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, management's assessment of estimates related to profitability of its long-term contracts and estimates related to impairment of contract-specific assets, 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 included elsewhere herein.

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 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 fiscal year ended March 30, 2012. The following discusses the Company's financial condition and results of operations as of and for the third quarter and nine months ended December 28, 2012, and the comparable periods of the prior fiscal year.

Overview

The key operating results for the third quarter and for the first nine months of fiscal 2013 include:

• Third quarter revenues increased $94 million, or 2.5%, to $3,781 million, while the nine month revenues decreased $93 million, or 0.8%, to $11,434 million as compared to the third quarter and nine months of the prior fiscal year. On a constant currency basis,(1) revenues increased $102 million, or 2.8%, and $106 million, or 0.9%, for the quarter and first nine months, respectively.

• Income from continuing operations before taxes for the third quarter of fiscal 2013 was $155 million, compared to a loss from continuing operations before taxes of $1,459 million in the third quarter of fiscal 2012, an increase of $1,614 million. Income from continuing operations before taxes for the first nine months of fiscal 2013 was $380 million, compared to a loss from continuing operations before taxes of $4,260 million for the same period of 2012, an increase of $4,640 million.

• Income from discontinued operations, net of taxes for the third quarter of fiscal 2013 was $390 million, compared to $30 million in the same period of fiscal 2012, an increase of $360 million. Income from continuing operations before taxes for the first nine months of fiscal 2013 was $419 million, compared to $110 million for the same period of fiscal 2012, and increase of $309 million. The increases for both the third quarter and the nine-month

period, due to the third quarter divestitures of the Company's Credit Services and the Italian consulting and system integration businesses.

• Operating income(2) for the third quarter increased to $268 million as compared to an operating loss of $1,307 million for the third quarter of fiscal 2012, and operating income margin increased to 7.1% from last year's third quarter margin of (35.4)%. For the first nine months, operating income increased to $698 million as compared to an operating loss of $1,251 million for the same period of 2012, and operating income margins increased to 6.1% from (10.9)%.

• Earnings before interest and taxes(3) (EBIT) for the third quarter of fiscal 2013 increased to $208 million as compared to a loss before interest and taxes of $1,425 million for the third quarter of fiscal 2012. EBIT margin improved to 5.5% from last year's third quarter margin of
(38.6)%. For the first nine months of fiscal 2013, EBIT of $513 million increased by $4,676 million from the first nine months of fiscal 2012. EBIT margin improved to 4.5% from last year's first nine months margin of (36.1)%.

• Net income attributable to CSC common shareholders for the third quarter of fiscal 2013 was $510 million, an increase of $1,900 million, as compared to the same period in the prior year. For the first nine months of fiscal 2013, net income attributable to CSC common shareholders was $680 million, an increase of $4,764 million, as compared to the same period in the prior year.

• Diluted earnings per share (EPS) was $3.27 for the third quarter of fiscal 2013, an increase of $12.23 as compared to $(8.96) for the same period in the prior year. Diluted EPS was comprised of $0.77 from continuing operations and $2.50 from discontinued operations, as compared to $(9.15) and $0.19, respectively, in the prior year. Diluted EPS was $4.36 for the first nine months of fiscal 2013, an increase of $30.71 as compared to $(26.35) for the same period in the prior year. Diluted EPS was comprised of $1.67 from continuing operations and $2.69 from discontinued operations, as compared to $(27.06) and $0.71, respectively, in the prior year.

• During the third quarter of fiscal 2013, the Company recorded restructuring costs of $26 million, of which $8 million is related to the MSS segment, $8 million is related to the BSS segment, $2 million is related to the NPS segment and $8 million is related to Corporate. For the first nine months of fiscal 2013, the Company recorded restructuring costs of $111 million, of which $68 million is related to the MSS segment, $32 million is related to the BSS segment, $3 million is related to the NPS segment and $8 million is related to Corporate.

• The Company announced contract awards of $3.0 billion for the third quarter of fiscal 2013, including new NPS segment awards of $0.7 billion, MSS segment awards of $1.4 billion, and BSS segment awards of $0.9 billion. Total backlog(4) at the end of the third quarter of fiscal 2013 was $34.3 billion, a decrease of $0.7 billion as compared to the backlog at the end of the third quarter of fiscal 2012 of $35.0 billion. Of the total $34.3 billion backlog, $3.1 billion is expected to be realized as revenue in the remainder of fiscal 2013. Of the total $34.3 billion, $11.2 billion is not yet funded.

• Days Sales Outstanding (DSO)(5) was 71 days at December 28, 2012, an improvement from 77 days at the end of the third quarter of the prior fiscal year.

