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Computer Sciences Corporation (NYSE:CSC)

F1Q10 Earnings Call

August 6, 2009 5:00 pm ET

Executives

Bryan Brady – Vice President of Investor Relations

Michael W. Laphen – Chairman of the Board, President & Chief Executive Officer

Michael J. Mancuso – Chief Financial Officer & Vice President

Analysts

Bryan Keane – Credit Suisse

Jason Kupferberg – UBS

Analyst for Tien-Tsin Huang – J.P. Morgan

Julio Quinteros – Goldman Sachs

Rob [Bersua] – Bernstein

Karl Keirstead – Kaufman Bros.

Ashwin Shirvaikar – Citi

Operator

Welcome to the CSC fiscal 2010 first quarter earnings conference call. Today’s call is being recorded. For opening remarks and introductions I would like to turn the call over to Mr. Bryan Brady.

Bryan Brad

Welcome to CSC earnings call for the first quarter of fiscal year 2010. We hope you’ve had a chance to review our financial results which were issued earlier this afternoon. With me today are Mike Laphen, our Chairman and Chief Executive Officer and Mike Mancuso, our Chief Financial Officer. As usual, this call is being webcast at www.CSC.com and we’ve also posted slides to our website to accompany our discussion.

On Slide Two there’s a reminder that statements made during this call that are not historical facts may be considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to known and unknown risks and uncertainties which could cause actual results to differ materially. Additional information concerning these risks and uncertainties is contained in the company’s filings with the SEC and copies of these filings are available from the SEC, from our website and from our investor relations department.

Slide Three acknowledges that CSC’s presentation includes certain non-GAAP financial measures. In accordance with SEC rules a reconciliation of these metrics to GAAP metrics is included in the tables of the earnings release and in the appendix to our slides. Both documents are available for your review at the investor relations section of the CSC website. Finally, I’d like to remind our listeners that CSC assumes no obligation to update the information presented on this conference call except of course as required by law.

If you’d kindly move to Slide Four, I’m pleased to turn the call over to Mike Laphen.

Michael W. Laphen

Today I’m again pleased to have the opportunity to speak with you about our first quarter’s [inaudible]. As I outlined in our last call, our objectives for fiscal year 2010 are to continue to position CSC for future new business opportunities and profitable growth while also improving this fiscal year’s operational and financial performance by continuing our focus on cost management and cash generation, by continuing our solid operational delivery particularly on key programs such as the NHS and by removing risks and uncertainties surrounding our current and future performance.

As Slide Five summarizes, our first quarter results demonstrate meaningful progress against our objectives. For the quarter we delivered GAAP EPS of $0.85, up 8% from the previous year and considerably ahead of our guidance for the quarter. We also continued to improve our [inaudible] margin performance with an increase of 46 basis points over our first quarter fiscal year 2009 result and we achieved cash performance slightly higher than our expectations and delivered bookings of $3.5 billion.

We are pleased with the results of our operating margin improvement program particularly since we believe they are sustainable as they arise from operational efficiencies and improvements, work force rationalizations that are consistent with the dynamics of our markets and increased leverage from our global work force and delivery infrastructure.

Our revenue performance up $3.9 billion is in line with our expectations. Year-over-year revenue declined 2.5% in constant currency and as normalized for the extra week in the first quarter of fiscal year 2009. Operationally, we continued to deliver results for our clients. For the NHS we completed the activities scheduled within the quarter and we continue on pace to achieve our next key milestone. In May we successfully completed the second phase of the US Army’s logistic modernization program or LMP increasing the system’s user base by some 5,000. With more than 8,500 users, the LMP remains one of the world’s largest fully integrated supply solutions every developed.

Strategically, we took several significant actions this quarter to enhance our market position. First, we strengthened our presence in Latin America with the acquisition of BearingPoint Brazil. With this action we expand our presence in Brazil, the ninth largest economy in the world and the largest IT services market in Latin America. We further strengthened business solutions and services with an infusion of experienced consulting team and we position ourselves to expand our support to existing CSC clients and multinational companies who have significant operations in Brazil.

Historically, CSC has offered private cloud services by leveraging its strengths in IT infrastructure and applications management, cyber security and regulatory compliance. These offerings provided the specific levels of security, service level management and audit controls that our clients required. To broaden these offerings we recently concluded several important strategic agreements with Microsoft. As a result, we have recently announced a whole new family of public, private and hybrid trusted cloud offerings and orchestration services.

