COMPUTER SCIENCES CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited)

(In millions)

   Dec. 31, 2004   

   April 2, 2004   

ASSETS

  Cash and cash equivalents

$      753.6  

$      609.7  

  Receivables

3,618.2  

3,398.3  

  Prepaid expenses and other current assets

1,028.5  

618.7  

  Assets of operations held for sale

        782.1  

        552.4  

      Total current assets

     6,182.4  

     5,179.1  

  Property and equipment, net

2,317.7  

2,174.6  

  Outsourcing contract costs, net

1,198.2  

1,131.8  

  Software, net

451.3  

403.2  

  Excess of cost of businesses acquired over

     related net assets, net

2,432.3  

2,345.1  

  Other assets

        517.5  

        570.2  

      Total assets

$13,099.4  
======== 

$11,804.0  
======== 

LIABILITIES

  Short-term debt and current

    maturities of long-term debt

$      579.3  

$       60.2  

  Accounts payable

686.8  

797.4  

  Accrued payroll and related costs

617.9  

628.7  

  Other accrued expenses

1,246.7  

1,017.2  

  Deferred revenue

572.4  

334.0  

  Income taxes payable

450.6  

284.5  

  Liabilities of operations held for sale

        191.2  

        149.9  

      Total current liabilities

     4,344.9  

     3,271.9  

  Long-term debt, net

1,804.6  

2,306.4  

  Other long-term liabilities

745.4  

722.0  

STOCKHOLDERS' EQUITY

  Common stock issued, par value $1.00 per share

191.5  

188.3  

  Additional paid-in capital

1,660.3  

1,539.2  

  Earnings retained for use in business

3,996.3  

3,597.9  

  Accumulated other comprehensive income

387.0  

198.4  

  Less common stock in treasury

(19.3) 

(19.2) 

  Unearned restricted stock

        (11.3) 

            (.9) 

      Total stockholders' equity

     6,204.5  

     5,503.7  

      Total liabilities and stockholders' equity

$13,099.4  

$11,804.0  

======== 

======== 

See accompanying notes

2

COMPUTER SCIENCES CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited)

Note 1 - Basis of Presentation

Computer Sciences Corporation (CSC or the Company) has prepared the unaudited consolidated condensed financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles for the United States have been condensed or omitted pursuant to such rules and regulations. It is recommended that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended April 2, 2004. In the opinion of the Company, the unaudited consolidated condensed financial statements included herein reflect all adjustments necessary to present fairly the financial position, the results of operations and the cash flows for such interim periods. The results of operations for such interim period s are not necessarily indicative of the results for the full year. Certain reclassifications have been made to prior period condensed consolidated financial statements to conform to the current year presentation.

Note 2 - Earnings Per Share

Basic and diluted earnings per share are calculated as follows (in millions except per share amounts):

           Third Quarter Ended          

 Dec. 31, 2004 

  Jan. 2, 2004  

Income from continuing operations

$  134.0  

$  123.2  

Income from discontinued operations, net of tax

          23.5  

            5.2  

Net income

$  157.5  
========

128.4  
========

Common share information:

   Average common shares outstanding for basic EPS

190.080  

187.385  

   Dilutive effect of stock options

       2.749  

       1.579  

Shares for diluted EPS

192.829  
========

188.964  
========

Income from continuing operations

$   0.70  

$   0.66  

Income from discontinued operations, net of tax

         0.12  

         0.03  

   Basic EPS*

$   0.83  
========

$   0.69  
========

Income from continuing operations

$   0.69  

$   0.65  

Income from discontinued operations, net of tax

         0.12  

         0.03  

   Diluted EPS*

$   0.82  
========

$   0.68  
========

* Amounts may not add as a result of rounding.

4

Note 2 - Earnings Per Share (continued)

           Nine Months Ended          

 Dec. 31, 2004 

 Jan. 2, 2004 

Income from continuing operations

$  340.8  

$  308.9  

Income from discontinued operations, net of tax

          57.6  

          19.9  

Net income

    $  398.4  
======== 

    $  328.8  
======== 

Common share information:

   Average common shares outstanding for basic EPS

189.053  

187.151  

   Dilutive effect of stock options

       2.068  

       1.322  

Shares for diluted EPS

    191.121  
======== 

   188.473  
======== 

Income from continuing operations

$    1.80  

$    1.65  

Income from discontinued operations, net of tax

          0.30  

         0.11  

   Basic EPS*

$    2.11  
======== 

$    1.76  
======== 

Income from continuing operations

$    1.78  

$    1.64  

Income from discontinued operations, net of tax

          0.30  

         0.11  

   Diluted EPS*

$    2.08  
======== 

$    1.74  
======= 

* Amounts may not add as a result of rounding.

