• GAAP EPS Grows 8 Percent in Constant Currency and 10
Percent as Reported
• Non-GAAP EPS Grows 46 Percent in Constant Currency and as
Reported
• Revenue Flat in Constant Currency and Down 1 Percent as
Reported
• Cash Flow From Operations Declines 7 Percent in Constant
Currency and 2 Percent as Reported
• Updates FY 2014 Outlook for Revenue and GAAP and Non-GAAP
EPS
In the Executive Commentary section, second graph, second
sentence should read: "This will enable us to continue to deliver
disruptive new products like our recently announced Nimsoft Monitor
Snap - a free, feature-rich monitoring solution that provides an
entirely new customer experience... (sted "This will enable us to
continue to deliver disruptive new products like our recently
announced Nimsoft Monitor Snap - a SaaS monitoring solution that
provides an entirely new customer experience...)
The corrected release reads:
CA TECHNOLOGIES REPORTS SECOND QUARTER
FISCAL YEAR 2014 RESULTS
• GAAP EPS Grows 8 Percent in Constant Currency and 10
Percent as Reported
• Non-GAAP EPS Grows 46 Percent in Constant Currency and as
Reported
• Revenue Flat in Constant Currency and Down 1 Percent as
Reported
• Cash Flow From Operations Declines 7 Percent in Constant
Currency and 2 Percent as Reported
• Updates FY 2014 Outlook for Revenue and GAAP and Non-GAAP
EPS
CA Technologies (NASDAQ:CA) today reported financial results for
its second quarter fiscal year 2014, ended September 30,
2013.
FINANCIAL OVERVIEW
(dollars in millions, except share data)
Second Quarter FY14 vs. FY13 FY14
FY13 % Change % Change
CC** Revenue $1,140 $1,152 (1)%
0% GAAP Net Income $240 $222
8% 7% Non-GAAP Income* $390 $272
43% 43% GAAP Diluted EPS $0.53
$0.48 10% 8% Non-GAAP Diluted
EPS* $0.86 $0.59 46% 46%
Cash Flow from Operations $87 $89 (2)%
(7)%
* 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
EXECUTIVE COMMENTARY
"I am pleased with our overall second quarter results," said
Mike Gregoire, CA Technologies chief executive officer. "We over
performed on both the top line and the bottom line, enabling us to
increase our full year guidance for revenue and GAAP and non-GAAP
earnings per share. This is clearly a beginning, but we still have
work to do to get the aggregate portfolio growing.
"To drive growth at CA we are investing in our business. In the
second half of the fiscal year we will increase our research and
development spend and accelerate our investment in marketing, all
within the expense guidance we outlined at the outset of the fiscal
year,” Gregoire said. “This will enable us to continue to deliver
disruptive new products like our recently announced Nimsoft Monitor
Snap - a free, feature-rich monitoring solution that provides an
entirely new customer experience - and the next generation of
mainframe products. Accelerating innovation, delivering
differentiated products and focusing our marketing is the path to
getting CA on a growth trajectory.”
REVENUE AND BOOKINGS
(dollars in millions)
Second Quarter FY14 vs. FY13
FY14 % of Total
FY13 % of Total
% Change % Change
CC** North America Revenue $731 64%
$730 63% 0% 0%
International Revenue $409 36% $422
37% (3)% (1)% Total
Revenue $1,140 $1,152
(1)% 0%
North America Bookings $495 56% $500
60% (1)% (1)%
International Bookings $382 44% $337
40% 13% 14% Total
Bookings $877 $837
5% 5% Current
Revenue Backlog $3,382 $3,453
(2)% (2)% Total
Revenue Backlog $7,241 $7,460
(3)% (3)%
**CC: Constant Currency
- The increase in the Company's second
quarter bookings was primarily due to higher Mainframe renewals,
offset by a decrease in Mainframe and Enterprise Solutions new
product sales and Services engagements.
- The Company executed a total of 12
license agreements with incremental contract values in excess of
$10 million each, for an aggregate contract value of $320 million.
During the second quarter of fiscal year 2013, the Company executed
a total of 10 license agreements with incremental contract values
in excess of $10 million each, for an aggregate contract value of
$232 million.
- The weighted average duration of
subscription and maintenance bookings for the quarter was 3.32
years, compared with 3.11 years for the same period in fiscal year
2013.
