-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UA5SkQzIqd0nX3uJOrAUNDHY0pPWrLJXA5Dj9CLFgysNqlPIAzAy7lsk8pN+U16t 84Nzgz0JJnOQ9pjRmzgOWg== 0000023082-96-000015.txt : 19960410 0000023082-96-000015.hdr.sgml : 19960410 ACCESSION NUMBER: 0000023082-96-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951229 FILED AS OF DATE: 19960209 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER SCIENCES CORP CENTRAL INDEX KEY: 0000023082 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [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: 96514603 BUSINESS ADDRESS: STREET 1: 2100 E GRAND AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3106150311 MAIL ADDRESS: STREET 1: 2100 EAST GRAND AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 10-Q 1 THIRD QUARTER FY96 10Q 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 DECEMBER 29, 1995 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 [ ] 55,908,055 shares of Common Stock, $1.00 par value, were outstanding on December 29, 1995. COMPUTER SCIENCES CORPORATION Index to Form 10-Q Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Balance Sheets, December 29, 1995 and March 31, 1995......................... 3 Consolidated Condensed Statements of Income, Third Quarter and Nine Months Ended December 29, 1995 and December 30, 1994............ ......... 4 Consolidated Condensed Statements of Cash Flows, Nine months ended December 29, 1995 and December 30, 1994.... 5 Notes to Consolidated Condensed Financial Statements............ 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 7 PART II. OTHER INFORMATION Item 2. Changes in Securities...................................... 10 Item 6. Exhibits and Reports on Form 8-K........................... 11 PART I, ITEM 1. FINANCIAL STATEMENTS COMPUTER SCIENCES CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS
Dec. 29, Mar. 31, 1995 1995 ($ in thousands) (unaudited) _____________ _____________ CURRENT ASSETS: Cash and cash equivalents $ 50,653 $ 155,310 Receivables 1,005,049 824,963 Prepaid expenses and other current assets 97,558 101,232 _____________ _____________ Total current assets 1,153,260 1,081,505 _____________ _____________ PROPERTY AND EQUIPMENT, at cost 1,101,339 905,469 Less-Accumulated depreciation and amortization 479,300 375,330 _____________ _____________ Net property and equipment 622,039 530,139 _____________ _____________ EXCESS OF COST OF BUSINESSES ACQUIRED OVER RELATED NET ASSETS, NET 426,278 431,074 OTHER ASSETS 334,377 290,942 _____________ _____________ Total assets $ 2,535,954 $ 2,333,660 ============= ============= CURRENT LIABILITIES: Short-term debt $ 108,746 $ 126,317 Current maturities of long-term debt 6,340 11,111 Accounts payable 156,151 181,983 Accrued payroll and related costs 161,071 152,438 Other accrued expenses 254,586 227,852 Advance contract payments 35,974 30,329 Income taxes payable 44,081 47,882 _____________ _____________ Total current liabilities 766,949 777,912 _____________ _____________ LONG-TERM DEBT, NET 402,524 310,317 _____________ _____________ OTHER LONG-TERM LIABILITIES 106,359 96,872 _____________ _____________ STOCKHOLDERS' EQUITY (Note A): Common stock issued, par value $1.00 per share 56,214 55,386 Other stockholders' equity 1,203,908 1,093,173 _____________ _____________ Total stockholders' equity 1,260,122 1,148,559 _____________ _____________ Total liabilities and stockholders' equity $ 2,535,954 $ 2,333,660 ============= ============= See accompanying notes.
