All statements and assumptions in this quarterly report on Form 10-Q and in the documents attached or incorporated by reference that do not directly and exclusively relate to historical facts constitute "forward-looking statements" within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements represent current expectations and beliefs of CSC, and no assurance can be given that the results described in such statements will be achieved.

Forward-looking information contained in these statements include, among other things, statements with respect to the Company's financial condition, results of operations, cash flows, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities, plans and objectives of management, and other matters. Such statements are subject to numerous assumptions, risks, uncertainties and other factors, many of which are outside of the Company's control, which could cause actual results to differ materially from the results described in such statements. These forward looking statements should be read in conjunction with our Annual Report on Form 10-K. The reader should specifically consider the various risks discussed in the Risk Factors section of our Annual Report on Form 10-K.

Forward-looking statements in this quarterly report on Form 10-Q speak only as of the date hereof, and forward-looking statements in documents attached or incorporated by reference speak only as to the date of those documents. The Company does not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

General

The following discussion and analysis provides information management believes is relevant to an assessment and understanding of the consolidated results of operations and financial condition of Computer Sciences Corporation (CSC or the Company). The discussion should be read in conjunction with the interim consolidated condensed financial statements and notes thereto and the Company's Annual Report on Form 10-K for the year ended March 28, 2008 as well as the Company's Current Report on Form 8-K filed December 16, 2008. The following discusses the Company's results of operations and financial condition as of and for the nine months ended January 2, 2009, and the comparable period for the prior fiscal year. See Note 1 to the consolidated condensed financial statements.

The reader should note Days Sales Outstanding (DSO), Free Cash Flow, Return on Investment (ROI), and Debt-to-total capitalization are not measures defined by Generally Accepted Accounting Principles in the United States (U.S. GAAP), and the Company's definition of these measures may differ from other companies. ROI is calculated by dividing the trailing 12 month (TTM) profits before special items and interest expense and after tax expenses (PBIAT) by the average capital of the past five quarters. For a discussion of these measures, please refer to the Company's Annual Report on Form 10-K for the year ended March 28, 2008.

Third Quarter Overview

Key highlights of the third quarter and year-to-date include:

· Third quarter revenues decreased 5% as reported, and increased 1.6% on a constant currency basis.

· Nine months year-to-date revenue as reported increased 5.1%, and 5.8% on a constant currency basis.

· Net income was $160.6 million compared to $179.0 million for the prior year third quarter and $732.9 million compared to $362.9 million for the prior year nine months year to date.

· Earnings per share were $1.06 and $4.80 compared to $1.05 and $2.08 for the third quarter and nine months year to date for fiscal 2009 and 2008, respectively.

· Business awards of $2.7 billion and $12.7 billion were announced for the quarter and year-to-date, respectively.

· DSO of 94 days improved 6 days compared to the third quarter of fiscal 2008.(1)

· Debt-to-total capitalization ratio at quarter-end increased to 43.8% from 38.9% at fiscal 2008 year-end.

· ROI for the last twelve months ended January 2, 2009 was approximately 12.9%.

· Cash provided by operating activities was $928.4 million for the nine months year to date of fiscal 2009 versus $498.5 million for the fiscal 2008 comparable period. Cash used in investing activities was $838.3 million for the first nine months of fiscal 2009 versus $2.2 billion for the fiscal 2008 comparable period. Free cash flow for the nine months year to date was $170.2 million inflow for fiscal 2009 compared to a $374.2 million used in the fiscal 2008 comparable period.(2)

(1) DSO for the quarter is calculated as total receivables at quarter-end divided by revenue-per-day. Revenue-per-day equals total revenues for the quarter divided by the number of days in the fiscal quarter.

