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computer sciences FY 2002 Q3


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computer sciences FY 2002 Q3

  1. 1. Computer Sciences Corporation QUARTERLY HIGHLIGHTS QUARTER FISCAL 2002 (ENDED DECEMBER 28, 2001) THIRD ABOUT CSC We are pleased with the progress we have made over the first three quarters of fiscal 2002 transitioning from the very difficult environment of late fiscal 2001. While the current environment continues to be challenging, the solid performance of CSC’s global commercial outsourcing activities, the strong revenue growth from our U.S. Computer Sciences federal government operations and additional revenue generating opportunities within the financial services market Corporation, one of the provided the major contributions to our increased quarterly revenue. world’s leading consulting Van B. Honeycutt and information technology Chairman and Chief Executive Officer (IT) services firms, helps Computer Sciences Corporation clients in industry and government achieve strategic and operational For the third quarter (ended December 28): revenues were $2.9 billion, an 8.9% increase over fiscal results through the use of 2001; net income was $87.1 million; earnings per share (diluted) were 51 cents; and announced major technology. The company’s new business awards were $3.2 billion. success is based on its For the nine months (ended December 28): revenues were $8.4 billion, up 9.9% over the comparable culture of working collabo- nine-month period of fiscal 2001 (up 11.3% in constant currency); net income was $203 million; earnings ratively with clients to per share (diluted) were $1.19; and announced major new business awards totaled $10.2 billion. For the third quarter, global commercial revenues grew 7.2%, to $2.2 billion compared with $2.0 billion develop innovative technol- in last year’s third quarter. The strong revenue performance from the company’s global outsourcing ogy strategies and solutions activity and financial services operation, enhanced by the Mynd acquisition, was moderated by the that address specific continued slowdown in the rate of growth for commercial consulting and systems integration project business challenges. work in North America and elsewhere. U.S. commercial revenue rose 9.5%, to $1.1 billion from last year’s $1 billion, fueled by solid contributions from U.S. commercial outsourcing clients. European Having guided clients revenue, led by commercial outsourcing activities, was up 8.7%, rising to $764.3 million from last year’s through every major wave $703.4 million. Non-European international revenue was down 3.2% to $304.1 million from last year’s of change in information $314.2 million, primarily due to strength in outsourcing being more than offset by reduced demand technology since 1959, for consulting and systems integration services resulting from the weakness in the Asian economies. CSC combines the newest Revenue generated from CSC’s U.S. federal government activities increased to $737.5 million, up technologies with its 13.9% from the $647.5 million recorded in last year’s third quarter. Department of Defense (DoD) capabilities in consulting, activities rose 15.5% to $461.5 million from last year’s $399.4 million, with meaningful contributions systems design and inte- from the National Security Agency Groundbreaker award, the Army Logistics Modernization program gration, IT and business and other additional task orders. Revenue from CSC’s civil agencies business rose to $276 million, up process outsourcing, 11.3%, from $248.1 million last year, aided by increased work under the IRS Modernization award, the applications software, and Health Care Financing Administration (HCFA) and several new awards. Web and application hosting CSC’s execution of cost reduction efforts, including back-office consolidations initiated during fiscal to meet the individual 2001, continue to pay dividends. The North American based consulting and systems integration business needs of global corporations has been structured to address the current market demand for these services, resulting in improved perfor- and organizations. mance levels. CSC has recently experienced some anticipated slowdown in the growth rate for consulting and systems integration services outside of North America, although so far not as severe as in the United States. With 68,000 employees The company continues to be pleased with its progress on aligning the execution and performance in locations worldwide, of recent outsourcing engagements to meet the needs of clients. Improved performance and constructive CSC had revenues changes to those contracts have solidified the relationships. of $11.3 billion for The healthy demand for global commercial outsourcing and the strong opportunity set within the the 12 months ended U.S. federal government are illustrative of the market dynamics the company believes will lead to continued December 28, 2001. revenue potential for CSC. 3RD QUARTER FISCAL 2002 FINANCIAL HIGHLIGHTS (unaudited) Revenues By Major Market Third Quarter Nine Months Ended U.S. Federal Commercial $ in millions, except 12/28/01 12/29/00 12/28/01 12/29/00 25% 75% per-share amounts ($ in millions) U.S. Commercial — $1,095.0 Revenues $2,900.9 $2,664.7 16% $ 7,626.9 $ 8,379.8 Europe — $764.3 $ 270.6* 65.6 * 9% Net Income 87.1 $ $ $ 203.0 38% Other International — $304.1 Diluted Earnings 11% U.S. DoD — $461.5 0.38 * 1.58 * Per Share $ 0.51 $ $ 1.19 $ U.S. Civil Agencies — $276.0 26% * Includes special items of $84.2 million ($57.3 million after income taxes), or 34 cents per share (diluted) which principally resulted from the restructuring of CSC’s global financial services activities following the December 2000 acquisition of Mynd Corporation. Total – $2,900.9
