UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): August 10, 2011
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COMPUTER SCIENCES CORPORATION
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(Exact name of Registrant as specified in its charter)
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Nevada
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1-4850
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95-2043126
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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3170 Fairview Park Drive
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22042
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Falls Church, Virginia
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(Zip Code)
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(Address of Principal Executive Offices)
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Registrant’s telephone number, including area code (703) 876-1000
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Dated: August 10, 2011
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By:
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/s/ Michael J. Mancuso
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Michael J. Mancuso
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Vice President and Chief Financial Officer
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Contact
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Chris Grandis
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Media Relations Director
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Moved on Business Wire
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Corporate
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August 10, 2011
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703.641.2316
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cgrandis@csc.com
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Bryan Brady
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Vice President, Investor Relations
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Corporate
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703.641.3000
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investorrelations@csc.com
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·
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New business awards of $2.3 billion compared to $3.3 billion during the first quarter of the previous year.
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·
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Pre-tax margin of 2.50%, a decrease of 290 bps from the previous year.
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·
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Operating margin of 4.46%, a decrease of 262 bps from the previous year.
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·
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Operating cash outflow of $46 million for the quarter, an improvement of $14 million from the previous year.
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·
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Free cash outflow of $409 million for the quarter, compared to an outflow of $318 million during the previous year.
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·
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Tax rate of (84.2%), compared to 31.3% in the previous year.
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May 25, 2011
excludes iSOFT
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August 10, 2011
includes iSOFT
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New Business Awards (billions)
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~$17
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~$17
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Revenue (billions)
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$16.5 - $17.0
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$16.5 - $17.0
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Operating Income Margin
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8.75% - 9.25%
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7.00% - 7.50%
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EPS
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$4.70 - $4.80
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$4.70 - $4.80
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Free Cash Flow as a %
of Net Income
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> 90%
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> 90%
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CSC-Page 4
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8/10/2011
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Revenues by Segment
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(preliminary and unaudited)
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Quarter Ended
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July 1, 2011
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July 2, 2010(2)
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% of Total Revenue
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(Amounts in millions )
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Fiscal
2012
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Fiscal (2)
2011
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Business Solutions & Services
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$ | 961 | $ | 821 | 24 | % | 21 | % | ||||||||
Managed Services Sector
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1,619 | 1,598 | 40 | 41 | ||||||||||||
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Department of Defense
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1,115 | 1,103 | 27 | 28 | ||||||||||||
Civil agencies
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305 | 361 | 8 | 9 | ||||||||||||
Other (1)
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64 | 56 | 2 | 2 | ||||||||||||
North American Public Sector
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1,484 | 1,520 | 37 | 39 | ||||||||||||
Corporate & Eliminations
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(31 | ) | (29 | ) | (1 | ) | (1 | ) | ||||||||
Total Revenue
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$ | 4,033 | $ | 3,910 | 100 | % | 100 | % | ||||||||
Note (1):
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Other revenues consist of state, local and foreign government as well as commercial contracts performed by the North American Public Sector (NPS)
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(2):
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The consolidated condensed statement of income for the quarter ended July 2, 2010, has been recast from the one presented in previously filed Form 10-Q and Press Release to reflect discontinued operations of two businesses sold in fiscal 2011.
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CSC-Page 5
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8/10/2011
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Consolidated Condensed Statements of Income
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(preliminary and unaudited)
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Quarter Ended
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(In millions except per-share amounts)
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July 1 , 2011
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July 2 , 2010(1)
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Revenues
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$ | 4,033 | $ | 3,910 | ||||
Costs of services (excludes depreciation and amortization)
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3,365 | 3,170 | ||||||
Selling, general and administrative
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264 | 243 | ||||||
Depreciation and amortization
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278 | 256 | ||||||
Interest expense
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42 | 41 | ||||||
Interest income
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(12 | ) | (8 | ) | ||||
Other (income) expense
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(5 | ) | (3 | ) | ||||
Total costs and expenses
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3,932 | 3,699 | ||||||
Income from continuing operations before taxes
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101 | 211 | ||||||
Taxes on income
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(85 | ) | 66 | |||||
Income from continuing operations
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186 | 145 | ||||||
(Loss) income from discontinued operations, net of taxes
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(1 | ) | 3 | |||||
Net income
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185 | 148 | ||||||
Less:
Net income attributable to noncontrolling interest, net of tax
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2 | 5 | ||||||
Net income attributable to CSC common shareholders
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$ | 183 | $ | 143 | ||||
Earnings per share:
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Basic:
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Continuing operations
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$ | 1.19 | $ | 0.91 | ||||
Discontinued operations
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(0.01 | ) | 0.02 | |||||
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$ | 1.18 | $ | 0.93 | ||||
Diluted:
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Continuing operations
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$ | 1.18 | $ | 0.89 | ||||
Discontinued operations
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(0.01 | ) | 0.02 | |||||
$ | 1.17 | $ | 0.91 | |||||
Cash dividend per common share
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$ | 0.20 | $ | 0.15 | ||||
Weighted average common shares outstanding for:
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Basic EPS
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154.844 | 154.215 | ||||||
Diluted EPS
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155.991 | 156.530 | ||||||
(1)
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The consolidated condensed statement of income for the quarter ended July 2, 2010, has been recast from the one presented in previously filed Form 10-Q and Press Release to reflect discontinued operations of two businesses sold in fiscal 2011.
