------------------- RESTRICTED OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS STOCK(1) (SHARES) COMPENSATION(2)
--------------------------- ------ ------ ------------ ---------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
J.R. Beyster 1995 $356,731 $225,000 $ 0 0 $14,684
Chairman of the Board and 1994 $323,409 $180,000 $ 0 0 $24,821
Chief Executive Officer 1993 $305,772 $200,000 $ 0 0 $24,569
L.A. Kull 1995 $294,423 $200,000 $ 0 0 $18,531
President and Chief Operating Officer 1994 $285,801 $165,000 $ 0 0 $24,821
1993 $268,504 $195,000 $ 0 10,000 $24,569
D.M. Kerr 1995 $304,423 $180,000 $20,138(3) 10,015 $18,530
Corporate Executive Vice President 1994 $296,030 $179,999(4) $ 0 10,000 $85,068(5)
1993 $ 15,385(6) $ 0 $24,997(7) 20,000 $ 0
E.A. Straker 1995 $220,231 $169,997(8) $ 0 8,000 $18,541
Executive Vice President 1994 $207,898 $150,004(9) $ 0 5,000 $21,665
1993 $196,780 $140,000 $19,997(10) 5,000 $20,839
J.H. Warner, Jr. 1995 $234,423 $139,998(11) $ 9,998(12) 2,000 $18,525
Executive Vice President 1994 $229,239 $124,995(13) $ 0 2,000 $24,091
1993 $225,664 $120,000 $40,005(14) 3,000 $23,485
</TABLE>
- -------------------------
(1) The amount reported represents the market value on the date of grant
(calculated by multiplying the formula price for Class A Common Stock
determined by the Company's Board of Directors (the "Formula Price") of the
Company's Class A Common Stock, par value $.01 per share (the "Class A
Common Stock") on the date of grant by the number of shares awarded),
without giving effect to the diminution in value attributable to the
restrictions on such stock. As of January 31, 1995, the aggregate
restricted stock holdings for the Named Executive Officers and for all
other employees were as follows: J.R. Beyster -- none; L.A. Kull -- none;
D.M. Kerr -- 1,278 shares, with a market value as of such date of $20,090;
E.A. Straker -- 4,446 shares, with a market value as of such date of
$69,891; J.H. Warner, Jr. -- 6,611 shares, with a market value as of such
date of $103,925; and all other employees -- 595,377 shares, with a market
value as of such date of $9,359,326. Dividends are payable on such
restricted stock if and when declared. However, the Company has never
declared or paid a cash dividend on its capital stock and no cash dividends
on its capital stock are contemplated in the foreseeable future.
(2) Amounts of All Other Compensation are amounts contributed or accrued by the
Company for the Named Executive Officers under the Company's Profit Sharing
Retirement Plan ("Profit Sharing Plan"), Employee Stock Ownership Plan
("ESOP") and Cash or Deferred Arrangement ("CODA").
(3) Represents 1,282 shares of Class A Common Stock which vest as to 20%, 20%,
20% and 40% on the first, second, third and fourth year anniversaries of
the date of grant, respectively.
(4) Includes the award of 1,057 shares of Class A Common Stock which had a
market value on the date of grant (calculated by multiplying the Formula
Price of the Class A Common Stock on the date of grant by the number of
shares awarded) of $14,999.
(5) Also includes $70,771 for the reimbursement of relocation expenses.
(6) D.M. Kerr joined the Company in January 1993. Such salary amount represents
the salary paid to D.M. Kerr for services rendered during such partial
fiscal year.
(7) Represents 2,113 shares of Class A Common Stock which vest as to 20%, 20%,
20% and 40% on the first, second, third and fourth year anniversaries of
the date of grant, respectively.
(8) Includes the award of 954 shares of Class A Common Stock which had a market
value on the date of grant (calculated by multiplying the Formula Price of
the Class A Common Stock on the date of grant by the number of shares
awarded) of $14,997.
(9) Includes the award of 705 shares of Class A Common Stock which had a market
value on the date of grant (calculated by multiplying the Formula Price of
the Class A Common Stock on the date of grant by the number of shares
awarded) of $10,004.
6
<PAGE> 8
(10) Represents 1,665 shares of Class A Common Stock which vest as to 20%, 20%,
20% and 40% on the first, second, third and fourth year anniversaries of
the date of grant, respectively.
(11) Includes the award of 636 shares of Class A Common Stock which had a market
value on the date of grant (calculated by multiplying the Formula Price of
the Class A Common Stock on the date of grant by the number of shares
awarded) of $9,998.
