SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended April 3, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission File No.: 1-4850

COMPUTER SCIENCES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NEVADA 95-2043126
(STATE OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)

2100 EAST GRAND AVENUE
EL SEGUNDO, CALIFORNIA 90245
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

Registrant's telephone number, including area code: (310) 615-0311

Securities registered pursuant to Section 12(b) of the Act:

NAME OF EACH EXCHANGE ON WHICH
TITLE OF EACH CLASS: REGISTERED
- -------------------------------------- -----------------------------------
Common Stock, $1.00 par value per
share New York Stock Exchange

Preferred Stock Purchase Rights Pacific Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

As of May 29, 1998, the aggregate market value of stock held by non-
affiliates of the Registrant was approximately $8,140,000,000. A total of
157,481,167 shares of common stock was outstanding as of such date.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive Proxy Statement for its 1998 Annual
Meeting of Stockholders, which will be filed with the Securities and Exchange
Commission within 120 days after April 3, 1998, are incorporated by reference
into Part III hereof.

TABLE OF CONTENTS

ITEM PAGE
---- ----

PART I

1. Business........................................................... 1
2. Properties......................................................... 4
3. Legal Proceedings.................................................. 5
4. Submission of Matters to a Vote of Security Holders................ 5

PART II

5. Market for the Registrant's Common Equity and Related Stockholder 7
Matters............................................................
6. Selected Financial Data............................................ 7
7. Management's Discussion and Analysis of Financial Condition and 9
Results of Operations..............................................
8. Financial Statements and Supplementary Data........................ 15
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................... 41

PART III

10. Directors and Executive Officers of the Registrant................. 41
11. Executive Compensation............................................. 41
12. Security Ownership of Certain Beneficial Owners and Management..... 41
13. Certain Relationships and Related Transactions..................... 41

PART IV

14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.... 42

PART I

ITEM 1. BUSINESS

INTRODUCTION AND HISTORY

GENERAL

Computer Sciences Corporation ("CSC" or the "Company") was founded in 1959,
and is among the world leaders in the information technology ("I/T") services
industry. CSC offers a broad array of professional services to industry and
government, and specializes in the application of advanced and complex I/T to
achieve its customers' strategic objectives. The Company's services include:

Outsourcing--Operating all or a portion of a customer's technology
infrastructure, including systems analysis, applications development, network
operations, and desktop and data center management. CSC also provides business
process outsourcing, which is the management of a client's non-core business
functions, such as claims processing, credit checking, or customer call
centers.

Systems Integration--Designing, developing, implementing and integrating
complete information systems.

I/T and Management Consulting and Other Professional Services--Advising
clients on the strategic acquisition and utilization of I/T, and on business
strategy, operations, change management and business process reengineering,
which involves the fundamental redesign of operations to achieve efficiencies
and improve competitive position. The Company also licenses sophisticated
software systems for certain vertical markets.

PRACTICE AREAS

The Company's service offerings are focused primarily on the U.S. federal
government and commercial industries including aerospace; automotive;
chemical, oil and gas; consumer goods; energy; financial services; healthcare;
manufacturing; media; public sector; retail/distribution; telecommunications;
traffic and transportation; travel and hospitality; and utilities. Because of
the size of its offerings within the financial services, healthcare, and
chemical, oil and gas industries, CSC has formed vertical industry groups to
better deliver integrated solutions to clients in these industries.

CSC has also formed dedicated practice groups with respect to certain key
technical solutions that have broad application to both industry and
government. These solutions include:

CSC Lynx(SM)--A framework for rapid systems development. Distributed
information technology solutions enable faster access to information and the
ability to process business transactions via the Internet. CSC has developed a
framework that includes components, an architecture, a process and tools for
creating these solutions quickly.

Data Warehousing--A repository for company data that allows for complex
analysis and decision making based on historical enterprise data. CSC's
customers are able to "test drive" solutions in the Company's data warehouse
applications lab.

Electronic Commerce--CSC's global initiative, e-Wave, leverages Internet
technology to deliver powerful digital solutions for transacting business on
the Internet.

Enterprise Resource Planning ("ERP")--Enterprise-wide applications that can
integrate disparate business functions, such as finance, manufacturing and
human resources, into one cohesive system making data easier to find, update
and analyze. CSC has global alliances with four software companies which
comprise approximately 70% of the ERP market, and has developed a customized
methodology for faster implementation of ERP systems.

- --------
CSC Lynx(SM) is a registered service mark of Computer Sciences Corporation.

Information Security (INFOSEC(SM))--CSC's INFOSEC capabilities originated from
its security contracts with the Department of Defense and other U.S. federal
agencies. The Company's INFOSEC practice develops and tests new world-class
solutions for both government and commercial clients.

Supply Chain Management--A process for capturing efficiencies throughout the
business and logistics functions that move goods and information between an
organization and its suppliers, manufacturers, distributors and customers.
This process can provide greater value to customers, quicker time-to-market
and reduced costs. CSC's supply chain practice uses the Company's best
practices center to demonstrate proven solutions to CSC's customers.

Year 2000 Compliance--Solutions for enabling computers to function
effectively when processing dates after 1999. Computer programs with two-
digit, rather than four-digit, date fields are unable to recognize the
difference between dates beginning 19XX and dates beginning 20XX, which may
cause computer systems to make errors or fail. CSC's Year 2000 practice
focuses on issues and methodologies addressing all aspects of Year 2000
compliance.

MAJOR MARKETS

For more than three decades, CSC has provided I/T services to the U.S.
federal government, ranging from traditional systems integration and
outsourcing to advanced technical undertakings and complex project management.
In fiscal 1986, when U.S. federal contracts represented 70% of its revenues,
CSC decided to devote substantial resources to further develop its other
businesses in order to accelerate its growth and take advantage of the
competencies gained as a leader in the federal sector. As a result of this
strategy, CSC has increased its penetration of the domestic commercial and
international markets and diversified its business.

During the last three fiscal years, the Company's revenue mix was as
follows:

1998 1997 1996
---- ---- ----

U.S. Commercial......................................... 42% 39% 37%
Europe.................................................. 27 26 24
Other International..................................... 6 6 6
--- --- ---
Global Commercial..................................... 75 71 67
U.S. Federal Government................................. 25 29 33
--- --- ---
Total Revenues........................................ 100% 100% 100%
=== === ===

U.S. COMMERCIAL MARKET

CSC is a major provider of outsourcing services, including systems analysis,
applications development, network operations, and desktop and data center
management. During fiscal 1998, the Company entered into a major technology
alliance with E. I. du Pont de Nemours and Company ("DuPont"), pursuant to
which CSC now operates DuPont's global information systems and technology
infrastructure and provides selected applications and software services. This
alliance allowed the Company to launch a new vertical business unit to support
the chemical, oil and gas industry. The unit includes industry specialists in
18 countries who joined CSC as part of the DuPont alliance, together with
CSC's well-established industry practice in Europe.

At CNA Financial Corporation ("CNA"), CSC is responsible for the creation of
new life insurance business process services and data service operations. The
business process services will handle many administrative processes involved
in insurance--from issuing policies to processing claims and managing record-
keeping functions. CNA transferred more than half of its Chicago-based data
center operations to CSC. Other new outsourcing contracts in fiscal 1998
include General Dynamics Corporation, Helix Health, and Managed Care
Assistance Corporation.

- --------
INFOSEC(SM) is a registered service mark of Computer Sciences Corporation.

CSC also provides consulting and technical services in the development and
integration of computer and communications systems, as well as various
industry-specific I/T services. The Company's experience includes business
process reengineering, the setting of information technology strategy, the
development of information systems for a wide range of applications and the
operation of computer facilities.

The Company markets business information systems, software and services to
the insurance and financial services industries and to the managed healthcare
industry, clinics and physicians. In addition, CSC provides services for
administering life and disability insurance for credit loans and mortgages,
collateral-protection insurance and warranty insurance.

Also in the financial services arena, the Company provides consumer credit
reports and account-management services to thousands of credit grantors
nationwide. Through an agreement with Equifax Inc., another major credit
services company, the Company offers retail chains and other large credit
grantors the benefits of a national file of consumer credit histories. The
national file enables customers to obtain credit information from a single
source, instead of dealing with multiple reporting services.

EUROPE AND OTHER INTERNATIONAL MARKETS

The Company's international operations, with major offices in the United
Kingdom, France, Germany, Belgium, the Netherlands, Denmark, Australia and
Singapore, provide a wide range of information technology services to
commercial and public sector clients. CSC provides substantially the same
services to its international customers that it provides to U.S. customers.
These services span the range of consulting and professional services, systems
integration, and outsourcing. Current activities include recent contracts with
Nokia Telecommunications, Australian Mutual Provident Society, Deutsche
Leasing AG, New South Wales Department of Community Services, Kaman Aerospace
and Belgian Ministry of Finance.

U.S. FEDERAL MARKET

For more than three decades, the Company has provided I/T services to the
U.S. federal government. CSC has extensive experience in the development of
software for mission-critical systems for defense and civil agency
applications, and also provides systems engineering and technical assistance
in network management, satellite communications, intelligence, aerospace,
logistics and related high-technology fields.

Recent awards include the Federal Computer Acquisition Center outsourcing
contract and contracts to provide various I/T services to the Department of
Transportation, FAA National Airspace System, HCFA, FDA, NASA, U.S. Bureau of
the Census, U.S. Navy and U.S. Marine Corps.

Other typical activities include supporting the Federal Aviation
Administration's National EnRoute Software system, developing the next
generation of NAVSTAR Global Positioning System satellites for the Air Force
and operating the computer center and supporting management information
systems for the Air Force's flight simulation test facilities at the Arnold
Engineering Development Center. Federal activities also include providing
command, control and communication technical engineering and integration to
the U.S. Army Communications Electronics Command, upgrading the Navy's AEGIS
Weapon Systems and providing technical information systems security
applications to the Department of Defense, among other federal agencies
and departments.

COMPETITION

The information technology market in which CSC competes is not dominated by
a single company or a small number of companies. A substantial number of
companies offer services that overlap and are competitive with those offered
by CSC. Some of these are large industrial firms, including computer
manufacturers and major aerospace firms that have greater financial resources
than CSC and in some cases may have greater capabilities to perform services
similar to those provided by CSC.

The Company's ability to obtain business is dependent upon its ability to
offer better strategic concepts and technical solutions, better value, a
quicker response, or a combination of these factors. In the opinion of Company
management, CSC is positioned to compete effectively in U.S. and international
commercial markets based on its technology and systems expertise and large
project management skills. These skills have been gained through years of
experience in providing I/T services to the federal government and to large
commercial outsourcing clients. It is also management's opinion that CSC's
competitive position is enhanced by its recognized position as a leader in
management consulting and the full spectrum of services that it provides.

EMPLOYEES

The Company has 650 offices worldwide, and currently employs approximately
45,000 persons, of which more than 34,000 are highly trained professionals.
The services provided by CSC require proficiency in many fields, such as
computer sciences, programming, mathematics, physics, engineering, astronomy,
geology, operations, research, economics, statistics and business
administration.

ITEM 2. PROPERTIES

OWNED PROPERTIES AS OF APPROXIMATE
APRIL 3, 1998 SQUARE FOOTAGE GENERAL USAGE
- ---------------------- -------------- -------------

Copenhagen, Denmark........ 423,000 Computer and General Office Facility
Falls Church, Virginia..... 290,000 General Office
El Segundo, California..... 206,000 General Office
Austin, Texas.............. 187,000 General Office
Newark, Delaware........... 183,000 Computer and General Office Facility
San Diego, California...... 178,000 Computer and General Office Facility
Norwich, Connecticut....... 149,000 Computer and General Office Facility
Meriden, Connecticut....... 119,000 Computer and General Office Facility
Moorestown, New Jersey..... 99,000 General Office
Herndon, Virginia.......... 87,000 General Office
Maidstone, United Kingdom.. 79,000 Computer and General Office Facility
St. Leonards, NSW,
Australia................. 60,000 General Office
Sterling, Virginia......... 45,000 General Office
Various other U.S. and
foreign locations......... 44,000 Primarily General Office

LEASED PROPERTIES AS OF
APRIL 3, 1998
- -----------------------

Washington, D.C. area...... 957,000 Computer and General Office Facility
Texas...................... 722,000 Computer and General Office Facility
Australia and other Pacific
Rim locations............. 502,000 Computer and General Office Facility
United Kingdom............. 482,000 General Office
Germany.................... 434,000 General Office
New Jersey................. 434,000 General Office
Boston, Massachusetts area. 277,000 General Office
Connecticut................ 204,000 General Office
Detroit, Michigan area..... 189,000 General Office
Ohio....................... 182,000 General Office
Chicago, Illinois area..... 161,000 General Office
Albany, New York area...... 140,000 General Office
California................. 136,000 General Office
Denmark.................... 136,000 General Office
Various other U.S. and
foreign locations......... 1,058,000 Computer and General Office Facility

Upon expiration of its leases, the Company does not anticipate any
difficulty in obtaining renewals or alternative space. Lease expiration dates
range from fiscal 1999 through 2018.

ITEM 3. LEGAL PROCEEDINGS

The Company is currently party to a number of disputes which involve or may
involve litigation. After consultation with counsel, it is the opinion of
Company management that the ultimate liability, if any, with respect to these
disputes will not be material to the Company's results of operations or
financial position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

EXECUTIVE OFFICERS OF THE REGISTRANT

YEAR FIRST
ELECTED AS TERM AS POSITION HELD WITH THE FAMILY
NAME AGE AN OFFICER OFFICER REGISTRANT RELATIONSHIP
---- --- ---------- ---------- ---------------------- ------------

Van B. Honeycutt* 53 1987 Indefinite Chairman, President and None
Chief Executive Officer
Leon J. Level* 57 1989 Indefinite Vice President and Chief None
Financial Officer
Harvey N. Bernstein 51 1988 Indefinite Vice President None
Edward P. Boykin 59 1995 Indefinite Vice President None
Milton E. Cooper 59 1992 Indefinite Vice President None
Scott M. Delanty 43 1997 Indefinite Vice President and None
Controller
Hayward D. Fisk 55 1989 Indefinite Vice President, General None
Counsel and Secretary
Ronald W. Mackintosh 49 1993 Indefinite Vice President None
Thomas R. Madison, Jr. 52 1995 Indefinite Vice President None
C. Bruce Plowman 60 1989 Indefinite Vice President None
Paul T. Tucker 50 1997 Indefinite Vice President None
Thomas Williams 61 1993 Indefinite Vice President None

- --------
* Director of the Company.

