-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, iDmUMY6QJOUBAwA5bJVEIspYzYDKcnc8WscCJrSfhhbmVRN402xX5cSdeuE5mnf4 Wv3cSHmd2L79pfTS5k6daA== 0000023082-94-000013.txt : 19941116 0000023082-94-000013.hdr.sgml : 19941116 ACCESSION NUMBER: 0000023082-94-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER SCIENCES CORP CENTRAL INDEX KEY: 0000023082 STANDARD INDUSTRIAL CLASSIFICATION: 7373 IRS NUMBER: 952043126 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04850 FILM NUMBER: 94560121 BUSINESS ADDRESS: STREET 1: 2100 E GRAND AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3106150311 10-Q 1 10Q 2ND QTR FY95 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 QUARTER ENDED SEPTEMBER 30, 1994 Commission File No. 1-4850 COMPUTER SCIENCES CORPORATION Incorporated in the State of Nevada Employer Identification No. 95-2043126 2100 East Grand Avenue El Segundo, California 90245 Telephone (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 [ ] 50,857,874 shares of Common Stock, $1.00 par value, were outstanding on September 30, 1994. COMPUTER SCIENCES CORPORATION Index to Form 10-Q Page Number Part I. Financial Information Consolidated Condensed Balance Sheets - September 30, 1994 and April 1, 1994 3 Consolidated Condensed Statements of Income - Second quarter and six months ended September 30, 1994 and October 1, 1993 4 Consolidated Condensed Statements of Cash Flows - Six months ended September 30, 1994 and October 1, 1993 5 Notes to Consolidated Condensed Financial Statements 6 Management's Discussion and Analysis of Results of Operations and Financial Condition 8 Part II. Other Information Item 6 - Exhibits and Reports on Form 8-K 11 Exhibit 11 - Calculation of Earnings Per Share 12 Exhibit 27 - Financial Data Schedule 13 Exhibit 28 - Additional Information - Revenues by Market Sector 14 Signatures 15 -2- PART I. FINANCIAL INFORMATION COMPUTER SCIENCES CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS ($ in thousands)
ASSETS Sept. 30, April 1, 1994 1994 (unaudited) CURRENT ASSETS: Cash and cash equivalents $13,396 $126,820 Receivables 742,323 665,253 Prepaid expenses and other assets 84,309 65,046 __________ __________ Total current assets 840,028 857,119 __________ __________ PROPERTY AND EQUIPMENT, at cost 757,617 695,796 Less-Accumulated depreciation and amortization 342,106 302,760 __________ __________ Net property and equipment 415,511 393,036 __________ __________ EXCESS OF COST OF BUSINESSES ACQUIRED OVER RELATED NET ASSETS, NET 348,931 324,145 OTHER ASSETS 240,243 232,080 __________ __________ $1,844,713 $ 1,806,380
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt $96,514 $17,772 Current maturities of long-term debt 6,629 32,685 Accounts payable 105,244 228,674 Accrued payroll and related costs 137,302 128,478 Other accrued expenses 175,359 175,005 Advance contract payments 30,083 24,454 Income taxes payable 45,673 54,176 __________ __________ Total current liabilities 596,804 661,244 __________ __________ LONG-TERM DEBT, NET 311,314 273,344 __________ __________ OTHER LONG-TERM LIABILITIES 71,667 66,112 __________ __________ STOCKHOLDERS' EQUITY (Note A): Common stock issued, par value $1.00 per share 51,070 50,807 Other stockholders' equity 813,858 754,873 __________ __________ Total stockholders' equity 864,928 805,680 __________ __________ 1,844,713 1,806,380 See accompanying notes. - 3 -
COMPUTER SCIENCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited) ($ in thousands except earnings per share)
Second Quarter Ended Six Months Ended _____________________ _______________________ Sept. 30, Oct. 1, Sept. 30, Oct. 1, 1994 1993 1994 1993 _________ _________ __________ __________ Revenues $788,486 $622,310 $1,526,631 $1,230,406 _________ _________ __________ __________ Costs of services 631,878 507,750 1,215,539 1,000,561 Selling, general and administrative 74,134 50,807 150,096 103,519 Depreciation and amortization 39,928 30,010 77,832 60,077 Interest, net (Note B) 5,573 2,353 10,995 4,962 _________ _________ __________ __________ Total costs and expenses 751,513 590,920 1,454,462 1,169,119 _________ _________ __________ __________ Income before taxes 36,973 31,390 72,169 61,287 Taxes on income 14,050 13,123 27,424 24,858 _________ _________ __________ __________ Net earnings before cumulative effect of accounting change 22,923 18,267 44,745 36,429 Cumulative effect of accounting change for income taxes (Note C) 4,900 _________ _________ __________ __________ Net earnings $22,923 $18,267 $44,745 $41,329 ========= ========= ========== ========== Earnings per common share before cumulative effect of accounting change $0.44 $0.36 $0.86 $0.72 Cumulative effect of accounting change for income taxes (Note C) 0.09 _________ _________ __________ __________ Earnings per common share (Notes A and D) $0.44 $0.36 $0.86 $0.81 ========= ========= ========== ========== See accompanying notes. - 4 -
