UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported):   February 9, 2016
 
 
COMPUTER SCIENCES CORPORATION
 
(Exact name of Registrant as specified in its charter)
 
Nevada
1-4850
95-2043126
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
 
 
 
3170 Fairview Park Drive
22042
Falls Church, Virginia
(Zip Code)
(Address of Principal Executive Offices)
 
 
Registrant’s telephone number, including area code (703) 876-1000
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
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):
 
[ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.02      Results of Operations and Financial Condition.

On February 9, 2016, Computer Sciences Corporation (the “Company”) issued a press release reporting its preliminary financial results for the third quarter ended January 1, 2016. The Company will hold a conference call at 5:00 PM ET, on Tuesday, February 9, 2016, in which the Chief Executive Officer and the Chief Financial Officer will discuss this matter. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference and made a part hereof.

This information is “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Securities Exchange Act of 1934 or the Securities Act of 1933 only if and to the extent such subsequent filing specifically references the information incorporated by reference herein.


All statements in this report that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” These statements represent the Company’s intentions, plans, expectations and beliefs, and are subject to risks, uncertainties and other factors many of which are outside the Company’s control. These factors could cause actual results to differ materially from such forward-looking statements. For a written description of these factors, see the section titled “Risk Factors” in CSC’s Form 10-K for the fiscal year ended April 3, 2015 and any updating information in subsequent SEC filings.  The Company disclaims any intention or obligation to update these forward-looking statements whether as a result of subsequent event or otherwise, except as required by law.



Item 9.01 Financial Statements and Exhibits

(d) The following exhibit is filed herewith.

Exhibit No.
Description
99.1
Earnings Press Release issued February 9, 2016






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.


 
 
 
 
COMPUTER SCIENCES CORPORATION
 
 
 
 
 
 
 
 
 
 
Dated:
 February 9, 2016
 
By:
 /s/ Paul N. Saleh
 
 
 
 
Paul N. Saleh
 
 
 
 
Executive Vice President and Chief Financial Officer







Exhibit Index

Exhibit No.
Description
99.1
Earnings Press Release issued February 9, 2016






Exhibit 99.1

 
Moved on Business Wire
 
February 9, 2016


Newly-Separated CSC Delivers Earnings Growth and Margin Expansion
in Third Quarter Fiscal 2016

Diluted Earnings per Share from Continuing Operations of $0.10 Includes Cumulative Impact of Certain Items of ($0.61) per Share
Non-GAAP Diluted Earnings per Share from Continuing Operations of $0.71, up 16% YoY
Income from Continuing Operations Before Taxes of $78 Million Includes Cumulative Impact from Certain Items of ($46) Million
Operating Income, adjusted for certain items, of $190 Million and Operating Income Margin on the same basis of 10.9%, up 200 basis points YoY


FALLS CHURCH, Va., Feb. 9, 2016 - CSC (NYSE: CSC) today reported results for the third quarter of fiscal year 2016.

“In the third quarter, CSC successfully completed its separation into two industry-leading pure-plays, while delivering margin improvement and earnings growth through disciplined cost management," said Mike Lawrie, chairman, president and CEO. “Our results in the third quarter were consistent with the long-term outlook we presented at our Investor Day in New York. We are seeing strong momentum in our next-generation offerings and a moderation of the headwinds in our legacy business, and we delivered the strongest bookings this quarter in the last 2 years. We are also making progress in our acquisition strategy. We are on track to complete the UXC acquisition by the end of February and have successfully moved into the regulatory approval stage of our Xchanging acquisition.”

Financial Highlights
Diluted earnings per share from continuing operations were $0.10 in the third quarter and included the cumulative impact of certain items of ($0.61) per share. These items included ($0.25) per share in separation, restructuring and other transaction costs, $0.04 per share in U.S. pension and OPEB impacts related to our separation of CSRA, ($0.10) per share in certain CSRA overhead costs, $0.09 per share in pension & OPEB actuarial and settlement gains, and ($0.38) per share from tax valuation allowance impacts. Excluding these items, non-GAAP diluted earnings per share from continuing operations were $0.71, up 16 percent when compared with $0.61 in the third quarter of fiscal 2015.
Income from continuing operations before taxes was $78 million, which includes the cumulative cost of certain items of ($46) million. Excluding the impact of these items, non-GAAP income from continuing operations before taxes was $124 million compared with $109 million a year ago.
Operating income, adjusted for certain items, was $190 million and compares with $174 million in the prior year. Operating margin on the same basis was 10.9 percent, up from 8.9 percent in the prior year.

