ISLANDIA, N.Y., July 20, 2011 /PRNewswire/ -- CA Technologies
(NASDAQ:CA) today reported financial results for its first quarter
of 2012, ended June 30, 2011.
- Revenue $1.163 Billion,
Up 4 Percent in Constant Currency and 9 Percent as
Reported
- GAAP EPS $0.45, Up 7 Percent
in Constant Currency and 5 Percent as Reported
- Non-GAAP EPS $0.55, Up 23
Percent in Constant Currency and Up 22 Percent as Reported
- Announces Intention to Take a $35
Million to $45 Million Charge in Second Quarter to Further
Disinvest Less Productive Parts of the Business
- Reaffirms Full-Year Outlook for Revenue, Non-GAAP EPS, and
Cash Flow from Operations; Updates GAAP EPS for Interactive TKO
Acquisition
FINANCIAL OVERVIEW
Note: All financial results have been adjusted to
reflect the classification of the Company's Internet Security
Business, which was divested in the first quarter, as a
discontinued operation.
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First
Quarter FY12 vs. FY11
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(in millions, except share
data)
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FY12
|
FY11
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%
Change
|
% Change
CC**
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Revenue
|
|
$1,163
|
$1,069
|
9%
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4%
|
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|
GAAP Net Income from continuing
operations
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$228
|
$221
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3%
|
3%
|
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Non-GAAP Net Income from
continuing operations*
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$279
|
$233
|
20%
|
20%
|
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|
GAAP Diluted EPS from continuing
operations
|
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$0.45
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$0.43
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5%
|
7%
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Non-GAAP Diluted EPS from
continuing operations*
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$0.55
|
$0.45
|
22%
|
23%
|
|
|
Cash Flow from continuing
operations
|
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$143
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$122
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17%
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2%
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* Non-GAAP income and earnings
per share are non-GAAP financial measures, as noted in the
discussion of non-GAAP results below. A reconciliation of non-GAAP
financial measures to their comparable GAAP financial measures is
included in the tables following this news release.
**CC: Constant
Currency
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EXECUTIVE COMMENTARY
"We had a solid start to fiscal year 2012," said Bill McCracken, chief executive officer of CA
Technologies. "First quarter results show improved operational
efficiencies, which were reflected in non-GAAP operating margin
improvements- and double-digit growth in non-GAAP earnings per
share.
"We continued to build our product and services portfolio with
the acquisition of Base Technologies, a privately-held consulting
firm focused on the management of IT assets, and our agreement to
acquire Interactive TKO, a leading provider of service
simulation solutions for developing applications in composite and
cloud environments," McCracken said. "We also delivered
on our commitment to return cash to shareholders, repurchasing
$150 million in common stock during
the quarter and distributing $25
million in dividends, an increase of 25 percent.
"Our customers tell us IT has become the primary vehicle they
use to adapt their business to changing market demands and become
more competitive. This evolution is being driven by
virtualization, cloud implementation and SaaS applications,
allowing business models to change in days and weeks, instead of
months and years. While these technologies increase
flexibility, they can also introduce significant management
complexity," McCracken continued. "Eighteen months ago we called
this evolution and built our strategy around it. We believe our
years of experience and core strength in traditional IT management
and security, combined with our significant investments in the
portfolio, will position us as the standard in the IT industry."
REVENUE AND BOOKINGS
During the first quarter, the Company saw healthy demand for its
service assurance, identity and access management, Nimsoft and
mainframe products. Just over 2 percentage points of
revenue growth in constant currency and 7 percentage points
as reported were driven by organic products, while just under 2
percentage points in constant currency and 2 percentage points as
reported came from the products and services from the
acquisitions of Base Technologies, Hyperformix, Inc. and
Arcot Systems, Inc. About 62 percent of the Company's revenue
came from North America, while 38
percent came from International operations.
Revenue year-over-year:
- Total revenue was $1.163 billion,
up 4 percent in constant currency and 9 percent as reported.
- Total revenue backlog was $8.511
billion, up 6 percent in constant currency and 11 percent as
reported. The current portion of revenue backlog was
$3.702 billion, up 4 percent in
constant currency and 10 percent as reported.
- North America revenue was
$716 million, up 9 percent in
constant currency and as reported.
- International revenue was $447
million, down 2 percent in constant currency and up 8
percent as reported.
Bookings year-over year:
- Total bookings in the first quarter were $865 million, up 11 percent in constant currency
and 18 percent as reported.
- The Company signed a total of 8 license agreements with
contract values in excess of $10
million each, for an aggregate contract value of
$255 million. During the first
quarter of fiscal year 2011, the Company signed a total of 6
license agreements with contract values in excess of $10 million each, for an aggregate contract value
of $188 million.
- The weighted average duration of subscription and maintenance
bookings for the quarter was 3.28 years, compared with 2.92 years
for the same period in fiscal year 2011.
- North America bookings were
$534 million, up 17 percent in
constant currency and 19 percent as reported.
- International bookings were $331
million, up 2 percent in constant currency and 17 percent as
reported.
EXPENSES AND MARGIN
Year-over-year GAAP results:
- Operating expenses, before interest and income taxes, were
$821 million, up 3 percent in
constant currency and 10 percent as reported.
- Operating income, before interest and income taxes, was
$342 million, up 8 percent in
constant currency and 7 percent as reported.
- Operating margin was 29 percent, down 1 percentage point.