Our clients can now select a combination of public and private cloud services that best suits their IT needs including the use of the Microsoft business productivity online suite BPOS and as a public cloud service the Windows Azure platform. As the first and only global systems integrator to offer both BPOS and Azure services, we believe CSC is uniquely positioned as a leader providing cloud offerings and services to both existing and new enterprise clients.

Another strategic move for this quarter was the consolidation of our application management business including all offshore activities and our global outsourcing services business. The consolidated business is now our managed services sector of MSS. This consolidation fully leverages the over 30,000 CSC professionals who deliver our application services globally, improves our market position, increases sales efficiency and further strengthens operational delivery.

Slide Six details our revenue performance by line of business. Our first quarter results provides evidence that our North American public sector business is returning to its historical rates of growth. Revenue grew 6.5% when normalized for the effect of the extra week or 1.7% as reported. Major new wins contributing to the growth include the Air Force contractor field teams and the Hanford Mission Support Alliance which will ramp up in the second half. Our activities to support the 2010 US Census will increase significantly in the fourth quarter providing additional growth as we move in to fiscal year 2011.

For the first quarter MSS revenues as reported were $1.6 billion, a year-over-year decline of 6.1% in constant currency normalized for the extra week. While MSS delivered some significant new wins in the quarter, new revenues were offset by reductions in project work particularly with several distressed clients. Our BSS revenues declined 9.6% in constant currency and as normalized for the extra week last year. Although we are seeing increasing signs of stabilization, discretionary spending across this space remains subdued.

Slide Seven addresses our fiscal year 2010 new business bookings. In aggregate we achieved total bookings for the quarter of $3.5 billion. This result is flat sequentially. Early in the year we announced some important signs including the UK identity and passport program and a new outsourcing arrangement with Xerox. Other important signings include new wins at Swiss Pharmaceutical Nobel Biocare and the UK Atomic Energy Authority. Important renewals and extensions include several business with BHP Billiton and expanded business with UTC among others.

In the first quarter BSS which operated under very difficult market conditions achieved bookings of $790 million. Signings included a business transformation product with a major European bank and a project to provide internet connectivity and services to passengers on certain high speed trains in Europe. For the quarter, MSS bookings were $1.1 billion including the new client wins I mentioned earlier.

Our outsourcing pipeline of opportunities that are scheduled to be decided within fiscal years ’10 and ’12 currently stands at approximately $12 billion or up over $2 billion from last quarter. The pipeline is balanced across industries and services including applications. While cross remains an important driver of many deals, clients are also looking for change and the opportunity to transfer their business to achieve greater productivity, efficiency and innovation. MPS bookings for the first quarter of fiscal year ’10 were $1.6 billion up from $1.2 billion year-over-year. Our MPS pipeline for the fiscal years ’10 through ’12 currently contain some $27 billion in opportunities of which $14 billion are currently scheduled for award in fiscal year ’10.

Turning to Slide Eight, revenue performance by industry shows positive performance in constant currency for our public sector business and declines across our product promotional industry groups. Excluding the effect of the extra week, our public sector business grew 1.7% in constant currency and is expected to continue to grow in fiscal year ’10 as the newly won programs I mentioned earlier come on line. The distress in the global financial services and manufacturing markets is reflected in our first quarter results with constant currency declines of 11% and 13% respectively.

In the financial services industry we’re starting to see some [inaudible] as clients begin to consider transformational programs. In the United States much of the healthcare market has been paralyzed by the uncertainties created by the ongoing healthcare debate in the US Congress. Regardless of this debates outcome, we continue to view this market constructively for CSC. Within our chemicals, energy and international resources vertical, the utilities industry is generating the strongest demand. Sustainability initiatives, smart grid technologies and the potential for a new regulatory compliance frame work are driving change across this industry segment. The nuclear subsector particularly in EMEA is generating increasing demand.

Looking forward Slide Nine depicts some of the major market opportunities that we believe will shape CSC’s future. This remains a difficult and uncertain market as companies rethink their spending priorities and governments contemplate programs to stimulate their economies while improving services to their citizens. Nonetheless, as the global economy improves, we see significant growth opportunities for CSC. We believe the uncertainties created by the ongoing healthcare debate are creating considerable pent up demand in the market place for healthcare IT services particularly for the use of electronic patient records, health informatics and claims management.

Our broad base of experience implementing complex national health information systems in other countries and at the state level within the US allow us to respond to those demands once policy direction has been established. We believe CSC will be seen as an independent trusted provider of secure cloud services. Our decades of experience managing enterprise computing environments on a global scale makes the move to public and provide clouds a natural step in the evolution of our business.

