|
CSC
|
February
10, 2009
|
|||||||||||||||
|
Revenues
by Segment
|
||||||||||||||||
|
(unaudited)
|
||||||||||||||||
|
Third
Quarter Ended
|
||||||||||||||||
|
Jan.
2,
|
Dec.
28,
|
%
of Total
|
||||||||||||||
|
(In millions)
|
2009
|
2007
|
Fiscal
2009
|
Fiscal
2008
|
||||||||||||
|
BS&S
– Consulting
|
$ | 457.3 | $ | 444.1 | 12 | % | 11 | % | ||||||||
|
BS&S
– Financial Services Sector
|
237.0 | 248.0 | 6 | 6 | ||||||||||||
|
BS&S
– Other
|
318.7 | 340.4 | 8 | 8 | ||||||||||||
|
Business
Solutions & Services
|
1,013.0 | 1,032.5 | 26 | 25 | ||||||||||||
|
Global
Outsourcing Services
|
1,487.2 | 1,718.1 | 38 | 41 | ||||||||||||
|
Department
of Defense
|
1,069.1 | 970.1 | 27 | 24 | ||||||||||||
|
Civil
agencies
|
373.3 | 419.6 | 10 | 10 | ||||||||||||
|
Other
(1)
|
33.7 | 45.3 | 1 | 1 | ||||||||||||
|
North
American Public Sector
|
1,476.1 | 1,435.0 | 37 | 35 | ||||||||||||
|
Eliminations
|
(23.9 | ) | (25.6 | ) | (1 | ) | (1 | ) | ||||||||
| $ | 3,952.4 | $ | 4,160.0 | 100 | % | 100 | % | |||||||||
|
Nine
Months Ended
|
||||||||||||||||
|
Jan.
2,
|
Dec.
28,
|
%
of Total
|
||||||||||||||
|
(In millions)
|
2009
|
2007
|
Fiscal
2009
|
Fiscal
2008
|
||||||||||||
|
BS&S
– Consulting
|
$ | 1,477.0 | $ | 1,243.8 | 12 | % | 11 | % | ||||||||
|
BS&S
– Financial Services Sector
|
746.5 | 760.4 | 6 | 6 | ||||||||||||
|
BS&S
– Other
|
1,049.9 | 874.4 | 8 | 7 | ||||||||||||
|
Business
Solutions & Services
|
3,273.4 | 2,878.6 | 26 | 24 | ||||||||||||
|
Global
Outsourcing Services
|
4,969.1 | 4,908.6 | 39 | 41 | ||||||||||||
|
Department
of Defense
|
3,130.3 | 2,882.1 | 25 | 24 | ||||||||||||
|
Civil
agencies
|
1,217.0 | 1,292.3 | 10 | 11 | ||||||||||||
|
Other
(1)
|
116.4 | 131.3 | 1 | 1 | ||||||||||||
|
North
American Public Sector
|
4,463.7 | 4,305.7 | 36 | 36 | ||||||||||||
|
Eliminations
|
(78.0 | ) | (77.8 | ) | (1 | ) | (1 | ) | ||||||||
| $ | 12,628.2 | $ | 12,015.1 | 100 | % | 100 | % | |||||||||
|
(1)
|
Other
revenues consist of state, local and foreign government as well as
commercial contracts performed by the North American Public reporting
segment.
|
|
CSC
|
February
10, 2009
|
|
Consolidated
Statements of Income
|
|
|
(preliminary unaudited)
|
|
|
Third
Quarter Ended
|
Nine
Months Ended
|
|||||||||||||||
|
Jan.
2,
|
Dec.
28,
|
Jan.
2,
|
Dec.
