CSC reports fourth quarter results
Company Meets or Exceeds Latest Guidance on Revenue, Earnings and Free Cash Flow
EL SEGUNDO,- Computer Sciences Corporation (NYSE: CSC) today reported results for its fiscal 2007 fourth quarter, ended March 30, 2007. Net earnings of $249.7 million, or $1.42 per share (diluted), included a special pre-tax charge related to the restructuring program announced on April 4, 2006, of $36.2 million, or 14 cents per share. Diluted earnings per share from continuing operations, excluding the special items, were $1.56. This year’s quarter also includes a 4 cent adverse impact of legal and related expenses for the stock option investigation and a 5 cent impact of interest expense accruals and other adjustments primarily related to income tax accounting errors described below. Last year’s fourth quarter earnings per share from continuing operations, as restated, excluding special items and a charge resulting from the cumulative effect of adoption of FIN 47, were 94 cents.
For the year ended March 30, 2007, net earnings of $388.8 million, or $2.16 per share (diluted), included an after-tax net special charge of $262.0 million, or $1.46 per share (diluted) related to the restructuring charge mentioned above.
As previously announced, CSC discovered significant errors in its accounting for tax liabilities in fiscal years 2000 through 2006 and other insignificant errors. The most significant of these errors related to the tax accounting for the amortization of tax bases of assets contributed to a consolidated affiliate. In addition, errors were identified in accounting for income tax liabilities related to foreign operations, as well as favorable adjustments in the preparation of U.S. federal tax returns. As a result of these changes, interest and penalties were accrued. The company also identified a correction required with respect to the accounting for the sale of licenses for a software product. The total effect of the errors resulted in a reduction of net income of $22.2 million and $90.7 million for fiscal years 2007 and 2006, respectively. These have resulted in dilutive earnings per share reductions of $0.12 and $0.48 for fiscal years 2007 and 2006, respectively.
Revenue for the quarter was $4.05 billion, up 4.0% (approximately 1% in constant currency) compared with the same period last year. Solid revenue growth from CSC’s North American Public Sector (formerly U.S. Federal Sector) activities as well as the company’s operations in Europe, Australia and Asia were somewhat offset by a decline in U.S. commercial revenue. Revenue for fiscal 2007 was $14.9 billion, up 1.5% (down less than 0.5% in constant currency) over last year’s comparable 12-month period.
For the fourth quarter, CSC’s North American Public Sector revenue increased 4.8% to $1.43 billion from $1.37 billion for the fourth quarter of fiscal 2006. Revenue derived from CSC’s DoD-related business was $978.4 million, up 6.4% from last year’s $919.5 million. A combination of new business awards and growth on existing contracts contributed to this DoD growth. Additionally, the December 2006 acquisition of DataTrac provided incremental revenue. CSC’s civil agencies activities generated revenue of $415.1 million, down slightly compared to $417.9 million last year. The decline was primarily caused by reduced tasking on projects from various departments and agencies. Other North American Public Sector revenue, comprised of state, local and foreign government as well as commercial contracts performed by the North American Public Sector, was $38.0 million, up from last year’s $28.9 million.
Fourth quarter global commercial revenue was $2.61 billion, up 3.5% (down approximately 2% in constant currency) compared to $2.53 billion in the year-ago quarter. U.S. commercial revenue was $991.1 million, down 3.0% compared with $1.02 billion last year. European revenue was $1.23 billion, compared to $1.13 billion for the fourth quarter last year, up 8.8% (down approximately 1% in constant currency). CSC’s non-European international revenue was $388.5 million, up 5.3% (up less than 0.5% in constant currency) compared with last year’s $369 million.
The company’s cash and marketable securities at March 30, 2007, were $1.05 billion, an increase of $324.1 million in the fourth quarter, resulting primarily from strong cash flow from operations.
Major announced business awards for the fourth quarter were $4.3 billion, bringing the full-year total to approximately $16.9 billion, up about 40% from last year. This annual total represents the highest announced amount in the company’s history. The $16.9 billion total is comprised of 55% federal and 45% commercial awards.
The company’s U.S. federal pipeline of opportunities over the next 22 months is approximately $44 billion, up nearly 35% from the same time last year, and is comprised of more than 500 programs across a broad spectrum of government agencies and departments. Of the total pipeline, approximately $22 billion is scheduled for award in the current fiscal year.
“Our fourth quarter results continued to display our solid operational progress in a transition year,” said CSC President and Chief Executive Officer Michael W. Laphen. “We are pleased with the year’s performance, and our record awards total positions the company for improved growth. Our U.S. federal government activities continue to illustrate CSC’s leading position in the federal information technology services market. We anticipate that the quality and quantity of our federal and commercial pipelines will provide us with engagements enhancing our operational progress going forward.
“For fiscal 2008, ending March 28, 2008, we anticipate revenue to be up approximately 6% to 7%, excluding the Covansys acquisition impact, and earnings per share to be in the $4.00 to $4.20 range, excluding special items including expenses related to restructuring and a retirement agreement. For the first quarter, ending June 29, we anticipate revenue to be in the range of $3.7 billion to $3.8 billion and earnings per share, excluding special items, to be in the 65 cent to 75 cent range.”
This news content was configured by WebWire editorial staff. Linking is permitted.
News Release Distribution and Press Release Distribution Services Provided by WebWire.