Page 1




Income from continuing operations was $15 million for the third quarter. Excluding the impact of the items discussed above, non-GAAP income from continuing operations was $100 million, compared with $87 million in the prior year.

Global Business Services
GBS revenue of $886 million in the quarter compares with $965 million in the year ago quarter, a decline of 2.5 percent year-over-year in constant currency. Modest growth in our Industry Software & Solutions and Big Data businesses partially offset lower than expected Consulting and Applications revenue. GBS operating margin, excluding the impact of certain items, was 13.1 percent, up from 12.8 percent a year ago. New business awards for GBS were $1.6 billion in the third quarter, up 35 percent year-over-year.

Global Infrastructure Services
GIS revenue of $864 million in the quarter compares with $984 million in the year-ago quarter, a decline of 7.2 percent year-over-year in constant currency. The decline in revenue from our legacy business moderated and was partially offset by growth in next-generation offerings. GIS operating margin, excluding the impact of certain items, was 9.1 percent, up from 6.4 percent a year ago. New business awards for GIS were $1.0 billion in the quarter, up 4 percent year-over-year.

Completed Spin-Off of Public Sector Business
During the third quarter, CSC completed the separation of the company into two industry-leading pure-plays by spinning off its public sector business and merging it with SRA International, Inc. (SRA). The new company began trading as an independent public company on the New York Stock Exchange (“NYSE”) under the ticker symbol “CSRA.” Concurrent with the spin-off, CSC shareholders were paid a special dividend in aggregate of $10.50 per share.

Returning Capital to Shareholders
During the third quarter, in addition to the special dividend associated with the separation, CSC returned $42 million to shareholders consisting of $32 million in common stock dividends and $10 million of share repurchases. CSC repurchased 307,000 shares in the quarter at a weighted average price of $32.40.

CSC had 138,816,691 basic shares outstanding on January 1, 2016.

Earnings Conference Call and Webcast

CSC senior management will host a conference call and webcast at 5 p.m. ET today. The dial-in number for domestic callers is 866-290-0920. Callers who reside outside of the United States or Canada should dial 913-312-0635. The passcode for all participants is 7639844. The webcast audio and any presentation slides will be available on CSC’s Investor Relations website.

A replay of the conference call will be available from approximately two hours after the conclusion of the call until February 16, 2016. The replay dial-in number is 888-203-1112 for domestic callers and 719-457-0820 for callers

Page 2




who reside outside of the United States and Canada. The replay passcode is also 7639844. A replay of this webcast will also be available on CSC’s website.

Non-GAAP Measures
In an effort to provide investors with additional information regarding the Company’s preliminary and unaudited results as determined by U.S. generally accepted accounting principles (GAAP), the Company has also disclosed in this press release preliminary non-GAAP information, and certain further adjustments thereto, which management believes provides useful information to investors, including: operating income, adjusted operating income, operating and adjusted operating margin, earnings before interest and taxes (EBIT), adjusted EBIT, EBIT and adjusted EBIT margin, and non-GAAP results including non-GAAP income (loss) from continuing operations and non-GAAP diluted earnings (loss) per share from continuing operations. Reconciliations of the preliminary non-GAAP measures to the respective and most directly comparable GAAP measures, as well as the rationale for management’s use of non-GAAP measures, are included below.
About CSC

CSC (NYSE: CSC) leads clients on their digital transformation journeys. The company provides innovative next-generation technology services and solutions that leverage deep industry expertise, global scale, technology independence and an extensive partner community. CSC serves leading commercial and international public sector organizations throughout the world. CSC is a Fortune 500 company and ranked among the best corporate citizens. For more information, visit the company's website at www.csc.com.

