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February 9, 2010

CSC Q3 revenues flat, reaffirms FY 2010 outlook

Profit up 31% on outsourcing demand

By CBR Staff Writer

Computer Sciences Corp. (CSC), an information technology and business process outsourcing services provider, has reported revenues of $3.95bn for the third quarter of 2009, flat compared to the same period last year.

The company has posted an operating income of $377m, compared to $371m for the same period a year ago. Operating margin was 9.54% compared to 9.39% for the second quarter of 2008.

For the third quarter ended December 31, 2009, the company posted a net income of $211m, an increase of 31% compared to $161m for the third quarter of 2008. Diluted EPS was $1.36 an increase of 28%, compared to $1.06 over last year.

Revenues from business solutions & services (BSS) segment was $887m compared to $893m for the third quarter of 2008. North American Public Sector (NPS) segment revenues were flat at $1.48bn, while Managed Services Sector (MSS) revenues increased modestly to $1.62bn from $1.6bn for the same period last year.

In constant currency, MSS was down 5.3% and BSS was down 8.4%. Collectively, CSC’s commercial lines of business, MSS and BSS, realised sequential growth of 3%.

For the quarter, the new business awards totaled $6.8bn. Across the three lines of business, NPS contributed $0.8bn, BSS reported $0.8bn and MSS closed $5.2bn of new business.

Michael Laphen, chairman and CEO of CSC, said: “Despite the sluggish pace of the worldwide economic recovery, our revenue held firm both sequentially and year-over-year as our margin rates and earnings continue to improve.

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“The market trend towards increased outsourcing continues, as evidenced by our MSS bookings and this underlines one of our core competencies in delivering customer value. We expect this trend to fuel sequential growth in the fourth quarter.”

The company re-affirmed its guidance for fiscal year 2010, anticipating revenue in the range of $16bn-$16.5bn, EPS in the higher end of the $4.80- $5 range, and free cash flow equal or greater than 90% of net income.

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