(12) Represents 636 shares of Class A Common Stock which vest as to 20%, 20%,
20% and 40% on the first, second, third and fourth year anniversaries of
the date of grant, respectively.
(13) Includes the award of 352 shares of Class A Common Stock which had a market
value on the date of grant (calculated by multiplying the Formula Price of
the Class A Common Stock on the date of grant by the number of shares
awarded) of $4,995.
(14) Represents 3,331 shares of Class A Common Stock which vest as to 20%, 20%,
20% and 40% on the first, second, third and fourth year anniversaries of
the date of grant, respectively.
OPTION GRANTS
The following table sets forth information regarding grants of options
to purchase shares of Class A Common Stock pursuant to the Company's 1992 Stock
Option Plan made during Fiscal 1995 to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM(2)
GRANTED(1) EMPLOYEES PRICE EXPIRATION --------------------
NAME (SHARES) IN FISCAL 1995 (PER SHARE) DATE 5% 10%
- ---- ---------- -------------- ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
J.R. Beyster . . . . . . . . . 0 N/A N/A N/A N/A N/A
L.A. Kull . . . . . . . . . . 0 N/A N/A N/A N/A N/A
D.M. Kerr . . . . . . . . . . 10,000 0.32% $14.48 8/25/99 $40,006 $88,402
10,000 0.32% $14.19 4/3/99 $39,204 $86,631
15 * $14.19 3/10/99 $ 59 $ 130
E.A. Straker . . . . . . . . . 5,000 0.16% $14.19 4/3/99 $19,602 $43,316
J.H. Warner, Jr. . . . . . . . 2,000 0.07% $14.19 4/3/99 $ 7,841 $17,326
</TABLE>
- -------------------------
* Less than 0.01% of the total options granted to employees in Fiscal 1995.
(1) Although the following grants of options were made during Fiscal 1995, such
grants relate to the individual's service during the fiscal year 1994. All
such options become exercisable one year after the date of grant and vest
as to 20%, 20%, 20% and 40% on the first, second, third and fourth year
anniversaries of the date of grant, respectively.
(2) The potential realizable value is based on an assumption that the stock
price of the Class A Common Stock will appreciate at the annual rate shown
(compounded annually) from the date of grant until the end of the 5-year
option term. These values are calculated based on the regulations
promulgated by the Securities and Exchange Commission and should not be
viewed in any way as an estimate or forecast of the future performance of
the Class A Common Stock. There can be no assurance that the values
realized upon the exercise of the stock options will be at or near the
potential realizable values listed in this table.
7
<PAGE> 9
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information regarding the exercise of
options during Fiscal 1995 and unexercised options to purchase Class A Common
Stock granted during Fiscal 1995 and prior years under the Company's 1982 Stock
Option Plan and 1992 Stock Option Plan to the Named Executive Officers and held
by them at January 31, 1995.
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT JANUARY 31, 1995 AT JANUARY 31, 1995(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J.R. Beyster . . . . . . . 0 N/A 0 0 N/A N/A
L.A. Kull . . . . . . . . . 0 N/A 12,000 8,000 $67,220 $29,680
D.M. Kerr . . . . . . . . . 0 N/A 4,000 36,015 $14,840 $87,083
E.A. Straker . . . . . . . 0 N/A 9,700 12,300 $54,431 $39,239
J.H. Warner, Jr. . . . . . 0 N/A 9,300 7,700 $52,947 $28,713
</TABLE>
- -------------------------
(1) Calculated by multiplying the difference between the Formula Price of the
Class A Common Stock underlying the option as of the date of exercise and
the exercise price of the option by the number of shares of Class A Common
Stock acquired on exercise of the option.
(2) Based on the Formula Price of the Class A Common Stock as of such date less
the exercise price of such options.
DIRECTORS' COMPENSATION
Except as otherwise described below, during Fiscal 1995, all
Directors, other than those who are employees of the Company, were paid an
annual retainer of $15,000 and received $1,000 for each day on which they
attended meetings of the Board of Directors or of the committees on which they
served; provided, however, if a committee meeting was held on the same day as a
Board of Directors or other committee meeting, the fee for the each additional
meeting was $500. Directors are also reimbursed for expenses incurred by them
while attending meetings or otherwise performing services for the Company.