We recently announced an agreement with the US Department of Defense to cooperate on cyber security as a member of the defense industrial base program. Under the agreement CSC will collaborate to improve risk management of critical network infrastructure in support of the President’s comprehensive national cyber security initiative. This further evidences our strong position in the cyber space market and the growing importance of that market. Regulatory uncertainty, complexity and compliance continue to be issues across many industries. We are out in front of the market offering solutions for customers needing to address government mandated breach requirements for the chemical industry and our position to help manage the dramatic regulatory changes anticipated in the financial and health industries. In summary, we continue to believe CSC is well positioned to take advantage of the market disruptions resulting from new technologies and the dramatic stimulus programs being implemented by governments around the world.

Turning to Slide 10 and our guidance for 2010, for fiscal year ’10 we are affirming our new business bookings guidance of $17 to $18 billion, our revenue guidance of $16 to $16.5 billion. Additionally, we continue to anticipate an expansion of our operating income margin of 25 to 50 basis points. Over the last two years we have aligned our three main lines of business to improve market and operational performance as well as achieve tax efficiency comparable to our peer competitors. As a consequence of these results and those from our ongoing focus on tax matters, we are pleased to now be in a position to lower our effective tax rate guidance for the year to 28% and to raise our earnings guidance to between $4.80 and $5 per share. This increase in EPS we are especially please to affirm our previous free cash flow guidance of 90% to 100% of net income.

At this point I’d like to turn the call over to Mike Mancuso for further details on this quarter’s financials.

Michael J. Mancuso

It is also my pleasure to have this opportunity to share with you our perspective and insights on our first quarter results. As Mike Laphen indicated, we had another good quarter having met or favorably exceeded all of our key financial metrics namely: revenue; earnings; margin rate improvement; cash flow; and our days receivable outstanding or DSOs as its referred to. This first quarter’s progress is a solid first step and a very important step towards meeting the financial targets for our fiscal year that we outlined for you in May of this year.

If you’ll turn to Slide 12 you’ll see essentially a repeat of the highlights from the press release and Mike’s comments. Revenue of $3.9 billion is where we thought we would be and needed to be to meet our full year guidance of $16 to $16.5 billion. OI or operating income margin was 46 basis points above last year, a result of our cost management initiatives with our intensified focus on execution, and again to remind you we are looking for a 25 to 50 basis point improvement in margin rate for the year.

I’ll talk to EPS in more detail on the next Slide. Free cash flow was -$462 million and although unfavorable to last year’s first quarter was in fact considerably better than our internal forecast. Lower receivables being the biggest contributor. Our DSOs dropped by four days which gives us comfort that we can achieve the four to five day improvement goal we set for ourselves this year. We do still expect free cash flow for the year to range between 90% and 100% of our increased net income.

Turning to Slide 13, I’m sure there’s going to be some keen interest in understanding the EPS performance above our guidance. About 90 days ago we set the fourth quarter EPS guidance at $0.50 which did not include any pickup from our pension actions which we expected would kick in during our second quarter. However, a onetime curtailment gain was able to be reported in the first quarter. Timing of software licenses and a currency tailwind contributed $0.05. We were able to close a deal to sell our former headquarters building in LA at a modest gain and we realized earlier than expected benefit from our productivity initiatives and work force pruning for another $0.10. Finally, a change in our tax rate contributed $0.11.

Our full year prior EPS guidance included an estimated effective tax rate of 37.5%. Last year our effective tax rate was -17.5%, the result of a massive effort to resolve several open year’s audit with the IRS and various taxing authorities around the world and compounded by our actions to remediate a Sarbanes Oxley 404 material weakness surrounding our tax accounting. I might remind you that our fiscal 2006 tax rate was 42%, our 2007 rate was 35%, our 2008 rate was 41% and our normalized rate last year adjusting out the large settlements was 32.5%.

After you [inaudible] that on FY ’09, we turned our full scale attention to a further in depth analysis of FY ’10 and the tax related opportunities associated with our organizational realignment the result of which yielded a 28% tax rate in the first quarter, an estimated rate of 15% in our second quarter and a fully year estimated tax rate of 28%. Keep in mind however that there are a considerable number of opportunities and issues in the tax area both domestically and internationally so I wouldn’t be at all surprised if that rate were to change again. If you’ll flip to Slide 14, the lower tax rate increases our second quarter guidance to $1.39 from $1.00 and our full year EPS guidance in to the range identified on the Slide.

