Computer Sciences Corporation (CSC) reported results for the third quarter of 2015. Earnings (loss) per share from continuing operations was ($2.23) in the third quarter and includes $2.05 from non-cash pension-related charges and $1.38 from a proposed SEC settlement-related charge.
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Adjusting for these items, non-GAAP diluted earnings (loss) per share was $1.18, up 9% when compared with $1.08 in the third quarter of fiscal 2014.
Income (loss) from continuing operations of ($313 million) for the third quarter includes pre-tax pension-related charges of $462 million and a $195 million charge for a proposed SEC settlement and related expenses.
Income from continuing operations, excluding these items, was $172 million, up 3% compared with $167 million in the prior year.
Operating income of $332 million compares with $338 million in the prior year. Operating margin of 11.3% for the quarter increased from 10.5% in the prior year.
Earnings before interest and taxes (EBIT) of $272 million compares with $278 million in the third quarter of fiscal 2014. EBIT margin of 9.2% improved from 8.6% in the prior year. Free cash flow of $498 million compares with $324 million in the prior year.
BS revenue of $965 million in the quarter compares with $1,093 million in the year ago quarter. Segment revenue decreased by 8.5% in constant currency due to the ongoing repositioning of the consulting business and contract completions, partially offset by growth in big data and applications modernization.
Operating margin of 13.3% increased from 12.8% in the prior year and 13.0% in the prior quarter, reflecting the company’s cost takeout actions. New business awards for GBS were $1.2 billion in the quarter.
GIS revenue was $984 million in the quarter, a decrease of 10.9% in constant currency from the prior year. Growth in cloud and other next-generation offerings partially offset the impact of price-downs, restructurings, and contract completions.
Operating margin was 7.3% compared with 7.9% in the prior year, reflecting investments in new offerings and strategic partnerships. Operating margin was up from 6.6% in the prior quarter, driven by cost takeout benefits. GIS reported new business awards of $1 billion in the quarter.
NPS revenue was $998 million in the quarter, an increase of 0.8% when compared with $990 million in the third quarter of fiscal 2014. Growth from infrastructure services, business process outsourcing at civil agencies, and healthcare applications offset declines from Department of Defense contracts.
Operating margin of 14.5% compares with 12.3% in the prior year and 15.4% in the prior quarter, as the business continues to benefit from cost takeout and better contract performance. New business awards for NPS were $0.5 billion in the quarter.
During the third quarter, CSC returned $41 million to shareholders consisting of $32 million in common stock dividends and $9 million of share repurchases. CSC repurchased 150,000 shares through open market purchases at an average price of $59.09. CSC had 140,991,870 basic shares outstanding on January 2, 2015. ■