Dec 3 - Standard & Poor's Ratings Services said today that its corporate
credit and other ratings on Computer Sciences Corp. (CSC) (BBB/Negative/A-2)
remain unchanged following the company's recent announcement that it has entered
into an agreement to sell its credit services business assets and operations to
Equifax Inc. (BBB+/Stable/A-2) for approximately $1 billion. The after-tax
proceeds from the sale of the business will be approximately $750 million to
$800 million. CSC intends to use $300 million to $400 million to repurchase
shares, contribute $300 million to $400 million to its pension plans, and apply
the remainder to general corporate purposes. CSC's credit reporting business
contributed about $230 million of revenue and $100 million of operating income.
Our ratings and 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 stabilize the outlook 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.