Welcome to the CSC 2009 first quarter earnings conference call. Today's call is being recorded, and for opening remarks and introduction, I would like to turn the call over to Mr. Bill Lackey, Director of Investor Relations. Please go ahead, sir.

Thank you very much, operator, and good afternoon everyone. Welcome to CSC's first quarter of fiscal year 2009 earnings conference call. I know you have had a chance to review our financial results issued earlier this afternoon. Mike Laphen, Chairman and Chief Executive Officer will begin with some opening remarks, and Don DeBuck, interim CFO will review the quarter's financials. As usual, this call is being webcast live at csc.com and we also welcome those joining us via that process. Additionally, we have provided a slide presentation on our website, which we will refer to during this discussion. Before we begin, please understand as shown on slide number 2, some of the matters discussed on this constitute forward-looking statements within the meaning of the Private Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties and the actual results of the company of the company may differ materially from results expressed or implied by the forward-looking statements. A more complete expression of these risks and uncertainties is contained in the section titled “Risk Factors” of CSC’s Form 10-K for the period ending March 28, 2008. Also on today’s call, we will reference certain non-GAAP financial measures. Reconciliation of these non-GAAP financial measures are provided in the tables attached to the earnings press release and will be posted on the investor relations section of CSCs website. The non-GAAP financial measures referred to during this conference call are not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Finally, we assume no obligation to update the information presented on this conference call. And now, if you would please turn to slide number 4, I am happy to turn the call over to Mike Laphen.

Thank you Bill, and good afternoon everyone. I am pleased to again have the opportunity to speak with you about CSCs current business position, as well as our strong first quarter financial results. Highlights for the quarter include revenue of $4.4 billion, up nearly 16%, with gains in all three of our lines of business and across all geographies. Our overall results include solid financial performance, as well as record new business profits. Much easier to be done, but we are pleased with the performance, particularly given how well it is balanced between each of our alliance of business, verticals and geographies. Our earnings per share of $0.79 is at the high end of our guidance, which no special items during the quarter. Free cash flow performance was on target with an approximate $300 million improvement in Q1 year-over-year. We have record signings for the quarter, a total of $5.4 billion comprised of $1.2 billion in our Business Solutions & Services business, our fastest growing business, $2.9 billion within Global Outsourcing and $1.2 billion in our North American Public Sector. Going forward the pipeline for our lines of business are robust. The opportunity set for NPS over the next 20 months is $43 billion with about $20 billion scheduled for award during the balance of this fiscal year. Of these opportunities is some meaningful number coming from the six high growth segments we have identified within the public sector market. The new business pipeline for Global Outsourcing is approximately $9 billion of qualified opportunities including about $6 billion within the midsize market. Overall we are not experiencing significant impacts on our short-term projects in the current economic environment. We are however, somewhat cautious and are keeping a watchful eye on discretionary spending. With the benefits of our diversified portfolio and…

Thank you, Mike and thanks everyone for joining us today for our fiscal 2009, first quarter conference cal and I have to ask you all to turn to slide 11. Financial highlights for the quarter include, revenue growth of 15.6% as reported, above our previous guidance, and 12% in constant currency. Operating income of $282 million. Earnings per share of $0.79, up 30% compared to the same period last year on an as-reported basis. And a free cash outflow of $329 million, an improvement of $332 million compared to last year. We did not record any special charges during the first quarter of fiscal 2009. So my comments today will be focused on as-reported figures. For reference, we reported $49 million in special charges during the first quarter last year or $0.19 per share. These charges included approximately $27 million related to restructuring, and $22 million related to the retirement of the Company's former Chairman and CEO. With that, let us move on to the next slide and focus first on revenues. Our revenue split about 60/40, US versus international. Given our expanded international presence, we got the benefit of some favorable tailwinds on our revenue performance of about 3.6 percentage points. We experienced growth across each geographic region and line of business. Revenue in the Americas was up about 14%, with EMEA up nearly 17%, and Asia and Australia, both up over 20%. Let us move to the next slide and discuss revenue as it relates to our three lines of business. Our North American Public Sector, or NPS, generated revenues of $1.5 billion, resulting in growth of 5% compared to the same period last year. The increment was primarily driven by growth on existing program for our defense related customers. Revenues from civil agencies declined as increased tasking,…

Thank you and operator we are ready for calls now, questions. I would like to again request that the questions be limited to no more than one part, with one short follow up. So that we can ensure that we get to all those people who are waiting to ask questions. So operator we are ready for the first question now.