COMPUTER SCIENCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited) ($ in thousands)
Six Months Ended __________ __________ Sept. 30, Oct. 1, 1994 1993 __________ __________ Cash flows from operating activities: Net earnings $44,745 $41,329 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 77,831 60,077 Provision for losses on accounts receivable 7,067 2,952 Changes in assets and liabilities, net of effects of acquisitions: Increase in assets (110,269) (11,642) Decrease in liabilities (4,740) (8,088) __________ __________ Net cash provided by operating activities 14,634 84,628 __________ __________ Investing activities: Short-term investments (18,281) Purchase of property, plant and equipment (81,659) (55,855) Purchased and internally developed software (8,445) (11,040) Acquisitions, net of cash acquired (15,485) (3,737) Other investing cash flows (8,572) 4,523 __________ __________ Net cash used in investing activities (114,161) (84,390) __________ __________ Financing activities: Paydown of commercial paper, net (51,928) Borrowings under lines of credit, net 29,419 3,006 Proceeds from term debt issuance 150,000 Payment of outsourcing financing (114,403) Principal payments on long-term debt (39,638) (9,521) Proceeds from exercise of stock options 6,640 7,897 Other financing cash flows 6,013 (160) __________ __________ Net cash (used in) provided by financing activities (13,897) 1,222 __________ __________ Net (decrease) increase in cash and cash equivalents (113,424) 1,460 Cash and cash equivalents at beginning of year 126,820 111,477 __________ __________ Cash and cash equivalents at end of period $13,396 $112,937 ========== ========== See accompanying notes. - 5 -
COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ($ in thousands except per share amounts) (A) On December 6, 1993, the Company's Board of Directors declared a three-for-one stock split in the form of a 200 percent stock dividend on the Company's common stock, with no change in par value. The dividend was distributed January 13, 1994 to shareholders of record as of December 22, 1993. All per share amounts contained in the statements of income and the accompanying notes are based on the new number of shares. No other dividends were paid or declared during the periods presented. There were 51,070,202 shares at September 30, 1994 and 50,807,452 shares at April 1, 1994 of $1.00 par value common stock issued with 212,328 and 201,752 shares, respectively, of treasury stock. (B) Interest, net consists of the following: 2nd Quarter Ended Six Months Ended --------------------- --------------------- Sept. 30, Oct. 1, Sept. 30, Oct. 1, 1994 1993 1994 1993 -------- -------- --------- -------- Interest income $ (481) $ (1,684) $ (1,293) $ (3,389) Interest expense 6,054 4,037 12,288 8,351 --------- -------- --------- --------- Total $ 5,573 $ 2,353 $ 10,995 $ 4,962 ========= ======== ========= ========= (C) The Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," effective April 3, 1993. The cumulative financial statement effect of adopting SFAS No. 109 was to increase the Company's net earnings by $4.9 million, or $0.09 per share for the quarter ended July 2, 1993, adjusted for the stock split described in Note A. (D) Primary earnings per common share are based on the weighted average number of common stock and common stock equivalent shares (dilutive stock options) outstanding of 52,247,000 and 50,988,000 respectively, for the six months ended September 30, 1994, and October 1, 1993 (see Part II - Exhibit 11). These share amounts reflect the stock split described in Note A above. (E) Cash payments for interest on indebtedness were $7,261 and $9,339, respectively, for the six months ended September 30, 1994, and October 1, 1993. Cash payments for taxes on income were $32,765 and $36,265, respectively, for the six months ended September 30, 1994, and October 1, 1993. -6- (F) 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. -7- MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Second Quarter of Fiscal 1995 Versus Second Quarter of Fiscal 1994 Revenues During the quarter ended September 30, 1994, the Company's total revenues of $788.5 million increased 26.7%, or $166.2 million, over the same period last year. Federal revenue totaled $371.7 million, up 25.8% from last year's $295.5 million due to the acquisition during December, 1993 of Atlantic Research Corporation's Professional Services Group (PSG) and the commencement since the prior year second quarter of a number of contracts, including the provision of information systems support to NASA Marshall Space Flight Center. Commercial revenue from domestic operations was $262.3 million