[January 24, 2017] |
|
CA Technologies Reports Third Quarter Fiscal Year 2017 Results
CA Technologies (NASDAQ:CA) today reported financial results for its
third quarter fiscal 2017, which ended December 31, 2016.
Mike Gregoire, CA Technologies Chief Executive Officer, said:
"I am pleased with the strong growth in cash flow from operations as
well as the healthy operating margin and earnings per share we delivered
in the third quarter. On a constant currency basis, our revenue in the
quarter came in as expected. The cadence and quality of our product
releases is improving and we are making progress across a number of
strategic imperatives, but we still have work to do to achieve the level
of sustainable growth we are targeting."
FINANCIAL OVERVIEW
|
|
|
|
|
|
(dollars in millions, except share data)
|
|
Third Quarter FY17 vs. FY16
|
|
FY17
|
|
FY16
|
|
% Change
|
|
% Change CC*
|
Revenue
|
|
$1,007
|
|
$1,034
|
|
(3)%
|
|
(2)%
|
GAAP Income from Continuing Operations
|
|
$208
|
|
$219
|
|
(5)%
|
|
(9)%
|
Non-GAAP Income from Continuing Operations*
|
|
$263
|
|
$268
|
|
(2)%
|
|
(3)%
|
GAAP Diluted EPS from Continuing Operations
|
|
$0.50
|
|
$0.52
|
|
(4)%
|
|
(8)%
|
Non-GAAP Diluted EPS from Continuing Operations*
|
|
$0.63
|
|
$0.63
|
|
0%
|
|
(2)%
|
Cash Flow provided by Continuing Operations
|
|
$517
|
|
$332
|
|
56%
|
|
57%
|
* Non-GAAP income, Non-GAAP earnings per share and CC or Constant
Currency are non-GAAP financial measures, as noted in "Non-GAAP
Financial Measures" below. A reconciliation of non-GAAP financial
measures to their comparable GAAP financial measures is included in the
tables following this news release.
REVENUE AND BOOKINGS
|
|
|
|
(dollars in millions)
|
|
Third Quarter FY17 vs. FY16
|
|
FY17
|
|
% of Total
|
|
FY16
|
|
% of Total
|
|
% Change
|
|
% Change CC*
|
North America Revenue
|
|
$674
|
|
67%
|
|
$702
|
|
68%
|
|
(4)%
|
|
(4)%
|
International Revenue
|
|
$333
|
|
33%
|
|
$332
|
|
32%
|
|
0%
|
|
1%
|
Total Revenue
|
|
$1,007
|
|
|
|
$1,034
|
|
|
|
(3)%
|
|
(2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Bookings
|
|
$809
|
|
64%
|
|
$727
|
|
59%
|
|
11%
|
|
11%
|
International Bookings
|
|
$449
|
|
36%
|
|
$515
|
|
41%
|
|
(13)%
|
|
(12)%
|
Total Bookings
|
|
$1,258
|
|
|
|
$1,242
|
|
|
|
1%
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Revenue Backlog
|
|
$2,994
|
|
|
|
$3,030
|
|
|
|
(1)%
|
|
0%
|
Total Revenue Backlog
|
|
$7,005
|
|
|
|
$6,800
|
|
|
|
3%
|
|
4%
|
*CC or Constant Currency is a non-GAAP financial measure, as noted in
"Non-GAAP Financial Measures" below. A reconciliation of non-GAAP
financial measures to their comparable GAAP financial measures is
included in the tables following this news release.
-
Total revenue decreased due to decline in subscription and maintenance
revenue, professional services revenue and software fees and other
revenue.
-
Total bookings increased primarily due to an increase in enterprise
solutions renewals, partially offset by decreases in mainframe
solutions renewals and enterprise solutions new product sales.
-
The Company executed a total of 21 license agreements with incremental
contract values in excess of $10 million each, for an aggregate
contract value of $577 million. During the third quarter of fiscal
2016, the Company executed a total of 18 license agreements with
incremental contract values in excess of $10 million each, for an
aggregate contract value of $593 million.
-
The weighted average duration of subscription and maintenance bookings
for the quarter was 3.32 years, compared with 3.76 years for the same
period in fiscal 2016.
EXPENSES, MARGIN AND EARNINGS PER SHARE
|
|
|
|
(dollars in millions)
|
|
Third Quarter FY17 vs. FY16
|
|
FY17
|
|
FY16
|
|
% Change
|
|
% Change CC**
|
GAAP
|
|
|
Operating Expenses Before Interest and Income Taxes
|
|
$699
|
|
$741
|
|
(6)%
|
|
(4)%
|
Operating Income Before Interest and Income Taxes
|
|
$308
|
|
$293
|
|
5%
|
|
2%
|
Diluted EPS from Continuing Operations
|
|
$0.50
|
|
$0.52
|
|
(4)%
|
|
(8)%
|
Operating Margin
|
|
31%
|
|
28%
|
|
|
|
|
Effective Tax Rate
|
|
28.8%
|
|
21.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP*
|
|
|
Operating Expenses Before Interest and Income Taxes
|
|
$623
|
|
$644
|
|
(3)%
|
|
(2)%
|
Operating Income Before Interest and Income Taxes
|
|
$384
|
|
$390
|
|
(2)%
|
|
(2)%
|
Diluted EPS from Continuing Operations
|
|
$0.63
|
|
$0.63
|
|
0%
|
|
(2)%
|
Operating Margin
|
|
38%
|
|
38%
|
|
|
|
|
Effective Tax Rate
|
|
28.5%
|
|
28.5%
|
|
|
|
|
*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, amortization
of internal software costs, Board approved workforce 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 or Constant Currency is a non-GAAP financial measure, as noted in
"Non-GAAP Financial Measures" below. A reconciliation of non-GAAP
financial measures to their comparable GAAP financial measures is
included in the tables following this news release.