All statements in this press release and in all future press releases that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” These statements represent the Company’s intentions, plans, expectations and beliefs, and are subject to risks, uncertainties and other factors, many of which are outside the Company’s control. These factors could cause actual results to differ materially from such forward-looking statements. For a written description of these factors, see the section titled “Risk Factors” in CSC’s Form 10-K for the fiscal year ended April 3, 2015 and any updating information in subsequent SEC filings. The Company disclaims any intention or obligation to update these forward-looking statements whether as a result of subsequent events or otherwise, except as required by law.
# # #

Contact:
Richard Adamonis, Corporate Media Relations, 862.228.3481, radamonis@csc.com
Neil DeSilva, M&A and Investor Relations, 703.641.3000, neildesilva@csc.com





Page 3




Business Segment Revenues, Operating Income and Operating Margins
(preliminary and unaudited)

Revenues by Segment
 
 
 
 
 
 
 
 
 
 
Quarter Ended
(Amounts in millions)
 
January 1, 2016
 
January 2, 2015
 
% Change
 
% Change at Constant Currency
Global Business Services
 
$
886

 
$
965

 
(8.2
)%
 
(2.5
)%
Global Infrastructure Services
 
864

 
984

 
(12.2
)
 
(7.2
)
Total Revenues
 
$
1,750

 
$
1,949

 
(10.2
)%
 
(4.9
)%

 
 
Nine Months Ended
(Amounts in millions)
 
January 1, 2016
 
January 2, 2015
 
% Change
 
% Change at Constant Currency
Global Business Services
 
$
2,696

 
$
3,056

 
(11.8
)%
 
(4.7
)%
Global Infrastructure Services
 
2,603

 
3,151

 
(17.4
)
 
(11.3
)
Total Revenues
 
$
5,299

 
$
6,207

 
(14.6
)%
 
(8.0
)%




Operating Income and Operating Margins by Segment
 
 
 
 
 
 
Quarter Ended
 
 
January 1, 2016
 
January 2, 2015
(Amounts in millions)
 
Operating Income
 
Operating Margin
 
Operating Income
 
Operating Margin
Global Business Services
 
$
101

 
11.4
%
 
$
128

 
13.3
%
Global Infrastructure Services
 
70

 
8.1

 
72

 
7.3

Corporate
 
(23
)
 

 
(22
)
 

Total Operating Income
 
$
148

 
8.5
%
 
$
178

 
9.1
%

 
 
Nine Months Ended
 
 
January 1, 2016
 
January 2, 2015
(Amounts in millions)
 
Operating Income
 
Operating Margin
 
Operating Income
 
Operating Margin
Global Business Services
 
$
299

 
11.1
%
 
$
366

 
12.0
%
Global Infrastructure Services
 
187

 
7.2
%
 
211

 
6.7
%
Corporate & Eliminations
 
(64
)
 

 
(79
)
 

Total Operating Income
 
$
422

 
8.0
%
 
$
498

 
8.0
%


Page 4





Consolidated Condensed Statements of Operations
(preliminary and unaudited)

 
 
Quarter Ended
 
Nine Months Ended
(Amounts in millions, except per-share amounts)
 
January 1, 2016
 
January 2, 2015
 
January 1, 2016
 
January 2, 2015
 
 
 
 
 
 
 
 
 
Revenues
 
$
1,750

 
$
1,949

 
$
5,299

 
$
6,207

 
 
 
 
 
 
 
 
 
Costs of services (excludes depreciation and amortization and restructuring costs)
 
1,216

 
1,572

 
3,725

 
4,541

Selling, general and administrative (excludes SEC settlement related charges and restructuring costs)
 
257

 
322

 
789

 
954

Selling, general and administrative - SEC settlement related charges
 

 
195

 

 
195

Depreciation and amortization
 
161

 
205

 
503

 
658

Restructuring costs
 
7

 
12

 
12

 
15

Separation costs
 
2

 

 
10

 

Interest expense
 
33

 
32

 
92

 
96

Interest income
 
(8
)
 
(4
)
 
(26
)
 
(14
)
Other expense (income), net
 
4

 
1

 
(3
)
 
5

Total costs and expenses
 
1,672

 
2,335

 
5,102

 
6,450

 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations, before taxes
 
78

 
(386
)
 
