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computer sciences FY 2004 Q2

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  • 1. Quar terly Highlights Second Quarter Fiscal 2004 (Ended October 3, 2003) Our results for the second quarter continue to track to our expectations. We have completed a solid first six About CSC months of the current fiscal year. Our commitment to continue to provide premier services to the U.S. fed- eral government, exemplified by the March acquisition of DynCorp, has played a major role in our strong Founded in 1959, revenue growth over the past six months. Computer Sciences Van B. Honeycutt Corporation is a leading Chairman and Chief Executive Officer information technology Computer Sciences Corporation (IT) services company. CSC results for its fiscal 2004 second quarter included: Revenue of $3.59 billion, up 32% (approximately CSC’s mission is to provide 28% in constant currency) over last year’s second quarter; Net income of $108.1 million after the pre-tax customers in industry special charge of $9.2 million ($5.7 million after tax) related to the March 7, 2003, DynCorp acquisition; and government with Earnings per share (diluted) of 57 cents after the approximately 3 cents per-share impact of the special solutions crafted to meet charge; and announced major new business awards were $3.5 billion. their specific challenges The 29-month federal pipeline of opportunities currently stands at approximately $41 billion, evenly and enable them to profit divided between DoD and civil agencies. Importantly, approximately $15 billion in federal contracts is sched- from the advanced use uled to be awarded over the remainder of CSC’s fiscal 2004. The market for global commercial IT infrastruc- of technology. ture services continues to be firm, especially in Europe. During the first two quarters of the current fiscal year, CSC has announced $4.6 billion in commercial awards. Together with the $2.6 billion in commercial With more than 92,000 awards for the March quarter, commercial awards during the last nine months were $7.2 billion of the $11.6 employees, CSC provides billion total -- an indicator of solid contributions to future revenue. innovative solutions for Demand for short-term commercial consulting and systems integration services continues to be mixed, customers around the depending to a large degree on specific geographic market conditions. CSC’s North American short-term world by applying leading project activities seem to have stabilized, but softness in Europe and Asia Pacific persists. The strength of CSC’s commercial outsourcing business in Europe during the quarter more than offset the reduced discre- technologies and CSC’s tionary spending which normally fuels demand for global consulting and systems integration activity. own advanced capabili- For the third quarter of fiscal 2004, ending January 2, 2004, CSC management believes revenues will be in ties. These include systems the $3.6 billion range, and earnings per share (diluted) will be in the 68 cents to 70 cents range. CSC remains design and integration; comfortable with the consensus revenue and earnings-per-share estimates for the full year. These quarterly IT and business process outsourcing; applications and annual estimates exclude any further DynCorp acquisition-related special charge. For the second quarter, revenue derived from CSC’s U.S. federal government activities continued to software development; reflect the positive impact of the recent DynCorp acquisition. Revenues increased to $1.52 billion, up 97% Web and application from last year. Revenues generated from CSC’s DoD related activities more than doubled to $984.6 million hosting; and management from last year’s second quarter. CSC’s civil agencies revenue was $534.6 million, up 65.8% from the compara- consulting. ble quarter last year. Global commercial revenues were up 6.3% (approximately 1% in constant currency) to $2.07 billion Headquartered in compared with last year’s second quarter. U.S. commercial revenue was $932.0 million, down 1.9%. European El Segundo, California, revenue was $851.9 million, up 21.1% (approximately 11% in constant currency) compared to last year. CSC reported revenue Global commercial and European revenue were the beneficiaries of meaningful new outsourcing activities of $13.0 billion for the 12 and favorable currency exchange rate movements. CSC's non-European international revenue declined 2.3% months ended July 4, 2003. (down approximately 13% in constant currency) to $288.1 million from last year's second quarter. FINANCIAL HIGHLIGHTS 2ND QUARTER FISCAL 2004 REVENUES BY MAJOR MARKET (unaudited) Commercial U.S. Federal Second Quarter Six Months Ended 58% 42% $ in millions, except 10/3/03 10/3/03 9/27/02 9/27/02 ($ in millions) per-share amounts U.S. Commercial – $932.0 26% 27% Revenues* $ 3,591.2 $ 7,146.0 $ 5,473.8 $ 2,720.1 Europe – $851.9 Net Income $ 108.1 $ 200.4 $ $ 92.9 171.9 Other International – $288.1 U.S. DoD – $984.6 15% 24% Diluted Earnings Per Share $ 0.57 $ 1.06 $ $ 0.54 1.00 8% U.S. Civil Agencies – $534.6 Total – $3,591.2 * Figures have been adjusted to conform to CSC’s current presentation.
