CSC Reports Continued Improvement In Second Quarter 2013 Results

CSC (NYSE: CSC) today reported second quarter 2013 diluted earnings of $0.83 per share, compared with diluted EPS of $(18.56) in the second quarter 2012 which included a goodwill impairment charge of $18.21 per share and a U.S. Claims settlement of $1.20 per share. Total revenues were $3.85 billion compared with $3.97 billion in the year ago period, a decrease of 3% as reported and a 1% decline in constant currency.

Financial Highlights
  • Diluted EPS of $0.83 per share included a workforce restructuring charge of $58 million, or $0.25 per share.
  • Operating income of $298 million was compared with an operating loss in the year ago period.
  • Operating margin of 7.7% increased compared with -1.9% a year ago and 4.6% in the prior quarter. Excluding the impact of a $269 million U.S. Claims settlement in the prior year, operating margin improved by 289 basis points.
  • Operating cash flow of $444 million for the quarter, improved by $438 million from the previous year.
  • Free cash flow of $237 million for the quarter improved by $505 million compared to the previous year, as the result of better contract management, cost takeout, and the benefit of the NHS Interim Agreement.
  • The company raised $700 million of senior unsecured notes and secured commitments for a new $250 million bank term loan. Funds from these financings were used to redeem maturing debt in October, 2012.
  • Ending cash and cash equivalents were $1.85 billion.

“Our second quarter results reflect continued progress made on our contract management performance and cost takeout program. As a result, operating margins improved across all three lines of business when compared with the prior year and we are raising our fiscal year 2013 EPS targets to $2.30 to $2.50,” said Mike Lawrie, President and CEO. “During the quarter, we also strengthened our offering portfolio through the acquisition of a premiere software development company that specializes in big data, analytics and advanced applications. This action is consistent with our strategy of being a leader in next generation technology solutions and services. We are also taking steps to divest certain non-core assets such as a smaller business in Italy. There is much work to be completed but we are encouraged with the early results of our turnaround program.”

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