TEXT-S&P: Computer Sciences Corp ratings unaffected by NHS deal

Thu Sep 6, 2012 11:35am EDT

Sept 6 - Standard & Poor's Ratings Services said today that Computer
Sciences Corp.'s (BBB/Negative/A-2) recent announcement that it has
entered into a binding interim agreement with the U.K. National Health Service
(NHS) will not currently affect our ratings or outlook on the company.

The interim agreement solidifies CSC's ongoing relationship with the NHS, and 
removes a significant component of operational and contract uncertainty. 
However, the negative outlook continues to reflect currently weak EBITDA 
levels, with limited realized benefits from recently announced cost-reduction 
actions. Additional concerns include the potential impact of incremental or 
prolonged weakness in European economic conditions and CSC's federal sector. 
Nevertheless, we could revise the outlook to stable within the next couple of 
quarters if CSC demonstrates continued margin improvements and progresses 
toward its $1 billion cost-reduction goal, while maintaining leverage at or 
below 2.5x.

The ratings on CSC reflect the company's "satisfactory" business profile, 
supported by its diversified business and geographic mix and expected 
organizational and cost improvements. We believe CSC will maintain an 
"intermediate" financial risk profile, incorporating solidly positive free 
operating cash flow, "adequate" liquidity, and expected operating margin 
improvements.