(2) The following is a reconciliation of free cash flow to the most directly comparable Generally Accepted Accounting Principle (GAAP) financial measure:

                                                        Nine Months Ended
    (In millions)                                Jan. 2, 2009       Dec. 28, 2007
    Free cash flow                              $        170.2     $        (374.2 )
    Net cash used in investing activities                838.3             2,159.1
    Acquisitions                                        (100.3 )          (1,315.6 )
    Capital lease payments                                20.2                29.2
    Net cash provided by operating activities   $        928.4     $         498.5
    Net cash used in investing activities       $       (838.3 )   $      (2,159.1 )
    Net cash provided by financing activities   $        952.6     $       1,180.1

The Company's announced new business awards of $2.7 billion for the third quarter of fiscal 2009, with $1.2 billion each awarded to the North American Public Sector and Business Solutions & Services lines of business, and $.3 billion awarded to the Global Outsourcing line of business.

Beginning in the first quarter of fiscal 2009 the Company announced awards for each of the three lines of business. The Company has also changed its method of determining the announced value for certain new awards. In the past for North American Public Sector ID/IQ contracts, the Company announced the value of estimated task order amounts upon the signing of an ID/IQ contract. Going forward, for ID/IQ contracts, the Company will announce as award value the expected contract value at the time a task order is awarded under the contract. There has been no change in the methodology for determining the announced value of multi-year outsourcing contracts. Previously the Company did not announce values for Business Solutions and Services awards. Going forward the Company will announce these awards with the value based on firm commitments.

Lines of Business and Reportable Segments

Under of the Company's comprehensive growth strategy, known as Project Accelerate, the Company targets the delivery of its services within three broad service lines: North American Public Sector (NPS), Global Outsourcing Services (GOS) and Business Solutions and Services (BS&S). Also as a part of Project Accelerate, the Company has restructured the management and reporting structure and certain related operating segments. These changes have resulted in changes to the Company's reportable segments. The Company's North American Public Sector, Global Outsourcing Services, and Financial Services Sector operating segments each represent separate reportable segments under the Company's new operating structure. The Company organizes Business Solutions and Services-Consulting operating segments by geographies and vertical operations. The BS&S-Consulting operating segments provide business process outsourcing, systems integration, consulting, and professional services within their assigned target geographic or vertical markets. Further, the service offerings and clientele overlap and the Company draws on multiple operating segments within BS&S-Consulting to serve clients. As a result, the aggregated operating segments have similar economic characteristics, products, services, customers and methods of operations. The Company's remaining operating segments do not meet the quantitative thresholds for separate disclosure and do not meet the aggregation criteria as indicated in SFAS No. 131. As a result, these operating segments are reported as "other." Because each of these other operating segments are within the Company's BS&S service line, the Company has labeled this group of operating segments as Business Solutions and Services-Other. The NPS and GOS lines of business are each entirely comprised of the reportable segments of the same name while the BS&S service line is comprised of the Business Solutions and Services-Consulting, Financial Services Sector reportable segments and Business Solutions and Services-Other.

The North American Public Sector segment operates principally within a regulatory environment subject to governmental contracting and accounting requirements, including Federal Acquisition Regulations, Cost Accounting Standards and audits by various U.S. Federal agencies. The Global Outsourcing Services segment provides large-scale outsourcing solutions offerings as well as midsize services delivery to customers globally. The Business Solutions and Services-Consulting segment enables the Company to provide industry specific consulting and systems integration services. The Financial Services Sector segment primarily provides information technology and business process outsourcing services and intellectual property (IP)-based software solutions to financial services companies globally.

Lines of Business                        Reportable Segments
North American Public Sector (NPS)       North American Public Sector
Global Outsourcing Services (GOS)        Global Outsourcing Services
Business Solutions and Services (BS&S)   BS&S - Consulting
                                         BS&S - Financial Services Sector
                                         BS&S - Other

BS&S-Other includes the Company's non-outsourcing related services in Australia and Asia and the Company's India operations. In addition, corporate entity and eliminations will be reported under the segment disclosure. See Note 12 to the consolidated condensed financial statements.

Overview

Revenue decreased 5% during the third quarter of fiscal 2009 on a year over year basis as a result of declines in the European and Australian GOS and BS&S businesses, which were impacted by changes in currency translation rates. Financial Services had slight declines due to reduced license sales. Certain US Commercial contracts were affected by negotiated price reductions, reductions in service offerings and reductions in discretionary project work. These reductions were partially offset by growth in the NPS sector, driven by increases with Department of Defense customers. For the nine months year to date, the revenue trend was similar to the trend for the third quarter.

