CSC REPORTS PRELIMINARY FIRST AND SECOND QUARTER RESULTS

Nyhedsartikel -- December 20, 2007

EL SEGUNDO, Calif., Dec. 20 -- Computer Sciences Corporation (NYSE: CSC) today reported its previously delayed preliminary results for its fiscal 2008 first quarter, ended June 29, 2007, and for its second quarter, ended Sept. 28, 2007. The delay was due to the discovery of certain accounting errors in prior fiscal years relating to the company’s accounting for income taxes and for the effect of foreign currency exchange rate movements on certain intracompany balances.

Highlights for first six months (ended Sept. 28, 2007) included:
• Revenue of $7.86 billion, up 9.6% (approximately 7% in constant currency);
• Net income of $183.9 million, or $1.04 per share (diluted), including special charges of 30 cents per share related to CSC’s restructuring program and an executive retirement agreement;
• Major business award announcements of $8.5 billion;
• Closing of the Covansys acquisition;
• Continued progress on multi-year Project Accelerate strategic plan.

For the first quarter, net income was $108.1 million, or 61 cents per share (diluted), including special charges of $33.4 million after-tax, or 19 cents a share, related to the restructuring program and an executive retirement agreement. Diluted earnings per share, excluding the special items, were 80 cents. Last year’s first quarter earnings per share, as restated, were a loss of 32 cents, but income was 60 cents before special items.

Revenue for the first quarter was $3.84 billion, up 7.8% (approximately 5% in constant currency) over last year’s first quarter. Both CSC reporting segments, global commercial and North American Public Sector (NPS), contributed to the quarter’s solid revenue growth.

First quarter global commercial revenue was $2.42 billion, up 7.7% compared to $2.25 billion in the year-ago quarter. Contributing to this growth were solid increases from CSC’s European and Asia Pacific operations. U.S. commercial revenue was $920 million, down 3.9% compared with $958 million last year. European revenue rose to $1.09 billion, up 16.1% (approximately 8% in constant currency) from the $941.9 million reported for the first quarter last year. CSC's non-European international revenue was $404.2 million, up 16.8% (approximately 8% in constant currency) compared with last year’s $346.1 million.

For the first quarter, CSC’s NPS revenue increased 7.9% to $1.42 billion from $1.32 billion for the first quarter of fiscal 2007. Revenue derived from CSC’s DoD-related business was $943.4 million, up 9.4% from last year’s $862.3 million. This strong growth was the result of a combination of new business awards and growth from existing contracts. CSC’s civil agencies activities generated revenue of $440.5 million, up 5.0% compared to $419.4 million last year. Other NPS segment revenue, comprised of state, local and foreign government, as well as commercial contracts performed by the U.S. federal segment, was $36.1 million, up 6.8% from last year’s $33.8 million.

For the second quarter, net income was $75.8 million, or 43 cents per share (diluted), including a special pre-tax charge of $25.9 million related to the restructuring program announced in April 2006. Diluted earnings per share, excluding the special item, were 54 cents. Last year’s second quarter earnings per share, as restated, were 51 cents, and 68 cents before special items. The current-year second quarter earnings included an after-tax charge of $25.4 million ($42 million pre-tax) related to a forward loss and reassessment of recoverability of an asset related to a U.S. federal program.

Net earnings for the second quarter were also adversely impacted by a higher than expected effective tax rate of 55.8% resulting from the adoption of FIN 48 and the discrete impact of statutory rate reductions in two foreign entities that caused a valuation decline in certain deferred tax assets.

Revenue for the second quarter was $4.02 billion, up 11.3% (approximately 8% in constant currency) over last year’s second quarter. The quarter’s solid revenue growth was led by growth in the company’s European and NPS sectors, as well as the acquisition of Covansys. Revenue growth in the European operations was led by increased work within the new regions of the UK NHS contract. Continued growth in CSC’s NPS revenues was driven by increased activity in both DoD and civil agency related contracts.

Second quarter global commercial revenue was $2.57 billion, up 13.7% (approximately 9% in constant currency) compared to $2.26 billion in the year-ago quarter. U.S. commercial revenue was $1.03 billion, up 10.3% compared with $930.6 million last year. Approximately 3% of the increase was attributable to the Covansys acquisition. European revenue rose to $1.11 billion, up 17.5% (approximately 9% in constant currency) from the $942.8 million reported for the second quarter last year. CSC's non-European international revenue was $432.7 million, up 12.6% (approximately 4% in constant currency) compared with last year’s $384.4 million.

For the second quarter, CSC’s NPS revenue increased 7.4% to $1.45 billion from $1.35 billion for the second quarter of fiscal 2007. Revenue derived from CSC’s DoD-related business was $968.6 million, up 7.6% from last year’s $900.3 million. This strong growth was the result of a combination of new business awards and growth from existing contracts. CSC’s civil agencies activities generated revenue of $432.2 million, up 4.9% compared to $412.1 million last year. Other NPS segment revenue, comprised of state, local and foreign government, as well as commercial contracts performed by the U.S. federal segment, was $49.9 million, up 28.3% from last year’s $38.9 million.

Overall company revenues for the first six months of fiscal 2008 were $7.86 billion, an increase of 9.6% (approximately 7% in constant currency) over the first six months of last fiscal year.