  2. 2. • Department of Defense (DoD) – CSC’S SERVICES ENCOMPASS INVESTMENT DATA In an agreement that more than NY SE: CSC THREE BROAD AREAS doubles global spending to combat • Outsourcing – Directly operate clients’ Recent Closing Price: 49.45 (2/11/02) cybercrime, CSC has won a contract information systems. CSC often 52-Week Range: 28.99 – 64.95 to support the U.S. DoD Computer acquires clients’ systems and employees. Shares Outstanding: 170.9 million Investigations Training Program. Registered Shareholders: 10,133 CSC will assist the DoD in researching, • Management Consulting/Professional Institutional Ownership: 78% developing and delivering state-of- Services – Dramatically improve client Average Daily Trading Volume: the-art computer investigation training organizations’ operations. Often 3rd Quarter F Y 2002 – 958,570 courses for military law enforcement streamline basic business processes. Market Cap: $8.5 billion professionals that support the prosecution of criminal activities • Systems Integration – Design, develop RESEARCH COVERAGE and execution of counter-intelligence and build information technology A.G. Edwards (Greg Gieber) actions. systems. Combine hardware, software Banc of America (Prakash Parthasarathy) and communications into more Bear, Stearns ( Jim Kissane) • Gulfstream – Reflecting CSC’s global productive systems. Bernstein (Rod Bourgeois) leadership in providing advanced IT CS First Boston (Barry Chubrik) solutions to the aerospace industry, Goldman Sachs (Greg Gould) RECENT ENGAGEMENTS INCLUDE: Gulfstream Aerospace Corporation, • Allders – Under an IT outsourcing J.P. Morgan Securities (Dirk Godsey) a wholly owned subsidiary of General contract, CSC will support U.K.-based Legg Mason (William Loomis) Dynamics, has selected CSC for an IT Allders Department Stores by managing Lehman Brothers (Karl Keirstead) outsourcing agreement. The contract the company’s applications portfolio Merrill Lynch (Stephen McClellan) is designed to help Gulfstream focus and IT infrastructure. CSC will also Morgan Stanley (David Togut) on its core competencies and achieve support a number of IT initiatives SG Cowen & Co. (Moshe Katri) key business goals. ranging from upgrading Allders’ Salomon Smith Barney (Pat Burton) financial systems to implementing a SoundView (Gary Helmig) • Transora -- CSC has expanded its corporate intranet. Standard & Poor’s ( Jonathan Rudy) procurement services client roster Thomas Weisel Partners (David Grossman) with the addition of Transora, the • Department of Education (DoEd) – CSC UBS Warburg (Adam Frisch) world’s largest e-marketplace for the and the U.S. DoEd Office of Student U.S. Bancorp Piper Jaffray consumer packaged goods industry. Financial Assistance have agreed to (T. Brett Manderfeld) CSC has been chosen as the supplier extend a student loan data center task Value Line (George Niemond) of computer hardware, software order. CSC will help the DoEd deliver and related services to Transora’s improved service and reduce the cost SHAREHOLDER SERVICES Collaborative Sourcing customers. of delivering aid to American students For more information regarding CSC: In addition, CSC will assist Transora seeking financial assistance. Since 1997, in developing full e-procurement CSC has helped the DoEd migrate • Shareholder services and literature capabilities in support of the IT and consolidate legacy systems into a request line – (800)542-3070 procurement service. seamless and accessible system. • Website – 3RD QUARTER FISCAL • Registrar and transfer agent – CSC REVENUE GROWTH FY 1997- 2001* Mellon Investor Services 2002 REVENUES P.O. Box 3315 BY BUSINESS SERVICES* $ in billions $ 12 S. Hackensack, New Jersey 07606 Systems (800)526 - 0801 or (201)329- 8660 Outsourcing Integration 10 18% • CSC Investor Relations – 51% Bill Lackey 8 Director, Investor Relations 31% (310)615 -1700 Management Consulting/ 6 Lisa Runge Professional Services FY97 FY98 FY99 FY00 FY01 Manager, Investor Relations (310)615 -1680 * CSC’s fiscal year ends the Friday closest to March 31. * Based on CSC estimates. All statements in this document that do not directly and exclusively relate to historical Email: facts constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements represent the Company’s intentions, plans, expectations and beliefs, and are subject to risks, uncertainties and other factors, • Headquarters many of which are outside the Company’s control. These factors could cause actual 2100 East Grand Avenue results to differ materially from such forward-looking statements. For a description El Segundo, California 90245, USA of these factors, see the section titled “Forward-Looking Statements” in the Company’s (310)615-0311 Quarterly Report on Form 10-Q for the fiscal quarter ended December 28, 2001. Printed in U.S.A. WH# CC -3Q02