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computer sciences FY 1999 Q2


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computer sciences FY 1999 Q2

  1. 1. Investor Relations 2ND Quart Report Fiscal 1999 Investor Highlights -- Fiscal 1999 (Quarter Ended October 2, 1998) Letter To Shareholders Research Coverage Consolidated Condensed Balance Sheets Consolidated Condensed Statements of Cash Flows Consolidated Condensed Statement of Income Revenues By Market Sector CSC's Business LETTER TO SHAREHOLDERS - November 23, 1998 Computer Sciences We reported earnings per share for the fiscal 1999 second quarter (ended Corporation provides a full October 2, 1998) of 45 cents per share (diluted), an increase of 21.6% from the range of services to industry 37 cents per share for last year's second quarter. Prior year earnings per share and government worldwide: reflect a 2- for-1 stock split in the form of a 100% stock dividend paid March Management q 23, 1998. consulting/ professional services; Net income for the current quarter was $73 million, an increase of 24.8% over Information systems the $58.6 million reported a year ago. Revenues for the fiscal 1999 second q consulting, design and quarter rose 17% to $1.85 billion from $1.58 billion for the prior year period. integration Our strong earnings performance reflects excellent revenue growth and Systems operations q improved margins. Revenue improvement in the second quarter was led by our and outsourcing European operations, which posted an increase of approximately 33%. Also, Corporations enlist CSC's our federal sector revenue continued to strengthen, increasing nearly 14%. expertise to attain strategic goals, while both industry and CSC is right on target for the first six months. Net income for the half rose governments use its services 23.6% to $137.4 million from last year's $111.1 million, which included a net to increase productivity and special credit of $1.7 million, or 1 cent per share. Excluding the net special efficiency. credit, earnings per share for the six months increased 23.2% to 85 cents per CSC operates in a strong, share from 69 cents per share (diluted) for the prior year period. Revenues for global market environment the six months totaled $3.6 billion, up 17.4% from the $3.07 billion reported for and is continuing to benefit the first half of the 1998 fiscal year. from the growing demand for management consulting and European revenue for the quarter increased 32.7% to $542.6 million from information technology $408.9 million from last year's second fiscal quarter. Both our United Kingdom solutions. operations and CSC Ploenzke, a leading information technology consultancy CSC had $7.1 billion in headquartered in Germany, contributed significantly 43% to revenue growth in revenue for the 12 months Europe. Consulting and systems integration services grew rapidly in such areas ended 10/02/98. The company (1 of 8) [03/29/2001 9:39:40 PM]
  2. 2. Investor Relations 2ND Quart Report Fiscal 1999 has more than 47,000 as client-server, supply chain, electronic commerce, data warehousing, 'Year employees and more than 700 2000' engagements, and enterprise-wide solutions such as SAP, Baan, Oracle offices worldwide. and PeopleSoft. Other international revenue for the quarter totaled $119.8 million, up 16.5% from the $102.8 million posted for the prior year's second quarter. U.S. federal revenue for the quarter increased 13.8% to $440.9 million from $387.3 million for the fiscal 1998 second quarter. The improved revenue came from new contracts, increased task orders on numerous existing contracts, and from an acquisition made during last year's fourth quarter. For the quarter just ended, U.S. commercial revenue grew $64 million over the same quarter last year. At $744 million, U.S. commercial revenues were up 9.5%, or 14.8% excluding last year's revenues from activities in our telecommunications operations and collections unit which were subsequently sold or phased out. Approximately half of the U.S. commercial growth was provided by information technology outsourcing contracts. The remainder was derived principally from demand for consulting and systems integration activities and continued expansion within the financial services and healthcare vertical markets. In October, we announced the acquisition of a 51% interest in KPMG Peat Marwick SA, a Paris-based management consulting and information technology services firm. This significantly increases our capabilities in France and makes our French operation one of the largest management and information technology consultancies in that country. We will acquire the remainder of the company, previously an independent firm and a member of the KPMG international network, early next year. So far this year we have announced $3.2 billion in international and U.S. commercial and U.S. federal awards, and our prospects in all three marketplaces are strong. Van B. Honeycutt Chairman, President and Chief Executive Officer INVESTMENT DATA NYSE: CSC Recent Closing Price: $60 9/16 (11/23/98) 52-Week Range: $37 1/2 - 74 7/8 Shares Outstanding: 158.5 million Registered Shareholders: Approx. 