Computer Sciences Corporation - Page 7
   
December 20, 2007
 
   
   
Revenues by Segment
 
(preliminary unaudited)
 
   
   
Second Quarter Ended
 
   
Sept. 28,
   
Sept. 29,
   
% of Total
 
(In millions)
 
2007
   
2006
   
Fiscal 2008
   
Fiscal 2007
 
         
(As Restated)
         
(As Restated)
 
                         
   U.S. Commercial
  $
1,026.0
    $
930.6
      26 %     26 %
   Europe
   
1,107.8
     
942.8
     
27
     
26
 
   Other International
   
432.7
     
384.4
     
11
     
11
 
Global Commercial sector
   
2,566.5
     
2,257.8
     
64
     
63
 
                                 
   Department of Defense
   
968.6
     
900.3
     
24
     
25
 
   Civil agencies
   
432.2
     
412.1
     
11
     
11
 
   Other (1)
   
49.9
     
38.9
     
1
     
1
 
North American Public sector
   
1,450.7
     
1,351.3
     
36
     
37
 
                                 
    $
4,017.2
    $
3,609.1
      100 %     100 %
   

   
Six Months Ended
 
   
Sept. 28,
   
Sept. 29,
   
% of Total
 
(In millions)
 
2007
   
2006
   
Fiscal 2008
   
Fiscal 2007
 
         
(As Restated)
         
(As Restated)
 
                         
   U.S. Commercial
  $
1,945.8
    $
1,888.2
      25 %     27 %
   Europe
   
2,201.7
     
1,884.7
     
28
     
26
 
   Other International
   
836.9
     
730.5
     
10
     
10
 
Global Commercial sector
   
4,984.4
     
4,503.4
     
63
     
63
 
                                 
   Department of Defense
   
1,912.0
     
1,762.6
     
25
     
24
 
   Civil agencies
   
872.7
     
831.5
     
11
     
12
 
   Other (1)
   
86.0
     
72.7
     
1
     
1
 
North American Public sector
   
2,870.7
     
2,666.8
     
37
     
37
 
                                 
    $
7,855.1
    $
7,170.2
      100 %     100 %
                                 

   
(1)
Other revenues consist of state, local and foreign government as well as commercial contracts performed by the North American Public reporting sector.





Computer Sciences Corporation - Page 8
December 20, 2007
 
 
Consolidated Statements of Income
(preliminary unaudited)

   
Second Quarter Ended
   
Six Months Ended
 
   
Sept. 28,
   
Sept. 29,
   
Sept. 28,
   
Sept. 29,
 
(In millions except per-share amounts)
 
2007
   
2006
   
2007
   
2006
 
         
(As Restated)
         
(As Restated)
 
Revenues
  $
4,017.2
    $
3,609.1
    $
7,855.1
    $
7,170.2
 
                                 
Costs of services
(excludes depreciation and amortization)
   
3,253.8
     
2,893.7
     
6,351.9
     
5,773.0
 
Selling, general and administrative
   
241.1
     
226.5
     
481.7
     
454.1
 
Depreciation and amortization
   
292.2
     
266.3
     
571.2
     
527.2
 
Interest expense
   
48.8
     
56.0
     
78.0
     
103.9
 
Interest income
    (8.8 )     (7.5 )     (18.3 )     (33.5 )
Special items
   
25.9
     
41.0
     
74.9
     
237.9
 
Other income
    (7.4 )     (8.3 )     (25.6 )     (12.7 )
                                 
Total costs and expenses
   
3,845.6
     
3,467.7
     
7,513.8
     
7,049.9
 
                                 
Income before taxes
   
171.6
     
141.4
     
341.3
     
120.3
 
Taxes on income
   
95.8
     
51.9
     
157.4
     
90.7
 
                                 
Net income
  $
75.8
    $
89.5
    $
183.9
    $
29.6
 
                                 
      Basic
  $
0.44
    $
0.52
    $
1.06
    $
0.16
 
                                 
      Diluted
  $
0.43
    $
0.51
    $
1.04
    $
0.16
 
                                 
Average common shares outstanding for:
                               
    Basic EPS
   
172.018
     
172.092
     
172.947
     
179.814
 
    Diluted EPS
   
175.264
     
175.270
     
176.439
     
183.427
 





Computer Sciences Corporation - Page 9
 
December 20, 2007
 
   
   