EXPENSES AND MARGIN
(dollars in millions)
Second Quarter FY14
vs. FY13 FY14 FY13
% Change % Change
CC** GAAP Operating Expenses Before Interest
and Income Taxes $781 $815 (4)%
(3)% Operating Income Before Interest and Income Taxes $359
$337 7% 5% Operating
Margin 31% 29%
Effective Tax Rate 31% 32%
Non-GAAP*
Operating Expenses Before Interest and Income Taxes
$673 $748 (10)% (9)%
Operating Income Before Interest and Income Taxes $467
$404 16% 15% Operating Margin
41% 35%
Effective Tax Rate 14% 31%
*A reconciliation of non-GAAP financial measures to their
comparable GAAP financial measures is included in the tables
following this news release. Year-over-year non-GAAP results
exclude purchased software and other intangibles amortization,
share-based compensation, capitalization (an add-back) and
amortization of internal software costs, Board approved rebalancing
initiatives and certain other gains and losses. The results also
include gains and losses on hedges that mature within the quarter,
but exclude gains and losses on hedges that do not mature within
the quarter.
**CC: Constant Currency
- GAAP and non-GAAP operating expenses
were positively affected by lower personnel costs within selling
and marketing, a decrease in commissions and other operational
efficiencies.
- GAAP and non-GAAP operating margins in
the second quarter were positively affected by the decrease in
personnel expenses. GAAP operating margin also was negatively
affected by a decrease in software capitalization.
- Non-GAAP EPS was positively affected by
$0.16 due to a lower effective tax rate. The Company recognized a
net discrete tax benefit of approximately $179 million in the first
half of fiscal year 2014, primarily from the resolution of
uncertain tax positions upon the completion of the examination of
U.S. federal income tax returns for fiscal years 2005, 2006 and
2007.
SEGMENT INFORMATION
Starting in the first quarter of fiscal year 2014, the measure
of segment expenses and segment profit was revised to treat all
costs of internal software development as segment expense in the
period the costs are incurred. As a result, the Company will add
back capitalized internal software costs and exclude amortization
of internally developed software costs previously capitalized from
segment expenses. Segment expenses also exclude the effects of the
Company’s fiscal year 2014 rebalancing plan. Prior period segment
expenses and profit information have been revised to present
segment profit and expenses on a consistent basis.
(dollars in millions)
Second Quarter
FY14 vs. FY13 Revenue %
Change % Change CC**
Operating Margin FY14
FY13 FY14
FY13 Mainframe Solutions $624
$619 1% 1% 63%
60% Enterprise Solutions $419 $438
(4)% (3)% 15% 7%
Services $97 $95 2% 3%
9% 6%
**CC: Constant Currency
- The increase in Mainframe Solutions
revenue was primarily due to an increase in new product and
mainframe capacity sales in the first quarter of fiscal year 2014
while the increase in operating margin was primarily a result of a
decrease in selling and marketing expenses.
- Enterprise Solutions revenue for the
second quarter of fiscal 2014 decreased compared with the year-ago
period primarily due to a decrease in new product sales in prior
periods. Enterprise Solutions operating margin for the second
quarter of fiscal 2014 increased compared with the year-ago period
as a result of a decrease in selling and marketing expenses.
- The increase in Services revenue was
primarily due to an increase in professional services engagements
resulting from prior period bookings.
CASH FLOW FROM OPERATIONS
- Cash flow from operations in the second
quarter was $87 million, compared with $89 million in the prior
year. Cash was positively affected by increased cash collections
and the receipt of a tax refund in connection with the resolution
of the U.S. tax matter mentioned above, offset by a number of
expected factors including higher cash taxes, payments related to
the rebalancing actions announced on May 7, 2013 and a reduction in
capitalized software development.
CAPITAL STRUCTURE
- Cash, cash equivalents and investments
at September 30, 2013 were $2.799 billion.
- With $1.779 billion in total debt
outstanding and $126 million in notional pooling, the Company’s net
cash, cash equivalents and investments position was $894 million.
In August 2013, the Company issued $250 million of 2.875% Senior
Notes due August 2018 and $250 million of 4.500% Senior Notes due
August 2023, for an aggregate principal amount of $500
million.
- In the second quarter of fiscal year
2014, the Company repurchased 5 million shares of stock for $145
million.
- The Company is currently authorized to
repurchase an additional $307 million of common stock through
fiscal year 2014.
- During the second quarter of fiscal
year 2014, the Company distributed $114 million in dividends to
shareholders.
- The Company’s outstanding share count
at September 30, 2013 was 447 million.
OUTLOOK FOR FISCAL YEAR 2014
The Company updated the following outlook, which represents
"forward-looking statements" (as defined below). It takes into
account the change in business practice regarding internally
developed software costs, the costs and payments associated with
the rebalancing initiative announced on May 7, 2013 and the
resolution of the U.S. tax matter mentioned above.