-
GAAP and non-GAAP operating expenses decreased primarily due to
favorable foreign exchange and a decline in legal settlement expense
included within other (gains) expenses, net, and a decrease in
commission expense as a result of the decline in total new product
sales, partially offset by an increase in personnel-related costs as a
result of severance actions during the third quarter of fiscal 2017.
-
GAAP operating expenses were also affected by lower amortization
expenses of capitalized software and other intangible assets.
-
GAAP EPS was negatively impacted by $0.05 from an increase in GAAP
effective tax rate partially offset by a $0.03 impact from improvement
in GAAP operating margin primarily due to an overall decrease in GAAP
operating expenses.
SELECTED HIGHLIGHTS FROM THE QUARTER
-
At CA World last November, the Company announced a series of new
solutions across its Agile, DevOps, Security and Mainframe portfolios,
which included:
* A new identity-as-a-service solution to address identity and access
management (IAM) needs for both on-premises and cloud-based applications.
* New DevOps capabilities with intelligent analytics and integrations
for cloud services and virtual networks.
* Predictive analytics capabilities with machine learning for the
mainframe.
* Enhancements to its leading SaaS solution purpose-built to scale agile
practices.
-
CA Technologies added new cloud-enabled automation and orchestration
capabilities across its portfolio and increased its reach into the
European market with the acquisition of Automic Holding GmbH
(Automic), a leader in business automation software. The deal, valued
at approximately 600 million euros net of cash and cash equivalents
acquired, closed earlier this month and complements the company's
organic innovation.
-
CA Technologies was positioned highest in the Gartner Leader's
Quadrant for Ability to Execute within the Full Life Cycle API
Management Magic Quadrant. (1)
-
CA Technologies has been named a leader in the Gartner Integrated IT
Portfolio Analysis Applications Magic Quadrant for the fifth
consecutive year.(2)
-
CA Technologies has been named a leader in The Forrester Wave: API
Management Solutions, Q4 2016.(3)
SEGMENT INFORMATION
|
|
|
|
(dollars in millions)
|
|
Third Quarter FY17 vs. FY16
|
|
Revenue
|
|
% Change
|
|
% Change CC*
|
|
Operating Margin
|
|
FY17
|
|
FY16
|
|
|
|
FY17
|
|
FY16
|
Mainframe Solutions
|
|
$546
|
|
$554
|
|
(1)%
|
|
(1)%
|
|
61%
|
|
61%
|
Enterprise Solutions
|
|
$389
|
|
$398
|
|
(2)%
|
|
(2)%
|
|
14%
|
|
12%
|
Services
|
|
$72
|
|
$82
|
|
(12)%
|
|
(12)%
|
|
-4%
|
|
6%
|
*CC or Constant Currency is a non-GAAP financial measure, as noted in
"Non-GAAP Financial Measures" below. A reconciliation of non-GAAP
financial measures to their comparable GAAP financial measures is
included in the tables following this news release.
-
Mainframe Solutions revenue declined primarily due to insufficient
revenue from prior period new sales to offset the decline in revenue
contribution from renewals.
-
Enterprise Solutions revenue declined primarily due to a decrease in
revenue recognized on an upfront basis. Enterprise Solutions operating
margin increased primarily due to an overall decrease in operating
expenses.
-
Services revenue decreased primarily due to a decline in professional
services engagements from prior periods. This decline in professional
services engagements is a result of several factors including the
Company's products being easier to install and manage, an increase in
the use of partners for services engagements and the completion of
non-strategic projects during previous periods. Operating margin for
Services decreased primarily due to the overall decline in
professional services revenue and an increase in personnel-related
costs as a result of severance actions during the third quarter of
fiscal 2017.
CASH FLOW FROM OPERATIONS
-
Cash flow from operations for the third quarter of fiscal 2017 was
$517 million, versus $332 million in the year-ago period. Cash flow
from operations increased compared with the year-ago period primarily
due to an increase in cash collections, mainly from higher single
installment collections, a decrease in vendor disbursements and
payroll, and a decrease in other disbursements.
CAPITAL STRUCTURE
-
Cash and cash equivalents at December 31, 2016 were $2.828 billion.
-
With $1.950 billion in total debt outstanding and $139 million in
notional pooling, the Company's net cash position was $739 million.
-
Approximately 79% of the Company's cash and cash equivalents were held
by foreign subsidiaries outside the United States at December 31, 2016.
-
As of December 31, 2016, the Company was authorized to purchase $650
million of its common stock under its current stock repurchase program.
-
The Company distributed $107 million in dividends to shareholders
during the third quarter of fiscal 2017.
-
The Company's outstanding share count at December 31, 2016 was 413
million.
OUTLOOK FOR FISCAL YEAR 2017
The Company has updated its fiscal 2017 outlook. This guidance includes
the acquisition of Automic, assumes no further material acquisitions,
and contains "forward-looking statements" (as defined below).
The Company expects the following:*
-
Total revenue to be flat as reported and to increase in a range of
flat to plus 1 percent in constant currency. Previous guidance was to
increase in a range of flat to plus 1 percent as reported and in
constant currency. At December 31, 2016 exchange rates, this
translates to reported revenue of $4.01 billion to $4.03 billion.
-
GAAP diluted earnings per share from continuing operations to increase
in a range of 1 percent to 4 percent as reported and flat to 2 percent
in constant currency. Previous guidance was to increase in a range of
6 percent to 8 percent as reported and 2 percent to 5 percent in
constant currency. At December 31, 2016 exchange rates, this
translates to reported GAAP diluted earnings per share from continuing
operations of $1.80 to $1.85.
-
Non-GAAP diluted earnings per share from continuing operations to be
in a range of flat to plus 2 percent as reported and minus 2 percent
to flat in constant currency. Previous guidance was to increase in a
range of 2 percent to 5 percent as reported and 1 percent to 3 percent
in constant currency. At December 31, 2016 exchange rates, this
translates to reported non-GAAP diluted earnings per share from
continuing operations of $2.42 to $2.47.