Selected Balance Sheet Data
 
(preliminary unaudited)
           
             
   
Sept. 28,
   
March 30,
 
(In millions)
 
2007
   
2007
 
         
(As Restated)
 
Assets
           
   Cash and cash equivalents
  $
490.8
    $
1,050.1
 
   Receivables, net of allowance for doubtful accounts
   
4,501.6
     
4,187.4
 
   Prepaid expenses and other current assets
   
1,704.5
     
1,464.0
 
      Total current assets
   
6,696.9
     
6,701.5
 
                 
   Property and equipment, net
   
2,655.0
     
2,539.1
 
   Outsourcing contract costs, net
   
982.4
     
1,029.5
 
   Software, net
   
525.3
     
513.3
 
   Goodwill, net
   
3,687.0
     
2,500.1
 
   Other assets
   
572.1
     
456.7
 
      Total assets
  $
15,118.7
    $
13,740.2
 
                 
                 
Liabilities
               
   Short-term debt and current maturities of long-term debt
  $
472.0
    $
93.7
 
   Accounts payable
   
653.1
     
855.7
 
   Accrued payroll and related costs
   
763.3
     
732.5
 
   Other accrued expenses
   
1,661.0
     
2,014.1
 
   Deferred revenue
   
887.0
     
1,025.5
 
   Federal, state and foreign income taxes
   
296.9
     
934.6
 
      Total current liabilities
   
4,733.3
     
5,656.1
 
                 
   Long-term debt, net
   
2,511.8
     
1,412.2
 
   Long-term deferred taxes on income tax liabilities
   
1,060.0
         
   Other long-term liabilities
   
1,141.6
     
1,131.9
 
                 
      Stockholders' Equity
   
5,672.0
     
5,540.0
 
                 
      Total liabilities and stockholders' equity
  $
15,118.7
    $
13,740.2
 
                 





Computer Sciences Corporation - Page 10
 
December 20, 2007
 
   
   
Consolidated Statements of Cash Flows
     
(preliminary unaudited)
     
       
   
Six Months Ended
 
   
Sept. 28,
   
Sept. 29,
 
(In millions)
 
2007
   
2006
 
         
(As Restated)
 
Cash flows from operating activities:
           
   Net income
  $
183.9
    $
29.6
 
   Adjustments to reconcile net income to net cash used in operating activities:
               
      Depreciation and amortization and other non-cash charges
   
633.2
     
597.8
 
      Gain on dispositions, net of taxes
    (3.3 )     (9.0 )
      Changes in assets and liabilities, net of effects of acquisitions:
               
         Increase in assets
    (441.4 )     (375.2 )
         Decrease in liabilities
    (464.2 )     (175.2 )
                 
Net cash (used in) provided by operating activities
    (91.8 )    
68.0
 
                 
Investing activities:
               
   Purchases of property and equipment
    (433.3 )     (361.9 )
   Acquisitions, net of cash acquired
    (1,315.6 )        
   Outsourcing contracts
    (61.4 )     (31.6 )
   Software
    (78.3 )     (73.8 )
   Other investing cash flows
   
8.2
     
182.8
 
                 
Net cash used in investing activities
    (1,880.4 )     (284.5 )
                 
Financing activities:
               
   Borrowings of commercial paper, net
    (.4 )    
596.9
 
   Borrowings under lines of credit
   
305.6
     
302.2
 
   Repayment on lines of credit
    (215.9 )     (298.8 )
   Principal payments on long-term debt
    (19.5 )     (14.8 )
   Proceeds from debt issuance
   
1,391.3
         
   Proceeds from stock option and other common stock transactions
   
73.2
     
44.2
 
   Repurchase of common stock
    (153.1 )     (1,000.0 )
   Excess tax benefit from stock-based compensation
   
8.9
     
2.2
 
   Other financing cash flows
   
2.9
      (1.9 )
                 
Net cash provided by (used in) financing activities
   
1,393.0
      (370.0 )
                 
Effect of exchange rate changes on cash and cash equivalents
   
19.9
      (1.0 )
                 
Net decrease in cash and cash equivalents
    (559.3 )     (587.5 )
Cash and cash equivalents at beginning of year
   
1,050.1
     
1,290.7
 
                 
Cash and cash equivalents at end of period
  $
490.8
    $
703.2
 





Computer Sciences Corporation - Page 11
December 20, 2007
 
 
Non-GAAP Financial Measures
 
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 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.