The Company expects the following:
- GAAP diluted earnings per share to
decrease in a range of minus 7 percent to minus 4 percent in
constant currency. Previous guidance was minus 11 percent to minus
6 percent in constant currency. At September 30, 2013 exchange
rates, this translates to reported GAAP diluted earnings per share
of $1.92 to $1.98.
- Non-GAAP diluted earnings per share to
increase in a range of 17 percent to 20 percent in constant
currency. Previous guidance was 16 percent to 20 percent in
constant currency. At September 30, 2013 exchange rates, this
translates to reported non-GAAP diluted earnings per share of $2.96
to $3.03.
- Cash flow from operations to decrease
in a range of minus 30 percent to minus 24 percent in constant
currency, unchanged from previous guidance. At September 30,
2013 exchange rates, this translates to reported cash flow from
operations of $970 million to $1.05 billion.
- Total revenue to decrease in a range of
minus 3 percent to minus 2 percent in constant currency. Previous
guidance was a decrease of minus 4 percent to minus 2 percent. At
September 30, 2013 exchange rates, this translates to reported
revenue of $4.47 billion to $4.52 billion.
Outlook for cash flow from operations is being negatively
affected by costs associated with the rebalancing of resources
during the fiscal year, an increase in cash taxes, and an increase
in operating cash outflows relating to product development and
enhancements expense for fiscal year 2014. In fiscal year 2013,
cash flow from operations did not reflect $165 million of
capitalized software development costs that appeared as an
investment activity in our Statement of Cash Flows.
This outlook also assumes no material acquisitions and a partial
currency hedge of operating income. The Company expects a full-year
GAAP operating margin of 24 percent, an increase of one point from
previous guidance, and non-GAAP operating margin of 36 percent. The
Company expects a fiscal year 2014 GAAP and non-GAAP effective tax
rate of approximately 14 percent.
The Company anticipates approximately 438 million shares
outstanding at fiscal year 2014 year-end and weighted average
diluted shares outstanding of approximately 447 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 conference call and webcast that the Company will host at
5 p.m. ET today to discuss its unaudited second quarter results.
The webcast will be archived on the website. Individuals can access
the webcast, as well as the press release and supplemental
financial information at http://ca.com/invest or can listen to the call at
1-877-561-2748. The international participant number is
1-720-545-0044.
About CA Technologies
CA Technologies (NASDAQ: CA) provides IT management solutions
that help customers manage and secure complex IT environments to
support agile business services. Organizations leverage CA
Technologies software and SaaS solutions to accelerate innovation,
transform infrastructure and secure data and identities, from the
data center to the cloud. Learn more about CA Technologies at
www.ca.com.
Follow CA Technologies
- Twitter
- Social Media Page
- Press Releases
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
continuing operations and diluted earnings per share exclude the
following items: non-cash amortization of purchased software and
other intangibles, share-based compensation, fiscal year 2007
restructuring costs, recoveries and certain costs associated with
derivative litigation matters and certain other gains and losses,
which include 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. The Company will expense
costs for internally developed software where development efforts
commenced in the first quarter of fiscal year 2014 and afterwards.
As a result, product development and enhancement expenses are
expected to increase in future periods as the amount capitalized
for internally developed software costs decreases. Due to this
change, the Company will also add back capitalized internal
software costs and exclude the amortization of internal software
costs from these non-GAAP metrics. Also beginning in the first
quarter of fiscal year 2014, the Company will exclude charges
relating to rebalancing initiatives that are large enough to
require approval from the Company's Board of Directors. 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 continuing operations,
respectively. These 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 in
which such items arise and the effective tax rate for non-GAAP
generally allocating the impact of discrete items pro rata to the
fiscal year's remaining reporting periods. Adjusted cash flow from
operations excludes payments associated with the fiscal year 2014
Board-approved rebalancing initiative as described above,
capitalized software development costs as described above, and
restructuring and other payments. Free cash flow excludes purchases
of property and equipment and capitalized software development
costs. 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 U.S.
dollars are converted into U.S. dollars at the exchange rate in
effect on the last day of our prior fiscal year (i.e., March 31,
2013, March 31, 2012 and March 31, 2011, respectively). 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
The declaration and payment of future dividends is subject to
the determination of the Company's Board of Directors, in its sole
discretion, after considering various factors, including the
Company's financial condition, historical and forecast operating
results, and available cash flow, as well as any applicable laws
and contractual covenants and any other relevant factors. The
Company's practice regarding payment of dividends may be modified
at any time and from time to time.