BUSINESS EXPERIENCE OF OFFICERS

Van B. Honeycutt was elected Chairman of the Board of Directors effective
March 29, 1997. He was appointed Chief Executive Officer of the Company
effective April 1, 1995. He joined the Company in 1975 and was elected
President and Chief Operating Officer during 1993. Prior to his election he
was a Vice President of CSC and President of the Industry Services Group. He
was formerly President of CSC Credit Services, Inc., where he directed the
growth of this wholly-owned subsidiary into one of the Company's major
commercial units. He has held a variety of other positions with the Company.

Leon J. Level joined the Company in 1989 as Vice President and Chief
Financial Officer and as a member of CSC's Board of Directors. Former
positions include Vice President and Treasurer of Unisys Corporation and
Chairman of Unisys Finance Corporation; Assistant Corporate Controller and
Executive Director of The Bendix Corporation; and Principal with the public
accounting firm of Deloitte & Touche LLP. He is a Certified Public Accountant.

Harvey N. Bernstein joined the Company as Assistant General Counsel in 1983.
He became Deputy General Counsel and was elected a Vice President in 1988.
Prior to joining the Company, he specialized in government procurement law at
the firm of Fried, Frank, Harris, Shriver & Jacobson in Washington, D.C.

Edward P. Boykin joined the Company in 1966 and has held numerous positions
with several divisions of the Company. He was elected a Vice President in
1995. Since May, 1998, he has been responsible for leveraging

the capabilities that exist within the J.P. Morgan and DuPont accounts in
Delaware and Asia Pacific. Previously, he was President of The Pinnacle
Alliance, a CSC-managed organization providing information technology
outsourcing and other services to J.P. Morgan, from 1996 to 1998, and
President of the Technology Management Group from 1993 to 1996.

Milton E. Cooper joined the Company in 1984 as Group Vice President of
program development. He was named President of the Federal Sector, formerly
known as the Systems Group, in December 1991 and became a Corporate Vice
President in January 1992. A veteran of 33 years in the information industry,
he has held senior sales and marketing positions with IBM Corporation and
Telex Corporation. He is a graduate of the United States Military Academy at
West Point.

Scott M. Delanty joined the Company in 1989 and served as Assistant
Controller until December, 1997, when he was elected Vice President and
Controller. Prior to joining the Company, he held various executive-level
finance positions in the healthcare industry and was an audit manager with the
public accounting firm of Ernst & Young LLP. He is a Certified Public
Accountant.

Hayward D. Fisk joined the Company in 1989 as Vice President, General
Counsel and Secretary. Prior to joining the Company, he was associated for 21
years with Sprint Corporation (formerly United Telecommunications, Inc.), in
various legal and executive officer positions, most recently as Vice President
and Associate General Counsel.

Ronald W. Mackintosh joined the Company in 1988 as a result of the Index
acquisition, where he was Managing Director of its London office. Previously
he was a partner in the London office of Nolan, Norton & Company. In 1991, he
was named Chief Executive Officer of the Company's U.K. Operations and,
subsequently, President of the European Group. In 1993 he was elected a Vice
President of the Company.

Thomas R. Madison, Jr. joined the Company in 1994 as President of the
Commercial Outsourcing Division of the Technology Management Group. He became
President of Integrated Business Services and was elected a Vice President in
1995. During 1997, he was named President of the Company's Financial Services
Group. Previously, he held numerous executive positions with IBM Corporation,
was a partner at The United Research Company, was Managing Director of Gemini
Consulting and a member of the Executive Committee of the Sogeti Group in
Paris.

C. Bruce Plowman joined the Company in 1982 as Director of Corporate
Communications. In 1989, he was elected a Vice President with responsibility
for investor relations, marketing communications, public relations and
employee communications. Prior to joining CSC, he spent 16 years at
Continental Airlines, where he was Director of Public Information.

Paul T. Tucker joined the Company in 1996 as a Corporate Development
executive, and in August, 1997 was elected Vice President of Corporate
Development. Prior to joining the Company, he was President and
Chief Executive Officer of Knight-Ridder Financial, an electronic real-time
financial market information company, from 1990 to 1995. Previously, he
founded and served as President and Chief Technologist of HAL Communications
Corp., a communications hardware and software company, and was an Associate
Professor and Senior Research Engineer at the University of Illinois.

Thomas Williams joined the Company in 1970 and has held a number of
managerial and technical positions within CSC. He currently is President of
the Chemicals, Oil and Gas Group. Previously, he served as President of the
U.K. Division, President of the Technology Management Group, President of the
Applied Technology Division and Vice President, Engineering and Range
Operations, and associate project manager of Computer Sciences Technicolor
Associates. In 1993, he was elected a Vice President of the Company and named
President of the Aerospace Systems Division and Deputy Chief Executive Officer
of the European Group.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Common stock of Computer Sciences Corporation is listed and traded on the
New York Stock Exchange and Pacific Exchange under the ticker symbol "CSC."

As of June 17, 1998, the number of registered shareholders of Computer
Sciences Corporation's common stock was 8,879. The table shows the high and
low intra-day prices of the Company's common stock as reported on the
composite tape of the New York Stock Exchange for each quarter during the last
two calendar years and through June 17, 1998, adjusted for a 2-for-1 stock
split in the form of a 100% stock dividend paid March 23, 1998 to shareholders
of record March 2, 1998.

1998 1997 1996
---------------- ---------------- --------------
CALENDAR QUARTER HIGH LOW HIGH LOW HIGH LOW
---------------- ------ -------- ------- -------- ------ -------

1st....................... 56 3/4 39 31/32 41 3/16 30 13/16 40 3/8 32 9/16
2nd....................... 59 7/8* 49 1/8* 40 1/16 28 15/16 39 3/4 34 1/16
3rd....................... 41 9/16 34 1/2 38 5/8 32 1/16
4th....................... 43 7/8 33 5/8 43 1/4 35

- --------
* Through June 17, 1998.

ITEM 6. SELECTED FINANCIAL DATA

COMPUTER SCIENCES CORPORATION

FIVE-YEAR REVIEW
------------------------------------------------------
APRIL 3, MARCH 28, MARCH 29, MARCH 31, APRIL 1,
IN THOUSANDS EXCEPT PER- 1998 1997 1996 1995 1994
SHARE AMOUNTS ---------- ---------- ---------- ---------- ----------

Total assets............ $4,046,795 $3,493,087 $2,936,019 $2,631,580 $2,064,192
Debt:
Long-term............. 736,054 630,842 426,634 335,696 292,493
Short-term............ 7,110 20,311 71,422 128,237 17,772
Current maturities.... 21,811 9,622 6,917 11,933 35,761
---------- ---------- ---------- ---------- ----------
Total............... 764,975 660,775 504,973 475,866 346,026
Stockholders' equity.... 2,001,275 1,669,560 1,420,113 1,290,769 912,497
Working capital......... 767,820 533,915 430,484 390,726 249,020
Property and equipment:
At cost............... 1,944,799 1,668,905 1,249,729 994,520 778,376
Accumulated
depreciation and
amortization......... 987,606 780,836 569,670 430,249 352,852
---------- ---------- ---------- ---------- ----------
Property and
equipment, net....... 957,193 888,069 680,059 564,271 425,524
Current assets to
current liabilities.... 1.6:1 1.5:1 1.5:1 1.4:1 1.3:1
Debt to total
capitalization......... 27.7% 28.4% 26.2% 26.9% 27.5%
Book value per share.... $12.75 $10.88 $9.40 $8.67 $6.52
Stock price range (high) 56.75 43.25 40.38 26.31 20.88
(low).. 28.94 30.81 23.25 17.63 11.67

FIVE-YEAR REVIEW (CONTINUED)

FISCAL YEAR
-------------------------------------------------------
IN THOUSANDS EXCEPT PER- 1998 1997 1996 1995 1994
SHARE AMOUNTS ---------- ---------- ---------- ---------- ----------

Revenues................ $6,600,838 $5,616,048 $4,740,760 $3,788,026 $2,896,390
---------- ---------- ---------- ---------- ----------
Costs of services....... 5,149,218 4,413,173 3,692,267 2,961,955 2,268,655
Selling, general and
administrative......... 602,708 485,113 471,309 383,973 294,641
Depreciation and
amortization........... 386,854 333,247 272,058 190,240 146,602
Interest, net........... 42,096 32,273 32,143 27,304 12,979
Special charges......... 229,093 48,929 76,053 3,740 48,592
---------- ---------- ---------- ---------- ----------
Total costs and
expenses............... 6,409,969 5,312,735 4,543,830 3,567,212 2,771,469
---------- ---------- ---------- ---------- ----------
Income before taxes..... 190,869 303,313 196,930 220,814 124,921
Taxes on income......... (69,500) 110,900 87,499 77,577 57,499
---------- ---------- ---------- ---------- ----------
Income before cumulative
effect of accounting
change................. 260,369 192,413 109,431 143,237 67,422
Cumulative effect of
accounting change for
income taxes........... 4,900
---------- ---------- ---------- ---------- ----------
Net income.............. $ 260,369 $ 192,413 $ 109,431 $ 143,237 $ 72,322
========== ========== ========== ========== ==========
Basic earnings per
common share before
cumulative effect of
accounting change...... $1.68 $1.27 $0.74 $1.02 $0.50
Cumulative effect of
accounting change for
income taxes........... 0.04
---------- ---------- ---------- ---------- ----------
Basic earnings per
common share........... $1.68 $1.27 $0.74 $1.02 $0.54
========== ========== ========== ========== ==========
Diluted earnings per
common share before
cumulative effect of
accounting change...... $1.64 $1.23 $0.71 $1.00 $0.49
Cumulative effect of
accounting change for
income taxes........... 0.04
---------- ---------- ---------- ---------- ----------
Diluted earnings per
common share........... $1.64 $1.23 $0.71 $1.00 $0.53
========== ========== ========== ========== ==========
Average common shares
outstanding............ 155,125 151,895 148,865 140,297 134,265
Average common shares
outstanding assuming
dilution............... 158,526 156,394 153,070 143,702 136,733

NOTES:

A discussion of "Income Before Taxes" and "Net Income and Earnings per
Share" before and after special items is included in Management's Discussion
and Analysis of Financial Condition and Results of Operations ("MD&A"). A
discussion of "Special Items" for the three fiscal years ended 1998 is also
included in MD&A. The fiscal 1995 special charge of $3,740 (1 cent per share
after tax) relates to the sale of the Company's tax processing operations. The
fiscal 1994 special charge of $48,592 (28 cents per share after tax) relates
to two acquisitions by Continuum.

The selected financial data has been restated for fiscal 1994 through 1996
to include the results of business combinations accounted for as poolings of
interests. Per-share amounts and shares are restated for a two-for-one stock
split, paid in the form of a 100% stock dividend on March 23, 1998.

No dividends were paid by CSC. A fiscal 1996 acquisition, accounted for as a
pooling of interests, paid dividends of $.17 per share during fiscal 1994 and
1995.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

REVENUES

The Company derived its revenues for fiscal years 1998, 1997 and 1996 from
the following market sectors:

FISCAL 1998 FISCAL 1997 FISCAL 1996
---------------- ---------------- -----------
PERCENT PERCENT
AMOUNT CHANGE AMOUNT CHANGE AMOUNT
DOLLARS IN MILLIONS -------- ------- -------- ------- -----------

U.S. Commercial................... $2,775.5 29% $2,159.7 22% $1,770.8
Europe............................ 1,771.0 21 1,467.1 32 1,109.6
Other International............... 423.6 20 353.6 22 288.9
-------- -------- --------
Global Commercial............... 4,970.1 25 3,980.4 26 3,169.3
U.S. Federal Government........... 1,630.7 0 1,635.6 4 1,571.5
-------- -------- --------
Total........................... $6,600.8 18 $5,616.0 18 $4,740.8
======== ======== ========

The Company's 18% revenue growth for fiscal 1998 compared with 1997 was
propelled by strong increases in its global commercial operations. U.S.
commercial revenue grew 29% or $615.8 million during fiscal 1998. More than
half of the growth was generated by increases in outsourcing. Fiscal 1998 U.S.
outsourcing revenue growth was fueled by major new contracts including E.I. du
Pont de Nemours and Company ("DuPont") and CNA Financial Corporation, and by
increases in revenues from vertical markets such as financial services and
healthcare. Consulting and systems integration services contributed about a
quarter of the Company's other U.S. commercial revenue growth during fiscal
1998 due to strong demand for enterprise resource planning ("ERP") services,
electronic commerce and Year 2000 assessment and renovation activities.

For fiscal 1997, U.S. commercial revenues grew 22%, or $388.9 million.
Nearly half of the growth was provided by increases in outsourcing. Fiscal
1997 outsourcing revenue growth was derived from additional services provided
to the Hughes Electronics Corporation and new contracts, including the
Pinnacle Alliance with J.P. Morgan & Co. Incorporated ("J.P. Morgan"), Bath
Iron Works Corporation, ING Financial Services International, Hyatt Hotels
Corp. and Baker & Taylor, Inc. The remainder of the U.S. commercial revenue
growth was derived principally from increased demand for consulting and
systems integration services, the acquisition of American Practice Management,
Inc. and growth within the financial services sector.

Effective August 1, 1996, the Company acquired The Continuum Company, Inc.
("Continuum"), in a transaction which was accounted for as a pooling of
interests. Accordingly, CSC's consolidated financial statements for periods
prior to August 1, 1996 have been restated to include the financial position
and results of operations of Continuum, which now operates as CSC's Financial
Services Group. For its fiscal year ended March 31, 1996, Continuum reported
$498.3 million of revenue.

