CSC Announces Settlement of its Claims with U.S. Government; Estimates One-Time Charge of $1.15 per Share

CSC CSC announced it has reached an agreement in principle with the United States Government in its dispute of contract claims asserted under the Contract Disputes Act of 1978. The case has been pending before the Armed Services Board of Contract Appeals. On November 19, 2010 the Government and the Company entered into a formal agreement to stay the claims litigation and engage in a non-binding alternate dispute resolution process to resolve all outstanding claims and other issues associated with the contract. Under the terms of the agreement in principle, the Company would receive a lump sum upfront cash payment of $277M and a five-year contract extension (four base years plus one option year) with an estimated value of $1B to continue to support and expand the capabilities of the systems covered by the original contract scheduled to expire in December 2011. The Company currently anticipates that the settlement will result in a non-cash pre-tax charge to earnings in its second fiscal quarter of approximately $250M reducing EPS by an estimated $1.15.