Repurchases under the Company's stock repurchase program are
expected to be made with cash on hand and may be made from time to
time, subject to market conditions and other factors, in the open
market, through solicited or unsolicited privately negotiated
transactions or otherwise. The program, which is authorized through
the fiscal year ending March 31, 2014, does not obligate the
Company to acquire any particular amount of common stock, and it
may be modified or suspended at any time at the Company's
discretion.
Certain statements in this communication (such as statements
containing the words "believes," "plans," "anticipates," "expects,"
"estimates," "targets" and similar expressions relating to the
future) 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, effectively rebalancing the Company's sales force to
enable the Company to maintain and enhance its strong relationships
in its traditional customer base of large enterprises and to
increase penetration in growth markets and with large enterprises
that have not historically been significant customers, 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,
application development and IT operations (DevOps),
Software-as-a-Service, mobile device management 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; the failure to
adapt to technological changes and introduce new software products
and services in a timely manner; competition in product and service
offerings and pricing; the failure to expand partner programs; the
ability to retain and attract adequate qualified personnel; the
ability to integrate acquired companies and products into existing
businesses; the ability to adequately manage, evolve and protect
managerial and financial reporting systems and processes; the
ability of the Company's products to remain compatible with
ever-changing operating environments; breaches of the Company's
software products and the Company's and customers' data centers and
IT environments; discovery of errors or omissions in the Company's
software products or documentation and potential product liability
claims; the failure to protect the Company's intellectual property
rights and source code; risks associated with sales to government
customers; access to software licensed from third parties; risks
associated with the use of software from open source code sources;
events or circumstances that would require us to record an
impairment charge relating to our goodwill or capitalized software
and other intangible asset balances; access to third-party code and
specifications for the development of code; third-party claims of
intellectual property infringement or royalty payments;
fluctuations in the number, terms and duration of the Company's
license agreements as well as the timing of orders from customers
and channel partners; the failure to renew large license
transactions on a satisfactory basis; changes in market conditions
or the Company's credit ratings; fluctuations in foreign
currencies; the failure to effectively execute the Company's
workforce reductions, workforce re-balancing and facility
consolidations; successful outsourcing of various functions to
third parties; potential tax liabilities; acquisition opportunities
that may or may not arise; and other factors described more fully
in the Company's filings with the Securities and Exchange
Commission. Should one or more of these risks or uncertainties
occur, or should our assumptions prove incorrect, actual results
may vary materially from those described herein as believed,
planned, anticipated, expected, estimated, targeted or similarly
expressed in a forward-looking manner. 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 © 2013 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.
Table 1 CA Technologies Consolidated Statements of
Operations (unaudited) (in millions, except per share amounts)
Three Months Ended Six Months
Ended
September
30,
September
30,
Revenue:
2013
2012
2013
2012
Subscription and maintenance $ 945 $ 963 $ 1,889 $ 1,940
Professional services 97 95 195 186 Software fees and other
98 94 184 171
Total
revenue $ 1,140 $ 1,152 $ 2,268 $ 2,297
Expenses: Costs of licensing and maintenance $ 73 $ 69 $ 144
$ 138 Cost of professional services 88 88 176 174 Amortization of
capitalized software costs 73 67 142 131 Selling and marketing 260
317 541 622 General and administrative 91 98 182 208 Product
development and enhancements 145 123 280 248 Depreciation and
amortization of other intangible assets 37 40 73 81 Other (gains)
expenses, net (1) 14 13 143 (23
)
Total expenses before interest and income taxes $ 781 $
815 $ 1,681 $ 1,579 Income before interest and income
taxes $ 359 $ 337 $ 587 $ 718 Interest expense, net 13
10 24 21 Income before income
taxes $ 346 $ 327 $ 563 $ 697 Income tax expense (benefit)
106 105 (12 ) 235
Net income $
240 $ 222 $ 575 $ 462
Basic income per
common share $ 0.53 $ 0.48 $ 1.27 $ 0.99
Basic weighted
average shares used in computation 448 458 449 462
Diluted income per common share $ 0.53 $ 0.48 $ 1.26 $ 0.99
Diluted weighted average shares used in computation 450 459
450 463 (1) Other (gains) expenses, net includes
approximately $2 million and $122 million of charges relating to
the FY2014 Board approved re-balancing initiative announced May 7,
2013, for the three and six month periods ending September 30,
2013, respectively.