-
Cash flow from continuing operations to change in a range of minus 5
percent to minus 1 percent as reported and minus 3 percent to plus 1
percent in constant currency. Previous guidance was to change in a
range of minus 3 percent to plus 1 percent as reported and in constant
currency. At December 31, 2016 exchange rates, this translates to
reported cash flow from continuing operations of $0.99 billion to
$1.03 billion.
The Company expects a full-year GAAP operating margin of 28 percent and
a full year non-GAAP operating margin of 37 percent, which translates to
a 1-point decrease from previous guidance for both GAAP and non-GAAP
operating margins.
The Company also expects a full-year GAAP and non-GAAP effective tax
rate of between 28 percent and 29 percent, unchanged from previous
guidance.
The Company anticipates approximately 413 million shares outstanding at
fiscal 2017 year-end and weighted average diluted shares outstanding of
approximately 415 million for the fiscal year.
*In the outlook section, certain non-material differences between growth
rates and translated dollar amounts may arise from impact of rounding.
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 5:00 p.m. ET
today to discuss its unaudited third 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.
(1)
|
|
Gartner Magic Quadrant for Full Life Cycle API Management,
Paolo Malinverno and Mark O'Neill, October 27, 2016.
|
|
|
|
(2)
|
|
Gartner Magic Quadrant for Integrated IT Portfolio Analysis
Applications, Daniel Stang and Stefan Van Der Zijden, November 22,
2016.
|
|
|
|
(1)(2)
|
|
The Gartner Report(s) described herein, (the "Gartner
Report(s)" represent(s) research opinion or viewpoints published,
as part of a syndicated subscription service, by Gartner, Inc.
("Gartner"), and are not representations of fact. Each Gartner
Report speaks as of its original publication date (and not as of
the date of this Quarterly Report) and the opinions expressed in
the Gartner Report(s) are subject to change without notice.
|
|
|
|
|
|
Gartner does not endorse any vendor, product or service
depicted in its research publications, and does not advise
technology users to select only those vendors with the highest
ratings or other designation. Gartner research publications
consist of the opinions of Gartner's research organization and
should not be construed as statements of fact. Gartner disclaims
all warranties, expressed or implied, with respect to this
research, including any warranties of merchantability or fitness
for a particular purpose.
|
|
|
|
(3)
|
|
The Forrester Wave™: API Management Solutions, Q4 2016, by
Randy Heffner with Christopher Mines and Amanda LeClair, November
14, 2016.
|
About CA Technologies
CA Technologies (NASDAQ: CA) creates software that fuels transformation
for companies and enables them to seize the opportunities of the
Application Economy. Software is at the heart of every business in every
industry. From planning, to development, to management and security, CA
is working with companies worldwide to change the way we live, transact,
and communicate - across mobile, private and public cloud, distributed
and mainframe environments. Learn more at www.ca.com.
Follow CA Technologies
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, include 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, internally developed software and other intangible assets;
share-based compensation expense; charges relating to rebalancing
initiatives that are large enough to require approval from the Company's
Board of Directors 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 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. 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. Non-GAAP adjusted cash flow from operations
excludes payments associated with the fiscal 2014 Board-approved
rebalancing initiative as described above and restructuring and other
payments. Non-GAAP free cash flow excludes purchases of property and
equipment. The Company presents constant currency information to provide
a framework for assessing how the Company's 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 the Company's prior fiscal year (i.e., March 31, 2016, March 31,
2015 and March 31, 2014, 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 by the Company 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 forecasted 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 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 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 news release (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 business
strategy by, among other things, ensuring that any new offerings address
the needs of a rapidly changing market while not adversely affecting the
demand for the Company's traditional products or the Company's
profitability to an extent greater than anticipated, enabling the
Company's sales force to accelerate growth of sales to new customers and
expand sales with existing customers, including sales outside of the
Company's renewal cycle and to a broadening set of purchasers outside of
traditional information technology operations (with such growth and
expansion at levels sufficient to offset any decline in revenue and/or
sales in the Company's Mainframe Solutions segment and in certain mature
product lines in the Company's Enterprise Solutions segment),
effectively managing the strategic shift in the Company's business model
to develop more easily installed software, provide additional SaaS
offerings and refocus the Company's professional services and education
engagements on those engagements that are connected to new product
sales, without affecting the Company's financial performance to an
extent greater than anticipated, and effectively managing the Company's
pricing and other go-to-market strategies, as well as improving the
Company's brand, technology and innovation awareness in the marketplace;
the failure to innovate or adapt to technological changes and introduce
new software products and services in a timely manner; competition in
product and service offerings and pricing; the ability of the Company's
products to remain compatible with ever-changing operating environments,
platforms or third party products; global economic factors or political
events beyond the Company's control and other business and legal risks
associated with non-U.S. operations; the failure to expand partner
programs and sales of the Company's solutions by the Company's partners;
the ability to retain and attract qualified professionals; general
economic conditions and credit constraints, or unfavorable economic
conditions in a particular region, business or industry sector; the
ability to successfully integrate acquired companies and products into
the Company's existing business; risks associated with sales to
government customers; breaches of the Company's data center, network, as
well as the Company's software products, and the IT environments of the
Company's vendors and customers; the ability to adequately manage,
evolve and protect the Company's information systems, infrastructure and
processes; the failure to renew license transactions on a satisfactory
basis; fluctuations in foreign exchange rates; 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; access to software
licensed from third parties; risks associated with the use of software
from open source code sources; 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; events or
circumstances that would require the Company to record an impairment
charge relating to the Company's goodwill or capitalized software and
other intangible assets balances; potential tax liabilities; changes in
market conditions or the Company's credit ratings; changes in generally
accepted accounting principles; the failure to effectively execute the
Company's workforce reductions, workforce rebalancing and facilities
consolidations; successful and secure outsourcing of various functions
to third parties; and other factors described more fully in the
Company's other filings with the Securities and Exchange Commission.
