-----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, Od0EdigqFqKnAFQWrNEb+YqiY5yHSA4iAHaQXGrX0OAXZeYsKOtAtQcmmop4bxTG OEZp+3l1xn7HosqseTQ5yQ== 0000023082-99-000006.txt : 19990628 0000023082-99-000006.hdr.sgml : 19990628 ACCESSION NUMBER: 0000023082-99-000006 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990402 FILED AS OF DATE: 19990625 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: 0328 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-04850 FILM NUMBER: 99652234 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-K/A 1 ============================================================================= SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K/A AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 2, 1999 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission File No.: 1-4850 [LOGO] COMPUTER SCIENCES CORPORATION (Exact name of Registrant as specified in its charter) Nevada 95-2043126 (State of incorporation or organization) (I.R.S. Employer Identification No.) 2100 East Grand Avenue El Segundo, California 90245 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (310) 615-0311 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class: on which registered - --------------------------------------- ------------------------- Common Stock, $1.00 par value per share New York Stock Exchange Preferred Stock Purchase Rights Pacific Exchange Securities registered pursuant to Section 12(g) of the Act: None The registrant hereby amends Part Iv, Item 14(a)(3) to include Exhibits 99.1, 99.2 and 99.3. ============================================================================= PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Exhibits The following exhibits are filed with this report: Exhibit Number Description of Exhibit - ------- ---------------------- 3.1 Restated Articles of Incorporation, effective October 31, 1988 (c) 3.2 Amendment to Restated Articles of Incorporation, effective August 10, 1992 (j) 3.3 Amendment to Restated Articles of Incorporation, effective July 31, 1996 (m) 3.4 Certificate of Amendment of Certificate of Designations of Series A Junior Participating Preferred Stock, effective August 1, 1996 (o) 3.5 Bylaws, amended and restated effective May 4, 1998 (g) 10.1 1978 Stock Option Plan, amended and restated effective March 31, 1988* (n) 10.2 1980 Stock Option Plan, amended and restated effective March 31, 1988* (n) 10.3 1984 Stock Option Plan, amended and restated effective March 31, 1988* (n) 10.4 1987 Stock Incentive Plan* (b) 10.5 Schedule to the 1987 Stock Incentive Plan for United Kingdom personnel* (b) 10.6 1990 Stock Incentive Plan* (h) 10.7 1992 Stock Incentive Plan, amended and restated effective August 9, 1993* (n) 10.8 Schedule to the 1992 Stock Incentive Plan for United Kingdom personnel* (q) 10.9 1995 Stock Incentive Plan* (k) 10.10 1998 Stock Incentive Plan* (v) 10.11 Form of Stock Option Agreement* (u) 10.12 Form of Restricted Stock Agreement* (u) 10.13 Annual Management Incentive Plan, effective April 2, 1983* (a) 10.14 Supplemental Executive Retirement Plan, amended and restated effective February 27, 1998* (u) 10.15 Deferred Compensation Plan, amended and restated effective February 2, 1998* (s) 10.16 Severance Plan for Senior Management and Key Employees, amended and restated effective February 18, 1998. (t) 10.17 Severance Agreement with Van B. Honeycutt, effective February 2, 1998. (s) 10.18 Employee Agreement with Van B. Honeycutt, effective May 1, 1999. 10.19 Form of Indemnification Agreement for Officers (e) 10.20 Form of Indemnification Agreement for Directors (d) 10.21 1997 Nonemployee Director Stock Incentive Plan (r) 10.22 Form of Restricted Stock Unit Agreement (g) 10.23 1990 Nonemployee Director Retirement Plan, amended and restated effective February 2, 1998 (s) 10.24 Information Technology Services Agreements with General Dynamics Corporation, dated as of November 4, 1991 (i) 10.25 Rights Agreement dated February 18, 1998 (t) 10.26 $350 million Credit Agreement dated as of September 6, 1995 (k) 10.27 First Amendment to $350 million Credit Agreement dated September 23, 1996 (p) 21 Significant Active Subsidiaries and Affiliates of the Registrant 23 Independent Auditors' Consent 27 Financial Data Schedule 99.1 Annual Report on Form 11-K for the Matched Asset Plan of the Registrant for the fiscal year ended December 31, 1998** 99.2 Annual Report on Form 11-K for the Hourly Savings Plan of CSC Outsourcing, Inc. for the fiscal year ended December 31, 1998** 99.3 Annual Report on Form 11-K for the CUTW Hourly Savings Plan of CSC Outsourcing, Inc. for the fiscal year ended December 31, 1998** Notes to Exhibit Index: * Management contract or compensatory plan or agreement ** Filed with this amendment. 2 (a)-(g) These exhibits are incorporated herein by reference to the Company's Annual Report on Form 10-K for the fiscal years ended on the respective dates indicated below: (a) March 30, 1984 (e) March 31, 1995 (b) April 1, 1988 (f) March 28, 1997 (c) March 31, 1989 (g) April 3, 1998 (d) April 3, 1992 (h) Incorporated herein by reference to the Registrant's Registration Statement on Form S-8 filed on August 15, 1990. (i) Incorporated herein by reference to the Registrant's Current Report on Form 8-K dated November 4, 1991. (j) Incorporated herein by reference to the Registrant's Proxy Statement for its August 10, 1992 Annual Meeting of Stockholders. (k) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on November 13, 1995. (l) Incorporated herein by reference to the Registrant's Current Report on Form 8-K dated April 28, 1996. (m) Incorporated herein by reference to the Registrant's Proxy Statement for its July 31, 1996 Annual Meeting of Stockholders. (n) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on August 12, 1996. (o) Incorporated herein by reference to the Registrant's Current Report of Form 8-K dated August 1, 1996. (p) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on November 12, 1996. (q) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on February 10, 1997. (r) Incorporated herein by reference to the Registrant's Proxy Statement for its August 11, 1997 Annual Meeting of Stockholders. (s) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on February 9, 1998. (t) Incorporated herein by reference to the Registrant's Solicitation/Recommendation Statement on Schedule 14D-9 filed on February 26, 1998. (u) Incorporated herein by reference to Amendment No. 2 to the Registrant's Solicitation/Recommendation Statement on Schedule 14D-9 filed on March 2, 1998. (v) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on August 14, 1998 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 Dated: June 25, 1998 By: /s/Scott M. Delanty ------------------------------- Scott M. Delanty, Vice President and Controller 3 INDEX TO EXHIBITS ----------------- Exhibit Number Description of Exhibit - ------- ---------------------- 3.1 Restated Articles of Incorporation, effective October 31, 1988 (c) 3.2 Amendment to Restated Articles of Incorporation, effective August 10, 1992 (j) 3.3 Amendment to Restated Articles of Incorporation, effective July 31, 1996 (m) 3.4 Certificate of Amendment of Certificate of Designations of Series A Junior Participating Preferred Stock, effective August 1, 1996 (o) 3.5 Bylaws, amended and restated effective May 4, 1998 (g) 10.1 1978 Stock Option Plan, amended and restated effective March 31, 1988* (n) 10.2 1980 Stock Option Plan, amended and restated effective March 31, 1988* (n) 10.3 1984 Stock Option Plan, amended and restated effective March 31, 1988* (n) 10.4 1987 Stock Incentive Plan* (b) 10.5 Schedule to the 1987 Stock Incentive Plan for United Kingdom personnel* (b) 10.6 1990 Stock Incentive Plan* (h) 10.7 1992 Stock Incentive Plan, amended and restated effective August 9, 1993* (n) 10.8 Schedule to the 1992 Stock Incentive Plan for United Kingdom personnel* (q) 10.9 1995 Stock Incentive Plan* (k) 10.10 1998 Stock Incentive Plan* (v) 10.11 Form of Stock Option Agreement* (u) 10.12 Form of Restricted Stock Agreement* (u) 10.13 Annual Management Incentive Plan, effective April 2, 1983* (a) 10.14 Supplemental Executive Retirement Plan, amended and restated effective February 27, 1998* (u) 10.15 Deferred Compensation Plan, amended and restated effective February 2, 1998* (s) 10.16 Severance Plan for Senior Management and Key Employees, amended and restated effective February 18, 1998. (t) 10.17 Severance Agreement with Van B. Honeycutt, effective February 2, 1998. (s) 10.18 Employee Agreement with Van B. Honeycutt, effective May 1, 1999. 10.19 Form of Indemnification Agreement for Officers (e) 10.20 Form of Indemnification Agreement for Directors (d) 10.21 1997 Nonemployee Director Stock Incentive Plan (r) 10.22 Form of Restricted Stock Unit Agreement (g) 10.23 1990 Nonemployee Director Retirement Plan, amended and restated effective February 2, 1998 (s) 10.24 Information Technology Services Agreements with General Dynamics Corporation, dated as of November 4, 1991 (i) 10.25 Rights Agreement dated February 18, 1998 (t) 10.26 $350 million Credit Agreement dated as of September 6, 1995 (k) 10.27 First Amendment to $350 million Credit Agreement dated September 23, 1996 (p) 21 Significant Active Subsidiaries and Affiliates of the Registrant 23 Independent Auditors' Consent 27 Financial Data Schedule 99.1 Annual Report on Form 11-K for the Matched Asset Plan of the Registrant for the fiscal year ended December 31, 1998** 99.2 Annual Report on Form 11-K for the Hourly Savings Plan of CSC Outsourcing, Inc. for the fiscal year ended December 31, 1998** 99.3 Annual Report on Form 11-K for the CUTW Hourly Savings Plan of CSC Outsourcing, Inc. for the fiscal year ended December 31, 1998** Notes to Exhibit Index: * Management contract or compensatory plan or agreement ** Filed with this amendment. 4 (a)-(g) These exhibits are incorporated herein by reference to the Company's Annual Report on Form 10-K for the fiscal years ended on the respective dates indicated below: (a) March 30, 1984 (e) March 31, 1995 (b) April 1, 1988 (f) March 28, 1997 (c) March 31, 1989 (g) April 3, 1998 (d) April 3, 1992 (h) Incorporated herein by reference to the Registrant's Registration Statement on Form S-8 filed on August 15, 1990. (i) Incorporated herein by reference to the Registrant's Current Report on Form 8-K dated November 4, 1991. (j) Incorporated herein by reference to the Registrant's Proxy Statement for its August 10, 1992 Annual Meeting of Stockholders. (k) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on November 13, 1995. (l) Incorporated herein by reference to the Registrant's Current Report on Form 8-K dated April 28, 1996. (m) Incorporated herein by reference to the Registrant's Proxy Statement for its July 31, 1996 Annual Meeting of Stockholders. (n) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on August 12, 1996. (o) Incorporated herein by reference to the Registrant's Current Report of Form 8-K dated August 1, 1996. (p) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on November 12, 1996. (q) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on February 10, 1997. (r) Incorporated herein by reference to the Registrant's Proxy Statement for its August 11, 1997 Annual Meeting of Stockholders. (s) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on February 9, 1998. (t) Incorporated herein by reference to the Registrant's Solicitation/Recommendation Statement on Schedule 14D-9 filed on February 26, 1998. (u) Incorporated herein by reference to Amendment No. 2 to the Registrant's Solicitation/Recommendation Statement on Schedule 14D-9 filed on March 2, 1998. (v) Incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q filed on August 14, 1998 5 EX-99.1 2 Exhibit 99.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended: December 31, 1998 [_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from __________ to __________ Commission file number: 1-4850 A. Full title of plan and the address of the plan, if different from that of the issuer named below: Computer Sciences Corporation Matched Asset Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Computer Sciences Corporation 2100 East Grand Avenue El Segundo, California 90245 1 TABLE OF CONTENTS ----------------- Description Page - ----------- ---- (a) Financial Statements: Independent Auditors' Report ........................................ 3 Statements of Net Assets Available for Benefits As of December 31, 1998 and 1997 .................................... 4 Statements of Changes in Net Assets Available for Benefits For the Years Ended December 31, 1998 and 1997 ...................... 5 Notes to Financial Statements ....................................... 6 (b) Exhibit: Independent Auditors' Consent ....................................... E-1 (c) Supplemental Schedules: Schedule of Assets Held for Investment Purposes ..................... S-1 Schedule of Reportable Transactions ................................. S-2 2 INDEPENDENT AUDITORS' REPORT Employee Retirement Plan Committee Computer Sciences Corporation El Segundo, California We have audited the accompanying statements of net assets available for benefits of the Computer Sciences Corporation Matched Asset Plan (the "Plan") as of December 31, 1998 and 1997, and the related statements of changes in net assets available for benefits for the years 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 audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion. In our opinion, such financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1998 and 1997, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in Section C of the table of contents are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are 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. These supplemental schedules are the responsibility of the Plan's management. Such schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Deloitte & Touche LLP June 11, 1999 3 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31 ------------------------------- 1998 1997 -------------- -------------- ASSETS Investments (Notes 2, 5, 9 and 10): Short-term investments $ 10,297,485 $ 14,812,841 Long-term investments--at fair value: Interest in registered investment companies Brinson U.S. Balanced Fund 71,679,904 84,332,245 Mellon Enhanced Asset Fund 77,207,126 40,159,408 Brinson U.S. Equity Fund 263,161,997 249,786,910 Mellon Stock Index Funds 179,469,818 110,042,765 CSC Company stock 380,378,825 238,770,004 Employee loans (Note 6) 21,042,106 20,422,664 Plan interest in Master Trust 174,961,001 142,956,868 Guaranteed investment contracts -at contract value 15,231,349 Cash 508,529 -------------- -------------- Total investments 1,178,706,791 916,515,054 Receivables: Employer contribution 293,000 452,287 Participants' contribution 1,565,285 3,900,688 Accrued income 16,760 15,259 Unsettled Trades 864,521 -------------- -------------- Total Receivables 2,739,566 4,368,234 -------------- -------------- Total Assets 1,181,446,357 920,883,288 -------------- -------------- LIABILITIES Accounts Payable 1,914,407 1,482,254 Accrued Expenses 693,068 325,925 Unsettled Trade Payables 2,791,900 -------------- -------------- Total Liabilities 5,399,375 1,808,179 -------------- -------------- NET ASSETS AVAILABLE FOR BENEFITS $1,176,046,982 $ 919,075,109 ============== ==============