Year-over-year non-GAAP results, which exclude purchased
software and intangibles amortization, pre-fiscal year 2010
restructuring costs, and certain other gains and losses (including
recoveries and certain costs associated with derivative litigation
matters and share-based compensation expense), and which include
gains and losses on hedges that mature within the quarter, but
which exclude gains and losses on hedges that do not mature within
the quarter:
- Operating expenses, before interest and income taxes, were
$746 million, down 1 percent in
constant currency and up 6 percent as reported.
- Operating income, before interest and income taxes, was
$417 million, up 15 percent in
constant currency and as reported.
- Operating margin was 36 percent, up 2 percentage points from
the prior year period.
For the first quarter of fiscal year 2012, the Company's
effective GAAP tax rate was 31.5 percent, compared to 28.2 percent
in the prior year. The Company's effective non-GAAP tax rate
was 31.6 percent, down from 33.6 percent in the prior year.
SEGMENT INFORMATION
For the first time, in the first quarter of fiscal year 2012, CA
Technologies is reporting segment results in three areas:
Mainframe Solutions, Enterprise Solutions and Services.
- Mainframe Solutions revenue was $646
million, up 1 percent in constant currency and 5 percent as
reported. Operating expense was $276
million and operating profit was $370
million. Operating margin was 57 percent, up from 54
percent a year ago.
- Enterprise Solutions revenue was $427
million, up 9 percent in constant currency and 14 percent as
reported. Operating expense was $382
million and operating profit was $45
million. Operating margin was 11 percent, up from 7
percent a year ago.
- Services revenue was $90 million,
up 9 percent in constant currency and 15 percent as reported.
Operating expense was $88
million and operating profit was $2
million. Operating margin was 2 percent, down from 5
percent a year ago.
CASH FLOW FROM CONTINUING OPERATIONS
Cash flow from continuing operations in the first quarter was
$143 million, compared to
$122 million in the prior year.
Cash flow was unfavorably affected by an increase of
$111 million in cash paid for income
taxes, compared to the prior year period. In addition, cash flow
was favorably affected by improved customer collections of
$150 million including the early
receipt of one payment of approximately $22
million scheduled for the second quarter of fiscal year
2012.
CAPITAL STRUCTURE
- Cash, cash equivalents and marketable securities at
June 30, 2011, were $2.950 billion.
- With $1.307 billion in total debt
outstanding, the Company's net cash, cash equivalents and
marketable securities position was $1.643
billion.
- In the first quarter, the Company repurchased approximately 6.4
million shares of stock, for a total of $150
million and distributed $25
million in dividends.
- The Company's outstanding share count at June 30, 2011 was 499 million.
BUSINESS HIGHLIGHTS
During the first quarter the Company announced:
- The acquisition of Base Technologies, a privately-held
consulting firm focused on the management of IT assets, with
leading practices in virtualization management, mainframe
technology, security and managed IT infrastructure.
- The appointment of Rohit Kapoor
of ExlService Holdings Inc. (NASDAQ: EXLS) to its Board of
Directors.
- The appointment of Richard
Beckert as chief financial officer.
- The hiring Peter Griffiths as
executive vice president of its Technology and Development
Group.
- The formation with VCE, the Virtual Computing Environment
Company, of a global strategic alliance to deliver integrated
private cloud solutions for VCE's Vblock™ Infrastructure Platforms
that help customers increase agility, reduce risk and lower
costs.
- A definitive agreement to acquire privately-held Interactive
TKO, Inc. (ITKO), a leading provider of service simulation
solutions for developing applications in composite and cloud
environments, for $330 million in an
all-cash transaction.
- The divestiture of its Internet Security Business to Updata
Partners.
ALIGNING COST STRUCTURE AND RESOURCES TO STRATEGY
The Company announced it would incur a GAAP and non-GAAP charge
of approximately $35 million to $45
million in the second quarter in connection with a reduction
of up to 500 jobs. This action is a continuation of the work the
company has been doing to optimize its business by reallocating
resources from non-strategic areas to growth technologies and
regions, and divesting non-strategic areas of the business.
OUTLOOK FOR FISCAL YEAR 2012
The Company reaffirmed its outlook for fiscal year 2012 for
revenue, non-GAAP EPS and cash flow from operations, and updated
GAAP EPS for the effect of the planned acquisition of Interactive
TKO. The following guidance represents "forward-looking
statements" (as defined below).
The Company expects the following:
- Total revenue growth in a range of 6 percent to 8 percent in
constant currency. At June 30,
2011 exchange rates, this translates to reported revenue of
$4.9 billion to $5.0 billion.
- GAAP diluted earnings per share growth in constant currency in
a range of 5 percent to 9 percent, adjusted from the previous range
of 6 percent of 11 percent. At June
30, 2011 exchange rates, this translates to reported diluted
earnings per share of $1.79 to
$1.86.
- Non-GAAP diluted earnings per share growth in constant currency
in a range of 6 percent to 10 percent. At June 30, 2011 exchange rates, this translates to
reported non-GAAP diluted earnings per share of $2.14 to $2.21.
- Cash flow from operations growth in a range of 3 percent to 5
percent in constant currency. At June
30, 2011 exchange rates, this translates to reported cash
flow from operations of $1.48 billion to
$1.51 billion.
This outlook includes the impact of the planned acquisition of
Interactive TKO, the charge of between $35
million and $45 million, a partial currency hedge of
operating income and an update to reflect our expectations for
share count. The Company also expects a full-year GAAP and
non-GAAP tax rate in a range of 31 to 32 percent. The Company
anticipates approximately 489 million shares outstanding at fiscal
year 2012 year-end and weighted average diluted shares outstanding
of approximately 497 million for the fiscal year.
Webcast
This news release and the accompanying tables should be read in
conjunction with additional content that is available on the
Company's website, including a supplemental financial package, as
well as a webcast that the Company will host at 5 p.m. ET today to discuss its unaudited first
quarter results. The webcast will be archived on the website.