ROI from continuing operations, for the twelve months ended January 2, 2009 was approximately 12.9%, an increase of 2.6 percentage points over the prior year 10.3%. The increase was a result of improved operating margin, the favorable impact of settlement with the U.S. Internal Revenue Service of tax audits for fiscal 2000 through 2004, and the Company's now concluded share repurchase program.

Results of Operations

Revenues

                                                      Third Quarter Ended
   Dollars in millions                   2009           2008         Change      Percent

   BS&S - Consulting                  $    457.3     $    444.1     $   13.2          3.0 %
   BS&S - Financial Services Sector        237.0          248.0        (11.0 )       (4.4 )
   BS&S - Other                            318.7          340.4        (21.7 )       (6.4 )
   Business Services & Solutions         1,013.0        1,032.5        (19.5 )       (1.9 )
   Global Outsourcing Services           1,487.2        1,718.1       (230.9 )      (13.4 )
   North American Public Sector          1,476.1        1,435.0         41.1          2.9
   Subtotal                              3,976.3        4,185.6        209.3         (5.0 )
   Eliminations                            (23.9 )        (25.6 )        1.7
   Total Revenue                      $  3,952.4     $  4,160.0     $ (207.6 )       (5.0 )%

                                                   Nine Months Year-to-Date
   Dollars in millions                   2009           2008         Change      Percent

   BS&S - Consulting                  $  1,477.0     $  1,243.8     $  233.2         18.8 %
   BS&S - Financial Services Sector        746.5          760.4        (13.9 )       (1.8 )
   BS&S - Other                          1,049.9          874.4        175.5         20.1
   Business Services & Solutions         3,273.4        2,878.6        394.8         13.7
   Global Outsourcing Services           4,969.1        4,908.6         60.5          1.2
   North American Public Sector          4,463.7        4,305.7        158.0          3.7
   Subtotal                             12,706.2       12,092.9        613.3          5.1
   Eliminations                            (78.0 )        (77.8 )      (0. 2 )
   Total Revenue                      $ 12,628.2     $ 12,015.1     $  613.1          5.1 %

The factors affecting the percent change in revenues for the third quarter and nine months year-to-date of fiscal 2009 are as follows:

                                                              Approximate
                                                               Impact of
                                                               Currency         Net Internal
                                           Acquisitions      Fluctuations          Growth          Total
Third Quarter
   BS&S - Consulting                                 9.1 %           (11.7 )%            5.6 %         3.0 %
   BS&S - Financial Services Sector                                   (3.0 )            (1.4 )        (4.4 )
   BS&S - Other                                                       (8.3 )             2.0          (6.4 )
Business Services & Solutions                        3.9              (8.5 )             2.7          (1.9 )
Global Outsourcing Services                           .7             (10.8 )            (3.3 )       (13.4 )
North American Public Sector                          .1                                 2.8           2.9
Eliminations/Other Corporate                                                            (6.2 )        (6.2 )
   Total                                             1.3 %            (6.5 )%             .2 %        (5.0 ) %

                                                               Approximate
                                                                Impact of
                                                                 Currency         Net Internal
                                            Acquisitions       Fluctuations          Growth          Total
Nine Months Year-to-Date
   BS&S - Consulting                                 11.9 %               .3 %             6.6 %        18.8 %
   BS&S - Financial Services Sector                                      (.4 )            (1.4 )        (1.8 )
   BS&S - Other                                      15.2                 .2               4.6          20.1
Business Services & Solutions                         9.8                 .1               3.8          13.7
Global Outsourcing Services                            .9               (1.6 )             1.9           1.2
North American Public Sector                           .1                                  3.6           3.7
Eliminations                                                                                .3            .3
   Total                                              2.7 %              (.6 )%            3.0 %         5.1 %

Business Solutions and Services

The Business Solutions and Services line of business revenue showed a small net decline, as reported, with the negative currency translation impact, but increased 6.6% on a constant currency basis due in part to an acquisition in the prior year. For the nine months year to date, BS&S Consulting and BS&S Other reported net internal revenue growth while BS&S Financial Services Sector reported a revenue decline.

