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November 10, 2009

CSC Q2 operating margin gains despite decline in revenue

Operating income increases to $341m

By CBR Staff Writer

CSC has reported revenues of $4.04 billion for the second quarter of 2009, a marginal decrease compared to $4.23 billion for the same period last year. The company has posted an operating income of $341m, compared to $282m for the same period a year ago. Operating margin was 8.44% compared to 6.65% for the second quarter of 2008.

For the quarter, the company posted a net income of $221m, down 51% compared to $453m for the second quarter of 2008. The second quarter 2008 net income includes net tax benefits of $267m.

Revenue from Business Solutions & Services (BSS) segment of the company was $864m compared to $967m for the second quarter of 2008. North American Public Sector (NPS) segment posted $1,622m compared to $1,495m year-on-year. Managed Services Sector (MSS) has reported revenue of $1,579m compared to $1,804m for the same quarter of 2008, and Department of Defense revenue was $1,210m versus $1,040m in the year ago quarter.

CSC has posted a revenue of $7.9 billion for the first six months of 2009, compared to $8.67 billion for the same period of previous year. The company reported operating income of $607m and net income of $353m for the first half compared to $564m and $577m in the year ago period respectively. The operating margin was 7.65% compared to 6.5% in the previous year period and diluted EPS was $2.26 compared to $3.74 in the year ago period.

For the quarter, the new business awards totaled $4.58 billion. Across the three lines of business, NPS contributed $3.23 billion, BSS reported $0.98 billion, and MSS closed $0.37 billion of new business.

Michael Laphen, chairman and CEO of CSC, said: “We are pleased with our Q2 results, most notably our significant, sequential and year over year, continuing performance improvements in cash flow, operating income, and margin rate. Additionally, new business awards in the quarter also increased sequentially and that momentum continues into the third quarter.

“Our federal business continues to experience growth due to the company’s solid market position, performance and customer satisfaction, and we remain confident that NPS revenue will grow at mid to high single digits this fiscal year.”

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