The Company's European operations generated revenue growth of 21%, or $303.9
million, for fiscal 1998 compared to 1997. The growth was primarily due to
outsourcing services provided to British Aerospace plc, DuPont and J.P.
Morgan, and strong demand throughout Europe for consulting and systems
integration activities and ERP services.

Other international operations contributed revenue growth of 20%, or $70
million, during fiscal 1998. The growth was primarily attributable to
increased outsourcing business in Australia as well as increases in the
financial services sector.

CSC's European operations generated revenue growth of 32%, or $357.5
million, for fiscal 1997 versus 1996. Three factors generated the bulk of the
Company's international growth: (1) the acquisition of two major Scandinavian
providers of information technology services, (2) the continued expansion of
outsourcing business

in the United Kingdom, including a full year of activity on the Company's
contract to manage the information technology operations of Anglian Water plc,
and (3) increased demand for consulting services in Germany, especially in the
area of ERP applications.

During fiscal 1997, other international revenues increased 22% to $353.6
million. The growth was principally due to increased outsourcing activity in
Australia and the acquisition of McDonnell Information Systems Ltd., a leading
provider of healthcare information systems to the Australasian healthcare
industry.

The Company's U.S. federal government revenues were derived from the
following agencies:

FISCAL 1998 FISCAL 1997 FISCAL 1996
---------------- ---------------- -----------
PERCENT PERCENT
AMOUNT CHANGE AMOUNT CHANGE AMOUNT
DOLLARS IN MILLIONS -------- ------- -------- ------- -----------

Department of Defense............. $1,071.9 (1)% $1,082.8 13% $ 961.6
NASA.............................. 298.6 0 299.4 (3) 310.1
Other civil agencies.............. 260.2 3 253.4 (15) 299.8
-------- -------- --------
Total U.S. Federal................ $1,630.7 0 $1,635.6 4 $1,571.5
======== ======== ========

Federal revenues were essentially unchanged for fiscal 1998 compared to
1997. Gains were generated on certain task order contracts with the General
Services Administration and the Defense Integration Systems Agency ("DISA")
and by the acquisition of Information Technology Solutions, Inc. These gains
were offset primarily by the conclusion of two large contracts in late fiscal
1997. During fiscal 1997, the Company's federal revenue increased primarily
due to additional revenue generated on another task order contract for DISA
and increased ordering of a management information system by the U.S.
Department of Defense. Although CSC's fiscal 1998 and 1997 federal business
was impacted by restrained federal spending, the Company believes the pipeline
of new federal contract opportunities is robust.

During fiscal 1998, CSC announced federal contract awards with a total value
of $1.0 billion, compared with the $2.1 billion and $2.4 billion announced
during fiscal 1997 and 1996, respectively.

COSTS AND EXPENSES

The Company's costs and expenses before special charges were as follows:

PERCENTAGE OF
DOLLAR AMOUNT REVENUE
-------------------------- ----------------
1998 1997 1996 1998 1997 1996
DOLLARS IN MILLIONS -------- -------- -------- ---- ---- ----

Costs of services................. $5,149.2 $4,413.2 $3,692.3 78.0% 78.6% 77.9%
Selling, general and
administrative................... 602.7 485.1 471.3 9.1 8.6 9.9
Depreciation and amortization..... 386.9 333.2 272.1 5.9 5.9 5.7
Interest expense, net............. 42.1 32.3 32.1 .6 .6 .7
-------- -------- -------- ---- ---- ----
Total............................. $6,180.9 $5,263.8 $4,467.8 93.6% 93.7% 94.2%
======== ======== ======== ==== ==== ====

COSTS OF SERVICES

The Company's costs of services as a percent of revenue decreased to 78% for
fiscal 1998 from 78.6% for fiscal 1997. The decrease relates to growth in
commercial business versus federal business. The commercial growth occurred in
the healthcare and financial services vertical markets as well as outsourcing,
consulting and European operations. Improvements in European operations also
contributed to the reduction in costs of services. The increase in costs of
services in fiscal 1997 was primarily related to excess costs in the Company's
U.S. telecommunications operations combined with lower telecommunications
software sales and increases in costs in European operations.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative ("SG&A") expenses as a percent of
revenue during fiscal 1998 increased to 9.1% from 8.6% for fiscal 1997. The
increase was largely related to the Company's overall growth in its commercial
operations as compared to its federal business. In particular, growth in the
Healthcare and Financial Services Groups contributed to the increase in SG&A
costs. The increase was partially offset by improvements within the Company's
U.S. outsourcing, consulting and systems integration operations.

For fiscal 1997, SG&A as a percent of revenue improved to 8.6% from 9.9% for
fiscal 1996. The improvements were largely attributable to the Company's
European operations and U.S. federal operations.

SPECIAL ITEMS

Special items for fiscal 1998 represent costs, expenses and benefits
associated with developments at CSC Enterprises and the Company's response to
a failed take-over attempt.

The Company recorded a net special credit of $1.7 million, or 1 cent per
share, at CSC Enterprises, a general partnership which operates certain of the
Company's credit services operations and carries out other business strategies
through acquisition and investment. The net credit resulted from a tax benefit
of $135 million and an after-tax charge of $133.3 million ($208.4 million
before tax). During the first quarter, several partners withdrew from CSC
Enterprises. These withdrawals caused CSC Enterprises to take actions which
caused CSC to recognize an increase in the tax basis of certain assets which
resulted in a deferred tax asset of $135 million and a corresponding reduction
in the Company's provision for taxes. In connection with these developments,
CSC Enterprises reviewed its operations, its market opportunities and the
carrying value of its assets. Based on this review, plans were initiated to
eliminate certain offerings and write down assets, primarily within its
telecommunications operations. As a result of these plans, an after-tax
special charge of $133.3 million was recognized. The charge is comprised of
$35 million of goodwill, $33.8 million of contract termination costs, $22.3
million of telecommunications software and accruals, $20.5 million of deferred
contract costs and other assets, $11.7 million of telecommunications property,
equipment and intangible assets, and $10 million of other costs.

Also, during fiscal 1998 the Company recorded a before-tax special charge of
$20.7 million, or 9 cents per share after tax, for costs relating to the
Company's response to a failed take-over attempt. The charge is comprised of
$14 million for investment banking expenses and $6.7 million for other
expenses such as legal costs, public relations and shareholder communications.

The fiscal 1997 special charge represents costs and expenses related to the
August 1 acquisition of Continuum. The amount of the charge, net of income tax
benefits on the tax deductible portion, is $35.3 million or 23 cents per
share. The charge is comprised of $11.0 million for investment banking and
other merger expenses; $11.8 million related to the write-off of certain
capitalized software, other assets and intangibles; and $26.1 million related
to the elimination of duplicate data-processing facilities, employee severance
costs and contract termination costs.

The fiscal 1996 special charges were largely related to Continuum's
acquisitions of Hogan Systems, Inc. and SOCS Holding, a Paris-based software
and services company. The special charges of $76.1 million, or 40 cents per
share after tax, included a $26.0 million non-cash charge resulting from the
write-off of certain software development activities at SOCS Holding,
restructuring and transaction costs of $19.4 million, and adjustments to the
carrying value of certain operating assets of $30.7 million.

INCOME BEFORE TAXES

The Company's income before taxes for the most recent three fiscal years is
as follows:

DOLLAR AMOUNT MARGIN
-------------------- ----------------
1998 1997 1996 1998 1997 1996
DOLLARS IN MILLIONS ------ ------ ------ ---- ---- ----

Before special charges..................... $420.0 $352.2 $273.0 6.4% 6.3% 5.8%
Income before taxes........................ 190.9 303.3 196.9 2.9 5.4 4.2

Income before special charges and taxes improved during fiscal 1998 as a
percentage of revenue. The .1% improvement during fiscal 1998 to a margin of
6.4% relates principally to the improvement in costs of services and
depreciation and amortization. Partially offsetting the improvement were
increases in SG&A expenses as a percent of revenue.

During fiscal 1997, income before special charges and taxes increased
principally due to improvement in SG&A expenses partially offset by increases
in costs of services and depreciation and amortization.

TAXES

The (benefit from) provision for income taxes as a percentage of pre-tax
earnings was (36.4)%, 36.6% and 44.4% for fiscal 1998, 1997 and 1996,
respectively. The fiscal 1998 rate includes the tax benefit associated with
the partnership withdrawals at CSC Enterprises. Before special items, the tax
rate was 35.1%, 35.4% and 37.3% for fiscal 1998, 1997 and 1996, respectively.

NET INCOME AND EARNINGS PER SHARE

The Company's net income and earnings per share for fiscal years 1998, 1997
and 1996 is as follows:

DOLLAR AMOUNT MARGIN
-------------------- ----------------
1998 1997 1996 1998 1997 1996
DOLLARS IN MILLIONS, EXCEPT EPS ------ ------ ------ ---- ---- ----

Net income:
Before special items................... $272.6 $227.7 $171.2 4.1% 4.1% 3.6%
As reported............................ 260.4 192.4 109.4 3.9 3.4 2.3
Diluted earnings per share:
Before special items................... 1.72 1.46 1.12
As reported............................ 1.64 1.23 0.71

During fiscal 1998, the Company's net income margin improved to 3.9% from
3.4%. The net special items incurred during fiscal 1998 reduced net income by
$12.2 million or .2% of revenue. In fiscal 1997, the Company's net income
margin improved to 3.4% from 2.3%. The special charge recorded in 1997 reduced
net income by $35.3 million or .6% of revenue.

Before special items, the net earnings margin was 4.1% for fiscal 1998 and
1997 and 3.6% for fiscal 1996. Although the net earnings margin before special
items for 1998 was the same as 1997, the Company registered an improvement in
cost of services as a percent of revenue and a lower tax rate before special
items. The improvement in 1997 was attributable to the reduction of SG&A as a
percent of revenue and a lower tax rate partially offset by an increase in
costs of services as a percent of revenue.

CASH FLOWS

FISCAL 1998 FISCAL 1997 FISCAL 1996
---------------- ---------------- -----------
PERCENT PERCENT
AMOUNT CHANGE AMOUNT CHANGE AMOUNT
DOLLARS IN MILLIONS ------- ------- ------- ------- -----------

Cash from operations.......... $ 583.3 17 % $ 500.4 30 % $ 384.0
Net cash used in investing.... (582.0) (14) (678.6) 28 (530.8)
Net cash provided by
financing.................... 162.7 (7) 175.0 230 53.1
------- ------- -------
Net increase (decrease) in
cash and cash equivalents.... 164.0 (3.2) (93.7)
Cash at beginning of year..... 110.7 113.9 207.6
------- ------- -------
Cash at end of year......... $ 274.7 148 $ 110.7 (3) $ 113.9
======= ======= =======

Historically, the majority of the Company's cash has been provided from
operating activities. The increases in cash from operations during fiscal 1998
and 1997 are primarily due to higher earnings, non-cash charges (depreciation
and amortization) and lower income tax payments, partially offset by increased
working capital requirements.

The Company's investments principally relate to purchases of computer
equipment and software that support the Company's expanding commercial
operations. Investments include computer equipment purchased at the inception
of outsourcing contracts as well as subsequent upgrades, expansion or
replacement of these client-supporting assets. The Company's investments also
include a significant number of business acquisitions during fiscal 1996
through 1998.

As described above, a majority of the Company's capital investments have
been funded by cash from operations. During fiscal 1997 the Company, through
affiliates, issued $150 million of term debt.

LIQUIDITY AND CAPITAL RESOURCES

The balance of cash and cash equivalents was $274.7 million at April 3,
1998, $110.7 million at March 28, 1997 and $113.9 million at March 29, 1996.
During this period, the Company's earnings have added substantially to equity.
At the end of fiscal 1998, CSC's ratio of debt to total capitalization was
27.7%.

1998 1997 1996
DOLLARS IN MILLIONS -------- -------- --------

Debt............................................. $ 765.0 $ 660.8 $ 505.0
Equity........................................... 2,001.3 1,669.6 1,420.1
-------- -------- --------
Total capitalization............................. $2,766.3 $2,330.4 $1,925.1
======== ======== ========
Debt to total capitalization..................... 27.7% 28.4% 26.2%

During fiscal 1997, the Company increased its affiliates' credit agreement
from $350 million to $490 million to provide stand-by support for commercial
paper. At April 3, 1998, $115 million was available for borrowing under this
program, down from $193.1 million at March 28, 1997.

In the opinion of management, CSC will be able to meet its liquidity and
cash needs for the foreseeable future through the combination of cash flows
from operating activities, unused borrowing capacity and other financing
activities. If these resources need to be augmented, major additional cash
requirements would likely be financed by the issuance of debt and/or equity
securities.

DIVIDENDS AND REDEMPTION

It has been the Company's policy to invest earnings in the growth of the
Company rather than distribute earnings as dividends. This policy, under which
dividends have not been paid since fiscal 1969, is expected to continue, but
is subject to regular review by the Board of Directors.

On February 27, 1998, the Board of Directors redeemed the stock purchase
rights issued under the 1988 stockholder rights plan and established March 30,
1998 as the record date for payment of the redemption price of one sixth of
one cent per right, which was paid on April 13, 1998.

YEAR 2000

Throughout its history, CSC has dealt with ongoing significant changes in
the information technology industry. As a result, resources are constantly
being employed to modify, upgrade and enhance systems and infrastructure on
behalf of clients and internal needs. The Year 2000 issue represents another
one of these changes. It is the result of computer programs which represent
years as a two-digit field rather than a four-digit field. Any of such
programs that utilize date sensitive data may not properly recognize a date
field of 00 as the year 2000, but as some other date, typically the year 1900.
This could result in possible system failure or miscalculations which affect
normal business activity.

The Company has established a comprehensive two-phase program to ensure that
its proprietary software and internal computer systems are Year 2000 ready.
The initial phase, which included planning, inventory and assessment, has been
completed. The final phase, which consists of correction, testing, deployment
and acceptance, is in process and is expected to be completed by mid-1999. The
Company expects that the cost of making its proprietary software and internal
systems compliant will not have a material effect on its overall financial
position or overall trends in results of operations.

The Company has initiated formal communications with all of its crucial
suppliers to determine that they are or will be Year 2000 capable.