197

 
(243
)
Income tax expense (benefit)
 
63

 
(192
)
 
31

 
(157
)
Income (loss) from continuing operations
 
15

 
(194
)
 
166

 
(86
)
Income (loss) from discontinued operations, net of taxes
 
30

 
(119
)
 
216

 
80

Net income (loss)
 
45

 
(313
)
 
382

 
(6
)
Less: net income attributable to noncontrolling interest, net of tax
 
2

 
1

 
12

 
11

Net income (loss) attributable to CSC common stockholders
 
$
43

 
$
(314
)
 
$
370

 
$
(17
)
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.11

 
$
(1.35
)
 
$
1.19

 
$
(0.60
)
Discontinued operations
 
0.20

 
(0.84
)
 
1.48

 
0.48

 
 
$
0.31

 
$
(2.19
)
 
$
2.67

 
$
(0.12
)
Diluted:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.10

 
$
(1.35
)
 
$
1.17

 
$
(0.60
)
Discontinued operations
 
0.20

 
(0.84
)
 
1.45

 
0.48

 
 
$
0.30

 
$
(2.19
)
 
$
2.62

 
$
(0.12
)
 
 
 
 
 
 
 
 
 
Cash dividend per common share
 
$
2.39

 
$
0.23

 
$
2.85

 
$
0.69

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
   Basic EPS
 
138.864

 
143.279

 
138.359

 
144.346

   Diluted EPS
 
141.183

 
143.279

 
141.003

 
144.346



Page 5





Selected Balance Sheet Data
(preliminary and unaudited)
 
 
As of
(Amounts in millions)
 
January 1, 2016
 
April 3, 2015
 
 
 
 
 
Assets
 
 
 
 
Cash and cash equivalents
 
$
1,830

 
$
2,076

Receivables, net
 
1,691

 
1,678

Prepaid expenses and other current assets
 
412

 
290

Assets of discontinued operations - current
 

 
806

Total current assets
 
3,933

 
4,850

 
 
 
 
 
Property and equipment, net
 
1,028

 
1,110

Software, net
 
729

 
718

Outsourcing contract costs, net
 
335

 
326

Goodwill
 
1,026

 
838

Other assets
 
977

 
928

Assets of discontinued operations - noncurrent
 

 
1,457

Total Assets
 
$
8,028

 
$
10,227

 
 
 
 
 
Liabilities
 
 
 
 
Short-term debt and current maturities of long-term debt
 
760

 
883

Accounts payable
 
211

 
295

Accrued payroll and related costs
 
305

 
265

Accrued expenses and other current liabilities
 
800

 
948

Deferred revenue and advance contract payments
 
463

 
457

Income taxes payable and deferred income taxes
 
100

 

Liabilities of discontinued operations - current
 

 
691

Total current liabilities
 
$
2,639

 
$
3,539

 
 
 
 
 
Long-term debt, net of current maturities
 
1,909

 
1,635

Income tax liabilities and deferred income taxes
 
446

 
523

Other long-term liabilities
 
817

 
850

Liabilities of discontinued operations - noncurrent
 

 
731

 
 
 
 
 
Total Equity
 
2,217

 
2,949

 
 
 
 
 
Total Liabilities and Equity
 
$
8,028

 
$
10,227

 
 
 
 
 


Page 6




Non-GAAP Financial Measures

The following tables reconcile non-GAAP financial measures of operating income, adjusted operating income, earnings before interest and taxes (EBIT), and adjusted EBIT, to the respective most directly comparable financial measure calculated and presented in accordance with GAAP. Also presented below are the Company's non-GAAP results, which exclude certain items that management believes are not indicative of the Company's operating performance. CSC management believes that these non-GAAP financial measures provide useful information to investors regarding the Company's financial condition and results of operations as they provide another measure of the Company's profitability and ability to service its debt, and are considered important measures by financial analysts covering CSC and its peers.

Management uses operating income to evaluate financial performance and it is one of the measures used in assessing management performance. One of the limitations associated with the use of operating income (as compared to reported earnings) is that it does not reflect the complete financial results of the Company. CSC compensates for these limitations by providing a reconciliation between operating income and income from continuing operations, before taxes.