Directors are also entitled to receive certain other incidental benefits which
in the aggregate do not exceed $1,200 per Director annually. Directors are
eligible to receive bonuses under the Company's Bonus Compensation Plan,
pursuant to which, for services rendered during Fiscal 1995, M.E. Trout and
J.B. Wiesler each received $25,000 in cash, M.R. Laird received $15,000 in cash
and C.K. Davis, W.H. Demisch, C.B. Malone and M.R. Thurman each received 954
restricted shares of Class A Common Stock which had a market value (as
reflected by the Formula Price) on the date of grant of $14,997. Directors are
also eligible to receive stock options under the Company's 1992 Stock Option
Plan, pursuant to which, for services rendered during Fiscal 1995, C.K. Davis,
W.H. Demisch, E.A. Frieman, C.B. Malone and M.R. Thurman each received stock
options to acquire 5,000 shares of Class A Common Stock at $15.72 per share,
which was the market value of the Class A Common Stock (as reflected by the
Formula Price) on the date of grant. All such options become exercisable one
year after the date of grant and vest as to 20%, 20%, 20% and 40% on the first,
second, third and fourth year anniversaries of the date of grant, respectively.
8
<PAGE> 10
The Company has also entered into agreements with certain Directors
whereby such Directors perform consulting and other services for the Company.
In Fiscal 1995, C.K. Davis received $7,800 for consulting services under a
consulting arrangement which provides for remuneration of $150 per hour. The
amount payable to Dr. Davis was in addition to the annual retainer and meeting
fees. In Fiscal 1995, E.A. Frieman received $60,000 for consulting services
and services as a Director under a consulting arrangement which provides for
remuneration of $5,000 per month. The amount payable to Dr. Frieman under such
consulting arrangement was in lieu of the annual retainer and meeting fees. In
Fiscal 1995, B.J. Shillito, a Director of the Company until July 1994, received
$25,268 for consulting services and services as a Director under a consulting
arrangement which provides for remuneration of $2,917 per month, the
reimbursement of certain agreed upon expenses for participation in special
projects and the use of a company car. The amount payable to Mr. Shillito under
such consulting arrangement was in lieu of the annual retainer and meeting
fees. In Fiscal 1995, M.E. Trout, a Director of the Company since January 14,
1995, received $2,083 for consulting services and services as a Director under
a consulting arrangement which provides for remuneration of $4,167 per month.
The amount payable to Dr. Trout was in lieu of the annual retainer and meeting
fees. In Fiscal 1995, W.E. Zisch, a Director of the Company until July 1994,
received $12,012 under a consulting arrangement which provides for remuneration
of $1,500 per month plus the use of a company car. The amount payable to Mr.
Zisch under such consulting arrangement was in addition to the annual retainer
and meeting fees.
See "Compensation Committee Interlocks and Insider Participation" and
"Certain Relationships and Related Transactions" for information with respect
to transactions between the Company and certain entities in which certain
Directors of the Company may be deemed to have an interest.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
During Fiscal 1995, C.K. Davis, W.H. Demisch, E.A. Frieman, R.M. Gates
(1), M.R. Laird, C.B. Malone, J.W. McRary, B.J. Shillito(1), M.R. Thurman, M.E.
Trout, J.B. Wiesler and W.E. Zisch(1) served as members of the Compensation
Committee. None of such persons served as an officer or employee of the Company
or any of its subsidiaries during Fiscal 1995 or formerly served as an officer
of the Company or any of its subsidiaries, except for E.A. Frieman, who was an
Executive Vice President and Group Manager of the Company from 1981 to 1986, and
J.W. McRary, who was an employee of the Company from 1971 to 1994 and served as
an Executive Vice President of the Company from 1979 to 1994.
Dressendorfer-Laird Incorporated ("D-L Inc."), a company that is 50%
owned by D.M. Laird, the son of M.R. Laird, a Director of the Company, has
provided governmental relations services to the Company since 1983. During
Fiscal 1995, the Company paid D-L Inc. $225,000 for such services. M.R. Laird
has no economic interest in D-L Inc. W. Frieman, daughter of E.A. Frieman, a
Director of the Company, is an employee of the Company and the Director of the
Asia Technology Program for the Company. For services rendered during Fiscal
1995, W. Frieman received $95,715 in cash and stock compensation, and received
options to acquire 2,000 shares of Class A Common Stock at $15.72 per share,
which was the market value of the Class A Common Stock (as reflected by the
Formula Price) on the date of grant. Such options become exercisable one year
after the date of grant and vest as to 20%, 20%, 20% and 40% on the first,
second, third and fourth year anniversaries of the date of grant,
- --------------------
(1) B.J. Shillito's and W.E. Zisch's terms on the Board of Directors and on the
Compensation Committee expired in July 1994, and R.M. Gates resigned from
the Board of Directors and the Compensation Committee in October 1994.