Should one or more of these risks or uncertainties occur, or should the
Company's assumptions prove incorrect, actual results may vary
materially from the forward-looking information described herein as
believed, planned, anticipated, expected, estimated, targeted or
similarly identified. We do not intend to update these forward-looking
statements, 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 © 2017 CA, Inc. All Rights Reserved. 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
|
Nine Months Ended
|
|
|
|
December 31,
|
|
December 31,
|
Revenue:
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Subscription and maintenance
|
|
|
$
|
817
|
|
$
|
828
|
|
$
|
2,467
|
|
$
|
2,496
|
Professional services
|
|
|
|
72
|
|
|
82
|
|
|
224
|
|
|
244
|
Software fees and other
|
|
|
|
118
|
|
|
124
|
|
|
333
|
|
|
276
|
Total revenue
|
|
|
$
|
1,007
|
|
$
|
1,034
|
|
$
|
3,024
|
|
$
|
3,016
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Costs of licensing and maintenance
|
|
|
$
|
68
|
|
$
|
73
|
|
$
|
202
|
|
$
|
209
|
Cost of professional services
|
|
|
|
74
|
|
|
75
|
|
|
222
|
|
|
224
|
Amortization of capitalized software costs
|
|
|
|
57
|
|
|
65
|
|
|
182
|
|
|
192
|
Selling and marketing
|
|
|
|
270
|
|
|
277
|
|
|
747
|
|
|
751
|
General and administrative
|
|
|
|
85
|
|
|
90
|
|
|
257
|
|
|
279
|
Product development and enhancements
|
|
|
|
144
|
|
|
133
|
|
|
428
|
|
|
420
|
Depreciation and amortization of other intangible assets
|
|
|
|
18
|
|
|
27
|
|
|
56
|
|
|
83
|
Other (gains) expenses, net
|
|
|
|
(17)
|
|
|
1
|
|
|
10
|
|
|
2
|
Total expenses before interest and income taxes
|
|
|
$
|
699
|
|
$
|
741
|
|
$
|
2,104
|
|
$
|
2,160
|
Income from continuing operations before interest and income taxes
|
|
|
$
|
308
|
|
$
|
293
|
|
$
|
920
|
|
$
|
856
|
Interest expense, net
|
|
|
|
16
|
|
|
15
|
|
|
45
|
|
|
36
|
Income from continuing operations before income taxes
|
|
|
$
|
292
|
|
$
|
278
|
|
$
|
875
|
|
$
|
820
|
Income tax expense
|
|
|
|
84
|
|
|
59
|
|
|
257
|
|
|
222
|
Income from continuing operations
|
|
|
$
|
208
|
|
$
|
219
|
|
$
|
618
|
|
$
|
598
|
Income from discontinued operations, net of income taxes
|
|
|
$
|
-
|
|
$
|
4
|
|
$
|
-
|
|
$
|
11
|
Net income
|
|
|
$
|
208
|
|
$
|
223
|
|
$
|
618
|
|
$
|
609
|
|
|
|
|
|
|
|
|
|
|
Basic income per common share:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
$
|
0.50
|
|
$
|
0.52
|
|
$
|
1.48
|
|
$
|
1.37
|
Income from discontinued operations
|
|
|
|
-
|
|
|
0.01
|
|
|
-
|
|
|
0.03
|
Net income
|
|
|
$
|
0.50
|
|
$
|
0.53
|
|
$
|
1.48
|
|
$
|
1.40
|
Basic weighted average shares used in computation
|
|
|
|
413
|
|
|
420
|
|
|
414
|
|
|
431
|
|
|
|
|
|
|
|
|
|
|
Diluted income per common share:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
$
|
0.50
|
|
$
|
0.52
|
|
$
|
1.47
|
|
$
|
1.37
|
Income from discontinued operations
|
|
|
|
-
|
|
|
0.01
|
|
|
-
|
|
|
0.03
|
Net income
|
|
|
$
|
0.50
|
|
$
|
0.53
|
|
$
|
1.47
|
|
$
|
1.40
|
Diluted weighted average shares used in computation
|
|
|
|
414
|
|
|
421
|
|
|
415
|
|
|
432
|
Table 2
|
CA Technologies
|
Condensed Consolidated Balance Sheets
|
(in millions)
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
March 31,
|
|
|
|
2016
|
|
2016
|
|
|
|
(unaudited)
|
|
|
Cash and cash equivalents
|
|
|
$
|
2,828
|
|
$
|
2,812
|
Trade accounts receivable, net
|
|
|
|
555
|
|
|
625
|
Other current assets
|
|
|
|
136
|
|
|
124
|
Total current assets
|
|
|
$
|
3,519
|
|
$
|
3,561
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
$
|
219
|
|
$
|
242
|
Goodwill
|
|
|
|
6,118
|
|
|
6,086
|
Capitalized software and other intangible assets, net
|
|
|
|
627
|
|
|
795
|
Deferred income taxes
|
|
|
|
426
|
|
|
407
|
Other noncurrent assets, net
|
|
|
|
113
|
|
|
113
|
Total assets
|
|
|
$
|
11,022
|
|
$
|
11,204
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
|
$
|
4
|
|
$
|
6
|
Deferred revenue (billed or collected)
|
|
|
|
1,917
|
|
|
2,197
|
Other current liabilities
|
|
|
|
698
|
|
|
691
|
Total current liabilities
|
|
|
$
|
2,619
|
|
$
|
2,894
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
|
$
|
1,946
|
|
$
|
1,947
|
Deferred income taxes
|
|
|
|
8
|
|
|
3
|
Deferred revenue (billed or collected)
|
|
|
|
651
|
|
|
737
|
Other noncurrent liabilities
|
|
|
|
222
|
|
|
245
|
Total liabilities
|
|
|
$
|
5,446
|
|
$
|
5,826
|
|
|
|
|
|
|
Common stock
|
|
|
$
|
59
|
|
$
|
59
|
Additional paid-in capital
|
|
|
|
3,678
|
|
|
3,664
|
Retained earnings
|
|
|
|
6,872
|
|
|
6,575
|
Accumulated other comprehensive loss
|
|
|
|
(518)
|
|
|
(416)
|
Treasury stock
|
|
|
|
(4,515)
|
|
|
(4,504)
|
Total stockholders' equity
|
|
|
$
|
5,576
|
|
$
|
5,378
|
Total liabilities and stockholders' equity
|
|
|
$
|
11,022
|
|
$
|
11,204
|
Table 3
|
CA Technologies
|
Condensed Consolidated Statements of Cash Flows
|
(unaudited)
|
(in millions)
|
|
|
|
|
