1st QUARTER FY 2014
EARNINGSPRESENTATION
August 6, 2013
21st Quarter FY 2014 Earnings Presentation August 6, 2013
Forward-Looking Statements
All written or oral statements made by CSC at this meeting or in these presentation materials that do not directly and exclusively relate to historical facts constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements represent CSC’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 outside of CSC’s control, that could cause actual results to differ materially from the results described in such statements. For a
description of these factors, please see CSC’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
31st Quarter FY 2014 Earnings Presentation August 6, 2013
Non-GAAP Reconciliations
This presentation includes certain non-GAAP financial measures, such as operating income, operating margin, earnings before interest and taxes (EBIT), EBIT margin, free cash flow,
and capital expenditures. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for results prepared in accordance with
accounting principles generally accepted in the United States (GAAP). A reconciliation of non-GAAP financial measures included in this presentation to the most directly comparable
financial measure calculated and presented in accordance with GAAP accompanies this presentation and is on our website at www.csc.com. CSC management believes that these
non-GAAP financial measures provide useful information to investors regarding the Company’s financial condition and results of operations as they provide another measure of the Company’s profitability and ability to service its debt, and are considered important
measures by financial analysts covering CSC and its peers.
1st QUARTER FY 2014 EARNINGS
Mike LawrieChief Executive Officer
51st Quarter FY 2014 Earnings Presentation August 6, 2013
Making investments to drive growth
Cost takeout drove higher margins and EPS
Continuing to return more cash to shareholders
Raising FY 2014 EPS* target to $3.50 – $3.70
Key Messages
*EPS from Continuing Operations
1st QUARTER FY 2014 EARNINGS
Paul SalehChief Financial Officer
71st Quarter FY 2014 Earnings Presentation August 6, 2013
1st Quarter Results
*Adjusted primarily for divestiture of Australian IT staffing business and NHS milestone payment in FY 2013
FY14 FY13
Revenue ($M) $ 3,260 $ 3,633
Adjusted Growth in cc* -6.1%
Operating Income ($M) 304 146
Operating Margin 9.3% 4.0%
EBIT ($M) 241 74
EBIT Margin 7.4% 2.0%
Income from Continuing Operations ($M) 141 17
EPS from Continuing Operations $ 0.91 $ 0.10
Bookings ($B) $ 2.8 $ 4.0
81st Quarter FY 2014 Earnings Presentation August 6, 2013
NPS 32%
GIS35%
GBS33%
Global Business Services (GBS)
Q1 FY14 Q1 FY13
Revenue ($M) $ 1,083 $ 1,278 YoY Growth – GAAP (15.3%) – cc (14.8%)Adjusted cc growth* (3.8%)
Operating Income ($M)– As reported 101 66
– Adjusted for restructuring 110 80
Operating Margin % – As reported 9.3% 5.2%– Adjusted for restructuring 10.2% 6.3%
Bookings ($B) $ 1.2 $ 2.1
Offerings
Technology and Business Consulting
Industry Software and Solutions
Applications Testing, Development, and Maintenance Services
*Adjusted primarily for divestiture of Australian IT staffing business and NHS milestone payment in FY 2013
91st Quarter FY 2014 Earnings Presentation August 6, 2013
Global Infrastructure Services (GIS)
Q1 FY14 Q1 FY13
Revenue ($M) $ 1,150 $ 1,203 YoY Growth – GAAP (4.4%) – cc (3.7%)