Individuals can access the webcast, as well as this press release
and supplemental financial information, at http://ca.com/invest or
listen to the call at 1-877-548-7913. The international
participant number is 1-719-325-4793.
(Logo:
http://photos.prnewswire.com/prnh/20100516/NY05617LOGO)
About CA Technologies
CA Technologies (NASDAQ: CA) is an IT management software and
solutions company with expertise across all IT environments – from
mainframe and distributed, to virtual and cloud. CA
Technologies manages and secures IT environments and enables
customers to deliver more flexible IT services. CA
Technologies innovative products and services provide the insight
and control essential for IT organizations to power business
agility. The majority of the Global Fortune 500 relies on CA
Technologies to manage evolving IT ecosystems. For additional
information, visit CA Technologies at www.ca.com.
Follow CA Technologies
- Twitter
- Social Media Page
- Press Releases
- Podcasts
Non-GAAP Financial Measures
This news release, the accompanying tables and the additional
content that is available on the Company's website, including a
supplemental financial package, includes certain financial measures
that exclude the impact of certain items and therefore have not
been calculated in accordance with U.S. generally accepted
accounting principles (GAAP). Non-GAAP metrics for operating
expenses, operating income, operating margin, income from
operations and diluted earnings per share exclude the following
items: non-cash amortization of purchased software and other
intangibles, share-based compensation, pre-fiscal year 2010
restructuring and certain other gains and losses, which includes
recoveries and certain costs associated with derivative litigation
matters and includes the gains and losses since inception of hedges
that mature within the quarter, but exclude gains and losses of
hedges that do not mature within the quarter. Prior to fiscal
year 2011, non-GAAP income also excludes the interest on
convertible bonds. The effective tax rate on GAAP and
non-GAAP income from operations is the Company's provision for
income taxes expressed as a percentage of pre-tax GAAP and non-GAAP
income from operations, respectively. Such tax rates are
determined based on an estimated effective full year tax rate, with
the effective tax rate for GAAP generally including the impact of
discrete items in the period such items arise and the effective tax
rate for non-GAAP income generally allocating the impact of
discrete items pro rata to the fiscal year's remaining reporting
periods. Non-GAAP adjusted cash flow excludes pre-fiscal 2010
restructuring and other payments. Free cash flow excludes
capital expenditures. We present constant currency information to
provide a framework for assessing how our underlying businesses
performed excluding the effect of foreign currency rate
fluctuations. To present this information, current and
comparative prior period results for entities reporting in
currencies other than US dollars are converted into US dollars at
the exchange rate in effect on March 31,
2011, which was the last day of our prior fiscal year.
Constant currency excludes the impacts from the Company's hedging
program. The constant currency calculation for annualized
subscription and maintenance bookings is calculated by dividing the
subscription and maintenance bookings in constant currency by the
weighted average subscription and maintenance duration in years.
These non-GAAP financial measures may be different from
non-GAAP financial measures used by other companies. Non-GAAP
financial measures should not be considered as a substitute for, or
superior to, measures of financial performance prepared in
accordance with GAAP. By excluding these items, non-GAAP
financial measures facilitate management's internal comparisons to
the Company's historical operating results and cash flows, to
competitors' operating results and cash flows, and to estimates
made by securities analysts. Management uses these non-GAAP
financial measures internally to evaluate its performance and they
are key variables in determining management incentive compensation.
The Company believes these non-GAAP financial measures are
useful to investors in allowing for greater transparency of
supplemental information used by management in its financial and
operational decision-making. In addition, the Company has
historically reported similar non-GAAP financial measures to its
investors and believes that the inclusion of comparative numbers
provides consistency in its financial reporting. Investors
are encouraged to review the reconciliation of the non-GAAP
financial measures used in this news release to their most directly
comparable GAAP financial measures, which are attached to this news
release.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this communication (such as statements
containing the words "believes," "plans," "anticipates," "expects,"
"estimates" and similar expressions) constitute "forward-looking
statements" that are based upon the beliefs of, and assumptions
made by, the Company's management, as well as information currently
available to management. These forward-looking statements
reflect the Company's current views with respect to future events
and are subject to certain risks, uncertainties, and assumptions.
A number of important factors could cause actual results or
events to differ materially from those indicated by such
forward-looking statements, including: the ability to achieve
success in the Company's strategy by, among other things,
increasing sales in new and emerging enterprises and markets,
enabling the sales force to sell new products, improving the
Company's brand in the marketplace and ensuring the Company's set
of cloud computing, Software-as-a-Service and other new
offerings address the needs of a rapidly changing market, while not
adversely affecting the demand for the Company's traditional
products or its profitability; global economic factors or political
events beyond the Company's control; general economic conditions
and credit constraints, or unfavorable economic conditions in a
particular region, industry or business sector; failure to expand
partner programs; the ability to adequately manage and evolve
financial reporting and managerial systems and processes; the
ability to integrate acquired companies and products into existing
businesses; competition in product and service offerings and
pricing; the ability to retain and attract qualified key personnel;
the ability to adapt to rapid technological and market changes; the
ability of the Company's products to remain compatible with
ever-changing operating environments; access to software licensed
from third parties; use of software from open source code sources;
discovery of errors in the Company's software and potential product
liability claims; significant amounts of debt and possible future
credit rating changes; the failure to protect the Company's
intellectual property rights and source code; fluctuations in the
number, terms and duration of our license agreements as well as the
timing of orders from customers and channel partners; reliance upon
large transactions with customers; risks associated with sales to
government customers; breaches of the Company's software products
and the Company's and customers' data centers and IT environments;
third-party claims of intellectual property infringement or royalty
payments; fluctuations in foreign currencies; failure to
effectively execute the Company's workforce reductions; successful
outsourcing of various functions to third parties; potential tax
liabilities; and other factors described more fully in the
Company's filings with the Securities and Exchange
Commission. The Company assumes no obligation to update the
information in this communication, except as otherwise required by
law. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof.