Three Months Ended
|
|
|
|
December 31,
|
|
|
|
2016
|
|
2015
|
Operating activities from continuing operations:
|
|
|
|
|
|
Net income
|
|
|
$
|
208
|
|
|
$
|
223
|
|
Income from discontinued operations
|
|
|
|
-
|
|
|
|
(4
|
)
|
Income from continuing operations
|
|
|
$
|
208
|
|
|
$
|
219
|
|
Adjustments to reconcile income from continuing operations to net
cash provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
75
|
|
|
|
92
|
|
Deferred income taxes
|
|
|
|
(9
|
)
|
|
|
(25
|
)
|
Provision for bad debts
|
|
|
|
1
|
|
|
|
(1
|
)
|
Share-based compensation expense
|
|
|
|
26
|
|
|
|
25
|
|
Other non-cash items
|
|
|
|
1
|
|
|
|
1
|
|
Foreign currency transaction gains
|
|
|
|
(4
|
)
|
|
|
(1
|
)
|
Changes in other operating assets and liabilities, net of effect of
acquisitions:
|
|
|
|
|
|
Increase in trade accounts receivable
|
|
|
|
(119
|
)
|
|
|
(181
|
)
|
Increase in deferred revenue
|
|
|
|
230
|
|
|
|
143
|
|
Increase in taxes payable, net
|
|
|
|
61
|
|
|
|
51
|
|
Decrease in accounts payable, accrued expenses and other
|
|
|
|
(6
|
)
|
|
|
(41
|
)
|
Increase in accrued salaries, wages and commissions
|
|
|
|
35
|
|
|
|
23
|
|
Changes in other operating assets and liabilities
|
|
|
|
18
|
|
|
|
27
|
|
Net cash provided by operating activities - continuing operations
|
|
|
$
|
517
|
|
|
$
|
332
|
|
Investing activities from continuing operations:
|
|
|
|
|
|
Acquisitions of businesses, net of cash acquired, and purchased
software
|
|
|
$
|
(47
|
)
|
|
$
|
(1
|
)
|
Purchases of property and equipment
|
|
|
|
(14
|
)
|
|
|
(11
|
)
|
Other investing activities
|
|
|
|
(1
|
)
|
|
|
-
|
|
Net cash used in investing activities - continuing operations
|
|
|
$
|
(62
|
)
|
|
$
|
(12
|
)
|
Financing activities from continuing operations:
|
|
|
|
|
|
Dividends paid
|
|
|
$
|
(107
|
)
|
|
$
|
(105
|
)
|
Purchases of common stock
|
|
|
|
-
|
|
|
|
(590
|
)
|
Notional pooling borrowings, net
|
|
|
|
15
|
|
|
|
10
|
|
Debt (repayments) borrowings, net
|
|
|
|
(1
|
)
|
|
|
298
|
|
Debt issuance costs
|
|
|
|
-
|
|
|
|
(1
|
)
|
Exercise of common stock options
|
|
|
|
-
|
|
|
|
1
|
|
Other financing activities
|
|
|
|
-
|
|
|
|
(5
|
)
|
Net cash used in financing activities - continuing operations
|
|
|
$
|
(93
|
)
|
|
$
|
(392
|
)
|
Effect of exchange rate changes on cash
|
|
|
$
|
(119
|
)
|
|
$
|
(37
|
)
|
Net change in cash and cash equivalents - continuing operations
|
|
|
$
|
243
|
|
|
$
|
(109
|
)
|
Cash provided by operating activities - discontinued operations
|
|
|
$
|
-
|
|
|
$
|
4
|
|
Net effect of discontinued operations on cash and cash equivalents
|
|
|
$
|
-
|
|
|
$
|
4
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
$
|
243
|
|
|
$
|
(105
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
$
|
2,585
|
|
|
$
|
2,458
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
2,828
|
|
|
$
|
2,353
|
|
Table 4
|
CA Technologies
|
Operating Segments
|
(unaudited)
|
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2016
|
|
|
Nine Months Ended December 31, 2016
|
|
|
|
Mainframe Solutions (1)
|
|
Enterprise Solutions (1)
|
|
Services (1)
|
|
Total
|
|
|
Mainframe Solutions (1)
|
|
Enterprise Solutions (1)
|
|
Services (1)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (2)
|
|
|
$
|
546
|
|
$
|
389
|
|
$
|
72
|
|
$
|
1,007
|
|
|
$
|
1,647
|
|
$
|
1,153
|
|
$
|
224
|
|
$
|
3,024
|
Expenses (3)
|
|
|
|
215
|
|
|
333
|
|
|
75
|
|
|
623
|
|
|
|
634
|
|
|
981
|
|
|
223
|
|
|
1,838
|
Segment profit (loss)
|
|
|
$
|
331
|
|
$
|
56
|
|
$
|
(3)
|
|
$
|
384
|
|
|
$
|
1,013
|
|
$
|
172
|
|
$
|
1
|
|
$
|
1,186
|
Segment operating margin
|
|
|
|
61%
|
|
|
14%
|
|
|
-4%
|
|
|
38%
|
|
|
|
62%
|
|
|
15%
|
|
|
0%
|
|
|
39%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit
|
|
|
|
|
|
|
|
|
$
|
384
|
|
|
|
|
|
|
|
|
$
|
1,186
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased software amortization
|
|
|
|
|
|
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
120
|
Other intangibles amortization
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
13
|
Internally developed software products amortization
|
|
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
62
|
Share-based compensation expense
|
|
|
|
|
|
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
80
|
Other gains, net (4)
|
|
|
|
|
|
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
(9)
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
45
|
Income from continuing operations before income taxes
|
|
|
|
|
|
|
|
|
$
|
292
|
|
|
|
|
|
|
|
|
$
|
875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2015
|
|
|
Nine Months Ended December 31, 2015
|
|
|
|
Mainframe Solutions (1)
|
|
Enterprise Solutions (1)
|
|
Services (1)
|
|
Total
|
|
|
Mainframe Solutions (1)
|
|
Enterprise Solutions (1)
|
|
Services (1)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (2)
|
|
|
$
|
554
|
|
$
|
398
|