(Operator Instructions)

Hi, operator, ready for the first question?

And we will go first to Bryan Keane with Credit Suisse.

Hi, good afternoon. Don, operating margins were down a little bit year-over-year, do you still expect operating margins to be up, I think 25 to 50 basis points for the full year?

We do. Absolutely.

And how will you make that up, because it sounds like the startup costs in 2Q are going to drag that down and if I look at 2Q margin, it almost could be again below 2Q of the past year?

Bryan, I tried to give some profile on that. As I said in our Global Outsourcing business, we have – that has traditionally had improving margins as you come through the fiscal year and a key element of that is, major items like these major enterprise software agreements we have, that are in essence are fixed costs for the year and so as a percentage of revenue with an increasing revenue throughout the year, they are a smaller component of that cost. And therefore that is one of the elements that helped come through with improved margins. And then we are just continually on working cost actions constantly, as you know that business tends to have a year-on-year price improvements, been into it. So it is always a matter of continuing to look for productivity improvement measures, whether they be labor or other related.

Okay. And then just finally, what is the risk of revenue EPS and free cash flow if delays continue with the implementation of Lorenzo. We are hearing that the Care Records Service product is having some issues?

The revenue recognition on NHS is its quite complex and it is more of a function of hospitals and trusts that accept the product. Though to the certain extent if there is slipped in that that may have an effect. Mike?

I would just add Don that, there is a lot of different working parts here on NHS Bryan. We have go continued work on the legacy products that we were working on and there is also a lot of other service activities going on. So, our expectation at this point is that the go-live or occur by the end of this month. Obviously we cannot guarantee that but that is what everybody's anticipation is at this point of time. So, if that does in fact happen as we expect to hope it will then, we think we are still on good shape with our revenue projections.

And based on all of the factors we know, we are very comfortable with our cash flow projections on that program as well.

Okay so the Care Records Service issue with Lorenzo does not sound like you overly worried about that going forward?

Well a bit based on the scale, but I am always worried about that. I do not want to that, but it has my utmost attention. But, we have been in testing for two months with the earlier adopters and we are ringing up the system and now through the final stages of testing, but we were pretty hopeful and expect that we get through that this month.

Okay thanks a lot.

Next question please operator.

Our next question come from George Price with Stifel Nicolaus.

Hi thanks very much. First on the -- I wanted to just circle back on the something you mentioned about demand, the tone on the discretionary services, consulting services. It seemed a little qualified when you mentioned that you are starting to see some impact on the discretionary spending in financial services, can you give us a little more detail there may be when you started to see that impact what type of client, generally we are talking about, what type of specific work, is it project based, consulting, does it add on to outsourcing deals. Any color there would be great.

Yeah well its project based and it is consulting. I would say both in our some of our offshore work with CSC India, as well as some of our consulting business. And I would say, it really has just started the service in the last month or so or six week, something like that. And its not a stopping of projects, just its more of a delay and as I said at this point its been modest and you might hear some mixed signals here, but we are just, I think like everybody else in the industry, we are just being cautious about what we are projecting on a go-forward basis here, but so far so good.

Any other signals or any other verticals there is been some turmoil on the healthcare side particularly on the payer side or may be in terms of retail, any signs there that might be a little worrisome.

No our healthcare business has been doing quiet well and continues to project a good pipeline and a good forward revenue forecast. Retail we do not have great exposure to. So, we probably see last end of that and may be some other providers.

Okay. Last question just on the tax rate. Don, tax rate was considerably lower I think than expected going into the quarter, did you with tax rate, I think you said that that tax rate was known when you gave the guidance. I just wanted to confirm that. And if there has been any change to the -- you were saying the upper 30% range. But if there is effectively any change, versus what you expected last quarter for the full year tax rate, is it moving down as a result of the magnitude of lower tax rate in the quarter?