Operating Income ($M)– As reported 82 16 – Adjusted for restructuring 82 29 Operating Margin % – As reported 7.1% 1.3%
– Adjusted for restructuring 7.1% 2.4%
Bookings ($B) $ 0.9 $ 1.1 Offerings
Platform
Workplace Services
Data Center
Enterprise Service Management
Next-Generation IT: Cyber and Cloud Solutions
NPS 32%
GIS35%
GBS33%
101st Quarter FY 2014 Earnings Presentation August 6, 2013
North American Public Sector (NPS)
Q1 FY14 Q1 FY13
Revenue ($M) $ 1,053 $ 1,183
YoY Growth – GAAP (11.0%)
Operating Income ($M)
– As reported 121 93
Operating Margin %
– As reported 11.5% 7.9%
Bookings ($B) $ 0.7 $ 0.8
DoD 57%Civil 38%Other 5%
NPS 32%
GIS35%
GBS33%
OfferingsMission-Specific IT Services
Business Services • Consulting• Applications • BPO
Infrastructure Services • Workplace• Platform• Data Center • Enterprise Service Management• Next-Generation IT: Cyber and Cloud Solutions
111st Quarter FY 2014 Earnings Presentation August 6, 2013
Financial Highlights
Q1 FY14
Share Repurchases2.8M shares
$127M
Dividends $30M
Capital to Shareholders
Divestiture of Non-Core Businesses
FY13Revenue ($M)
Gross Proceeds ($M)
Applied Technology Division (ATD)* ~$729 $178
Flood Insurance BPO ~$45 $47
Total ~$774 $225
Asset PortfolioRebalancing
*Proceeds from sale of Applied Technology Division received subsequent to the quarter end
121st Quarter FY 2014 Earnings Presentation August 6, 2013
Financial Highlights (Cont’d)
Strengthening Balance Sheet
Q1 FY14 Q1 FY13
Cash and Cash Equivalents $1,929M $1,000M
Net Debt to Capital Ratio 13.3% 31.5%
($M) Q1 FY14 Q1 FY13
Free Cash Flow $(9) $(25)
DSO 77 79
DSO — Excluding Unbilled 45 46
Cap Ex — Including Capital Leases $228 $264
Cap Ex as a % of Revenue 7.0% 7.3%
Cash Flow Performance
131st Quarter FY 2014 Earnings Presentation August 6, 2013
COST TAKEOUT• Contract management discipline• Supply chain and procurement• Workforce optimization• Enterprise overhead reduction
REINVESTMENTS• Customer-committed savings• Business transformation
– Enterprise finance and HR systems– Sales and go-to-market initiatives
• Restructuring
Cost Takeout Update
Q1 FY14 FY14 Targets
~$175M Revised ~$500M
~$35M Revised ~$300M
Previous ~$400M
Previous ~$300M
141st Quarter FY 2014 Earnings Presentation August 6, 2013
FY14 Free Cash Flow Update
• Shift to utility-based model• Disciplined demand management
• Cost takeout• Operational efficiencies
• Optimized geographic income mix• Use of valuation allowances• R&D credit opportunities
• DSO improvement• Better supplier terms
EBIT
Taxes
WorkingCapital
CapitalExpenditures
Drivers
Revised Target: $550MPrevious Target: $500M
151st Quarter FY 2014 Earnings Presentation August 6, 2013
Free Cash Flow Comparison
$M
Free Cash Flow* $ 764 $ 550 Adjustments:Net Income from Divestitures (75)
NHS Settlement (110) -
Incremental Bonus Payments - 90
Incremental Restructuring - 50
Adjusted Free Cash Flow $ 579 $ 690
FY13 FY14Target
*FY13 Free Cash Flow excludes impact of $500M in discretionary pension contributions
~20% YoY
~~
161st Quarter FY 2014 Earnings Presentation August 6, 2013
Revenue
EPS from Continuing Operations $3.50 – $3.70
Free Cash Flow $550 million
Flat to slightly down• NPS — high-single-digit to low-double-digit decline
• Commercial — slightly up
Summary — FY14 Targets
Supplemental Information
181st Quarter FY 2014 Earnings Presentation August 6, 2013
CSC’s New Operating Model
Financial Services Healthcare Manu-
facturing Diversified Public Sector (incl.
