CSC Delivers Continued Earnings and Margin Growth

  CSC Delivers Continued Earnings and Margin Growth

        Diluted EPS from Continuing Operations of $0.93, up $0.24 YoY

    Income from Continuing Operations of $146 Million, up $30 Million YoY

Operating Income of $338 Million, up $29 Million Sequentially and $76 Million
                                     YoY

Operating Income Margin of 10.6% Improved from 9.5% in Q1 2014 and 7.4% in Q2
                                     2013

Maintaining FY 2014 Target Range for EPS from Continuing Operations of $3.50 -
                                    $3.70

Business Wire

FALLS CHURCH, Va. -- October 30, 2013

CSC (NYSE: CSC) today reported diluted earnings per share of $1.34 consisting
of $0.93 from continuing operations and $0.41 from discontinued operations for
the second quarter of fiscal 2014. In the second quarter of 2013, CSC reported
$0.83 of diluted earnings per share consisting of $0.69 from continuing
operations and $0.14 from discontinued operations. Total revenue was $3.19
billion, a decline of 9% in constant currency when compared to $3.53 billion
from the year ago period. However, on a more comparable basis, revenue
declined by 7% in constant currency.

“In our commercial business, we are seeing early signs of improvement in
book-to-bill and pipeline growth as a result of our investments in
salespeople, sales support and next-generation IT services offerings,” said
Mike Lawrie, president and CEO. “The Federal business is delivering strong
profitability and margin growth amidst uncertainty in government spending. And
our cost takeout actions across the company are contributing to our earnings
growth.”

Financial Highlights

  *EPS from continuing operations of $0.93 for the second quarter, flat
    sequentially and an increase of $0.24 from the second quarter of fiscal
    2013.
  *Net income was $209 million for the second quarter, an increase of $50
    million sequentially and $71 million from the prior year.
  *Operating income was $338 million, an increase of $29 million sequentially
    and $76 million when compared with the prior year. Operating income margin
    was 10.6% for the quarter, an increase when compared with 9.5% on a
    sequential basis and 7.4% in the prior year.
  *Earnings before interest and taxes (EBIT) was $248 million, an increase of
    $2 million sequentially and $45 million when compared with the second
    quarter of fiscal 2013. EBIT margin of 7.8% improved from 7.6% on a
    sequential basis and 5.8% in the prior year.
  *Operating cash flow of $270 million in the quarter compares with $444
    million in the prior year. Last year’s result includes a $110 million
    settlement payment from the UK National Health Service (NHS) and $22
    million from divested businesses.
  *Free cash flow of $86 million compares with $105 million in the prior
    period excluding the settlement payment and net contributions from
    divested businesses.
  *Ending cash and cash equivalents were $2.1 billion as of September 27,
    2013, an increase of $245 million over the prior year.

Global Business Services

GBS offerings include consulting, industry software & solutions, business
process services, and applications services. Revenue was $1.05 billion in the
quarter which compares with revenue of $1.20 billion in the year ago quarter.
Excluding $69 million from a divested IT staffing business in the year-ago
period, GBS revenue decreased by 7% in constant currency. Operating margin
excluding restructuring increased to 11.7% from 8.2% in the prior year,
primarily due to the company’s cost takeout efforts. New business awards for
GBS were $1.3 billion in the quarter.

Global Infrastructure Services

GIS provides managed and virtual desktop solutions, unified communications and
collaboration services, data center management, as well as CSC's next
generation Cloud offerings including secure Infrastructure as a Service
(IaaS), private Cloud solutions, CloudMail and Storage as a Service (SaaS).

GIS revenue was $1.12 billion in the quarter, a 3% decrease in constant
currency from $1.16 billion in the prior year as the company terminated or
restructured less profitable contracts. Operating margin excluding
restructuring increased to 9.3% from 7.1% in the prior year as the business
benefitted from cost takeout initiatives and better contract performance. GIS
reported new business awards of $800 million in the quarter.