If you move to Slide 15, year-over-year revenue is off 12% but only 2% in constant currency and normalized for the extra week. The currency impact is $264 million. Also, fiscal first quarter last year with one week longer this year resulted in $170 million more revenue in that quarter. FY ’09 has been recast to reflect the realignment of our operating segments to facilitate the comparison to FY ’10.

Chart 16 shows operating income by segment reflecting a very modest reduction year-over-year given the currency and extra week impact on revenue. BSS is most affected by the sluggish business environment, thus experienced a significant year-over-year decrease in operating income.

Slide 17 is a recap of selected financial info most of which we’ve already addressed. On Slide 18, I draw your attention to the highlighted numbers, on the asset side cash is appreciably higher than last year. Strong cash flow last year coupled with the drawdown of our revolver partially offset by large debt repayments. Receivables have been reduced dramatically. On the liability side although interest bearing debt has grown by over $400 million, keep in mind that our revolver drawdown of $1.5 billion so our debt increase was largely offset by paying down commercial paper and maturing term debt. Our overall net debt to capital ratio is further improved and our overall balance sheet strengthened.

Slide 19 displays selected cash flow items, you can see that depreciation is lower largely a product of lower capital expenditure while working capital usage has increased and that’s primarily a timing issue. This package also includes a significant amount of supplemental financial information starting on Slide 20 that I will not address. It’s there to help answer more detailed questions you may have.

In summary, we feel good about the quarter, we feel our guidance is achievable and we anxiously await your questions. With that I’ll turn it back to Bryon to get things started.

BB

We’re now ready to begin the Q&A session. Before we start, we’d really appreciate it if everyone would restrict themselves to one question because last time a few people were unable to participate on the call. With your understanding we can avoid a repeat of that. Thank you very much. Operator can you now please issue the instructions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Bryan Keane – Credit Suisse.

Bryan Keane – Credit Suisse

Just looking at the operational improvement of the upside to the quarter of $0.10, can you just talk a little bit about what that was and if that was repeatable going forward should we see more operational improvement upside in quarters two through four?

Michael J. Mancuso

Bryan, it is repeatable but I want you to keep in mind we had already factored significant operational improvements in our prior guidance and we have it embodied in our future quarter estimates. What we saw in the first quarter was an earlier than anticipated benefit from those initiatives. So, they are repeatable, we got it a quarter earlier.

Bryan Keane – Credit Suisse

I’m just going to sneak in one question, tax rate does that mean the tax rate will stay at these levels when we model out for fiscal year ’11 and beyond? I know that’s kind of a tricky question but just looking for a little guidance on that?

Michael J. Mancuso

Well, it’s hard for me to sit here and forecast tax rate for beyond FY ’10 particularly in light of the tax changes that are being contemplated by the current administration. Having said that, we’re focused on our tax rate, we have benchmarked our industry, our tax rate for our industry is in the neighborhood of about 31%. There are obviously some significant swings in that but ballpark is around 31%. I think it’s possible for us to continue to work in that area to find opportunities and notwithstanding changes in tax legislation I would see us staying in the range we’re in right now, if not improving.

Operator

Your next question will come from Jason Kupferberg – UBS.

Jason Kupferberg – UBS

A couple of questions, first of all on the bookings outlook for the year I know you’re reiterating the $17 to $18 billion, can you talk about the step up here from Q1 levels? Based on what you see in the pipeline do you think this will be more back end loaded in the fiscal year to get to that full year target?

Michael J. Mancuso

Yes, I think it will be more second half loaded. As we look at what we have in the pipelines and as we mentioned the pipelines have improved and with the business we’re pursuing, we think those numbers are quite achievable. But, it will be more back end loaded in the second half than towards the front end.

Jason Kupferberg – UBS

What kind of commercial versus government split would you roughly expect out of that $17 to $18?

Michael W. Laphen

We’ll have to get back to you on that.

Operator

Your next question comes from Analyst for Tien-Tsin Huang – J.P. Morgan.

Analyst for Tien-Tsin Huang – J.P. Morgan

I wanted to ask about what you’re seeing in pricing in the market in the different businesses? And, just a clarification, it looks like the EPS range got wider, was there a change in the visibility that drove that?

Michael J. Mancuso

As far as the EPS range is concerned David, we’re obviously optimistic about the second half of the year. That having been said we still have a lot of runway in front of us so we’re not hedging our bets we’re just presuming that there will be timing and variation in the second half of the year and we’re just more comfortable with a broader range.

Operator

Your next question comes from Julio Quinteros – Goldman Sachs.