No. Certain of these matters like these accounting method changes are in essence can be effective at a point that you file for them. And so there are so many things that we certainly knew heading into the fiscal year when we were giving the guidance. There is other matters that we expect to resolve with some of the local, like for example some of the state authority issues cannot necessarily predict which quarter this may happen until, but we sort of took that into account into the full year rate. So that rate is going to move around as we settle out from these positions. As you know, one of the issues we have with our restatement was the number of open tax years that we have had and we are working hard to resolve many of those matters. So we are on track with our total year rate for that, and again Q1 gets the benefit of some of these resolutions and Q2 is going to be a high, obviously in comparison to the Q1, but we are still tracking to the total year guidance number.

But, just to be clear, coming into the quarter, how did the tax rate perform versus your expected, what you gave in the guidance for EPS.

We probably got a little bit of benefit out of that just in terms of the timing.

Can you quantify that?

No. I would say we just got some benefit out of it. But I cannot give you the time. I cannot give you the magnitude.

Okay, all right. Thank you.

Next question please, operator.

And we will go next to Adam Frisch with UBS Adam Frisch – UBS: Thanks. Good afternoon. First of all nice job on the presentation. The incremental data is very helpful. If we can just look at bookings, trends in a different light for a second in terms of what you are expecting in the next quarter or two. Obviously this was a big quarter, did get some push from last quarter or pull from the next few quarters are you expecting continued momentum in the next or in the near term?

Well we had some slip from the fourth quarter into the first quarter this year. So obviously that was little bit uptick. I do not want to get into predicting the bookings quarter-by-quarter, because we just get in these situation where some of these things are slipping right. And I would say Q2 is difficult to predict because we have a number of things happenings in September, which could fall into Q2 or Q3. I would say for the full fiscal what we are targeting is $17 billion to $19 billion in overall bookings. So that I think that could help you give a little bit of flavor of what we are anticipating.

17 to 19, okay. And the first time you are guiding for 2Q EPS but it is a little bit below the Street. Your full year is obviously unchanged aside from the precedent of prior year seasonality and patterns. Why do we feel comfortable with the back half ramp, especially given some of the uncertainty in discretionary spending and continued resolution of the government side and things like that?

Well I think the continued resolution on the government side, traditionally when we have been through this tends to -- you get some issues with there is some pent-up issues that ends up, for our experience tends to always get caught up. There are some issues at times with ODCs that get towards year end that you wouldn't necessarily have when you get some of those things, that those are often don’t bring them an awful lot of margin with them. And I think with respect to the comments on the discretionary spend, Mike commented that in the last four to six weeks we have seen some of those things and some things may have shifted to the right. But the amount of some that discretionary spend as a percentages of our total revenue versus what we see today, we do not see that impacting our guidance. We remain committed and reaffirm the guidance with the year.

The only other thing I would add[Adam, is that the revenue growth quarter over quarter, is a pretty consistent number. S its not like we have a big hockey stick in the revenue side on the ongoing quarters and we are about where would expect to be at this point in time for the first quarter and first half. As you well know, we always have a more productive, from a profitability standpoint second half over first half and all the signals at this point is that we are on target for that. Adam Frisch – UBS: Okay great. If I could just sneak in, two house keeping questions, one what was your organic growth in the quarter and two are you planning on updating the revenue and operating income? Do you have a new format, for each quarter that comes out, or you are going to plan for all every quarter in '08, so we can update our models little bit more easily?

We will do that as we come through the quarters. Adam Frisch – UBS: Okay. And then your organic growth rate?

The organic growth rate, if we take out the effect of the currency of our 15.6%, we would say that the currency impact was the 3.6%. The acquired growth is about 5.5%. So the net organic would then be about 6.5%. Adam Frisch – UBS: Great, thanks so much

Okay, next question please operator?

We will go next to Rod Bourgeois with Bernstein.

Hi guys, I am just trying to understand the big picture on how things are progressing for the year. With the margins down year-over-year and you cited a contract startup issue. I am trying to reconcile that with the argument that you are on track for the year. I guess I just have not heard the offsetting positive that is offsetting the contract startup issue to allow you to be on track for the year. Or maybe you were already expecting the contract startup issue. So if you can clarify how we are on track for the year, but yet you had some issues with margins and contract startup things year-over-year, as the year has started. Can you clarify what is happening on that front?

