CSC REPORTS SOLID THIRD QUARTER EARNINGS, IMPROVED MARGINS AND STRONG FREE CASH FLOW PERFORMANCE

Nyhedsartikel -- Februar 10, 2009

FALLS CHURCH, Va., Feb. 10 -- CSC (NYSE: CSC) today reported fiscal 2009 third quarter revenues of $3.95 billion with earnings per share for the quarter of $1.06 fully diluted. The company also reported year-to-date revenues of $12.6 billion, a 5% increase over the same period last year. Year-to-date earnings per share, fully diluted, were $4.80, including $2.43 from the IRS resolution reported in the second quarter (up 131% in reported earnings per share over the comparable period last year).

Highlights also include:

• Net income of $161 million for the quarter; Operating income of $371 million, up 8% year-over-year;
• Operating cash flow of $583 million for the quarter, bringing the year-to-date operating cash flow to $928 million, an increase of $430 million year-to-date;
• Free cash flow of $333 million for the quarter, bringing year-to-date free cash flow to $170 million, a $544 million improvement over last year;
• Pre-tax margin of 6.58 % for the quarter, representing an 18 basis point improvement year-over-year; and an operating margin of 9.4%, a 110 basis point improvement year-over-year.

Commenting on the results, CSC Chairman, President and Chief Executive Officer Michael W. Laphen said, "We are pleased with our progress in the third quarter. These results reflect the company's intensified focus on financial discipline, cost control and cash management. CSC continues to execute on its strategic initiatives and is well positioned to take advantage of emerging opportunities in an otherwise unsettled and difficult economic environment."

New Business Awards

New business awards for the third quarter totaled almost $2.7 billion across CSC's three lines of business. These awards were comprised of approximately $1.2 billion from North American Public Sector (NPS), $1.2 billion from Business Solutions & Services (BS&S) and $327 million for Global Outsourcing Services (GOS). Awards for the first nine months of fiscal 2009 were up for all three lines of business, totaling approximately $12.7 billion, up 21% over last year's comparable period.

Performance by Lines of Business and Industry Verticals

Lines of Business

Overall CSC's quarterly revenue declined 5% (up 2% in constant currency) with varying results in the company's three lines of business: Business Solutions & Services, Global Outsourcing Services and the North American Public Sector.

BS&S quarterly revenue was $1.01 billion, essentially flat compared with last year's $1.03 billion (up 7% in constant currency).

GOS posted a third quarter revenue total of $1.49 billion, down 13% (down 3% in constant currency) from $1.72 billion a year ago. The company attributed the GOS revenue decline to deferral of contract decisions and the negative impact of currency fluctuations.

NPS revenue for the third quarter increased 3% to $1.48 billion from $1.44 billion for last year's comparable quarter.

Industry Verticals

The company's quarterly revenue growth by industry group was mixed. Healthcare was up 17%, and the Public Sector increased 2%, while the remaining four industry verticals declined from 10% to 16% due primarily to the difficult discretionary spending environment and the impact of currency fluctuations in the quarter. In constant currency, quarterly revenue growth for the six industry verticals ranged from -7% to 29%, equating to a net consolidated revenue growth of 2% year-over-year.

Business Outlook

"Notwithstanding the challenging macroeconomic environment, including widespread currency volatility, CSC remains well positioned to assist both public and private sector clients in addressing the realities of the global economic environment, including efficiency demands, pressure on profitability and increased regulation," said Laphen. "Our broad services portfolio allows us to focus on these growth opportunities while we continue to deliver high-value solutions to our existing customers."

Guidance

As previously mentioned, there are a number of factors affecting the company's ability to forecast fourth quarter revenue and earnings performance, including uncertainty in the macroeconomic environment, continued volatility in the currency exchange rates and the fact that CSC is currently undergoing tax examinations in a number of state and international tax jurisdictions. In light of these factors, the company currently anticipates full-year revenue of approximately $16.8 billion and earnings per share of approximately $6.30, which is at the low end of previous guidance.

As announced in the company's press release dated Jan. 20, 2009, a teleconference will be held today at 5 p.m. EST to discuss third quarter results. This teleconference can be accessed at www.csc.com/investorrelations, in a listen-only mode, and slides will also be available at this site immediately prior to the call.

Non-GAAP Measures

In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release non-GAAP information which management believes provides useful information to investors, including: operating income, operating margin and free cash flow. A reconciliation of the adjustments to GAAP results for this quarter and prior periods, as well as the rationale for management's use of non-GAAP measures, is included in the tables below.

About CSC

CSC is a global leader in providing technology-enabled solutions and services through three primary lines of business. These include Business Solutions & Services, Global Outsourcing Services and the North American Public Sector. CSC's advanced capabilities include systems design and integration, information technology and business process outsourcing, applications software development, Web and application hosting, mission support and management consulting. Headquartered in Falls Church, Va., CSC has approximately 92,000 employees and reported revenue of $17.1 billion for the 12 months ended Jan. 2, 2009. For more information, visit the company's Web site at www.csc.com.

All statements in this press release and in all future press releases that do not directly and exclusively relate to historical facts constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements represent the company's intentions, plans, expectations and beliefs, and are subject to risks, uncertainties and other factors, many of which are outside the company's control.  These factors could cause actual results to differ materially from such forward-looking statements.  For a written description of these factors, see the section titled "Risk Factors" in CSC's Form 10-K for the fiscal year ended March 28, 2008 and any updating information in subsequent SEC filings. The company disclaims any intention or obligation to update these forward-looking statements whether as a result of subsequent events or otherwise except as required by law.

Note to Analysts and Editors: Please see attached tables PDF, 112 KB for print.