Copyright © 2011 CA, Inc. All Rights Reserved. One CA Plaza,
Islandia, N.Y. 11749. All other trademarks, trade names,
service marks, and logos referenced herein belong to their
respective companies.
Contacts:
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Dan Kaferle
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Kelsey Doherty
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Public Relations
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Investor Relations
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(631) 342-2111
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(212) 415-6844
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daniel.kaferle@ca.com
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kelsey.doherty@ca.com
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Table
1
|
|
CA
Technologies
|
|
Condensed
Consolidated Statements of Operations
|
|
(in
millions, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June
30,
|
|
|
Revenue
|
2011
|
|
2010
|
|
|
Subscription and maintenance
revenue
|
$1,007
|
|
$ 939
|
|
|
Professional services
|
90
|
|
78
|
|
|
Software fees and
other
|
66
|
|
52
|
|
|
Total revenue
|
1,163
|
|
1,069
|
|
|
Expenses
|
|
|
|
|
|
Costs of licensing and
maintenance
|
67
|
|
67
|
|
|
Cost of professional
services
|
88
|
|
71
|
|
|
Amortization of capitalized
software costs
|
50
|
|
45
|
|
|
Selling and marketing
|
326
|
|
290
|
|
|
General and
administrative
|
114
|
|
117
|
|
|
Product development and
enhancements
|
118
|
|
128
|
|
|
Depreciation and amortization of
other intangible assets
|
47
|
|
44
|
|
|
Other expenses (gains),
net
|
10
|
|
(11)
|
|
|
Restructuring and
other
|
1
|
|
(3)
|
|
|
Total expenses before interest
and income taxes
|
821
|
|
748
|
|
|
Income from continuing
operations before interest and income taxes
|
342
|
|
321
|
|
|
Interest expense, net
|
9
|
|
13
|
|
|
Income from continuing
operations before income taxes
|
333
|
|
308
|
|
|
Income tax expense
|
105
|
|
87
|
|
|
Income from continuing
operations
|
$ 228
|
|
$ 221
|
|
|
Income (loss) from discontinued
operations, net of income taxes
|
13
|
|
(4)
|
|
|
Net income
|
$ 241
|
|
$ 217
|
|
|
|
|
|
|
|
|
Basic income (loss) per
share
|
|
|
|
|
|
Income from continuing
operations
|
$ 0.45
|
|
$0.43
|
|
|
Income (loss) from discontinued
operations
|
0.03
|
|
(0.01)
|
|
|
Net Income
|
$ 0.48
|
|
$0.42
|
|
|
Basic weighted average shares
used in computation
|
500
|
|
510
|
|
|
|
|
|
|
|
|
Diluted income (loss) per
share
|
|
|
|
|
|
Income from continuing
operations
|
$ 0.45
|
|
$0.43
|
|
|
Income (loss) from discontinued
operations
|
0.02
|
|
(0.01)
|
|
|
Net Income
|
$ 0.47
|
|
$0.42
|
|
|
Diluted weighted average shares
used in computation
|
501
|
|
511
|
|
|
|
|
|
|
|
|
Prior year results have been
adjusted to reflect the discontinued operations associated with
the
sale of the Information
Governance business and the Internet Security business.
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|
|
|
|
|
|
|
Table
2
|
|
|
CA
Technologies
|
|
|
Condensed
Consolidated Balance Sheets
|
|
|
(in
millions)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
March
31,
|
|
|
|
2011
|
|
2011
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$ 2,761
|
|
$ 3,049
|
|
|
Marketable securities-
current
|
84
|
|
75
|
|
|
Trade and installment accounts
receivable, net
|
597
|
|
849
|
|
|
Deferred income taxes -
current
|
207
|
|
246
|
|
|
Other current assets
|
192
|
|
152
|
|
|
|
|
|
|
|
|
Total current
assets
|
3,841
|
|
4,371
|
|
|
|
|
|
|
|
|
Marketable securities -
noncurrent
|
105
|
|
104
|
|
|
Property and equipment,
net
|
426
|
|
437
|
|
|
Goodwill
|
5,695
|
|
5,688
|
|
|
Capitalized software and other
intangible assets, net
|
1,275
|
|
1,284
|
|
|
Deferred income taxes -
noncurrent
|
249
|
|
284
|
|
|
Other noncurrent assets,
net
|
261
|
|
246
|
|
|
|
|
|
|
|
|
Total assets
|
$11,852
|
|
$ 12,414
|
|
|
|
|
|
|
|
|
Current portion of long-term
debt and loans payable
|
$
19
|
|
$
269
|
|
|
Deferred revenue (billed or