28,
|
|||||||||||||
|
(In millions except per-share
amounts)
|
2009
|
2007
|
2009
|
2007
|
||||||||||||
|
Revenues
|
$ | 3,952.4 | $ | 4,160.0 | $ | 12,628.2 | $ | 12,015.1 | ||||||||
|
Costs
of services
(excludes depreciation and amortization)
|
3,083.4 | 3,301.6 | 10,091.4 | 9,653.5 | ||||||||||||
|
Selling,
general and administrative
|
261.2 | 240.2 | 824.0 | 721.9 | ||||||||||||
|
Depreciation
and amortization
|
282.2 | 307.1 | 911.5 | 878.3 | ||||||||||||
|
Interest
expense
|
68.7 | 51.1 | 191.4 | 129.1 | ||||||||||||
|
Interest
income
|
(12.1 | ) | (7.5 | ) | (30.7 | ) | (25.8 | ) | ||||||||
|
Special
items
|
17.5 | 92.4 | ||||||||||||||
|
Other
(income) expense
|
8.9 | (16.3 | ) | 22.0 | (41.9 | ) | ||||||||||
|
Total
costs and expenses
|
3,692.3 | 3,893.7 | 12,009.6 | 11,407.5 | ||||||||||||
|
Income
before taxes
|
260.1 | 266.3 | 618.6 | 607.6 | ||||||||||||
|
Taxes
on income
|
99.5 | 87.3 | (114.3 | ) | 244.7 | |||||||||||
|
Net
income
|
$ | 160.6 | $ | 179.0 | $ | 732.9 | $ | 362.9 | ||||||||
|
Basic
|
$ | 1.06 | $ | 1.07 | $ | 4.84 | $ | 2.12 | ||||||||
|
Diluted
|
$ | 1.06 | $ | 1.05 | $ | 4.80 | $ | 2.08 | ||||||||
|
Average
common shares outstanding for:
|
||||||||||||||||
|
Basic
EPS
|
151.485 | 166.826 | 151.352 | 170.907 | ||||||||||||
|
Diluted
EPS
|
151.857 | 169.793 | 152.619 | 174.240 | ||||||||||||
|
CSC
|
February
10, 2009
|
|||||||
|
Selected
Balance Sheet Data
|
||||||||
|
(preliminary unaudited)
|
||||||||
|
Jan.
2,
|
Mar.
28,
|
|||||||
|
(In millions)
|
2009
|
2008
|
||||||
|
Assets
|
||||||||
|
Cash
and cash equivalents
|
$ | 1,673.1 | $ | 698.9 | ||||
|
Receivables
|
4,061.3 | 4,564.7 | ||||||
|
Prepaid
expenses and other current assets
|
1,687.5 | 1,764.5 | ||||||
|
Total
current assets
|
7,421.9 | 7,028.1 | ||||||
|
Property
and equipment, net
|
2,419.2 | 2,764.6 | ||||||
|
Outsourcing
contract costs, net
|
727.8 | 925.4 | ||||||
|
Software,
net
|
480.5 | 527.4 | ||||||
|
Goodwill,
net
|
3,852.4 | 3,975.2 | ||||||
|
Other
assets
|
551.4 | 659.0 | ||||||
|
Total
assets
|
$ | 15,453.2 | $ | 15,879.7 | ||||
|
Liabilities
|
||||||||
|
Short-term
debt and current maturities of long-term debt
|
$ | 257.6 | $ | 838.4 | ||||
|
Accounts
payable
|
415.9 | 798.1 | ||||||
|
Accrued
payroll and related costs
|
747.7 | 926.6 | ||||||
|
Other
accrued expenses
|
1,420.2 | 1,638.7 | ||||||
|
Deferred
revenue
|
830.6 | 1,078.5 | ||||||
|
Income
taxes payable and deferred income taxes
|
330.4 | 414.9 | ||||||
|
Total
current liabilities
|
4,002.4 | 5,695.2 | ||||||
|
Long-term
debt, net
|
4,158.0 | 2,635.3 | ||||||
|
Income
tax liabilities
|
846.7 | 1,235.6 | ||||||
|
Other
long-term liabilities
|
770.9 | 851.8 | ||||||
|
Stockholders'
Equity
|
5,675.2 | 5,461.8 | ||||||
|
Total
liabilities and stockholders' equity
|
$ | 15,453.2 | $ | 15,879.7 | ||||
|
Debt
as a percentage of total capitalization
|
43.8 | % | 38.9 | % | ||||
|
CSC
|
February
10, 2009
|
|||||||
|
Consolidated
Statements of Cash Flows
|
||||||||
|
(preliminary unaudited)
|
||||||||
|
Nine
Months Ended
|
||||||||
|
Jan.
2,
|
Dec.
