EXHIBIT 99.1
Contact: Bill Lackey FOR IMMEDIATE RELEASE
Director, Investor Relations Moved On PR Newswire
Corporate May 14, 2001
310.615.1700
blackey3@csc.com
Frank Pollare
Director, Public Information
Corporate
310.615.1601
fpollare@csc.com
CSC REPORTS FISCAL 2001 RESULTS;
RECORD 4TH QUARTER REVENUE, UP 12.5%
EL SEGUNDO, Calif., May 14 -- Computer Sciences Corporation (NYSE: CSC)
reported quarterly results for its fiscal 2001 fourth quarter, ended March 30,
2001, in line with the company's March 16, 2001 guidance. Revenues for the
quarter showed a strong year-over-year comparison, made more notable given the
difficult global economic environment.
For the fourth quarter (ended March 30):
- Revenues were $2.9 billion, a 12.5% increase (approximately 16% in
constant currency) over last year's comparable quarter;
- Earnings, before special items, were $61.3 million;
- Earnings per share (diluted), before special items, were 36 cents;
- Net loss and loss per share (diluted) were $37.4 million and 22 cents,
respectively;
- and announced major new business awards were $1.5 billion.
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Computer Sciences Corporation - page 2 May 14, 2001
For the twelve months (ended March 30):
- Revenues were $10.5 billion, up 12.3% (approximately 16% in constant
currency) over fiscal 2000;
- Earnings, before special items, were $389.2 million;
- Earnings per share (diluted), before special items, were $2.28;
- Net income and earnings per share (diluted) were $233.2 million and
$1.37 respectively;
- and announced major new business awards totaled $10.9 billion.
"While our revenue growth for the fourth quarter was quite solid, our
profits were not," said Van B. Honeycutt, CSC's chairman, president and chief
executive officer.
"Four general areas adversely impacted the quarter's earnings
performance," Honeycutt added. "First, the continuing deterioration of global
demand for commercial consulting and systems integration services,
particularly in North America, had a dramatic negative impact. Second, we
also experienced a shortfall in healthcare software license sales and related
services. While software sales do not impact revenue meaningfully, they make
a significant contribution to margins. In addition, two of our recent
outsourcing engagements experienced profit pressure, a few fixed-price
projects required revised cost estimates and we experienced a reduced rate of
growth for out-of-scope consulting and systems integration projects from
several outsourcing clients. Finally, we experienced lower than planned
revenue, increasingly adverse economic factors impacting former Internet-
related clients and causing the write-off of some of our receivables, and
increased interest expense, among other factors.
"We continue to be pleased with the integration of the Mynd Corporation
acquisition, which has further strengthened our financial services offerings,"
said Honeycutt. "Along with a solid contribution from our U.S. federal
government activities, our U.S. commercial outsourcing activities and non-
European international operations continued to show good revenue growth. We
announced major new business awards of $10.9 billion, the second consecutive
year of approximately $11 billion, and we currently are addressing a large set
of opportunities in both the commercial and federal marketplace.
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Computer Sciences Corporation - page 3 May 14, 2001
"Outsourcing continues to grow for CSC, and current International Data
Corporation estimates are that the information technology outsourcing market
is expanding at a compound annual rate of 12%," Honeycutt added. "We have a
robust commercial outsourcing pipeline, and the value proposition becomes more
compelling in the current economic environment as companies increasingly focus
on reducing costs. With CSC's outsourcing and U.S. federal government related
revenues, which are recurring and long term in nature, constituting
approximately 67% of our global revenue, we have solid visibility into our
future revenue stream.
"As we look ahead, some of the conditions that impacted our fourth
quarter will linger to some degree into fiscal 2002, ending March 29. As a
result of finalizing our budget for the current fiscal year, we anticipate our
results to improve, quarter by quarter, as fiscal 2002 progresses," said
Honeycutt. "Our first quarter has historically shown a sequential decline of
approximately 30% from the fourth quarter of the previous year. We anticipate
our first quarter, ending June 29, 2001, will begin to reflect the actions we
have taken and earnings per share to be in the high 20 cent range. We are
comfortable with a range of revenue growth for fiscal 2002 of 11% to 13%. The
First Call earnings per share consensus for fiscal 2002 stands at $2.31 with a
low of $1.87 and high of $2.51. We currently anticipate a narrower range of
$2.25 to $2.35."