COMPUTER SCIENCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited) ($ in thousands except earnings per share)
Third Quarter Ended Nine Months Ended __________________________ __________________________ Dec. 29, Dec. 30, Dec. 29, Dec. 30, 1995 1994 1995 1994 ____________ ____________ ____________ ____________ Revenues $ 1,110,416 $ 827,901 $ 3,081,913 $ 2,354,532 ____________ ____________ ____________ ____________ Costs of services 863,704 661,815 2,441,271 1,877,354 Selling, general and administrative 115,379 73,471 287,849 223,567 Depreciation and amortization 64,378 41,812 176,460 119,644 Interest expense 9,371 7,876 26,600 20,164 Interest income (1,028) (401) (3,249) (1,694) ____________ ____________ ____________ ____________ Total costs and expenses 1,051,804 784,573 2,928,931 2,239,035 ____________ ____________ ____________ ____________ Income before taxes 58,612 43,328 152,982 115,497 Taxes on income 22,600 16,580 58,900 44,004 ____________ ____________ ____________ ____________ Net income $ 36,012 $ 26,748 $ 94,082 $ 71,493 ============ ============ ============ ============ Earnings per common share (Note B) $ 0.63 $ 0.51 $ 1.65 $ 1.37 ============ ============ ============ ============ See accompanying notes.
COMPUTER SCIENCES CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended ___________________________ Dec. 29, Dec. 30, ($ in thousands) 1995 1994 ____________ ____________ Cash flows from operating activities: Net earnings $ 94,082 $ 71,493 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 176,460 119,644 Provision for losses on accounts receivable 14,977 11,436 Changes in assets and liabilities, net of effects of acquisitions: Increase in assets (165,229) (170,974) Increase (decrease) in liabilities 8,048 (4,807) ____________ ____________ Net cash provided by operating activities 128,338 26,792 ____________ ____________ Investing activities: Purchases of property, plant and equipment (172,192) (149,289) Acquisitions, net of cash acquired (27,469) (22,159) Outsourcing assets (98,514) Purchased and internally developed software (25,020) (12,190) Other investing cash flows 978 (4,158) ____________ ____________ Net cash used in investing activities (322,215) (187,796) ____________ ____________ Financing activities: Paydown of commercial paper, net (723) (1,941) Borrowing under lines of credit, net 82,262 50,339 Borrowing under term debt issuance 150,000 Payment of outsourcing financing (114,403) Principal payments on long-term debt (9,259) (42,143) Proceeds from exercise of stock options 11,550 11,858 Other financing cash flows 5,390 8,953 ____________ ____________ Net cash provided by financing activities 89,220 62,663 ____________ ____________ Net decrease in cash and cash equivalents (104,657) (98,341) Cash and cash equivalents at beginning of year 155,310 126,820 ____________ ____________ Cash and cash equivalents at end of period $ 50,653 $ 28,479 ============ ============ See accompanying notes.
COMPUTER SCIENCES CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ($ in thousands except per share amounts) (A) No dividends were paid during the periods presented. There were 56,214,355 shares at December 29, 1995 and 55,385,555 shares at March 31, 1995 of $1.00 par value common stock issued with 306,300 and 215,047 shares, respectively, of treasury stock. (B) 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 57,191,000 and 52,334,000 respectively, for the nine months ended December 29, 1995, and December 30, 1994 (see Part II, Exhibit 11). Fiscal 1996 amounts include the effect of a four-million- share common stock offering completed February 15, 1995. (C) Cash payments for interest on indebtedness were $28,973 and $17,034, respectively, for the nine months ended December 29, 1995, and December 30, 1994. Cash payments for taxes on income were $40,426 and $38,769, respectively, for the nine months ended December 29, 1995, and December 30, 1994. (D) 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. PART I, ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Third Quarter of Fiscal 1996 versus Third Quarter of Fiscal 1995 Revenues The Company derived its revenues from the following market sectors for the third quarter and nine months, respectively (dollars in millions):