BS&S Consulting revenue growth for the third quarter resulted largely from the acquisition of First Consulting Group but was significantly offset by a negative currency impact. For the quarter to date and nine months year to date, the acquisition of First Consulting Group contributed approximately $40 million and $148 million of revenue, respectively.

Financial Services Sector revenue declined $11 million during the third quarter of fiscal 2009 versus prior year comparable period, due partly to a decrease in software license sales in both the United States and Europe.

BS&S Other, which includes the Company's Australia, Asia and India businesses, reported a combined revenue decline of 6.4% for the third quarter of fiscal 2009. This decline was primarily as a result of negative currency impact and changing market conditions for a professional staffing augmentation business in Australia. Asia experienced modest growth from expanded or new contracts.

Global Outsourcing Services

Global Outsourcing Services revenue declined for the third quarter of fiscal 2009 versus fiscal 2008 by 13.4% but increased for the nine months year to date by 1.2%. Foreign currency fluctuations adversely impacted revenue growth by approximately 10.8% and 1.6% for the quarter and nine months, respectively. Revenue for the quarter was also adversely impacted by $41 million or 2.4% from two contract terminations in North America. The remainder of the decline was a result of lower volumes, scope reductions and decreases in project demand that slightly outweighed new business and scope increases on several other projects as well as the impact of a fiscal 2008 acquisition.

North American Public Sector

The Company's North American Public Sector revenues were generated from the
following sources:

                                                          Third Quarter
    (Dollars in millions)                  2009          2008        Change      Percent

    Department of Defense                $ 1,069.1     $   970.1     $  99.0         10.2 %
    Civil agencies                           373.3         419.6       (46.3 )     (11.03 )
    Other (1)                                 33.7          45.3       (12.0 )      (26.3 )
    Total North American Public Sector   $ 1,476.1     $ 1,435.0     $  41.1          2.9 %



                                                     Nine Months Year-to-Date
    (Dollars in millions)                  2009          2008        Change      Percent

    Department of Defense                $ 3,130.3     $ 2,882.1     $ 248.2          8.6 %
    Civil agencies                         1,217.0       1,292.3       (75.3 )       (5.8 )
    Other (1)                                116.4         131.3       (14.9 )      (11.0 )
    Total North American Public Sector   $ 4,463.7     $ 4,305.7     $ 158.0          3.7 %

(1) Other revenues consist of state and local government as well as commercial contracts performed by the North American Public Sector reporting segment.

Revenues from the North American Public Sector increased 2.9% and 3.7% for the third quarter and nine months year to date, respectively, as a result of growth on new and existing programs with the Department of Defense (DoD). DoD contributors to revenue growth for the quarter included additional tasking on systems integration programs with the Army and Air Force which contributed $20 million, procurement programs with the Army which provided an additional $47 million, and other programs to provide engineering support, business process outsourcing and logistics support which provided $60 million of additional revenue compared to third quarter fiscal year 2008. These increases more than offset the impact of the conclusion of a classified program which reduced revenue approximately $30 million for the quarter.

Revenue from Civil agencies declined $42.7 million as a cumulative result of lower existing contract funding levels and program completions. Other revenue for the quarter declined as the development phase of a project with a foreign government was completed which reduced revenue $3.5 million and a $6 million project reduction for other contracts.

During the third quarter of fiscal 2009, the Company announced federal, state, and defense contract awards with a total value of $1.2 billion, compared to $1.9 billion announced during the comparable period for fiscal 2008.