North American Public Sector

NPS provides mission-specific IT services, infrastructure and business
services primarily to the U.S. federal government. NPS revenue was $1.05
billion in the quarter, a decline of 12% as compared to $1.19 billion in the
second quarter of fiscal 2013. Revenue in the quarter was impacted by the
continuing Federal budget uncertainties and delays in new contract awards.
Operating margin improved to 14.9% versus 12.0% in the prior year due to the
benefit of our cost takeout initiatives and better performance on fixed price
contracts. New business awards for NPS were $2.1 billion in the quarter.

Returning Capital to Shareholders

During the second quarter, CSC returned $132 million to shareholders
consisting of $30 million in common stock dividends and $102 million of share
repurchases. CSC repurchased 2.0 million shares at an average price of $49.85
per share during the quarter. CSC had 147,631,192 basic shares outstanding on
September 27, 2013.

Conference Call and Webcast

CSC senior management will host a conference call and Webcast at 5 p.m. today.
The dial-in number for domestic callers is 800-768-6563. Callers who reside
outside of the United States or Canada should dial 785-830-7991. The passcode
for all participants is 7725133. The webcast audio and any presentation slides
will be available on CSC’s Investor Relations site.

A replay of the conference call will be available from approximately two hours
after the conclusion of the call until November 6, 2013. The replay dial-in
number is 888-203-1112 for domestic callers and 719-457-0820 for callers who
reside outside of the United States and Canada. The replay passcode is also
7725133.

Non-GAAP Measures

In an effort to provide investors with additional information regarding the
Company’s preliminary results as determined by generally accepted accounting
principles (GAAP), the Company has also disclosed in this press release
preliminary non-GAAP information which management believes provides useful
information to investors, including: operating income, operating margin,
earnings before interest and taxes (EBIT), EBIT margin, and free cash flow.
Reconciliations of the preliminary non-GAAP measures to the respective and
most directly comparable GAAP measures, as well as the rationale for
management’s use of non-GAAP measures, is included below.

About CSC

CSCis a global leader of next-generation information technology (IT) services
and solutions. The company's mission is to enable superior returns on clients'
technology investments through best-in-class industry solutions, domain
expertise and global scale. CSChas approximately 81,000 employees and
reported revenue of $13.5 billion for the 12 months ended September 27, 2013.

All statements in this press release and in all future press releases 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 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 actual results to differ materially from
such forward-looking statements. For a written description of these factors,
see the section titled “Risk Factors” in CSC’s Form 10-K for the fiscal year
ended March 29, 2013 and any updating information in subsequent SEC filings.
The Company disclaims any intention or obligation to update these
forward-looking statements whether as a result of subsequent event or
otherwise, except as required by law.


Business Segment Revenues, Operating Income and Operating Margins
(preliminary and unaudited)


Revenues by                                                 
Segment
                    Quarter Ended
                                                                     % Change
                    September        September                       in
(Amounts in         27,              28,              % Change
millions)                                                            Constant
                    2013             2012
                                                                     Currency
Global Business     $  1,047         $  1,200           (12.8 )%     (12.5  )%
Services
Global
Infrastructure         1,121            1,163           (3.6  )%     (2.6   )%
Services
North American         1,052            1,190           (11.6 )%     (11.6  )%
Public Sector
Corporate &           (33    )        (25    )        —            —
Eliminations
Total Revenues      $  3,187        $  3,528          (9.7  )%     (9.2   )%
                                                                            
                                                                            
                    Six Months Ended
                                                                     % Change
                    September        September                       at
(Amounts in         27,              28,              % Change
millions)                                                            Constant
                    2013             2012
                                                                     Currency
Global Business     $  2,124         $  2,473           (14.1 )%     (13.7  )%
Services
Global
Infrastructure         2,271            2,366           (4.0  )%     (3.2   )%
Services
North American         2,105            2,373           (11.3 )%     (11.3  )%
Public Sector
Corporate and         (59    )        (56    )        —            —
Eliminations
Total Revenues      $  6,441        $  7,156          (10.0 )%     (9.6   )%
                                                                            
