computer sciences FY 2003 Q1


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computer sciences FY 2003 Q1

  1. 1. Computer Sciences Corporation QUARTERLY HIGHLIGHTS FIRST QUARTER FISCAL 2003 (ENDED JUNE 28, 2002) ABOUT CSC Both our global commercial outsourcing and U.S. federal opportunity pipelines are healthy and provide a source of confidence as we pursue a substantial set of potential client engagements. The difficult worldwide economy has lengthened the global commercial outsourcing decision-making process, but it has not resulted in a diminished Computer Sciences pipeline. Our record of success in delivering cost savings and operational improvements to clients globally positions Corporation, one of the us to benefit from this expanding IT outsourcing market. We will continue our discipline around controlling our costs, world’s leading consulting improving operating efficiencies and aggressively pursuing those opportunities which will contribute to our long-term and information technology success and improve our return on investment. (IT) services firms, helps Van B. Honeycutt clients in industry and Chairman and Chief Executive Officer government achieve Computer Sciences Corporation strategic and operational results through the use of Computer Sciences Corporation fiscal 2003 first quarter results include: revenues of $2.76 billion, a technology. The company’s 2% increase over last year’s comparable quarter (approximately 1% in constant currency); net income success is based on its of $79.0 million; and earnings per share (diluted) of 46 cents; and announced major new business awards culture of working collabo- of $1.1 billion. ratively with clients to Effective March 30, 2002, the company adopted SFAS No. 142, which eliminates the amortization develop innovative technol- of goodwill and certain intangible assets. Earnings per share before goodwill and employee workforce ogy strategies and solutions amortization increased 18% over the same period last year. This year’s fiscal first quarter revenue increase that address specific was primarily driven by U.S. federal government activities. Earnings per share growth resulted from business challenges. continued profitability improvement. With nearly 18% revenue growth, CSC’s U.S. federal government activities comprised 29% of quarterly Having guided clients revenue. Global commercial outsourcing accounted for another 48% of CSC’s total revenue and, together, through every major wave these two long-term contract revenue sources totaled approximately 77%. of change in information CSC’s North American consulting and systems integration activities have been operating under a technology since 1959, significant slowdown in demand for several quarters. Focus on specific vertical markets and a unique CSC combines the newest plan-build-manage competency, along with structural and other strategic moves, has resulted in a stronger technologies with its competitive position for the company. For the quarter just ended, North American consulting and systems capabilities in consulting, integration revenues were ahead of the preceding quarter, ended March 29, 2002, and profitability systems design and inte- improved compared to both the first quarter of last fiscal year and the preceding quarter. gration, IT and business For the first quarter, revenue derived from CSC’s U.S. federal government activities showed excellent process outsourcing, growth, increasing to $791.7 million, up 17.6% from the $673.2 million recorded in last year’s comparable applications software, and quarter. Department of Defense (DoD) activities rose 15.2% to $472.9 million from last year’s $410.6 Web and application hosting million, with significant contributions from intelligence community activities and several new awards and to meet the individual task orders. Civil agencies business rose to $318.8 million, up 21.4% from the $262.6 million reported last needs of global corporations year, aided primarily by increased work from the IRS Modernization activity and additional tasking from and organizations. NASA, the Environmental Protection Agency and the Immigration and Naturalization Service. Global commercial revenues declined 3.3% (approximately 4.9% in constant currency), to $1.97 With more than 66,000 billion compared with $2.04 billion in last year’s first quarter. The continued slowdown in demand for employees in locations global commercial consulting and systems integration project work was partially offset by growth in the worldwide, CSC had company’s global outsourcing activities. U.S. commercial revenue was $1.0 billion, down 4.8%. European revenues of $11.5 billion revenue was $681.9 million, essentially unchanged from the same quarter a year ago (down approximately for the 12 months ended 3.5% in constant currency). CSC’s non-European international revenue declined 5.2% (approximately June 28, 2002. 8.4% in constant currency) from last year’s $303.3 million. FINANCIAL HIGHLIGHTS 1ST QUARTER FISCAL 2003 (unaudited) Revenues By Major Market First Quarter U.S. Federal Commercial 29% 71% 6/28/02 $ in millions, except per-share amounts 6/29/01 ($ in millions) $2,764.8 Revenues $2,713.7 U.S. Commercial – $1,003.7 17% Europe – $681.9 $ 79.0 Net Income $ 47.7 36% 12% Other International – $287.5 $ 0.46 Diluted Earnings Per Share $ 0.28 10% U.S. DoD – $472.9 Effective March 30, 2002, the Company adopted SFAS No. 142 which requires 25% U.S. Civil Agencies – $318.8 that upon adoption goodwill and certain other intangible assets must no longer be amortized. Amortization of goodwill and acquired employee workforce was $19.1 million ($18.3 million after tax), or 11 cents per share (diluted), during the first quarter ended June 29, 2001. Total – $2,764.8