The computation of diluted EPS did not include stock options which were antidilutive, as their exercise price was greater than the average market price of the common stock of CSC during the periods presented. The numbers of such options were 3,114,525 and 8,933,581 for the nine months ended December 31, 2004 and January 2, 2004, respectively.

5

Note 3 - Discontinued Operations

On December 12, 2004, CSC entered into a definitive agreement to sell the international and other select operations of DynCorp to allow CSC's U.S. Federal segment to continue concentrating on its core competency of providing information technology, engineering and professional services to the U.S. federal government. As a result of this decision, the operating revenue and expense of those operations have been classified as discontinued operations under Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets." The sale is expected to close in February 2005.

The following discloses the results of the discontinued operations for the quarter and nine months ended December 31, 2004 and January 2, 2004 (in millions):

               Third Quarter Ended       

 Dec. 31, 2004 

  Jan. 2, 2004  

Revenue

$   474.9  

$   291.7   

Income before taxes

38.1  

8.5   

Net Income

23.5  

5.2   

                Nine Months Ended         

 Dec. 31, 2004 

  Jan. 2, 2004  

Revenue

$1,401.8  

$   829.4   

Income before taxes

93.6  

32.4   

Net income

57.6  

19.9   

The following is a summary of the assets and liabilities of the held for sale operations as of December 31, 2004 and April 2, 2004 (in millions):

Dec. 31, 2004

April 2, 2004

Total receivables, net

$   426.4  

$   218.0  

Prepaid expenses and other assets

41.2  

22.5  

Goodwill and certain intangibles

303.0  

307.6  

Investments

.7  

.6  

Property, plant and equipment

         10.8  

           3.7  

  Total Assets

$   782.1  
========

$   552.4  
========

Accounts payable

$       2.4  

$     13.0  

Accrued expenses

154.7  

101.0  

Deferred income taxes

         34.1  

         35.9  

  Total Liabilities

$   191.2  
========

$   149.9  
========

6

Note 4 - Stock Incentive Plans

On December 31, 2004, the Company had eight stock incentive plans which authorized the issuance of stock options, restricted stock and other stock-based incentives to employees. These plans are described more fully in Note 11 of the Company's 2004 Annual Report filed on Form 10-K. The Company accounts for the plans under the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. In accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure," the following pro forma net income and earnings per share information is presented as if the Company accounted for stock-based compensation awarded under the stock incentive plans using the fair value based method. Under the fair value based method, the estimated fair value of stock incentive awards is charged against income over the vesting period.

         Third Quarter Ended         

 Dec. 31, 2004 

  Jan. 2, 2004  

Net income, as reported

$  157.5  

$  128.4  

Add: Stock-based employee compensation expense included in

  reported net income, net of related tax effects

1.5  

.9  

Deduct: Total stock-based employee compensation expense

  determined under fair value based method for all awards,

  net of related tax effects

         (8.8) 

          (9.1) 

Pro forma net income

$  150.2  
========

$  120.2  
========

Earnings per share:

     Basic - as reported

$    0.83  

$    0.69  

     Basic - pro forma

0.79  

0.64  

     Diluted - as reported

0.82  

0.68  

     Diluted - pro forma

0.78  

0.64  

          Nine Months Ended          

 Dec. 31, 2004 

  Jan. 2, 2004  

Net income, as reported

$  398.4  

$  328.8  

Add: Stock-based employee compensation expense included in

  reported net income, net of related tax effects

4.6  

4.0  

Deduct: Total stock-based employee compensation expense

  determined under fair value based method for all awards,

  net of related tax effects

       (27.2) 

       (31.3) 

Pro forma net income

$  375.8  
========

$  301.5  
========

Earnings per share:

     Basic - as reported

$    2.11  

$    1.76  

     Basic - pro forma

1.99  

1.61  

     Diluted - as reported

2.08  

1.74  

     Diluted - pro forma

1.97  

1.60  

7

Note 5 - Depreciation and Amortization

Included in the consolidated condensed balance sheets are the following accumulated depreciation and amortization amounts (in millions):

   Dec. 31, 2004   

   April 2, 2004   

Property and equipment

$3,291.8  

$2,850.9  

Excess of cost of businesses acquired over

   related net assets (goodwill)

345.2  

329.0  

Note 6 - Dividends

No dividends were paid during the periods presented. At December 31, 2004 and April 2, 2004, there were 191,473,898 and 188,294,022 shares, respectively, of $1.00 par value common stock issued. The Company had 454,604 and 452,257 shares of treasury stock as of December 31, 2004 and April 2, 2004.

Note 7 - Cash Flows

Cash payments for interest on indebtedness were $125.2 million and $122.5 million for the nine months ended December 31, 2004 and January 2, 2004, respectively. Net cash payments for taxes on income were $37.3 million and $32.0 million for the nine months ended December 31, 2004 and January 2, 2004, respectively.