28,
|
|||||||
|
(In millions)
|
2009
|
2007
|
||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
income
|
$ | 732.9 | $ | 362.9 | ||||
|
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
||||||||
|
Depreciation
and amortization and other non-cash charges
|
986.9 | 964.4 | ||||||
|
Stock
based compensation
|
47.2 | 47.7 | ||||||
|
Provision
for losses on accounts receivable
|
20.3 | 2.0 | ||||||
|
Foreign
currency exchange loss
|
93.0 | (19.8 | ) | |||||
|
Gain
on dispositions, net of taxes
|
(2.0 | ) | (6.3 | ) | ||||
|
Changes
in assets and liabilities, net of effects of acquisitions:
|
||||||||
|
Increase
in assets
|
(124.7 | ) | (639.1 | ) | ||||
|
Decrease
in liabilities
|
(825.2 | ) | (213.3 | ) | ||||
|
Net
cash provided by (used in) operating activities
|
928.4 | 498.5 | ||||||
|
Investing
activities:
|
||||||||
|
Purchases
of property and equipment
|
(556.7 | ) | (644.2 | ) | ||||
|
Outsourcing
contracts
|
(114.2 | ) | (87.7 | ) | ||||
|
Acquisitions
|
(100.3 | ) | (1,315.6 | ) | ||||
|
Software
|
(129.2 | ) | (129.6 | ) | ||||
|
Other
investing cash flows
|
62.1 | 18.0 | ||||||
|
Net
cash used in investing activities
|
(838.3 | ) | (2,159.1 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Net
(repayments) borrowings of commercial paper, net
|
(263.4 | ) | 205.1 | |||||
|
Borrowings
under lines of credit
|
1,646.8 | 456.6 | ||||||
|
Repayments
on lines of credit
|
(119.4 | ) | (472.2 | ) | ||||
|
Principal
payments on long-term debt
|
(323.7 | ) | (29.3 | ) | ||||
|
Proceeds
from debt issuance
|
1,400.0 | |||||||
|
Proceeds
from stock options, and other common stock transactions
|
12.4 | 82.4 | ||||||
|
Repurchase
of common stock, net of settlement
|
(3.6 | ) | (474.9 | ) | ||||
|
Excess
tax benefit from stock-based compensation
|
1.3 | 10.6 | ||||||
|
Other
financing cash flows
|
2.2 | 1.8 | ||||||
|
Net
cash provided by financing activities
|
952.6 | 1,180.1 | ||||||
|
Effect
of exchange rate changes on cash and cash equivalents
|
(68.5 | ) | 19.5 | |||||
|
Net
increase (decrease) in cash and cash equivalents
|
974.2 | (461.0 | ) | |||||
|
Cash
and cash equivalents at beginning of year
|
698.9 | 1,050.1 | ||||||
|
Cash
and cash equivalents at end of period
|
$ | 1,673.1 | $ | 589.1 | ||||
|
CSC
|
February
10, 2009
|
|
Non-GAAP
Financial Measures
|
|
|
The
following tables reconcile operating income 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 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. Management uses operating income to evaluate
business unit financial performance and it is one of the measures used in
assessing management performance. One of the limitations
associated with the use of operating income (as compared to reported
earnings) is that it does not reflect the complete financial results of
the Company. CSC compensates for these limitations by providing
a reconciliation between operating income and reported
earnings.
|
|
|
GAAP
Reconciliations
|
||||||||||||||||
|
(In millions)
|
||||||||||||||||
|
Operating
Income (preliminary and unaudited)
|
Third
Quarter Ended
|
Nine
Months Ended
|
||||||||||||||
|
Jan.
2,
|
Dec.
28,
|
Jan.
2,
|
Dec.
28,
|
|||||||||||||
|
2009
|
2007
|
2009
|
2007
|
|||||||||||||
|
Operating
income
|
$ | 371.0 | $ | 345.0 | $ | 935.1 | $ | 867.5 | ||||||||
|
Minority
interest expense
|
(1.8 | ) | (3.4 | ) | (7.1 | ) | (10.1 | ) | ||||||||
|
Equity
earnings
|
3.1 | 4.1 | 12.8 | 12.6 | ||||||||||||
|
Corporate
G&A
|
(46.7 | ) | (34.6 | ) | (139.5 | ) | (108.6 | ) | ||||||||
|
Interest
expense
|
(68.7 | ) | (51.1 | ) | (191.4 | ) | (129.1 | ) | ||||||||
|
Interest
income
|
12.1 | 7.5 | 30.7 | 25.8 | ||||||||||||
|
Special
items
|
(17.5 | ) | (92.4 | ) | ||||||||||||
|
Other
expense (income)
|
(8.9 | ) | 16.3 | (22.0 | ) | 41.9 | ||||||||||
|
Income
before taxes
|
260.1 | 266.3 | 618.6 | 607.6 | ||||||||||||
|
Taxes
on income
|
99.5 | 87.3 | (114.3 | ) | 244.7 | |||||||||||
|
Net
income
|
$ | 160.6 | $ | 179.0 | $ | 732.9 | $ | 362.9 | ||||||||
|
Free
Cash Flow (preliminary unaudited)
|
Third
Quarter Ended
|
Nine
Months Ended
|
||||||||||||||
|
Jan.