• Debt-to-total capitalization ratio(6) was 44.2% at December 28, 2012, a decrease of 5.0 percentage points from 49.2% at March 30, 2012, due to the early redemption of the 5.50% and 5.00% term notes, both due in 2013, and increase in equity due to higher net income attributable to CSC shareholders.

• Cash provided by operating activities was $1,078 million for the first nine months of fiscal 2013, as compared to $680 million for the first nine months of fiscal 2012, primarily due to a cash inflow from the settlement with the U.S. government, and higher net cash flows related to the NHS contract, as well as lower vendor and payroll-related payments, partly offset by lower cash receipts and higher restructuring payments.

• Cash provided by investing activities was $474 million for the first nine months of fiscal 2013, as compared to cash used of $1,088 million for the first nine months of fiscal 2012, primarily due to net proceeds of the divestitures of two businesses in the third quarter and lower expenditures on acquisitions and property and equipment.

• Cash used in financing activities was $433 million for the first nine months of fiscal 2013, as compared to $471 million for the first nine months of fiscal 2012, primarily due to higher net borrowings in fiscal 2013, partially offset by cash used for share repurchases.

• Free cash flow(7) of $457 million for the first nine months of fiscal 2013 was favorable to the $172 million outflow for the first nine months of fiscal 2012, driven primarily by higher year-over-year cash inflow associated with the NHS contract, the settlement with the U.S. government, and reduced payments for capital expenditures.

(1) Selected references are made on a "constant currency basis" so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby providing comparisons of operating performance from period to period. Financial results on a "constant currency basis" are calculated by translating current period activity into U.S. dollars using the comparable prior period's currency conversion rates. This approach is used for all results where the functional currency is not the U.S. dollar.

(2) Operating income is a non-U.S. Generally Accepted Accounting Principle (GAAP) measure used by management to assess performance at the segments and on a consolidated basis. The Company's definition of such measure may differ from other companies. We define operating income as revenue less costs of services, depreciation and amortization expense, restructuring costs and segment general and administrative (G&A) expense, excluding corporate G&A. Operating margin is defined as operating income as a percentage of revenue. Management compensates for the limitations of this non-GAAP measure by also reviewing income (loss) from continuing operations before taxes, which includes costs excluded from the operating income definition such as goodwill impairment, corporate G&A, interest and other income (expense). A reconciliation of consolidated operating (loss) income to (loss) income from continuing operations before taxes is as follows:

                                                   Quarter Ended
(Amounts in millions)                 December 28, 2012       December 30, 2011
Operating income (loss)             $             268        $          (1,307 )
Corporate G&A                                     (56 )                    (46 )
Interest expense                                  (57 )                    (42 )
Interest Income                                     4                        8
Goodwill impairment                                 -                      (60 )
Other expense, net                                 (4 )                    (12 )
Income (loss) from continuing
operations before taxes             $             155        $          (1,459 )



                                                  Nine Months Ended
(Amounts in millions)                  December 28, 2012        December 30, 2011
Operating income (loss)             $              698         $          (1,251 )
Corporate G&A                                     (186 )                    (166 )
Interest expense                                  (147 )                    (129 )
Interest Income                                     14                        32
Goodwill impairment                                  -                    (2,745 )
Other income (expense), net                          1                        (1 )
Income (loss) from continuing
operations before taxes             $              380         $          (4,260 )

(3) Earnings before interest and taxes (EBIT) is a non-U.S. Generally Accepted Accounting Principle (GAAP) measure that provides useful information to investors regarding the Company's results of operations as it provides another measure of the Company's profitability, and is considered an important measure by financial analysts covering CSC and its peers. The Company's definition of such measure may differ from other companies. We define EBIT as revenue less costs of services, selling, general and administrative expenses, depreciation and amortization, goodwill impairment, restructuring costs, and other income (expense). EBIT margin is defined as EBIT as a percentage of revenue. A reconciliation of EBIT to net income from continuing operations is as follows:

                                                Quarter Ended
(Amounts in millions)              December 28, 2012       December 30, 2011
Earnings (loss) before
interest and taxes               $             208        $          (1,425 )
Interest expense                               (57 )                    (42 )
Interest income                                  4                        8
Taxes on income                                (32 )                     38
Net income (loss) from
continuing operations            $             123        $          (1,421 )

                                               Nine Months Ended
(Amounts in millions)               December 28, 2012        December 30, 2011
Earnings (loss) before
interest and taxes               $              513         $          (4,163 )
Interest expense                               (147 )                    (129 )
Interest income                                  14                        32
Taxes on income                                (106 )                      78
Net income (loss) from
continuing operations            $              274         $          (4,182 )

(4) Backlog represents total estimated contract value of predominantly long-term contracts, based on customer commitments that the Company believes to be firm. Backlog value is based on contract commitments, management's judgment and assumptions about volume of services, availability of customer funding and other factors. Backlog estimates for government contracts include both the funded and unfunded portions and all of the option periods. Backlog estimates are subject to change and may be affected by factors including modifications of contracts and foreign currency movements.