  2. 2. • The United Kingdom Department CSC’S SERVICES ENCOMPASS INVESTMENT DATA of Health – The United Kingdom NY SE: CSC SEVERAL BROAD AREAS Department of Health awarded • Outsourcing – Involves operating all Recent Closing Price: 37 (8/16/02) CSC an IT outsourcing contract to or a portion of a customer’s technology 52-Week Range: 30.96 – 53.47 support and enhance the Department’s infrastructure. CSC also provides Shares Outstanding: 171.6 million information and communications business process outsourcing, which Registered Shareholders: 10,171 technology investments. Through the is the management of a client’s non- Institutional Ownership: 79% contract, the Department is looking core business functions. Average Daily Trading Volume: to gain an increase in effectiveness 1st Quarter F Y 2003 – 1,126,173 through remote and offsite working, • Consulting, Systems Integration Market Cap: $6.3 billion in addition to achieving greater and Professional Services – Designing, connectivity and communication developing, implementing and RESEARCH COVERAGE across networks with the National integrating complete information A.G. Edwards (Greg Gieber) Health Service and other partner systems, as well as advising clients Banc of America (Prakash Parthasarathy) institutions. on the strategic acquisition and Bear, Stearns ( Jim Kissane) utilization of IT. Bernstein (Rod Bourgeois) • D&B – CSC and D&B, formerly known CS First Boston (Barry Chubrik) as Dun & Bradstreet, signed an IT Deutsche Bank (William Zinsmeister) RECENT ENGAGEMENTS INCLUDE: outsourcing agreement whereby D&B • Environmental Protection Agency Goldman Sachs (Greg Gould) will transition to CSC data center (EPA) – A task order was awarded to J.P. Morgan Securities (Dirk Godsey) operations, technology help desk CSC to assist the EPA in implementing Legg Mason (William Loomis) and network management functions and operating a Central Data Exchange Lehman Brothers (Karl Keirstead) in the U.S. and the United Kingdom. (CDX). The CDX will serve as an Merrill Lynch (Stephen McClellan) D&B, the leading provider of business enterprisewide portal, providing a Morgan Stanley (David Togut) information and technology solutions, single point of entry for required SG Cowen & Co. (Moshe Katri) is outsourcing its technology operations environmental reporting from federal, Salomon Smith Barney (Pat Burton) to focus more of its resources on state and local government agencies, SoundView ( John Jones, Jr.) driving growth in its core business. tribal communities and industry. Standard & Poor’s ( Richard Stice) Thomas Weisel Partners (David Grossman) • Raytheon Company -- Under three • U.S. Department of State (DoS) – UBS Warburg (Adam Frisch) agreements, Raytheon Company Under an agreement with the DoS, U.S. Bancorp Piper Jaffray extended and expanded its IT CSC will provide the full spectrum of (T. Brett Manderfeld) outsourcing contracts with CSC. IT support services and professional/ Value Line (George Niemond) One agreement calls for CSC to technical services to DoS organizations, manage Raytheon Aircraft Company’s bureaus and U.S. embassies in more SHAREHOLDER SERVICES IT infrastructure and under two than 280 locations worldwide. The For more information regarding CSC: new extended agreements, CSC will contract is part of a long-term depart- continue to provide engineering ment effort to improve its IT capabili- • Shareholder services and literature computing and applications support ties supporting U.S. foreign policy request line – (800)542-3070 to Raytheon. activities in more than 150 countries. • Website – CSC REVENUE GROWTH 1ST QUARTER FISCAL 2003 REVENUES BY BUSINESS SERVICES* • Registrar and transfer agent – FY 1998- 2002* Mellon Investor Services $ in billions $ 12 P.O. Box 3315 23% S. Hackensack, New Jersey 07606 48% (800)526 - 0801 or (201)329- 8660 10 23% • CSC Investor Relations – 6% OUTSOURCING . . . . . . . . . . . . . . . . . . . . 54% Bill Lackey 8 Global Commercial 48% Director, Investor Relations Federal Sector 6% (310)615 -1700 CONSULTING, SYSTEMS INTEGRATION AND PROFESSIONAL SERVICES . . . . . . . .46% 6 Lisa Runge Global Commercial 23% FY98 FY99 FY00 FY01 FY02 Federal Sector 23% 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 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 June 28, 2002. Printed in U.S.A. WH# CC -1Q03