Yeah. Well the contract startup, number one is not a particularly large number. We are reporting it out and we have already put the corrective actions and replacing the number one to correct the problem associated with the startup, but that has been not as we expected. We would be through that shortly. But we have also taken into consideration cost reductions and expense reductions that will be taken to offset that. So, that we still have the numbers that we are planning to hit.

Rod, I would also point out that given the greater granularity we are now giving you in our presentation, the magnitude of certain numbers that before were not be material as to comment on, we are now having to point out to you some of those items.

Yeah. It is a good point. Can you – so how big was the contract startup issue and can you define what a contract startup issue is or did you just.

Well, we are not getting into the specifics of the magnitude of it. But Rod as I think you well know we have a profile and this was disclosed in our basis for accounting, that we have certain items that we will defer to the balance sheet to the extent that they are protected by contractual coverage items. But if we overrun and there is no contractual coverage then we are going to expense that and you have got that kind of situation kind of going on here.

So in this particular case Rod it was a startup and it is a transition from us taking over the activities from the client and that transition is taking a bit longer than we had anticipated with this.. From our perspective it is not a big deal to have from time to time on a startup, but it impacted the numbers this period.

Got it. And you are offsetting that with what you said taking down cost and expenses on that particular contract?

Well on that contract there well as other…

Okay.

Other production cost.

Okay and then a couple of things on the cash flow on the cash flow trajectory front. Do you have back-end loaded milestones on the NHS contract? I am assuming you do but probably not to the same extent as you had in past years. And I wanted to test the accuracy of that as something…?

I think that is not the fair statement the way you have said it. I mean there is lots of those issues on NHS as the milestones comes through that and the pattern of that is such that the fourth quarter has some of those. That is just the way the program is [calendared] for that. But I agree with your comments that is not the magnitude of initiative we had whatever was a year or two years ago.

In other words you could argue that the next couple of months with the testing process underway right now, maybe more critical in terms of milestones what you are going to be facing in the month of March, in this fiscal year?

Its very important for us to get this offer up then loaded as Mike has said we are not going do it unless there is, we are through the clinical safety issues. We are very highly energized to have success on this program and get that going.

I got it and then what you are targeting in terms of DSO reductions through the you are targeting a reduction, but I was wondering if you could just mention how big that reduction target is?

Rod I think we talked in terms of the Investor Day about sort of four to five days.

Okay.

For that.

Okay and that is already in your guidance for the cash flow for the year.

Okay great. Thanks guys.

Next question please operator.

And our next question comes from Eric Boyer with Wachovia.

Thanks. Could you just comment on whether or not you are seeing any signs of softness within Europe?

Europe has actually been pretty good for us, we have had good utilization in our Business Solutions and Services sector line of business and the Outsourcing has been quiet active in Europe as well. So Europe has been pretty good for us.

How about as far as application development outsourcing?

That is active, there is a considerable amount of offshore activity going on that. So from that perspective we utilize both CSC India when that is appropriate, as well as GOS when it is applicable.

How about then, do you have any update on how the NHS is going to handle the South region with Logisys [discussion]?

No, we would have to parse them, as I said my expectation has been that they will parse that out, not necessarily parse force out but make both ourselves and BT available to as alternatives to the southern region. But again I think you are better off raising that question with the NHS at this point of time until we have more visibility.

Okay and just following the federal business bit again. Are you planning for slowdown I guess in that business line just due to the upcoming elections and the change in the administration that is going to happen here in your fiscal year.

I think we are still from the rolling forecast, we are getting we are still expecting 6% to 8% growth in that area. So that is what in there right now and those guys have their ears pretty close to the ground. So, and I think so far we are going to stick with that.

All right. Thanks a lot.

Next question please, operator.

Our next question comes from Tien-Tsin Huang at JPMorgan.

Hi, this is David Cohen for Tien-Tsin. Would you talk a little bit about the M&A pipeline? Any thoughts you have around future acquisitions?

We have said that acquisitions will be part of our growth strategy. We are not going to talk about any specific ones. What we have said publicly is that we would be -- our priorities would be industry specific plays, particularly those with intellectual property that we could exploit and turn into a business solutions or BPO plays in specific industries. So, we are always out there looking and seeing what is available and then the other would be some possible geographic expansion.