|
$
|
82
|
|
$
|
1,034
|
|
|
$
|
1,668
|
|
$
|
1,104
|
|
$
|
244
|
|
$
|
3,016
|
Expenses (3)
|
|
|
|
218
|
|
|
349
|
|
|
77
|
|
|
644
|
|
|
|
641
|
|
|
996
|
|
|
227
|
|
|
1,864
|
Segment profit
|
|
|
$
|
336
|
|
$
|
49
|
|
$
|
5
|
|
$
|
390
|
|
|
$
|
1,027
|
|
$
|
108
|
|
$
|
17
|
|
$
|
1,152
|
Segment operating margin
|
|
|
|
61%
|
|
|
12%
|
|
|
6%
|
|
|
38%
|
|
|
|
62%
|
|
|
10%
|
|
|
7%
|
|
|
38%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit
|
|
|
|
|
|
|
|
|
$
|
390
|
|
|
|
|
|
|
|
|
$
|
1,152
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased software amortization
|
|
|
|
|
|
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
106
|
Other intangibles amortization
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
36
|
Internally developed software products amortization
|
|
|
|
|
|
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
86
|
Share-based compensation expense
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
70
|
Other gains, net (4)
|
|
|
|
|
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
(2)
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
36
|
Income from continuing operations before income taxes
|
|
|
|
|
|
|
|
|
$
|
278
|
|
|
|
|
|
|
|
|
$
|
820
|
(1)
|
|
The Company's Mainframe Solutions and Enterprise Solutions segments
comprise its software business organized by the nature of the
Company's software offerings and the platform on which the products
operate. The Services segment comprises product implementation,
consulting, customer education and customer training, including
those directly related to the Mainframe Solutions and Enterprise
Solutions software that the Company sells to its customers.
|
|
|
|
(2)
|
|
The Company regularly enters into a single arrangement with a
customer that includes mainframe solutions, enterprise solutions and
services. The amount of contract revenue assigned to operating
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 operating segment is then
recognized in a manner consistent with the revenue recognition
policies the Company applies to the customer contract for purposes
of preparing the 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 and non-segment specific direct 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 of cost of professional services and other
direct costs included within selling and marketing and general and
administrative expenses. There are no allocated or indirect costs
for the Services segment.
|
|
|
|
(4)
|
|
Other gains, net consists of costs associated with certain foreign
exchange derivative hedging gains and losses, and other
miscellaneous costs.
|
Table 5
|
CA Technologies
|
Constant Currency Summary
|
(unaudited)
|
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Nine Months Ended December 31,
|
|
|
|
2016
|
|
2015
|
|
% Increase
(Decrease)
in $ US
|
|
% Increase (Decrease) in Constant Currency (1)
|
|
2016
|
|
2015
|
|
% Increase
(Decrease)
in $ US
|
|
% Increase (Decrease) in Constant Currency (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bookings
|
|
|
$
|
1,258
|
|
$
|
1,242
|
|
1%
|
|
2%
|
|
$
|
3,340
|
|
$
|
3,287
|
|
2%
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
$
|
674
|
|
$
|
702
|
|
(4)%
|
|
(4)%
|
|
$
|
2,033
|
|
$
|
2,031
|
|
0%
|
|
0%
|
International
|
|
|
|
333
|
|
|
332
|
|
0%
|
|
1%
|
|
|
991
|
|
|
985
|
|
1%
|
|
2%
|
Total revenue
|
|
|
$
|
1,007
|
|
$
|
1,034
|
|
(3)%
|
|
(2)%
|
|
$
|
3,024
|
|
$
|
3,016
|
|
0%
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription and maintenance
|
|
|
$
|
817
|
|
$
|
828
|
|
(1)%
|
|
(1)%
|
|
$
|
2,467
|
|
$
|
2,496
|
|
(1)%
|
|
(1)%
|
Professional services
|
|
|
|
72
|
|
|
82
|
|
(12)%
|
|
(12)%
|
|
|
224
|
|
|
244
|
|
(8)%
|
|
(8)%
|
Software fees and other
|
|
|
|
118
|
|
|
124
|
|
(5)%
|
|
(6)%
|
|
|
333
|
|
|
276
|
|
21%
|
|
21%
|
Total revenue
|
|
|
$
|
1,007
|
|
$
|
1,034
|
|
(3)%
|
|
(2)%
|
|
$
|
3,024
|
|
$
|
3,016
|
|
0%
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainframe solutions
|
|
|
$
|
546
|
|
$
|
554
|
|
(1)%
|
|
(1)%
|
|
$
|
1,647
|
|
$
|
1,668
|
|
(1)%
|
|
(1)%
|
Enterprise solutions
|
|
|
|
389
|
|
|
398
|
|
(2)%
|
|
(2)%
|
|
|
1,153
|
|
|
1,104
|
|
4%
|
|
5%
|
Services
|
|
|
|
72
|
|
|
82
|
|
(12)%
|
|
(12)%
|
|
|
224
|
|
|
244
|
|
(8)%
|
|
(8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses before interest and income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total GAAP
|
|
|
$
|
699
|
|
$
|
741
|
|
(6)%
|
|
(4)%
|
|
$
|
2,104
|
|
$
|
2,160
|
|
(3)%
|
|
(1)%
|
Total non-GAAP (2)
|
|
|
|
623
|
|
|
644
|
|
(3)%
|
|
(2)%
|
|
|
1,838
|
|
|
1,864
|
|
(1)%
|
|
0%
|
(1)
|
|
Constant currency information is presented to provide a framework
for assessing how the Company's 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
March 31, 2016, which was the last day of the 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.