collected) - current
|
2,475
|
|
2,600
|
|
|
Deferred income taxes -
current
|
69
|
|
68
|
|
|
Other current
liabilities
|
763
|
|
987
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
3,326
|
|
3,924
|
|
|
|
|
|
|
|
|
Long-term debt, net of current
portion
|
1,288
|
|
1,282
|
|
|
Deferred income taxes -
noncurrent
|
66
|
|
64
|
|
|
Deferred revenue (billed or
collected) - noncurrent
|
909
|
|
969
|
|
|
Other noncurrent
liabilities
|
540
|
|
555
|
|
|
|
|
|
|
|
|
Total liabilities
|
6,129
|
|
6,794
|
|
|
|
|
|
|
|
|
Common stock
|
59
|
|
59
|
|
|
Additional paid-in
capital
|
3,562
|
|
3,615
|
|
|
Retained earnings
|
4,321
|
|
4,106
|
|
|
Accumulated other comprehensive
loss
|
(48)
|
|
(65)
|
|
|
Treasury stock
|
(2,171)
|
|
(2,095)
|
|
|
|
|
|
|
|
|
Total stockholders’
equity
|
5,723
|
|
5,620
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity
|
$11,852
|
|
$ 12,414
|
|
|
|
|
|
|
Table
3
|
|
CA
Technologies
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
(in
millions)
|
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
June
30,
|
|
|
|
2011
|
|
2010
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
|
|
Net
income
|
$ 241
|
|
$ 217
|
|
|
(Income) loss from discontinued operations
|
(13)
|
|
4
|
|
|
Income from continuing operations
|
228
|
|
221
|
|
|
Adjustments to reconcile income from continuing operations to
net cash provided
|
|
|
|
|
|
by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
97
|
|
89
|
|
|
Provision for deferred
income taxes
|
71
|
|
116
|
|
|
Provision for bad
debts
|
-
|
|
3
|
|
|
Share-based compensation
expense
|
25
|
|
19
|
|
|
Asset impairments and
other non-cash charges
|
2
|
|
5
|
|
|
Foreign currency
transaction losses (gains)
|
2
|
|
(2)
|
|
|
Changes in other operating assets and liabilities, net of
effect of acquisitions:
|
|
|
|
|
|
Decrease in trade and
installment accounts receivable, net
|
274
|
|
320
|
|
|
Decrease in deferred
revenue
|
(214)
|
|
(310)
|
|
|
Decrease in taxes payable,
net
|
(241)
|
|
(191)
|
|
|
(Decrease) increase in
accounts payable, accrued expenses and other
|
(2)
|
|
3
|
|
|
Decrease in accrued
salaries, wages and commissions
|
(82)
|
|
(105)
|
|
|
Decrease in restructuring
liabilities
|
(6)
|
|
(34)
|
|
|
Changes in other operating
assets and liabilities
|
(11)
|
|
(12)
|
|
|
NET CASH PROVIDED BY OPERATING
ACTIVITIES - CONTINUING OPERATIONS
|
143
|
|
122
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
|
Acquisitions of businesses, net of cash acquired, and purchased
software
|
(29)
|
|
(9)
|
|
|
Purchases of property and equipment
|
(19)
|
|
(25)
|
|
|
Capitalized software development costs
|
(50)
|
|
(42)
|
|
|
Investment in marketable securities, net
|
(8)
|
|
-
|
|
|
Other investing activities
|
(1)
|
|
(16)
|
|
|
NET CASH USED IN INVESTING
ACTIVITIES - CONTINUING OPERATIONS
|
(107)
|
|
(92)
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
|
Dividends paid
|
(25)
|
|
(21)
|
|
|
Purchases of common stock
|
(153)
|
|
(55)
|
|
|
Debt
repayments, net
|
(184)
|
|
(3)
|
|
|
Exercise of common stock options and other
|
9
|
|
4
|
|
|
NET CASH USED IN FINANCING
ACTIVITIES - CONTINUING OPERATIONS
|
(353)
|
|
(75)
|
|
|
NET CHANGE IN CASH AND CASH
EQUIVALENTS BEFORE EFFECT OF EXCHANGE RATE CHANGES ON CASH -
CONTINUING OPERATIONS
|
(317)
|
|
(45)
|
|
|
Effect of exchange rate changes
on cash
|
37
|
|
(73)
|
|
|
CASH PROVIDED (USED) BY
OPERATING ACTIVITIES - DISCONTINUED OPERATIONS
|
(12)
|
|
(5)
|
|
|
CASH PROVIDED (USED) BY
INVESTING ACTIVITIES - DISCONTINUED OPERATIONS
|
4
|
|
16
|
|
|
NET EFFECT OF DISCONTINUED
OPERATIONS ON CASH AND CASH EQUIVALENTS
|
(8)
|
|
11
|
|
|
DECREASE IN CASH AND CASH
EQUIVALENTS
|
(288)
|
|
(107)
|
|
|
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD
|
3,049
|
|
2,583
|
|
|
CASH AND CASH EQUIVALENTS AT END
OF PERIOD
|
$2,761
|
|
$2,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year results have been
adjusted to reflect the discontinued operations associated with the
sale of the Information Governance business and the Internet
Security business.