Table 2 CA Technologies
Condensed Consolidated Balance Sheets (in millions)
September 30, March 31,
2013
2013
(unaudited) Cash and cash equivalents $ 2,790 $ 2,593 Short-term
investments 9 183 Trade accounts receivable, net 588 856 Deferred
income taxes 358 346 Other current assets 166
148
Total current assets $ 3,911 $ 4,126
Property and equipment, net $ 306 $ 311 Goodwill 5,920 5,871
Capitalized software and other intangible assets, net 1,214 1,231
Deferred income taxes 76 77 Other noncurrent assets, net 168
195
Total assets $ 11,595 $
11,811 Current portion of long-term debt $ 11 $ 16
Deferred revenue (billed or collected) 2,038 2,482 Deferred income
taxes 12 12 Other current liabilities 794
1,031
Total current liabilities $ 2,855 $ 3,541
Long-term debt, net of current portion $ 1,768 $ 1,274
Deferred income taxes 122 120 Deferred revenue (billed or
collected) 856 975 Other noncurrent liabilities 319
451
Total liabilities $ 5,920 $ 6,361
Common stock $ 59 $ 59 Additional paid-in capital
3,566 3,593 Retained earnings 5,704 5,357 Accumulated other
comprehensive loss (175 ) (155 ) Treasury stock (3,479 )
(3,404 )
Total stockholders’ equity $ 5,675 $
5,450
Total liabilities and stockholders’ equity $
11,595 $ 11,811
Table 3 CA Technologies
Condensed Consolidated Statements of Cash Flows (unaudited)
(in millions) Three Months Ended
September 30, 2013
2012 Operating activities: Net income $ 240 $
222 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 110 107
Deferred income taxes (11 ) (27 ) Provision for bad debts 3 2
Share-based compensation expense 21 21 Asset impairments and other
non-cash items 2 2 Foreign currency transaction losses 3 7 Changes
in other operating assets and liabilities, net of effect of
acquisitions: Increase in trade accounts receivable (57 ) (92 )
Decrease in deferred revenue (263 ) (283 ) Increase in taxes
payable, net 68 110 Increase (decrease) in accounts payable,
accrued expenses and other 4 (7 ) (Decrease) increase in accrued
salaries, wages and commissions (33 ) 28 Changes in other operating
assets and liabilities - (1 )
Net cash
provided by operating activities $ 87 $ 89
Investing activities: Acquisitions of businesses, net of
cash acquired, and purchased software $ (3 ) $ (7 ) Purchases of
property and equipment (22 ) (10 ) Capitalized software development
costs (10 ) (42 ) Purchases of short-term investments (9 )
(154 )
Net cash used in investing activities $ (44 )
$ (213 )
Financing activities: Dividends paid $ (114 ) $
(116 ) Purchases of common stock (151 ) (258 ) Notional pooling
(repayments) borrowings, net (32 ) 26 Debt borrowings (repayments),
net 494 (5 ) Debt issuance costs (3 ) - Exercise of common stock
options and other 27 5
Net cash
provided by (used in) financing activities $ 221 $ (348
)
Net change in cash and cash equivalents before effect of
exchange rate
changes on cash
$ 264 $ (472 ) Effect of exchange rate changes on cash $ 65
$ 17
Increase (decrease) in cash and cash equivalents
$ 329 $ (455 )
Cash and cash equivalents at beginning of
period $ 2,461 $ 2,541
Cash and cash
equivalents at end of period $ 2,790 $ 2,086
Table 4 CA Technologies Operating Segments
(unaudited) (dollars in millions)
Three Months Ended September 30,
2013 Six Months Ended September 30, 2013 Mainframe Solutions
(1) Enterprise Solutions (1) Services (1)
Total Mainframe Solutions (1) Enterprise Solutions (1)
Services (1) Total Revenue (2) $ 624 $ 419 $
97 $ 1,140 $ 1,243 $ 830 $ 195 $ 2,268 Expenses (3) 228
357 88 673
470 727 178 1,375
Segment profit $ 396 $ 62 $ 9 $ 467 $
773 $ 103 $ 17 $ 893 Segment operating
margin 63 % 15 % 9 % 41 % 62 % 12 % 9 % 39 % Segment profit
$ 467 $ 893 Less: Purchased software amortization 31 59 Other
intangibles amortization 15 29 Software development costs
capitalized (8 ) (31 ) Internally developed software products
amortization 42 83 Share-based compensation expense 21 41 Other
(gains) expenses, net (4) 7 125 Interest expense, net 13
24 Income before income taxes $ 346 $
563 Three Months Ended
September 30, 2012 Six Months Ended September 30, 2012
Mainframe Solutions (1) Enterprise Solutions (1)
Services (1) Total Mainframe Solutions (1) Enterprise
Solutions (1) Services (1) Total Revenue (2) $
619 $ 438 $ 95 $ 1,152 $ 1,247 $ 864 $ 186 $ 2,297 Expenses (3)
250 409 89 748
511 766 176
1,453 Segment profit $ 369 $ 29 $ 6 $
404 $ 736 $ 98 $ 10 $ 844
Segment operating margin 60 % 7 % 6 % 35 % 59 % 11 % 5 % 37 %
Segment profit $ 404 $ 844 Less: Purchased software
amortization 27 54 Other intangibles amortization 13 27 Software
development costs capitalized (42 ) (78 ) Internally developed
software products amortization 40 77 Share-based compensation
expense 21 44 Other (gains) expenses, net (4) 8 2 Interest expense,
net 10 21 Income before income taxes $
327 $ 697
(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 Next Generation
Mainframe Management 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: reducing costs and improving operational
efficiency, sustaining critical skills through modernized and
simplified management, and increasing innovation and agility to
help deliver on business goals.