|
|
|
|
|
|
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
|
|
Nine Months Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
GAAP net income
|
|
|
$
|
208
|
|
$
|
223
|
|
$
|
618
|
|
$
|
609
|
GAAP income from discontinued operations, net of income taxes
|
|
|
|
-
|
|
|
(4)
|
|
|
-
|
|
|
(11)
|
GAAP income from continuing operations
|
|
|
$
|
208
|
|
$
|
219
|
|
$
|
618
|
|
$
|
598
|
GAAP income tax expense
|
|
|
|
84
|
|
|
59
|
|
|
257
|
|
|
222
|
Interest expense, net
|
|
|
|
16
|
|
|
15
|
|
|
45
|
|
|
36
|
GAAP income from continuing operations before interest and income
taxes
|
|
|
$
|
308
|
|
$
|
293
|
|
$
|
920
|
|
$
|
856
|
GAAP operating margin (% of revenue) (1)
|
|
|
|
31%
|
|
|
28%
|
|
|
30%
|
|
|
28%
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments to expenses:
|
|
|
|
|
|
|
|
|
|
Costs of licensing and maintenance (2)
|
|
|
$
|
2
|
|
$
|
2
|
|
$
|
5
|
|
$
|
5
|
Cost of professional services (2)
|
|
|
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
Amortization of capitalized software costs (3)
|
|
|
|
57
|
|
|
65
|
|
|
182
|
|
|
192
|
Selling and marketing (2)
|
|
|
|
9
|
|
|
9
|
|
|
28
|
|
|
25
|
General and administrative (2)
|
|
|
|
8
|
|
|
9
|
|
|
27
|
|
|
25
|
Product development and enhancements (2)
|
|
|
|
6
|
|
|
4
|
|
|
17
|
|
|
12
|
Depreciation and amortization of other intangible assets (4)
|
|
|
|
4
|
|
|
11
|
|
|
13
|
|
|
36
|
Other gains, net (5)
|
|
|
|
(11)
|
|
|
(4)
|
|
|
(9)
|
|
|
(2)
|
Total Non-GAAP adjustment to operating expenses
|
|
|
$
|
76
|
|
$
|
97
|
|
$
|
266
|
|
$
|
296
|
Non-GAAP income from continuing operations before interest and
income taxes
|
|
|
$
|
384
|
|
$
|
390
|
|
$
|
1,186
|
|
$
|
1,152
|
Non-GAAP operating margin (% of revenue) (6)
|
|
|
|
38%
|
|
|
38%
|
|
|
39%
|
|
|
38%
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
16
|
|
|
15
|
|
|
45
|
|
|
36
|
GAAP income tax expense
|
|
|
|
84
|
|
|
59
|
|
|
257
|
|
|
222
|
Non-GAAP adjustment to income tax expense (7)
|
|
|
|
21
|
|
|
48
|
|
|
69
|
|
|
96
|
Non-GAAP income tax expense
|
|
|
$
|
105
|
|
$
|
107
|
|
$
|
326
|
|
$
|
318
|
Non-GAAP income from continuing operations
|
|
|
$
|
263
|
|
$
|
268
|
|
$
|
815
|
|
$
|
798
|
(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)
|
|
For the three month periods ending December 31, 2016 and 2015,
non-GAAP adjustment consists of $39 million and $39 million of
purchased software amortization and $18 million and $26 million of
internally developed software products amortization, respectively.
For the nine month periods ending December 31, 2016 and 2015,
non-GAAP adjustment consists of $120 million and $106 million of
purchased software amortization and $62 million and $86 million of
internally developed software products amortization, respectively.
|
|
|
|
(4)
|
|
Non-GAAP adjustment consists of other intangibles amortization.
|
|
|
|
(5)
|
|
Non-GAAP adjustment consists 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.
|
|
|
|
(6)
|
|
Non-GAAP operating margin is calculated by dividing non-GAAP income
from continuing operations before interest and income taxes by total
revenue (refer to Table 1 for total revenue).
|
|
|
|
(7)
|
|
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 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.
|
|
|
|
|
|
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
|
|
Nine Months Ended
|
|
|
|
December 31,
|
|
December 31,
|
Operating Expenses
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Total expenses before interest and income taxes
|
|
|
$
|
699
|
|
$
|
741
|
|
$
|
2,104
|
|
$
|
2,160
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating adjustments:
|
|
|
|
|
|
|
|
|
|
Purchased software amortization
|
|
|
|
39
|
|
|
39
|
|
|
120
|
|
|
106
|
Other intangibles amortization
|
|
|
|
4
|
|
|
11
|
|
|
13
|
|
|
36
|
Internally developed software products amortization
|
|
|
|
18
|
|
|
26
|
|
|
62
|
|
|
86
|
Share-based compensation
|
|
|
|
26
|
|
|
25
|
|
|
80
|
|
|
70
|
Other gains, net (1)
|
|
|
|
(11)
|
|
|
(4)
|
|
|
(9)
|
|
|
(2)
|
Total non-GAAP operating adjustment
|
|
|
$
|
76
|
|
$
|
97
|
|
$
|
266
|
|
$
|
296
|
|
|
|
|
|
|
|
|
|
|
Total non-GAAP operating expenses
|
|
|
$
|
623
|
|
$
|
644
|
|
$
|
1,838
|
|
$
|
1,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
December 31,
|
|
December 31,
|
Diluted EPS from Continuing Operations
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted EPS from continuing operations
|
|
|
$
|
0.50
|
|
$
|
0.52
|
|
$
|
1.47
|
|
$
|
1.37
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
|
|
|
|
Purchased software amortization
|
|
|
|
0.09
|
|
|
0.09
|
|
|
0.29
|
|
|
0.24
|
Other intangibles amortization
|
|
|
|
0.01
|
|
|
0.03
|
|
|
0.03
|
|
|
0.08
|
Internally developed software products amortization
|
|
|
|
0.04
|
|
|
0.06
|
|
|
0.15
|
|
|
0.20
|
Share-based compensation
|
|
|
|
0.06
|
|
|
0.06
|
|
|
0.19
|
|
|
0.16
|
Other (gains) expenses, net (1)
|
|
|
|
(0.02)
|
|
|
(0.01)
|
|
|
(0.02)
|
|
|
-
|
Tax effect of non-GAAP adjustments
|
|
|
|
(0.05)
|
|
|
(0.05)
|
|
|
(0.19)
|
|
|
(0.18)
|
Non-GAAP effective tax rate adjustments (2)
|
|
|
|
-
|
|
|
(0.07)
|
|
|
0.02
|
|
|
(0.04)
|
Total non-GAAP adjustment
|
|
|
$
|
0.13
|
|
$
|
0.11
|
|
$
|
0.47
|
|
$
|
0.46
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted EPS from continuing operations
|
|
|
$
|
0.63
|
|
$
|
0.63
|
|
$
|
1.94
|
|
$
|
1.83
|
(1)
|
|
Other (gains) expenses, net consists of costs associated with
certain foreign exchange derivative hedging gains and losses, and
other miscellaneous costs.