Management uses non-GAAP income from continuing operations and non-GAAP EPS to evaluate the Company's results, excluding the impact of items that management believes are not indicative of the Company's operating performance. CSC compensates for the limitations of these non-GAAP measures by providing a reconciliation from non-GAAP results to reported results.

Adjustments to operating results include:

Certain CSRA overhead costs - Reflects costs historically allocated to CSRA but not included in discontinued operations based on Accounting Standards Codification Subtopic 205-20 "Presentation of Financial Statements - Discontinued Operations." These costs are expected to be largely eliminated on a prospective basis.

U.S. Pension and OPEB - Reflects the impact of certain U.S. pension and other postretirement benefit (OPEB) plans historically included in CSC's financial results that have been transferred to CSRA as part of the previously announced separation.

Pension and OPEB actuarial & settlement gains (losses) - Reflects pension and OPEB actuarial and settlement gains (losses) from mark-to-market accounting.

Separation, restructuring & other transaction costs - Reflects non-recurring costs related to CSC's (1) previously announced separation, (2) certain special accelerated workforce optimization and real estate charges, and (3) previously announced acquisitions.

SEC settlement-related items - Reflects costs associated with certain SEC charges and settlements.

Tax valuation allowance & adjustments - Reflects the adjustments to tax valuation allowances in certain jurisdictions and the application of a 20% tax rate, for the first and second quarters, which is at the low end of the prospective targeted effective tax rate range of 20% to 25% and effectively excludes the impact of discrete tax adjustments for those periods.

GAAP Reconciliations

Operating Income and Adjusted Operating Income
(preliminary and unaudited)

CSC defines operating income as revenue less costs of services, depreciation and amortization expense, restructuring costs and segment selling, general and administrative (SG&A) expense. Operating Income, as defined by CSC, excludes corporate G&A, actuarial and settlement gains (losses) related to CSC's pension and OPEB plans, and separation costs. Operating margin is defined as operating income as a percentage of revenue.

Adjusted operating income is computed by excluding from operating income certain CSRA overhead costs, U.S. Pension and OPEB, and separation, restructuring & other transaction costs.

A reconciliation of consolidated operating income to income from continuing operations, before taxes is as follows:

Page 7




 
 
Quarter Ended
 
Nine Months Ended
(Amounts in millions)
 
January 1, 2016
 
January 2, 2015
 
January 1, 2016
 
January 2, 2015
Adjusted Operating income
 
$
190

 
$
174

 
$
494

 
$
491

Certain CSRA overhead costs
 
(12
)
 
(9
)
 
(48
)
 
(31
)
U.S. Pension & OPEB
 
10

 
13

 
38

 
38

Separation, restructuring & other transaction costs
 
(40
)
 

 
(62
)
 

Operating income
 
$
148

 
$
178

 
$
422

 
$
498

Corporate G&A
 
(58
)
 
(55
)
 
(171
)
 
(173
)
Pension & OPEB actuarial & settlement gains (losses)
 
19

 
(285
)
 
19

 
(286
)
SEC settlement related charges
 

 
(195
)
 

 
(195
)
Separation costs
 
(2
)
 

 
(10
)
 

Interest expense
 
(33
)
 
(32
)
 
(92
)
 
(96
)
Interest income
 
8

 
4

 
26

 
14

Other (expense) income, net
 
(4
)
 
(1
)
 
3

 
(5
)
Income from continuing operations before taxes
 
$
78

 
$
(386
)
 
$
197

 
$
(243
)
 
 
 
 
 
 
 
 
 
Adjusted Operating margin
 
10.9
%
 
8.9
%
 
9.3
%
 
7.9
%
Operating margin
 
8.5
%
 
9.1
%
 
8.0
%
 
8.0
%



Page 8




Earnings Before Interest and Taxes and Adjusted Earnings Before Interest and Taxes
(preliminary and unaudited)

EBIT is defined as income from continuing operations less interest expense, interest income and income tax expense. EBIT margin is defined as EBIT as a percentage of revenue.