GAAP Reconciliations
                       
(In millions)
                       
             
EBITDA / EBIT (preliminary unaudited)
 
Second Quarter Ended
   
Six Months Ended
 
   
Sept. 28,
   
Sept. 29,
   
Sept. 28,
   
Sept. 29,
 
   
2007
   
2006
   
2007
   
2006
 
         
(As Restated)
         
(As Restated)
 
EBITDA and special items
  $
529.7
    $
497.2
    $
1,047.1
    $
955.8
 
   Special items
   
25.9
     
41.0
     
74.9
     
237.9
 
EBITDA
   
503.8
     
456.2
     
972.2
     
717.9
 
   Depreciation and amortization
   
292.2
     
266.3
     
571.2
     
527.2
 
EBIT
   
211.6
     
189.9
     
401.0
     
190.7
 
   Interest, net
   
40.0
     
48.5
     
59.7
     
70.4
 
Income before taxes
   
171.6
     
141.4
     
341.3
     
120.3
 
   Taxes on income
   
95.8
     
51.9
     
157.4
     
90.7
 
Net income
  $
75.8
    $
89.5
    $
183.9
    $
29.6
 
                                 

Free Cash Flow (unaudited)
 
Six Months Ended
 
   
Sept. 28,
   
Sept. 29,
 
   
2007
   
2006
 
         
(As Restated)
 
Free cash flow
  $ (676.0 )   $ (357.1 )
Net cash used in investing activities
   
1,880.4
     
284.5
 
Proceeds from redemption of preferred stock
           
126.5
 
Acquisitions
    (1,315.6 )        
Capital lease payments
   
19.4
     
14.1
 
Net cash (used in) provided by operating activities
  $ (91.8 )   $
68.0
 

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.  Prior periods have been adjusted to conform with this presentation.  Proceeds from the redemption of DynCorp preferred stock is included in other investing activities and is being excluded from the calculation of free cash flow.





Computer Sciences Corporation - Page 12
December 20, 2007
 
 
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 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 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.

   
Second Quarter Ended
 
   
September 28, 2007
   
September 29, 2006
 
               
(As Restated)
 
         
EPS
         
EPS
 
   
Amount
   
(diluted)
   
Amount
   
(diluted)
 
Net income and EPS (diluted), as reported
  $
75.8
    $
0.43
    $
89.5
    $
0.51
 
Add back: Special items
   
19.3
     
0.11
     
29.7
     
0.17
 
Income before special items
  $
95.1
    $
0.54
    $
119.2
    $
0.68
 
                                 
Average common shares outstanding for diluted EPS
     
175.264
             
175.270
 

   
Six Months Ended
 
   
September 28, 2007
   
September 29, 2006
 
               
(As Restated)
 
         
EPS
         
EPS
 
   
Amount
   
(diluted)
   
Amount
   
(diluted)
 
Net income and EPS (diluted), as reported
  $
183.9
    $
1.04
    $
29.6
    $
0.16
 
Add back: Special items
   
52.7
     
0.30
     
201.5
     
1.10
 
Income before special items
  $
236.6
    $
1.34
    $
231.1
    $
1.26
 
                                 
Average common shares outstanding for diluted EPS
     
176.439
             
183.427
 

Notes:
All amounts are net of taxes.
 
Amounts are in millions except per-share amounts.
 
Per share amounts may not add due to rounding.





Computer Sciences Corporation - Page 13
December 20, 2007
 
 
Consolidated Statements of Income
(preliminary unaudited)

   
First Quarter Ended
 
(In millions except per-share amounts)
 
June 29, 2007
   
June 30, 2006
 
         
(As Restated)
 
Revenues
  $
3,837.9
    $
3,561.1
 
                 
Costs of services (excludes depreciation and amortization)
   
3,098.1
     
2,879.3
 
Selling, general and administrative
   
240.6
     
227.6
 
Depreciation and amortization
   
279.0
     
260.9
 
Interest expense
   
29.2
     
47.9
 
Interest income
    (9.5 )     (26.0 )
Special items
   
49.0
     
196.9
 
Other (income)/expense
    (18.2 )     (4.4 )
                 
Total costs and expenses
   
3,668.2
     
3,582.2
 
                 
Income before taxes
   
169.7
      (21.1 )
Taxes on income
   
61.6
     
38.8
 
                 
Net income (loss)
  $
108.1
    $ (59.9 )
                 
      Basic
  $
0.62
    $ (0.32 )
                 
      Diluted
  $
0.61
    $ (0.32 )
                 
Average common shares outstanding for:
               
    Basic EPS
   
173.876
     
187.536
 
    Diluted EPS
   
177.445
     
187.536
 





Computer Sciences Corporation - Page 14
December 20, 2007
 
 
Non-GAAP Financial Measures
 
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 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 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.