|
|
|
|
(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 from continuing operations 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.
|
|
|
|
|
|
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
|
|
Nine Months Ended
|
|
|
|
December 31, 2016
|
|
December 31, 2016
|
|
|
|
GAAP
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest and income taxes (1)
|
|
|
$
|
308
|
|
$
|
384
|
|
$
|
920
|
|
$
|
1,186
|
Interest expense, net
|
|
|
|
16
|
|
|
16
|
|
|
45
|
|
|
45
|
Income from continuing operations before income taxes
|
|
|
$
|
292
|
|
$
|
368
|
|
$
|
875
|
|
$
|
1,141
|
|
|
|
|
|
|
|
|
|
|
Statutory tax rate
|
|
|
|
35%
|
|
|
35%
|
|
|
35%
|
|
|
35%
|
|
|
|
|
|
|
|
|
|
|
Tax at statutory rate
|
|
|
$
|
102
|
|
$
|
129
|
|
$
|
306
|
|
$
|
399
|
Adjustments for discrete and permanent items (2)
|
|
|
|
(18)
|
|
|
(24)
|
|
|
(49)
|
|
|
(73)
|
Total tax expense
|
|
|
$
|
84
|
|
$
|
105
|
|
$
|
257
|
|
$
|
326
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate (3)
|
|
|
|
28.8%
|
|
|
28.5%
|
|
|
29.4%
|
|
|
28.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
December 31, 2015
|
|
December 31, 2015
|
|
|
|
GAAP
|
|
Non-GAAP
|
|
GAAP
|
|
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before interest and income taxes (1)
|
|
|
$
|
293
|
|
$
|
390
|
|
$
|
856
|
|
$
|
1,152
|
Interest expense, net
|
|
|
|
15
|
|
|
15
|
|
|
36
|
|
|
36
|
Income from continuing operations before income taxes
|
|
|
$
|
278
|
|
$
|
375
|
|
$
|
820
|
|
$
|
1,116
|
|
|
|
|
|
|
|
|
|
|
Statutory tax rate
|
|
|
|
35%
|
|
|
35%
|
|
|
35%
|
|
|
35%
|
|
|
|
|
|
|
|
|
|
|
Tax at statutory rate
|
|
|
$
|
97
|
|
$
|
131
|
|
$
|
287
|
|
$
|
391
|
Adjustments for discrete and permanent items (2)
|
|
|
|
(38)
|
|
|
(24)
|
|
|
(65)
|
|
|
(73)
|
Total tax expense
|
|
|
$
|
59
|
|
$
|
107
|
|
$
|
222
|
|
$
|
318
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate (3)
|
|
|
|
21.2%
|
|
|
28.5%
|
|
|
27.1%
|
|
|
28.5%
|
(1)
|
|
Refer to Table 6 for a reconciliation of income from continuing
operations before interest and income taxes on a GAAP basis to
income from continuing operations 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 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. 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.
|
|
|
|
|
|
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 from Continuing
Operations
|
|
|
March 31, 2017
|
|
|
|
|
|
|
Projected GAAP diluted EPS from continuing operations range
|
|
|
$
|
1.80
|
to
|
$
|
1.85
|
|
|
|
|
|
|
Non-GAAP adjustments:
|
|
|
|
|
|
Purchased software amortization
|
|
|
|
0.40
|
|
|
0.40
|
Other intangibles amortization
|
|
|
|
0.03
|
|
|
0.03
|
Internally developed software products amortization
|
|
|
|
0.19
|
|
|
0.19
|
Share-based compensation
|
|
|
|
0.25
|
|
|
0.24
|
Tax effect of non-GAAP adjustments
|
|
|
|
(0.25)
|
|
|
(0.24)
|
Total non-GAAP adjustment
|
|
|
$
|
0.62
|
|
$
|
0.62
|
|
|
|
|
|
|
Projected non-GAAP diluted EPS from continuing operations range
|
|
|
$
|
2.42
|
to
|
$
|
2.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ending
|
Projected Operating Margin
|
|
|
March 31, 2017
|
|
|
|
|
|
|
Projected GAAP operating margin
|
|
|
|
28%
|
|
|
|
|
|
|
|
Non-GAAP operating adjustments:
|
|
|
|
|
|
Purchased software amortization
|
|
|
|
4%
|
|
Other intangibles amortization
|
|
|
|
0%
|
|
Internally developed software products amortization
|
|
|
|
2%
|
|
Share-based compensation
|
|
|
|
3%
|
|
Total non-GAAP operating adjustment
|
|
|
|
9%
|
|
|
|
|
|
|
|
Projected non-GAAP operating margin
|
|
|
|
37%
|
|
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.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170124006461/en/
[ Back To Mobile World Congress's Homepage ]
|