  • 2. • CSC’S SERVICES ENCOMPASS INVESTMENT DATA Providian – Under an IT outsourcing SEVERAL BROAD AREAS NYSE: CSC agreement signed with Providian • Outsourcing – Involves operating all Recent Closing Price: 41.69 (11/19/03) Financial Corporation, CSC will or a portion of a customer’s technology 52-Week Range: 26.52 – 44.99 assume responsibility for Providian’s infrastructure. CSC also provides Shares Outstanding: 187.3 million desktop, help desk, server, security business process outsourcing, which is Registered Shareholders: 12,022 administration, e-mail, and voice and the management of a client’s non-core Institutional Ownership: 81% data network infrastructure functions. business functions. Average Daily Trading Volume: CSC was selected because it offers 2nd Quarter FY 2004 – 1,241,531 the most compelling value proposition • IT & Professional Services – Designing, Market Cap: $8.0 billion that aligns with Providian’s strategic developing, implementing and integrat- objectives. ing complete information systems, as RESEARCH COVERAGE • well as advising clients on the strategic A.G. Edwards (Timothy Willi) U.S. Air Force – CSC was one of six acquisition and utilization of IT. Bear, Stearns ( Jim Kissane) companies selected to support the U.S. Bernstein (Rod Bourgeois) Air Force under the Air Force Informa- RECENT ENGAGEMENTS INCLUDE: CS First Boston (Dris Upitis) tion Warfare Center's Engineering and • Ascension Health – Ascension Health, Deutsche Bank (Bill Zinsmeister) Technical Services Support II contracts. the largest U.S. nonprofit health system, Goldman Sachs (Greg Gould) Under the terms of the award, CSC will has selected CSC for an IT outsourcing J.P. Morgan Securities (Dirk Godsey) provide professional, engineering and contract. CSC was chosen because of its Jefferies & Co. ( Joe Vafi) other services. This contract signifies commitment to Ascension associates Legg Mason (Bill Loomis) the reputation CSC’s has earned in the transitioning to CSC, and CSC’s history Lehman Brothers (Louis Miscioscia) intelligence community for providing of helping healthcare organizations McDonald Investments (Michael Keller) experienced professionals who produce achieve real business results through the Merrill Lynch (Jennifer Dugan) results. strategic and efficient application of Morgan Stanley (David Togut) • technology solutions. Prudential Securities (Bryan Keane) U.S. Army – CSC has been awarded a Scotia Capital (Peter Misek) contract to provide simulator-based • Maybank – CSC and Malayan Banking SG Cowen & Co. (Moshe Katri) flight training and related aviation Berhad (Maybank), Malaysia’s largest Smith Barney Citigroup (Pat Burton) training support activities to the U.S. banking group, signed an IT outsourcing SoundView ( John Jones, Jr.) Army Aviation Center at Ft. Rucker, agreement under which CSC will provide Standard & Poor’s ( Richard Stice) Alabama. Under the contract CSC will comprehensive computing services to Thomas Weisel Partners (David Grossman) help the Army maximize its use of high Maybank in Malaysia and Singapore. UBS Warburg (Adam Frisch) technology training methodologies and The agreement is expected to showcase U.S. Bancorp Piper Jaffray virtual flight simulators to enhance CSC’s ability to leverage its global (T. Brett Manderfeld) training effectiveness and significantly strengths and experience, along with the Value Line (George Niemond) reduce costs. delivery capabilities of local affiliates, to provide business and operational results SHAREHOLDER SERVICES for clients. For more information regarding CSC: • Shareholder services and literature CSC REVENUE GROWTH FIRST SIX MONTHS FISCAL 2004 request line – (800)542-3070 FY 1999-2003* REVENUES BY BUSINESS SERVICE* • Website – www.csc.com $ in billions $ 12 • Registrar and transfer agent – 18% Mellon Investor Services 40% P.O. Box 3315 37% 10 S. Hackensack, New Jersey 07606 (800)526 - 0801 or (201)329- 8660 www.melloninvestor.com 5% 8 • OUTSOURCING . . . . . . . . . . . . . . . . . . . 45% CSC Investor Relations – Global Commercial 40% Bill Lackey U.S. Federal Sector 5% Director, Investor Relations IT & PROFESSIONAL SERVICES . . . . . . . . 55% (310)615-1700 6 Global Commercial 18% FY99 FY00 FY01 FY02 FY03 U.S. Federal Sector 37% Lisa Runge Manager, Investor Relations * CSC’s fiscal year ends the Friday closest to March 31. * Based on CSC estimates. (310)615-1680 All statements in this document that do not directly and exclusively relate to historical facts constitute “forward-looking statements” within the meaning of the Private Securities Litigation Email: InvestorRelations@csc.com Reform Act of 1995. These statements represent the Company’s intentions, plans, expectations • Headquarters and beliefs, and are subject to risks, uncertainties and other factors, many of which are outside 2100 East Grand Avenue the Company’s control. These factors could cause actual results to differ materially from such El Segundo, California 90245, USA forward-looking statements. For a description of these factors, see the section titled “Forward- Looking Statements” in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter (310)615-0311 ended October 3, 2003. Printed in U.S.A. WH# CC-2Q04

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