Defense leads CSC growth

Computer Sciences Corp.’s December quarter ended with an increase in revenue compared to the same quarter a year ago, with the federal sector rising more than the company overall. Defense-related projects led the growth.

The integrator reported revenue of $3.58 billion, a 2.5 percent increase compared with $3.49 billion in the year-earlier quarter. Its revenue from the federal government accounted for $1.22 billion of that total, a rise of 6.9 percent from the $1.14 billion it reported a year ago. Overall, CSC’s net income grew 29 percent to $203.5 million, or $1.08 per share, compared with $157.5 million, or 82 cents per share, last year.

The firm’s Defense Department-related business increased 12 percent compared with last year. Leon Level, CSC’s chief financial officer, cited increased work from the Army’s Rapid Response program and the increased scope of a Naval Sea Systems Command program as growth factors. But the defense growth was partially offset by lower volumes on some civilian projects, including the IRS modernization, he said.

Level said $200 million in revenue from one federal contract, which was to be modified to account for out-of-scope work, is no longer expected to materialize in the company’s 2006 fiscal year. In a November filing with the Securities and Exchange Commission, CSC reported that its expected full-year fiscal 2006 revenue would include the $200 million. The company’s fiscal year ends March 31.

The company has adjusted its revenue projection for fiscal 2006 to account for the change, reducing the figure from $15 billion to $14.6 billion.

Level said the company has submitted requests for “equitable adjustments” on that contract and another project. He did not identify the contracts. The company expects to resolve the contract issues in fiscal 2007, according to Level.

CSC’s federal business pipeline over the next 14 months stands at $28 billion, noted Van Honeycutt, the company’s chairman and chief executive officer.