See Notes to Financial Statements 4 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended December 31 ------------------------------- 1998 1997 -------------- -------------- ADDITIONS Investment Income: Net appreciation in fair value of investments (Note 9) $ 190,408,299 $ 65,905,291 Interest 927,110 3,031,996 Dividends 19,529,963 15,217,887 Plan interest in Master Trust investment income 11,827,691 7,283,958 -------------- -------------- 222,693,063 91,439,132 Less Investment Management Fees (1,454,871) (972,982) -------------- -------------- 221,238,192 90,466,150 Contributions: Employee 98,450,484 88,006,055 Employer 16,139,568 14,800,519 Employee Rollovers 9,782,838 18,922,266 Transfers From Other Plans (Note 8) 13,861,524 23,324,149 -------------- -------------- 138,234,414 145,052,989 -------------- -------------- Total Additions 359,472,606 235,519,139 -------------- -------------- DEDUCTIONS Distributions to Participants (Notes 1 and 7) 102,500,733 70,914,853 -------------- -------------- Total Deductions 102,500,733 70,914,853 -------------- -------------- Net Increase 256,971,873 164,604,286 Net Assets Available for Benefits at Beginning of Year 919,075,109 754,470,823 -------------- -------------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $1,176,046,982 $ 919,075,109 ============== ==============
See Notes to Financial Statements 5 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Note 1 Description of the Plan ----------------------- The following brief description of the Computer Sciences Corporation Matched Asset Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan documents for more complete information. The Plan was adopted by the action of the Board of Directors of Computer Sciences Corporation (the "Company") taken on November 3, 1986, and constitutes an amendment and restatement of the Employee Stock Purchase Plan ("the Prior Plan"). The Plan is a continuation of the Prior Plan and is qualified under the Internal Revenue Code (the "Code"), as amended, Section 401(a) and, effective as of January 1, 1987, with respect to the portion thereof that qualifies as a qualified cash or deferred arrangement, to satisfy the requirement of Code Section 401(k). It is also subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The Company reserves the right to discontinue its contributions and terminate the Plan subject to the provisions of ERISA. Upon such termination, the participants' rights to the Company's contributions vest immediately and the account balances are fully paid to the participants. Eligibility and Participation - ----------------------------- Any eligible employee who has satisfied the Plan's age and service requirements, and is employed by the Company, and who receives a stated compensation in respect of employment on the payroll of the Company, is eligible to become a participant, with the exception of a person who is represented by a collective bargaining unit and whose benefits have been the subject of good faith bargaining under a contract that does not specify that such person is eligible to participate in the Plan. In addition, the Company may determine to exempt all employees of any division, unit, facility or class from coverage under the Plan. Any person who leaves the employ of the Company and, at a later time becomes re-employed, must reapply to participate in the Plan, provided he or she otherwise meets the eligibility requirements. There were approximately 25,005 and 18,755 participating employees at December 31, 1998 and 1997, respectively. 6 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Employee and Company Contributions - ---------------------------------- Subject to certain limitations described below, an eligible employee who elects to become a participant may authorize any whole percentage (at least 1% but not more than 15%) of such employee's monthly compensation (as defined in the Plan) to be deferred and contributed to the trust fund on his or her behalf, up to a maximum amount of $10,000 and $9,500 for 1998 and 1997, respectively. Any compensation deferral in excess of $10,000 and $9,500 in 1998 and 1997, respectively, together with income allocable to that excess, will be returned to a participant. Any matching Company contributions attributable to any excess contribution, and income allocable thereto, will either be returned to the Company or applied to reduce future matching Company contributions. In order to qualify for the special tax treatment accorded to plans by Section 401(k) of the Code, contributions on behalf of participants under the Plan must meet two nondiscrimination tests designed to prevent a disproportionate compensation deferral election by employees who are highly compensated in relation to other employees. The Committee may cause the percentage authorized by the highly compensated participants to be reduced if the Plan does not meet both of the nondiscrimination tests. A participant is not permitted to make voluntary after-tax contributions to the Plan. The Company will contribute and forward to the trust fund, together with a compensation deferral contribution equal to each participant's qualifying compensation deferral, an amount equal to 50% of the first 3% of the participant's compensation deferral (except for three groups of employees: the first group is a small number of employees to whom under the terms of their contract agreement the Company will contribute an amount equal to 50% of the first 4% of the participant's compensation deferral; the second group to whom under the terms of their contract agreement the Company will contribute an amount equal to 100% of the first 7% of the participant's compensation deferral; and the third group to whom under the terms of their contract agreement the Company will contribute an amount equal to 50% of the first 6% of the participant's compensation deferral). Matching contributions will be invested in the Company Stock Fund, which invests in the common stock of Computer Sciences Corporation. 7 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Participant Accounts - -------------------- Each participant's account is credited with the participant's contribution and the Company's matching contribution and allocations of Plan earnings, and is charged with an allocation of investment management fees. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Vesting of Participants' Interests/Forfeitures - ---------------------------------------------- A participant's interest in his or her Compensation Deferral Account, Retirement Account, After Tax Account, and Rollover Account is at all times fully vested in the participant or, when appropriate, in the participant's beneficiary or legal representative. Each participant has a vested interest in the value of his or her Matching Contribution Account equal to twenty-five percent (25%) after completing two full years of service and increasing by twenty-five percent (25%) for each additional full year of service (except for a small number of participants who, under the terms of their contract agreement, will vest 100% after 2 years). Vesting accelerates to 100% in the event of reaching age 65 while employed by the Company or upon severance by reason of death or total and permanent disability. Any nonvested portion of the Matching Contributions Account will be forfeited upon withdrawal from the Plan. Forfeitures may be applied to reduce future matching contributions by the Company. Such forfeitures during 1998 and 1997 amounted to $2,186,594 and $1,410,024, respectively. Distributable Amounts, Withdrawals and Refunds - ---------------------------------------------- A participant may become entitled to a distribution of his or her distributable benefit by reason of retirement, death, total and permanent disability, voluntary termination of employment, or dismissal. The rules of payment of a participant's distributable benefit depend upon age of the participant, the number of years of service completed by the participant and the type of severance. The total amounts distributed during 1998 and 1997 were $101,578,143 and $70,097,198, respectively. While still an employee, a participant may, upon at least a 30 day written notice to the Committee, make a withdrawal of his or her compensation deferral contributions if the Committee finds, after considering the participant's request, that an adequate financial hardship and resulting need for such amount has been demonstrated by the participant. These withdrawals during 1998 and 1997 totaled $922,590 and $817,655, respectively. 8 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 In order for the Plan to meet the nondiscrimination tests, the Committee has caused the compensation deferral percentage for certain highly compensated employees to be reduced, which has also resulted in the return of excess compensation deferrals. Note 2 Summary of Significant Accounting Policies ------------------------------------------ The accounting and reporting policies followed in preparation of the financial statements of the Plan of the Company conform with generally accepted accounting principles. The following is a summary of the significant policies. Use of Estimates - ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Assets of the Plan - ------------------ The assets of the Plan are held in a trust with five sub-accounts representing the investment options. The investment income in the respective sub-accounts is allocated to the participants. Contributions to, and payments from, the Plan are specifically identified to the applicable sub- accounts within the trust. Security Transactions - --------------------- Security transactions are accounted for on a trade-date basis. Dividend income is recorded on the ex-dividend date. Interest income is accounted for on the accrual basis. In general, participants in the Company Stock Fund receive distributions in certificates for shares of the common stock of the Company. Valuation of Investment Securities - ---------------------------------- Investments in common stocks and institutional investment vehicles are stated at fair value based upon closing sales prices reported on recognized securities exchanges on the last business day of the plan year or, for the listed securities having no sales reported and for unlisted securities, upon 9 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 last reported bid prices on that date. Investments in short-term investments are stated at cost which approximates fair value. Valuation of Guaranteed Investment Contracts - -------------------------------------------- At December 31, 1997, the Plan held guaranteed investment contracts, which are considered to be fully benefit responsive as access to the funds of these contracts is not restricted. The guaranteed investment contracts are valued at contract value in accordance with SOP 94-4. Contract value represents contributions made by participants, plus interest at the contract rates, less withdrawals or transfers by participants. No guaranteed investment contracts were held by the plan at December 31, 1998. Based on the treasury yield curve for similar types of investments, the fair value of the guaranteed investment contracts at December 31, 1997 was approximately $15,294,818. The average yield and average crediting interest rate was approximately 6.79% for 1997. The crediting interest rate is based on an agreed-upon formula with the issuer, but cannot be less than zero. Payment of Benefits - ------------------- Benefits are recorded when paid. Note 3 Income Tax Status ----------------- The Internal Revenue Service has determined and informed the Company by a letter dated July 18, 1996, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Committee believes that the Plan is designed and operated to qualify under Section 401(a) of the Code and, with respect to its qualified cash or deferred arrangement, under Section 401(k) of the Code. When the requirements of Section 401(k) of the Code are satisfied, the following tax consequences result: (i) A participant is not subject to federal income tax on Company contributions to the Plan or on income or realized gains in Plan Accounts attributable to the participant until a distribution from the Plan is made to him or her. (ii) The participant is able to exclude from his or her income for federal income tax purposes, the amount of his or her compensation deferral contributions, subject to a maximum exclusion of $10,000 and $9,500 for the 1998 and 1997 taxable years of the participant, respectively. 10 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 (iii) On distribution of a participant's vested interest in the Plan, the participant generally is subject to federal income taxation, except that: (1) tax on "net unrealized appreciation" on any Company stock distributed as a part of a "lump sum distribution" generally is deferred until the participant disposes of such stock, and (2) tax may be deferred to the extent the participant is eligible for and complies with certain rules permitting the "rollover" of a qualifying distribution to another retirement plan, or individual retirement account. Note 4 Reconciliation of Financial Statements to Form 5500 ---------------------------------------------------
December 31, -------------------------------- 1998 1997 -------------- -------------- Net assets available for benefits per the financial statements $1,176,046,982 $919,075,109 Amounts allocated to withdrawing participants (8,055,721) (11,552,858) -------------- -------------- Net assets available for benefits per Form 5500 $1,167,991,261 $907,522,251 ============== ==============
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:
Year ended December 31, 1998 ----------------- Benefits paid to participants per the financial statements $102,500,733 Add: Amounts allocated to withdrawing participants at December 31, 1998 8,055,721 Less: Amounts allocated to withdrawing participants at December 31, 1997 (11,552,858) -------------- Benefits paid to participants per the Form 5500 $ 99,003,596 ==============
Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 1998 but not paid as of that date. 11 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Note 5 Investment Funds ---------------- Participant contributions - Subject to rules the Committee may from time to time adopt, each participant has the right to designate one or more of the following investment funds established by the Committee for the investment of his or her compensation deferral contributions, in increments of 10%. After an initial election has been made, a participant may designate a different Fund into which future compensation deferral contributions shall be invested as of the first day of any payroll period that coincides with or immediately follows the first day of any month once within a calendar quarter. In addition, a participant may elect to redesignate any amounts in his or her accounts as of the last business day of any month once within a calendar quarter to be invested in a different Fund. These elections may be made by giving such advance notice as may be required by the Plan administrator. Following are the investment funds available for participant contributions: The Fixed Income Fund - --------------------- The Fixed Income Fund represents holdings of units in a Master Trust investment vehicle and is managed by BlackRock Financial Management. The investment portfolio is actively managed and consists of short-term (1-3 year) fixed income instruments which include: U.S. Treasury and agency securities, corporate bonds, mortgage-backed securities and asset-backed fixed income securities. All of the Fund's assets are rated single-A or better at the time of purchase and all securities must be U.S. dollar denominated. All new cash flows into the Fund are invested in this actively managed bond fund. At December 31, 1998 and 1997, the Plan's interest in the net assets of the Master Trust was approximately 89% for both years. Investment income and administrative expenses relating to the Master Trust are allocated to individual plans based upon average monthly balances invested by each plan. 12 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 The following table represents the fair value of investments for the Master Trust.
