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Securities and Exchange Commission
Washington, D.C., 20549
Form 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the calendar year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-12771
AMSEC Employees' 401(k) Profit Sharing Plan
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(Full Title of Plan)
Science Applications International Corporation
10260 Campus Point Drive, San Diego, California 92121
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(Name of issuer of the securities held pursuant to
the Plan and the address of its principal executive office)
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SIGNATURE
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the Retirement Plan Committee of the AMSEC Employees' 401(K) Profit
Sharing Plan duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMSEC LLC
AMSEC Employees' 401(k)
Profit Sharing Plan
DATE 6/8/00 S/CARL M. ALBERO
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Carl M. Albero
AMSEC LLC President and CEO
Retirement Plan Committee
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AMSEC
EMPLOYEES 401(k) PROFIT SHARING PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
FOR THE YEAR ENDED
DECEMBER 31, 1999
INDEPENDENT AUDITORS' REPORT
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AMSEC
EMPLOYEES 401(k) PROFIT SHARING PLAN
TABLE OF CONTENTS
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PAGE
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INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS FOR THE YEAR ENDED
DECEMBER 31, 1999:
Statement of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-8
SUPPLEMENTAL SCHEDULE AS OF DECEMBER 31, 1999 AND FOR THE YEAR THEN ENDED:
Schedule of Net Assets Held for Investment Purposes at End of Year 9
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All other schedules required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure Under the Employee Retirement
Income Security Act of 1974 are omitted because of the absence of
conditions under which they are required.
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INDEPENDENT AUDITORS' REPORT
To the Administrative Committee
AMSEC Employees 401(k)
Profit Sharing Plan
Virginia Beach, Virginia
We have audited the accompanying statement of net assets available for benefits
of the AMSEC Employees 401(k) Profit Sharing Plan (the "Plan") as of December
31, 1999, and the related statement of changes in net assets available for
benefits for the year then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1999, and the changes in net assets available for benefits for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.
Our audit was conducted for the purpose of forming an opinion on the basic 1999
financial statements taken as a whole. The supplemental schedule listed in the
Table of Contents is presented for the purpose of additional analysis and is not
a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This schedule is the responsibility of the Plan's management. This
schedule has been subjected to the auditing procedures applied in our audit of
the basic 1999 financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
/s/ Deloitte & Touche LLP
April 14, 2000
Richmond, Virginia
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AMSEC
EMPLOYEES 401(k) PROFIT SHARING PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1999
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<TABLE>
<CAPTION>
ASSETS
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INVESTMENTS - at fair value:
SAIC Class A Common Stock $10,197,598
Vanguard Funds 39,492,273
Participant Loans 2,074,736
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Total investments 51,764,607
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RECEIVABLES:
Participant contributions 285,650
Company contributions 204,546
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Total receivables 490,196
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NET ASSETS AVAILABLE FOR BENEFITS $52,254,803
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The accompanying notes are an integral part of these financial statements.
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AMSEC
EMPLOYEES 401(k) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1999
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<CAPTION>
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ADDITIONS
NET INVESTMENT INCOME:
Net appreciation in fair value of investments $ 3,092,670
Interest and dividends 2,009,261
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Total net investment income 5,101,931
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Contributions:
Employee contributions 5,355,469
Employer contributions 743,205
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Total contributions 6,098,674
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Net transfers from other plans 16,251,273
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Total additions 27,451,878
DEDUCTIONS
Distributions to participants 1,287,732
Other expenses 1,024
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Total deductions 1,288,756
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NET INCREASE 26,163,122
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 26,091,681
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END OF YEAR $52,254,803
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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AMSEC
EMPLOYEES 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1999
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1. DESCRIPTION OF PLAN
GENERAL - AMSEC LLC (the "Company") is a joint venture in which Science
Applications International Corporation (SAIC) holds a majority interest.
The Company's Employees 401(K) Profit Sharing Plan (the "Plan") is a
defined contribution plan. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"). Participants should
refer to the Plan document for a more complete description of the Plan's
provisions.
The authority to control and manage the operation and administration of
the Plan is vested in AMSEC LLC (the "Company") whose members are the
named fiduciaries for purposes of Section 402(a) of ERISA.
ELIGIBILITY - Generally, employees of the Company are eligible to
participate immediately upon commencing employment.
CONTRIBUTIONS - The Plan permits participants to elect to defer up to 20%
of their eligible compensation (17% prior to January 1999), up to $10,000
for calendar year 1999. A participant is eligible for the employer's
quarterly matching and/or discretionary contributions if they are an
employee as of the last day of the respective quarter. Matching
contributions to the Plan by the Company equate to either:
- 50% of the first 8% of participant contributions, if the participant
was formerly a participant of the Newport News Shipbuilding (NNS)
401(k) Plan, or
- 20% of the participants contributions not to exceed an annual amount of
$1,000, for all other participants.
Company matching contributions are allocated 50% to the SAIC stock funds
and 50% to the participant's investment choices. Participants' accounts
are adjusted quarterly for the Company's matching contributions. The
Company may elect to make discretionary contributions to the Plan.