The Company has been working with its clients and has completed an
assessment of its obligations to make their systems Year 2000 ready. As a
result of this assessment, the Company does not believe that these obligations
will have a material effect on the Company.

The Company has experienced significant growth in Year 2000 engagements and
expects that trend to continue for the next few years.

NEW ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income," SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" and SFAS No. 132, "Employers' Disclosures about Pensions
and other Postretirement Benefits." The Company will adopt these standards for
fiscal 1999 which will expand or modify disclosures and will have no impact on
consolidated financial position, results of operations or cash flows.

During October 1997, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 97-2, "Software Revenue Recognition,"
which supersedes SOP 91-1, "Software Revenue Recognition." SOP 97-2 provides
further guidance on recognizing revenue from sales of proprietary software and
is effective for transactions CSC enters into beginning in fiscal 1999. The
Company does not expect the adoption of SOP 97-2 to have a material impact on
consolidated financial position, results of operations or cash flows.

MARKET RISK

The Company has fixed-rate long-term debt obligations, short-term commercial
paper, and other borrowings which are subject to market risk from changes in
interest rates. During the ordinary course of business, the Company also
enters into certain transactions contracted in foreign currency which are
subject to market risk from changes in foreign currency exchange rates. The
Company may use foreign currency forward contracts or options to hedge
exposures arising from these transactions.

Sensitivity analysis is one technique used to measure the impact of changes
in interest rates and foreign exchange rates on the value of market-risk
sensitive financial instruments. A hypothetical ten-percent movement in
interest rates or a ten-percent fluctuation in the U.S. dollar against all
currencies would not have a material impact on the Company's future earnings,
fair value, or cash flows.

FORWARD-LOOKING STATEMENTS

All statements contained in this annual report, or in any other document
filed by the Company with the Securities and Exchange Commission, or in any
press release or other written or oral communication by or on behalf of the
Company, 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, which represent
the Company's expectations and beliefs, are subject to risks, uncertainties
and other factors, many of which are outside of the Company's control, that
could cause actual results to differ materially from such statements. These
factors include, without limitation, the following: (i) competitive pressures;
(ii) the Company's

ability to attract and retain key personnel; (iii) changes in the demand for
information technology outsourcing and business process outsourcing; (iv)
changes in the financial condition of the Company's major commercial
customers; (v) changes in U.S. federal government spending levels for
information technology services; (vi) the Company's ability to consummate
strategic acquisitions and alliances; (vii) the future profitability of the
Company's customer contracts; (viii) the Company's ability to continue to
develop and expand its service offerings to address emerging business demand
and technological trends; and (ix) general economic conditions in countries in
which the Company does business.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements and Financial Statement Schedules

FINANCIAL STATEMENTS

PAGE
----

Independent Auditors' Reports............................................. 16
Consolidated Balance Sheets as of April 3, 1998 and March 28, 1997........ 18
Consolidated Statements of Income for the fiscal years ended April 3,
1998, March 28, 1997, and March 29, 1996................................. 20
Consolidated Statements of Cash Flows for the fiscal years ended April 3,
1998, March 28, 1997, and March 29, 1996................................. 21
Consolidated Statements of Stockholders' Equity for the fiscal years ended
April 3, 1998, March 28, 1997 and March 29, 1996......................... 22
Notes to Consolidated Financial Statements................................ 23
Quarterly Financial Information (Unaudited)............................... 40

SCHEDULE

Schedule VIII--Valuation and Qualifying Accounts.......................... 47

Schedules other than that listed above have been omitted since they are
either not required, are not applicable, or the required information is shown
in the financial statements or related notes.

Separate financial statements of the Registrant have been omitted since it
is primarily an operating company, and the minority interests in subsidiaries
and long-term debt of the subsidiaries held by other than the Registrant are
less than five percent of consolidated total assets. Financial statements (or
summarized financial information) for unconsolidated subsidiaries and 50%-
owned companies accounted for by the equity method have been omitted because
they are inapplicable, or do not, considered individually or in the aggregate,
constitute a significant subsidiary.

INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE

The Board of Directors and Stockholders
Computer Sciences Corporation
El Segundo, California

We have audited the accompanying consolidated balance sheets of Computer
Sciences Corporation and Subsidiaries (the Company) as of April 3, 1998 and
March 28, 1997, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years in the period
ended April 3, 1998. Our audits also included the financial statement schedule
listed in the Index at Item 8. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. These consolidated financial
statements give retroactive effect to the merger of Computer Sciences
Corporation and The Continuum Company, Inc. on August 1, 1996, which has been
accounted for as a pooling of interests as described in Note 1 to the
consolidated financial statements. We did not audit the financial statements
of The Continuum Company, Inc. for the year ended March 31, 1996. Such
statements reflect aggregate total revenues constituting 11% in 1996 of the
consolidated totals. Those statements were audited by other auditors, whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for The Continuum Company, Inc. is based solely on the report
of the other auditor.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, based on our audits and the report of the other auditors,
such consolidated financial statements present fairly, in all material
respects, the financial position of Computer Sciences Corporation and
Subsidiaries as of April 3, 1998 and March 28, 1997, and the results of their
operations and their cash flows for each of the three years in the period
ended April 3, 1998, in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.

Deloitte & Touche LLP

Los Angeles, California
May 26, 1998

REPORT OF INDEPENDENT AUDITORS

STOCKHOLDERS AND BOARD OF DIRECTORS
The Continuum Company, Inc.

We have audited the consolidated balance sheets of The Continuum Company,
Inc. as of March 31, 1996 and 1995 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended March 31, 1996 (which are not presented herein). The
consolidated financial statements give retroactive effect to the acquisition
of Hogan Systems, Inc. in March 1996, which has been accounted for using the
pooling of interests method as described in the notes to the consolidated
financial statements. These financial statements are the responsibility of the
management of The Continuum Company, Inc. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit
the 1995 and 1994 financial statements of Hogan Systems, Inc., which
statements reflect total assets constituting 33% as of March 31, 1995 and net
income constituting approximately 19% and 27% for the years ended March 31,
1995 and 1994, respectively, of the related consolidated financial statement
totals. Those statements were audited by other auditors whose report has been
furnished to us, and our opinion, insofar as it relates to data included for
Hogan Systems, Inc. for 1995 and 1994, is based solely on the report of other
auditors.

In our opinion, based on our audits, and for 1995 and 1994 the report of
other auditors, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of The Continuum Company, Inc. at March 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended March 31, 1996, after giving effect to the
merger of Hogan Systems, Inc., as described in the notes to the consolidated
financial statements, in conformity with generally accepted accounting
principles.

As described in Note 2 to the consolidated financial statements referred to
above, during the year ended March 31, 1994, The Continuum Company, Inc.
changed its method of accounting for income taxes.

Ernst & Young LLP

Austin, Texas
May 1, 1996

COMPUTER SCIENCES CORPORATION

CONSOLIDATED BALANCE SHEETS

ASSETS

APRIL 3, MARCH 28,
1998 1997
IN THOUSANDS ---------- ----------

Current assets:
Cash and cash equivalents.............................. $ 274,688 $ 110,726
Receivables, net of allowance for doubtful accounts of
$75,373 (1998) and $52,507 (1997) (notes 4 and 10).... 1,456,330 1,294,003
Prepaid expenses and other current assets.............. 251,618 161,317
---------- ----------
Total current assets................................. 1,982,636 1,566,046
---------- ----------
Investments and other assets:
Purchased and internally developed software, net of
accumulated amortization of $120,675 (1998) and
$152,725 (1997)....................................... 125,430 132,627
Excess of cost of businesses acquired over related net
assets, net of accumulated amortization of $90,007
(1998) and $72,472 (1997)............................. 538,408 561,670
Other assets........................................... 443,128 344,675
---------- ----------
Total investments and other assets................... 1,106,966 1,038,972
---------- ----------
Property and equipment--at cost (note 5):
Land, buildings and leasehold improvements............. 301,437 291,878
Computers and related equipment........................ 1,490,765 1,255,455
Furniture and other equipment.......................... 152,597 121,572
---------- ----------
1,944,799 1,668,905
Less accumulated depreciation and amortization......... 987,606 780,836
---------- ----------
Property and equipment, net.......................... 957,193 888,069
---------- ----------
$4,046,795 $3,493,087
========== ==========

(See notes to consolidated financial statements)

COMPUTER SCIENCES CORPORATION

CONSOLIDATED BALANCE SHEETS (CONTINUED)

LIABILITIES AND STOCKHOLDERS' EQUITY

APRIL 3, MARCH 28,
1998 1997
IN THOUSANDS EXCEPT SHARES ---------- ----------

Current liabilities:
Short-term debt and current maturities of long-term
debt (note 5)......................................... $ 28,921 $ 29,933
Accounts payable....................................... 317,787 295,112
Accrued payroll and related costs (note 6)............. 299,062 252,902
Other accrued expenses................................. 403,860 311,283
Deferred revenue....................................... 127,337 112,888
Federal, state and foreign income taxes (note 3)....... 37,849 30,013
---------- ----------
Total current liabilities............................ 1,214,816 1,032,131
---------- ----------
Long-term debt, net of current maturities (note 5)....... 736,054 630,842
---------- ----------
Deferred income taxes (note 3)........................... 83,216
---------- ----------
Other long-term liabilities (note 6)..................... 94,650 77,338
---------- ----------
Commitments and contingencies (notes 6 and 7)............
Stockholders' equity (notes 1, 8 and 9)..................
Preferred stock, par value $1 per share; authorized
1,000,000 shares; none issued.........................
Common stock, par value $1 per share; authorized
275,000,000 shares; issued 157,324,565 (1998) and
76,924,836 (1997)..................................... 157,325 76,925
Additional paid-in capital............................. 660,971 569,719
Earnings retained for use in business.................. 1,236,968 1,055,183
Foreign currency translation and unfunded pension
adjustments........................................... (39,691) (14,625)
---------- ----------
2,015,573 1,687,202
Less common stock in treasury, at cost, 346,170 shares
(1998) and 332,220 shares (1997) (13,029) (11,982)
Unearned restricted stock (note 8)..................... (1,142) (1,251)
Notes receivable for shares sold (note 8).............. (127) (4,409)
---------- ----------
Stockholders' equity, net............................ 2,001,275 1,669,560
---------- ----------
$4,046,795 $3,493,087
========== ==========

(See notes to consolidated financial statements)

COMPUTER SCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

FISCAL YEAR ENDED
----------------------------------
APRIL 3, MARCH 28, MARCH 29,
1998 1997 1996
IN THOUSANDS EXCEPT PER-SHARE AMOUNTS ---------- ---------- ----------

Revenues.................................... $6,600,838 $5,616,048 $4,740,760
---------- ---------- ----------
Costs of services........................... 5,149,218 4,413,173 3,692,267
Selling, general and administrative......... 602,708 485,113 471,309
Depreciation and amortization............... 386,854 333,247 272,058
Interest expense............................ 50,951 40,268 37,925
Interest income............................. (8,855) (7,995) (5,782)
Special charges (note 2).................... 229,093 48,929 76,053
---------- ---------- ----------
Total costs and expenses.................... 6,409,969 5,312,735 4,543,830
---------- ---------- ----------
Income before taxes......................... 190,869 303,313 196,930
Taxes on income (notes 2 and 3)............. (69,500) 110,900 87,499
---------- ---------- ----------
Net income.................................. $ 260,369 $ 192,413 $ 109,431
========== ========== ==========
Earnings per common share (note 1):
Basic..................................... $ 1.68 $ 1.27 $ 0.74
========== ========== ==========
Diluted................................... $ 1.64 $ 1.23 $ 0.71
========== ========== ==========

(See notes to consolidated financial statements)

COMPUTER SCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

FISCAL YEAR ENDED
-------------------------------
APRIL 3, MARCH 28, MARCH 29,
IN THOUSANDS, INCREASE (DECREASE) IN CASH AND 1998 1997 1996
CASH EQUIVALENTS --------- --------- ---------

Cash flows from operating activities:
Net income...................................... $ 260,369 $ 192,413 $ 109,431
Adjustments to reconcile net income to net cash
provided:
Depreciation and amortization................. 386,854 333,247 272,058
Special items, net of tax..................... 97,870 11,884 73,186
Provision for losses on accounts receivable... 20,058 33,501 20,623
Changes in assets and liabilities, net of
effects of acquisitions:
Increase in receivables..................... (221,974) (164,184) (163,517)
(Increase) decrease in prepaid expenses..... (86,815) (39,692) 7,234
Increase in accounts payable and accruals... 109,575 97,294 28,768
Increase in income taxes payable............ 3,683 29,028 25,959
Increase (decrease) in deferred revenue..... 13,817 (3,304) 12,518
Other changes, net.......................... (133) 10,235 (2,274)
--------- --------- ---------
Net cash provided by operating activities..... 583,304 500,422 383,986
--------- --------- ---------
Cash flows from investing activities:
Purchases of property and equipment............. (349,316) (322,434) (275,841)
Outsourcing contracts........................... (145,974) (102,508) (114,144)
Acquisitions, net of cash acquired.............. (103,269) (176,693) (76,878)
Dispositions.................................... 75,827 6,229 7,380
Purchased and internally developed software..... (64,052) (77,227) (56,767)
Other investing cash flows, net................. 4,777 (6,011) (14,555)
--------- --------- ---------
Net cash used in investing activities........... (582,007) (678,644) (530,805)
--------- --------- ---------
Cash flows from financing activities:
Net borrowing (repayment) of commercial paper... 77,953 50,188 (587)
Borrowings under lines of credit................ 61,281 48,180 78,457
Repayment of borrowings under lines of credit... (73,022) (99,283) (38,376)
Proceeds from term debt issuance................ 32,568 150,000 43,541
Principal payments on long-term debt............ (10,959) (29,843) (58,476)
Proceeds from stock option transactions......... 61,488 42,869 18,511
Other financing cash flows...................... 13,356 12,964 10,023
--------- --------- ---------
Net cash provided by financing activities....... 162,665 175,075 53,093
--------- --------- ---------
Net increase (decrease) in cash and cash
equivalents...................................... 163,962 (3,147) (93,726)
Cash and cash equivalents at beginning of year.... 110,726 113,873 207,599
--------- --------- ---------
Cash and cash equivalents at end of year.......... $ 274,688 $ 110,726 $ 113,873
========= ========= =========