December 31, -------------------------------- 1998 1997 -------------- -------------- Investments at fair value: Corporate bonds $118,380,288 $105,242,979 U.S. government securities 57,684,732 46,459,080 Other bonds 16,164,613 6,446,213 Short-term investments 3,777,721 1,371,261 Accrued income 966,721 1,198,486 -------------- -------------- $196,974,075 $160,718,019 ============== ==============
Investment income for the Master Trust is as follows:
December 31, -------------------------------- 1998 1997 -------------- -------------- Investment income: Net appreciation (depreciation) in fair value of investments $ 1,731,522 $ 450,257 Interest: Corporate bonds 6,710,396 4,037,722 U.S. government securities 3,786,462 3,243,205 Other bonds 691,664 366,303 Short-term investments 365,214 485,226 -------------- -------------- 13,285,258 8,582,713 Less investment management fees (227,349) (208,306) -------------- -------------- $ 13,057,909 $ 8,374,407 ============== ==============
The Balanced Fund - ----------------- The Balanced Fund is co-managed by Mellon Capital Management (51% as of December 31, 1998) and Brinson Partners, Inc. (49% as of December 31, 1998). The Balanced Fund is invested in an actively managed combination of U.S. equity securities, U.S. fixed income securities and cash equivalents. The U.S. equity portfolio consists of large, intermediate and small company stocks. The bond portfolio consists primarily of U.S. Treasury, government agency and corporate issues. This Fund's objective is to maximize risk- adjusted total returns relative to the U.S. Balanced Index over a full economic cycle. 13 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 The Active Equity Fund - ---------------------- The Active Equity Fund is managed by Brinson Partners, Inc. The Fund is broadly diversified by issue and industry relative to the Wilshire 5000 index. The Fund is typically invested in 70% large capitalization and 30% intermediate and small capitalization stocks. The Fund may hold up to 50% in cash equivalents for portfolio risk management purposes. The Fund's objective is to maximize risk-adjusted total returns relative to the Wilshire 5000 index over a full economic cycle. The Stock Index Fund - -------------------- The fund is managed by Mellon Capital Management. The objective of the fund is to modestly exceed the performance of the Standard & Poor's 500 Stock Index. The Stock Index Fund either invests in a stock portfolio designed to track the performance of the S&P Stock Index and/or creates a synthetic S&P 500 portfolio using (unleveraged) financial futures and options. Assets used as collateral for futures/options positions are comprised of various market or debt instruments. The Company Stock Fund - ---------------------- Amounts allocated to this investment alternative will be used to purchase shares of Computer Sciences Corporation common stock which will be held for the benefit of the participant. The performance of this fund will depend upon the performance of Computer Sciences Corporation stock. The Bank of New York (the "Trustee") may purchase Company stock on national securities exchanges or elsewhere. Company contributions - In accordance with the provisions of the Plan, the Trustee must promptly invest matching Company contributions paid into the trust fund in the Company Stock Fund. An exception is in the case of a participant who has (i) attained at least age 591/2, or (ii) has been credited with at least five years of service and has attained at least age 55 and has made an election to designate different Funds. 14 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Note 6 Participant Loans ----------------- The Plan allows participants to borrow from their vested account balances from a minimum of $1,000 up to a maximum of $50,000 or 50% of their vested account balances, subject to certain limitations. The loans bear interest at the prime rate quoted in the Wall Street Journal plus 1%, which is set on a quarterly basis. Loan terms range from 1-5 years or up to 15 years for purchase of a primary residence. Loans are recorded at cost, which approximate fair value, on the Statement of Net Assets Available for Benefits. The loans (which are accounted for in the Loan Fund) are deducted from the participants' accounts according to a priority specified in the Plan's loan rules and, within each account, pro rata from the funds based on their balances at the time. Loan repayments are reinvested in the participants' funds according to their current investment election. The repayments are similarly allocated among participants' accounts according to the priority specified in the Plan's rules. Note 7 Benefits Payable ---------------- As of December 31, 1998 and 1997, net assets available for benefits included benefits of $8,055,721 and $11,552,858 respectively, due to participants who have withdrawn from participation in the Plan. Note 8 Transfers from Other Plans -------------------------- During the two years ended December 31, 1998, the Plan had several transfers from other plans. The asset values of these transfers were as follows: $7,380,010 in 1998 from APM; $2,816,617 in 1998 from BDM; $1,736,677 in 1998 from Security Life; $776,503 in 1998 from Heller; $637,478 and $15,612,395 in 1998 and 1997, respectively from Dupont Conoco; $224,931 in 1998 from Liberty; $206,213 in 1998 from Statistica; $75,615 and $8,168,573 in 1998 and 1997, respectively from CNA Employees' Saving Plan; $66,426 in 1998 from Electronic Data Systems; $53,500 in 1998 from Volpe; $5,079 and $128,350 in 1998 and 1997, respectively from Credit Services; $2,394,153 in 1997 from Bath Iron Works Corporation Tax Deferred Savings Plan; $1,371,171 in 1997 from Planmetrics, Inc. Savings and Profit Sharing Plan; and $355,773 in 1997 from SunBeam-Oster Company, Inc. 401(K) Savings and Profit Sharing Plan. The Plan also had several transfers to other plans in 1998 and 1997 as a result of spin-offs. The asset values of these transfers were as follows: $80,399 in 1998 to Faxnet; $33,046 in 1998 to ITDS; $3,343 and $740,644 in 1998 and 1997, respectively to Artemis Holding; $737 in 1998 to 15 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Planmetrics, Inc. Savings and Profit Sharing Plan; $3,270,348 in 1997 to Mutual of New York; $609,053 in 1997 to ST Research; and $86,221 in 1997 to CTI. 16 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Note 9 Statements of Net Assets Available for Benefits by Fund -------------------------------------------------------
December 31, 1998 -------------------------------------------------------------------------------------------- Fixed Active Stock Company Employee Income Balanced Equity Index Stock Loans Total ------------ ------------ ------------ ------------ ------------ ------------ -------------- Assets Investments Short-term investments $ 419,934 $ 1,305,353 $ 3,204,113 $ 1,921,866 $ 3,446,219 $ 10,297,485 Long-term investments At fair value Interest in registered investment companies: 148,887,030 263,161,997 179,469,818 591,518,845 CSC Company stock 380,378,825 380,378,825 Employee loans $ 21,042,106 21,042,106 Plan interest in Master Trust 174,961,001 174,961,001 Guaranteed investment contracts-at contract value - Receivables Employer contribution 1,000 1,000 1,000 290,000 293,000 Participants' contribution 163,697 232,000 482,000 424,000 263,045 543 1,565,285 Accrued Income 2,540 1,222 5,074 2,843 5,081 16,760 Plan to plan transfers - Interfund Transfers 621,209 (82,682) (1,048,277) (420,511) 930,261 - Unsettled Trades 322,520 542,001 864,521 Cash 508,529 508,529 ------------ ------------ ------------ ------------ ------------ ------------ -------------- Total Assets 176,169,381 151,173,972 266,347,908 181,399,016 385,313,431 21,042,649 1,181,446,357 Liabilities Accounts Payable 68,028 82,191 104,103 104,440 762,078 793,567 1,914,407 Accrued Expenses 156,741 177,790 315,243 42,800 494 693,068 Unsettled Trades 829,539 542,001 1,420,360 2,791,900 ------------ ------------ ------------ ------------ ------------ ------------ -------------- Total Liabilities 224,769 1,089,520 961,347 147,240 2,182,932 793,567 5,399,375 ------------ ------------ ------------ ------------ ------------ ------------ -------------- Net Assets Available for Benefits $175,944,612 $150,084,452 $265,386,561 $181,251,776 $383,130,499 $ 20,249,082 $1,176,046,982 ============ ============ ============ ============ ============ ============ ==============
17 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Note 9 Statements of Net Assets Available for Benefits by Fund -------------------------------------------------------
December 31, 1997 ------------------------------------------------------------------------------------------ Fixed Active Stock Company Employee Income Balanced Equity Index Stock Loans Total ------------ ------------ ------------ ------------ ------------ ------------ ----------- Assets Investments Short-term investments $ 6,176,886 $ 7,192,178 $ 885,362 $ 460,515 $ 97,900 $ 14,812,841 Long-term investments At fair value Interest in registered investment companies: 124,491,653 249,786,910 110,042,765 484,321,328 CSC Company stock 238,770,004 238,770,004 Employee loans $ 20,422,664 20,422,664 Plan interest in Master Trust 142,956,868 142,956,868 Guaranteed investment contracts-at contract value 15,231,349 15,231,349 Receivables - Employer contribution 3,649 2,568 6,006 3,887 436,177 452,287 Participants' contribution 619,957 500,627 1,155,151 779,456 845,624 (127) 3,900,688 Accrued Income 3,207 2,140 5,575 2,125 2,212 15,259 Plan to plan transfers - Interfund Transfers 480,752 (43,101) (240,573) 2,237,379 (2,434,457) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ Total Assets 165,472,668 132,146,065 251,598,431 113,526,127 237,717,460 20,422,537 920,883,288 Liabilities Accounts Payable 324,067 74,935 155,307 136,793 809,105 (17,953) 1,482,254 Accrued Expenses 70,786 80,935 154,190 19,265 749 325,925 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Total Liabilities 394,853 155,870 309,497 156,058 809,854 (17,953) 1,808,179 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Net Assets Available for Benefits $165,077,815 $131,990,195 $251,288,934 $113,370,069 $236,907,606 $ 20,440,490 $919,075,109 ============ ============ ============ ============ ============ ============ ============
18 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Note 9 Statements of Changes in Net Assets Available for Benefits by Fund ------------------------------------------------------------------
Year Ended December 31, 1998 -------------------------------------------------------------------------------------------- Fixed Active Stock Company Employee Income Balanced Equity Index Stock Loans Total ------------ ------------ ------------ ------------ ------------ ------------ --------------- Additions to Net Assets Attributable to: Investment Income Net Appreciation in Fair Value of Investments $ 11,917,119 $ 20,288,161 $ 28,706,995 $129,496,024 $ 190,408,299 Interest $ 418,548 300,456 82,123 62,848 63,135 927,110 Dividend 6,675,426 4,715,321 8,139,216 19,529,963 Plan interest in Master Trust Investment Income 11,827,691 11,827,691 Investment Mgmt/Admin. Fees (330,895) (357,012) (644,731) (116,952) (5,281) (1,454,871) ------------ ------------ ------------ ------------ ------------ ------------ -------------- 11,915,344 18,535,989 24,440,874 36,792,107 129,553,878 221,238,192 ------------ ------------ ------------ ------------ ------------ ------------ -------------- Contributions: Employee 14,938,449 14,327,240 31,052,917 25,066,123 21,319,413 $ (8,253,658) 98,450,484 Employer 81,177 56,332 135,876 90,174 15,776,009 16,139,568 Employee Rollovers 1,139,099 1,339,920 2,497,846 3,242,117 1,563,856 9,782,838 Transfers From Other Plans 5,624,438 948,568 2,467,909 3,691,630 846,182 282,797 13,861,524 Interfund Transfers 317,725 (2,267,708) (18,821,620) 12,699,474 8,072,129 - ------------ ------------ ------------ ------------ ------------ ------------ -------------- 22,100,888 14,404,352 17,332,928 44,789,518 47,577,589 (7,970,861) 138,234,414 ------------ ------------ ------------ ------------ ------------ ------------ -------------- TOTAL ADDITIONS 34,016,232 32,940,341 41,773,802 81,581,625 177,131,467 (7,970,861) 359,472,606 ------------ ------------ ------------ ------------ ------------ ------------ -------------- Deductions to Net Assets Attributable to: Distributions to Participants 23,149,435 14,846,084 27,676,175 13,699,918 30,908,574 (7,779,453) 102,500,733 ------------ ------------ ------------ ------------ ------------ ------------ -------------- TOTAL DEDUCTIONS 23,149,435 14,846,084 27,676,175 13,699,918 30,908,574 (7,779,453) 102,500,733 ------------ ------------ ------------ ------------ ------------ ------------ -------------- NET INCREASE 10,866,797 18,094,257 14,097,627 67,881,707 146,222,893 (191,408) 256,971,873 ------------ ------------ ------------ ------------ ------------ ------------ -------------- Net Assets Available for Benefits: Beginning of Year 165,077,815 131,990,195 251,288,934 113,370,069 236,907,606 20,440,490 919,075,109 ------------ ------------ ------------ ------------ ------------ ------------ -------------- End of Year $175,944,612 $150,084,452 $265,386,561 $181,251,776 $383,130,499 $ 20,249,082 $1,176,046,982 ============ ============ ============ ============ ============ ============ ==============
19 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Note 9 Statements of Changes in Net Assets Available for Benefits by Fund ------------------------------------------------------------------
