Revenues by Segment
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Revenues by Segment |
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(unaudited) |
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First Quarter Ended |
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June 30, |
July 1, |
% of Total |
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(In millions) |
2006 |
2005 |
Fiscal 2007 |
Fiscal 2006 |
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U.S. Commercial |
$ 976.6 |
$1,007.1 |
27% |
28% |
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Europe |
941.9 |
1,037.0 |
27 |
29 |
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Other International |
346.1 |
317.5 |
10 |
9 |
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Global Commercial segment |
2,264.6 |
2,361.6 |
64 |
66 |
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Department of Defense |
853.8 |
793.9 |
24 |
22 |
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Civil agencies |
404.1 |
376.7 |
11 |
11 |
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Other (1) |
33.7 |
50.3 |
1 |
1 |
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U.S. Federal segment |
1,291.6 |
1,220.9 |
36 |
34 |
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$3,556.2 |
$3,582.5 |
100% |
100% |
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(1) |
Other revenues consist of state, local and foreign government as well as commercial contracts performed by the U.S. Federal reporting segment. |
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Consolidated Statements of Income |
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(unaudited) |
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(In millions except per-share amounts) |
First Quarter Ended |
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June 30, |
July 1, |
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2006 |
2005 |
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Revenues |
$3,556.2 |
$3,582.5 |
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Costs of services |
2,883.3 |
2,926.7 |
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Selling, general and administrative |
227.6 |
205.1 |
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Depreciation and amortization |
260.9 |
269.7 |
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Interest expense |
30.7 |
24.1 |
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Interest income |
(26.0) |
(5.3) |
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Special items |
196.9 |
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Total costs and expenses |
3,573.4 |
3,420.3 |
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(Loss) income before taxes |
(17.2) |
162.2 |
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Taxes on income |
38.1 |
53.5 |
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(Loss) income from continuing operations |
(55.3) |
108.7 |
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Discontinued operations, net of taxes |
|
22.9 |
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Net (loss) income |
$ (55.3) |
$ 131.6 |
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======== |
======== |
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(Loss) earnings per share: |
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Continuing operations |
$ (0.29) |
$ 0.59 |
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Discontinued operations |
|
0.12 |
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Basic |
$ (0.29) |
$ 0.71 |
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======== |
======== |
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Continuing operations |
$ (0.29) |
$ 0.58 |
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Discontinued operations |
|
0.12 |
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Diluted |
$ (0.29) |
$ 0.70 |
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======== |
======== |
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Average common shares outstanding for: |
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Basic EPS |
187.536 |
185.510 |
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Diluted EPS |
187.536 |
187.152 |
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Selected Balance Sheet Data |
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(unaudited) |
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June 30, |
March 31, |
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(In millions) |
2006 |
2006 |
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Assets |
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Cash and cash equivalents |
$ 1,008.0 |
$ 1,290.7 |
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Receivables, net of allowance for doubtful accounts |
4,012.9 |
3,746.3 |
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Prepaid expenses and other current assets |
1,250.2 |
1,268.9 |
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Total current assets |
6,271.1 |
6,305.9 |
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Property and equipment, net |
2,392.9 |
2,320.1 |
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Outsourcing contract costs, net |
1,116.6 |
1,175.3 |
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Software, net |
455.8 |
453.3 |
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Goodwill, net |
2,339.5 |
2,306.3 |
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Other assets |
465.1 |
468.7 |
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Total assets |
$13,041.0 |
$13,029.6 |
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========== |
========== |
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Liabilities |
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Short-term debt and current maturities of long-term debt |
$ 86.8 |
$ 85.3 |
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Accounts payable |
597.5 |
705.1 |
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Accrued payroll and related costs |
750.1 |
706.5 |
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Other accrued expenses |
1,933.6 |
1,359.7 |
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Deferred revenue |
578.6 |
629.1 |
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Federal, state and foreign income taxes |
612.4 |
655.4 |
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$ 4,559.0 |
$ 4,141.1 |
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Long-term debt, net |
1,397.3 |
1,376.8 |
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Other long-term liabilities |
737.1 |
739.8 |
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Stockholders' equity |
6,347.6 |
6,771.9 |
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Total liabilities and stockholders' equity |
$13,041.0 |
$13,029.6 |
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========== |
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Consolidated Statements of Cash Flows |
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(unaudited) |
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Three Months Ended |
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(In millions) |
June 30, |
July 1, |
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2006 |
2005 |
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Cash flows from operating activities: |
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Net (loss) income |
$ (55.3) |
$ 131.6 |
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Adjustments to reconcile net (loss) income to net |
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cash provided by operating activities: |
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Depreciation and amortization and other non-cash charges |
299.1 |
296.3 |
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Gain on disposition, net of taxes |
(19.3) |
(22.9) |
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Changes in assets and liabilities, net of effects of acquisitions: |
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Increase in assets |
(347.0) |
(286.8) |
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Decrease in liabilities |
(89.9) |
(108.7) |