(See notes to consolidated financial statements)

COMPUTER SCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOREIGN
CURRENCY NOTES
EARNINGS AND RECEIVABLE
COMMON STOCK ADDITIONAL RETAINED UNFUNDED COMMON UNEARNED FOR
--------------------- PAID-IN FOR USE IN PENSION STOCK IN RESTRICTED SHARES
IN THOUSANDS EXCEPT SHARES AMOUNT CAPITAL BUSINESS ADJUSTMENTS TREASURY STOCK SOLD
SHARES ----------- -------- ---------- ---------- ----------- -------- ---------- ----------

Balance at March 31,
1995................... 74,248,357 $ 74,248 $465,742 $ 753,339 $ 6,652 $ (5,179) $(2,981) $(1,052)
Stock option
transactions........... 1,347,368 1,348 40,460 (5,309) (3,888)
Granting of restricted
stock of $200 net of
amortization and
forfeitures of $1,093.. 4,130 4 196 893
Net income.............. 109,431
Currency translation
adjustment............. (12,218) (28)
Unfunded pension
obligation............. (1,648)
Retirement of Hogan
treasury stock......... (171,233) (171) 171
Repayment of notes...... 103
----------- -------- -------- ---------- -------- -------- ------- -------
Balance at March 29,
1996................... 75,428,622 75,429 506,569 862,770 (7,214) (10,488) (2,088) (4,865)
Stock option
transactions........... 1,501,214 1,501 63,240 (1,494) (1,125)
Amortization and
forfeitures of
restricted stock....... (5,000) (5) (90) 837
Net income.............. 192,413
Currency translation
adjustment............. (7,182) (24)
Unfunded pension
obligation............. (229)
Repayment of notes...... 1,605
----------- -------- -------- ---------- -------- -------- ------- -------
Balance at March 28,
1997................... 76,924,836 76,925 569,719 1,055,183 (14,625) (11,982) (1,251) (4,409)
Stock option
transactions........... 2,077,103 2,077 91,252 (1,047)
Amortization and
forfeitures of
restricted stock....... 109
Net income.............. 260,369
Currency translation
adjustment............. (23,287)
Unfunded pension
obligation............. (1,779)
Repayment of notes...... 4,282
Effect of two-for-one
stock split............ 78,322,626 78,323 (78,323)
Stock purchase rights
redemption............. (261)
----------- -------- -------- ---------- -------- -------- ------- -------
Balance at April 3,
1998................... 157,324,565 $157,325 $660,971 $1,236,968 $(39,691) $(13,029) $(1,142) $ (127)
=========== ======== ======== ========== ======== ======== ======= =======

(See notes to consolidated financial statements)

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The accompanying consolidated financial statements include those of Computer
Sciences Corporation, its subsidiaries and those joint ventures and
partnerships over which it exercises control, hereafter collectively referred
to as "CSC" or "the Company." All material intercompany transactions and
balances have been eliminated.

BUSINESS COMBINATION

On August 1, 1996, CSC acquired The Continuum Company, Inc. ("Continuum").
Upon consummation of the merger, Continuum became a wholly owned subsidiary of
the Company. Each outstanding share of Continuum common stock was converted
into 1.58 shares of common stock of the Company and each outstanding option to
purchase shares of Continuum common stock was converted into an option to
purchase 1.58 shares of CSC common stock. The acquisition has been accounted
for as a pooling of interests, and previously reported consolidated financial
statements of the Company for periods ended prior to August 1, 1996 have been
restated to include the financial position and results of operations of
Continuum.

OTHER ACQUISITIONS

On March 15, 1996, Continuum, prior to its merger with CSC, acquired Hogan
Systems, Inc. ("Hogan") through the issuance of 4,814,000 shares of its common
stock (equivalent to 7,606,000 shares of CSC's common stock). The acquisition
was accounted for as a pooling of interests and, accordingly, the Company's
consolidated financial statements have been restated to include the results of
Hogan for all periods presented.

During the three years ended April 3, 1998, the Company made a number of
acquisitions in addition to those described above which, either individually
or collectively, are not material. In conjunction with business combinations
accounted for as purchases, the Company acquired assets with an estimated fair
value of $61,460, $199,302 and $34,497; and assumed liabilities of $47,632,
$125,511 and $18,628 for fiscal 1998, 1997 and 1996 respectively. The excess
of cost of businesses acquired over related net assets was $89,028, $139,504
and $22,448 for the three fiscal years ended 1998.

INCOME RECOGNITION

The Company provides services under time and materials, level of effort,
cost-based and fixed price contracts. For time and materials and level of
effort types of contracts, income is recorded as the costs are incurred,
income being the difference between such costs and the agreed-upon billing
amounts. For cost-based contracts, income is recorded by applying an estimated
factor to costs as incurred, such factor being determined by the contract
provisions and prior experience. For fixed price contracts, income is recorded
on the basis of the estimated percentage of completion of services rendered.
Losses, if any, on fixed price contracts are recognized during the period in
which the loss is determined.

Revenues from certain information processing services are recorded at the
time the service is utilized by the customer. Revenues from sales of
proprietary software are generally recognized upon receipt of a signed
contract documenting a customer commitment; however, if significant
customization is part of the transaction, such revenues are recognized over
the period of delivery.

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEPRECIATION AND AMORTIZATION

The Company's depreciation and amortization policies are as follows:

Property and Equipment:
Buildings.......................... 10 to 40 years
Computers and related equipment.... 3 to 10 years
Furniture and other equipment...... 2 to 10 years
Leasehold improvements............. Shorter of lease term or useful life
Investments and Other Assets:
Purchased and internally developed
software.......................... 2 to 10 years
Credit information files........... 10 to 20 years
Excess of cost of businesses
acquired over related net assets.. Up to 40 years
Deferred contract costs............ Contract life

For financial reporting purposes, computer equipment is depreciated using
either the straight-line or sum-of-the-years'-digits method, depending on the
nature of the equipment's use. The cost of other property and equipment, less
applicable residual values, is depreciated on the straight-line method.
Depreciation commences when the specific asset is complete, installed and
ready for normal use. Investments and other assets are amortized on a
straight-line basis over the years indicated above.

Included in purchased and internally developed software are unamortized
capitalized software development costs of $76,969 and $71,709 as of April 3,
1998 and March 28, 1997, respectively. The related amortization expense was
$17,358, $20,073 and $19,947 for the three fiscal years ended 1998. During
March 1996, $20,200 of capitalized software was written off to reflect a
decline in net realizable value associated primarily with changes in market
conditions and changes in business strategy relating to certain banking
products.

Included in other assets are deferred contract costs related to the initial
purchase of assets under outsourcing contracts. The balance of such costs, net
of amortization, was $102,723 and $89,378 for fiscal 1998 and 1997,
respectively. The related amortization expense was $15,371, $12,112 and
$12,764 for the three fiscal years ended 1998.

The Company evaluates at least annually the recoverability of its excess
cost of businesses acquired over related net assets. In assessing
recoverability, the current and future profitability of the related operations
are considered, along with management's plans with respect to the operations
and the projected undiscounted cash flows.

CASH FLOWS

Cash payments for interest on indebtedness and taxes on income are as
follows:

FISCAL YEAR
-----------------------
1998 1997 1996
------- ------- -------

Interest........................................... $50,909 $37,910 $36,322
Taxes on income.................................... 30,613 63,899 50,703

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

For purposes of reporting cash and cash equivalents, the Company considers
all investments purchased with an original maturity of three months or less to
be cash equivalents. The Company's investments consist of high quality
securities issued by a number of institutions having high credit ratings,
thereby limiting the Company's exposure to concentrations of credit risk. With
respect to financial instruments, the Company's carrying amounts of its other
current assets and liabilities were deemed to approximate their market values
due to their short maturity. The Company has no material hedge contracts with
respect to its foreign exchange or interest rate positions.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions, in particular estimates of anticipated contract costs utilized in
the revenue recognition process, that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.

STOCK SPLIT

All share data with the exception of prior year share amounts in the
Consolidated Balance Sheets and Consolidated Statements of Stockholders'
Equity have been restated to reflect the two-for-one stock split in the form
of a 100% stock dividend paid on March 23, 1998.

EARNINGS PER SHARE

During fiscal 1998, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings per Share." This statement requires
presentation of both basic and diluted EPS and restatement of all prior-period
EPS data presented. Basic earnings per common share are computed using the
weighted average number of common shares outstanding during the period.
Diluted earnings per share reflect the incremental shares issuable upon the
assumed exercise of stock options.

Basic and diluted earnings per share are calculated as follows:

FISCAL YEAR
--------------------------
1998 1997 1996
-------- -------- --------

Net income for basic and diluted EPS............. $260,369 $192,413 $109,431
======== ======== ========
Common share information (in thousands)
Average common shares outstanding for basic
EPS........................................... 155,125 151,895 148,865
Dilutive effect of stock options............... 3,401 4,499 4,205
-------- -------- --------
Shares for diluted EPS......................... 158,526 156,394 153,070
======== ======== ========
Basic EPS........................................ $ 1.68 $ 1.27 $ 0.74
Diluted EPS...................................... 1.64 1.23 0.71

In accordance with SFAS No. 128, the computation of diluted EPS did not
include stock options which were antidilutive, as their exercise price was
greater than the average market price of the Company's common stock during the
year. The number of such options was 95,310, 249,813 and 136,973 at April 3,
1998, March 27, 1997 and March 28, 1996, respectively.

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board recently issued SFAS No. 130,
"Reporting Comprehensive Income," SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" and SFAS No. 132, "Employers'
Disclosures about Pensions and other Postretirement Benefits." During fiscal
1999, the Company will adopt these standards, which will expand or modify
disclosures but will have no impact on consolidated financial position,
results of operations or cash flows.

In October 1997, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 97-2, "Software Revenue Recognition,"
which supersedes SOP 91-1, "Software Revenue Recognition." SOP 97-2 provides
further guidance on recognizing revenue from sales of proprietary software and
is effective for transactions CSC enters into beginning in fiscal 1999. The
Company does not expect the adoption of SOP 97-2 to have a material impact on
consolidated financial position, results of operations or cash flows.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior years' financial
statements in order to conform to the current presentation.

NOTE 2--SPECIAL ITEMS

Special items in fiscal 1998 represent costs, expenses, and benefits
associated with developments at CSC Enterprises and the Company's response to
a failed take-over attempt.

During the fiscal quarter ended June 27, 1997, CSC recognized a net special
credit of $1,707, or 1 cent per share, at CSC Enterprises, a general
partnership of which CSC, through one of its affiliates, is the managing
general partner. This net credit resulted from a tax benefit of $135,000 and
an after-tax special charge of $133,293 ($208,393 before tax). During the
fiscal quarter ended June 27, 1997, several partners withdrew from CSC
Enterprises. As a result of these withdrawals, CSC Enterprises took actions
that caused CSC to recognize an increase in the tax basis of certain assets.
As required by SFAS No. 109, this tax basis increase resulted in a permanent
difference between the tax and book basis of certain assets, which established
a deferred tax asset of $135,000 and a corresponding reduction of CSC's
provision for income taxes during the quarter ended June 27, 1997. In
connection with these developments, CSC Enterprises reviewed its operations,
its market opportunities and the carrying value of its assets. Based on this
review, certain offerings and assets were eliminated, primarily within its
telecommunications operations. As a result, CSC recognized an after-tax
special charge of $133,293 during the fiscal quarter ended June 27, 1997. This
special charge included goodwill of $35,000, contract termination costs of
$34,000, deferred contract costs and other assets of $20,000,
telecommunications software and accruals of $22,000, telecommunications
property, equipment and intangible assets of $12,000 and other costs of
$10,000.

In the fourth quarter of fiscal 1998, the Company recorded a before-tax
special charge of $20,700, or 9 cents per share after tax, for costs relating
to the Company's response to a failed take-over attempt. The charge is
comprised of $14,000 for investment banking expenses and $6,700 for other
expenses such as legal costs, public relations and shareholder communications.

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 2--SPECIAL ITEMS (CONTINUED)

23 cents per share. The charge is composed of $11,040 for investment banking
and other merger expenses; $11,785 related to the write-off of certain
capitalized software, other assets and intangibles; and $26,104 related to the
elimination of duplicate data processing facilities, employee severance costs
and contract termination costs.

In connection with the fiscal 1996 acquisition of Hogan discussed in note 1,
Continuum effected a plan to integrate, restructure and realign its expanded
business. As a result, approximately $50,100 of special charges were expensed,
including $9,600 of transaction and $9,800 of restructuring costs (which
includes the consolidation of facilities and data processing and employee
terminations). In addition, non-cash adjustments to the carrying value of
certain tangible and intangible assets of $30,700 were recorded, including
$20,200 to capitalized software.

Fiscal 1996 charges also included $26,000, related to an acquisition, which
was assigned to purchased research and development and subsequently expensed
with no income tax benefit. The combined fiscal 1996 after-tax special charges
recorded were $61,800, or 40 cents per share.

NOTE 3--INCOME TAXES

The sources of income before taxes, classified as between domestic entities
and those entities domiciled outside of the United States, are as follows:

FISCAL YEAR
--------------------------
1998 1997 1996
-------- -------- --------

Domestic entities................................ $ 96,438 $270,353 $198,571
Entities outside the United States............... 94,431 32,960 (1,641)
-------- -------- --------
$190,869 $303,313 $196,930
======== ======== ========

The provisions (credits) for taxes on income, classified as between current
and deferred and as between taxing jurisdictions, consist of the following:

FISCAL YEAR
--------------------------
1998 1997 1996
-------- -------- -------

Current portion:
Federal........................................ $(12,275) $ 83,185 $27,611
State.......................................... (2,051) 12,065 2,282
Foreign........................................ 39,299 10,529 14,258
-------- -------- -------
24,973 105,779 44,151
-------- -------- -------
Deferred portion:
Federal........................................ (82,170) 3,566 38,980
State.......................................... (8,812) 664 7,540
Foreign........................................ (3,491) 891 (3,172)
-------- -------- -------
(94,473) 5,121 43,348
-------- -------- -------
Total provision (credit) for taxes............... $(69,500) $110,900 $87,499
======== ======== =======

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 3--INCOME TAXES (CONTINUED)

Included in the fiscal 1998 current portion is $27,000 (composed of $26,200
federal and $800 state) of the $135,000 deferred tax asset described in Note 2
and $81,900 related to the other fiscal 1998 special items, also described in
Note 2. The fiscal 1998 deferred portion includes the remaining $108,000
(composed of $104,800 federal and $3,200 state) of the $135,000 deferred tax
asset.