Note 8 - Comprehensive Income

The components of comprehensive income, net of tax, are as follows (in millions):

         Third Quarter Ended         

 Dec. 31, 2004 

  Jan. 2, 2004  

Net income

$157.5   

$128.4   

Foreign currency translation adjustment

187.9   

150.4   

Unrealized gain (loss) on available for sale securities

           (.1)  

          (.1)  

Comprehensive income

$345.3   
========

$278.7   
========

          Nine Months Ended          

 Dec. 31, 2004 

  Jan. 2, 2004  

Net income

$398.4   

$328.8   

Foreign currency translation adjustment

188.8   

297.6   

Unrealized gain (loss) on available for sale securities

          (.2)  

          (.5)  

Comprehensive income

$587.0   
========

$625.9   
========

8

Note 8 - Comprehensive Income (continued)

Accumulated other comprehensive income presented on the accompanying consolidated condensed balance sheets consists of accumulated foreign currency translation adjustments, minimum pension liability adjustments, and net unrealized gain (loss) on available for sale securities.

Note 9 - Segment Information

CSC provides information technology outsourcing, consulting and systems integration services and other professional services. Based on the criteria of SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information," CSC aggregates operating segments into two reportable segments, U.S. Federal and Global Commercial. The U.S. Federal 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. Information on reportable segments is as follows (in millions):

Global

U.S.

Commercial

   Federal   

Corporate

    Total    

Third Quarter Ended Dec. 31, 2004

    Revenues

$2,373.0  

$1,143.8  

$3,516.8  

    Earnings (loss) before special items,

      interest, taxes and results from

      discontinued operations

169.5  

65.8  

$ (7.7) 

227.6  

Third Quarter Ended January 2, 2004

    Revenues

2,136.7  

1,192.8  

3,329.5  

    Earnings (loss) before special items,

      interest, taxes and results from

      discontinued operations

136.7  

97.3  

(8.3) 

225.7  

Global

U.S.

Commercial

   Federal   

Corporate

    Total    

Nine Months Ended Dec. 31, 2004

    Revenues

$6,790.7  

$3,470.1  

$10,260.8  

    Earnings (loss) before special items,

      interest, taxes and results from

      discontinued operations

393.8  

227.6  

$(20.7) 

600.7  

Nine Months Ended January 2, 2004

    Revenues

6,231.3  

3,706.4  

9,937.7  

    Earnings (loss) before special items,

      interest, taxes and results from

      discontinued operations

338.0  

270.7  

(23.8) 

584.9  

9

Note 10 - Goodwill and Other Intangible Assets

SFAS No. 142, "Goodwill and Other Intangible Assets," requires the Company to validate the carrying value of goodwill at least annually or as circumstances require. Goodwill and other purchased intangible assets are included in the identifiable assets of the segment to which they have been assigned. The annual validation test for all reporting units was performed during the second quarter ended October 1, 2004, which supported the goodwill balance.

A summary of the changes in the carrying amount of goodwill by segment for the nine months ended December 31, 2004 is as follows (in millions):

Global

U.S.

  Commercial  

      Federal      

        Total        

Balance as of April 2, 2004

$1,806.1  

$   539.0  

$2,345.1  

Additions

1.4  

10.9  

12.3  

Dispositions

(6.3) 

(6.3) 

Foreign currency translation

         81.2  

         81.2  

Balance as of December 31, 2004

$1,882.4  
========

$   549.9  
========

$2,432.3  
========

The Global Commercial additions to goodwill relate to an earn out payment associated with an acquisition made in Europe and dispositions relate to divestments of small non-core businesses in Europe and Australia. Additions to U.S. Federal goodwill during the nine months ended December 31, 2004 relate to the purchase of a minority share in a joint venture. The foreign currency translation amount relates to the impact of foreign currency adjustments in accordance with SFAS No. 52, "Foreign Currency Translation." The U.S. Federal segment goodwill balance as of April 2, 2004 has been restated to account for $259.7 million in goodwill that was reclassed to assets held for sale as part of the discontinued operations summarized in Note 3.

10

Note 10 - Goodwill and Other Intangible Assets (continued)

A summary of amortizable intangible assets as of December 31, 2004 and April 2, 2004 is as follows:

                                     December 31, 2004                                     

Gross

Accumulated

 Carrying Value 

   Amortization   

            Net            

Software

$1,111.4  

$   660.1  

$   451.3  

Outsourcing contract costs

2,123.3  

925.1  

1,198.2  

Other intangible assets

        170.4  

          79.1  

          91.3  

Total intangible assets

$3,405.1  
========

$1,664.3  
========

$1,740.8  
========

                                          April 2, 2004                                          

Gross

Accumulated

 Carrying Value 

   Amortization