Year Ended December 31, 1997 ------------------------------------------------------------------------------------------ Fixed Active Stock Company Employee Income Balanced Equity Index Stock Loans Total ------------ ------------ ------------ ------------ ------------ ------------ ------------ Additions to Net Assets Attributable to: Investment Income: Net Appreciation in Fair Value of Investments $ 206,077 $ 10,812,740 $ 31,087,793 $ 18,326,612 $ 5,472,069 $ 65,905,291 Interest 2,838,297 34,120 75,383 41,929 42,267 3,031,996 Dividend 6,101,150 4,585,948 4,530,789 15,217,887 Plan interest in Master Trust investment income 7,283,958 7,283,958 Investment Management Fees (70,280) (303,570) (551,674) (43,349) (4,109) (972,982) ------------ ------------ ------------ ------------ ------------ ------------ ------------ 10,258,052 16,644,440 35,197,450 22,855,981 5,510,227 90,466,150 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Contributions Employee 15,787,189 13,765,687 29,150,336 15,921,012 20,266,502 $ (6,884,671) 88,006,055 Employer 104,254 72,544 183,292 96,929 14,343,500 14,800,519 Employee Rollovers 3,337,470 2,596,418 6,213,624 3,969,856 2,804,898 18,922,266 Transfers From Other Plans 13,215,479 1,247,156 3,005,062 3,283,548 (165,934) 2,738,838 23,324,149 Interfund Transfers (11,683,241) (1,195,825) 3,818,292 15,708,532 (6,647,758) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ 20,761,151 16,485,980 42,370,606 38,979,877 30,601,208 (4,145,833) 145,052,989 ------------ ------------ ------------ ------------ ------------ ------------ ------------ TOTAL ADDITIONS 31,019,203 33,130,420 77,568,056 61,835,858 36,111,435 (4,145,833) 235,519,139 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Deductions to Net Assets Attributable to: Distributions to Participants 19,506,618 10,772,788 20,503,101 8,132,543 20,265,818 (8,266,015) 70,914,853 ------------ ------------ ------------ ------------ ------------ ------------ ------------ TOTAL DEDUCTIONS 19,506,618 10,772,788 20,503,101 8,132,543 20,265,818 (8,266,015) 70,914,853 ------------ ------------ ------------ ------------ ------------ ------------ ------------ NET INCREASE 11,512,585 22,357,632 57,064,955 53,703,315 15,845,617 4,120,182 164,604,286 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Net Assets Available for Benefits: Beginning of Year 153,565,230 109,632,563 194,223,979 59,666,754 221,061,989 16,320,308 754,470,823 ------------ ------------ ------------ ------------ ------------ ------------ ------------ End of Year $165,077,815 $131,990,195 $251,288,934 $113,370,069 $236,907,606 $ 20,440,490 $919,075,109 ============ ============ ============ ============ ============ ============ ============
20 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Note 10 Investments 1998 ----------------
Principal Amount or Fair Value or Shares Cost Contract Value --------------- ------------ -------------- Fixed Income Fund Interest in Master Trust* sh. 282,086,762 $174,339,624 $ 174,961,001 BNY Collective Short-Term Invst. Fund sh. 419,934 419,934 419,934 Balanced Fund Brinson Partners Inc.: U.S. Bond Fund* sh. 377,098 47,231,044 49,321,216 U.S. Stock Equity Fund sh. 54,362 13,335,155 22,358,688 Mellon Bank Enhanced Asset Fund* sh. 718,239 72,377,700 77,207,126 BNY Collective Short-Term Invst. Fund sh. 1,305,353 1,305,353 1,305,353 Cash $ 508,529 508,529 508,529 Active Equity Fund Brinson Partners Inc.: U.S. Equity Portfolio* sh. 686,993 156,058,114 263,161,997 U.S. Cash Management Fund sh. 2 2 2 BNY Collective Short-Term Invst. Fund sh. 3,204,111 3,204,111 3,204,111 Stock Index Fund Mellon Capital: Mellon Capital Mgmt. Stock Index Fund* sh. 451,193 118,174,427 178,136,929 Mellon EB Daily Opening Stock Index Fund sh. 4,429 1,260,964 1,332,889 Mellon Temporary Investment Fund sh. 71,688 71,688 71,688 BNY Collective Short-Term Invst. Fund sh. 1,850,178 1,850,178 1,850,178 Company Stock Fund Computer Sciences Common Stock* sh. 5,920,293 119,007,404 380,378,825 BNY Collective Short-Term Invst. Fund sh. 3,446,219 3,446,219 3,446,219 Employee Loan Fund Participant Loans $ 21,042,106 21,042,106 21,042,106 ------------ -------------- $733,632,552 $1,178,706,791 ============ ============== Total Long-Term Investments $722,826,538 $1,167,900,777 Total Short-Term Investments 10,806,014 10,806,014 ------------ -------------- $733,632,552 $1,178,706,791 ============ ==============
*represents investments greater than 5% of net assets 21 COMPUTER SCIENCES CORPORATION MATCHED ASSET PLAN NOTES TO FINANCIAL STATEMENTS For the two years ended December 31, 1998 Note 10 Investments 1997 ----------------
Principal Amount or Fair Value or Shares Cost Contract Value --------------- ------------ -------------- Fixed Income Fund Guaranteed Investment Contracts $ 15,231,349 $ 15,231,349 $ 15,231,349 Interest in Master Trust* sh. 234,665,405 142,864,685 142,956,868 BNY Collective Short-Term Invst. Fund sh. 6,176,886 6,176,886 6,176,886 Balanced Fund Brinson Partners Inc.: U.S. Bond Fund* sh. 698,494 81,072,821 84,332,245 U.S. Stock Only Fund* sh. 113,806 25,472,338 40,159,408 U.S. Cash Management Fund sh. 6,569,237 6,569,237 6,569,237 BNY Collective Short-Term Invst. Fund sh. 622,941 622,941 622,941 Active Equity Fund Brinson Partners Inc.: U.S. Equity Portfolio* sh. 719,179 152,634,615 249,786,910 U.S. Cash Management Fund sh. 2 2 2 BNY Collective Short-Term Invst. Fund sh. 885,360 885,360 885,360 Stock Index Fund Mellon Capital: Mellon Capital Mgmt. Stock Index Fund* sh. 350,600 76,226,631 107,371,946 Mellon EB Daily Opening Stock Index Fund sh. 11,230 2,628,795 2,670,819 Mellon Temporary Investment Fund sh. 465 465 465 BNY Collective Short-Term Invst. Fund sh. 460,050 460,050 460,050 Company Stock Fund Computer Sciences Common Stock* sh. 2,859,521 96,856,806 238,770,004 BNY Collective Short-Term Invst. Fund sh. 97,900 97,900 97,900 Employee Loan Fund Participant Loans $ 20,422,664 20,422,664 20,422,664 ------------ ------------ $628,223,545 $916,515,054 ============ ============ Total Long-Term Investments $613,410,704 $901,702,213 Total Short-Term Investments 14,812,841 14,812,841 ------------ ------------ $628,223,545 $916,515,054 ============ ============
*represents investments greater than 5% of net assets 22 SIGNATURES The Plan. Pursuant to the requirements of the Securities Act of 1934, the Computer Sciences Corporation Retirement Plans Committee has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. Computer Sciences Corporation MATCHED ASSET PLAN Date: June 25, 1999 By: /s/ LEON J. LEVEL ---------------------------------- Leon J. Level Chairman, Computer Sciences Corporation Retirement Plans Committee 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Computer Sciences Corporation Registration Statement No. 333-00755 on Form S-8 of our report dated June 11, 1999, appearing in this Annual Report on Form 11-K of the Computer Sciences Corporation Matched Asset Plan for the year ended December 31, 1998. /s/ DELOITTE & TOUCHE LLP Los Angeles, California June 25, 1999 E-1 1998 Form 5500 Item 27(a) Computer Sciences Corporation EIN 95-2043126 Matched Asset Plan 001 SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES - -----------------------------------------------
(a) (b) Identity of issue, (c) Description of investment including (d) Cost (e) Current Value borrower, lessor maturity date, rate of interest, or similar party collateral, par or maturity value - --- ------------------------------ ----------------------------------------- ----------- ----------------- Mellon Capital Management Corp. Mutual Fund - EB Daily Liquidity Enhanced $ 72,377,700 $ 77,207,126 Brinson Trust Company, Inc. Mutual Fund - U.S. Bond Fund 47,231,044 49,321,216 Brinson Trust Company, Inc. Mutual Fund - U.S. Stock Fund 13,335,155 22,358,688 Brinson Trust Company, Inc. Mutual Fund - U.S. Equity Portfolio 156,058,114 263,161,997 Mellon Capital Management Corp. Mutual Fund - Stock Index Fund 118,174,427 178,136,929 Mellon Capital Management Corp. Mutual Fund - EB Daily Opening Stock Index Fund 1,260,964 1,332,889 * Computer Sciences Corporation Common Stock 119,007,404 380,378,825 * Computer Sciences Corporation Employee Loan Fund (8.75%-10%) (1/25/13) 21,042,106 21,042,106 Brinson Trust Company, Inc. U.S. Cash Management Fund 2 2 Mellon Capital Management Corp. Mellon Temporary Investment Fund 71,688 71,688 * Bank of New York BNY Collective Short-Term Invst. Fund 10,225,795 10,225,795 Cash Cash 508,529 508,529 ------------ -------------- Total Assets Held for Investment Purposes $559,292,928 $1,003,745,790 ============ ==============
*represents party in interest S-1 1998 Form 5500 Item 27(d) Computer Sciences Corporation EIN 95-2043126 Matched Asset Plan 001 SCHEDULE OF REPORTABLE TRANSACTIONS ----------------------------------- Single Transactions in Excess of 5% - -----------------------------------
(h) Current Value (a) Identity of (b) Description (c) Purchase (d) Selling (g) Cost of of Asset on (i) Net Gain Party Involved of Asset Price Price Asset Transaction Date or (Loss) - ------------------ --------------- ------------ ----------- ----------- -------------------- ------------- Mellon Capital Mutual Fund - Management Mellon EB Daily Liquidity Enhanced - Purchases $50,000,000 $50,000,000 $50,000,000 - Sales $54,444,145 53,899,908 54,444,145 $544,237
S-2 1998 Form 5500 Item 27(d) Computer Sciences Corporation EIN 95-2043126 Matched Asset Plan 001 SCHEDULE OF REPORTABLE TRANSACTIONS ----------------------------------- Series Transactions in the Aggregate in Excess of 5% - ----------------------------------------------------
(h) Current Value (a) Identity of (b) Description (c) Purchase (d) Selling (g) Cost of of Asset on (i) Net Gain Party Involved of Asset Price Price Asset Transaction Date or (Loss) - ------------------ --------------- ------------ ----------- ----------- -------------------- ------------- Brinson Trust Mutual Fund - Company U.S. Bond Fund - Sales $ 49,094,329 $ 46,959,112 $ 49,094,329 $2,135,217 Mellon Capital Mutual Fund - Management EB Liquidity Enhanced - Purchases $ 72,377,700 72,377,700 72,377,700 Mellon Capital Mutual Fund - Management EB Enhanced Asset Allocation Fund - Purchases 55,431,826 55,431,826 55,431,826 - Sales 55,987,747 55,431,826 55,987,747 555,921 Bank of New York BNY Short - Term Money Market Fund - Purchases 296,193,238 296,193,238 296,193,238 - Sales 294,210,580 294,210,580 294,210,580
EX-99.2 3 Exhibit 99.2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended: December 31, 1998 [_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from __________ to __________ Commission file number: 1-4850 A. Full title of plan and the address of the plan, if different from that of the issuer named below: CSC Outsourcing Inc. Hourly Savings Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Computer Sciences Corporation 2100 East Grand Avenue El Segundo, California 90245 TABLE OF CONTENTS ----------------- Description Page - ----------- ---- (a) Financial Statements: Independent Auditors' Report ..................................... 3 Statements of Net Assets Available for Benefits As of December 31, 1998 and 1997 ................................. 4 Statements of Changes in Net Assets Available for Benefits For the Years Ended December 31, 1998 and 1997 ................... 5 Notes to Financial Statements .................................... 6 (b) Exhibit: Independent Auditors' Consent .................................... E-1 (c) Supplemental Schedules: Schedule of Assets Held for Investment Purposes .................. S-1 Schedule of Reportable Transactions .............................. S-2 2 INDEPENDENT AUDITORS' REPORT Employee Retirement Plan Committee Computer Sciences Corporation El Segundo, California We have audited the accompanying statements of net assets available for benefits of the CSC Outsourcing Inc. Hourly Savings Plan (the "Plan") as of December 31, 1998 and 1997, and the related statements of changes in net assets available for benefits for the years 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 audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion. In our opinion, such financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1998 and 1997, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules listed in Section C of the table of contents are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are 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. These supplemental schedules are the responsibility of the Plan's management. Such schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/Deloitte & Touche LLP June 11, 1999 Los Angeles, California 3 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31 ------------------------------- 1998 1997 -------------- -------------- ASSETS Investments (Notes 2, 5, 8 and 9): Short-term $ 14,587 $ 24,281 Long-term--at fair value Mellon Capital Government Bond Fund 981,182 972,097 Brinson U.S. Equity Fund 1,591,617 1,502,152 CSC common stock 666,915 438,292 Employee loans (Note 6) 13,983 17,258 Interest in Master Trust 1,906,881 714,880 Guaranteed investment contracts --at contract value 1,394,969 ---------- ---------- Total investments 5,175,165 5,063,929 ---------- ---------- Receivables: Participants' Contributions 2,129 7,172 Employer Contributions 1,412 Other 10,683 1,573 ---------- ---------- Total receivables 14,224 8,745 ---------- ---------- Total assets 5,189,389 5,072,674 ---------- ---------- LIABILITIES Accrued expenses 3,641 1,323 Other 13,579 1,390 ---------- ---------- Total Liabilities 17,220 2,713 ---------- ---------- NET ASSETS AVAILABLE FOR BENEFITS $5,172,169 $5,069,961 ========== ==========
See notes to financial statements 4 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Years Ended December 31 ------------------------------- 1998 1997 -------------- -------------- ADDITIONS Investment Income: Net appreciation in fair value of Investments $ 378,557 $ 199,727 Interest 81,547 155,032 Dividends 64,841 107,411 Plan interest in Master Trust investment income 89,229 19,303 ---------- ---------- 614,174 481,473 Investment Management Fees (6,856) (4,092) ---------- ---------- 607,318 477,381 Contributions: Employee 182,437 183,550 Employer 78,049 79,199 ---------- ---------- 260,486 262,749 ---------- ---------- Total Additions 867,804 740,130 ---------- ---------- DEDUCTIONS Distributions to Participants (Notes 1 and 7) 765,596 945,711 ---------- ---------- Total Deductions 765,596 945,711 ---------- ---------- Net Increase (Decrease) 102,208 (205,581) Net assets available for benefits at beginning of year 5,069,961 5,275,542 ---------- ---------- NET ASSETS AVAILABLE FOR BENEFITS AT END OF YEAR $5,172,169 $5,069,961 ========== ==========