                                                                            
Operating Income and Operating Margins by Segment
                    Quarter Ended
                    September 27, 2013                September 28, 2012
(Amounts in         Operating        Operating        Operating      Operating
millions)           Income                            Income
                                     Margin                          Margin
Global Business     $  114              10.9   %      $ 81           6.8    %
Services
Global
Infrastructure         98               8.7    %        42           3.6    %
Services
North American         157              14.9   %        143          12.0   %
Public Sector
Corporate &           (31    )         —              (4    )      —
Eliminations
Total Operating     $  338             10.6   %      $ 262         7.4    %
Income
                                                                            
                                                                            
Operating Income and Operating Margins by Segment
                    Six Months Ended
                    September 27, 2013                September 28, 2012
(Amounts in         Operating        Operating        Operating      Operating
millions)           Income                            Income
                                     Margin                          Margin
Global Business     $  220              10.4   %      $ 152          6.1    %
Services
Global
Infrastructure         180              7.9    %        58           2.5    %
Services
North American         278              13.2   %        236          9.9    %
Public Sector
Corporate &           (31    )         —              (33   )      —
Eliminations
Total Operating     $  647             10.0   %      $ 413         5.8    %
Income
                                                                            


Consolidated Condensed Statements of Operations
(preliminary and unaudited)


                 Quarter Ended                 Six Months Ended
(Amounts in        September       September       September       September
millions,          27,             28,             27,             28,
except                                                        
per-share          2013            2012            2013            2012
amounts)
                                                                             
Revenues           $ 3,187        $ 3,528        $ 6,441        $ 7,156   
                                                                             
Costs of
services
(excludes
depreciation
and
amortization
and
restructuring
costs ($17 and
$56 for the
second quarter       2,338           2,713           4,794           5,680
of fiscal 2014
and 2013,
respectively,
and $24 and
$83 for the
first six
months of
fiscal 2014
and 2013,
respectively))
Selling,
general and
administrative
(excludes
restructuring
costs of $(2)
and $2 for           316             294             608             575
both the
second quarter
and first six
months of
fiscal 2014
and 2013,
respectively)
Depreciation
and                  248             271             502             533
amortization
Restructuring        15              58              22              85
costs
Interest             35              46              74              90
expense
Interest             (3      )       (5      )       (7      )       (10     )
income
Other (income)      22            (11     )      21            1       
expense, net
Total costs         2,971         3,366         6,014         6,954   
and expenses
                                                                             
Income from
continuing           216             162             427             202
operations
before taxes
Taxes on            70            46            136           65      
income
Income from
continuing           146             116             291             137
operations
Income from
discontinued        63            22            77            43      
operations,
net of taxes
Net income           209             138             368             180
Less: net
income
attributable
to                  6             8             9             10      
noncontrolling
interest, net
of tax
Net income
attributable       $ 203          $ 130          $ 359          $ 170     
to CSC common
stockholders
                                                                             
Earnings per
common share
Basic:
Continuing         $ 0.95          $ 0.70          $ 1.89          $ 0.81
operations
Discontinued        0.42          0.14          0.52          0.28    
operations
                   $ 1.37         $ 0.84         $ 2.41         $ 1.09    
Diluted:
Continuing         $ 0.93          $ 0.69          $ 1.86          $ 0.81
operations
Discontinued        0.41          0.14          0.51          0.28    
operations
                   $ 1.34         $ 0.83         $ 2.37         $ 1.09    
                                                                             
Cash dividend
per common         $ 0.20          $ 0.20            0.40            0.40
share
                                                                             
