*
2nd QUARTER FY 2010
EARNINGS PRESENTATION
EARNINGS PRESENTATION
November 11, 2009
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
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 subsequently filed Form 10-Qs.
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 subsequently filed Form 10-Qs.
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
This presentation includes certain non-GAAP financial measures, such as
operating income, operating margin, operating costs, and free cash flow.
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 is set forth
elsewhere in this presentation and on our web site 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.
operating income, operating margin, operating costs, and free cash flow.
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 is set forth
elsewhere in this presentation and on our web site 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.
*
2nd QUARTER FY 2010 EARNINGS
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Financial and Operational Performance Scorecard
Earnings per Share | |
Operating Margin | |
Free Cash Flow | |
Revenue | |
Operational Performance | |
New Business Bookings |
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
New Business Bookings by Lines of Business
North American Public Sector
NPS
Business Solutions and Services
BSS
Managed Services Sector
MSS
• DOE Hanford/Lockheed Martin
• Nobel Biocare
• Raytheon
• TSA ITIP
• UK Atomic Energy
• UK Identity and Passport Service
• Xerox Business Services
• Zurich Financial Services*
$B | YTD November |
$12.3B |
*Down selected for negotiations
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Reaffirming Full Year Guidance
MSS growth based on
bookings and recovering
demand
bookings and recovering
demand
Lift for BSS from an
improving demand for
discretionary projects
improving demand for
discretionary projects
Returning to historic rates
of growth for NPS
Increased demand as
clients budget for CY10
and return to
transformational agendas
clients budget for CY10
and return to
transformational agendas
Business Outlook for Second Half FY10:
Anticipated Improvements…
Anticipated Improvements…
Business
Outlook
2010
Outlook
2010
*
Mike Mancuso
Vice President
Chief Financial Officer
Vice President
Chief Financial Officer
2nd QUARTER FY 2010 EARNINGS
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
2nd Quarter FY 2010 Financial Accomplishments
• Significant new business awards
• Sequential revenue stability
• Operating income growth
• Margin rate improvement
• Achievement of forecasted EPS
• Strong cash generation
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Revenue by Lines of Business
FY09 reflects realignment for operating segments
North American Public Sector
Managed Services Sector
NPS
MSS
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Operating Income by Lines of Business
North American Public Sector
Business Solutions and Services
Managed Services Sector
NPS
BSS
MSS
FY09 reflects realignment for operating segments
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Selected Financial Information
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Selected Balance Sheet Items
*Accounts receivable excludes tax receivables of $71M and $34M for FY10 and FY09, respectively
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Days Sales Outstanding (DSO)*
*DSO excludes tax receivables
Four Quarter DSO Average
Days
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Selected Cash Flow Items
*Capital expenditures figures include capital lease payments and exclude cash used/received for acquisitions/dispositions
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Earnings per Share (EPS)
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Summary FY 2010 Guidance
Positive performance in 1st half provides confidence
in delivery of full year guidance
• EPS between $4.80 and $5.00
• New Business Bookings in the range of $17B to $18B
• Revenue in the range of $16.0B to $16.5B
• Free Cash Flow performance of 90% to 100% of net income
• Operating Margin Improvement of 25 to 50 BPS
*
Supplemental
Information
Information
2nd QUARTER FY 2010 EARNINGS
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
FY09 Revenue by Lines of Business*
* Percentages exclude corp. and other eliminations
FY09 reflects realignment for operating segments
North American Public Sector
Business Solutions and Services
Managed Services Sector
NPS
BSS
MSS
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
New Business Bookings
$B
FY09 reflects realignment for operating segments
North American Public Sector
Business Solutions and Services
Managed Services Sector
NPS
BSS
MSS
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Non-GAAP Reconciliation
*NCI: Net Income Attributable to Non-Controlling Interest Net of Tax
**Capital lease payments and proceeds from the sale of P&E (included in investing activities)
are included in the calculation of Free Cash Flow
are included in the calculation of Free Cash Flow
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Non-GAAP Reconciliation (Cont’d)
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Net Debt Reconciliation
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Components of Operating Costs
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*
Non-GAAP and Other Definitions
• Operating Cost: Equal to the sum of (1) cost of services, (2) business units
SG&A, (3) depreciation and amortization
SG&A, (3) depreciation and amortization
• 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 for the last quarter divided by the number of days in the
fiscal quarter. Total receivables includes unbilled receivables but excludes tax
receivables
day equals total revenues for the last quarter divided by the number of days in the
fiscal quarter. Total receivables includes unbilled receivables but excludes tax
receivables
• Free Cash Flow: Equal to the sum of (1) operating cash flows, (2) investing cash
flows, excluding business acquisitions and dispositions, purchase, or sale of
available for sale securities, and (3) capital lease payments
flows, excluding business acquisitions and dispositions, purchase, or sale of
available for sale securities, and (3) capital lease payments
• Net Debt: Calculated as the sum of long-term and short-term debt, less cash and
marketable securities
marketable securities
• Net Debt to Capital: Calculated as the ratio of net debt to capital (total debt
plus equity)
plus equity)
2nd QUARTER FY 2010 EARNINGS PRESENTATION
*