See notes to financial statements 5 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 1 Description of the Plan ----------------------- The following brief description of the CSC Outsourcing Inc. Hourly Savings Plan (the "Plan"), formerly the TMD Hourly Savings Plan, of CSC Outsourcing Inc. (the "Company") is provided for general information purposes only. Participants should refer to the Plan document for more complete information. The Plan became effective May 2, 1992, as a result of the Company acquiring the Data Systems Division of General Dynamics Corporation. The Plan is administered by a committee consisting of four members who are appointed by the Board of Directors of the Company and serve without compensation, being reimbursed by the Company for all expenditures incurred in the discharge of their duties as members of the committee. The committee has the power to interpret, construe and administer the Plan and to decide any dispute which may arise under the Plan. The Bank of New York (the "Trustee") administers the Plan pursuant to a Trust Agreement entered into with the Company. Certain administrative expenses (including Trustee fees) incurred for services rendered to the Plan are paid by the Company. The Plan is a voluntary, contributory, defined contribution plan and is intended to satisfy the requirements of Section 401(a) and 401(k) of the Internal Revenue Code (the "Code"). It is also subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The Company reserves the right to discontinue contributions and to terminate the Plan subject to the provisions of ERISA. Upon such termination, the participants' rights to the Company's contributions vest immediately and the account balances are fully paid to the participants. Eligibility and Participation - ----------------------------- Employees are eligible to participate on specified enrollment dates if they satisfy the Plan's service requirements, are hourly paid employees of CSC Outsourcing Inc. and are members of a collective bargaining unit for which participation in this Plan has been provided by negotiated agreement. A rehired eligible employee may receive service credit for his or her previous employment and is eligible to rejoin the Plan on the next enrollment date. There were approximately 137 and 121 participating employees at December 31, 1998 and 1997, respectively. 6 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Employee and Company Contributions - ---------------------------------- A participant may authorize before-tax and after-tax contributions to the Plan subject to a maximum level of contributions (a certain percentage of base earnings), as specified by the bargaining agreement covering the employee. Depending on the investment election option the participant elects, the Company will contribute, and forward to the trust fund $0.50 for each $1.00 of the employee matched contribution together with the participant's before-tax and after-tax contribution. Participants in certain bargaining units who direct 100 percent of their contributions to the Plan's stock fund will receive a monthly matching contribution of $1.00 for each $1.00 of employee matched contributions. Participants under certain bargaining units may contribute additional unmatched contributions at various percentages of base earnings to a maximum specified by the union agreement covering the employee, but only if a participant contributes the maximum matched percentage for which he or she is eligible. The employee's base earnings deferred and contributed to the Trust fund cannot exceed $10,000 for calendar year 1998, the maximum allowable under the Code. Annual after-tax contributions to the Plan (including employee and Company matching contributions) are limited to $30,000 for each participant. Any compensation deferral in excess of $10,000 and any after-tax contributions with matching Company contributions in excess of $30,000, together with income allocable to those excess contributions will be returned to a participant. Any matching Company contributions attributable to any excess contribution, and income allocable thereto, will either be returned to the Company or applied to reduce future matching Company contributions. Participants may change their investment elections as of any enrollment date if at least a 30 day prior notice is given. However, participants under certain circumstances may be eligible to change their investment elections within a 30 day window period. Participants may transfer their existing account balances in 25 percent increments. Transfer elections are effective on the first quarterly enrollment date following receipt of a 30 day prior notice from the participant. Company contributions - In accordance with the provisions of the Plan, the Trustee must promptly invest matching Company contributions paid into the trust fund in the same funds as the participant contributions. The Plan does not permit employees to rollover a qualified distribution from another plan. 7 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Participant Accounts - -------------------- Each participant's account is credited with the participant's contribution and the Company's matching contribution and allocations of Plan earnings, and is charged with an allocation of investment management fees. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Vesting of Participants' Interests/Forfeitures - ---------------------------------------------- Participants are 100 percent vested at all times in their before-tax and after-tax contribution accounts. Each participant has a vested interest in the value of his or her Company matching contributions account and investment earnings thereon equal to 100 percent after completing five full years of service. The five-year cliff vesting schedule is overridden under extraordinary circumstances as specified in the Plan document, in which the participant (or beneficiary(ies)) immediately becomes fully vested in all employer contributions and earnings, regardless of his or her number of years of service. Any nonvested balances will be immediately forfeited from the participant's account at termination. Distributable Amounts, Withdrawals and Refunds - ---------------------------------------------- The entire balance in all accounts is distributed to participants who retire, die, become disabled, are laid-off for four consecutive weeks, are discharged without fault, or who involuntarily enter military service. Participants who terminate for other reasons receive their vested balances. Nonvested balances are forfeited immediately. The amounts distributed during 1998 and 1997 totaled $765,596 and $945,711, respectively. While still an employee, a participant may make an in-service withdrawal of all or a portion of his or her after-tax contributions, subject to frequency of withdrawal penalties, as well as vested Company matching contributions, plus the earnings on those amounts. Upon at least a 30 day written notice to the Committee, a participant may make a hardship withdrawal of his or her before-tax and after-tax contributions, as well as vested Company matching contributions if the Committee finds, after considering the participant's request, that an adequate financial hardship and resulting need for such amount has been demonstrated by the participant. Both types of withdrawals are subject to certain restrictions as described in the Plan document. No hardship withdrawals were made in 1998 and 1997. Note 2 Summary of Significant Accounting Policies ------------------------------------------ The accounting and reporting policies followed in preparation of the financial statements of the Plan of the Company conform with generally accepted accounting principles. The following is a summary of the significant policies. 8 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Use of Estimates - ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Assets of the Plan - ------------------ The assets of the Plan are held in a trust with four sub-accounts. The investment income in the respective sub-accounts is allocated to the participants. Contributions to, and payments from, the Plan are specifically identified to the applicable sub-accounts within the trust. Security Transactions - --------------------- Security transactions are accounted for on a trade date basis. Dividend income is recorded on the ex-dividend date. Interest income is accounted for on the accrual basis. In general, participants in the Stock Fund receive distributions in certificates for shares of the common stock of the Computer Sciences Corporation. Valuation of Investment Securities - ---------------------------------- Investments in common stocks and institutional investment vehicles are stated at fair value based upon closing sales prices reported on recognized securities exchanges on the last business day of the plan year or, for the listed securities having no sales reported and for unlisted securities, upon last reported bid prices on that date. Investments in short-term securities are stated at cost which approximates fair value. Valuation of Guaranteed Investment Contracts - -------------------------------------------- The Plan held guaranteed investment contracts, which are considered to be fully benefit responsive as access to the funds of these contracts is not restricted. The guaranteed investment contracts are valued at contract value in accordance with SOP 94-4. Contract value represents contributions made by participants, plus interest at the contract rates, less withdrawals or transfers by participants. Based on treasury yield curves for similar type investments, the fair value of guaranteed investment contracts at December 31, 1998 and 1997, was approximately $0 and $1,407,371, respectively. The average yield and average crediting interest rate was approximately 7.64% for 1997. The crediting interest rate is based on an agreed-upon formula with the issuer, but cannot be less than zero. 9 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Payment of Benefits - ------------------- Benefits are recorded when paid. Note 3 Income Tax Status ----------------- The Internal Revenue Service has determined and informed the Company by a letter dated June 1, 1995, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Committee believes that the Plan is designed and operated to qualify under Section 401(a) of the Code and, with respect to its qualified cash or deferred arrangement, under Section 401(k) of the Code. Since the requirements of Section 401(k) of the Code are satisfied, the following tax consequences result: (i) A participant is not subject to federal income tax on Company contributions to the Plan or on income or realized gains in Plan Accounts attributable to the participant until a distribution from the Plan is made to him or her. (ii) The participant is able to exclude from his or her income for federal income tax purposes, the amount of his or her compensation deferral contributions, subject to a maximum exclusion of $10,000 and $9,500 for 1998 and 1997 taxable years of the participant, respectively. (iii) On distribution of a participant's vested interest in the Plan, the participant generally is subject to federal income taxation, except that: (1) tax on "net unrealized appreciation" on any Computer Sciences Corporation stock distributed as a part of a "lump sum distribution" generally would be deferred until the participant disposes of such stock, and (2) tax may be deferred to the extent the participant is eligible for and complies with certain rules permitting the "rollover" of a qualifying distribution to another retirement plan, or individual retirement account. Note 4 Reconciliation of Financial Statements to Form 5500 ---------------------------------------------------
December 31 ------------------------------- 1998 1997 -------------- -------------- Net assets available for benefits per the financial statements $5,172,169 $5,069,961 Amounts allocated to withdrawing Participants (167,744) (29,969) ---------- ---------- Net assets available for benefits per Form 5500 $5,004,425 $5,039,992 ========== ==========
10 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:
Year Ended December 31, 1998 ----------------- Benefits paid to participants per the financial statements $765,596 Add: Amounts allocated to withdrawing participants at December 31, 1998 167,744 Less: Amounts allocated to withdrawing participants at December 31, 1997 (29,969) -------- Benefits paid to participants per the Form 5500 $903,371 ========
Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 1998 but not yet paid as of that date. Note 5 Investment Funds ---------------- Participant contributions - Subject to rules the bargaining units have adopted, each participant has the right to designate one or more of the following investment funds established by the Committee for the investment of his or her compensation deferral contributions and after-tax contributions in percentages determined by the bargaining units. The Fixed Income Fund - --------------------- The Fixed Income Fund represents holdings of units in a Master Trust investment vehicle and is managed by BlackRock Financial Management. The investment portfolio is actively managed and consists of short-term (1-3 year) fixed income instruments which include: U.S. Treasury and agency securities, corporate bonds, mortgage-backed securities and asset-backed fixed income securities. All of the Fund's assets are rated single-A or better at the time of purchase and all securities must be U.S dollar denominated. All new cash flows into the Fund are invested in this actively managed bond fund. At December 31, 1998 and 1997, the Plan's interest in the net assets of the Master Trust was approximately 0.97% and 0.44%, respectively. Investment income and administrative expenses relating to the Master Trust are allocated to individual plans based upon average monthly balances invested by each plan. 11 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 The following table represents the fair value of investments for the Master Trust.