2,
|
Dec.
28,
|
Jan.
2,
|
Dec.
28,
|
|||||||||||||
|
2009
|
2007
|
2009
|
2007
|
|||||||||||||
|
Free
cash flow
|
$ | 333.0 | $ | 301.8 | $ | 170.2 | $ | (374.2 | ) | |||||||
|
Net
cash used in investing activities
|
281.5 | 278.7 | 838.3 | 2,159.1 | ||||||||||||
|
Acquisitions,
net of cash acquired
|
(37.5 | ) | - | (100.3 | ) | (1,315.6 | ) | |||||||||
|
Capital
lease payments
|
6.4 | 9.7 | 20.2 | 29.2 | ||||||||||||
|
Net
cash provided by (used in) operating activities
|
$ | 583.4 | $ | 590.2 | $ | 928.4 | $ | 498.5 | ||||||||
|
Net
cash used in investing activities
|
$ | (281.5 | ) | $ | (278.7 | ) | $ | (838.3 | ) | $ | (2,159.1 | ) | ||||
|
Net
cash (used in) provided by financing activities
|
$ | 665.3 | $ | (212.9 | ) | $ | 952.6 | $ | 1,180.1 | |||||||
|
Operating
income
|
$ | 371.0 | $ | 345.0 | $ | 935.1 | $ | 867.5 | ||||||||
|
Operating
margin
|
9.39 | 8.29 | 7.40 | 7.22 | ||||||||||||
|
Pre-tax
margin
|
6.58 | 6.40 | 4.90 | 5.06 | ||||||||||||
|
Note:
|
Capital
lease payments and proceeds from the sale of property and equipment
(included in investing activities) are included in the calculation of free
cash flow.
Operating
margin: Operating income as a percentage of revenue.
Pre-tax
margin: Income before tax as a percentage of
revenue.
|
|
CSC
|
February
10, 2009
|
|
Non-GAAP
Financial Measures (continued)
|
|
|
Earnings
per Share Reconciliation (preliminary unaudited)
|
|
|
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 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 operating performance to past and future
operating performance. CSC management believes that these
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. Management uses earnings
before special items to evaluate business unit financial performance and
it is one of the measures used in assessing management
performance. One of the limitations associated with the use of
earnings before special items (as compared to reported earnings) is that
it does not reflect the complete financial results of the
Company. CSC compensates for these limitations by providing a
reconciliation between earnings before special items and reported
earnings.
|
|
|
Third
Quarter Ended
|
||||||||||||||||
|
January
2, 2009
|
December
28, 2007
|
|||||||||||||||
|
Amount
|
EPS
(diluted)
|
Amount
|
EPS
(diluted)
|
|||||||||||||
|
Net
income and EPS (diluted), as reported
|
$ | 160.6 | $ | 1.06 | $ | 179.0 | $ | 1.05 | ||||||||
|
Income
from total operations
|
160.6 | 1.06 | 179.0 | 1.05 | ||||||||||||
|
Add
back: Special items
|
9.9 | 0.06 | ||||||||||||||
|
Income
from continuing operations before special items
|
$ | 160.6 | $ | 1.06 | $ | 188.9 | $ | 1.11 | ||||||||
|
Average
common shares outstanding for diluted EPS
|
151.857 | 169.793 | ||||||||||||||
|
Nine
Months Ended
|
||||||||||||||||
|
January
2, 2009
|
December
28, 2007
|
|||||||||||||||
|
Amount
|
EPS
(diluted)
|
Amount
|
EPS
(diluted)
|
|||||||||||||
|
Net
income and EPS (diluted), as reported
|
$ | 732.9 | $ | 4.80 | $ | 362.9 | $ | 2.08 | ||||||||
|
Income
from total operations
|
732.9 | 4.80 | 362.9 | 2.08 | ||||||||||||
|
Add
back: Special items
|
62.7 | 0.36 | ||||||||||||||
|
Income
from continuing operations before special items
|
$ | 732.9 | $ | 4.80 | $ | 425.6 | $ | 2.44 | ||||||||
|
Average
common shares outstanding for diluted EPS
|
152.619 | 174.240 | ||||||||||||||