   
First Quarter Ended
 
   
June 29, 2007
   
June 30, 2006
 
               
(As Restated)
 
         
EPS
         
EPS
 
   
Amount
   
(diluted)
   
Amount
   
(diluted)
 
Net income (loss) and EPS (diluted), as reported
  $
108.1
    $
0.61
    $ (59.9 )   $ (0.32 )
Add back: Special items
   
33.4
     
0.19
     
171.8
     
0.92
 
Income before special items
  $
141.5
    $
0.80
    $
111.9
    $
0.60
 
                                 
Average common shares outstanding for diluted EPS
     
177.445
             
187.536
 

Notes:
All amounts are net of taxes.
 
Amounts are in millions except per-share amounts.
 
Per share amounts may not add due to rounding.








Computer Sciences Corporation - Page 15
December 20, 2007
 
 
Consolidated Statements of Income
(preliminary unaudited)

   
Twelve Months Ended
 
   
March 30,
   
March 31,
 
(In millions except per-share amounts)
 
2007
   
2006
 
   
(As Restated)
   
(As Restated)
 
Revenues
  $
14,854.9
    $
14,644.8
 
                 
Costs of services (excludes depreciation and amortization)
   
11,813.5
     
11,724.5
 
Selling, general and administrative
   
918.3
     
863.8
 
Depreciation and amortization
   
1,073.6
     
1,091.8
 
Interest expense
   
217.9
     
145.1
 
Interest income
    (49.5 )     (40.8 )
Special items
   
316.1
     
77.3
 
Other (income)/expense
    (41.3 )    
21.3
 
                 
Total costs and expenses
   
14,248.6
     
13,883.0
 
                 
Income before taxes
   
606.3
     
761.8
 
Taxes on income
   
209.0
     
319.5
 
                 
Income from continuing operations
   
397.3
     
442.3
 
                 
Gain on the sale of discontinued operations, net of taxes
           
57.6
 
                 
Discontinued operations, net of taxes
           
57.6
 
Cumulative effect of change in accounting principle, net of taxes
            (4.3 )
                 
Net income
  $
397.3
    $
495.6
 
Earnings per share:
               
   Continuing operations
  $
2.25
    $
2.38
 
   Discontinued operations
           
0.31
 
   Cumulative effect of change in accounting principle, net of taxes
            (0.02 )
      Basic
  $
2.25
    $
2.67
 
                 
   Continuing operations
  $
2.21
    $
2.35
 
   Discontinued operations
           
0.31
 
   Cumulative effect of change in accounting principle, net of taxes
            (0.02 )
      Diluted
  $
2.21
    $
2.64
 
                 
Average common shares outstanding for:
               
    Basic EPS
   
176.263
     
185.693
 
    Diluted EPS
   
179.733
     
187.984
 





Computer Sciences Corporation - Page 16
December 20, 2007
 
 
Non-GAAP Financial Measures
 
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 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 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.

   
Twelve Months Ended
 
   
March 30, 2007
   
March 31, 2006
 
   
(As Restated)
   
(As Restated)
 
         
EPS
         
EPS
 
   
Amount
   
(diluted)
   
Amount
   
(diluted)
 
Net income and EPS (diluted), as reported
  $
397.3
    $
2.21
    $
495.6
    $
2.64
 
Less: Gain on discontinued operations
                    (57.6 )     (0.31 )
Add: Cumulative change in accounting principle
                   
4.3
     
0.02
 
                                 
Income from continuing operations
   
397.3
     
2.21
     
442.3
     
2.35
 
Add back: Special items
   
262.0
     
1.46
     
48.3
     
0.26
 
Income from continuing operations before special items
  $
659.3
    $
3.67
    $
490.6
    $
2.61
 
                                 
Average common shares outstanding for diluted EPS
     
179.733
             
187.984
 

Notes:
All amounts are net of taxes.
 
Amounts are in millions except per-share amounts.
 
Per share amounts may not add due to rounding.