Costs and Expenses

The Company's costs and expenses were as follows:

                                                                    Third Quarter
(Dollars in millions)                      Dollar Amount              Percent of Revenue            Percentage
                                        2009          2008           2009             2008         Point Change


Cost of services(1)                   $ 3,083.4     $ 3,301.6           78.0 %           79.4 %             (1.4 )%
Selling, general &   administrative       261.2         240.2            6.6              5.8                0.8
Depreciation and   amortization           282.2         307.1            7.1              7.4               (0.3 )
Special items                                            17.5                             0.4               (0.4 )
Interest expense, net                      56.6          43.6            1.4              1.0                0.4
Other expense/(income)                      8.9         (16.3 )          0.2             (0.4 )              0.6
Total                                 $ 3,892.3     $ 3,893.7           93.3 %           93.6 %             (0.3 )%



                                                                Nine Months Year-to-Date
(Dollars in millions)                       Dollar Amount               Percent of Revenue            Percentage
                                         2009           2008           2009             2008         Point Change


Cost of services(1)                     10,091.4     $  9,653.5           80.0 %           80.3 %             (0.3 )%
Selling, general &   administrative        824.0          721.9            6.5              6.0                0.5
Depreciation and   amortization            911.5          878.3            7.2              7.3               (0.1 )
Special items                                              92.4                             0.8               (0.8 )
Interest expense, net                      160.7          103.3            1.3              0.9                0.4
Other expense/(income)                      22.0          (41.9 )          0.2             (0.4 )             (0.6 )
Total                                 $ 12,009.7     $ 11,407.5           95.2 %           94.9 %              0.3 %

(1) Excludes depreciation and amortization.

Comparing the third quarter and nine months year to date of fiscal 2009 and 2008, total costs and expenses as a percentage of revenue for the third quarter improved 30 basis points on a year over year basis with a decrease in cost of services, special items, and depreciation and amortization during fiscal 2009 offsetting increases in selling, general and administrative expense, net interest expense and other expense/(income). For the nine months year to date the trends were similar.

Cost of Services

Cost of services (COS) declined $218 million for the quarter driven by reduced volume and demand for new projects. As a percentage of revenue, COS decreased 1.4 percentage points to 78% from the year earlier period. For the quarter, the improvement in the ratio was largely attributable to GOS as a result of lower labor costs including the impact of headcount reductions. Additionally, improvement in the ratio was seen at the BS&S-Other and Financial Services segments as a result of improved performance and tighter control of discretionary expenses. For the nine months year to date, the ratio improved by .3 percentage points relative to the comparable period for fiscal 2008. Approximately two-thirds of this improvement is due to GOS labor cost savings and one-third due to BS&S Other savings as described above.

Selling, General and Administrative

Selling, general and administrative (SG&A) expense increased as a percentage of revenue by .8 percentage points and .5 percentage points to 6.6% and 6.5% for the third quarter and nine months year to date of fiscal 2009, respectively. For the quarter, the most significant factor was an increase in the ratio for GOS, driven by increased business development expenses, increased personnel costs related to managing customer relationships and costs incurred to roll out of the new CSC brand in Europe. The Company's ratio was also higher due to Corporate costs related to the roll out of the new CSC brand and costs incurred to relocate the Company's headquarters, as well as increased legal fees for BS&S-Financial Services segment. The increases were slightly offset by an improved ratio for the BS&S-Consulting segment. Trends were similar for the year-to-date.

Depreciation and Amortization

The depreciation and amortization (D&A) ratio decreased 0.3 percentage points to 7.1 for the third quarter and decreased 0.1 percentage points to 7.2 for the nine months, respectively, compared to the prior year periods. For the quarter, the most significant factor in the decline was the favorable mix impact of the decline in revenue volume for GOS, which has the Company's highest ratio of D&A as a percent of revenue. Also contributing to the ratio decline for the Company was lower royalty amortization expenses in the BS&S-Financial Services segment and improvement in the ratio at NPS, including the completion of amortization of deferred costs on a significant program. Trends were similar for the year-to-date.

Interest Expense, Net

Net interest expense increased $13.1 million for the third quarter of fiscal 2009 and increased $57.5 million for the nine months year to date as compared to the prior year comparable periods. As a result, the ratio increased as a . . .