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Net cash (used in) provided by operating activities |
(212.4) |
9.5 |
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Investing activities: |
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Purchases of property and equipment |
(199.4) |
(235.4) |
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Outsourcing contracts |
(17.0) |
(98.0) |
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Software |
(36.7) |
(40.4) |
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Other investing cash flows |
165.8 |
18.2 |
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Net cash used in investing activities |
(87.3) |
(355.6) |
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Financing activities: |
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Borrowings on lines of credit, net |
(6.4) |
(15.2) |
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Principal payments on long-term debt |
(8.1) |
(2.0) |
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Proceeds from stock option and other common stock transactions |
32.1 |
8.7 |
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Excess tax benefit from stock-based compensation |
1.7 |
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Repurchase of common stock |
(227.6) |
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Other financing cash flows |
(4.3) |
1.6 |
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Net cash provided by (used in) financing activities |
15.0 |
(234.5) |
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Effect of exchange rate changes on cash and cash equivalents |
2.0 |
(2.4) |
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Net decrease in cash and cash equivalents |
(282.7) |
(583.0) |
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Cash and cash equivalents at beginning of year |
1,290.7 |
1,010.3 |
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Cash and cash equivalents at end of period |
$1,008.0 |
$ 427.3 |
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========== |
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The following tables reconcile Earnings Before Interest, Taxes, and Depreciation and Amortization (EBITDA); Earnings Before Interest and Taxes (EBIT); and Free Cash Flow to the most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP). CSC management believes that these three non-GAAP financial measures provide useful information to investors regarding the Company's financial condition and results of operations as they provide another measure of the Company's profitability and ability to service its debt, and are considered important measures by financial analysts covering CSC and its peers. |
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GAAP Reconciliations |
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(In millions) |
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EBITDA / EBIT (unaudited) |
First Quarter Ended |
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June 30, |
July 1, |
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2006 |
2005 |
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EBITDA and special items |
$ 445.3 |
$ 450.7 |
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Special items |
196.9 |
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EBITDA |
248.4 |
450.7 |
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Depreciation and amortization |
260.9 |
269.7 |
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EBIT |
(12.5) |
181.0 |
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Interest, net |
4.7 |
18.8 |
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(Loss) income before taxes |
(17.2) |
162.2 |
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Taxes on income |
38.1 |
53.5 |
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(Loss) income from continuing operations |
(55.3) |
108.7 |
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Discontinued operations, net of taxes |
|
22.9 |
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Net (loss) income |
$ (55.3) |
$ 131.6 |
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======== |
======== |
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Free Cash Flow (unaudited) |
First Quarter Ended |
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June 30, |
July 1, |
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2006 |
2005 |
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Free cash flow |
$ (434.1) |
$ (346.1) |
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Net cash used in investing activities |
87.3 |
355.6 |
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Proceeds from redemption of preferred stock |
126.5 |
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Capital lease payments |
7.9 |
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Net cash (used in) provided by operating activities |
$ (212.4) |
$ 9.5 |
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======== |
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Note: |
Capital lease payments and proceeds from the sale of property and equipment (included in other investing activities) are included in the calculation of free cash flow. |
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Prior periods have been adjusted to conform with this presentation. |
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Proceeds from the redemption of DynCorp preferred stock is included in other investing activities and is excluded from the calculation of free cash flow. |
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Earnings per Share Reconciliation (unaudited) |
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The following table is presented to illustrate the impact of the special items on earnings per share. It also provides a reconciliation of the earnings per share amount relating to this item to earnings per share for continuing operations. The earnings per share amounts presented below include non-GAAP measures. This table should be read in conjunction with the Consolidated Statements of Income within this release on which the GAAP earnings per share measures are presented. Earnings per share before special items provides a basis for comparing current operations performance to past and future operating performance. |
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First Quarter Ended |
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June 30, 2006 |
July 1, 2005 |
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EPS |
EPS |
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Amount |
(diluted) |
Amount |
(diluted) |
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Net (loss) income and EPS (diluted), as reported |
$ (55.3) |
$ (0.29) |
$ 131.6 |
$ 0.70 |
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Less: Gain on discontinued operations |
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22.9 |
0.12 |
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(Loss) income from total operations |
(55.3) |
(0.29) |
108.7 |
0.58 |
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Add back: Special items |
171.8 |
0.90 |
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Income and EPS from continuing operations |
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before special items |
$ 116.5 |
$ 0.61 |
$ 108.7 |
$ 0.58 |
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======= |
======= |
======= |
======= |
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Average common shares outstanding for diluted EPS |
187.536 |
187.152 |
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Notes: |
All amounts are net of taxes. |
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Amounts are in millions except per-share amounts. |
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EPS from continuing operations before special items for the quarter ended June 30, 2006, is calculated using average common shares outstanding including common stock equivalents of 191.588, which includes those common stock equivalents that were antidilutive due to the reported loss. |
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The EPS impact of special items is calculated as the difference between EPS as reported and EPS from continuing operations before special items. |