10,200 Institutional Ownership: 74% Average Daily Trading Volume: 2nd Quarter FY99 - 665,848 Market Cap: $9.6 billion (11/23/98) (2 of 8) [03/29/2001 9:39:40 PM]
  3. 3. Investor Relations 2ND Quart Report Fiscal 1999 MANAGEMENT CONSULTING Dramatically improves client organizations' operations. Often streamlines basic business processes. Examples: MidCon Corp. -- CSC was engaged by MidCon, a large mid-western natural gas company, to formulate a growth strategy and implement a plan to realign the company. The team built the idea of a quot;newquot; MidCon, or mc2, which would sell energy to a completely new market. CSC's consultants realigned the company, helping the entire organization Build its capacity and grow quickly. Motor Coach Industries (MCI) -- Tour bus maker, MCI, engaged CSC to perform a complete business diagnosis and develop strategies to gain back lost market share. The result was the successful launch of a new product line and the return to a leading position in the industry. SYSTEMS CONSULTING, DESIGN AND INTEGRATION Designs, develops and builds information technology systems. Combines hardware, software and communications into more productive systems. Examples: Sweden's Premium Pension Authority -- -CSC will provide software and services to help the Swedish government implement its new state pension reform. Under the contract, CSC will establish a life and pensions insurance administration system, allowing individual account holders to access and manage their portfolios and to supply the Authority with information through the Internet. Australian Department of Defense -- Under a contract to develop a new satellite-based mobile communications system capable of carrying classified messages, CSC will enhance existing software by incorporating encryption techniques and upgrade transmission security. The system will enable personnel in the Australian armed forces to communicate operational and administrative information throughout Australia and out to sea. (3 of 8) [03/29/2001 9:39:40 PM]
  4. 4. Investor Relations 2ND Quart Report Fiscal 1999 SYSTEMS OPERATIONS AND OUTSOURCING Directly operate clients' information systems. CSC often acquires clients' systems and employees. Examples: Dr. Pepper/Seven Up, Inc. (DPSU) -- The largest non- cola soft drink enterprise in North America, DPSU, enterprise in North America, DPSU, support, user support and ongoing system maintenance and enhancement services for their SAP applications. CSC will apply its Application Value Management (AVM) approach, which is a results-based offering with fees tied to value delivered rather than effort expanded. National Security Agency (NSA) -- CSC has been awarded the first federal government outsourcing contract involving the voluntary transition of federal employees to the private sector. Entitled the NSA Breakthrough Program, CSC will maintain daily computer systems operations and provide I/T services to the DoD agency. Lincoln National Corporation -- CSC has been engaged to provide application development, production support and ongoing maintenance services for the VANTAGE-ONE life insurance and annuity system. The agreement is part of Lincoln National's overall strategy to out-source information technology functions, so it can focus on its core competency of providing financial services. RESEARCH COVERAGE A.G. Edwards (Mark Jordan) Bear, Stearns (Jim Kissane) Brown Brothers Harriman (Greg Gieber) BT Alex. Brown (Ed Caso) CIBC Oppenheimer & Co. (Andrew Burns) CS First Boston (Mark Wolfenberger) Donaldson, Lufkin & Jenrette (Thomas Rooney) Furman Selz (Brian Maimone) Goldman Sachs (Greg Gould) J.P. Morgan Securities (Raimundo Archibold) Lehman Brothers (Patrick Burton/Karl Keirstead) Merrill Lynch (Steve McClellan) Morgan Stanley (David Togut) Prudential Securities (Thomas E. Browne, Jr.) Robinson Humphrey (David Keil) SG Cowen & Co. (Hugh Shytle) Sound View Financial Group (Gary Helmig) Standard & Poors Corporation (Brian Goodstadt) Value Line (David Rosenfield) Volpe Brown Whelan Co. (Chris Paul) (4 of 8) [03/29/2001 9:39:40 PM]