Discretionary contributions were made only to former participants of the
NNS 401(k) plan during 1999.
INVESTMENT FUNDS - Participants may direct the investment of their
contributions to the following fund options offered by the Plan:
Vanguard Prime Money Market Fund - Invests in money market instruments.
Vanguard 500 Index Fund - Invests in common stocks.
Vanguard Wellesley Income Fund - Invests in fixed income securities and
common stocks.
Vanguard Windsor Fund - Invests in common stocks.
Vanguard GNMA Fund - Invests in fixed income securities guaranteed by
the U.S. government.
Vanguard Short-Term Federal Fund - Invests in U.S. government
obligations.
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Vanguard International Growth Fund - Invests in common stock of
companies based outside the United States.
Vanguard STAR Fund - Invests in 60% Common Stock , 30% Bonds, and 10%
Money Market.
Vanguard Long-Term Corporate Fund - Invests primarily in investment
grade corporate bonds.
Vanguard U.S. Growth Fund - Invests in common stocks.
Vanguard Explorer Fund - Invests in common stocks.
Vanguard Equity Income Fund - Invests in common stocks.
Vanguard Growth and Income Fund - Invests in common stocks.
Vanguard Small-Cap Index Fund - Invests primarily in common stocks in
the Russell 2000 Index.
SAIC Exchangeable Stock Fund - Invests primarily in SAIC Class A Common
Stock and is participant directed to the extent that participant
contributions were used to purchase SAIC stock.
SAIC Non-Exchangeable Stock Fund - This fund is a non-participant
directed fund created to invest the Company's matching contributions in
SAIC Class A Common Stock.
SAIC Stock Purchase Fund - This fund is a temporary holding fund
designed to hold participant and Company contributions until the
following SAIC common stock quarterly trade date. Pending the quarterly
trade, the contributions are invested in the Vanguard Prime Money
Market Fund.
Participants may transfer their funds among investment options and change
their future contribution allocations at any time under rules prescribed
by the Plan.
PARTICIPANT ACCOUNTS - Each participant's account is credited with
participant deferrals and Company contributions in accordance with
provisions of the Plan. A participant is entitled to the benefit that can
be provided from the participant's vested account balance.
VESTING - A participant's interest in each of the participant's accounts
is 100% vested at all times.
PARTICIPANT LOANS - Participants may borrow up to 50% of their vested
account balance, up to a maximum of $50,000, excluding amounts invested in
the SAIC Stock Fund. The maximum loan term is generally five years. The
loans are secured by the balance in the participant's account and bear
interest at rates ranging from 6% to 10%. Principal and interest are paid
ratably through biweekly payroll deductions.
DISTRIBUTIONS TO PARTICIPANTS - Participants receive their vested account
balance in a single lump sum payment in cash following their termination
of employment with the Company, retirement date, permanent disability or
in the event of death. However, participants with a plan account balance
as of December 31, 1991 also have the option of receiving an annuity form
of payment. A participant may make one withdrawal from the Plan prior to
attaining age 59-1/2 only if the Company determines that the participant
is incurring financial hardship. An unlimited number of withdrawals are
allowed after age 70-1/2. After attaining age 59-1/2, a participant may
make withdrawals even if still employed by the Company.
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TAX STATUS - The Company received its latest determination letter from the
Internal Revenue Service dated July 27, 1994, indicating the Plan, as then
designed, was in compliance with the applicable requirements of the
Internal Revenue Code. The Plan has been amended since receiving the
determination letter. The Plan administrator and the Plan's tax counsel
believe that the Plan is designed and is currently being operated in
compliance with the applicable requirements of the Internal Revenue Code
and is qualified and the related trust is tax-exempt.
TERMINATION OF THE PLAN - Although it has not expressed any intent to do
so, the Company has the right under the Plan to discontinue its
contributions and to terminate the Plan at any time subject to the
provisions of ERISA. Upon termination of the Plan, the participants become
100% vested in their accounts.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The Plan's financial statements are prepared on the
accrual basis of accounting. Investment transactions are accounted for on
the trade date. Dividend income is recorded on the ex-dividend date.
INVESTMENT VALUATION - Investments, except for SAIC Common Stock and
participant loans, are carried at fair value based on quoted market
prices. A general public market for SAIC's Common Stock does not exist;
therefore, the fair market value of the Common Stock is determined
pursuant to a stock price formula and valuation process which includes an
appraisal prepared by an independent appraisal firm. Periodic
determinations of fair market value of the Common Stock are made by the
Board of Directors of SAIC, with the assistance of the independent
appraisal firm. The Board of Directors reserves the right to alter the
formula. On August 31, 1999, SAIC effected a four-for-one stock split. All
share and per share information for SAIC Class A common stock has been
retroactively restated in these financial statements to reflect this
split.
The gains or losses realized on distributions of investments and the
unrealized appreciation or depreciation are calculated as the difference
between the current fair market value and the fair market value of the
investments at the beginning of the year, or purchase price if purchased
during the year. As of December 31, 1999, the fair market value of the
Company's Class A Common Stock was $19.99 per share and the Plan held
approximately 510,000 shares.
