computer sciences FY 2004 Q3


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computer sciences FY 2004 Q3

  1. 1. Quar terly Highlights Third Quarter Fiscal 2004 (Ended January 2, 2004) We are pleased with our fiscal year-to-date operating results. The record third quarter and nine months About CSC announced award totals have enhanced visibility for future revenue. The demand for U.S. federal IT services remains robust, with activities supporting the Department of Defense and Homeland Security continuing Founded in 1959, to be high priorities. The market for global commercial outsourcing services continues to be firm. Computer Sciences Corporation is a leading Van B. Honeycutt information technology Chairman and Chief Executive Officer Computer Sciences Corporation (IT) services company. CSC’s mission is to provide CSC results for its fiscal 2004 third quarter included: Revenue of $3.62 billion, up 29.6% over the third customers in industry quarter a year ago (approximately 23% in constant currency); Net income of $128.4 million after the after-tax and government with special charge of $5.0 million ($7.3 million pre-tax), or 3 cents per share related to the March 7, 2003, solutions crafted to meet DynCorp acquisition; Net earnings per share (diluted) of 68 cents after the special charge; and announced their specific challenges major new business awards of $6.0 billion, the highest quarterly total in CSC’s history. CSC does not expect and enable them to profit to recognize any additional DynCorp acquisition-related charge. from the advanced use CSC’s federal government revenue growth was the principal driver of the quarter’s favorable year-over-year of technology. revenue performance. CSC’s quarterly revenue derived from U.S. federal government activities benefited from the DynCorp acquisition. Significant new global commercial outsourcing awards and favorable currency movements contributed to growth in year-over-year global commercial revenue. With approximately The combination of CSC’s U.S. federal government and global commercial outsourcing activities, which 90,000 employees, CSC generate longer-term revenue streams, accounted for more than 80% of third-quarter revenue. provides innovative The strength of CSC’s commercial outsourcing business in Europe during the quarter more than offset solutions for customers the reduced activity for consulting and systems integration services. The softness in demand for shorter-term around the world by project work and discretionary spending continues to linger, especially in Europe. applying leading tech- For the third quarter, revenue derived from CSC’s U.S. federal government activities increased to $1.46 nologies and CSC’s own billion, up 84.4% from last year. Revenue generated from CSC’s DoD-related activities rose to $940.1 million advanced capabilities. from last year. The quarter’s gain benefited significantly from the DynCorp acquisition. In addition, benefit These include systems was derived from new awards, growth in tasking from several existing programs and increased use of certain design and integration; GSA schedules. DoD revenue growth was negatively impacted as a previously consolidated joint venture’s IT and business process revenue is no longer reported because CSC has become a minority owner. CSC’s civil agencies revenue was up 58.8%, growing to $516.2 million from last year. The civil agencies quarterly growth was attributable to outsourcing; applications the DynCorp acquisition. Global commercial revenue was up 8.0% (down approximately 1% in constant software development; currency), to $2.16 billion compared to the third quarter a year ago. Web and application U.S. commercial revenue was $921.9 million, down 4.9%, attributable to the reduction in scope and hosting; and management winding down of several contracts, most of which will anniversary by the end of this fiscal year. Revenue consulting. from CSC’s European activities was $933.2 million, up 22.8% (approximately 6% in constant currency) compared to last year. Both global commercial and European revenue benefited from significant new Headquartered in outsourcing awards over the past 12 months. CSC’s non-European international revenue was up 12.7% El Segundo, California, (down approximately 4% in constant currency) to $309.8 million from last year’s third quarter. CSC reported revenue For the fourth quarter, ending April 2, 2004, CSC management expects revenue growth will be in the 20% of $13.8 billion for to 23% range and earnings per share (diluted) will be in the 98 cents to $1.02 range, bringing full fiscal 2004 the 12 months ended earnings per share (diluted) to the $2.80 to $2.84 range, excluding the impact of the DynCorp acquisition- related special charge. January 2, 2004. FINANCIAL HIGHLIGHTS 3RD QUARTER FISCAL 2004 REVENUES BY MAJOR MARKET (unaudited) Commercial U.S. Federal Third Quarter Nine Months Ended 60% 40% $ in millions, except 1/2/04 12/27/02 1/2/04 12/27/02 ($ in millions) per-share amounts U.S. Commercial – $921.9 25% 26% Europe – $933.2 Revenues $ 3,621.2 $ 2,793.6 $10,767.2 $ 8,267.4 Other International – $309.8 Net Income $ 128.4 $ 105.7 $ 328.8 $ 277.5 14% U.S. DoD – $940.1 26% 9% U.S. Civil Agencies – $516.2 Diluted Earnings Per Share $ 0.68 $ 0.61 $ 1.74 $ 1.61 Total – $3,621.2
