CSC to recognize net special credit.EL SEGUNDO El Segundo (ĕl sēgŭn`dō), industrial city (1990 pop. 15,223), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1917. Its products include navigation and computer systems, aircraft parts, office machines, telephone apparatus, and , Calif.--(BUSINESS WIRE)--June 23, 1997--Computer Sciences Corp. (NYSE NYSE See: New York Stock Exchange :CSC (Card Security Code) A three- or four-digit number printed on the back of credit cards for security purposes. Called "Card Verification Value" (CVV) by Visa, "Card Validation Code" (CVC) by MasterCard and "Card Identification (CID) by American Express and Discover, ) expects to recognize a net special credit of $2 million, or 2 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , in the quarter ending June 27, 1997, it was announced by Van B. Honeycutt, CSC's chief executive officer. The net credit will result from a tax benefit, estimated at $135 million, and an after-tax special charge, estimated at $133 million, both of which are related to recent developments at an affiliated joint venture. "These developments will significantly benefit CSC's cash flow for the current year and beyond," Honeycutt said, "and will add substantially to CSC's financial strength." The joint venture, known as CSC Enterprises, was formed in 1990 to operate CSC's credit services operations and to carry out other business strategies through acquisition and investment. The original members of the venture included affiliates of CSC, affiliates of Equifax Inc., and Merel Corp. During the current fiscal quarter, the Equifax affiliates withdrew from CSC Enterprises. As a result of these withdrawals, CSC Enterprises took actions with respect to its remaining assets that will cause CSC to recognize an increase in the tax basis of certain of these assets. As required by Financial Accounting Standard No. 109, this tax basis increase will result in a deferred tax asset, estimated at $135 million, and a corresponding reduction of the company's provision for income taxes during the current fiscal quarter. Through related income tax deductions Tax deduction An expense that a taxpayer is allowed to deduct from taxable income. tax deduction See deduction. , the $135 million should be realized as cash savings over the next three to five years. In connection with these developments, CSC Enterprises reviewed its operations, its market opportunities and the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of its assets. Based on this review, plans were initiated during the current fiscal quarter to eliminate certain offerings and write down assets, primarily within its telecommunications operations. "When we completed this review, it became clear that some of our telecommunications software, products and services required greater levels of future investment than we were prepared to make," said Leon J. Level, CSC's chief financial officer. "Consequently, we decided it would be prudent to stop offering them." As a result of these plans, the company, through CSC Enterprises, will recognize an after-tax special charge, estimated at $133 million, during the current fiscal quarter. This special charge, which is principally non-cash, includes goodwill of $35 million, contract termination Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). costs of $29 million, deferred contract costs and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. of $24 million, telecommunications software and accruals of $21 million, telecommunications property, equipment and intangible assets of $14 million and other costs of $10 million. CSC Enterprises is currently composed of affiliates of CSC, one of which is the managing general partner, and Merel. The joint venture, the tax credit and the special charge are described in footnotes to CSC's financial statements for the year ended March 28, 1997, which were filed with the Securities and Exchange Commission today. CSC had $5.6 billion in revenues for the 12 months ended March 28, 1997. The company has headquarters in El Segundo, and has nearly 44,000 employees in more than 600 offices worldwide providing clients with management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects , information systems consulting and integration, and operations support. CONTACT: CSC Bruce Plowman or Spencer Davis For a former Governor of Saint Helena, see . Spencer David Nelson Davis (born 17 July, 1939 in South Wales, UK) is a musician and multi-instrumentalist, and the founder of the 1960s rock band, the Spencer Davis Group. 310/615-0311 |
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