9
<PAGE> 11
respectively. W. Frieman's area of professional expertise is the analysis of
industrial and defense technology in the Pacific Rim, with an emphasis on
China, Japan and Southeast Asia.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Class A Common Stock
To the best of the Company's knowledge, as of May 19, 1995 (the
"Record Date"), no person (other than State Street Bank and Trust Company
("State Street") in its capacity as trustee of the ESOP, CODA, Profit Sharing
Plan and the Retirement Savings Plan ("Syntonic Retirement Plan") of Syntonic
Technology, Inc., a wholly-owned subsidiary of the Company, (collectively, the
"Retirement Plans") and of the Company's Stock Compensation Plan and Management
Stock Compensation Plan (collectively, the "Stock Compensation Plans")
beneficially owned more than 5% of the outstanding shares of Class A Common
Stock. The following table sets forth, as of the Record Date, to the best of
the Company's knowledge, the number of shares of Class A Common Stock
beneficially owned by each Director, each nominee for Director, the Named
Executive Officers and all executive officers and Directors as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
------------------------ ----------------- --------
<S> <C> <C>
A.L. Alm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,740 *
J.R. Beyster . . . . . . . . . . . . . . . . . . . . . . . . . . . 852,080 1.8%
V.N. Cook . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,064 *
S.J. Dalich . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,665 *
C.K. Davis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,974 *
W.H. Demisch . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,779 *
E.A. Frieman . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,606 *
J.E. Glancy . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,184 *
D.A. Hicks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,560 *
B.R. Inman . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,594 *
D.M. Kerr . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,766 *
L.A. Kull . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264,839 *
M.R. Laird . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,559 *
W.M. Layson . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,358 *
C.B. Malone . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,836 *
J.W. McRary . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,746 *
E.A. Straker . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,470 *
M.R. Thurman . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,076 *
M.E. Trout . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0%
J.H. Warner, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . 139,385 *
J.A. Welch . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,348 *
J.B. Wiesler . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 *
A.T. Young . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0%
State Street Bank and Trust Company . . . . . . . . . . . . . . . 21,997,082(2) 47.7%
One Enterprise Drive
North Quincy, MA 02171
All executive officers and Directors as a group (38 persons) . . . 2,975,301 6.5%
</TABLE>
- -----------------------
* Less than 1% of the outstanding shares of Class A Common Stock and less
than 1% of the voting power of the Class A Common Stock and the Class B
Common Stock, par value $.05 ("Class B Common Stock") combined. The Class
A Common Stock and Class B Common Stock are collectively referred to herein
as the "Common Stock."
(1) The beneficial ownership depicted in the table includes: (i) shares held
for the account of the individual by the Trustee of the Company's ESOP,
Profit Sharing Plan and CODA as follows: A.L. Alm (3,994 shares), J.R.
Beyster (46,721 shares), V.N. Cook (1,713 shares), S.J. Dalich (32,396
shares), J.E. Glancy (25,085 shares), D.A. Hicks (346 shares), B.R. Inman
(10 shares), D.M. Kerr (815 shares), L.A. Kull (35,959 shares), W.M. Layson
(38,131 shares), J.W. McRary (440 shares), E.A. Straker (36,844 shares),
J.H. Warner, Jr. (30,247 shares), J.A. Welch (3,094 shares), and all
executive officers and Directors as a group (372,979 shares); (ii) shares
subject to options exercisable within 60 days following the Record Date, as
follows:
10
<PAGE> 12
A.L. Alm (14,318 shares), V.N. Cook (9,800 shares), S.J. Dalich (13,800
shares), C.K. Davis (1,523 shares), W.H. Demisch (4,800 shares), E.A.
Frieman (4,800 shares), J.E. Glancy (2,800 shares), D.A. Hicks (4,800
shares), B.R. Inman (14,800 shares), D.M. Kerr (10,003 shares), L.A. Kull
(14,000 shares), M.R. Laird (4,800 shares), C.B. Malone (1,500 shares),
J.W. McRary (10,000 shares), E.A. Straker (13,800 shares), M.R. Thurman
(1,540 shares), J.H. Warner, Jr. (3,400 shares), J.A. Welch (4,800 shares),
and all executive officers and Directors as a group (310,550 shares); (iii)
shares held by spouses, minor children or other relatives sharing a
household with the individual, as follows: J.R. Glancy (250 shares), W.M.