  5. 5. Investor Relations 2ND Quart Report Fiscal 1999 Warburg Dillion Road (Moshe Katri) Wheat, First Union (Jeff Newman) Consolidated Condensed Balance Sheets (5 of 8) [03/29/2001 9:39:40 PM]
  6. 6. Investor Relations 2ND Quart Report Fiscal 1999 Consolidated Condensed Statements of Cash Flows (unaudited) Consolidated Condensed Statements of Income (unaudited) (a) As previously disclosed, the results for the first quarter ended June 27, 1997 included a net special credit of $1.7 million, or 1 cent per share (diluted). The net credit resulted from a $208.4 million special charge ($133.3 million after tax) and a $135.0 million income tax benefit, both of which related to developments at an affiliated joint venture during the first quarter. (6 of 8) [03/29/2001 9:39:40 PM]
  7. 7. Investor Relations 2ND Quart Report Fiscal 1999 Revenues By Market Sector (unaudited) Forward-Looking Statements All statements contained in this quarter report, or in any document filed by the Company with the Securities and Exchange Commission, or in any press release or other written or oral communication by or on behalf of the Company, that do not directly and exclusively relate to historical facts constitute quot;forward-looking statementsquot; within the meaning of the Private Securities Litigation Reform Act of 1995. These statements represent the Company's expectations and beliefs, and no assurance can be given that the results described in such statements will be achieved. These statements are subject to risks, uncertainties and other factors, many of which are outside of the Companies control, that could cause actual results to differ materially from the results described in such statements. These factors include, without limitation, the following: (i) competitive pressures; (ii) the Company's ability to attract and retain key personnel; (iii) changes in the demand for information technology outsourcing and business process outsourcing; (iv) changes in the financial condition of the Company's major commercial customers; (v) changes in U.S. federal government spending levels for information technology services; (vi) the Company's ability to consummate strategic acquisitions and alliances; (vii) the future profitability of the Company's customer contracts; (viii) the Company's ability to continue to develop and expand its service offerings to address emerging business demand and technological trends; and (ix) general economic conditions in countries in which the Company does business; and (x) the ability of the Company, its customers and suppliers to become Year 2000 ready. SHAREHOLDER SERVICES FINANCIAL COMMUNITY INFORMATION Registered shareholders with questions concerning the Inquiries from institutional investors, financial analysts, and transfer or registration of their shares may call our portfolio managers should be directed to: Shareholder Relations office at (800) 542-3070. Bill Lackey (310) 615-1700 Director, Investor Relations For prompt assistance on address changes, consolidation of duplicate accounts or related matters, shareholders should Inquiries from individual shareholders and registered write or call CSC's transfer agent: representatives should be directed to: ChaseMellon Lisa Runge (310) 615-1680 Shareholder Services LLC Manager, Investor Relations P.O.Box 3315 S. Hackensack, NJ 07660 LITERATURE REQUESTS USA (201) 329-8660 To receive reports recent financial reports, press (800) 526-0801 releases and other corporate information please call: CSC's automated request line: (310) 615-4455 or CSC's facsimile service at: (800) 962-7328 (7 of 8) [03/29/2001 9:39:40 PM]
  8. 8. Investor Relations 2ND Quart Report Fiscal 1999 INTERNET INQUIRIES CSC's home page address on the Internet: Investor Highlights is designed for individual investors and professionals who advise them, and does not constitute an offer to buy or sell securities. To obtain additional information, e-mail or write: E-Mail inquiries are also welcomed at: Bill Lackey Director, Investor Relations Computer Sciences Corporation 2100 East Grand Avenue El Segundo, California 90245, USA [About CSC] [Industries] [Solutions] [Career Opportunities] [Investor Relations] [Press Releases] [Contact CSC] [Search] [Home] Copyright © 2000 Computer Sciences Corporation. All rights reserved. (8 of 8) [03/29/2001 9:39:40 PM]