Weighted
average common
shares
outstanding
for:
Basic EPS            148.047         155.360         148.951         155.293
Diluted              150.973         155.754         151.476         155.742
                                                                             


Selected Balance Sheet Data
(preliminary and unaudited)


                                       As of
(Amounts in millions)                    September 27, 2013   March 29, 2013
                                                                            
Assets
Cash and cash equivalents                $    2,095             $   2,054
Receivables, net                              2,823                 3,199
Prepaid expenses and other current           409                 420     
assets
Total current assets                         5,327               5,673   
                                                                            
Property and equipment, net                   2,086                 2,184
Software, net                                 603                   611
Outsourcing contract costs, net               472                   505
Goodwill                                      1,474                 1,516
Other assets                                 811                 762     
Total Assets                             $    10,773           $   11,251  
                                                                            
Liabilities
Short-term debt and current              $    254               $   234
maturities of long-term debt
Accounts payable                              306                   373
Accrued payroll and related costs             614                   653
Accrued expenses and other current            1,052                 1,425
liabilities
Deferred revenue and advance                  593                   630
contract payments
Income taxes payable and deferred            18                  34      
income taxes
Total current liabilities                    2,837               3,349   
                                                                            
Long-term debt, net of current                2,448                 2,498
maturities
Income tax liabilities and deferred           494                   501
income taxes
Other long-term liabilities                   1,686                 1,743
                                                                            
Total Equity                                  3,308                 3,160
                                                                       
Total Liabilities and Equity             $    10,773           $   11,251  
                                                                            
Debt as a percentage of total                 45.0      %           46.4    %
capitalization
                                                                            


Consolidated Condensed Statements of Cash Flows
(preliminary and unaudited)


                                   Six Months Ended
(Amounts in millions)                September 27, 2013   September 28, 2012
Cash flows from operating
activities:
Net income                           $    368               $    180
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization             502                    533
Stock-based compensation                  33                     20
(Gain) loss on dispositions               (86      )             11
Excess tax benefit from stock             (5       )             —
based compensation
Unrealized foreign currency               (22      )             (71      )
exchange gain
Other non cash charges, net               21                     30
Changes in assets and
liabilities, net of effects of
acquisitions and dispositions:
Decrease in assets                        60                     55
Decrease in liabilities                  (388     )            (93      )
Net cash provided by operating           483                  665      
activities
                                                                          
Cash flows from investing
activities:
Purchases of property and                 (188     )             (215     )
equipment
Payments for outsourcing                  (38      )             (61      )
contract costs
Payments for acquisitions, net            (27      )             (34      )
of cash acquired
Proceeds from business                    232                    2
dispositions
Software purchased and developed          (91      )             (89      )
Other investing activities, net          36                   31       
Net cash used in investing               (76      )            (366     )
activities
                                                                          
Cash flows from financing
activities:
Borrowings under lines of credit          —                      126
Repayment of borrowings under             —                      (143     )
lines of credit
Borrowings on long-term debt,             —                      699
net of discount
Principal payments on long-term           (120     )             (120     )
debt
Proceeds from stock options and           85                     1
other common stock transactions
Excess tax benefit from                   5                      —
stock-based compensation
Repurchase of common stock and            (251     )             —
acquisition of treasury stock
Dividend payments                         (60      )             (62      )
Other financing activities, net          (8       )            (32      )
Net cash (used in) provided by           (349     )            469      
financing activities
Effect of exchange rate changes          (17      )            (11      )
on cash and cash equivalents
Net increase in cash and cash             41                     757
equivalents
Cash and cash equivalents at             2,054                1,093    
beginning of year
Cash and cash equivalents at end     $    2,095            $    1,850    
of period
                                                                          

Non-GAAP Financial Measures

The following tables reconcile non-GAAP financial measures of operating
income, earnings before interest and taxes (EBIT) and free cash flow, to the
respective most directly comparable financial measure calculated and presented
in accordance with GAAP. 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.