For NPS, announced award values for competitive indefinite delivery and indefinite quantity (IDIQ) awards represent the expected contract value at the time a task order is awarded under the contract. Announced values for non-competitive IDIQ awards represent management's estimate at the award date. Business awards for MSS are estimated at the time of contract signing based on then existing projections of service volumes and currency exchange rates, and include option years. BSS award values are based on firm commitments.

(5) DSO is calculated as total receivables at the fiscal period end divided by revenue-per-day. Revenue-per-day equals total revenues divided by the number of days in the fiscal period. Total receivables includes unbilled receivables but excludes income tax receivables and long-term receivables.

(6) Debt-to-total capitalization ratio is defined as total current and long-term debt divided by total debt and equity, including noncontrolling interest.

(7) Free cash flow is a non-GAAP measure and the Company's definition of such measure may differ from that of other companies. We define free cash flow as equal to the sum of (1) operating cash flows, (2) investing cash flows, excluding business acquisitions, dispositions and investments (including short-term investments and purchase or sale of available for sale securities) and (3) payments on capital leases and other long-term asset financings.

CSC's free cash flow measure does not distinguish operating cash flows from investing cash flows as they are required to be presented in accordance with GAAP, and should not be considered a substitute for operating and investing cash flows as determined in accordance with GAAP. Free cash flow is one of the factors CSC management uses in reviewing the overall performance of the business. Management compensates for the limitations of this non-GAAP measure by also reviewing the GAAP measures of operating, investing and financing cash flows as well as debt levels measured by the debt-to-total capitalization ratio.

A reconciliation of free cash flow to the most directly comparable GAAP financial measure is presented below:

                                                         Nine Months Ended
(Amounts in millions)                         December 28, 2012      December 30, 2011
Free cash flow                               $              457     $            (172 )
Net cash (provided by) used in investing                   (474 )               1,088
activities
Acquisitions, net of cash acquired                          (34 )                (368 )
Business dispositions                                       958                     -
Short-term investments                                        -                     3
Payments on capital leases and other                        171                   129
long-term asset financings
Net cash provided by operating activities    $            1,078     $             680
Net cash provided by (used in) investing     $              474     $          (1,088 )
activities
Net cash used in financing activities        $             (433 )   $            (471 )

Reportable Segments

CSC provides information technology (IT) and business process outsourcing, consulting and systems integration services and other professional services to its customers. The Company targets the delivery of these services within three broad service lines or sectors: North American Public Sector (NPS), Managed Services Sector (MSS), and Business Solutions and Services (BSS).

The Company's reportable segments in fiscal 2013 and 2012 are as follows:

• The NPS 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 MSS segment provides large-scale infrastructure and application outsourcing solutions offerings as well as mid-size services delivery to customers globally.

• The BSS segment provides industry specific consulting and systems integration services, business process outsourcing, and intellectual property-based software solutions.

Results of Operations

Revenues

Revenues for the NPS, MSS, and BSS segments for the quarter and nine months
ended December 28, 2012 and December 30, 2011 are as follows:
                                                 Quarter Ended
                                                                               Percent
(Amounts in millions)    December 28, 2012     December 30, 2011     Change     Change
NPS                     $           1,340     $           1,379     $  (39 )    (2.8 )%
MSS                                 1,620                 1,670        (50 )    (3.0 )
BSS                                   853                   663        190      28.7
Corporate                               3                     3          -         -
Subtotal                            3,816                 3,715        101       2.7
Eliminations                          (35 )                 (28 )       (7 )       -
Total Revenue           $           3,781     $           3,687     $   94       2.5  %



                                               Nine Months Ended
                                                                               Percent
(Amounts in millions)    December 28, 2012     December 30, 2011     Change     Change
NPS                     $           4,083     $           4,299     $ (216 )    (5.0 )%
MSS                                 4,838                 4,908        (70 )    (1.4 )
BSS                                 2,601                 2,410        191       7.9
Corporate                               9                     9          -         -
Subtotal                           11,531                11,626        (95 )    (0.8 )
Eliminations                          (97 )                 (99 )        2         -
Total Revenue           $          11,434     $          11,527     $  (93 )    (0.8 )%

The major factors affecting the percent change in revenues for the quarter and nine months ended December 28, 2012 are presented as follows:

                                                 Quarter Ended
                                             Approximate
                                              Impact of
                                              Currency      Net Internal
                            Acquisitions    Fluctuations       Growth        Total
NPS                               0.3 %            -            (3.1 )%     (2.8 )%
MSS                                 -           (0.2 )%         (2.8 )      (3.0 )
BSS                                 -           (0.7 )          29.4        28.7
Cumulative Net Percentage         0.1 %         (0.3 )%          2.7  %      2.5  %



                                               Nine Months Ended
                                             Approximate
                                              Impact of
                                              Currency      Net Internal
                            Acquisitions    Fluctuations       Growth        Total
NPS                               0.6 %            -            (5.6 )%     (5.0 )%
MSS                               1.0           (2.4 )%            -        (1.4 )
BSS                               2.8           (3.3 )           8.4         7.9
Cumulative Net Percentage         1.2 %         (1.7 )%         (0.3 )%     (0.8 )%

North American Public Sector

NPS segment revenues were derived from the following sources:
                                                  Quarter Ended
(Amounts in millions)                                                            Percent
                         December 28, 2012      December 30, 2011      Change     Change
Department of Defense   $               944    $               921    $   23       2.5  %
Civil Agencies                          337                    392       (55 )   (14.0 )
Other (1)                                59                     66        (7 )   (10.6 )
Total                   $             1,340    $             1,379    $  (39 )    (2.8 )%



                                                Nine Months Ended
(Amounts in millions)                                                            Percent
                         December 28, 2012      December 30, 2011      Change     Change
Department of Defense   $             2,803    $             2,901    $  (98 )    (3.4 )%
Civil Agencies                        1,107                  1,221      (114 )    (9.3 )
Other (1)                               173                    177        (4 )    (2.3 )
Total                   $             4,083    $             4,299    $ (216 )    (5.0 )%

(1) Other revenues consist of foreign, state and local government work as well as commercial contracts performed by the NPS segment.

NPS revenue decreased $39 million, or 2.8%, in the third quarter of fiscal 2013, and decreased $216 million, or 5.0%, in the first nine months of fiscal 2013, as compared to similar periods of fiscal 2012.

The third quarter revenue decrease was primarily driven by a $55 million decrease in Civil Agencies (Civil) revenue, partially offset by a $23 million increase in Department of Defense (DOD) revenue. The decrease in revenue from Civil contracts was due to reduced revenue on contracts primarily with the Department of Labor, NASA, and the Department of Commerce, which either concluded, were winding down, or had reduced scope. These decreases were partially offset by increased revenue on contracts with the Department of State, which ramped up in fiscal 2013, and the Department of

Homeland Security, which expanded in fiscal 2013. In addition, Civil revenue was adversely impacted by a $12 million adjustment that reduced revenue resulting from a termination for convenience on a contract with Department of Labor. The increase in revenue from DOD contracts was due to a favorable wage determination settlement of $18 million on a contract with the Air Force and a fiscal 2012 forward loss that reduced revenue by $16 million on an U.S. Air Force contract that did not repeat in fiscal 2013, partially offset by net scope decreases on existing contracts.

For the nine months ended December 28, 2012, the NPS revenue decline was due to revenue decreases on both DOD and Civil contracts. The nine month decrease in revenue from DOD contracts was due to revenue decreases on contracts primarily with the U.S. Air Force of $108 million and the U.S. Army of $58 million that either had concluded or were winding down, partially offset by a favorable wage settlement of $26 million on a contract with the Air Force and a fiscal 2012 adverse adjustment of $42 million resulting from a contract settlement with the U.S. Federal government, which did not repeat in fiscal 2013. The nine month decrease in Civil revenue was due to reduced revenue on contracts primarily with NASA, the Department of Labor, the Department of Commerce, and the Department of State, which either concluded, were winding down, or had reduced scope. These decreases were partially offset by increased revenue on certain other contracts with the Department of State which ramped up in fiscal 2013 and the Department of Homeland Security, which expanded in fiscal 2013. Included in the $114 million Civil revenue reduction is a $12 million adverse adjustment resulting from a contract settlement on a contract with Department of Labor. NPS' nine month year-over-year revenue trend benefited from $26 million of fiscal 2012 net adverse adjustments on certain contracts accounted for under the percentage of completion method, which did not repeat in fiscal 2013.

During the quarter and nine months ended December 28, 2012, NPS won new contracts of $0.7 billion and $2.7 billion, as compared to $0.8 billion and $4.8 billion in the comparable periods in the prior year, respectively.

NPS' revenue decreases continue to reflect the ongoing uncertainty in government budgets and the difficulties customers are facing in awarding new initiatives. Delays in award decisions continue to be the most significant issue in the industry, with delays ranging from nine to eighteen months on submitted proposals.

The U.S. government fiscal issues, and continued uncertainty regarding the timing and magnitude of U.S. government budget reductions, may reduce the U.S. . . .