computer sciences FY 2003 Q1
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Total – $2,764.8 ABOUT CSC Computer Sciences Corporation, one of the world’s leading consulting and information technology (IT) services firms, helps clients in industry and government achieve strategic and operational results through the use of technology. The company’s success is based on its culture of working collabo- ratively with clients to develop innovative technol- ogy strategies and solutions that address specific business challenges. Having guided clients through every major wave of change in information technology since 1959, CSC combines the newest technologies with its capabilities in consulting, systems design and inte- gration, IT and business process outsourcing, applications software, and Web and application hosting to meet the individual needs of global corporations and organizations. With more than 66,000 employees in locations worldwide, CSC had revenues of $11.5 billion for the 12 months ended June 28, 2002. 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 pipeline. Our record of success in delivering cost savings and operational improvements to clients globally positions us to benefit from this expanding IT outsourcing market. We will continue our discipline around controlling our costs, improving operating efficiencies and aggressively pursuing those opportunities which will contribute to our long-term success and improve our return on investment. Van B. Honeycutt Chairman and Chief Executive Officer Computer Sciences Corporation F INANCIAL HIGHLIGHTS Commercial 71% U.S. Federal 29% 1 ST QUARTER FISCAL 2003 Revenues By Major Market (unaudited) First Quarter 6/29/01 $2,713.7 $ 47.7 $ 0.28 $ in millions, except per-share amounts Revenues Net Income Diluted Earnings Per Share 6/28/02 $2,764.8 $ 79.0 $ 0.46 Computer Sciences Corporation fiscal 2003 first quarter results include: revenues of $2.76 billion, a 2% increase over last year’s comparable quarter (approximately 1% in constant currency); net income of $79.0 million; and earnings per share (diluted) of 46 cents; and announced major new business awards of $1.1 billion. Effective March 30, 2002, the company adopted SFAS No. 142, which eliminates the amortization of goodwill and certain intangible assets. Earnings per share before goodwill and employee workforce amortization increased 18% over the same period last year. This year’s fiscal first quarter revenue increase was primarily driven by U.S. federal government activities. Earnings per share growth resulted from continued profitability improvement. With nearly 18% revenue growth, CSC’s U.S. federal government activities comprised 29% of quarterly revenue. Global commercial outsourcing accounted for another 48% of CSC’s total revenue and, together, these two long-term contract revenue sources totaled approximately 77%. CSC’s North American consulting and systems integration activities have been operating under a significant slowdown in demand for several quarters. Focus on specific vertical markets and a unique plan-build-manage competency, along with structural and other strategic moves, has resulted in a stronger competitive position for the company. For the quarter just ended, North American consulting and systems integration revenues were ahead of the preceding quarter, ended March 29, 2002, and profitability improved compared to both the first quarter of last fiscal year and the preceding quarter. For the first quarter, revenue derived from CSC’s U.S. federal government activities showed excellent growth, increasing to $791.7 million, up 17.6% from the $673.2 million recorded in last year’s comparable quarter. Department of Defense (DoD) activities rose 15.2% to $472.9 million from last year’s $410.6 million, with significant contributions from intelligence community activities and several new awards and task orders. Civil agencies business rose to $318.8 million, up 21.4% from the $262.6 million reported last year, aided primarily by increased work from the IRS Modernization activity and additional tasking from 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 billion compared with $2.04 billion in last year’s first quarter. The continued slowdown in demand for global commercial consulting and systems integration project work was partially offset by growth in the company’s global outsourcing activities. U.S. commercial revenue was $1.0 billion, down 4.8%. European revenue was $681.9 million, essentially unchanged from the same quarter a year ago (down approximately 3.5% in constant currency). CSC’s non-European international revenue declined 5.2% (approximately 8.4% in constant currency) from last year’s $303.3 million. ($ in millions) U.S. Commercial – $1,003.7 Europe – $681.9 Other International – $287.5 U.S. DoD – $472.9 U.S. Civil Agencies – $318.8 Computer Sciences Corporation Q UARTERLY H IGHLIGHTS F IRST Q UARTER FISCAL 2003 (ENDED JUNE 28, 2002) 17% 12% 10% 25% 36% Effective March 30, 2002, the Company adopted SFAS No. 142 which requires 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.
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Transcript of computer sciences FY 2003 Q1
Total – $2,764.8
ABOUT CSC
Computer Sciences Corporation, one of theworld’s leading consultingand information technology(IT) services firms, helpsclients in industry andgovernment achieve strategic and operationalresults through the use oftechnology. The company’ssuccess is based on its culture of working collabo-ratively with clients todevelop innovative technol-ogy strategies and solutionsthat address specific business challenges.
Having guided clientsthrough every major waveof change in informationtechnology since 1959,CSC combines the newesttechnologies with its capabilities in consulting,systems design and inte-gration, IT and businessprocess outsourcing,applications software, andWeb and application hosting to meet the individualneeds of global corporationsand organizations.