Federal) Regions
Global Industries
Workplace
Cloud
Cyber
Big Data
PlatformsGlobal Infrastructure
Services
Global Business Services
CEO direct reports
Enterprise Service Management
Data Center
Americas
Australia
Nordics
India
Asia
Central Europe
UK & Ireland
Sales & MarketingContract Performance & Quality Control
Finance, Legal & Human Resources, CIO, CTOCorporate Strategy & Business Development
South & West Europe
Industry Softwareand Solutions
Applications
Consulting
191st Quarter FY 2014 Earnings Presentation August 6, 2013
$M Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 FY13GBS $ 1,278 $ 1,207 $ 1,226 $ 1,230 $ 4,941 GIS 1,203 1,163 1,191 1,186 4,743NPS 1,183 1,190 1,157 1,132 4,662Corporate and Elim. (31) (25) (32) (39) (127)
Total $ 3,633 $ 3,535 $ 3,542 $ 3,509 $ 14,219
$M Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 FY12GBS $ 1,242 $ 1,230 $ 1,062 $ 1,359 $ 4,893 GIS 1,184 1,195 1,216 1,245 4,840NPS 1,260 1,219 1,185 1,216 4,880Corporate and Elim. (31) (34) (25) (31) (121)
Total $ 3,655 $ 3,610 $ 3,438 $ 3,789 $ 14,492
FY 2013 and FY 2012 Revenue by Segment*
*Revenue recast for change in reportable segments and impact of the following discontinued operations: U.S. credit services business, Italian consulting and systems integration business, enterprise system integration
business in Malaysia and Singapore, Applied Technology Division, and flood insurance BPO
201st Quarter FY 2014 Earnings Presentation August 6, 2013
$M Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 FY13GBS $ 66 $ 78 $ 96 $ 123 $ 363 GIS 16 42 58 9 125NPS 93 143 131 123 490 Corporate and Elim. (29) (4) (30) (53) (116)
Total $ 146 $ 259 $ 255 $ 202 $ 862
$M Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 FY12GBS $ 73 $ 42 $ (1,375) $ (32) $ (1,292)GIS (34) 2 18 (130) (144)NPS 110 (139) 60 73 104 Corporate and Elim. (4) (22) (21) (18) (65)
Total $ 145 $ (117) $ (1,318) $ (107) $ (1,397)
FY 2013 and FY 2012 Operating Income by Segment*
*Operating Income recast for change in reportable segments and impact of the following discontinued operations: U.S. credit services business, Italian consulting and systems integration business, enterprise system integration
business in Malaysia and Singapore, Applied Technology Division, and flood insurance BPO
211st Quarter FY 2014 Earnings Presentation August 6, 2013
FY 2013 and FY 2012 EPS*
*EPS from Continuing Operations recast to exclude impact of the following discontinued operations: U.S. credit services business, Italian consulting and systems integration business, enterprise system integration
business in Malaysia and Singapore, Applied Technology Division, and flood insurance BPOQuarterly earnings per share (EPS) amounts may not total full-year EPS. EPS is calculated based on weighted average shares outstanding
for the period. Quarterly weighted average shares may not equal the full-year weighted average shares for the fiscal year.
Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 FY13DilutedContinuing Operations $ 0.10 $ 0.68 $ 0.70 $ 1.54 $ 3.02 Discontinued Operations $ 0.16 $ 0.15 $ 2.57 $ 0.27 $ 3.16 Total EPS $ 0.26 $ 0.83 $ 3.27 $ 1.81 $ 6.18
Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 FY12DilutedContinuing Operations $ 0.48 $ (18.42) $ (9.28) $ (1.27) $ (28.50)Discontinued Operations $ 0.69 $ (0.14) $ 0.32 $ 0.25 $ 1.13 Total EPS $ 1.17 $ (18.56) $ (8.96) $ (1.02) $ (27.37)
221st Quarter FY 2014 Earnings Presentation August 6, 2013
1st Quarter Selected Cash Flow Items
$MNet Income $ 159 $ 42 Depreciation and Amortization 255 262 Change in Working Capital (182) (89) (Gain)/Loss on Dispositions (25) 3 Other 6 3 Operating Cash Flow 213 221
Capital Expenditures (168) (199) Business Dispositions 56 2 Other 11 18 Investing Cash Flow (101) (179)
Capital Leases and Other Financing (60) (65) Business Dispositions (56) (2) Other (5) - Free Cash Flow $ (9) $ (25)
Q1 FY14 Q1 FY13
231st Quarter FY 2014 Earnings Presentation August 6, 2013
Non-GAAP Reconciliation
Operating Income $M Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 FY13Operating Income $ 146 $ 259 $ 255 $ 202 $ 862 Corporate G&A (60) (70) (56) (107) (293)Interest Expense (44) (46) (56) (37) (183)Interest Income 5 5 4 8 22 Other (Expense) Income, Net (12) 11 (6) 32 25 Income from Continuing Operations Before Taxes $ 35 $ 159 $ 141 $ 98 $ 433