The major elements contributing to the difference between the federal
statutory tax rate and the effective tax rate are as follows:

FISCAL YEAR
------------------
1998 1997 1996
----- ---- ----

Statutory rate........................................... 35.0 % 35.0% 35.0%
State income tax, less effect of federal deduction....... 2.2 2.8 3.7
Goodwill amortization.................................... .4 .6 1.8
Utilization of tax credits/losses........................ (2.2) (1.9) (.2)
Special items............................................ (71.5) 1.2 4.9
Other.................................................... (.3) (1.1) (.8)
----- ---- ----
Effective tax rate....................................... (36.4)% 36.6% 44.4%
===== ==== ====

The fiscal 1998 special items percentage relates principally to the $135,000
tax benefit described in Note 2. The fiscal 1997 and 1996 special items
percentages are the result of non-deductible acquisition-related costs.

The tax effects of significant temporary differences that comprise deferred
tax balances are as follows:

APRIL 3, MARCH 28,
1998 1997
--------- ---------

Deferred tax assets (liabilities)
Deferred income..................................... $ 1,457 $ 2,055
Employee benefits................................... (1,421) 788
Provisions for contract settlement.................. 4,121 16,047
Currency exchange................................... 18,909 (623)
Other assets........................................ 22,438 8,096
Contract accounting................................. (109,343) (90,963)
Depreciation and amortization....................... 54,420 (73,921)
Prepayments......................................... (41,083) (7,460)
Tax loss/credit carryforwards....................... 20,231
Other assets (liabilities).......................... (998) 4,967
--------- ---------
Total deferred taxes.................................. $ (31,269) $(141,014)
========= =========

Of the above deferred amounts, $111,277 and $57,799 are included in current
income taxes payable at April 3, 1998 and March 28, 1997, respectively.

During fiscal 1996, the Internal Revenue Service ("IRS") completed its
examination of the Company's consolidated federal income tax returns for
fiscal years 1987 through 1991, and assessed the Company additional federal
income tax plus interest. The Company filed a protest during fiscal 1996
regarding the assessment and took the issue before the Appeals Division of the
IRS. During fiscal 1998, the Appeals Division completed its review of the
matter and is in the process of completing their report. The results are not
expected to have a material effect on the financial statements.

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 4--RECEIVABLES

Receivables consist of the following:

APRIL 3, MARCH 28,
1998 1997
---------- ----------

Billed trade accounts.............................. $1,043,703 $ 884,772
Recoverable amounts under contracts in progress.... 366,778 376,266
Other receivables.................................. 45,849 32,965
---------- ----------
$1,456,330 $1,294,003
========== ==========

Amounts due under long-term contracts include the following items:

APRIL 3, MARCH 28,
1998 1997
---------- ----------

Included in billed trade accounts receivable--
Amounts retained in accordance with contract
terms, due upon completion or other specified
event........................................... $ 3,556 $ 8,848
========== ==========
Included in recoverable amounts under contracts in
progress:
Amounts on fixed price contracts not billable in
accordance with contract terms until some future
date............................................ $ 240,814 $ 231,115
Amounts retained in accordance with contract
terms, due upon completion or other specified
event........................................... 23,246 31,072
Excess of costs over provisional billings,
awaiting clearance for final billing or future
negotiation..................................... 6,593 26,056
Accrued award fees............................... 14,647 12,120
Amounts on completed work, negotiated and
awaiting contractual document................... 3,670 4,106
Unrecovered costs related to claims.............. 3,902 4,554
---------- ----------
$ 292,872 $ 309,023
========== ==========

The recoverable amounts under contracts in progress which have not yet been
billed comprise amounts of contract revenue not billable at the balance sheet
date. Such amounts generally become billable upon completion of a specified
phase of the contract, negotiation of contract modifications, completion of
government audit activities, or upon acceptance by the customer.

All items relating to long-term contracts shown above are expected to be
collected during fiscal 1999 except for $3,896 of unrecovered costs related to
claims and $118,949 of other items to be collected during fiscal 2000 and
thereafter. The unrecovered costs related to claims are recorded at net
realizable value and consist primarily of amounts due under long-term
contracts which are pending determination by negotiation or legal proceedings.

NOTE 5--DEBT

SHORT-TERM

At April 3, 1998, the Company had uncommitted lines of credit of $45,000
with domestic banks. As of April 3, 1998, the Company had no borrowings
outstanding under these lines of credit.

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 5--DEBT (CONTINUED)

At April 3, 1998, the Company also had uncommitted lines of credit of
$101,393 with certain foreign banks. As of April 3, 1998, the Company had
$24,626 of borrowings outstanding under these lines of credit. These short-
term lines of credit carry no commitment fees or significant covenants. At
April 3, 1998, the weighted average interest rate on borrowings under these
short-term lines of credit was 4.7%. At March 28, 1997, the rate was 5.0%.

LONG-TERM

APRIL 3, MARCH 28,
1998 1997
-------- --------

Commercial paper........................................ $375,023 $296,937
6.8% term notes, due April 1999......................... 150,000 150,000
6.5% term notes, due November 2001...................... 150,000 150,000
Capitalized lease liabilities, at varying interest
rates, payable in monthly installments through fiscal
2003................................................... 21,603 17,451
Notes payable, at varying interest rates (from 3.5% to
6.5%) through fiscal 2004.............................. 61,239 26,076
-------- --------
Total long-term debt.................................... 757,865 640,464
Less current maturities................................. 21,811 9,622
-------- --------
$736,054 $630,842
======== ========

The weighted average interest rate on the Company's commercial paper was
5.5% and 5.4% at April 3, 1998 and March 28, 1997, respectively.

Capitalized lease liabilities shown above represent amounts due under leases
for the use of computers and related equipment. Included in property and
equipment are related assets of $18,895 (1998) and $11,823 (1997), less
accumulated amortization of $5,378 and $6,055, respectively.

Certain of the Company's borrowing arrangements contain covenants that
require the Company to maintain certain financial ratios and that limit the
amount of dividend payments. Under the most restrictive requirement,
approximately $1,066,000 of retained earnings were available for cash
dividends at April 3, 1998.

The carrying value of the Company's long-term debt is $757,865 at April 3,
1998, as shown above. The corresponding fair value approximates the carrying
value using the current interest rates available to the Company for debt of
the same remaining maturities.

Maturities of long-term debt by fiscal year are $21,811 (1999), $541,529
(2000), $13,538 (2001), $158,010 (2002), $1,006 (2003) and $21,971 thereafter.

NOTE 6--RETIREMENT PLANS

PENSIONS

The Company and its subsidiaries have several pension plans, as described
below.

A contributory, defined benefit pension plan is generally available to U.S.
employees. The benefits under this plan are based on years of participation
and the employee's compensation over the entire period of

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 6--RETIREMENT PLANS (CONTINUED)

participation. It is the Company's funding policy to make contributions to the
plan as required by applicable regulations. Certain non-U.S. employees are
enrolled in defined benefit pension plans in the country of domicile. The
benefits for these plans generally are based on years of participation and the
employee's average compensation during the final years of employment. In
addition, the Company has a Supplemental Executive Retirement Plan ("SERP")
and a Nonemployee Director Retirement Plan, which are nonqualified,
noncontributory pension plans. The SERP is a defined benefit retirement plan
for designated officers and key executives of the Company. It restores
benefits limited by tax regulations and provides for additional benefits based
on years of service and the participant's average compensation during a final
period of employment.

Net periodic pension cost for U.S. and non-U.S. pension plans included the
following components:

FISCAL YEAR
----------------------------
1998 1997 1996
-------- -------- --------

Service cost--benefits earned during the year. $ 54,629 $ 42,831 $ 32,351
Interest cost on projected benefit obligation. 50,469 36,553 28,590
Actual return on assets....................... (98,071) (61,133) (68,449)
Net amortization and deferral:
Amortization of initial net obligations (net
assets).................................... 280 (320) (538)
Amortization of prior service costs......... 2,830 1,703 1,432
Amortization of net loss.................... 965 999 518
Asset gain deferred......................... 43,757 21,503 37,893
-------- -------- --------
Net periodic pension cost..................... $ 54,859 $ 42,136 $ 31,797
======== ======== ========

The following table sets forth the funded status and amounts recognized in
the Company's consolidated balance sheets:

FISCAL YEAR
-------------------------------------------------------
1998 1997
--------------------------- ---------------------------
ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFIT ACCUMULATED BENEFIT
BENEFIT OBLIGATIONS BENEFIT OBLIGATIONS
OBLIGATIONS EXCEED ASSETS OBLIGATIONS EXCEED ASSETS
------------- ------------- ------------- -------------

Actuarial present value
of benefit obligations:
Vested benefit
obligation........... $(602,062) $(68,904) $(446,978) $(28,774)
========= ======== ========= ========
Accumulated benefit
obligation........... $(628,771) $(84,741) $(475,791) $(41,408)
========= ======== ========= ========
Projected benefit
obligation............. $(820,390) $(92,594) $(570,739) $(44,743)
Plan assets at fair
market value........... 848,336 53,826 604,969 14,387
--------- -------- --------- --------
Projected benefit
obligation less than
(in excess of) plan
assets................. 27,946 (38,768) 34,230 (30,356)
Unrecognized net (gain)
loss................... (67,949) 13,402 (42,796) 4,865
Prior service cost not
yet recognized in net
periodic pension cost.. 19,820 2,968 11,308 4,585
Unrecognized net
obligation being
amortized over future
service periods of plan
participants........... 877 4,406 2,677 759
Adjustment to reflect
minimum liability...... (8,775) (8,762)
Contribution in fourth
fiscal quarter......... 2,560 1,940
--------- -------- --------- --------
Pension (liability)
asset.................. $ (16,746) $(26,767) $ 7,359 $(28,909)
========= ======== ========= ========

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 6--RETIREMENT PLANS (CONTINUED)

Assumptions used in the accounting for the Company's plans were:

FISCAL YEAR
-------------------------------
1998 1997 1996
--------- --------- ---------

U.S. plans
Discount or settlement rate.................... 7.25% 7.50% 7.50%
Rates of increase in compensation levels....... 4.00-5.92 4.00-6.17 4.00-6.17
Expected long-term rate of return on assets.... 8.50 8.50 8.50
Non-U.S. plans
Discount or settlement rates................... 3.50-7.50 6.00-8.00 7.00-9.00
Rates of increase in compensation levels....... 2.50-5.00 3.50-6.00 3.50-6.50
Expected long-term rates of return on assets... 6.00-8.25 6.00-9.00 7.00-9.25

Plan assets include equity and fixed income securities, real estate
investments, insurance contracts and short term investments.

The Company sponsors several defined contribution plans for substantially
all U.S. employees and certain foreign employees. The plans allow employees to
contribute a portion of their earnings in accordance with specified
guidelines. At April 3, 1998, plan assets included 5,729,033 shares of the
Company's common stock. During fiscal 1998, 1997 and 1996, the Company
contributed $35,216, $29,772 and $20,809, respectively.

OTHER POSTRETIREMENT BENEFITS

The Company provides healthcare and life insurance benefits for certain
retired U.S. employees, generally for those employed prior to August 1992. It
is the Company's funding policy to make contributions to the related plans as
required for recovery on government contracts. Most non-U.S. employees are
covered by government sponsored programs at no direct cost to the Company
other than related payroll taxes. The net periodic postretirement benefit
costs, relating principally to retiree healthcare, amounted to $4,496, $4,931
and $5,100 in fiscal 1998, 1997 and 1996, respectively.

Net periodic postretirement benefit cost included the following components:

FISCAL YEAR
-------------------------
1998 1997 1996
------- ------- -------

Service cost, benefits earned during the
period....................................... $ 662 $ 865 $ 831
Interest cost on accumulated benefit
obligation................................... 3,044 3,031 3,018
Actual return on plan assets.................. (3,543) (1,565) (1,463)
Amortization of initial obligation............ 1,633 1,633 1,633
Amortization of prior service cost............ 490 36
Amortization of net gain...................... (389) (44) (42)
Asset gain deferred........................... 2,599 975 1,123
------- ------- -------
Net provision for postretirement benefits..... $ 4,496 $ 4,931 $ 5,100
======= ======= =======

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 6--RETIREMENT PLANS (CONTINUED)

The status of the plan and amounts recognized in the Company's consolidated
balance sheets are as follows:

APRIL 3, MARCH 28,
1998 1997
-------- --------

Actuarial present value of benefit obligation
applicable to:
Retirees............................................ $(21,456) $(20,302)
Fully eligible plan participants.................... (6,510) (3,518)
Other active plan participants...................... (19,860) (13,109)
-------- --------
Accumulated postretirement benefit obligation......... (47,826) (36,929)
Plan assets at fair market value...................... 20,311 12,721
-------- --------
Accumulated postretirement benefit obligation in
excess of plan assets................................ (27,515) (24,208)
Unrecognized net gain................................. (7,481) (9,419)
Unrecognized transition obligation.................... 23,726 25,359
Prior service cost not yet recognized in net periodic
postretirement benefit cost.......................... 4,900 649
-------- --------
Accrued postretirement benefit liability.............. $ (6,370) $ (7,619)
======== ========

The assumed rate of return on plan assets was 8.5% and 7.5% for fiscal 1998
and 1997, respectively, and the discount rate used to estimate the accumulated
postretirement benefit obligation was 7.25% and 7.5% for fiscal 1998 and 1997,
respectively. Plan assets include equity and fixed income securities and short
term investments. The assumed healthcare cost trend rate used in measuring the
expected benefit obligation was 8.5% for fiscal 1998, declining to 5.0% for
2004 and subsequent years. A one-percentage point increase in the assumed
healthcare cost trend rate would increase the accumulated postretirement
benefit obligation as of April 3, 1998, and the net periodic postretirement
benefit cost for fiscal 1998 by $5,123 and $561, respectively.

