EL SEGUNDO, Calif., Nov. 2 -- Computer Sciences Corporation (NYSE: CSC) today reported preliminary results for its fiscal 2007 second quarter, ended Sept. 29, 2006. The company will delay filing its Quarterly Report on Form 10-Q for the second quarter until it has completed the previously announced review of its stock option grant practices and has determined the tax and accounting impacts. The preliminary results reported today are subject to adjustment when those impacts have been determined.

After a special pre-tax charge related to the restructuring program announced on April 4, 2006, of $41.0 million, or 17 cents per share, the company reported net income of $92.6 million, or 53 cents per share (diluted). Diluted earnings per share from continuing operations, excluding the special items, were 70 cents. This year’s quarter includes a 4 cent adverse incremental impact of stock options expense resulting from the adoption of SFAS 123R and a 1 cent adverse impact of legal and related expenses for the stock options investigation. Last year’s second quarter earnings per share from continuing operations were 53 cents and included a special charge of 18 cents related to the partial termination of the Nortel contract, or 71 cents excluding the special charge.

Major announced business awards for the second quarter were a very strong $8.8 billion, representing the company’s largest quarterly amount in its history. Those quarterly awards were split approximately 57% federal and 43% commercial.

“We are extremely pleased with our large and significant win of additional business from the UK National Health Service as part of the NHS Connecting for Health program,” said CSC Chairman and Chief Executive Officer Van B. Honeycutt. “This plays to one of our major strengths -- successfully managing long-term, very complex and critically important programs. We estimate the value of the nine-year contract to be approximately $3.73 billion if all options are exercised.”

Revenue for the second quarter was $3.61 billion, in line with guidance and up slightly (down approximately 0.3% in constant currency) over last year’s second quarter. CSC’s U.S. federal government activities again demonstrated solid revenue growth along with the company’s Australia and Asia operations. These gains were partially offset by declines in commercial revenue in the U.S. and Europe.

For the second quarter, CSC’s U.S. federal government revenue increased 6.8% to $1.33 billion from $1.24 billion for the second quarter of fiscal 2006. Revenue derived from CSC’s DoD-related business was $890.0 million, up 6.5% from last year’s $835.4 million. New business awards, including the U.S. Army Aviation & Missile Command and the Air Force Launch Operations Support contract, were the principal drivers of the DoD revenue growth as were increases on several existing contracts, including Mission Support Services and Rapid Response. CSC’s civil agencies activities generated revenue of $400.1 million, up 4.4%, compared to $383.4 million last year. Engagements for NASA’s Center for Computational Sciences and the FAA contributed positively to the quarter’s activity. Other federal segment revenue, comprised of state, local and foreign government, as well as commercial contracts performed by the U.S. federal segment, was $39.0 million, up from last year’s $25.3 million.

Second quarter global commercial revenue was $2.28 billion, compared to $2.33 billion in the year-ago quarter, a decline of 2.3% (approximately 4% in constant currency). U.S. commercial revenue was $948.9 million, down 5.6%, compared with $1.01 billion last year. European revenue was $942.8 million, a decline of 4.2% (approximately 8% in constant currency) from $983.7 million for the second quarter last year. CSC's non-European international revenue was $384.4 million, up 13.4% (approximately 12% in constant currency), compared with last year’s $339.1 million.

The decline in the company’s commercial revenues for the second quarter was the result of lower levels of outsourcing activity, primarily in Europe and the U.S. Several European outsourcing engagements generated reduced revenue, and the company’s U.S. commercial revenue comparisons continued to be adversely impacted by the Sears contract termination and the partial Nortel termination. Demand for consulting and systems integration services in Europe continued to be soft and similar business in
the U.S. experienced softness in demand in selected service lines during the second quarter as well.

“Our second quarter results were on-plan, and with our restructuring efforts, continue to position us for the future,” said Honeycutt. “Our solid U.S. federal government results for the quarter reflect our leadership role in the federal information technology services market and continue to pay dividends. Our operations in Australia and Asia delivered double-digit revenue growth aided in large part by growth in existing accounts.

“We expect to continue to be a leader in providing IT services to the large and growing U.S. federal information technology market. We are encouraged by the improved state of our commercial pipeline, and our federal pipeline continues to grow. These are positive signs as we enter into the second half of the year.”

CSC’s U.S. federal pipeline of opportunities over the next 17 months is approximately $40 billion, comprised of more than 400 programs across a broad spectrum of government agencies and departments. This pipeline is up approximately 35% over last year’s comparable 17-month set and nearly $9 billion of the total is scheduled for award during the remainder of the current fiscal year.

“We believe the strong first six months’ announced awards of approximately $11 billion, compared with a total of $12.1 billion for all of last fiscal year, position the company very well,” Honeycutt said.

The restructuring program announced in April involving workforce reductions, primarily in Europe, continues on plan. The program is designed to streamline the company’s worldwide operations, further leveraging the increased use of lower-cost resources and significantly improving future cash flow and earnings. The year-to-date pre-tax restructuring charges are $255.2 million.

“We continue to anticipate revenue to be up approximately 2% to 3%, excluding the effect of any acquisitions for the fiscal year ending March 30, 2007,” said Honeycutt. “Our 2007 fiscal year earnings per share guidance continues to be in the range of $3.71 to $3.81, including the adverse impact of SFAS 123R and the estimated 10 cent benefit of the share repurchase, previously announced on June 29, 2006, but excluding the net restructuring charge and the expenses or impact related to the ongoing options
investigation and litigation. While we have maintained the 10 cent range, we expect it to probably be weighted toward the low end.

“For the third quarter, ending December 29, we anticipate revenue to be in the range of $3.6 billion to $3.7 billion and earnings per share to be in the low- to mid-80 cent range, including the effect of SFAS 123R and the share repurchase, but excluding any restructuring charge or expenses related to the ongoing stock options investigation and litigation.”

As announced in the company’s press release dated Oct. 16, 2006, a teleconference will be held today at 5:00 p.m. EST to discuss the first quarter results. This teleconference can be accessed from the CSC Web site at www.csc.com/investorrelations, in a listen-only mode.

Computer Sciences Corporation is a leading global IT services company. CSC’s mission is to provide customers in industry and government with solutions crafted to meet their specific challenges and enable them to profit from the advanced use of technology.

With approximately 78,000 employees, CSC provides innovative solutions for customers around the world by applying leading technologies and CSC’s own advanced capabilities. These include systems design and integration; IT and business process outsourcing; applications software development; Web and application hosting; and management consulting. Headquartered in El Segundo, Calif., CSC reported revenue of $14.6 billion for the 12 months ended Sept. 29, 2006. For more information, visit the company’s Web site 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” within the meaning of the Private Securities Litigation Reform Act of 1995. 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 March 31, 2006. 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.

Note to Analysts and Editors: Please see attached tables.