December 31 ------------------------------- 1998 1997 -------------- -------------- Investments at fair value: Corporate bonds $118,380,288 $105,242,979 U.S. government securities 57,684,732 46,459,080 Other bonds 16,164,613 6,446,213 Short-term investments 3,777,721 1,371,261 Accrued income 966,721 1,198,486 ------------ ------------ $196,974,075 $160,718,019
Investment income for the Master Trust is as follows:
December 31 ------------------------------- 1998 1997 -------------- -------------- Investment income: Net appreciation (depreciation) in fair value of Investments $ 1,731,522 $ 450,257 Interest: Corporate bonds 6,710,396 4,037,722 U.S. government securities 3,786,462 3,243,205 Other bonds 691,664 366,303 Short-term investments 365,214 485,226 ------------ ------------ 13,285,258 8,582,713 Less investment management fees (227,349) (208,306) ------------ ------------ $ 13,057,909 $ 8,374,407 ============ ============
12 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Government Bond Fund - -------------------- This fund is invested in bonds issued or guaranteed by the U.S. Government or U.S. Government agencies. The Fund is managed by Mellon Capital with the objective of tracking to the Intermediate Government Bond Index. The Active Equity Fund - ---------------------- The Active Equity Fund is managed by Brinson Partners, Inc. The Fund is broadly diversified by issue and industry relative to the Wilshire 5000 index. The Fund is typically invested in 70% large capitalization and 30% intermediate and small capitalization stocks. The Fund may hold up to 50% in cash equivalents for portfolio risk management purposes. The Fund's objective is to maximize risk-adjusted total returns relative to the Wilshire 5000 index over a full economic cycle. The Company Stock Fund - ---------------------- Amounts allocated to this investment alternative will be used to purchase shares of Computer Sciences Corporation common stock that are held for the benefit of the participant. The performance of this investment depends upon the performance of Computer Sciences Corporation's stock. The Trustee may purchase Computer Sciences Corporation stock on national securities exchanges or elsewhere. Note 6 Participant Loans ----------------- The Plan has a loan provision in place which is available to participants covered by certain bargaining units. The Plan allows participants to borrow from their vested account balances from a minimum of $500 up to a maximum of $50,000 or 50% of their vested account, subject to certain limitations. The loans bear interest at the prime rate quoted in the Wall Street Journal plus 1%, which is set on a quarterly basis. Loan terms range from 1-5 years or up to 15 years for purchase of a primary residence. Loans are recorded at cost, which approximate fair value, on the Statement of Net Assets Available for Benefits. The loans (which are accounted for in the Loan Fund) are deducted from the participants' accounts according to a priority specified in the Plan's loan rules and, within each account, pro rata from the funds based on their balances at the time. Loan repayments are reinvested in the participants' funds according to their current investment election. The repayments are similarly allocated among participants' accounts according to the priority specified in the Plan's rules. Note 7 Benefits Payable ---------------- As of December 31, 1998 and 1997, net assets available for benefits included benefits of $167,744 and $29,969, respectively, due to participants who have withdrawn from participation in the Plan. 13 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 8 Investments 1998 ----------------
Principal Amount or Fair Value or Shares Cost Contract Value --------------- ------------ -------------- Fixed Income Fund Interest in Master Trust* sh. 3,080,507 $1,188,504 $1,906,881 BNY Short-Term Money Market Fund 1,610 1,610 1,610 Government Bond Fund Mellon Capital: Government Bond Fund* sh. 6,921 964,200 981,182 Temporary Investment Fund 73 73 73 BNY Short-Term Money Market Fund 1,185 1,185 1,185 Active Equity Fund Brinson Partners Inc.: U.S. Equity Portfolio* sh. 4,155 830,813 1,591,617 U.S. Cash Management Fund 2 2 2 BNY Short-Term Money Market Fund 7,335 7,335 7,335 Company Stock Fund Computer Sciences Common Stock* sh. 10,380 222,716 666,915 BNY Short-Term Money Market Fund 4,382 4,382 4,382 Employee Loan Fund Participant Loan $ 13,983 13,983 13,983 ---------- ---------- $3,234,803 $5,175,165 ========== ========== Total Long-Term Investments $3,220,216 $5,160,578 Total Short-Term Investments 14,587 14,587 ---------- ---------- $3,234,803 $5,175,165 ========== ========== *represents investments greater than 5% of net assets 14 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 8 Investments 1997 ----------------
Principal Amount or Fair Value or Shares Cost Contract Value --------------- ------------ -------------- Fixed Income Fund Guaranteed Investment Contracts: Hartford Life* $ 1,232,200 $1,232,200 $1,232,200 Canada Life Insurance Company 38,268 38,268 38,268 Pacific Mutual Life Insurance 104,106 104,106 104,106 Prudential Life Insurance Company 20,395 74,302 74,302 Interest in Master Trust sh. 1,173,484 124,382 120,628 BNY Short-Term Money Market Fund 21,195 21,195 21,195 Government Bond Fund Mellon Capital: Government Bond Fund* sh. 7,450 970,317 972,097 Temporary Investment Fund 44 44 44 BNY Short-Term Money Market Fund 780 780 780 Active Equity Fund Brinson Partners Inc.: U.S. Equity Portfolio* sh. 4,325 807,043 1,502,152 U.S. Cash Management Fund 2 2 2 BNY Short-Term Money Market Fund 2,211 2,211 2,211 Company Stock Fund Computer Sciences Common Stock* sh. 5,249 199,055 438,292 BNY Stort-Term Money Market Fund 49 49 49 Employee Loan Fund Participant Loan $ 17,258 17,258 17,258 ---------- ---------- $4,127,803 $5,063,929 ========== ========== Total Long-Term Investments $4,103,522 $5,039,648 Total Short-Term Investments 24,281 24,281 ---------- ---------- $4,127,803 $5,063,929 ========== ========== *represents investments greater than 5% of net assets 15 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 9 Statements of Net Assets Available for Benefits by Fund -------------------------------------------------------
December 31, 1998 ---------------------------------------------------------------------------------- Fixed Government Active Company Employee Income Bond Equity Stock Loans Total ------------ ------------ ------------ ------------ ------------ ------------ Assets Investments Short-term investments $ 1,610 $ 1,258 $ 7,337 $ 4,382 $ 14,587 Long-term investments At fair value Interest in registered investment companies 981,182 1,591,617 2,572,799 CSC Company stock 666,915 666,915 Employee loans $13,983 13,983 Interest in Master Trust 1,906,881 1,906,881 At contract value Guaranteed investment contracts Receivables Participants' Contributions 529 300 800 500 2,129 Employer Contributions 698 53 485 176 1,412 Accrued Income 24 5 22 8 59 Interfund Transfers 317 (176) (283) 142 0 Other 7,352 3,272 10,624 ---------- -------- ---------- -------- ------- ---------- Total Assets 1,910,059 989,974 1,603,250 672,123 13,983 5,189,389 Liabilities Accrued Expenses 1,588 143 1,910 3,641 Forfeitures Payable 328 865 1,193 Other 7,352 3,272 1,097 665 12,386 ---------- -------- ---------- -------- ------- ---------- Total Liabilities 1,916 7,495 6,047 1,097 665 17,220 ---------- -------- ---------- -------- ------- ---------- Net Assets Available for Benefits $1,908,143 $982,479 $1,597,203 $671,026 $13,318 $5,172,169 ========== ======== ========== ======== ======= ==========
16 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 9 Statements of Net Assets Available for Benefits by Fund -------------------------------------------------------
December 31, 1997 ---------------------------------------------------------------------------------- Fixed Government Active Company Employee Income Bond Equity Stock Loans Total ------------ ------------ ------------ ------------ ------------ ------------ Assets Investments Short-term investments $ 21,195 $ 824 $ 2,213 $ 49 $ 24,281 Long-term investments At fair value Interest in registered investment companies 972,097 1,502,152 2,474,249 CSC Company stock 438,292 438,292 Employee loans $17,258 17,258 Interest in Master Trust 714,880 714,880 At contract value Guaranteed investment contracts 1,394,969 1,394,969 Receivables Participants' Contributions 2,530 670 2,505 1,467 7,172 Employer Contributions 738 (100) 469 343 1,450 Accrued Income 60 9 17 37 123 ---------- -------- ---------- -------- ------- ---------- Total Assets 2,134,372 973,500 1,507,356 440,188 17,258 5,072,674 Liabilities Accrued Expenses 318 78 927 1,323 Forfeitures Payable 297 607 904 Other 486 486 ---------- -------- ---------- -------- ------- ---------- Total Liabilities 615 78 1,534 486 2,713 ---------- -------- ---------- -------- ------- ---------- Net Assets Available for Benefits $2,133,757 $973,422 $1,505,822 $440,188 $16,772 $5,069,961 ========== ======== ========== ======== ======= ==========
17 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 9 Statements of Changes in Net Assets Available for Benefits by Fund ------------------------------------------------------------------
Year Ended December 31, 1998 ---------------------------------------------------------------------------------- Fixed Government Active Company Employee Income Bond Equity Stock Loans Total ------------ ------------ ------------ ------------ ------------ ------------ Additions to Net Assets Attributable to: Investment Income: Net Appreciation (Depreciation) in Fair Value of Investments $ 3,497 $ 15,495 $ 127,499 $232,066 $ 378,557 Interest in Master Trust Investment Income 89,229 89,229 Interest 52,289 92 29,075 91 81,547 Dividends 64,841 64,841 Investment Management Fees (2,610) (297) (3,949) (6,856) ---------- -------- ---------- -------- ------- ---------- 142,405 80,131 152,625 232,157 607,318 ---------- -------- ---------- -------- ------- ---------- Contributions: Employee 62,919 22,284 59,776 40,912 $(3,454) 182,437 Employer 27,186 9,954 25,742 15,167 78,049 Interfund Transfers 6,581 (1,404) (3,467) (1,710) - ---------- -------- ---------- -------- ------- ---------- 96,686 30,834 82,051 54,369 (3,454) 260,486 ---------- -------- ---------- -------- ------- ---------- TOTAL ADDITIONS 239,091 110,965 234,676 286,526 (3,454) 867,804 ---------- -------- ---------- -------- ------- ---------- Deductions to Net Assets Attributable to: Distributions to Participants 464,705 101,909 143,295 55,687 765,596 ---------- -------- ---------- -------- ------- ---------- TOTAL DEDUCTIONS 464,705 101,909 143,295 55,687 765,596 ---------- -------- ---------- -------- ------- ---------- NET INCREASE (DECREASE) (225,614) 9,056 91,381 230,839 (3,454) 102,208 ---------- -------- ---------- -------- ------- ---------- Net Assets Available for Benefits: Beginning of Year 2,133,757 973,422 1,505,822 440,188 16,772 5,069,961 ---------- -------- ---------- -------- ------- ---------- End of Year $1,908,143 $982,478 $1,597,203 $671,027 $13,318 $5,172,169 ========== ======== ========== ======== ======= ==========
18 CSC OUTSOURCING INC. HOURLY SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 9 Statements of Changes in Net Assets Available for Benefits by Fund ------------------------------------------------------------------
Year Ended December 31, 1997 ---------------------------------------------------------------------------------- Fixed Government Active Company Employee Income Bond Equity Stock Loans Total ------------ ------------ ------------ ------------ ------------ ------------ Additions to Net Assets Attributable to: Investment Income: Net Appreciation (Depreciation) in Fair Value of Investments $ 374 $ 4,076 $ 197,464 $ (2,187) $ 199,727 Interest in Master Trust Investment Income 19,303 19,303 Interest 154,354 306 272 100 155,032 Dividends 68,760 29,119 9,532 107,411 Investment Management Fees (282) (339) (3,471) (4,092) ---------- -------- ---------- -------- -------- ---------- 173,749 72,803 223,384 7,445 477,381 ---------- -------- ---------- -------- -------- ---------- Contributions: Employee 65,498 23,376 61,263 35,541 $ (2,128) 183,550 Employer 28,880 9,815 26,452 14,052 79,199 Interfund Transfers (1,345) (444) 826 963 - ---------- -------- ---------- -------- -------- ---------- 93,033 32,747 88,541 50,556 (2,128) 262,749 ---------- -------- ---------- -------- -------- ---------- TOTAL ADDITIONS 266,782 105,550 311,925 58,001 (2,128) 740,130 ---------- -------- ---------- -------- ------- ---------- Deductions to Net Assets Attributable to: Distributions to Participants 683,460 121,979 113,206 45,966 (18,900) 945,711 ---------- -------- ---------- -------- -------- ---------- TOTAL DEDUCTIONS 683,460 121,979 113,206 45,966 (18,900) 945,711 ---------- -------- ---------- -------- -------- ---------- NET INCREASE (DECREASE) (416,678) (16,429) 198,719 12,035 16,772 (205,581) ---------- -------- ---------- -------- -------- ---------- Net Assets Available for Benefits: Beginning of Year 2,550,435 989,851 1,307,103 428,153 5,275,542 ---------- -------- ---------- -------- -------- ---------- End of Year $2,133,757 $973,422 $1,505,822 $440,188 $ 16,772 $5,069,961 ========== ======== ========== ======== ======== ==========
19 SIGNATURES The Plan. Pursuant to the requirements of the Securities Act of 1934, the Computer Sciences Corporation Retirement Plans Committee has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. CSC OUTSOURCING INC. HOURLY SAVINGS PLAN Date: June 25, 1999 By: /S/ LEON J. LEVEL ------------------------------------- Leon J. Level Chairman, Computer Sciences Corporation Retirement Plans Committee 20 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Computer Sciences Corporation Registration Statement No. 333-00757 on Form S-8 of our report dated June 11, 1999, appearing in this Annual Report on Form 11-K of the CSC Outsourcing Inc. Hourly Savings Plan for the year ended December 31, 1998. /S/ DELOITTE & TOUCHE LLP Los Angeles, California June 25, 1999 E-1 1998 Form 5500 Item 27(a) CSC Outsourcing Inc. Hourly Savings Plan EIN 88-0276684 SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES - -----------------------------------------------
(a) (b) Identity of issue, (c) Description of investment including (d) Cost (e) Current Value borrower, lessor maturity date, rate of interest, or similar party collateral, par or maturity value - --- ------------------------------ ----------------------------------------- ----------- ----------------- Mellon Capital Management Corp. Mutual Fund - Government Bond Fund $ 964,200 $ 981,182 Brinson Trust Company, Inc. Mutual Fund - U.S. Equity Portfolio 830,813 1,591,617 * Computer Sciences Corporation Common Stock 222,716 666,915 * Computer Sciences Corporation Employee Loan Fund (9.25%, 3/29/02) 13,983 13,983 Brinson Trust Company, Inc. U.S. Cash Management Fund 2 2 Mellon Capital Management Corp. Mellon Bank Temporary Investment Fund 73 73 * Bank of New York BNY Short-Term Money Market Fund 14,512 14,512 ---------- ---------- Total Assets Held for Investment Purposes $2,046,299 $3,268,284 ========== ==========
* represents party in interest S-1 1998 Form 5500 Item 27(d) CSC Outsourcing Inc. Hourly Savings Plan EIN 88-0276684 SCHEDULE OF REPORTABLE TRANSACTIONS ----------------------------------- Single Transactions in Excess of 5% - -----------------------------------