Adjusted EBIT is computed by excluding from EBIT the impact of certain items in the third quarter and first nine months of fiscal 2016, including certain CSRA overhead costs, U.S. pension and OPEB, separation, restructuring & other transaction costs, SEC settlement related charges, and pension and OPEB actuarial & settlement gains (losses). Adjusted EBIT margin is computed as adjusted EBIT as a percentage of revenue.

A reconciliation of adjusted EBIT and EBIT to income from continuing operations is as follows:

 
Quarter Ended
 
Year to date
(Amounts in millions)
 
January 1, 2016
 
January 2, 2015
 
January 1, 2016

January 2, 2015
Adjusted EBIT
 
$
147

 
$
137

 
$
375

 
$
362

Certain CSRA overhead costs
 
(22
)
 
(28
)
 
(88
)
 
(80
)
U.S. Pension & OPEB
 
10

 
13

 
38

 
38

Separation, restructuring & other transaction costs
 
(51
)
 

 
(81
)
 

SEC settlement related charges
 

 
(195
)
 

 
(195
)
Pension & OPEB actuarial & settlement gains (losses)
 
19

 
(285
)
 
19

 
(286
)
EBIT
 
$
103

 
$
(358
)
 
$
263

 
$
(161
)
Interest expense
 
(33
)
 
(32
)
 
(92
)
 
(96
)
Interest income
 
8

 
4

 
26

 
14

Income tax (expense) benefit
 
(63
)
 
192

 
(31
)
 
157

Income from continuing operations
 
$
15

 
$
(194
)
 
$
166

 
$
(86
)
 
 
 
 
 
 
 
 
 
Adjusted EBIT margin
 
8.4
%
 
7.0
 %
 
7.1
%
 
5.8
 %
EBIT margin
 
5.9
%
 
(18.4
)%
 
5.0
%
 
(2.6
)%





Page 9




Adjusted Segment Operating Income and Operating Margin
(preliminary and unaudited)

Adjusted operating income is computed by excluding from operating income certain CSRA overhead costs, U.S. Pension and OPEB, and separation, restructuring & other transaction costs. Reconciliations of adjusted operating income to operating income, for the quarter and nine months ended January 1, 2016, are as follows:
 
 
Quarter Ended January 1, 2016
(Amounts in millions)
 
Operating income
 
Certain CSRA overhead costs
 
U.S. Pension & OPEB
 
Separation, restructuring & other transaction costs
 
Adjusted operating income
 
Adjusted operating margin
Global Business Solutions
 
$
101

 

 
(3
)
 
18

 
$
116

 
13.1
%
Global Infrastructure Services
 
70

 

 
(7
)
 
16

 
79

 
9.1

Corporate
 
(23
)
 
12

 

 
6

 
(5
)
 
 
Total
 
$
148

 
$
12

 
$
(10
)
 
$
40

 
$
190

 
10.9
%

 
 
Nine Months Ended January 1, 2016
(Amounts in millions)
 
Operating income
 
Certain CSRA overhead costs
 
U.S. Pension & OPEB
 
Separation, restructuring & other transaction costs
 
Adjusted operating income
 
Adjusted operating margin
Global Business Solutions
 
$
299

 
$

 
$
(11
)
 
$
31

 
$
319

 
11.8
%
Global Infrastructure Services
 
187

 

 
(27
)
 
25

 
185

 
7.1

Corporate
 
(64
)
 
48

 

 
6

 
(10
)
 
 
Total
 
$
422

 
$
48

 
$
(38
)
 
$
62

 
$
494

 
9.3
%




Page 10




Non-GAAP Results
(preliminary and unaudited)

Non-GAAP results are financial measures calculated by excluding certain items, which management believes are not indicative of the Company's operating performance. A reconciliation of select non-GAAP results to reported results is as follows:
 
 
Quarter ended January 1, 2016
(Amounts in millions, except per-share amounts)
 
As reported
 
Certain CSRA overhead costs
 
U.S. Pension & OPEB
 
Separation, restructuring & other transaction costs
 
Pension & OPEB actuarial & settlement gains
 
Tax valuation allowance & adjustments
 
Non-GAAP results
Costs of services (excludes depreciation and amortization and restructuring costs)
 
$
1,216

 
$
(7
)
 
$
8

 
$
(5
)
 