Layson (46,977 shares), E.A. Straker (20,712 shares), and all executive
officers and Directors as a group (100,697 shares); and (iv) shares held by
certain trusts established by the individual, as follows: J.R. Beyster
(805,359 shares), L.A. Kull (214,880 shares), J.B. Wiesler (3,000 shares)
and all executive officers and Directors as a group (1,060,434 shares).
(2) At the Record Date, State Street, as Trustee for the Retirement Plans and
the Stock Compensation Plans, beneficially owned the following percentage
of the outstanding shares of Class A Common Stock and Class B Common Stock
and voting power of the Common Stock under each plan: ESOP -- 34.5% Class A
Common Stock, 9.6% Class B Common Stock and 33.6% of voting power of the
Common Stock; CODA -- 12.4% Class A Common Stock, 0% Class B Common Stock
and 12.0% of voting power of the Common Stock; Profit Sharing Plan -- 0.1%
Class A Common Stock, 0.01% Class B Common Stock and 0.1% of voting power
of the Common Stock; Syntonic Retirement Plan -- 0.1% Class A Common Stock,
0% Class B Common Stock and 0.1% of voting power of the Common Stock and
Stock Compensation Plans -- 0.5% Class A Common Stock, 0% Class B Common
Stock and 0.5% of voting power of the Common Stock. Under the terms of the
Retirement Plans, participants are entitled to direct State Street how to
vote Common Stock allocated to their accounts in the plans, subject to
certain restrictions imposed upon State Street by the fiduciary provisions
of the Employee Retirement Income Security Act of 1974, as amended. Under
the terms of the Stock Compensation Plans, the Trustee will vote the Common
Stock held by the Trustee in the Stock Compensation Plans in the same
proportion that the other stockholders of the Company vote their shares of
Class A Common Stock.
Class B Common Stock
The following table sets forth, as of the Record Date, to the best of
the Company's knowledge, those persons who were beneficial owners of more than
5% of the outstanding shares of Class B Common Stock. None of the Directors,
nominees for Director or executive officers of the Company own any shares of
Class B Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------------ -------------------- --------
<S> <C> <C>
J.D. Cramer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,240 5.1%
J.L. Griggs, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . 19,464 5.7%
State Street Bank and Trust Company . . . . . . . . . . . . . . . . 32,707(1) 9.6%
One Enterprise Drive
North Quincy, MA 02171
</TABLE>
- -----------------------
(1) Represents shares of Class B Common Stock beneficially owned by State
Street in its capacity as trustee of the Retirement Plans. State Street's
total ownership of Common Stock is set forth in Note (2) to the previous
table above.
Item 13. Certain Relationships and Related Transactions.
The Foundation for Enterprise Development (the "Foundation"), a
non-profit organization, was founded in 1986 by J.R. Beyster, Chairman of the
Board and Chief Executive Officer of the Company, to promote employee
ownership. Dr. Beyster is the President and a member of the Board of Trustees
of the Foundation. In Fiscal 1995, the Company made a contribution of $250,000
to the Foundation consisting of a combination of cash and rent-free space in a
building owned by the Company in La Jolla, California, and in a building leased
by the Company in McLean, Virginia. The aggregate estimated fair rental value
of the contributed facilities in Fiscal 1995 was approximately $28,000 and the
cash contribution was $222,000. The Board of Directors has approved a similar
contribution of a combination of cash and rent-free space to the Foundation in
fiscal year 1996 in an aggregate amount of $300,000.
11
<PAGE> 13
R.D. Layson, wife of W.M. Layson, a Director of the Company, is an
employee of the Company and the Deputy Division Manager for the Information
Systems Integration Division. For services rendered during Fiscal 1995, R.D.
Layson received $83,343 in cash and stock compensation, and received options to
acquire 500 shares of Class A Common Stock at $14.46 per share and 200 shares
of Class A Common Stock at $15.72 per share, which were the market values of
the Class A Common Stock (as reflected by the Formula Price) on the dates of
grant. Such options become exercisable one year after the date of grant and
vest as to 20%, 20%, 20% and 40% on the first, second, third and fourth year
anniversaries of the date of grant, respectively. R.D. Layson has been an
employee of the Company for over 15 years and works in the area of systems
integration and software development management.
See also "Directors' Compensation" and "Compensation Committee
Interlocks and Insider Participation."
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
(Registrant)
By: /s/ Douglas E. Scott
------------------------------------
D.E. Scott
Corporate Vice President
and General Counsel
Date: April 18, 1996
12