With more than 66,000employees in locationsworldwide, CSC had revenues of $11.5 billionfor the 12 months ended June 28, 2002.
Both our global commercial outsourcing and U.S. federal opportunity pipelines are healthy and provide a sourceof confidence as we pursue a substantial set of potential client engagements. The difficult worldwide economy haslengthened the global commercial outsourcing decision-making process, but it has not resulted in a diminishedpipeline. Our record of success in delivering cost savings and operational improvements to clients globally positionsus to benefit from this expanding IT outsourcing market. We will continue our discipline around controlling our costs,improving operating efficiencies and aggressively pursuing those opportunities which will contribute to our long-termsuccess and improve our return on investment.
Van B. HoneycuttChairman and Chief Executive OfficerComputer Sciences Corporation
FINANCIAL HIGHLIGHTS
Commercial71%
U.S. Federal29%
1ST QUARTER FISCAL 2003Revenues By Major Market (unaudited)
First Quarter
6/29/01
$2,713.7
$ 47.7
$ 0.28
$ in millions, except per-share amounts
Revenues
Net Income
Diluted Earnings Per Share
6/28/02
$2,764.8
$ 79.0
$ 0.46
Computer Sciences Corporation fiscal 2003 first quarter results include: revenues of $2.76 billion, a2% increase over last year’s comparable quarter (approximately 1% in constant currency); net incomeof $79.0 million; and earnings per share (diluted) of 46 cents; and announced major new business awardsof $1.1 billion.
Effective March 30, 2002, the company adopted SFAS No. 142, which eliminates the amortizationof goodwill and certain intangible assets. Earnings per share before goodwill and employee workforceamortization increased 18% over the same period last year. This year’s fiscal first quarter revenue increasewas primarily driven by U.S. federal government activities. Earnings per share growth resulted fromcontinued profitability improvement.
With nearly 18% revenue growth, CSC’s U.S. federal government activities comprised 29% of quarterlyrevenue. Global commercial outsourcing accounted for another 48% of CSC’s total revenue and, together,these two long-term contract revenue sources totaled approximately 77%.
CSC’s North American consulting and systems integration activities have been operating under asignificant slowdown in demand for several quarters. Focus on specific vertical markets and a uniqueplan-build-manage competency, along with structural and other strategic moves, has resulted in a strongercompetitive position for the company. For the quarter just ended, North American consulting and systemsintegration revenues were ahead of the preceding quarter, ended March 29, 2002, and profitabilityimproved compared to both the first quarter of last fiscal year and the preceding quarter.
For the first quarter, revenue derived from CSC’s U.S. federal government activities showed excellentgrowth, increasing to $791.7 million, up 17.6% from the $673.2 million recorded in last year’s comparablequarter. Department of Defense (DoD) activities rose 15.2% to $472.9 million from last year’s $410.6million, with significant contributions from intelligence community activities and several new awards andtask orders. Civil agencies business rose to $318.8 million, up 21.4% from the $262.6 million reported lastyear, aided primarily by increased work from the IRS Modernization activity and additional tasking fromNASA, the Environmental Protection Agency and the Immigration and Naturalization Service.
Global commercial revenues declined 3.3% (approximately 4.9% in constant currency), to $1.97billion compared with $2.04 billion in last year’s first quarter. The continued slowdown in demand forglobal commercial consulting and systems integration project work was partially offset by growth in thecompany’s global outsourcing activities. U.S. commercial revenue was $1.0 billion, down 4.8%. Europeanrevenue was $681.9 million, essentially unchanged from the same quarter a year ago (down approximately3.5% in constant currency). CSC’s non-European international revenue declined 5.2% (approximately8.4% in constant currency) from last year’s $303.3 million.
($ in millions)
U.S. Commercial – $1,003.7
Europe – $681.9
Other International – $287.5
U.S. DoD – $472.9
U.S. Civil Agencies – $318.8
Computer Sciences Corporation
Q UA RT E R LY H I G H L I G H T SFIRST QUARTER FISCAL 2003 (ENDED JUNE 28, 2002)
17%
12%
10%
25%
36%
Effective March 30, 2002, the Company adopted SFAS No. 142 which requiresthat upon adoption goodwill and certain other intangible assets must no longerbe amortized. Amortization of goodwill and acquired employee workforcewas $19.1 million ($18.3 million after tax), or 11 cents per share (diluted),during the first quarter ended June 29, 2001.
All statements in this document that do not directly and exclusively relate to historicalfacts constitute “forward-looking statements” within the meaning of the Private SecuritiesLitigation 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 the Company’s control. These factors could cause actualresults to differ materially from such forward-looking statements. For a descriptionof these factors, see the section titled “Forward-Looking Statements” in the Company’sQuarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2002.