Operating Income $M Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 FY12Operating Income $ 145 $ (117) $ (1,318) $ (107) $ (1,397)Corporate G&A (54) (66) (46) (53) (219)Interest Expense (42) (45) (42) (44) (173)Interest Income 12 12 8 6 38 Goodwill Impairment - (2,685) (60) - (2,745)Other Income (Expense), Net 1 5 (15) 4 (5)Income from Continuing Operations Before Taxes $ 62 $ (2,896) $ (1,473) $ (194) $ (4,501)
241st Quarter FY 2014 Earnings Presentation August 6, 2013
*Capital lease payments, repayments of obligations related to assets acquired under long-term financing arrangements, and proceeds from the sale of P&E (included in investing activities) are included in the calculation of Free Cash Flow
Operating Income $M Q1 FY14 Q1 FY13Operating Income $ 304 $ 146 Corporate G&A (64) (60)Interest Expense (39) (44)Interest Income 4 5 Other Income (Expense), Net 1 (12)Income from Continuing Operations Before Taxes
$ 206 $ 35
Non-GAAP Reconciliation (Cont’d)
Free Cash Flow $M* Q1 FY14 Q1 FY13Net Cash Provided by Operating Activities $ 213 $ 221
Net Cash Used in Investing Activities (101) (179)Business Dispositions (56) (2)Short-Term Investments (5) - Payments on Capital Leases and Other Long-Term Asset Financings (60) (65)
Free Cash Flow $ (9) $ (25)
251st Quarter FY 2014 Earnings Presentation August 6, 2013
Non-GAAP Reconciliation (Cont’d)
Q1 FY14 Q1 FY13Earnings Before Interest and Taxes $ 241 $ 74 Interest Expense (39) (44)Interest Income 4 5 Taxes on Income (65) (18)Income from Continuing Operations $ 141 $ 17
Earnings Before Interest and Taxes $M
Q1 FY14 Q1 FY13Earnings Before Interest and Taxes $ 241 $ 74 Revenue $ 3,260 $ 3,633 EBIT Margin % 7.4% 2.0%
EBIT Margin %
261st Quarter FY 2014 Earnings Presentation August 6, 2013
Adjusted Operating Income
$M Operating Income
Restructuring Costs
Adjusted Operating
Income
Adjusted Operating
MarginGBS $ 101 $ 9 $ 110 10.2%GIS 82 - 82 7.1%NPS 121 - 121 11.5%Corporate & Eliminations - (2) (2)Total $ 304 $ 7 $ 311 9.5%
$M Operating Income
Restructuring Costs
Adjusted Operating
Income
Adjusted Operating
MarginGBS $ 66 $ 14 $ 80 6.3%GIS 16 13 29 2.4%NPS 93 - 93 7.9%Corporate & Eliminations (29) - (29)Total $ 146 $ 27 $ 173 4.8%
Q1 FY14
Q1 FY13
271st Quarter FY 2014 Earnings Presentation August 6, 2013
$M Q1 FY14 Q1 FY13Cost of Services (excluding restructuring costs) $ 2,466 $ 2,977 Percentage of Revenue 75.6% 82.0%SG&A (excluding Corp. G&A) 228 221 Percentage of Revenue 7.0% 6.1%Depreciation and Amortization 255 262 Percentage of Revenue 7.8% 7.2%Restructuring Costs 7 27 Percentage of Revenue .2% .7%Operating Costs 2,956 3,487 Percentage of Revenue 90.7% 96.0%Corporate G&A 64 60 Percentage of Revenue 2.0% 1.6%
Components of Operating Costs
0 0
281st Quarter FY 2014 Earnings Presentation August 6, 2013
• Operating Cost: Equal to the sum of (1) cost of services, (2) segment SG&A excluding Corporate G&A, (3) depreciation and amortization, and (4) restructuring costs
• Operating Income: Revenue minus Operating Cost• Operating Income Margin: Operating Income as a percentage of Revenue• DSO: Total receivables at quarter end, divided by Revenue per day
– Revenue per day equals total revenues divided by the number of days in the fiscal quarter– Total receivables includes unbilled receivables, but excludes income tax receivables and
long-term receivables• DSO Excluding Unbilled Receivables: Total receivables excluding income tax receivables and
long-term receivables less unbilled receivables at quarter end divided by Revenue per day. Revenue per day equals total revenues divided by the number of days in the fiscal quarter
• Free Cash Flow: Equal to the sum of (1) operating cash flows, (2) investing cash flows, excluding business acquisitions and dispositions, and investments (including short-term investments and purchase or sale of available-for-sale securities), and (3) payments on capital leases and other long-term asset financings
• Capital Expenditures: Equal to sum of net purchases of property, plant, and equipment, outsourcing contracts, and software
• Earnings Before Interest and Taxes: Revenue minus cost of services, selling, general and administrative expenses, depreciation and amortization, goodwill impairment, restructuring costs and other income (expense)
• Earnings Before Interest and Taxes Margin: Earnings Before Interest and Taxes as a percentage of Revenue
Non-GAAP and Other Definitions
Thank You
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