(h) Current Value (a) Identity of (b) Description (c) Purchase (d) Selling (g) Cost of of Asset on (i) Net Gain Party Involved of Asset Price Price Asset Transaction Date or (Loss) - ------------------ --------------- ------------ ----------- ----------- -------------------- ------------- Bank of New York Short-Term Money Market Fund - Purchase $ 264,669 $ 264,669 $ 264,669 - Purchase 1,271,087 1,271,087 1,271,087 - Sale $ 267,396 267,396 267,396 - - Sale 1,284,449 1,284,449 1,284,449 - Hartford Life Guaranteed Insurance Co. Investment Contract - Sale 1,279,222 1,279,222 1,279,222 -
S-2 1998 Form 5500 Item 27(d) CSC Outsourcing Inc. Hourly Savings Plan EIN 88-0276684 SCHEDULE OF REPORTABLE TRANSACTIONS ----------------------------------- Series Transactions in the Aggregate in Excess of 5% - ----------------------------------------------------
(h) Current Value (a) Identity of (b) Description (c) Purchase (d) Selling (g) Cost of of Asset on (i) Net Gain Party Involved of Asset Price Price Asset Transaction Date or (Loss) - ------------------ --------------- ------------ ----------- ----------- -------------------- ------------- Bank of New York BNY Short-Term Money Market Fund - Purchases $2,345,620 $2,345,620 $2,345,620 - Sales $2,355,344 2,355,344 2,355,344 - Hartford Life Guaranteed Insurance Co. Investment Contract - Purchases 47,022 47,022 47,022 - Sales 1,279,222 1,279,222 1,279,222 -
EX-99.3 4 Exhibit 99.3 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended: December 31, 1998 [_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from __________ to __________ Commission file number: 1-4850 A. Full title of plan and the address of the plan, if different from that of the issuer named below: CSC Outsourcing Inc. CUTW Hourly Savings Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Computer Sciences Corporation 2100 East Grand Avenue El Segundo, California 90245 TABLE OF CONTENTS Description Page - ----------- ---- Statements of Net Assets Available for Benefits As of December 31, 1998 and 1997 .................................... 3 Statements of Changes in Net Assets Available for Benefits As of December 31, 1998 and 1997 .................................... 4 Notes to the Financial Statements ................................... 5 2 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31 ------------------------------- 1998 1997 -------------- -------------- Assets Investments (Note 2, 5, 8 and 9): Short-term $ 8,094 $ 4,824 Long-term - at fair value: Brinson U.S. Bond Fund 57,871 46,049 Brinson U.S. Stock Fund 25,748 21,912 Mellon Enhanced Asset Fund 7,151 Brinson U.S. Equity Fund 284,552 262,330 Mellon Stock Index Fund 117,654 62,609 CSC Company stock 676,231 370,740 Employee Loans (Note 6) 27,660 28,881 Plan interest in Master Trust 151,592 144,470 ---------- -------- Total Investments 1,356,553 941,815 ---------- -------- Receivables: Employee Contributions 1,715 876 Employer Contributions 750 1,814 Other Receivables 966 7 ---------- -------- Total Receivables 3,431 2,697 ---------- -------- Total Assets 1,359,984 944,512 ---------- -------- Liabilities Accounts Payable 13,494 2,974 ---------- -------- Total Liabilities 13,494 2,974 ---------- -------- Net Assets Available for Benefits $1,346,490 $941,538 ========== ========
See Notes to Financial Statements 3 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the Year For the Year Ended Ended December 31, December 31, 1998 1997 -------------- -------------- ADDITIONS Investment Income: Net appreciation in fair value of investments (Note 9) $ 266,598 $ 64,395 Interest 563 400 Dividends 13,449 10,574 Plan interest in Master Trust investment income 9,551 5,424 ---------- -------- 290,161 80,793 Less Investment Management Fees (1,191) (770) ---------- -------- 288,970 80,023 Contributions: Employee 107,697 91,718 Employer 49,488 45,963 ---------- -------- 157,185 137,681 ---------- -------- Total Additions 446,155 217,704 DEDUCTIONS Distributions to Participants (Notes 1 and 7) 41,203 ---------- -------- Total Deductions 41,203 ---------- -------- Net Increase 404,952 217,704 ---------- -------- Net Assets Available for Benefits: Beginning of Year 941,538 723,834 ---------- -------- End of Year $1,346,490 $941,538 ========== ========
See Notes to Financial Statements 4 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 1 Description of the Plan ----------------------- The following brief description of the CSC Outsourcing Inc. CUTW Hourly Savings Plan (the "Plan") of CSC Outsourcing Inc. (the "Company") is provided for general information purposes only. Participants should refer to the Plan document for more complete information. The Plan became effective August 5, 1995, as a result of the Company acquiring certain employees of the Southern New England Telephone Company. The Plan is administered by a Committee consisting of four members (the "Committee) who are appointed by the Board of Directors of the Company and serve without compensation, being reimbursed by the Company for all expenditures incurred in the discharge of their duties as members of the Committee. The Committee has the power to interpret, construe and administer the Plan and to decide any dispute which may arise under the Plan. The Bank of New York (the "Trustee"), administers the Trust pursuant to a Trust Agreement entered into with the Company. All administrative expenses incurred for services rendered to the Plan shall be paid from the Trust to the extent not paid by the Company. The Plan is a voluntary, contributory, defined contribution plan and is intended to satisfy the requirements of Section 401(a) and 401(k) of the Internal Revenue Code (the "Code"). It is also subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The Company reserves the right to discontinue contributions and to terminate the Plan at anytime. Upon such termination, the participants' rights to the Company's contributions vest immediately and the account balances are fully paid to the participants. Eligibility and Participation - ----------------------------- Employees are eligible to participate on specified enrollment dates if they satisfy the Plan's eligibility requirements, are hourly paid employees of CSC Outsourcing Inc. and are members of a collective bargaining unit for which participation in this Plan has been provided by negotiated agreement. A rehired eligible employee is eligible to rejoin the Plan on the next enrollment date. There were approximately 65 and 54 participating employees at December 31, 1998 and 1997, respectively. 5 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Employee and Company Contributions - ---------------------------------- A participant may authorize before-tax and after-tax contributions to the Plan subject to a maximum level of contributions (a certain percentage of base earnings), as specified by the bargaining agreement covering the employee. The Company will contribute, and forward to the Trust fund 66 2/3% of the first 1% to 6% for the employee matched contribution together with the participant's before-tax and after-tax contribution. The employee base earnings deferred and contributed to the Trust fund cannot exceed $10,000 and $9,500 for calendar years 1998 and 1997, respectively, the maximum allowable under the Code. Annual after-tax contributions to the Plan (including employee and Company matching contributions) are limited to $30,000 for each participant. Any compensation deferral in excess of $10,000 and any after-tax contributions with matching Company contributions in excess of $30,000, together with income allocable to those excess contributions will be returned to a participant. Any matching Company contributions attributable to any excess contribution, and income allocable thereto, will either be returned to the Company or applied to reduce future matching Company contributions. Participant Accounts - -------------------- Each participant's account is credited with the participant's contribution and allocations of the Company's contribution and Plan earnings, and is charged with an allocation of investment management fees. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Vesting of Participants' Interests/Forfeitures - ---------------------------------------------- Participants are 100 percent vested at all times in their before-tax, after- tax contribution and Company matching accounts. Distributable Amounts, Withdrawals and Refunds - ---------------------------------------------- The entire balance in all accounts for participants who retire, die, become disabled, or are discharged is distributed according to the provisions of the Plan. There are no forfeitures. The amounts distributed during 1998 and 1997 totaled $3,161 and $0, respectively. 6 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 While still an employee, a participant may make an in-service withdrawal of all or a part of the vested portion of his or her accounts attributable to their contributions, as well as vested Company matching contributions, plus the earnings on those amounts subject to the provisions of the Plan. Upon written notice to the Committee, a participant may make a hardship withdrawal of his or her before-tax and after-tax contributions, as well as Company matching contributions if the Committee finds, after considering the participant's request, that an adequate financial hardship and resulting need for such amount has been demonstrated by the participant. A participant may request a hardship withdrawal only if he or she first takes a loan of any available monies in the Plan. Both types of withdrawals are subject to certain restrictions as described in the Plan document. The withdrawals made in 1998 and 1997 totaled $38,042 and $0, respectively. Note 2 Summary of Significant Accounting Policies ------------------------------------------ The accounting and reporting policies followed in preparation of the financial statements of the Plan of the Company conform with generally accepted accounting principles. The following is a summary of the significant policies. Assets of the Plan - ------------------ The assets of the Plan are held in a trust with five sub-accounts, which represents the investment options. The investment income in the respective sub-accounts is allocated to the participants. Contributions to, and payments from, the Plan are specifically identified to the applicable sub- accounts within the Trust. Use of Estimates - ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Security Transactions - --------------------- Security transactions are accounted for on a trade date basis. Dividend income is recorded on the ex-dividend date. Interest income is accounted for on the accrual basis. Participants in the Stock Fund may elect to receive distributions in certificates for shares of the common stock of Computer Sciences Corporation. 7 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Valuation of Investment Securities - ---------------------------------- Investments in common stocks and mutual funds are stated at fair value based upon closing sales prices reported on recognized securities exchanges on the last business day of the month or, for the listed securities having no sales reported and for unlisted securities, upon last reported bid prices on that date. Investments in certificates of deposit, money market funds and corporate debt instruments (commercial paper) are stated at cost which approximates fair value. Payment of Benefits - ------------------- Benefits are recorded when paid. Note 3 Income Tax Status ----------------- The Company will apply for a determination letter from the Internal Revenue Service substantiating that the Plan, as amended, qualifies under Section 401(a) of the Code and, with respect to its qualified cash or deferred arrangement, under Section 401(k) of the Code. The Committee believes the Plan is designed and operated to qualify as such. When the requirements of Section 401(k) of the Code are satisfied, the following tax consequences result: (i) A participant is not subject to federal income tax on Company contributions to the Plan or on income or realized gains in Plan Accounts attributable to the participant until a distribution from the Plan is made to him or her. (ii) The participant is able to exclude from his or her income for federal income tax purposes, the amount of his or her compensation deferral contributions, subject to a maximum exclusion of $10,000 and $9,500 for 1998 and 1997, respectively. (iii) On distribution of a participant's vested interest in the Plan, the participant generally is subject to federal income taxation, except that: (1) tax on "net unrealized appreciation" on any Computer Sciences Corporation stock distributed as a part of a "lump sum distribution" generally is deferred until the participant disposes of such stock, and (2) tax may be deferred to the extent the participant is eligible for and complies with certain rules permitting the "rollover" of a qualifying distribution to another retirement plan, or individual retirement account. 8 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 4 Reconciliation of Financial Statements to Form 5500 ---------------------------------------------------
December 31 ------------------------------- 1998 1997 -------------- -------------- Net assets available for benefits per the financial statements $1,346,490 $941,538 Amounts allocated to withdrawing Participants (1,075) (4,237) ---------- -------- Net assets available for benefits per Form 5500 $1,345,415 $937,301 ========== ========
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:
Year ended December 31, 1998 ----------------- Benefits paid to participants per the financial statements $41,203 Add: Amounts allocated to withdrawing participants at December 31, 1998 1,075 Less: Amounts allocated to withdrawing participants at December 31, 1997 (4,237) ------- Benefits paid to participants per the Form 5500 $38,041 =======
Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 1998 but not paid as of that date. Note 5 Investment Funds ---------------- Participant contributions - Subject to rules the bargaining unit has adopted, each participant has the right to designate one or more of the following investment funds established by the Committee for the investment of his or her compensation deferral contributions and after-tax contributions in percentages determined by the bargaining unit. 9 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 The Fixed Income Fund - --------------------- The Fixed Income Fund represents holdings of units in a Master Trust investment vehicle and is managed by BlackRock Financial Management. The investment portfolio is actively managed and consists of short-term (1-3 year) fixed income instruments which include: U.S. Treasury and agency securities, corporate bonds, mortgage-backed securities and asset-backed fixed income securities. All of the Fund's assets are rated single-A or better at the time of purchase and all securities must be U.S. dollar denominated. All new cash flows into the Fund are invested in this actively managed bond fund. At December 31, 1998 and 1997, the Plan's interest in the net assets of the Master Trust was approximately .08% and .09%, respectively. Investment income and administrative expenses relating to the Master Trust are allocated to individual plans based upon average monthly balances invested by each plan. The following table represents the fair value of investments for the Master Trust.