• Enterprise Solutions – Our Enterprise
Solutions segment includes products that operate on non-mainframe
platforms, such as application performance management,
infrastructure management, security (identity and access
management), service and portfolio management, application
delivery, 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) We regularly enter into a single arrangement with a
customer that includes Mainframe Solutions segment software
products, Enterprise Solutions segment software products and
Services. The amount of contract revenue assigned to segments is
generally based on the manner in which the proposal is made to the
customer. 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 product); (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.
The contract value assigned to each segment is then recognized in a
manner consistent with the revenue recognition policies we apply to
the customer contract for purposes of preparing the Condensed
Consolidated Financial Statements. (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 and general and
administrative costs. 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) Other (gains) expenses, net
includes charges relating to the FY2014 Board approved re-balancing
initiative announced May 7, 2013, certain foreign exchange
derivative hedging gains and losses, and other miscellaneous costs.
Prior year segment results have been adjusted for internally
developed software.
Table 5 CA Technologies
Constant Currency Summary (unaudited) (dollars in millions)
Three
Months Ended September 30, Six Months Ended September 30, 2013 2012
% Increase
(Decrease)
in $ US
% Increase (Decrease) in Constant Currency (1) 2013 2012 % Increase
(Decrease)
in $ US
% Increase (Decrease) in Constant Currency (1)
Bookings $ 877 $ 837 5 % 5 % $ 1,701 $ 1,390 22 % 24 %
Revenue: North America $ 731 $ 730 0 % 0 % $ 1,448 $
1,456 (1 )% 0 % International 409 422 (3 )% (1 )%
820 841 (2 )% (1 )% Total revenue $ 1,140 $ 1,152 (1
)% 0 % $ 2,268 $ 2,297 (1 )% (1 )%
Revenue:
Subscription and maintenance $ 945 $ 963 (2 )% (1 )% $ 1,889 $
1,940 (3 )% (2 )% Professional services 97 95 2 % 3 % 195 186 5 % 5
% Software fees and other 98 94 4 % 6 % 184
171 8 % 9 % Total revenue $ 1,140 $ 1,152 (1 )% 0 % $ 2,268
$ 2,297 (1 )% (1 )%
Segment Revenue: Mainframe
solutions $ 624 $ 619 1 % 1 % $ 1,243 $ 1,247 0 % 0 % Enterprise
solutions 419 438 (4 )% (3 )% 830 864 (4 )% (3 )% Services 97 95 2
% 3 % 195 186 5 % 5 %
Total expenses before interest and
income taxes: Total non-GAAP (2) $ 673 $ 748 (10 )% (9 )% $
1,375 $ 1,453 (5 )% (5 )% Total GAAP 781 815 (4 )% (3 )% 1,681
1,579 6 % 7 % (1) Constant currency information is presented
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, 2013, which was the last day of our prior
fiscal year. 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 non-GAAP
results have been adjusted for internally developed software.