NOTE 7--COMMITMENTS AND CONTINGENCIES

COMMITMENTS

The Company has operating leases for the use of certain property and
equipment. Substantially all operating leases are noncancelable or cancelable
only by the payment of penalties. All lease payments are based on the lapse of
time but include, in some cases, payments for insurance, maintenance and
property taxes. There are no purchase options on operating leases at favorable
terms, but most leases have one or more renewal options. Certain leases on
real property are subject to annual escalations for increases in utilities and
property taxes. Lease rental expense amounted to $183,128 (1998), $162,777
(1997), and $148,088 (1996).

Minimum fixed rentals required for the next five years and thereafter under
operating leases in effect at April 3, 1998 are as follows:

FISCAL YEAR REAL ESTATE EQUIPMENT
----------- ----------- ---------

1999................................................. $ 79,260 $50,163
2000................................................. 66,041 21,672
2001................................................. 55,192 7,526
2002................................................. 44,456 1,844
2003................................................. 36,300 127
Thereafter........................................... 100,636 44
-------- -------
$381,885 $81,376
======== =======

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 7--COMMITMENTS AND CONTINGENCIES (CONTINUED)

DST Systems, Inc., a shareholder of the Company, provides data processing
and consulting services and licenses certain software products to the Company.
During the fiscal years ended April 3, 1998, March 28, 1997 and March 29,
1996, the Company incurred aggregate expenses of $27,271, $22,788 and $22,647,
respectively, related thereto, which are included in costs of services.

CONTINGENCIES

Financial instruments which potentially subject the Company to
concentrations of credit risk are primarily accounts receivable. The Company's
customer base includes Fortune 500 companies, the U.S. Federal government, and
other significant, well-known companies operating in North America, Europe and
the Pacific Rim. Credit risk with respect to accounts receivable is minimized
because of the nature and diversification of the Company's customer base.
Furthermore, the Company continuously reviews its accounts receivables and
records provisions for doubtful accounts as needed.

The Company is currently party to a number of disputes which involve or may
involve litigation. After consultation with counsel, it is the opinion of
Company management that ultimate liability, if any, with respect to these
disputes will not be material to the Company's results of operations or
financial position.

NOTE 8--STOCK INCENTIVE PLANS

Stock Options. The Company has seven stock incentive plans which authorize
the issuance of stock options, restricted stock and other stock-based
incentives to employees upon terms approved by the Compensation Committee. In
addition, on August 1, 1996, in connection with the acquisition of Continuum,
the Company assumed outstanding employee and non-employee director options to
purchase an aggregate of 2,976,000 shares of Continuum common stock at an
average exercise price of $26.77 per share (which is equivalent to 4,702,000
shares of CSC common stock at an average exercise price of $16.95 per share),
and shares of restricted Continuum common stock were converted into 45,232
shares of restricted CSC common stock. At April 3, 1998, March 28, 1997 and
March 29, 1996, 1,938,838, 4,588,930 and 6,852,000 shares, respectively, of
CSC common stock were available for the grant to employees of future stock
options, restricted stock or other stock-based incentives.

Information concerning stock options granted under stock incentive plans is
as follows:

FISCAL YEAR
--------------------------------------------------------------
1998 1997 1996
-------------------- -------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- -------- ---------- -------- ---------- --------

Outstanding, beginning
of year................ 13,157,762 $20.22 13,972,880 $15.45 14,327,886 $12.77
Granted................. 3,285,950 35.36 3,148,736 34.74 2,657,384 24.75
Exercised............... (3,820,152) 15.20 (2,918,180) 12.77 (2,367,032) 9.39
Canceled................ (776,702) 28.83 (1,045,674) 20.90 (645,358) 16.51
---------- ---------- ----------
Outstanding, end of
year................... 11,846,858 25.48 13,157,762 20.23 13,972,880 15.45
========== ====== ========== ====== ========== ======
Exercisable, end of
year................... 4,261,089 $16.21 5,412,886 $13.79 4,761,898 $11.19
========== ====== ========== ====== ========== ======

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 8--STOCK INCENTIVE PLANS (CONTINUED)

APRIL 3, 1998
----------------------------------------------------------------------
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------- --------------------------
WEIGHTED WEIGHTED AVERAGE WEIGHTED
RANGE OF OPTION EXERCISE NUMBER AVERAGE REMAINING NUMBER AVERAGE
PRICE OUTSTANDING EXERCISE PRICE CONTRACTUAL LIFE EXERCISABLE EXERCISE PRICE
- ------------------------ ----------- -------------- ---------------- ----------- --------------

$ .17-$12.17.......... 2,520,076 $10.12 4.0 2,117,491 $ 9.84
12.25-22.69.......... 2,416,970 17.93 6.1 1,386,796 17.26
23.38-33.50.......... 1,276,640 26.03 7.5 276,200 26.27
33.75-33.94.......... 2,541,400 33.93 9.1 19,070 33.76
34.00-53.28.......... 3,091,772 36.72 8.5 461,532 35.59

The Company uses the intrinsic value based method of accounting for stock
options, under which compensation cost is equal to the excess, if any, of the
quoted market price of the stock at the option grant date over the exercise
price, and is amortized over the vesting period. Compensation cost recognized
with respect to stock options was $377, $442 and $213 for fiscal 1998, 1997
and 1996, respectively.

Restricted Stock. Restricted stock awards consist of shares of common stock
of the Company sold at par value ($1 per share). Upon sale to an employee,
shares of restricted stock become outstanding, receive dividends and have
voting rights. The shares are subject to forfeiture and to restrictions which
limit the sale or transfer during the restriction period.

The restrictions on shares of Continuum restricted stock lapse ratably on
the first five anniversaries of the date of sale, and were granted coincident
with cash bonuses aggregating $211 during the fiscal year ended March 29,
1996. The restrictions on shares of CSC restricted stock (other than Continuum
restricted stock) generally lapse on the fifth, sixth and seventh
anniversaries of the date of sale.

At April 3, 1998, March 28, 1997 and March 29, 1996, 165,302, 296,482 and
400,348 shares, respectively, of CSC restricted stock were outstanding, net of
shares forfeited by or repurchased from terminated employees, and shares for
which the restrictions have lapsed.

The Company uses the intrinsic value based method of accounting for
restricted stock, under which compensation cost is equal to the excess, if
any, of the quoted market price of the stock at the date of sale to the
employee over the sales price, and is amortized over the restriction period.
Compensation cost recognized with respect to restricted stock was $645, $742
and $1,049 during fiscal 1998, 1997 and 1996, respectively.

Restricted Stock Units. During fiscal 1998, the Company adopted a stock
incentive plan which authorizes the issuance of stock options, restricted
stock and other stock-based incentives to nonemployee directors upon terms
approved by the Company's Board of Directors. As of April 3, 1998, 22,488
restricted stock units ("RSUs") had been awarded to nonemployee directors
under this plan and were outstanding on that date.

When a holder of RSUs ceases to be a director of the Company, the RSUs are
automatically redeemed for shares of CSC common stock and dividend equivalents
with respect to such shares. At the holder's election, which must be made
within 30 days after the date of the award, the RSUs may be redeemed (i) as an
entirety, upon the day the holder ceases to be a director, or (ii) in
substantially equal amounts upon the first five, ten or fifteen anniversaries
of such day.

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 8--STOCK INCENTIVE PLANS (CONTINUED)

There are two types of RSUs: (i) those awarded in lieu of vested retirement
benefits under other plans ("Accrued Benefit RSUs"); and (ii) those awarded as
a form of future retirement benefits ("Future Benefit RSUs"). When a holder of
Accrued Benefit RSUs ceases to be a director of the Company, the number of
shares of CSC common stock to be delivered by the Company upon redemption of
the RSUs is equal to the number of such RSUs awarded. When a holder of Future
Benefit RSUs ceases to be a director, the number of shares to be delivered
upon redemption is equal to 20% of the number of such RSUs awarded, multiplied
by the number of full years (but not in excess of 5) that the holder served as
a director after the date of award.

At April 3, 1998, 8,778 Accrued Benefit RSUs and 13,710 Future Benefit RSUs
were outstanding, and 77,512 shares of CSC common stock remained available for
the grant to nonemployee directors of future RSUs or other stock-based
incentives.

The Company uses the intrinsic value based method of accounting for RSUs,
under which compensation cost is equal to 100% of the total number of the RSUs
awarded, multiplied by the quoted market price of the stock at the date of
award, and is amortized, in the case of Future Benefit RSUs, over the vesting
period. Compensation cost recognized with respect to RSUs was $413 for fiscal
1998.

Pro Forma Information. The following pro forma net income and earnings per
share information has been determined as if the Company had accounted for
stock-based compensation awarded under the stock incentive plans using the
fair value based method. Under the fair value method, the estimated fair value
of stock option awards would be charged against income on a straight-line
basis over the vesting period. The effects on pro forma disclosures of
applying SFAS No. 123, "Accounting for Stock-Based Compensation," are not
likely to be representative of the effects on pro forma disclosures of future
years, because SFAS No. 123 is applicable only to options granted subsequent
to fiscal 1995.

FISCAL YEAR
-----------------------------------------------------------------
1998 1997 1996
--------------------- --------------------- ---------------------
AS REPORTED PRO FORMA AS REPORTED PRO FORMA AS REPORTED PRO FORMA
----------- --------- ----------- --------- ----------- ---------

Net income.............. $260,369 $246,161 $192,413 $182,649 $109,431 $106,063
Basic earnings per
share.................. 1.68 1.59 1.27 1.20 0.74 0.71
Diluted earnings per
share.................. 1.64 1.55 1.23 1.17 0.71 0.69

The weighted average fair values of stock options granted during fiscal
1998, 1997 and 1996 were $12.08, $11.53 and $8.11, respectively. The fair
value of each stock option was estimated on the date of grant using the Black-
Scholes option-pricing model with the following weighted average assumptions
used for grants in 1998, 1997 and 1996, respectively: risk-free interest rates
of 6.43%, 6.55% and 6.16%; expected volatility of 28%, 26% and 26%; and
expected lives in years of 6.06, 5.75 and 5.75.

Promissory Notes. Certain acquired companies sold shares of their common
stock to employees and directors in exchange for non-interest bearing
promissory notes secured by the shares. The outstanding principal balances of
these notes amounted to $127 at April 3, 1998 and are classified as a
reduction of stockholders' equity.

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 9--STOCKHOLDER PURCHASE RIGHTS PLAN

On December 21, 1988, the Company adopted a stockholder rights plan pursuant
to which it issued one right for each outstanding share of its common stock.
On February 27, 1998, the Company's Board of Directors redeemed these rights
for one sixth of one cent per right. The redemption price was paid after the
end of fiscal 1998 to the holders of record of rights as of the close of
business March 30, 1998.

On February 18, 1998, the Company adopted a new stockholder rights plan
pursuant to which it issued one right for each outstanding share of its common
stock. These rights, which are attached to and trade only together with the
common stock, are not currently exercisable. On the tenth business day after
any person or entity becomes the beneficial owner of 10% or more of CSC's
common stock, each right (other than rights held by the 10% stockholder, which
will become void) will become exercisable to purchase, for $250, CSC common
stock having a market value of $500. The rights expire February 18, 2008, and
may be redeemed by the Board of Directors at $.0005 per right at any time
before they become exercisable.

NOTE 10--SEGMENT AND GEOGRAPHIC INFORMATION

The Company's business involves operations in principally one industry
segment, providing management and information technology consulting, systems
integration and outsourcing. CSC operates primarily in the United States,
Europe, Australia and other Pacific Rim countries.

FISCAL YEAR
--------------------------------
1998 1997 1996
---------- ---------- ----------

Revenues
United States........................... $4,406,236 $3,795,361 $3,342,317
Europe.................................. 1,770,955 1,474,933 1,109,616
Other................................... 423,647 345,754 288,827
---------- ---------- ----------
Total................................. $6,600,838 $5,616,048 $4,740,760
========== ========== ==========
Operating income
United States........................... $ 165,625 $ 342,353 $ 248,642
Europe.................................. 108,788 32,998 6,514
Other................................... 14,355 1,198 11,737
---------- ---------- ----------
Total................................. $ 288,768 $ 376,549 $ 266,893
========== ========== ==========
Identifiable assets at year end
United States........................... $2,579,269 $2,608,849 $1,844,305
Europe.................................. 1,193,131 726,953 931,183
Other................................... 274,395 157,285 160,531
---------- ---------- ----------
Total................................. $4,046,795 $3,493,087 $2,936,019
========== ========== ==========

Operating income is generally calculated as total revenue less operating
expenses, without adding or deducting corporate general and administrative
costs, interest income and expense, income taxes or other items. Operating
expenses include special charges.

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 10--SEGMENT AND GEOGRAPHIC INFORMATION (CONTINUED)

The composition of the special charges included in the operating income
above is as follows:

FISCAL YEAR
------------------------
1998 1997 1996
-------- ------- -------

United States....................................... $229,093 $27,247 $42,138
Europe.............................................. 10,300 31,816
Other............................................... 11,382 2,099
-------- ------- -------
Total............................................. $229,093 $48,929 $76,053
======== ======= =======

The Company derives a significant portion of its revenues from departments
and agencies of the United States government. At April 3, 1998, approximately
27% of the Company's accounts receivable were due from the federal government.
Federal government revenues by agency/department are as follows:

FISCAL YEAR
-----------------------------------------------------------
1998 1997 1996
------------------- ------------------- -------------------
PERCENT PERCENT PERCENT
AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL
---------- -------- ---------- -------- ---------- --------

Department of Defense... $1,071,958 16% $1,082,885 19% $ 961,587 20%
National Aeronautics and
Space Administration... 298,592 5 299,388 5 310,053 7
Other civil agencies.... 260,183 4 253,394 5 299,859 6
---------- --- ---------- --- ---------- ---
Total................. $1,630,733 25% $1,635,667 29% $1,571,499 33%
========== === ========== === ========== ===

NOTE 11--AGREEMENTS WITH EQUIFAX

During fiscal 1989, the Company entered into an agreement (the "Operating
Agreement") with Equifax Inc. and its subsidiary, Equifax Credit Information
Services, Inc. ("ECIS"), pursuant to which certain of the Company's
subsidiaries (collectively, the "Bureaus") became affiliated credit bureaus of
ECIS and purchase credit reporting services from the ECIS system for resale to
their customers. The Bureaus retain ownership of their credit files stored in
the ECIS system and receive revenues generated from the sale of the credit
information they contain. The Bureaus pay ECIS a fee for storing and
maintaining the files and for each report supplied by the ECIS system.

