CSC Reports First Quarter Results

Nyhedsartikel -- August 10, 2011

Tax Benefits Lead to Higher EPS

FALLS CHURCH, Va., Aug. 10 – CSC (NYSE: CSC) today reported first quarter fiscal 2012 revenue of $4.03 billion and fully diluted earnings per share (EPS) from continuing operations of $1.18 compared to first quarter fiscal 2011 revenue of $3.91 billion and EPS from continuing operations of $0.89.

Results for the quarter include:

• New business awards of $2.3 billion compared to $3.3 billion during the first quarter of the previous year.
• Pre-tax margin of 2.50%, a decrease of 290 bps from the previous year.
• Operating margin of 4.46%, a decrease of 262 bps from the previous year.
• Operating cash outflow of $46 million for the quarter, an improvement of $14 million from the previous year.
• Free cash outflow of $409 million for the quarter, compared to an outflow of $318 million during the previous year.
• Tax rate of (84.2%), compared to 31.3% in the previous year.

“This quarter’s margin results were adversely affected by performance within the Managed Services Sector (MSS). Improvement actions are underway within this business,” said Michael W. Laphen, CSC Chairman, President and Chief Executive Officer. “Our other two lines of business delivered results essentially in line with our expectations. I am particularly encouraged by the revenue growth in Business Solutions & Services (BSS) which we’ve identified as our growth platform. We are very pleased to have closed our acquisition of iSOFT with its depth of quality healthcare resources and clients.”

New Business Awards

Across the three lines of business, new business awards for the first quarter were $2.3 billion. North American Public Sector (NPS) contributed $0.9 billion, BSS reported $0.9 billion and MSS closed $0.5 billion of new business.

On a year-to-date basis, new business awards are approximately $4.1 billion with a further $1.4 billion of awards for which CSC has been down-selected to one and/or the only party in negotiations.

Revenue by Line of Business

For the quarter, BSS revenue was $0.96 billion (an increase of 17.1% from the first quarter last year and 8.0% in constant currency). NPS revenue was $1.48 billion (down 2.4% from the first quarter last year but flat when adjusted for the Census contract contribution in the previous fiscal year). MSS revenue was $1.62 billion (an increase of 1.3% from the first quarter of last year and a decline of 5.7% in constant currency).

Fiscal Year 2012 Updated Guidance

The Company’s updated guidance for fiscal year 2012 includes the July 29, 2011 iSOFT acquisition and related costs.

	May 25, 2011 excludes iSOFT	August 10, 2011 includes iSOFT
New Business Awards (billions)	~$17	~$17
Revenue (billions)	$16.5 - $17.0	$16.5 - $17.0
Operating Income Margin	8.75% - 9.25%	7.00% - 7.50%
EPS	$4.70 - $4.80	$4.70 - $4.80
Free Cash Flow as a % of Net Income	> 90%	> 90%

Conference Call and Webcast

Conference Call and Webcast CSC senior management will host a conference call and Webcast at 11:00 a.m. EDT today. The conference call dial-in number for domestic callers is 877-548-7906. International callers will need to dial +1 719-325-4805. The pass code for all participants is 5541259. The Webcast and presentation slides can be accessed at www.csc.com/investor_relations.

Non-GAAP Measures

In an effort to provide investors with additional information regarding the Company’s preliminary results as determined by generally accepted accounting principles (GAAP), the Company has also disclosed in this press release preliminary non-GAAP information which management believes provides useful information to investors, including: operating income, operating margin, free cash flow and free cash flow as a percentage of net income attributable to CSC common shareholders. A reconciliation of the adjustments to preliminary GAAP results for this quarter, twelve months 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 business solutions and services. Headquartered in Falls Church, Va., CSC has approximately 93,000 employees and reported revenue of $16.2 billion for the 12 months ended July 1, 2011. For more information, visit the company's website 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 April 1, 2011 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 event or otherwise, except as required by law.

Please see attached PDF for print (340 KB).