Julio Quinteros – Goldman Sachs

On the operating improvement $0.10 component of the improvement for the quarter, how much of that is attributed to the renegotiation of the UK NHS contract?

Michael W. Laphen

We don’t speak to renegotiations with specific customers and the impact there. But, I don’t think you should consider it a factor.

Operator

Your next question comes from Rob [Bersua] – Bernstein.

Rob [Bersua] – Bernstein

Our checks on the NHS contract suggests that the Derbyshire mental health site which is one of the early adopter sites for your LORENZO system, apparently they’ve decided to pull back on their plans to implement LORENZO and their citing essentially that they want systems problems resolved before they implement the full LORENZO system. I guess I’m wondering if that will at all affect the payments that you received in the March quarter related to the early adoption milestone on the NHS deal?

Michael W. Laphen

I’m not sure that information is current that you have. That’s certainly not my understanding at the moment.

Rob [Bersua] – Bernstein

Is LORENZO continuing to be deployed at the Derbyshire mental health site?

Michael W. Laphen

My understanding is that’s on schedule to do so. Also, my understanding was the final decision on that has not been made but our understanding is it is all systems go and we’re marching towards that path. We’re pretty pleased with where we are right now on that path.

Rob [Bersua] – Bernstein

I guess the real question is, is there any contingencies related to the payments you received in the March quarter related to that milestone to the extent that the deployment of LORENZO at that particular site gets delayed or postponed, are there any contingencies related to those payments or is that payment essentially in the bag?

Michael W. Laphen

As we’ve always said, we get milestone payments, that milestone is a significant milestone and we need to achieve that milestone to get our full anticipated payments from NHS.

Operator

Your next question comes from Karl Keirstead – Kaufman Bros.

Karl Keirstead – Kaufman Bros.

I’ve got a question about the BSS margins which if I’m correct came in at about 6%. Do you believe that’s a low that we’ll see in fiscal ’10? And, is your 25 to 50 basis point margin improvement predicated on a significant pickup in that 6% margin in the BSS unit?

Michael J. Mancuso

First quarter is always a low margin quarter for BSS for a number of reasons one is the number of billable days in the quarter is substantially down. The second thing is typically licenses are lighter than normal in the first quarter as well. Also, whatever restructuring or rationalization charges that we take in that business unit, we typically do in the first quarter as well. Yes, we do expect that to improve and yes, we do see that participating in the improved margin performance of 25 to 50 points.

Karl Keirstead – Kaufman Bros.

As a quick follow up, on the last call you mentioned the BSS unit was showing signs of stabilization yet it feels like it might have weakened a little bit further. Did anything in your judgment or perhaps what changed in the quarter that you didn’t get the stability that you called out last quarter?

Michael W. Laphen

I don’t want to reflect that it’s not stable. We don’t see the uptick yet but I would still characterize it as stable except for possibly the German market which is a bit more stressed than others. But no, I would still characterize that business area as stable and we’re anticipating, we’re seeing signs at least that we could be cautiously optimistic about upticks in the second half.

Operator

Your next question comes from Analyst for Tien-Tsin Huang – J.P. Morgan.

Analyst for Tien-Tsin Huang – J.P. Morgan

I just wanted to follow up because I was hoping to hear about the pricing environment for each of the different businesses?

Michael W. Laphen

Well, the federal business is what it is, it’s not impacted by the broader macroeconomic commercial picture. The outsourcing, we haven’t seen any substantial changes in pricing levels there and thankfully actually on the discretionary BSS side, the billing rate has held up for the last several months so I think that seems to be stable at this point.

Analyst for Tien-Tsin Huang – J.P. Morgan

If I could just get a clarification, the revenue guidance was unchanged and the margin guidance was unchanged and the EPS is up, so how much of the increase in the EPS guidance is tax, how much is operations and how much is other?

Michael J. Mancuso

If you did the math from the 37.5% tax rate we guided to before to the 28% tax rate guidance you’ll see the lion’s share of the EPS improvement in guidance is coming from tax. There is a modest amount of operational improvement also in that number but the lion’s share is in the tax side.

Michael W. Laphen

Just to go back to that earlier question on the bookings split between our commercial business and our public sector business, I think you could look at the public sector at or around $8 billion and the remainder on the commercial business.

Operator

Your next question comes from Ashwin Shirvaikar – Citi.

Ashwin Shirvaikar – Citi

My question is on the cash flow impact from the lower tax rate if you could comment on that? Does that pretty much flow through or is there a difference?

