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Moody's Investors Services

Global Credit Research

Rating Action

1 JUN 2006

 

Rating Action: CA, Inc.

 

MOODY'S REVISES CA, INC.'S OUTLOOK TO NEGATIVE FROM POSITIVE

 

Approximately $1.8 Billion Debt Affected

 

New York, June 01, 2006 -- Moody's Investors Service has affirmed the Ba1 senior unsecured rating for CA, Inc. and has revised its rating outlook to negative from positive. The outlook revision to negative is prompted by the company's May 30th announcement that it will delay the release of its fourth quarter and fiscal year ended March 31, 2006 earnings report and has yet to conclude its review of forecasting, processing, and monitoring of sales commissions. The revision reflects challenges the company has to implement effective financial controls, the recent departure of key personnel, including the company's chief software architect, financial officer, and operating officer, as well as subdued billings performance, which the company announced on May 30 declined slightly in fiscal 2006, excluding acquisition related products and accelerated customer payments.

 

The company's Ba1 senior unsecured rating reflects its portfolio of mission critical software product offerings and large installed base of a diverse set of creditworthy clients. However, the rating also reflects the company's unsettled fulfillment of the terms of the Deferred Prosecution Agreement (DPA), subdued organic client billings growth, competition from integrated and non-integrated technology vendors, and exposure to mature mainframe and Unix markets.

 

CA's SGL-1 liquidity rating reflects the company's sizable free cash flow (defined as cash flow from operating activities less capital expenditures and dividends) and ample internal and external sources of liquidity. Liquidity sources include cash and marketable securities balances of $1.8 billion at December 31, 2005 and a $1 billion unused revolving credit facility.

 

Headquartered in Islandia, New York, CA, Inc. is an enterprise software vendor for enterprise management, security, and storage applications.

 

 

New York
John Moore
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
 

New York
Brian Oak
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
 

 


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