Printed in U.S.A. WH# CC-1Q03
CSC REVENUE GROWTHFY 1998-2002*
* CSC’s fiscal year ends the Friday closest to March 31.
INVESTMENT DATA
NYSE: CSCRecent Closing Price: 37 (8/16/02)52-Week Range: 30.96 – 53.47Shares Outstanding: 171.6 millionRegistered Shareholders: 10,171Institutional Ownership: 79%Average Daily Trading Volume:
1st Quarter FY 2003 – 1,126,173Market Cap: $6.3 billion
RESEARCH COVERAGE
A.G. Edwards (Greg Gieber)Banc of America (Prakash Parthasarathy)Bear, Stearns ( Jim Kissane)Bernstein (Rod Bourgeois)CS First Boston (Barry Chubrik)Deutsche Bank (William Zinsmeister)Goldman Sachs (Greg Gould)J.P. Morgan Securities (Dirk Godsey)Legg Mason (William Loomis)Lehman Brothers (Karl Keirstead)Merrill Lynch (Stephen McClellan)Morgan Stanley (David Togut)SG Cowen & Co. (Moshe Katri)Salomon Smith Barney (Pat Burton)SoundView ( John Jones, Jr.)Standard & Poor’s ( Richard Stice)Thomas Weisel Partners (David Grossman)UBS Warburg (Adam Frisch)U.S. Bancorp Piper Jaffray
(T. Brett Manderfeld)Value Line (George Niemond)
SHAREHOLDER SERVICES
For more information regarding CSC:
• Shareholder services and literaturerequest line – (800)542-3070
• Website – www.csc.com
• Registrar and transfer agent –Mellon Investor ServicesP.O. Box 3315S. Hackensack, New Jersey 07606(800)526 -0801 or (201)329-8660www.mellon-investor.com
• CSC Investor Relations –Bill Lackey
Director, Investor Relations (310)615-1700
Lisa RungeManager, Investor Relations(310)615-1680
Email: [email protected]
• Headquarters2100 East Grand AvenueEl Segundo, California 90245, USA(310)615-0311
CSC’S SERVICES ENCOMPASS
SEVERAL BROAD AREAS
• Outsourcing – Involves operating allor a portion of a customer’s technologyinfrastructure. CSC also providesbusiness process outsourcing, whichis the management of a client’s non-core business functions.
• Consulting, Systems Integration and Professional Services – Designing,developing, implementing and integrating complete information systems, as well as advising clients on the strategic acquisition and utilization of IT.
RECENT ENGAGEMENTS INCLUDE:• Environmental Protection Agency
(EPA) – A task order was awarded toCSC to assist the EPA in implementingand operating a Central Data Exchange(CDX). The CDX will serve as anenterprisewide portal, providing asingle point of entry for requiredenvironmental reporting from federal,state and local government agencies,tribal communities and industry.
• U.S. Department of State (DoS) –Under an agreement with the DoS,CSC will provide the full spectrum ofIT support services and professional/technical services to DoS organizations,bureaus and U.S. embassies in morethan 280 locations worldwide. Thecontract is part of a long-term depart-ment effort to improve its IT capabili-ties supporting U.S. foreign policyactivities in more than 150 countries.
• The United Kingdom Department of Health – The United KingdomDepartment of Health awarded CSC an IT outsourcing contract tosupport and enhance the Department’sinformation and communicationstechnology investments. Through thecontract, the Department is lookingto gain an increase in effectivenessthrough remote and offsite working,in addition to achieving greater connectivity and communicationacross networks with the NationalHealth Service and other partnerinstitutions.
• D&B – CSC and D&B, formerly knownas Dun & Bradstreet, signed an IToutsourcing agreement whereby D&Bwill transition to CSC data centeroperations, technology help desk and network management functionsin the U.S. and the United Kingdom.D&B, the leading provider of businessinformation and technology solutions,is outsourcing its technology operationsto focus more of its resources on driving growth in its core business.
• Raytheon Company -- Under threeagreements, Raytheon Companyextended and expanded its IT outsourcing contracts with CSC. One agreement calls for CSC to manage Raytheon Aircraft Company’sIT infrastructure and under two new extended agreements, CSC willcontinue to provide engineeringcomputing and applications supportto Raytheon.
$ $ in billions12
10
8
6FY98 FY99 FY00 FY01 FY02
1ST QUARTER FISCAL 2003REVENUES BY BUSINESS SERVICES*
* Based on CSC estimates.
6%
23%
23%
48%
OUTSOURCING . . . . . . . . . . . . . . . . . . . . 54%Global Commercial 48%Federal Sector 6%
CONSULTING, SYSTEMS INTEGRATIONAND PROFESSIONAL SERVICES . . . . . . . .46%
Global Commercial 23%Federal Sector 23%