Management uses operating income to evaluate financial performance and it is
one of the measures used in assessing management performance. One of the
limitations associated with the use of operating income (as compared to
reported earnings) is that it does not reflect the complete financial results
of the Company. CSC compensates for these limitations by providing
reconciliation between operating income and income from continuing operations,
before taxes. Management uses free cash flow as one of the factors in
reviewing the overall performance of the business. Management compensates for
the limitations of this non-GAAP measure by also reviewing the GAAP measures
of operating, investing and financing cash flows as well as debt levels
measured by the debt-to-total capitalization ratio.

GAAP Reconciliations

Operating Income
(preliminary and unaudited)

CSC defines operating income as revenue less costs of services, depreciation
and amortization expense, restructuring costs and segment selling, general and
administrative (SG&A) expense, excluding corporate G&A. Operating margin is
defined as operating income as a percentage of revenue. Pre-tax margin is
defined as income from continuing operations, before taxes as a percentage of
revenue. A reconciliation of consolidated operating income to income from
continuing operations, before taxes is as follows:

                                              
                      Quarter Ended                  Six Months Ended
                      September       September      September       September
(Amounts in           27,             28,            27,           28,
millions)
                      2013            2012           2013            2012
Operating income      $  338          $  262         $  647          $  413
Corporate G&A            (68   )         (70  )         (132  )         (130 )
Interest expense         (35   )         (46  )         (74   )         (90  )
Interest income          3               5              7               10
Other income            (22   )        11           (21   )        (1   )
(expense), net
Income from
continuing            $  216         $  162        $  427         $  202  
operations before
taxes
                                                                             
Operating margin         10.6  %         7.4  %         10.0  %         5.8  %
Pre-tax margin           6.8   %         4.6  %         6.6   %         2.8  %
                                                                             

Earnings Before Interest and Taxes
(preliminary and unaudited)

CSC defines EBIT as revenue less costs of services, selling, general and
administrative expenses, depreciation and amortization, restructuring costs,
and other income (expense). EBIT margin is defined as EBIT as a percentage of
revenue. Reconciliation of EBIT to income from continuing operations is as
follows:

                                                
                       Quarter Ended                 Six Months Ended
                       September      September      September       September
(Amounts in            27,          28,            27,           28,
millions)
                       2013           2012           2013            2012
Earnings before        $  248         $  203         $  494          $  282
interest and taxes
Interest expense          (35  )         (46  )         (74   )         (90  )
Interest income           3              5              7               10
Income taxes             (70  )        (46  )        (136  )        (65  )
Income from
continuing             $  146        $  116        $  291         $  137  
operations
                                                                             
EBIT margin               7.8  %         5.8  %         7.7   %         3.9  %
                                                                             

Free Cash Flow
(preliminary and unaudited)

CSC defines free cash flow as equal to the sum of (1) operating cash flows,
(2) investing cash flows, excluding business acquisitions, 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. A reconciliation of free cash flow to net cash
provided by operating activities is as follows:

                                                 
                      Quarter Ended                   Six Months Ended
                      September       September       September      September
(Amounts in           27,           28,             27,          28,
millions)
                      2013            2012            2013           2012
Net cash provided
by operating          $  270          $  444          $  483         $  665
activities
Net cash used in
investing                25              (187  )         (76   )        (366 )
activities
Acquisitions, net        27              34              27             34
of cash acquired
Business                 (176  )         —               (232  )        (2   )
dispositions
Short-term               —               —               (5    )        —
investments
Payments on
capital leases
and other               (60   )        (54   )        (120  )       (119 )
long-term asset
financings
Free cash flow        $  86          $  237         $  77         $  212  
                                                                             

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Contact:

CSC
Marcel Goldstein
Corporate Media Relations
703.641.3271
mgoldstein@csc.com
or
Steve Virostek
Investor Relations
703.641.3000
investorrelations@csc.com