Note 1 – Basis of Presentation

Computer Sciences Corporation (CSC or the Company) has prepared the unaudited Consolidated Condensed Financial Statements included herein, as of and for the quarter and nine months ended December 30, 2011, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles for the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Condensed Financial Statements and the accompanying notes. It is recommended that these Consolidated Condensed Financial Statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended April 1, 2011 (fiscal 2011). In the opinion of management, the unaudited Consolidated Condensed Financial Statements included herein reflect all adjustments necessary, including those of a normal recurring nature, to present fairly the financial position, the results of operations and the cash flows for such interim periods. The results of operations for such interim periods are not necessarily indicative of the results for the full year.

The Consolidated Condensed Statements of Operations for the quarter and nine months ended December 31, 2010, have been recast from those presented in the previously filed Form 10-Q, to reflect discontinued operations of a business sold in the second quarter of fiscal 2011, as previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended April 1, 2011.

The Consolidated Condensed Statements of Operations for the quarter and nine months ended December 30, 2011 include separate line items for “Costs of services – specified contract charge”, “Costs of services – settlement charge” and “Goodwill impairment”. The specified contract charge is discussed further in Note 15, the settlement charge is discussed further in Note 17, and the goodwill impairment is discussed further in Note 14.

The Company recognized significant changes in estimated profitability on certain contracts accounted for in accordance with the percentage of completion method. The net impact of these adjustments, excluding the specified contract write off, was a decrease in pre-tax earnings of $79 million and $124 million for the third quarter and nine months ended December 30, 2011, respectively, and a decrease in pre-tax earnings of $22 million and an increase in pre-tax earnings of $19 million, respectively, for the comparable periods in the prior year.

Depreciation expense was $201 million and $568 million for the quarter and nine months ended December 30, 2011, respectively, and $173 million and $515 million for the quarter and nine months ended December 31, 2010, respectively.

Contractual work in process balances at December 30, 2011, and April 1, 2011, of $40 million and $1,162 million, respectively, are included in prepaid expenses and other current assets. The significant change is further explained in Note 15.

Unbilled recoverable amounts under contracts in progress do not have an allowance for credit losses, and any adjustments to unbilled recoverable amounts under contracts in progress related to credit quality, should they occur, would be accounted for as a reduction of revenue. Unbilled recoverable amounts under contracts in progress resulting from sales primarily to the United States and other governments that are expected to be collected after one year totaled $90 million.

The components of accumulated other comprehensive losses, net of taxes, are as follows:

	As of
(Amounts in millions)	December 30, 2011			April 1, 2011

Foreign currency translation adjustment	$	104		$	284
Unfunded pension obligation		(975	)		(974	)
Accumulated other comprehensive loss	$	(871	)	$	(690	)