The fourth quarter special items of $148.7 million principally consisted
of CSC's global restructuring activities announced in mid-March of $137.5
million and $11.2 million related to the finalization of the financial
services restructuring resulting from the acquisition of Mynd Corporation.
BUSINESS RESULTS
- ----------------
For the fourth quarter, global commercial revenues grew 13.8%
(approximately 19% in constant currency), to $2.2 billion compared with $1.9
billion for last year's fourth quarter. An increase in U.S. commercial
revenue of 13.8% to $1.1 billion from last year's $973.4 million and an
increase in non-European international revenue of 29% (approximately 41% in
constant currency) to $347.7 million from last year's $269.7
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Computer Sciences Corporation page 4 May 14, 2001
million, contributed to this performance. European revenue was $734.3
million, up 7.8% (approximately 16% in constant currency) from last year's
$680.9 million. The excellent local currency revenue growth in Europe was
driven largely by outsourcing engagements, particularly in the United Kingdom
and Scandinavia.
CSC's U.S. federal government activities continued to show solid growth,
with revenues increasing to $707.2 million, up 8.6% from the $651.2 million
recorded in last year's fourth quarter. CSC's civil agencies business rose
10% to $255.7 million, up from $232.3 million last year, fueled by continued
increases in revenue from the IRS Modernization efforts, a significant
contribution from NASA awards, and task order contracts from other civil
agencies. Revenues from CSC's Department of Defense activities were $451.5
million, up 7.8% from last year's $418.9 million, with strong contributions
from task order activities and increased revenue from the Army Logistics
Modernization award.
"Our federal opportunity pipeline through fiscal 2004, at approximately
$29 billion, is as strong as it has ever been for a 35-month period," said
Honeycutt. "CSC's position as a premier provider of outsourcing services to
both the commercial and federal markets is anticipated to enable CSC to
continue its historical solid win rate as we approach this very vibrant
opportunity set. We believe our private-sector expertise will enhance our
success as we address an increasing number of modernization opportunities with
agencies and departments of the U.S. federal government."
As announced in the company's press release dated April 24, 2001, a
teleconference will be held today at 5:00 p.m. EST, to discuss the fourth
quarter results. This teleconference can be accessed from the CSC Web site at
www.csc.com, in a listen-only mode.
Computer Sciences Corporation, one of the world's leading consulting and
IT services firms, helps clients in industry and government achieve strategic
and operational results through the use of technology. The company's success
is based on its culture of working collaboratively with clients to develop
innovative technology strategies and solutions that address specific business
challenges.
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Computer Sciences Corporation - page 5 May 14, 2001
Having guided clients through every major wave of change in information
technology since 1959, CSC combines the newest technologies with its
capabilities in consulting, systems design and integration, IT and business
process outsourcing, applications software, and Web and application hosting to
meet the individual needs of global corporations and organizations. With
nearly 68,000 employees in locations worldwide, CSC had revenues of $10.5
billion for the twelve months ended March 30, 2001. It is headquartered in El
Segundo, California. For more information, visit the company's Web site at
www.csc.com.
All statements in this press release 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 "Management's
Discussion and Analysis of Financial Conditions and Results of Operations" in
CSC's Form 10-Q for the quarter ended December 29, 2000.
Note to Analysts and Editors: Please see attached tables.