And on the geographic expansion, can you talk about the geographies that are important? Is it just India, or it is more than India?

Well, no, it is more than India. We just said that we bought the minority interest of a Malaysian subsidiary. So we just completed that piece. Eastern Europe continues to be a target for opportunity for us there and Latin America will probably also be a target.

And are you where you want to be in terms of your India based workforce?

Well, but always wanted to be bigger, but we do not see the need to make an acquisition there.

Great. And then just quickly in the competitive landscape as you have gone after the mid-size deals, has there been any shift in the competitive landscape for Outsourcing, given the slightly different market that you are pursuing?

From our standpoint it has been a significant shift, as I spoke previously we have shifted our sales and marketing approach to accommodate the needs of that specific market and we have adjusted our solutions segment into a more standardized set, that is economical and feasible for that market. So from that standpoint we have made a lot of changes. From the competitive standpoint we have seen more players there then we would in the mega deals, but we seem to be wining our fair share at this point in time, so.

Okay thank you.

The next question please operator.

Our next question comes from Julio Quinteros with Goldman Sachs.

Hi this is actually [Vincent Lansing] for Julio. I am just going back to the 6% to 8% revenue growth expected for this year I know that. I think you mentioned that you are still expecting 6% to 8% that’s were 40 federal business how about the, in terms of growth expectations for the other two segments. How should we think about the composition between the Business Solution segment and the Global Outsourcing segment?

Well we expect the Outsourcing business to grow in the 5% to 6% range and we expect the Business solutions to grow in the mid teens.

Not yet and then just secondly could you provide a little bit more color and may be discuss a little bit more about the progress that you are making in the small-medium size market?

The midsize market?

Yeah.

With respect to the Outsourcing business?

Right.

Yeah I think that is a -- I will let Mike take that. I think that is going quite well for us with respective to the pipeline that we are seeing on that, as well as our ability to on that.

May be just in terms of percentage of your overall pipeline and then maybe on revenue.

I think I mentioned that overall Outsourcing pipeline was $9 billion and that the midsize was $6 billion of that $9 billion.

That is $6 million of $9 million. Okay that is helpful. Thanks a lot.

Operator we have time for one more question please.

And we will take our final question from George Price of Stifel Nicolaus.

Thanks for letting me ask one more and first of all just wanted to clarify one thing Don on the 25 to 50 bips of improvement in the operating margin, just to clarify is that operating margin, a operating profit by your definition as a percent of revenue or bottom line EBIT.

No it is consistent with the operating income discussion as we outlined at the Investor Day. So it is the operating income.

Excluding corporate overheads?

Which excludes corporate G&A.

Okay, by virtue of the corporate G&A increase this quarter in terms of year-over-year and I guess what should we expect for that. In terms of how should we expect that to move as a percent of revenue?

This quarter its increased a little bit before our stock option expenses, the so called FAS-123R expense, for the corporate piece for that there are certain requirements of certain options that are granted and if you are at retirement eligible, you have to expense a lot of that right away. You can sometimes get some of those phenomena effects in there. As well as we have indicated we are making investments in global sales and marketing in our branding campaign and those are higher in the first quarter as well. And also we have the relocation of the corporate headquarters. And so if we are to the extent we have severance related packages we have to accrue those during the performance period, as well we have the relocation efforts and we have the knowledge transfer where we may in fact have people doubled up as they execute the knowledge transfer. So the corporate relocation is adding some corporate G&A type cost as well.

Lastly, can you give us an update on maybe on the Chrysler deal, given the turmoil that we are seeing in the automotive world, particularly with Chrysler?

No, it is not appropriate for me to speak to any specific transaction and I am booked to the contract specifically for this, but I am sure I am barred from talking about it without their consent, so.

Is that the contract that we are talking about in terms of startup costs and transition being extended and that sort of thing?

No, it is not.

Okay. Thank you.

Okay. Well, let me thank everyone for participating. I hope our presentation was more enlightening and illuminating to you, and hopefully you have again a better understanding of CSC and our business, with our opportunity ahead of us. So, thank you for participating and we look forward to talking to you next quarter.

And again, that does conclude today's conference. We appreciate your participation and you may now disconnect.