|
|
|
|
|
|
|
Table
4
|
|
CA
Technologies
|
|
Operating
Segments
|
|
(in
millions)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30, 2011
|
|
|
|
Mainframe
Solutions (1)
|
|
Enterprise
Solutions (1)
|
|
Services
(1)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (2)
|
$
646
|
|
$
427
|
|
$
90
|
|
$1,163
|
|
|
Expenses (3)
|
276
|
|
382
|
|
88
|
|
746
|
|
|
Segment profit
|
$
370
|
|
$
45
|
|
$
2
|
|
$ 417
|
|
|
Operating Margin
|
57%
|
|
11%
|
|
2%
|
|
36%
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated operating expenses
and interest expense (4)
|
|
|
|
|
|
|
$ 84
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations before income taxes
|
|
|
|
|
|
|
$ 333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30, 2010
|
|
|
|
Mainframe
Solutions (1)
|
|
Enterprise
Solutions (1)
|
|
Services
(1)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (2)
|
$
615
|
|
$
376
|
|
$
78
|
|
$1,069
|
|
|
Expenses (3)
|
280
|
|
351
|
|
74
|
|
705
|
|
|
Segment profit
|
$
335
|
|
$
25
|
|
$
4
|
|
$ 364
|
|
|
Operating Margin
|
54%
|
|
7%
|
|
5%
|
|
34%
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated operating expenses
and interest expense (4)
|
|
|
|
|
|
|
$ 56
|
|
|
|
|
|
|
|
|
Income from continuing
operations before income taxes
|
|
|
|
|
|
|
$ 308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
• Mainframe Solutions – Our
Mainframe Solutions segment addresses the mainframe market and is
focused on making significant investments in order to be innovative
in key management disciplines across our broad portfolio of
products. Ongoing development is guided by customer needs,
our cross-enterprise management philosophy and our Mainframe 2.0
strategy, which offers management capabilities designed to appeal
to the next generation of mainframe staff while also offering
productivity improvements to today’s mainframe experts. Our
mainframe business assists customers by addressing three major
challenges: lowering costs, providing high service levels by
sustaining critical workforce skills and increasing agility to help
deliver on business goals.
• Enterprise Solutions – Our
Enterprise Solutions segment includes products that operate on
non-mainframe platforms, such as service assurance, security
(identity and access management), project and portfolio management,
service management, virtualization and service automation, SaaS,
and cloud offerings. Our offerings help customers address
their regulatory compliance demands, privacy needs, and internal
security policies. Enterprise Solutions also focuses on delivering
growth to the Company in the form of new customer acquisitions and
revenue, while leveraging non-traditional routes-to-market and
delivery models.
• Services – Our Services
segment offers implementation, consulting, education and training
services to customers, which is intended to promote a seamless
customer experience and to increase the value that customers
realize from our solutions.
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
The software product revenue is
assigned to the Mainframe Solutions and Enterprise Solutions
segments based on either: (1) a list price allocation method (which
allocates a discount in the total contract price to the individual
products in proportion to the list price of the products); (2)
allocations included within internal contract approval documents;
or (3) the value for individual software products as stated in the
customer contract. The price for the implementation,
consulting, education and training services is separately stated in
the contract and these amounts of contract revenue are assigned to
the Services segment.
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
Segment expenses include costs
that are controllable by segment managers (i.e., direct costs) and,
in the case of the Mainframe Solutions and Enterprise Solutions
segments, an allocation of shared and indirect costs (i.e.,
allocated costs). Segment-specific direct costs include a
portion of selling and marketing costs, licensing and maintenance
costs, product development costs, general and administrative costs
and amortization of the cost of internally developed software.
Allocated segment costs primarily include indirect selling
and marketing costs and general and administrative costs that are
not directly attributable to a specific segment. The basis
for allocating shared and indirect costs between the Mainframe
Solutions and Enterprise Solutions segments is dependent on the
nature of the cost being allocated and is either in proportion to
segment revenues or in proportion to the related direct cost
category. Expenses for the Services segment consist only of
direct costs and there are no allocated or indirect costs for the
Services segment.
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
Unallocated segment expenses
include the following: share-based compensation expense;
amortization of purchased software; amortization of other
intangible assets; derivative hedging gains and losses; and
severance, exit costs and related charges associated with the
Company’s Fiscal 2007 Plan, which can be found on Table 7 and
Interest Expense which can be found on Table 1.
|
|
|
|
|
|
|
|
|
|
|
Table
5
|
|
CA
Technologies
|
|
Constant
Currency Summary
|
|
(in
millions)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
|
|
|
|
2011
|
|
2010
|
|
%
Increase
(Decrease)
in $ US
|
|
%
Increase
(Decrease) in
Constant
Currency (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Bookings
|
$
865
|
|
$
732
|
|
18%
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
North America
|
$
716
|
|
$
655
|
|
9%
|
|
9%
|
|
|
International
|
447
|
|
414
|
|
8%
|
|
(2%)
|
|
|
Total revenue
|
$
1,163
|
|
$
1,069
|
|
9%
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Subscription and
maintenance
|
$
1,007
|
|
$
939
|
|
7%
|
|
3%
|
|
|
Professional
services
|
90
|
|
78
|
|
15%
|
|
9%
|
|
|
Software fees and
other
|
66
|
|
52
|
|
27%
|
|
23%
|
|
|
Total revenue
|
$
1,163
|
|
$
1,069
|
|
9%
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Revenue:
|
|
|
|
|
|
|
|
|
|
Mainframe
Solutions
|
$
646
|
|
$
615
|
|
5%
|
|
1%
|
|
|
Enterprise
Solutions
|
427
|
|
376
|
|
14%
|
|
9%
|
|
|
Services
|
90
|
|
78
|
|
15%
|
|
9%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses before interest and income taxes:
|
|
|
|
|
|
|
|
|
|
Total Non-GAAP
(2)
|
$
746
|
|
$
705
|
|
6%
|
|
(1%)
|
|
|
Total GAAP
|
$
821
|
|
$
748
|
|
10%
|
|
3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Constant currency information is
presented to provide a framework to assess how the underlying
businesses performed excluding the effect of foreign currency rate
fluctuations. To present this information, current and
comparative prior period results for entities reporting in
currencies other than US dollars are converted into US dollars at
the exchange rate in effect on March 31, 2011, which was the last
day of fiscal year 2011. Constant currency excludes the
impacts from the Company's hedging program.