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CSC-Page 6
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8/10/2011
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Selected Balance Sheet Data
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(preliminary and unaudited)
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As of
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As of
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(Amounts in millions)
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July 1, 2011
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April 1, 2011
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Assets
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Cash and cash equivalents
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$ | 1,666 | $ | 1,837 | ||||
Receivables, net
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4,052 | 3,719 | ||||||
Prepaid expenses and other current assets
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2,062 | 2,001 | ||||||
Total current assets
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7,780 | 7,557 | ||||||
Property and equipment, net
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2,513 | 2,496 | ||||||
Outsourcing contract costs, net
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651 | 647 | ||||||
Software, net
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603 | 562 | ||||||
Goodwill
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4,062 | 4,038 | ||||||
Other assets
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820 | 820 | ||||||
Total assets
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$ | 16,429 | $ | 16,120 | ||||
Liabilities
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Short-term debt and current maturities of long-term debt
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$ | 430 | $ | 170 | ||||
Accounts payable
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483 | 517 | ||||||
Accrued payroll and related costs
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840 | 817 | ||||||
Other accrued expenses
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1,232 | 1,291 | ||||||
Deferred revenue
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880 | 987 | ||||||
Income taxes payable and deferred income taxes
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368 | 396 | ||||||
Total current liabilities
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4,233 | 4,178 | ||||||
Long-term debt, net
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2,418 | 2,409 | ||||||
Income tax liabilities and deferred income taxes
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540 | 511 | ||||||
Other long-term liabilities
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1,467 | 1,462 | ||||||
Total equity
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7,771 | 7,560 | ||||||
Total liabilities and equity
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$ | 16,429 | $ | 16,120 | ||||
Debt as a percentage of total capitalization
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26.8 | % | 25.4 | % |
CSC-Page 7
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8/10/2011
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Consolidated Condensed Statements of Cash Flows
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(preliminary and unaudited)
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Quarter Ended
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(Amounts in millions)
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July 1 , 2011
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July 2, 2010
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Cash flows from operating activities:
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Net income
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$ | 185 | $ | 148 | ||||
Adjustments to reconcile net income to net cash used in operating activities:
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Depreciation and amortization and other non-cash charges
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292 | 277 | ||||||
Stock based compensation
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5 | 14 | ||||||
Provision for losses on accounts receivable
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2 | 4 | ||||||
Unrealized foreign currency exchange loss (gain)
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4 | (10 | ) | |||||
Loss (gain) on dispositions
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2 | (4 | ) | |||||
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
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Increase in assets
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(247 | ) | (203 | ) | ||||
Decrease in liabilities
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(289 | ) | (286 | ) | ||||
Net cash used in operating activities
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(46 | ) | (60 | ) | ||||
Cash flows from investing activities:
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Purchases of property and equipment
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(161 | ) | (177 | ) | ||||
Outsourcing contracts
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(50 | ) | (28 | ) | ||||
Acquisitions, net of cash acquired
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(8 | ) | (4 | ) | ||||
Software purchased and developed
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(111 | ) | (44 | ) | ||||
Other investing cash flows
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(4 | ) | - | |||||
Net cash used in investing activities
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(334 | ) | (253 | ) | ||||
Cash flows from financing activities:
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Net borrowings of commercial paper
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200 | - | ||||||
Borrowings under lines of credit
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52 | 4 | ||||||
Repayment of borrowings under lines of credit
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(9 | ) | (2 | ) | ||||
Principal payments on long-term debt
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(37 | ) | (11 | ) | ||||
Proceeds from stock options
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13 | 16 | ||||||
Excess tax benefit from stock-based compensation
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2 | 1 | ||||||
Dividend payments
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(31 | ) | - | |||||
Other financing activities, net
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4 | (6 | ) | |||||
Net cash provided by financing activities
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194 | 2 | ||||||
Effect of exchange rate changes on cash and cash equivalents
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15 | (38 | ) | |||||
Net decrease in cash and cash equivalents
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(171 | ) | (349 | ) | ||||
Cash and cash equivalents at beginning of year
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1,837 | 2,784 | ||||||
Cash and cash equivalents at end of period
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$ | 1,666 | $ | 2,435 |
CSC-Page 8
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8/10/2011
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GAAP Reconciliations
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Quarter Ended
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||||||||
Operating Income (preliminary and unaudited)
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||||||||
(Amounts in millions)
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July 1, 2011
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July 2, 2010(1)
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Operating income
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$ | 180 | $ | 277 | ||||
Corporate G&A
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(54 | ) | (36 | ) | ||||
Interest expense
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(42 | ) | (41 | ) | ||||
Interest income
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12 | 8 | ||||||
Other income (expense)
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5 | 3 | ||||||
Income from continuing operations before taxes
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$ | 101 | $ | 211 | ||||
Quarter Ended
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||||||||
Free Cash Flow (preliminary and unaudited)
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||||||||
(Amounts in millions)
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July 1, 2011
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July 2, 2010
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Free cash flow
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$ | (409 | ) | $ | (318 | ) | ||
Net cash used in investing activities
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334 | 253 | ||||||
Business acquisitions, net of cash acquired
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(8 | ) | (4 | ) | ||||
Payments on capital leases and other long-term asset financings
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37 | 9 | ||||||
Net cash used in operating activities
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$ | (46 | ) | $ | (60 | ) | ||
Net cash used in investing activities
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$ | (334 | ) | $ | (253 | ) | ||
Net cash provided by financing activities
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$ | 194 | $ | 2 | ||||
Operating income
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$ | 180 | $ | 277 | ||||
Operating margin
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4.46 | % | 7.08 | % | ||||
Pre-tax margin
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2.50 | % | 5.40 | % |
(1)
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Quarter ended July 2, 2010, amounts have been recast from the one presented in previously filed Form 10-Q and Press Release to reflect discontinued operations of two business sold in fiscal 2011.
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