December 31 ------------------------------- 1998 1997 -------------- -------------- Investments at fair value: Corporate bonds $118,380,288 $105,242,979 U.S. government securities 57,684,732 46,459,080 Other bonds 16,164,613 6,446,213 Short-term investments 3,777,721 1,371,261 Accrued income 966,721 1,198,486 ------------ ------------ $196,974,075 $160,718,019 ============ ============
Investment income for the Master Trust is as follows:
December 31 ------------------------------- 1998 1997 -------------- -------------- Investment income: Net appreciation (depreciation) in fair value of investments $ 1,731,522 $ 450,257 Interest: Corporate bonds 6,710,396 4,037,722 U.S. government securities 3,786,462 3,243,205 Other bonds 691,664 366,303 Short-term investments 365,214 485,226 ------------ ------------ 13,285,258 8,582,713 Less investment management fees (227,349) (208,306) ------------ ------------ $ 13,057,909 $ 8,374,407 ============ ============
10 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 The Balanced Fund - ----------------- The Balanced Fund is co-managed by Brinson Partners, Inc. (approximately 89% as of December 31, 1998) and Mellon Capital Management (approximately 11% as of December 31, 1998). The Balanced Fund is invested in an actively managed combination of U.S. equity securities, U.S. fixed income securities and cash equivalents. The U.S. equity portfolio consists of large, intermediate and small company stocks. The bond portfolio consists primarily of U.S. Treasury, government agency and corporate issues. This Fund's objective is to maximize risk-adjusted total returns relative to the U.S. Balanced Index over a full economic cycle. The Active Equity Fund - ---------------------- The Active Equity Fund is managed by Brinson Partners, Inc. The Fund is broadly diversified by issue and industry relative to the Wilshire 5000 index. The Fund is typically invested in 70% large capitalization and 30% intermediate and small capitalization stocks. The Fund may hold up to 50% in cash equivalents for portfolio risk management purposes. The Fund's objective is to maximize risk-adjusted total returns relative to the Wilshire 5000 index over a full economic cycle. The Stock Index Fund - -------------------- The Fund is managed by Mellon Capital Management. The objective of the Fund is to modestly exceed the performance of the Standard & Poor's 500 Stock Index. The Stock Index Fund either invests in a stock portfolio designed to track the performance of the S&P Stock Index and/or creates a synthetic S&P 500 portfolio using (unleveraged) financial futures and options. Assets used as collateral for futures/options positions are comprised of various market or debt instruments. The Company Stock Fund - ---------------------- Amounts allocated to this investment alternative will be used to purchase shares of Computer Sciences Corporation common stock which will be held for the benefit of the participant. The performance of this fund will depend upon the performance of Computer Sciences Corporation stock. The Trustee may purchase Computer Sciences Corporation stock on national securities exchanges or elsewhere. 11 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 In accordance with rules established by the Committee, participants may change their investment elections as of the first day of the first payroll period in the month, if filed within the prescribed time, by delivering an election form to the Company. Participants may transfer their existing account balances in 1 percent increments. Transfer elections are effective as of the first day of the month, or the second month if the participant's election form is not filed within the time prescribed by the Committee, following the month in which the participant files his election form with the Company. Company contributions - In accordance with the provisions of the Plan, the Trustee must promptly invest matching Company contributions paid into the Trust fund in the same fund as the participant contributions. Note 6 Participant Loans ----------------- The Plan has a loan provision in place which is available to participants covered by the bargaining unit. As of December 31, 1998 and 1997, $27,660 and $28,881 of loans were outstanding, respectively. The loans (which are accounted for in the Loan Fund) are deducted from the participants' accounts according to a priority specified in the Plan's loan rules and, within each account, pro rata from the funds based on their balances at the time. Loan repayments are reinvested in the participants' funds according to their current investment election. The repayments are similarly allocated among participants' accounts according to the priority specified in the Plan's rules. Note 7 Benefits Payable ---------------- As of December 31, 1998 and 1997, net assets available for benefits included benefits of $1,075 and $4,237 respectively, due to participants who have withdrawn from participation in the Plan. 12 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 8 Investments 1998 ----------------
Shares/Units Cost Fair Value ------------ -------- ---------- Fixed Income Fund Plan Interest in Master Trust sh. 44,409 $152,183 $ 151,592 BNY Short-Term Money Market Fund sh. 905 905 905 Balanced Fund Brinson Trust Company Inc. U.S. Bond Fund sh. 442 55,654 57,871 U.S. Stock Fund sh. 63 16,041 25,748 Mellon EB Enhanced Asset Allocation sh. 21 6,566 7,151 Mellon Temporary Investment Fund sh. 174 174 174 BNY Short-Term Money Market Fund sh. 2,355 2,355 2,355 Active Equity Fund Brinson Trust Company, Inc. U.S. Equity Portfolio sh. 743 198,141 284,552 BNY Short-Term Money Market Fund sh 62 62 62 Stock Index Fund Mellon EB Stock Index Fund sh. 298 80,064 117,654 Mellon Temporary Investment Fund sh. 417 417 417 BNY Short-Term Money Market Fund sh 21 21 21 Company Stock Fund Computer Sciences Common Stock sh. 10,525 419,017 676,231 BNY Short-Term Money Market Fund sh. 4,160 4,160 4,160 CSC Employee Loan Fund Participant Loans $ 27,660 27,660 27,660 -------- ---------- $963,420 $1,356,553 ======== ========== Total Long-Term Investments $955,326 $1,348,459 Total Short-Term Investments 8,094 8,094 -------- ---------- $963,420 $1,356,553 ======== ==========
13 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 8 Investments 1997 ----------------
Shares/Units Cost Fair Value ------------ -------- ---------- Fixed Income Fund Plan Interest in Master Trust sh. 37,149 $145,491 $144,470 Balanced Fund Brinson Trust Company Inc. U.S. Bond Fund sh. 380 44,369 46,049 U.S. Stock Fund sh. 63 14,634 21,912 U.S. Cash Management Fund sh. 3,564 3,564 3,564 BNY Short-Term Money Market Fund sh. 856 856 856 Active Equity Fund Brinson Trust Company, Inc. U.S. Equity Portfolio sh. 755 191,200 262,330 Stock Index Fund Mellon EB Stock Index Fund sh. 199 43,383 60,944 Mellon EB Daily Opening Stock Index sh. 7 1,627 1,665 Mellon Temporary Investment Fund sh. 393 393 393 Company Stock Fund Computer Sciences Common Stock sh. 4,440 315,269 370,740 BNY Short-Term Money Market Fund sh. 11 11 11 CSC Employee Loan Fund Participant Loans $ 28,881 28,881 28,881 -------- -------- $789,678 $941,815 ======== ======== Total Long-Term Investments $784,854 $936,991 Total Short-Term Investments 4,824 4,824 -------- -------- $789,678 $941,815
14 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 9 Statements of Net Assets Available for Benefits by Fund -------------------------------------------------------
December 31, 1998 -------------------------------------------------------------------------------------------- Fixed Balanced Active Stock Company Loan Income Fund Equity Index Stock Fund Total ------------ ------------ ------------ ------------ ------------ ------------ -------------- Assets Short-term Investments $ 905 $ 2,529 $ 62 $ 438 $ 4,160 $ 8,094 Long-term Investments: Interest in registered investment Companies 90,770 284,552 117,654 492,976 CSC Company stock 676,231 676,231 Employee Loans $27,660 27,660 Plan Interest in Master Trust 151,592 151,592 Employee Contributions Receivable 240 163 230 265 817 1,715 Employer Contribution Receivable 750 750 Other Receivables 2 371 585 1 7 966 Interfund Transfers (2,613) 486 1,438 1,922 (1,233) 0 -------- ------- -------- -------- -------- ------- ---------- Total Assets 150,126 94,319 286,867 120,280 680,732 27,660 1,359,984 Liabilities Accounts Payable 133 1,980 923 24 4,130 6,304 13,494 -------- ------- -------- -------- -------- ------- ---------- Total Liabilities 133 1,980 923 24 4,130 6,304 13,494 -------- ------- -------- -------- -------- ------- ---------- Net Assets Available for Benefits $149,993 $92,339 $285,944 $120,256 $676,602 $21,356 $1,346,490 ======== ======= ======== ======== ======== ======= ==========
15 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 9 Statements of Net Assets Available for Benefits by Fund -------------------------------------------------------
December 31, 1997 -------------------------------------------------------------------------------------------- Fixed Balanced Active Stock Company Loan Income Fund Equity Index Stock Fund Total ------------ ------------ ------------ ------------ ------------ ------------ -------------- Assets Short-term Investments $ 4,420 $ 393 $ 11 $ 4,824 Long-term Investments: Interest in registered investment Companies 67,961 $262,330 62,609 392,900 CSC Company stock 370,740 370,740 Employee Loans $28,881 28,881 Plan Interest in Master Trust $144,470 144,470 Employee Contributions Receivable 1,079 454 714 393 (1,764) 876 Employer Contribution Receivable 1,814 1,814 Other Receivables 1 3 3 7 Interfund Transfers 41 (321) (704) 117 867 0 -------- ------- -------- ------- -------- ------- -------- Total Assets 145,591 72,517 262,340 63,512 371,671 28,881 944,512 Liabilities Accounts Payable 43 42 160 9 2,720 2,974 -------- ------- -------- ------- -------- ------- -------- Total Liabilities 43 42 160 9 2,720 2,974 -------- ------- -------- ------- -------- ------- -------- Net Assets Available for Benefits $145,548 $72,475 $262,180 $63,503 $371,671 $26,161 $941,538 ======== ======= ======== ======= ======== ======= ========
16 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 9 Statements of Changes in Net Assets Available for Benefits by Fund ------------------------------------------------------------------
Year Ended December 31, 1998 -------------------------------------------------------------------------------------------- Fixed Balanced Active Stock Company Loan Income Fund Equity Index Stock Fund Total ------------ ------------ ------------ ------------ ------------ ------------ -------------- Additions to Net Assets Attributable to: Investment Income: Net Appreciation in Fair Value of Investments $ 431 $ 5,056 $ 21,044 $ 19,627 $220,440 $ 266,598 Interest 29 326 30 42 136 563 Dividends 3,796 5,067 4,586 13,449 Plan Interest in Master Trust Investment Income 9,551 9,551 Investment Management Fees (263) (195) (678) (55) (1,191) -------- ------- -------- -------- -------- -------- ---------- 9,748 8,983 25,463 24,200 220,576 288,970 -------- ------- -------- -------- -------- -------- ---------- Contributions: Employee 24,230 10,533 15,162 11,865 58,389 (12,482) 107,697 Employer 49,488 49,488 Interfund Transfers (23,985) 539 (10,262) 23,526 10,182 0 -------- ------- -------- -------- -------- -------- ---------- 245 11,072 4,900 35,391 118,059 (12,482) 157,185 -------- ------- -------- -------- -------- -------- ---------- Total Additions 9,993 20,055 30,363 59,591 338,635 (12,482) 446,155 -------- ------- -------- -------- -------- -------- ---------- Deductions to Net Assets Attributable to: Distributions to Participants 5,548 191 6,599 2,838 33,704 (7,677) 41,203 -------- ------- -------- -------- -------- -------- ---------- Total Deductions 5,548 191 6,599 2,838 33,704 (7,677) 41,203 -------- ------- -------- -------- -------- -------- ---------- Net Increase 4,445 19,864 23,764 56,753 304,931 (4,805) 404,952 -------- ------- -------- -------- -------- -------- ---------- Net Assets Available for Benefits: Beginning of Year 145,548 72,475 262,180 65,503 371,671 26,161 941,538 -------- ------- -------- -------- -------- -------- ---------- End of Year $149,993 $92,339 $285,944 $120,256 $676,602 $ 21,356 $1,346,490
17 CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN NOTES TO THE FINANCIAL STATEMENTS For the Two Years Ended December 31, 1998 Note 9 Statements of Changes in Net Assets Available for Benefits by Fund ------------------------------------------------------------------
Year Ended December 31, 1997 -------------------------------------------------------------------------------------------- Fixed Balanced Active Stock Company Loan Income Fund Equity Index Stock Fund Total ------------ ------------ ------------ ------------ ------------ ------------ -------------- Additions to Net Assets Attributable to: Investment Income: Net Appreciation in Fair Value of Investments $ 147 $ 5,640 $ 32,552 $11,862 $ 14,194 $ 64,395 Interest 8 86 27 202 77 400 Dividends 3,082 4,801 2,691 10,574 Plan Interest in Master Trust Investment Income 5,424 5,424 Investment Management Fees (21) (149) (571) (29) (770) -------- ------- -------- ------- -------- -------- -------- 5,558 8,659 36,809 14,726 14,271 80,023 -------- ------- -------- ------- -------- -------- -------- Contributions: Employee 21,249 10,870 16,371 9,814 43,556 $(10,142) 91,718 Employer 45,963 45,963 Interfund Transfers 47,524 (579) 425 (47) (47,323) 0 -------- ------- -------- ------- -------- -------- -------- 68,773 10,291 16,796 9,767 42,196 (10,142) 137,681 -------- ------- -------- ------- -------- -------- -------- Total Additions 74,331 18,950 53,605 24,493 56,467 (10,142) 217,704 -------- ------- -------- ------- -------- -------- -------- Deductions to Net Assets Attributable to: Distributions to Participants 2,592 1,479 3,273 1,798 10,557 (19,700) 0 -------- ------- -------- ------- -------- -------- -------- Total Deductions 2,592 1,479 3,273 1,798 10,557 (19,700) 0 -------- ------- -------- ------- -------- -------- -------- Net Increase 71,739 17,471 50,332 22,695 45,910 9,558 217,704 -------- ------- -------- ------- -------- -------- -------- Net Assets Available for Benefits: Beginning of Year 73,809 55,004 211,848 40,808 325,761 16,603 723,834 -------- ------- -------- ------- -------- -------- -------- End of Year $145,548 $72,475 $262,180 $63,503 $371,671 $ 26,161 $941,538 ======== ======= ======== ======= ======== ======== ========
18 SIGNATURES The Plan. Pursuant to the requirements of the Securities Act of 1934, the Computer Sciences Corporation Retirement Plans Committee has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. CSC OUTSOURCING INC. CUTW HOURLY SAVINGS PLAN Date: June 25, 1999 By: /S/ LEON J. LEVEL ----------------------------------------- Leon J. Level Chairman, Computer Sciences Corporation Retirement Plans Committee 19 -----END PRIVACY-ENHANCED MESSAGE-----