  2. 2. • CSC’S SERVICES ENCOMPASS INVESTMENT DATA Swiss Re Life & Health – CSC has SEVERAL BROAD AREAS NYSE: CSC signed a business process outsourcing • Outsourcing – Involves operating all Recent Closing Price: 40.99 (2/25/04) (BPO) agreement with Swiss Re Life or a portion of a customer’s technology 52-Week Range: 26.52 – 47.00 & Health, the world’s largest life and infrastructure. CSC also provides Shares Outstanding: 187.6 million health reinsurer. This new agreement business process outsourcing, which is Registered Shareholders: 11,798 extends and expands an outsourcing the management of a client’s non-core Institutional Ownership: 81% relationship between CSC and Swiss Re business functions. Average Daily Trading Volume: that began in 1995. The relationship 3rd Quarter FY 2004 – 1,140,989 represents one of the largest BPO • IT & Professional Services – Designing, Market Cap: $7.7 billion arrangements yet concluded in the developing, implementing and integrat- global insurance market. ing complete information systems, as RESEARCH COVERAGE • well as advising clients on the strategic A.G. Edwards (Timothy Willi) UK National Health Service (NHS) – acquisition and utilization of IT. Bear, Stearns ( Jim Kissane) A CSC-led alliance has been awarded Bernstein (Rod Bourgeois) a contract under the NHS’ national RECENT ENGAGEMENTS INCLUDE: CS First Boston (Dris Upitis) program to improve healthcare service • National Grid Transco – A leading Deutsche Bank (Bill Zinsmeister) for patients in the North West and international energy delivery company, Goldman Sachs (Greg Gould) West Midlands of England. Under the National Grid Transco plc, selected J.P. Morgan Securities (Dirk Godsey) contract, the CSC alliance will design, CSC for an IT infrastructure outsourcing Jefferies & Co. ( Joe Vafi) deliver and operate an integrated contract. The agreement will support Legg Mason (Bill Loomis) patient care record system, improving National Grid Transco’s continuing Lehman Brothers (Louis Miscioscia) the way patient information is efforts to achieve improved efficiency McDonald Investments (Michael Keller) accessed and shared by 275,000 health and productivity in key back-office func- Merrill Lynch (Jennifer Dugan) professionals. tions supporting its primary business. Morgan Stanley (David Togut) • Piper Jaffray (T. Brett Manderfeld) U.S. Navy – The Naval Sea Systems • SAS Group – SAS Group has selected Prudential Securities (Bryan Keane) Command has chosen CSC to provide CSC for an IT outsourcing agreement. Schwab SoundView ( John Jones, Jr.) professional services to the Program CSC will provide IT consulting, systems SG Cowen & Co. (Moshe Katri) Executive Office Aircraft Carriers integration, application development Smith Barney Citigroup (Pat Burton) (PEO Carriers). Under the task order, and maintenance, and IT infrastructure Standard & Poor’s ( Richard Stice) CSC will provide PEO Carriers with services for mission-critical SAS business Thomas Weisel Partners (David Grossman) a full range of professional support needs, including booking and ticket UBS Warburg (Adam Frisch) services. PEO Carriers acquires and reservation systems, ticket-free travel Value Line (George Niemond) operates the ships and systems crucial technologies, self-service check-in, flight to the United States’ ability to counter maintenance and cargo control systems. SHAREHOLDER SERVICES threats around the world. For more information regarding CSC: • Shareholder services and literature CSC REVENUE GROWTH FIRST NINE MONTHS FISCAL 2004 FY 1999-2003* REVENUES BY BUSINESS SERVICE* request line – (800)542-3070 • Website – $ in billions $ 12 17% • Registrar and transfer agent – 42% Mellon Investor Services P.O. Box 3315 37% 10 S. Hackensack, New Jersey 07606 (800)676- 0654 or (201)329- 8660 4% 8 OUTSOURCING . . . . . . . . . . . . . . . . . . . . 46% • CSC Investor Relations – Global Commercial 42% U.S. Federal Sector 4% Bill Lackey IT & PROFESSIONAL SERVICES . . . . . . . . 54% Director, Investor Relations 6 Global Commercial 17% FY99 FY00 FY01 FY02 FY03 (310)615-1700 U.S. Federal Sector 37% Lisa Runge * CSC’s fiscal year ends the Friday closest to March 31. * Based on CSC estimates. Manager, Investor Relations All statements in this document that do not directly and exclusively relate to historical facts (310)615-1680 constitute “forward-looking statements” within the meaning of the Private Securities Litigation Email: 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 • Headquarters the Company’s control. These factors could cause actual results to differ materially from such 2100 East Grand Avenue forward-looking statements. For a description of these factors, see the section titled “Forward- El Segundo, California 90245, USA Looking Statements” in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter (310)615-0311 ended January 2, 2004. Printed in U.S.A. WH# CC-3Q04