$
16

 
$

 
$
1,228

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative (excludes restructuring costs)
 
$
257

 
$
(15
)
 
$
2

 
$
(13
)
 
$
3

 
$

 
$
234

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations, before taxes
 
$
78

 
$
(22
)
 
$
10

 
$
(53
)
 
$
19

 
$

 
$
124

Income tax expense (benefit)
 
63

 
(8
)
 
4

 
(17
)
 
6

 
54

 
24

Income (loss) from continuing operations
 
$
15

 
$
(14
)
 
$
6

 
$
(36
)
 
$
13

 
$
(54
)
 
$
100

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
45

 
$
(14
)
 
$
6

 
$
(36
)
 
$
13

 
$
(54
)
 
$
130

Less: net income attributable to noncontrolling interest, net of tax
 
2

 
 
 
 
 
 
 
 
 

 
2

Net income (loss) attributable to CSC common stockholders
 
$
43

 
$
(14
)
 
$
6

 
$
(36
)
 
$
13

 
$
(54
)
 
$
128

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
80.6
%
 
 
 
 
 
 
 
 
 
 
 
19.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS from continuing operations
 
$
0.11

 
$
(0.10
)
 
$
0.04

 
$
(0.26
)
 
$
0.09

 
$
(0.39
)
 
$
0.72

Diluted EPS from continuing operations
 
$
0.10

 
$
(0.10
)
 
$
0.04

 
$
(0.25
)
 
$
0.09

 
$
(0.38
)
 
$
0.71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
138.864

 
138.864

 
138.864

 
138.864

 
138.864

 
138.864

 
138.864

Diluted EPS
 
141.183

 
141.183

 
141.183

 
141.183

 
141.183

 
141.183

 
141.183


 
 
Nine months ended January 1, 2016
(Amounts in millions, except per-share amounts)
 
As reported
 
Certain CSRA overhead costs
 
U.S. Pension & OPEB
 
Separation, restructuring & other transaction costs
 
Pension & OPEB actuarial & settlement gains
 
SEC settlement-related items
 
Tax valuation allowance & adjustments
 
Non-GAAP results
Costs of services (excludes depreciation and amortization and restructuring costs)
 
$
3,725

 
$
(41
)
 
$
32

 
$
(5
)
 
$
16

 
$

 
$

 
$
3,727

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative (excludes restructuring costs)
 
$
789

 
$
(47
)
 
$
6

 
$
(15
)
 
$
3

 
$
(5
)
 
$

 
$
731

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations, before taxes
 
$
197

 
$
(88
)
 
$
38

 
$
(83
)
 
$
19

 
$
(5
)
 
$

 
$
316

Income tax expense (benefit)
 
31

 
(34
)
 
15

 
(27
)
 
6

 
(2
)
 
10

 
63

Income (loss) from continuing operations
 
$
166

 
$
(54
)
 
$
23

 
$
(56
)
 
$
13

 
$
(3
)
 
$
(10
)
 
$
253

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
382

 
$
(54
)
 
$
23

 
$
(56
)
 
$
13

 
$
(3
)
 
$
(10
)
 
$
469

Less: net income attributable to noncontrolling interest, net of tax
 
12

 

 

 

 

 

 

 
12

Net income (loss) attributable to CSC common stockholders
 
$
370

 
$
(54
)
 
$
23

 
$
(56
)
 
$
13

 
$
(3
)
 
$
(10
)
 
$
457

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
15.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
19.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS from continuing operations
 
$
1.19

 
$
(0.39
)
 
$
0.17

 
$
(0.40
)
 
$
0.09

 
$
(0.02
)
 
$
(0.07
)
 
$
1.82

Diluted EPS from continuing operations
 
$
1.17

 
$
(0.38
)
 
$
0.16

 
$
(0.40
)
 
$
0.09

 
$
(0.02
)
 
$
(0.07
)
 
$
1.79

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
138.359

 
138.359

 
138.359

 
138.359

 
138.359

 
138.359

 
138.359

 
138.359

Diluted EPS
 
141.003

 
141.003

 
141.003

 
141.003

 
141.003

 
141.003

 
141.003

 
141.003



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Page 12
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