for the second quarter versus $261.8 million for the prior year quarter, with growth in consulting revenues offset by the continuing phaseout of certain claims processing activities and a slight decrease in outsourcing revenues from existing outsourcing contracts as service efficiencies were achieved. International revenue increased to $154.5 million from $65 million reflecting the commencement of the Company's outsourcing contract with British Aerospace (BAe) during April, 1994, the acquisition of Computer Sciences Australia (CSA) during November, 1993 and other revenue growth. During the current fiscal year, the Company has been awarded approximately $1.4 billion of federal business, including the Marshall Space Flight Contract mentioned above. The Company has also been awarded $425 million of commercial outsourcing contracts. Costs and Expenses As a percentage of revenue, costs of services were 80.1% for the quarter ended September 30, 1994, versus 81.8% for the same quarter last year. The improvement was widespread, with the largest benefit achieved in the Company's European operations. Selling, general and administrative expenses increased to $74.1 million for the quarter ended September 30, 1994, up from $50.8 million for the same period last year. The largest increases were in the Company's European, Federal and U.S. consulting businesses where revenue growth was also strongest. The Company's depreciation and amortization expense increased to $39.9 million for the current quarter, up from $30 million last year. The increase is primarily the result of the BAe contract and PSG and CSA acquisitions, as well as other internal business growth. -8- Net interest expense increased to $5.6 million for the current quarter from $2.4 million for the same quarter last year. The increase is due to both decreased interest income and increased interest expense as cash on hand and increased borrowings were used to supplement cash flows from operations. The increased borrowings helped to fund the purchase of outsourcing assets from BAe and to acquire CSA and PSG during the second half of fiscal 1994. Income Before Taxes Income before taxes was $37 million, up $5.6 million or 17.8% over last year's second quarter, reflecting the revenue growth achieved, offset somewhat by the higher selling, general and administrative expenses and net interest expense described above. Net Earnings Net earnings were $22.9 million for the quarter ended September 30, 1994, up $4.7 million or 25.5% over the same quarter last year. The effective tax rate was 38.0%, versus 41.8% for the prior period. The higher rate for fiscal 1994 is principally related to the passage of federal income tax legislation during August, 1993. The cumulative effect of the tax legislation was recorded in the second quarter of fiscal 1994, the quarter in which the tax law changes occurred. During the third quarter of fiscal 1994, CSC's Board of Directors declared a three-for-one stock split in the form of a 200 percent stock dividend, and the additional shares were distributed January 13, 1994. This year's second quarter earnings per share were 44 cents compared to 36 cents for last year's second quarter, on a greater number of shares outstanding. Cash Flows Cash flows from operating activities were $14.6 million for the six months ended September 30, 1994, compared to $84.6 million during the same period last year. The lower operating cash flow is mainly the result of higher accounts receivable and other current assets related to the Company's Federal business. The Company's cash outflows for investing activities were $114.2 million for the six months versus $84.4 million during the same period last year. The higher outflow reflects greater purchases of property, plant and equipment in keeping with company growth, particularly in the asset-intensive area of information technology outsourcing. The Company also had greater acquisition-related expenditures for this period than in the prior year. These factors were partially offset by an absence of short-term investment purchases during the period compared to last year. -9- Cash used in financing activities was $13.9 million for the six months versus cash provided of $1.2 million during the same period last year. Year-to-date activity includes the payment of $114 million of BAe outsourcing financing. Additionally, a $150 million private placement of fixed-rate, term debt was issued by CSC Enterprises, an affiliate of the Company and was used partially to repay commercial paper borrowings. Financial Condition During the first six months of fiscal 1995, the Company's capital needs included $114 million for the payment related to the BAe outsourcing contract and $115 million for additional working capital. These needs were met by