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Refer to Table 7 for a
reconciliation of total expenses before interest and income taxes
to total non-GAAP operating expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year results have been
adjusted to reflect the discontinued operations associated with the
sale of the Information Governance business and the Internet
Security business.
|
|
|
Certain non-material differences
may arise versus actual from impact of rounding.
|
|
|
|
|
|
|
|
|
|
|
Table
6
|
|
CA
Technologies
|
|
Reconciliation of Select GAAP
Measures to Non-GAAP Measures
|
|
(in
millions)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2011
|
|
June 30,
2010
|
|
|
|
|
|
|
|
|
GAAP net income
|
$
241
|
|
$
217
|
|
|
GAAP Income (loss) from
discontinued operations, net of taxes
|
13
|
|
(4)
|
|
|
GAAP income from continuing
operations
|
228
|
|
221
|
|
|
GAAP income tax
expense
|
105
|
|
87
|
|
|
GAAP interest expense
|
9
|
|
13
|
|
|
GAAP Income from continuing
operations before interest and income taxes
|
342
|
|
321
|
|
|
GAAP operating margin (% of
revenue) (1)
|
29%
|
|
30%
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments to
expenses:
|
|
|
|
|
|
Costs of licensing and
maintenance(2)
|
1
|
|
1
|
|
|
Cost of professional
services(2)
|
1
|
|
1
|
|
|
Amortization of
capitalized software costs(3)
|
23
|
|
22
|
|
|
Selling and
marketing(2)
|
10
|
|
7
|
|
|
General and
administrative(2)
|
8
|
|
4
|
|
|
Product development and
enhancements(2)
|
5
|
|
6
|
|
|
Depreciation and
amortization of other intangible assets(4)
|
19
|
|
16
|
|
|
Other (gains), net
(5)
|
7
|
|
(14)
|
|
|
Restructuring and other
(6)
|
1
|
|
-
|
|
|
Total Non-GAAP adjustment to
operating expenses
|
75
|
|
43
|
|
|
Non-GAAP Income from continuing
operations before interest and income taxes
|
417
|
|
364
|
|
|
Non-GAAP operating margin (% of
revenue) (7)
|
36%
|
|
34%
|
|
|
|
|
|
|
|
|
GAAP Interest expense,
net
|
9
|
|
13
|
|
|
Non-GAAP adjustment to Interest
expense
|
-
|
|
-
|
|
|
Non-GAAP interest
expense
|
9
|
|
13
|
|
|
|
|
|
|
|
|
GAAP Income tax
expense
|
105
|
|
87
|
|
|
Non-GAAP adjustment to income
tax expense(8)
|
24
|
|
31
|
|
|
Non-GAAP income tax
expense
|
129
|
|
118
|
|
|
|
|
|
|
|
|
Non-GAAP Income from continuing
operations
|
$
279
|
|
$
233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
GAAP operating margin is
calculated by dividing GAAP Income from continuing operations
before interest and income taxes by total revenue (refer to Table 1
for total revenue).
|
|
|
|
|
|
|
|
(2)
|
Non-GAAP adjustment consists of
share-based compensation.
|
|
|
|
|
|
|
|
|
|
|
(3)
|
Non-GAAP adjustment consists of
purchased software amortization.
|
|
|
|
|
|
|
|
(4)
|
Non-GAAP adjustment consists of
intangibles amortization.
|
|
|
|
|
|
|
|
(5)
|
Consists of gains and losses
since inception of hedges that mature within the quarter, but
exclude gains and losses of hedges that do not mature within the
quarter.
|
|
|
|
|
|
|
|
(6)
|
Non-GAAP adjustment consists of
Fiscal 2007 Restructuring Plan expense adjustments.
|
|
|
|
|
|
|
|
(7)
|
Non-GAAP operating margin is
calculated by dividing non-GAAP income from continuing operations
before interest and income taxes by total revenue (refer Table 1
for total revenue).
|
|
|
|
|
|
|
|
(8)
|
The full year non-GAAP income
tax expense is different from GAAP income tax expense because of
the difference in non-GAAP income from continuing operations
(before tax). On an interim basis this difference would also
include a difference in the impact of discrete and permanent items
where for GAAP purposes the effect is recorded in the period such
items arise, but for non-GAAP such items are recorded pro rata to
the fiscal year's remaining reporting periods.
|
|
|
|
|
|
|
|
|
Refer to the discussion of
non-GAAP financial measures included in the accompanying press
release for additional information.
|
|
|
|
|
|
|
|
|
Prior year results have been
adjusted to reflect the discontinued operations associated with the
sale of the Information Governance business and the Internet
Security business.
|
|
|
|
|
|
|
|
|
Certain non-material differences
may arise versus actual from impact of rounding.
|
|
|
|
|
|
|
Table
7
|
|
CA
Technologies
|
|
Reconciliation of GAAP to
Non-GAAP
|
|
Operating
Expenses and Diluted Earnings per Share
|
|
(in
millions, except per share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June
30,
|
|
|
Operating Expenses
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
Total expenses before interest
and income taxes
|
$ 821
|
|
$ 748
|
|
|
|
|
|
|
|
|
Non-GAAP operating
adjustments:
|
|
|
|
|
|
Purchased software
amortization
|
23
|
|
22
|
|
|
Intangibles
amortization
|
19
|
|
16
|
|
|
Share-based
compensation
|
25
|
|
19
|
|
|
Restructuring and other
(1)
|
1
|
|
-
|
|
|
Hedging (gains),
net (2)
|
7
|
|
(14)
|
|
|
Total non-GAAP operating
adjustments
|
75
|
|
43
|
|
|
|
|
|
|
|
|
Total non-GAAP operating
expenses
|
$ 746
|
|
$ 705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June
30,
|
|
|
Diluted EPS from Continuing
Operations
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
GAAP diluted EPS from continuing
operations
|
$0.45
|
|
$0.43
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments, net of
taxes
|
|
|
|
|
|
Purchased software and
intangibles amortization
|
0.06
|
|
0.05
|
|
|
Share-based
compensation
|
0.03
|
|
0.02
|
|
|
Restructuring and other
(1)
|
-
|
|
-
|
|
|
Hedging (gains), net
(2)
|
0.01
|
|
(0.02)
|
|
|
Non-GAAP effective tax
rate adjustments (3)
|
(0.00)
|
|
(0.03)
|
|
|
|
|
|
|
|
|
Non-GAAP diluted EPS from
continuing operations
|
$0.55
|
|
$0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Non-GAAP adjustment consists of
Fiscal 2007 Restructuring Plan expense adjustments.