Third Quarter Nine Months ---------------- Pct. ---------------- Pct. FY96 FY95 Growth FY96 FY95 Growth ------- ------- ------ ------- ------- ------ U.S. Commercial $ 405 $ 285 42.2% $ 1,118 $ 812 37.7% International 293 175 67.2 796 475 67.8 ------- ------- ------ ------- ------- ------ Total Commercial 698 460 51.7 1,914 1,287 48.8 U.S. Federal Government 412 368 12.2 1,168 1,068 9.4 ------- ------- ------ ------- ------- ------ Total $ 1,110 $ 828 34.1% $ 3,082 $ 2,355 30.9% ======= ======= ====== ======= ======= ======
During the quarter ended December 29, 1995, the Company's total revenue increased 34.1%, or $283 million, over the same period last year. Commercial revenue fueled the growth, increasing 51.7%, or $238 million. Nearly one-half of the commercial growth came from the Company's international operations, reflecting the acquisitions of Ploenzke AG in Germany (effective January 1995), and business associated with the outsourcing contract signed June 1995 with Lucas Industries PLC in the United Kingdom. The remaining international growth was broad-based across the Company's operations in Europe and Australia. U.S. commercial revenue grew $120 million or 42.2%. Approximately three- fourths of this growth came from outsourcing contracts, the largest of which were with Hughes Aircraft Company, Scott Paper Company and James River Corporation. The Company's U.S. consulting operations also contributed to the growth with revenues 13.6% over the same quarter of fiscal 1995. U.S. federal government revenue for the quarter increased $45 million, or 12.2%. The Company has announced federal contract awards with a value of about $2.0 billion during fiscal 1996, compared with $1.8 billion for all of fiscal 1995. However, many new and some existing contracts allow the Government discretion as to the timing and extent of expenditures. For the nine months, revenue growth for all market sectors reflects the same overall trends as those described for the third quarter above. As the Company's commercial sector revenues have grown faster than federal, they comprise a larger percentage of total CSC revenue, as shown by the following table:
Revenue by Market Sector, Third Quarter Nine Months as a percentage of total FY96 FY95 FY96 FY95 - ---------------------------- ------- ------- ------- ------- U.S. Commercial 37% 34% 36% 35% International 26 21 26 20 ------- ------- ------- ------- Total Commercial 63 55 62 55 U.S. Federal Government 37 45 38 45 ------- ------- ------- ------- Total Revenue 100% 100% 100% 100% ======= ======= ======= =======
Costs and Expenses The Company's costs and expenses as a percentage of revenue are as follows (dollars in millions):
Dollar Amount Percentage of Revenue ---------------- ------------------------------- Nine Months Third Quarter Nine Months FY96 FY95 FY96 FY95 FY96 FY95 ------- ------- ------ ------ ------ ------ Costs of services $ 2,441 $ 1,877 77.78% 79.94% 79.21% 79.73% Selling, general & admin. 288 224 10.39 8.87 9.34 9.50 Depreciation and amort. 177 120 5.80 5.05 5.73 5.08 Interest expense, net 23 18 0.75 0.90 0.76 0.78 ------- ------- ------ ------ ------ ------ Total $ 2,928 $ 2,239 94.72% 94.76% 95.04% 95.09% ======= ======= ====== ====== ====== ======
Compared with the corresponding periods of the prior year, total costs and expenses improved slightly as a percentage of revenue for both the quarter and the nine months ended December 29, 1995. The third quarter above contains a year-to-date adjustment of an expense classification between costs of services and selling, general and administrative with respect to a recent acquisition. For the nine months, costs of services and selling, general and administrative expenses improved as a percentage of revenue, offset partially by an increase in depreciation and amortization expense. The latter increase reflects the Company's expansion in outsourcing, which is generally more capital intensive. The Company's U.S. and European outsourcing business also had a lower cost of services as a percentage of revenue than the company average, aiding the improvement seen for the quarter and nine months above. Income Before Taxes Income before taxes for the quarter was $58.6 million, up $15.3 million, or 35.3%, over last year's third quarter, reflecting the Company's revenue growth. Compared with the like periods of the prior year, the Company's pre- tax profit margin improved from 4.9% to 5.0% for the nine months and from 5.2% to 5.3% for the quarter ended December 29, 1995. Net Income Net income was $36.0 million for the quarter ended December 29, 1995, up $9.3 million, or 34.6%, over the same quarter last year. The effective tax rate was 38.6%, versus 38.3% for the same quarter last year. The higher current tax rate includes the increases in state income tax rates and less tax exempt income and income tax credits. This year's third quarter earnings per share of 63 cents increased 23.5% over the 51 cents for last year's third quarter. Fiscal 1996 includes the effect of a four-million-share common stock offering completed February 15, 1995. Cash Flows Cash provided by operating activities was $128.3 million for the first nine months of fiscal 1996, compared with $26.8 million for the same period last year. A majority of the increase relates to higher non-cash expenses for depreciation and amortization as the Company has expanded in more capital intensive areas. The Company's cash expenditures for investing activities totaled $322.2 million for the current period versus $187.8 million during the first nine months of last year. The increase principally reflects greater investments in acquisition and outsourcing related assets, as described above. Cash provided by financing activities was $89.2 million for the nine months versus $62.7 million for the same period last year. The increase is primarily due to additional borrowing on available lines of credit. Financial Condition During the first nine months of fiscal 1996, the Company's capital outlays included $298.2 million of business investments in the form of fixed asset purchases, outsourcing asset purchases and acquisitions. These amounts were funded from operating cash flows and additional debt and existing cash, which decreased from $155.3 million to $50.7 million. As a result of the net increase in borrowings, the Company's debt-to-total capitalization ratio increased to 29.1% at December 29, 1995 versus 28% at March 31, 1995. It is management's opinion that the Company will be able to fund its current 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. Part II. Other Information Item 6. Exhibits and Reports on Form 8-K
a. Exhibits Page ---- 3.1 Restated Articles of Incorporation (d) 3.2 Amendment to Restated Articles of Incorporation (l) 3.3 By-Laws, effective January 31, 1993 (h) 10.1 Annual Management Incentive Plan (a) 10.2 1978 Stock Option Plan (h) 10.3 Amendment Nos. 1 and 2 to the 1978 Stock Option Plan (h) 10.4 Amendment No. 3 to the 1978 Stock Option Plan (c) 10.5 1980 Stock Option Plan (h) 10.6 Amendment Nos. 1, 2, 3 and 4 to the 1980 Stock Option Plan (b) 10.7 Amendment No. 5 to the 1980 Stock Option Plan (c) 10.8 1984 Stock Option Plan (i) 10.9 Amendment No. 1 to the 1984 Stock Option Plan (b) 10.10 Amendment No. 2 to the 1984 Stock Option Plan (c) 10.11 1987 Stock Incentive Plan (c) 10.12 Schedule to the 1987 Stock Incentive Plan for United Kingdom personnel (c) 10.13 1990 Stock Incentive Plan (j) 10.14 1992 Stock Incentive Plan (l) 10.15 Amendment No. 1 to the 1992 Stock Incentive Plan (h) 10.16 1995 Stock Incentive Plan (n) 10.17 Deferred Compensation Plan (n) 10.18 Restated Supplemental Executive Retirement Plan, effective August 14, 1995 (n) 10.19 Form of Indemnification Agreement for Directors (e) 10.20 Form of Indemnification Agreement for Officers (h) 10.21 Information Technology Services Agreements with General Dynamics Corporation, dated as of November 4, 1991 (k) 10.22 Restated Rights Agreement dated as of December 21, 1988, effective December 6, 1993 (g) 10.23 $100 million Credit Agreement dated as of September 15, 1994 (h) 10.24 $150 million Credit Agreement dated as of September 15, 1994 (h) 10.25 $350,000,000 Credit Agreement dated as of September 6, 1995 (n) 10.26 $100 million Credit Agreement dated as of January 3, 1995 (h) 10.27 Amended and Restated Rights Agreement, effective October 30, 1995 (n) 11 Calculation of Primary and Fully Diluted Earnings Per Share, filed herewith 27 Article 5 Financial Data Schedule, filed herewith 28 Additional exhibit, Revenue by Market Sector, filed herewith 99.1 Annual Report on Form 11-K for the Matched Asset Plan of Computer Sciences Corporation (h) 99.2 Annual Report on Form 11-K for the Hourly Savings Plan of CSC Outsourcing Inc. (h) 99.3 Annual Report on Form 11-K for the Employee Savings Plan of CSC Credit Services, Inc. (h) 99.4 Annual Report on Form 11-K for the CUTW Hourly Savings Plan of CSC Outsourcing, Inc. (o)