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
(unaudited) (dollars in millions) Three
Months Ended Six Months Ended
September
30,
September
30,
2013
2012
2013
2012
GAAP net income $ 240 $ 222 $ 575 $ 462 GAAP income tax expense
(benefit) 106 105 (12 ) 235 Interest expense, net 13
10 24 21 GAAP income
before interest and income taxes $ 359 $ 337 $ 587
$ 718 GAAP operating margin (% of revenue) (1) 31 %
29 % 26 % 31 % Non-GAAP adjustments to expenses: Costs of
licensing and maintenance (2) $ 1 $ 1 $ 2 $ 1 Cost of professional
services (2) 1 1 2 2 Amortization of capitalized software costs (3)
73 67 142 131 Selling and marketing (2) 8 8 15 18 General and
administrative (2) 6 7 12 15 Product development and enhancements
(4) (3 ) (38 ) (21 ) (70 ) Depreciation and amortization of other
intangible assets (5) 15 13 29 27 Other (gains) expenses, net (6)
7 8 125 2
Total Non-GAAP adjustment to operating expenses $ 108 $ 67
$ 306 $ 126 Non-GAAP income before interest
and income taxes $ 467 $ 404 $ 893 $ 844 Non-GAAP operating margin
(% of revenue) (7) 41 % 35 % 39 % 37 % Interest expense, net
13 10 24 21 GAAP income tax expense (benefit) 106 105 (12 ) 235
Non-GAAP adjustment to income tax expense (benefit) (8) (42
) 17 134 18 Non-GAAP
income tax expense $ 64 $ 122 $ 122 $ 253
Non-GAAP income $ 390 $ 272 $ 747 $ 570
(1) GAAP operating margin is calculated by dividing
GAAP income 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) For the
three month periods ending September 30, 2013 and 2012, non-GAAP
adjustment consists of $31 million and $27 million of purchased
software amortization and $42 million and $40 million of internally
developed software products amortization, respectively. For the six
month periods ending September 30, 2013 and 2012, non-GAAP
adjustment consists of $59 million and $54 million of purchased
software amortization and $83 million and $77 million of internally
developed software products amortization, respectively. (4)
For the three month periods ending September 30, 2013 and 2012,
non-GAAP adjustment consists of $5 million and $4 million of
share-based compensation and ($8) million and ($42) million of
software development costs capitalized, respectively. For the six
month periods ending September 30, 2013 and 2012, non-GAAP
adjustment consists of $10 million and $8 million of share-based
compensation and ($31) million and ($78) million of software
development costs capitalized, respectively. (5) Non-GAAP
adjustment consists of other intangibles amortization. (6)
Non-GAAP adjustment consists of charges relating to the FY2014
Board approved re-balancing initiative announced May 7, 2013 and
certain other gains and losses, including gains and losses since
inception of hedges that mature within the quarter, but excludes
gains and losses of hedges that do not mature within the quarter.
(7) Non-GAAP operating margin is calculated by dividing
non-GAAP income before interest and income taxes by total revenue
(refer to 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 before income
taxes. 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 non-GAAP results have been adjusted for internally developed
software. 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
(unaudited) (in millions, except per share amounts)
Three Months Ended Six Months Ended
September
30,
September
30,
Operating
Expenses
2013
2012
2013
2012
Total expenses before interest and income taxes $ 781 $ 815
$ 1,681 $ 1,579 Non-GAAP operating adjustments: Purchased
software amortization 31 27 59 54 Other intangibles amortization 15
13 29 27 Software development costs capitalized (8) (42) (31) (78)
Internally developed software products amortization 42 40 83 77
Share-based compensation 21 21 41 44 Other (gains) expenses, net
(1) 7 8 125 2 Total non-GAAP operating adjustment $ 108 $ 67 $ 306
$ 126 Total non-GAAP operating expenses $ 673 $ 748 $ 1,375
$ 1,453 Three Months Ended Six Months Ended
September
30,
September
30,
Diluted
EPS
2013
2012
2013
2012
GAAP diluted EPS $ 0.53 $ 0.48 $ 1.26 $ 0.99 Non-GAAP
adjustments, net of taxes: Purchased software amortization 0.05
0.04 0.13 0.08 Other intangibles amortization 0.02 0.02 0.07 0.04
Software development costs capitalized (0.01) (0.06) (0.07) (0.11)
Internally developed software products amortization 0.06 0.06 0.19
0.11 Share-based compensation 0.03 0.03 0.09 0.06 Other (gains)
expenses, net (1) 0.01 0.01 0.28 - Non-GAAP effective tax rate
adjustments (2) 0.17 0.01 (0.31) 0.05 Total non-GAAP adjustment $
0.33 $ 0.11 $ 0.38 $ 0.23 Non-GAAP diluted EPS $ 0.86 $ 0.59
$ 1.64 $ 1.22 (1) Non-GAAP adjustment consists of charges
relating to the FY2014 Board approved re-balancing initiative
announced May 7, 2013 and certain other gains and losses, including
gains and losses since inception of hedges that mature within the
quarter, but excludes gains and losses of hedges that do not mature
within the quarter. (2) The non-GAAP effective tax rate is
equal to the full year GAAP effective tax rate, therefore no
adjustment is required on an annual basis. On an interim basis, the
difference in non-GAAP income tax expense and GAAP income tax
expense relates to the difference in non-GAAP income before income
taxes, and includes 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 purposes 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 non-GAAP results have been adjusted
for internally developed software. Certain non-material
differences may arise versus actual from impact of rounding.