Pursuant to the Operating Agreement, the Company has an option to require
ECIS to purchase the collections business (the "Collections Put Option"), and
a separate option to require ECIS to purchase the credit reporting business
and, if not previously sold, the collections business (the "Credit Reporting
Put Option"). Both options require six months' advance notice and expire on
August 1, 2013.

On November 25, 1997, the Collections Put Option was exercised and the
collections business was sold for approximately $38,000. The transaction was
consummated after the end of fiscal 1998.

The exercise price of the Credit Reporting Put Option is determined by
certain financial formulas if notice of exercise is given on or prior to July
31, 1998. In the opinion of management, the exercise price of the Credit
Reporting Put Option on or prior to July 31, 1998, as determined using
consistent methods of calculation under the financial formulas, approximated
$526,000 at April 3, 1998. In its annual report for the year ended

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

NOTE 11--AGREEMENTS WITH EQUIFAX (CONTINUED)

December 31, 1997, Equifax Inc. stated that this exercise price is currently
estimated at approximately $375,000. Both amounts have been reduced to reflect
the sale of the collections business, which occurred after April 3, 1998.

If notice of exercise of the Credit Reporting Put Option is given after July
31, 1998, the exercise price is equal to the appraised value of the assets
subject to the option.

The Operating Agreement has a 10-year term, which will automatically be
renewed indefinitely for successive 10-year periods unless the Company gives
notice of termination at least six months prior to the expiration of any such
term. In the event that on or prior to August 1, 2013 (i) the Company gives
such notice of termination and does not exercise the Credit Reporting Put
Option prior to the termination of the then-current term or (ii) there is a
change in control of the Company, then ECIS has an option for 60 days after
the date of such event to require the Company to sell to it the credit
reporting business at the Credit Reporting Put Option exercise price.

Effective December 1990, the Company established a joint venture, named CSC
Enterprises, to operate the Company's credit services and collections
businesses, and to carry out other business strategies through acquisition and
investment. The joint venture is structured as a general partnership, and an
affiliate of the Company is the managing general partner. The Company assigned
to this partnership its credit reporting and collections businesses and all of
its rights under the Operating Agreement.

As of March 28, 1997, the partners of CSC Enterprises included affiliates of
CSC, affiliates of Equifax Inc., and Merel Corporation. As described in Note
2, during the fiscal quarter ended June 27, 1997 the Equifax affiliates
withdrew from CSC Enterprises and CSC recognized a deferred tax asset of
$135,000 and an after-tax special charge of $133,293.

As of April 3, 1998, the partners of CSC Enterprises included the Company,
certain affiliates of the Company and Merel Corporation. The Company's rights
under the Operating Agreement, including its put option exercise rights,
remain exercisable by the Company through its affiliates.

COMPUTER SCIENCES CORPORATION

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

FISCAL 1998
--------------------------------------------
1ST 2ND 3RD 4TH
IN THOUSANDS EXCEPT PER-SHARE QUARTER QUARTER QUARTER QUARTER
AMOUNTS ---------- ---------- ---------- ----------

Revenues......................... $1,488,750 $1,578,824 $1,664,092 $1,869,172
Income before taxes.............. (127,612) 92,353 106,632 119,496
Net income....................... 52,588 58,553 69,132 80,096
Net earnings per share:
Basic.......................... 0.34 0.38 0.44 0.51
Diluted........................ 0.33 0.37 0.44 0.50

FISCAL 1997
--------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
---------- ---------- ---------- ----------

Revenues......................... $1,303,892 $1,355,255 $1,421,638 $1,535,263
Income before taxes.............. 71,773 27,010 87,690 116,840
Net income....................... 45,277 14,006 57,390 75,740
Net earnings per share:
Basic.......................... 0.30 0.09 0.38 0.49
Diluted........................ 0.29 0.09 0.37 0.48

FISCAL 1996
--------------------------------------------
1ST 2ND 3RD 4TH
QUARTER QUARTER QUARTER QUARTER
---------- ---------- ---------- ----------

Revenues......................... $1,082,963 $1,128,648 $1,236,674 $1,292,475
Income before taxes.............. 56,622 62,900 46,105 31,303
Net income....................... 35,941 39,569 19,721 14,200
Net earnings per share:
Basic.......................... 0.24 0.27 0.13 0.10
Diluted........................ 0.24 0.26 0.13 0.09

A discussion of "special items" for the three fiscal years ended 1998 is
included in Note 2 to the consolidated financial statements.

PART II--(CONTINUED)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information regarding executive officers of the Company is included in Part
I. For the other information called for by Items 10, 11, 12 and 13, reference
is made to the sections entitled "Voting Securities and Principal Holders
Thereof," "Item 1--Election of Directors" and "Executive Compensation" in the
Registrant's definitive Proxy Statement for its 1998 Annual Meeting of
Stockholders, which will be filed with the Securities and Exchange Commission
within 120 days after April 3, 1998. Such sections are incorporated herein by
reference in their entirety, except for the material included in the
"Executive Compensation" section under the captions "Report of Compensation
Committee on Annual Compensation of Executive Officers" and "Comparison of
Cumulative Total Return."

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A)(1) AND (2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

These documents are included in the response to Item 8 of this report. See
the index on page 48.

(3) EXHIBITS

The following exhibits are filed with this report:

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------

3.1 Restated Articles of Incorporation, effective October 31, 1988 (c)
3.2 Amendment to Restated Articles of Incorporation, effective
August 10, 1992 (i)
3.3 Amendment to Restated Articles of Incorporation, effective July
31, 1996 (l)
3.4 Certificate of Amendment of Certificate of Designations of
Series A Junior Participating Preferred Stock, effective August
1, 1996 (n)
3.5 Bylaws, amended and restated effective May 4, 1998
10.1 1978 Stock Option Plan, amended and restated effective March 31,
1988* (m)
10.2 1980 Stock Option Plan, amended and restated effective March 31,
1988* (m)
10.3 1984 Stock Option Plan, amended and restated effective March 31,
1988* (m)
10.4 1987 Stock Incentive Plan* (b)
10.5 Schedule to the 1987 Stock Incentive Plan for United Kingdom
personnel* (b)
10.6 1990 Stock Incentive Plan* (g)
10.7 1992 Stock Incentive Plan, amended and restated effective August
9, 1993* (m)
10.8 Schedule to the 1992 Stock Incentive Plan for United Kingdom
personnel* (p)
10.9 1995 Stock Incentive Plan* (j)
10.10 Form of Stock Option Agreement* (t)
10.11 Form of Restricted Stock Agreement* (t)
10.12 Annual Management Incentive Plan, effective April 2, 1983* (a)
10.13 Supplemental Executive Retirement Plan, amended and restated
effective February 27, 1998* (t)
10.14 Deferred Compensation Plan, amended and restated effective
February 2, 1998* (r)
10.15 Severance Plan for Senior Management and Key Employees, amended
and restated effective February 18, 1998 (s)
10.16 Severance Agreement with Van B. Honeycutt, effective February 2,
1998 (r)
10.17 Form of Indemnification Agreement for Officers (e)
10.18 Form of Indemnification Agreement for Directors (d)
10.19 1997 Nonemployee Director Stock Incentive Plan (q)
10.20 Form of Restricted Stock Unit Agreement
10.21 1990 Nonemployee Director Retirement Plan, amended and restated
effective February 2, 1998 (r)
10.22 Information Technology Services Agreements with General Dynamics
Corporation, dated as of November 4, 1991 (h)
10.23 Rights Agreement dated December 21, 1988, amended and restated
effective February 18, 1998 (s)
10.24 Rights Agreement dated February 18, 1998 (s)
21 Significant Active Subsidiaries and Affiliates of the Registrant
23 Independent Auditors' Consent
27 Financial Data Schedule
99.1 Annual Report on Form 11-K for the Matched Asset Plan of the
Registrant for the fiscal year ended December 31, 1997
99.2 Annual Report on Form 11-K for the Hourly Savings Plan of CSC
Outsourcing, Inc. for the fiscal year ended December 31, 1997
99.3 Annual Report on Form 11-K for the CUTW Hourly Savings Plan of
CSC Outsourcing, Inc. for the fiscal year ended December 31,
1997

- --------
*Management contract or compensatory plan or agreement

NOTES TO EXHIBIT INDEX:

(a)-(f) These exhibits are incorporated herein by reference to the Company's
Annual Report on Form 10-K for the fiscal years ended on the respective
dates indicated below:

(a) March 30, 1984 (d) April 3, 1992
(b) April 1, 1988 (e) March 31, 1995
(c) March 31, 1989 (f) March 28, 1997

(g) Incorporated herein by reference to the Registrant's Registration
Statement on Form S-8 filed on August 15, 1990.

(h) Incorporated herein by reference to the Registrant's Current Report on
Form 8-K dated November 4, 1991.

(i) Incorporated herein by reference to the Registrant's Proxy Statement
for its August 10, 1992 Annual Meeting of Stockholders.

(j) Incorporated herein by reference to the Registrant's Quarterly Report
on Form 10-Q filed on November 13, 1995.

(k) Incorporated herein by reference to the Registrant's Current Report on
Form 8-K dated April 28, 1996.

(l) Incorporated herein by reference to the Registrant's Proxy Statement
for its July 31, 1996 Annual Meeting of Stockholders.

(m) Incorporated herein by reference to the Registrant's Quarterly Report
on Form 10-Q filed on August 12, 1996.

(n) Incorporated herein by reference to the Registrant's Current Report of
Form 8-K dated August 1, 1996.

(o) Incorporated herein by reference to the Registrant's Quarterly Report
on Form 10-Q filed on November 12, 1996.

(p) Incorporated herein by reference to the Registrant's Quarterly Report
on Form 10-Q filed on February 10, 1997.

(q) Incorporated herein by reference to the Registrant's Proxy Statement
for its August 11, 1997 Annual Meeting of Stockholders.

(r) Incorporated herein by reference to the Registrant's Quarterly Report
on Form 10-Q filed on February 9, 1998.

(s) Incorporated herein by reference to the Registrant's
Solicitation/Recommendation Statement on Schedule 14D-9 filed on
February 26, 1998.

(t) Incorporated herein by reference to Amendment No. 2 to the Registrant's
Solicitation/ Recommendation Statement on Schedule 14D-9 filed on March
2, 1998.

(B)REPORTS ON FORM 8-K

There were three reports on Form 8-K filed during the fourth quarter of
fiscal 1998:

(1) on February 2, 1998, the Registrant filed a Current Report on Form 8-K
dated February 2, 1998 which reported that on that date, the Board of
Directors of the Registrant declared a 2-for-1 stock split in the form
of a 100% stock dividend with respect the Registrant's common stock,
payable to stockholders of record on March 2, 1998;

(2) on February 4, 1998, the Registrant filed a Current Report on Form 8-K
dated February 2, 1998 which clarified that the previously reported 2-
for-1 stock split in the form of a 100% stock dividend with respect the
Registrant's common stock was payable on March 23, 1998 to stockholders
of record as of March 2, 1998; and

(3) on February 17, 1998, the Registrant filed a Current Report on Form 8-K
dated February 16, 1998 which reported that on February 16, 1998, the
Board of Directors of the Registrant amended the Bylaws to opt out of
the "Control Shares" provisions of the Nevada Revised Statutes.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

Computer Sciences Corporation

Dated: June 15, 1998 /s/ Van B. Honeycutt
By: ___________________________
VAN B. HONEYCUTT,
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ Van B. Honeycutt Chairman, President and June 15, 1998
____________________________________ Chief Executive Officer
VAN B. HONEYCUTT (Principal Executive
Officer)
/s/ Leon J. Level Vice President, Chief June 15, 1998
____________________________________ Financial Officer and
LEON J. LEVEL Director (Principal
Financial Officer)
/s/ Scott M. Delanty Vice President and June 15, 1998
____________________________________ Controller (Principal
SCOTT M. DELANTY Accounting Officer)
Director
____________________________________
RICHARD C. LAWTON
Director
____________________________________
IRVING W. BAILEY, II
/s/ William R. Hoover Director June 15, 1998
____________________________________
WILLIAM R. HOOVER
/s/ Thomas A. McDonnell Director June 15, 1998
____________________________________
THOMAS A. MCDONNELL

SIGNATURE TITLE DATE
--------- ----- ----

/s/ F. Warren McFarlan Director June 15, 1998
____________________________________
F. WARREN MCFARLAN
/s/ James R. Mellor Director June 15, 1998
____________________________________
JAMES R. MELLOR
/s/ William P. Rutledge Director June 15, 1998
____________________________________
WILLIAM P. RUTLEDGE

COMPUTER SCIENCES CORPORATION AND SUBSIDIARIES

SCHEDULE VIII, VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED APRIL 3, 1998

ADDITIONS
-------------------------
BALANCE, CHARGED TO COST BALANCE,
BEGINNING OF PERIOD AND EXPENSES OTHER (1) DEDUCTIONS END OF PERIOD
IN THOUSANDS ------------------- --------------- --------- ---------- -------------

Year ended April 3, 1998
Allowance for doubtful
receivables............ $52,507 $31,828 $3,724 $12,686 $75,373
Year ended March 28,
1997
Allowance for doubtful
receivables............ 45,425 22,288 (618) 14,588 52,507
Year ended March 29,
1996
Allowance for doubtful
receivables............ 32,254 20,623 1,001 8,453 45,425

- --------
(1) Includes balances from acquisitions, changes in balances due to foreign
currency exchange rates and recovery of prior-year charges.