the use of existing cash and additional debt. As a result of the additional borrowing, the Company's debt-to-total-capitalization ratio increased to 32% at September 30, 1994, versus 29% at the prior fiscal year-end. In all other respects, the Company's financial condition has not changed significantly since the fiscal year-end. It is management's opinion that the Company will be able to fund its cash needs from operating activities and from short-term borrowings. It is also management's opinion that any major additional requirements can be financed by the use of unused borrowing capacity or by the issuance of new CSC securities. -10- Part II. Other Information Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit No. 11 - Calculation of Earnings Per Share Exhibit No. 27 - Financial Data Schedule Exhibit No. 28 - Additional Exhibits (i) Revenues by Market Sector b. Reports on Form 8-K: There were no Form 8-K reports filed for the second quarter of fiscal 1995. -11- EXHIBIT 11 COMPUTER SCIENCES CORPORATION CALCULATION OF EARNINGS PER SHARE (In thousands except earnings per share)
Second Quarter Ended Six Months Ended _____________________ _______________________ Sept. 30, Oct. 1, Sept. 30, Oct. 1, 1994 1993 1994 1993 _________ _________ __________ __________ Net earnings before cumulative effect of accounting change $22,923 $18,267 $44,745 $36,429 Cumulative effect of accounting change for income taxes 0 0 0 4,900 _________ _________ __________ __________ Net earnings $22,923 $18,267 $44,745 $41,329 ========= ========= ========== ========== Shares: Weighted average shares outstanding 50,821 50,123 50,760 50,015 Common stock equivalents 1,495 1,111 1,487 973 _________ _________ __________ __________ Total for primary and fully diluted calculation 52,316 51,234 52,247 50,988 Earnings Per Share*: Earnings per common share before cumulative effect of accounting change $0.44 $0.36 $0.86 $0.72 Cumulative effect of accounting change for income taxes 0.09 _________ _________ __________ __________ Primary and fully diluted** $0.44 $0.36 $0.86 $0.81 ========= ========= ========== ========== * All shares and per share amounts include the effect of the stock split described in Note A of the accompanying financial statements. ** The fully diluted calculation is submitted in accordance with Regulation S-K item 601 (b) (11) although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%. - 12 -
[TYPE] EX-27 [DESCRIPTION] ART. 5 FDS FOR 2ND QUARTER 10-Q [ARTICLE] 5 [MULTIPLIER] 1,000 [FISCAL-YEAR-END] MAR-31-1995 [PERIOD-START] APR-2-1994 [PERIOD-END] SEP-30-1994 [PERIOD-TYPE] 6-MOS [CASH] 13,396 [SECURITIES] 0 [RECEIVABLES] 773,072 [ALLOWANCES] 30,749 [INVENTORY] 0 [CURRENT-ASSETS] 840,028 [PP&E] 757,617 [DEPRECIATION] 342,106 [TOTAL-ASSETS] 1,844,713 [CURRENT-LIABILITIES] 596,804 [BONDS] 311,314 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 51,070 [OTHER-SE] 813,858 [TOTAL-LIABILITY-AND-EQUITY] 1,844,713 [SALES] 0 [TOTAL-REVENUES] 1,526,631 [CGS] 0 [TOTAL-COSTS] 1,215,539 [OTHER-EXPENSES] 77,832 [LOSS-PROVISION] 7,067 [INTEREST-EXPENSE] 10,995 [INCOME-PRETAX] 72,169 [INCOME-TAX] 27,424 [INCOME-CONTINUING] 44,745 [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 44,745 [EPS-PRIMARY] 0.86 [EPS-DILUTED] 0.86 -13-
EXHIBIT 28 COMPUTER SCIENCES CORPORATION REVENUES BY MARKET SECTOR ($ in millions)
Fiscal Period Ended % of Total _________ __________ __________ __________ Sept. 30, Oct. 1, Sept. 30, Oct. 1, 1994 1993 1994 1993 _________ _________ __________ __________ Second Quarter U.S. Federal Government: Department of Defense $210.7 $177.5 27 % 29 % NASA 77.4 55.5 10 9 Civil agencies 83.6 62.5 10 10 _________ _________ ___________ ___________ Total 371.7 295.5 47 48 _________ _________ ___________ ___________ Commercial: Domestic 262.3 261.8 33 42 International 154.5 65.0 20 10 _________ _________ ___________ ___________ Total 416.8 326.8 53 52 _________ _________ ___________ ___________ Total revenues $788.5 $622.3 100 % 100 % ========= ========= =========== =========== Six Months U.S. Federal Government: Department of Defense $400.6 $351.6 26 % 29 % NASA 138.1 108.6 9 9 Civil agencies 161.4 133.6 10 11 _________ _________ __________ __________ Total 700.1 593.8 45 49 _________ _________ __________ __________ Commercial: Domestic 527.2 509.5 35 41 International 299.3 127.1 20 10 _________ _________ __________ __________ Total 826.5 636.6 55 51 _________ _________ __________ __________ Total revenues $1,526.6 $1,230.4 100 % 100 % ========= ========= ========== ========== - 14 -
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. COMPUTER SCIENCES CORPORATION Registrant Date: November 10, 1994 By:/s/Denis M. Crane Denis M. Crane Vice President and Controller Chief Accounting Officer -15- -----END PRIVACY-ENHANCED MESSAGE-----