Michael J. Mancuso

Well it will pretty much flow through which underpins our guidance that our cash flow would remain at 90% to 100% of our increased net income so we’ll also get a cash benefit out of the tax change.

Ashwin Shirvaikar – Citi

And that’s ratable through the year?

Michael J. Mancuso

It will be ratable through the year Ashwin.

Ashwin Shirvaikar – Citi

Going forward, pension gain does it step up from the $0.06 impact that you had in the first quarter or does it stay about the same?

Michael J. Mancuso

Pension gain is about $30 million plus for the full year. That was intended to be for a three quarter period in FY ’09 since it kicked in in July. We still expect it to be at that level plus or minus not a significant amount but $30 million so you can do the EPS math on $30 million pretax.

Operator

Your next question comes from Rob [Bersua] – Bernstein.

Rob [Bersua] – Bernstein

Just a few follow up questions on the cash flow assumptions, can you kind of give us an update on your DSO target for the year and your cap ex plan for the year? Then, whether there is some incremental pension benefits from maybe freezing benefits in Europe? I know that was one of the topics that was up in the air three months ago, how the European pension would play out over the course of the year. So, DSO, cap ex and pension assumptions that might affect cash flow for the year?

Michael J. Mancuso

Well, DSO first, we targeted a four to five day improvement, we expect to achieve it and it’s factored in to our guidance. Cap ex, would ballpark, I don’t have the number in front of me but, about $1 billion in cap ex. Again, that kind of a number has been factored in to our guidance. As far as the pension in Europe is concerned, what we said was that we were looking at that, dialoging with the various works councils in the various countries England, Scandinavia, etc. We don’t have anything new to report on that front right now but it is a work in process.

We’re hopeful at some point in the future we’ll see some benefit from altering the pension scheme using the British term in those jurisdictions and those geographic areas and we’ll get some benefit out of it. So, it’s on our to do list and it’s being worked.

Rob [Bersua] – Bernstein

I’m seeing a lot of questions from investors on the tax rate, I know you can’t really forecast tax rate well in to the future but is it feasible that a 28% tax rate is sustainable kind of beyond this year? Is there a reason that your structural tax rate would be that low on a sustainable basis or is that at the low end of what seems realistic longer term? How would you look at that?

Michael J. Mancuso

Well again to qualify by not knowing what our current administration is going to do in that area, absent that or setting that aside for a moment, our peer rates are in the very low 30s kind of thing. Obviously, we are in enjoying right now a tax holiday in India that will expire next year, that will put upward pressure on the tax rate unless it’s extended. But, we’re still looking and we’ll continue to look. A long winded answer to say is 28% doable? I think it is but if I had to bet the farm I don’t think I’d stick my neck out that far next year until I find out what’s going to happen here domestically.

Michael J. Mancuso

Just a follow up on that NHS question, thanks to our communications, I’ve got a hot response from over in the UK, Derbyshire from our people’s perspective over there is not an issue. Derbyshire is committed to LORENZO but pushed it out a bit. It wasn’t planned in this quarter and it’s a small trust with no impact on the milestones. The key trust by the way is Bury, that’s where the first adopter site has been selected of the go forward on the November milestone.

Rob [Bersua] – Bernstein

But any case, this was one of the earlier adopter sites and it’s been delayed but they’re still going to deploy it in the long run, that’s the way to look at that right?

Michael J. Mancuso

That’s correct but, it’s a minor trust. I think the one you should be focused on is the November milestone and that’s the Bury trust and my understanding is that they have agreed to go forward and we’re marching down that path.

Rob [Bersua] – Bernstein

That’s what I’m picking up too but the payments in March weren’t at all related to the Derbyshire system? And, I’m assuming by your comments that there’s no contingencies in those payments related to Derbyshire and this delay at Derbyshire won’t have any impact on monies that you’ve already received?

Michael W. Laphen

Derbyshire would be totally insignificant in terms of our cash planning. The one that would be of significance is Bury.

Bryan Brady

I think we’re at the end of the question session and I’d like to hand the call back to Mr. Laphen to close off.

Michael W. Laphen

Again, thank you for your participation today. Before I close I’m pleased to inform you that CSC will be hosting an investors’ conference where we will provide an update on our business strategy in New York City on the 18th of November. A press release will be forthcoming with the appropriate details. I hope to see you all there. Have a good evening.

Operator

This does conclude today’s conference call. Thank you for your participation.

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Source: Computer Sciences Corporation F1Q10 (Qtr End 07/03/09) Earnings Call Transcript
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