It is the policy of the Committee to keep the SAIC Stock Fund invested
primarily in Common Stock, except for estimated reserves for use in
distributions and investment exchanges by participants. Such reserves are
held in short-term investments. If reserves in the SAIC Stock Fund are
less than the amount required at any given time to make requested
distributions and investment changes, investment exchanges out of the SAIC
Stock Fund by participants may have to be deferred.
Participant loans are carried at the aggregate unpaid principal balance of
loans outstanding which approximates fair value.
BENEFITS PAYABLE - Benefit payments to participants are recorded upon
distribution. Benefits payable to participants are not reflected in the
accompanying financial statements. As of December 31, 1999, there were no
benefits payable.
ACCOUNTING ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires Plan
management to make estimates and assumptions that affect the reported
amounts of assets at the date of the financial statements and the reported
amounts of additions and deductions during the reporting period. Actual
results may differ from those estimates.
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3. INVESTMENT INFORMATION
The Plan's investments are held in a trust fund. The fair values of the
investments representing 5% or more of the Plan's assets at December 31,
1999 are separately identified below.
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<CAPTION>
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Mutual funds:
Vanguard 500 Index Trust $11,043,952
Vanguard Growth and Income Fund 2,926,740
Vanguard Prime Money Market Fund 6,414,274
Vanguard U.S. Growth Fund 6,537,897
Vanguard Windsor Fund 3,969,860
Other 8,599,550
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Total mutual funds 39,492,273
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SAIC Class A Common Stock 10,197,598
Participant loans 2,074,736
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Total investments $51,764,607
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</TABLE>
During the year ended December 31, 1999, the Plan's investments (including
investments bought, sold, and held during the year) appreciated in value
by $3,092,670, as follows:
<TABLE>
<CAPTION>
<S> <C>
Mutual funds $2,315,657
SAIC Class A Common Stock 777,013
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Net appreciation in fair value $3,092,670
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</TABLE>
4. NON-PARTICIPANT DIRECTED INVESTMENTS
Information about the net assets and the significant components of changes
in net assets relating to the SAIC Non-Exchangeable Stock Fund, a
non-participant directed investment, is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1999
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Investments, at fair value:
SAIC common shares in the SAIC
Non-Exchangeable Stock Fund $ 234,294
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<CAPTION>
YEAR ENDED
DECEMBER 31,
1999
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Net appreciation of investments $ 11,650
Employer contributions 224,234
Distributions to participants (1,590)
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$ 234,294
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5. NET TRANSFERS FROM OTHER PLANS
During 1999, the Company acquired Newport News Shipbuilding administering
separate defined contribution plans. The plan assets of the active
employees acquired by the Company were transferred to the Plan during
September 1999.
6. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Vanguard,
the trustee as defined by the Plan and, therefore, these transactions
qualify as party-in-interest transactions.
7. PLAN AMENDMENTS
Effective January 1, 1999, the maximum employee contribution withholding
percentage was increased from 17% to 20%. Effective May 1, 1999, the Plan
eliminated the Vanguard Explorer Fund investment option and effective
January 1, 1999 established the SAIC stock fund investment options. SAIC
is the parent company of AMSEC Corporation, which is the majority member
of the Plan sponsor. Effective January 1, 1999 the Plan document was
amended to provide that 50% of employer matching contributions be
allocated to the SAIC stock fund and 50% allocated according to each
participant's investment choices. Participants were given an option to
invest 50% of their eligible accounts in the SAIC stock funds on January
22, 1999 and April 23, 1999.
* * * * * *
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AMSEC
EMPLOYEES 401(k) PROFIT SHARING PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
DECEMBER 31, 1999
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<CAPTION>
DESCRIPTION COST FAIR VALUE
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* SAIC Class A Common Stock $ 9,438,893 $10,197,598
MUTUAL FUNDS
* Vanguard Prime Money Market Fund 6,414,273 6,414,274
* Vanguard 500 Index Fund 7,483,273 11,043,952
* Vanguard Wellesley Income Fund 2,713,533 2,516,996
* Vanguard Windsor Fund 4,112,773 3,969,860
* Vanguard GNMA Fund 1,152,781 1,113,415
* Vanguard Short-Term Federal Fund 498,111 486,757
* Vanguard International Growth Fund 1,418,147 1,908,058
* Vanguard STAR Fund 1,487,137 1,527,710
* Vanguard Long-Term Corporate Fund 365,940 341,933
* Vanguard U.S. Growth Fund 5,468,346 6,537,897
* Vanguard Explorer Fund 2 2
* Vanguard Equity Income Fund 466,429 436,119
* Vanguard Growth and Income Fund 2,643,824 2,926,740
* Vanguard Small-Cap Index Fund 247,820 268,560
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TOTAL MUTUAL FUNDS 34,472,389 39,492,273
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Participant Loans (interest rates from
6% to 10%; maturities from January 2000
through December 2004) 2,074,736 2,074,736
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TOTAL INVESTMENTS $45,986,018 $51,764,607
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</TABLE>
* Party-in-interest
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Index to Exhibit
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Exhibit No.
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23.1 Consent of Deloitte & Touche LLP
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