The company’s global commercial revenue for the first six months showed solid growth with an increase of 10.7% (approximately 6% in constant currency), led by strong contributions from the company’s European and other international operations, as reported. This solid international growth was offset somewhat by lower revenue derived from U.S. commercial activities adversely impacted by reductions across several outsourcing contracts. CSC’s NPS revenues for the first six months increased 7.6% over the comparable period last year, led by DoD activities, which were up 8.5%.

Other income of $18.2 million and $7.4 million in the first and second quarter of fiscal 2008, respectively, and $4.4 million and $8.3 million in the first and second quarter of fiscal 2007, respectively, is primarily attributable to foreign exchange gains.

Major announced business awards for the first and second quarter were $4.5 billion and $4.0 billion, respectively, bringing the six-month total to $8.5 billion, and continuing the momentum from the nearly $17 billion record amount achieved in fiscal 2007.

CSC’s NPS pipeline of opportunities over the next 15 months is approximately $35 billion, comprised of more than 465 programs across a broad array of public sector agencies and departments. Approximately $9 billion of the total is scheduled for award during the remainder of the current fiscal year.

“We are pleased with progress on our multi-year strategic plan, Project Accelerate, as we strengthen our position in selected industry markets to drive improving revenue growth and profitability,” said CSC Chairman, President and Chief Executive Officer Michael W. Laphen. “The solid revenue growth in our North American Public Sector business continues to reflect our strong leadership role in the large public sector information technology services market. Additionally, we are experiencing good traction in the financial services and healthcare verticals, and are encouraged by the quality and quantity of both the North American Public Sector and global commercial pipelines.

“We completed the acquisition of Covansys in early July -- an important step toward aggressively growing and leveraging our India capabilities. With more than 15,000 CSC employees, India now represents our second-largest employee base for any country in the world.

“Additionally, in late October, we announced an agreement to acquire First Consulting Group,” said Laphen. “The transaction, which is expected to close during the first calendar quarter of 2008, will increase our domestic and offshore healthcare expertise and service delivery capabilities.

“The restructuring program begun in April of 2006 is nearing its end, and we are pleased with the results to date as reflected in our increased global commercial margins. We look forward to continuing the momentum this program has generated as we focus on accelerating our growth and improving our commercial margins.

“For the third quarter, ending December 28, we anticipate revenue to be in the range of $4.0 billion to $4.2 billion, or up approximately 10% to 15%, and earnings per share, excluding special items, to be in the 95 cent to $1.05 range,” said Laphen. “Our guidance for the fiscal year is for revenue to be in the range of $16.2 billion to $16.5 billion, up approximately 9% to 11%, including the Covansys acquisition. We expect earnings per share for the year to be in the $3.70 to $3.90 range, including the adoption of FASB Interpretation No. 48, but excluding special items.”

ADOPTION OF FIN 48

The company has adopted the provision of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an interpretation of FASB statement No. 109” (FIN 48), effective March 31, 2007. As a result of the implementation of FIN 48, the company recorded tax liabilities within the consolidated balance sheet resulting in a reduction of approximately $163 million to the fiscal 2008 beginning retained earnings balance. Included in the recorded tax liabilities are $1.4 billion of cumulative uncertain tax positions.

The company’s effective tax rate of 46.1% during the first six months of fiscal 2008 was higher than previously expected primarily due to the adoption of FIN 48 and includes the prospective reclassification of interest expense accruals related to tax liabilities from interest expense to taxes on income. The rate for the first six months also includes the discrete adverse impact of statutory rate reductions to foreign entities that caused a reduced valuation in certain deferred tax assets.

RESTATEMENT OF FISCAL 2007 10-K

The corrections in accounting for income taxes related to prior fiscal years resulted in a cumulative charge of $303 million related to fiscal years 1995 through March 30, 2007. Corrections in accounting for currency exchange rate movements resulted in the recognition of cumulative after-tax gains of $193 million related to the fiscal years 1998 through March 30, 2007. The net effect is a cumulative $110 million after-tax charge to retained earnings through fiscal 2007. The company will file as soon as practicable an amended Annual Report on Form 10-K/A for the year ended March 30, 2007, which will restate the financial statements previously included therein. Shortly thereafter, the company will file its Quarterly Reports on Form 10-Q for the quarters ended June 29 and Sept. 28, 2007.

As announced in the company’s press release dated Dec. 17, 2007, a teleconference will be held today at 5:00 p.m. EST to discuss the first and second quarter results. This teleconference can be accessed from the CSC Web site at www.csc.com/investorrelations, in a listen-only mode.

Computer Sciences Corporation is a leading global information technology (IT) services company. CSC’s mission is to provide customers in industry and government with solutions crafted to meet their specific challenges and enable them to profit from the advanced use of technology.

With approximately 89,000 employees, CSC provides innovative solutions for customers around the world by applying leading technologies and CSC’s own advanced capabilities. These include systems design and integration; IT and business process outsourcing; applications software development; Web and application hosting; and management consulting. Headquartered in El Segundo, Calif., CSC reported revenue of $15.5 billion for the 12 months ended Sept. 28, 2007. 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 30, 2007. 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.