- ---------------------------------------------------------
Revenues by Market Sector
(unaudited)
Fourth Quarter
-----------------------------------------------
% of Total
Mar. 30, Mar. 31, ------------------------
In millions 2001 2000 Fiscal 2001 Fiscal 2000
--------- --------- ----------- -----------
U.S. commercial $ 1,107.9 $ 973.4 38% 38%
Europe 734.3 680.9 25 26
Other international 347.7 269.7 12 11
--------- --------- ----------- -----------
Global commercial 2,189.9 1,924.0 75 75
--------- --------- ----------- -----------
Department of Defense 451.5 418.9 16 16
Civil agencies 255.7 232.3 9 9
--------- --------- ----------- -----------
U.S. federal government 707.2 651.2 25 25
--------- --------- ----------- -----------
$ 2,897.1 $ 2,575.2 100% 100%
========= ========= =========== ===========
Twelve Months Ended
-----------------------------------------------
% of Total
Mar. 30, Mar. 31, ------------------------
In millions 2001 2000 Fiscal 2001 Fiscal 2000
--------- --------- ----------- -----------
U.S. commercial $ 4,088.3 $ 3,641.1 39% 39%
Europe 2,593.0 2,526.0 25 27
Other international 1,219.3 930.0 11 10
--------- --------- ----------- -----------
Global commercial 7,900.6 7,097.1 75 76
--------- --------- ----------- -----------
Department of Defense 1,629.5 1,474.1 16 16
Civil agencies 993.9 799.5 9 8
--------- --------- ----------- -----------
U.S. federal government 2,623.4 2,273.6 25 24
--------- --------- ----------- -----------
$10,524.0 $ 9,370.7 100% 100%
========= ========= =========== ===========
Consolidated Statements of Operations
Fourth Quarter Twelve Months Ended
------------------------- -------------------------
In millions, except Mar. 30, Mar. 31, Mar. 30, Mar. 31,
per-share amounts 2001 2000 2001 2000
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (audited)
Revenues $ 2,897.1 $ 2,575.2 $10,524.0 $ 9,370.7
----------- ----------- ----------- -----------
Costs of services 2,391.9 1,998.8 8,425.1 7,352.5
Selling, general
and administrative 216.2 197.6 796.6 779.4
Depreciation and
Amortization 182.3 151.9 649.3 545.7
Interest, net 34.9 11.5 89.8 40.5
Special items (a) 148.7 232.9 41.1
----------- ----------- ----------- -----------
Total costs and
Expenses 2,974.0 2,359.8 10,193.7 8,759.2
----------- ----------- ----------- -----------
Income (loss)
before taxes (76.9) 215.4 330.3 611.5
Provision (benefit)
for income taxes (39.5) 72.5 97.1 208.6
----------- ----------- ----------- -----------
Net income (loss) $ (37.4) $ 142.9 $ 233.2 $ 402.9
=========== =========== =========== ===========
Earnings (loss)
per share:
Basic $ (0.22) $ 0.85 $ 1.39 $ 2.42
=========== =========== =========== ===========
Diluted $ (0.22) $ 0.84 $ 1.37 $ 2.37
=========== =========== =========== ===========
Common shares:
Outstanding 168.639 167.331 168.260 166.311
Assuming dilution 170.275 170.953 170.767 169.749
Notes to Consolidated Statements of Operations
(a) In response to a changing mix of information technology services, business
conditions and overall demand for consulting and systems integration
services, the Company reviewed its global operations. As a result of this
review, a special charge of $137.5 million ($91.3 million after tax) or
54 cents per share (diluted) was recorded. Included in the charge are
employee severance costs of $68.9 million, write-offs in connection with
consolidation of facilities of $25.6 million, write-off of capitalized
software and computer-related assets of $22.1 million and $20.9 million
related to phased-out operations and other assets. In addition, during
the fourth quarter the Company completed its integration of Mynd
Corporation (Mynd) into the Company's global commercial financial services
operation. As a result, a special charge of $11.2 million ($7.4 million
after tax) or 4 cents per share (diluted) was recorded. Included in the
charge is the write-off of capitalized software and a provision for
consolidation of facilities.
As previously reported, special items of $84.2 million ($57.3 million
after tax) , or 34 cents per share (diluted) were recorded during the
third quarter ended December 29, 2000. In connection with the December
2000 acquisition of Mynd, the Company reviewed its global financial
services operations, product strategies and the carrying value of its
assets. Included in the charge is $58.2 million related to non-cash
adjustments to the carrying value of capitalized software and the
write-off of other assets and intangibles and $16.6 million related to
employee severance costs. The charge also includes $9.4 million related
to a legal settlement and write-off of assets from operations previously
sold or phased-out.
Special items of $41.1 million ($29.8 million after tax), or 18 cents per
share (diluted) were recorded during the third quarter ended December 31,
1999. The special items resulted from merger-related charges and other
transaction costs of $39.1 million ($28.5 million after tax) associated
with the November 16, 1999 acquisition of Nichols Research Corporation
(Nichols), and legal and other costs, net of recoveries, of $2 million
($1.3 million after tax) associated with the resolution, during the third
quarter, of the remaining issues relating to the Company's fiscal 1998
response to a failed take-over attempt. The Nichols' charge is comprised
of $9.3 million for investment banking and other transaction expenses;
$23.5 million related to the write-off of capitalized software and the
write-off of other assets and intangibles; and $6.3 million related to
employee severance and elimination of duplicate facilities.