Notes to Exhibit Index: (a)-(h) These exhibits are incorporated herein by reference to the Company's Form 10-K, Commission File No. 1-4850, for the respective fiscal year noted below: (a) March 30, 1984 (e) April 3, 1992 (b) April 3, 1987 (f) April 2, 1993 (c) April 1, 1988 (g) April 1, 1994 (d) March 31, 1989 (h) March 31, 1995 (i) Incorporated herein by reference to the Company's Form S-8 filed on August 17, 1984. (j) Incorporated herein by reference to the Company's Form S-8 filed on August 15, 1990. (k) Incorporated herein by reference to the Company's Form 8-K filed on November 4, 1991. (l) Incorporated herein by reference to the Company's Proxy Statement for its August 10, 1992 Annual Meeting of Stockholders. (m) Incorporated herein by reference to the Company's Form S-8 filed on August 12, 1992. (n) Incorporated herein by reference to the Company's Form 10-Q filed on November 13, 1995. (o) Incorporated by reference to the Form 11-K filed on Feb. 6, 1996. b. Reports on Form 8-K: There were no reports on Form 8-K filed during the third quarter of fiscal 1996. EX-11 2 EXHIBIT 11 COMPUTER SCIENCES CORPORATION CALCULATION OF EARNINGS PER SHARE (In thousands except earnings per share)
Third Quarter Ended Nine Months Ended ______________________ ______________________ Dec. 29, Dec. 30, Dec. 29, Dec. 30, 1995 1994 1995 1994 __________ __________ __________ __________ Net income $ 36,011 $ 26,748 $ 94,081 $ 71,493 ========== ========== ========== ========== Shares: Weighted average shares outstanding 55,781 50,951 55,550 50,824 Common stock equivalents 1,699 1,554 1,641 1,510 __________ __________ __________ __________ Total for primary and fully diluted 57,480 52,505 57,191 52,334 ========== ========== ========== ========== Earnings Per Share: Primary and fully diluted* $ 0.63 $ 0.51 $ 1.65 $ 1.37 ========== ========== ========== ========== * 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%.
EX-27 3 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 1000 Mar-29-1996 Apr-1-1995 Dec-29-1995 9-MOS 50,653 0 1,025,693 20,644 0 1,153,260 1,101,339 479,300 2,535,954 766,949 402,524 56,214 0 0 1,203,908 2,535,954 0 3,081,913 0 2,426,294 176,460 14,977 23,351 152,982 58,900 94,082 0 0 0 94,082 1.65 1.65
EX-28 4 EXHIBIT 28 COMPUTER SCIENCES CORPORATION REVENUES BY MARKET SECTOR ($ in millions)
Fiscal Period Ended % of Total __________________________ __________________ Dec. 29, Dec. 30, Dec. 29, Dec. 30, 1995 1994 1995 1994 ___________ ___________ ________ ________ THIRD QUARTER U.S. Federal Government: Dept. of Defense $ 252.4 $ 198.4 23% 24% NASA 77.6 81.3 7 10 Civil agencies 82.5 88.1 7 11 ___________ ___________ ________ ________ Total 412.5 367.8 37 45 ___________ ___________ ________ ________ Commercial: Domestic 405.2 285.0 37 34 International 292.7 175.1 26 21 ___________ ___________ ________ ________ Total 697.9 460.1 63 55 ___________ ___________ ________ ________ Total revenues $ 1,110.4 $ 827.9 100% 100% =========== =========== ======== ======== NINE MONTHS U.S. Federal Government: Dept. of Defense $ 700.9 $ 588.7 23% 25% NASA 234.1 219.4 8 9 Civil agencies 233.1 259.8 7 11 ___________ ___________ ________ ________ Total 1,168.1 1,067.9 38 45 ___________ ___________ ________ ________ Commercial: Domestic 1,118.0 812.2 36 35 International 795.8 474.4 26 20 ___________ ___________ ________ ________ Total 1,913.8 1,286.6 62 55 ___________ ___________ ________ ________ Total revenues $ 3,081.9 $ 2,354.5 100% 100% =========== =========== ======== ========
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 Registrant Date: February 9, 1996 By:/s/ Denis M. Crane ----------------------------- Denis M. Crane Vice President and Controller Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----