|
|
|
|
(2)
|
Consists of gains and losses
since inception of hedges that mature within the quarter, but
exclude gains and losses of hedges that do not mature within the
quarter.
|
|
|
|
(3)
|
The effective tax rate on
non-GAAP income from continuing operations is the Company's
provision for income taxes expressed as a percentage of non-GAAP
income from continuing operations before income taxes. Such
tax rates are determined based on an estimated effective full year
tax rate after the adjustments for the impacts of certain discrete
items (such as changes in tax rates, reconciliations of tax returns
to tax provisions and resolutions of tax contingencies).
|
|
|
|
|
Refer to the discussion of
non-GAAP financial measures included in the accompanying press
release for additional information.
|
|
|
|
|
Prior year results have been
adjusted to reflect the discontinued operations associated with the
sale of the Information Governance business and the Internet
Security business.
|
|
|
|
|
Certain non-material differences
may arise versus actual from impact of rounding.
|
|
|
|
|
|
|
Table
8
|
|
CA
Technologies
|
|
Effective
Tax Rate Reconciliation
|
|
GAAP and
Non-GAAP
|
|
(in
millions)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2011
|
|
|
|
GAAP
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
Income from continuing
operations before income taxes (1)
|
$ 333
|
|
$
408
|
|
|
|
|
|
|
|
|
Statutory tax rate
|
35%
|
|
35%
|
|
|
|
|
|
|
|
|
Tax at statutory rate
|
117
|
|
143
|
|
|
|
|
|
|
|
|
Adjustments for discrete and
permanent items (2)
|
(12)
|
|
(14)
|
|
|
|
|
|
|
|
|
Total tax expense
|
$ 105
|
|
$
129
|
|
|
|
|
|
|
|
|
Effective tax rate
(3)
|
31.5%
|
|
31.6%
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2010
|
|
|
|
GAAP
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
Income from continuing
operations before income taxes (1)
|
$ 308
|
|
$
351
|
|
|
|
|
|
|
|
|
Statutory tax rate
|
35%
|
|
35%
|
|
|
|
|
|
|
|
|
Tax at statutory rate
|
108
|
|
123
|
|
|
|
|
|
|
|
|
Adjustments for discrete and
permanent items (2)
|
(21)
|
|
(5)
|
|
|
|
|
|
|
|
|
Total tax expense
|
$ 87
|
|
$
118
|
|
|
|
|
|
|
|
|
Effective tax rate
(3)
|
28.2%
|
|
33.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Refer to Table 6 for a
reconciliation of income from continuing operations before income
taxes on a GAAP basis to income from continuing operations before
income taxes on a non-GAAP basis.
|
|
|
|
(2)
|
The effective tax rate for GAAP
generally includes the impact of discrete and permanent items in
the period such items arise, whereas the effective tax rate for
non-GAAP generally allocates the impact of such items pro rata to
the fiscal year's remaining reporting periods.
|
|
|
|
(3)
|
The effective tax rate on GAAP
and non-GAAP income from continuing operations is the Company's
provision for income taxes expressed as a percentage of GAAP and
non-GAAP income from continuing operations before income taxes,
respectively. Such tax rates are determined based on an
estimated effective full year tax rate after the adjustments for
the impacts of certain discrete items (such as changes in tax
rates, reconciliations of tax returns to tax provisions and
resolutions of tax contingencies).
|
|
|
|
|
|
Refer to the discussion of
non-GAAP financial measures included in the accompanying press
release for additional information.
|
|
|
|
|
Certain non-material differences
may arise versus actual from impact of rounding.
|
|
|
|
|
Table
9
|
|
|
CA
Technologies
|
|
|
Reconciliation of Projected GAAP
Earnings per Share to
|
|
|
Projected
Non-GAAP Earnings per Share
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
Ending
|
|
|
Projected Diluted EPS from
Continuing Operations
|
March 31,
2012
|
|
|
|
|
|
|
|
|
Projected GAAP Diluted EPS From
Continuing Operations Range
|
$
1.79
|
to
|
$
1.86
|
|
|
|
|
|
|
|
|
Non-GAAP Adjustments, Net of
Taxes:
|
|
|
|
|
|
Purchased Software
and Intangibles Amortization
|
0.21
|
|
0.21
|
|
|
Share-based
Compensation
|
0.14
|
|
0.14
|
|
|
|
|
|
|
|
|
Non-GAAP Projected Diluted EPS
From Continuing Operations Range
|
$
2.14
|
to
|
$
2.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This outlook includes the impact
of the planned acquisition of Interactive TKO.
|
|
|
|
|
|
|
|
|
Refer to the discussion of
non-GAAP financial measures included in the accompanying
press
release for additional
information.
|
|
|
|
|
|
|
SOURCE CA Technologies