Table 8 CA Technologies Effective Tax Rate
Reconciliation GAAP and Non-GAAP (unaudited) (dollars in
millions) Three Months Ended Six
Months Ended
September 30,
2013
September 30,
2013
GAAP
Non-GAAP
GAAP
Non-GAAP
Income before interest and income taxes (1) $ 359 $ 467 $
587 $ 893 Interest expense, net 13 13
24 24 Income before income taxes $ 346
$ 454 $ 563 $ 869 Statutory tax rate 35 % 35 % 35 % 35 %
Tax at statutory rate $ 121 $ 159 $ 197 $ 304 Adjustments
for discrete and permanent items (2) (15 ) (95 )
(209 ) (182 ) Total tax expense (benefit) $ 106 $ 64
$ (12 ) $ 122 Effective tax rate (3) 30.6 % 14.1 % (2.1 )%
14.0 % Three Months Ended Six Months Ended
September 30,
2012
September 30,
2012
GAAP
Non-GAAP
GAAP
Non-GAAP
Income before interest and income taxes (1) $ 337 $ 404 $
718 $ 844 Interest expense, net 10 10
21 21 Income before income taxes $ 327
$ 394 $ 697 $ 823 Statutory tax rate 35 % 35 % 35 % 35 %
Tax at statutory rate $ 114 $ 138 $ 244 $ 288 Adjustments
for discrete and permanent items (2) (9 ) (16 )
(9 ) (35 ) Total tax expense $ 105 $ 122 $ 235 $ 253
Effective tax rate (3) 32.1 % 31.0 % 33.7 % 30.7 % (1)
Refer to Table 6 for a reconciliation of income before
interest and income taxes on a GAAP basis to income before interest
and 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 is the Company's provision for income taxes expressed as a
percentage of GAAP and non-GAAP income before income taxes,
respectively. The non-GAAP effective tax rate is equal to the full
year GAAP effective tax rate. On an interim basis, the effective
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 non-GAAP results have been adjusted for internally
developed software. Certain non-material differences may
arise versus actual from impact of rounding.
Table 9 CA
Technologies Reconciliation of Projected GAAP Metrics to
Projected Non-GAAP Metrics (unaudited) Fiscal
Year Ending
Projected Diluted
EPS
March 31,
2014
Projected GAAP diluted EPS range $ 1.92 to $ 1.98
Non-GAAP adjustments, net of taxes: Purchased software amortization
0.24 0.25 Other intangibles amortization 0.10 0.10 Software
development costs capitalized (0.07 ) (0.07 ) Internally developed
software products amortization 0.32 0.32 Share-based compensation
0.16 0.16 Other (gains) expenses, net (1) 0.29
0.29 Total non-GAAP adjustment $ 1.04 $ 1.05
Projected non-GAAP diluted EPS range $ 2.96 to $ 3.03
Fiscal Year Ending
Projected Operating
Margin
March 31,
2014
Projected GAAP operating margin 24 % Non-GAAP
operating adjustments: Purchased software amortization 3 % Other
intangibles amortization 1 % Software development costs capitalized
(1 )% Internally developed software products amortization 4 %
Share-based compensation 2 % Other (gains) expenses, net (1) 3 %
Total non-GAAP operating adjustment 12 % Projected non-GAAP
operating margin 36 % (1) Non-GAAP adjustment consists of
charges relating to the FY2014 Board approved re-balancing
initiative announced May 7, 2013. Refer to the discussion of
non-GAAP financial measures included in the accompanying press
release for additional information.
CA TechnologiesDan KaferlePublic Relations(631)
342-2111daniel.kaferle@ca.comorJonathan DorosInvestor
Relations(212) 415-6870jonathan.doros@ca.comorMichael BauerInvestor
Relations(212) 310-6276michael.bauer@ca.com
Xtrackers California Mun... (NASDAQ:CA)
Historical Stock Chart
From Sep 2024 to Oct 2024
Xtrackers California Mun... (NASDAQ:CA)
Historical Stock Chart
From Oct 2023 to Oct 2024