[May 10, 2012]

CA Technologies Reports Fourth Quarter and Full Fiscal Year 2012 Results

CA Technologies (NASDAQ:CA) today reported financial results for its fourth quarter and full fiscal year 2012, ended March 31, 2012.

EXECUTIVE COMMENTARY

"We finished fiscal 2012 by delivering a solid fourth quarter," said Bill McCracken, CA Technologies chief executive officer. "Fiscal 2012 was a year that further demonstrated CA Technologies progress against its strategic goals and our commitment to consistently delivering innovative solutions and services to our customers, revenue and earnings growth and attractive, sustainable returns to our shareholders.

"In fiscal 2013 we will continue to focus on improving our execution, expanding our presence in large existing enterprises, and winning new accounts in large new enterprises and growth markets," he said. "We also will continue to follow a strategy that thoughtfully balances investments in the business to fuel growth with the return of cash to our shareholders."

REVENUE AND BOOKINGS

During the fourth quarter, the Company saw demand for its services and learning, virtualization and service automation, security and mainframe solutions. This was offset by softness in mainframe capacity and service assurance. About 4 percentage points of revenue growth in constant currency and 3 percentage points as reported were driven by organic products, with the remaining 2 percentage points in constant currency and as reported coming from products from recent acquisitions. About 63 percent of the Company's revenue in the fourth quarter came from North America, while 37 percent came from International operations.

Fourth Quarter

Total revenue year-over-year:

• Total revenue was $1.188 billion, up 6 percent in constant currency and 5 percent as reported.
• Total revenue backlog was $8.473 billion, down 2 percent in constant currency and 3 percent as reported. The current portion of revenue backlog was $3.714 billion, up 1 percent in constant currency and flat as reported.
• North America revenue was $748 million, up 9 percent in constant currency and as reported.
• International revenue was $440 million, up 1 percent in constant currency and flat as reported.

Bookings year-over-year:

• Total bookings in the fourth quarter were $1.542 billion, down 17 percent in constant currency and 18 percent as reported. Fourth quarter bookings in fiscal year 2011 were positively affected by a five-year contract renewal of approximately $500 million with a large IT outsourcer.
• The Company renewed a total of 27 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $694 million. During the fourth quarter of fiscal year 2011, the Company renewed a total of 21 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $989 million. The fiscal year 2011 total included the large renewal mentioned above.
• The weighted average duration of subscription and maintenance bookings for the quarter was 3.41 years, compared with 3.82 years for the same period in fiscal year 2011.
• North America bookings were $895 million, down 35 percent in constant currency and as reported. North America bookings in the fourth quarter of fiscal year 2011 were positively affected by the large contract renewal mentioned above.
• International bookings were $647 million, up 33 percent in constant currency and 27 percent as reported. International bookings were positively affected by a large, multi-year contract with a financial institution in Europe.

Full Year

About 5 percentage points of revenue growth in constant currency and 7 percentage points as reported were driven by organic products, with the remaining 2 percentage points in constant currency and as reported coming from products from recent acquisitions. About 62 percent of the Company's full year revenue came from North America, while 38 percent came from International operations.

Total revenue year-over-year:

• Total revenue was $4.814 billion, up 7 percent in constant currency and 9 percent as reported. Full year results benefited from a large IT outsourcer renewal booked in the fourth quarter of fiscal year 2011 and a final license payment received in the third quarter of fiscal year 2012 that will not recur.
• North America revenue was $2.990 billion, up 11 percent in constant currency and as reported.
• International revenue was $1.824 billion, flat in constant currency and up 5 percent as reported.

Bookings year-over-year:

• Total bookings were $4.663 billion, down 5 percent in constant currency and as reported. Bookings in fiscal year 2011 were positively affected by the aforementioned renewal of approximately $500 million with a large IT outsourcer.

• North America bookings were $2.859 billion, down 12 percent in constant currency and as reported. North America bookings in fiscal year 2011 were positively affected by the large contract renewal mentioned above.
• International bookings were $1.804 billion, up 9 percent in constant currency and 10 percent as reported.

EXPENSES AND MARGIN

Fourth Quarter

Year-over-year GAAP results:

• Operating expenses, before interest and income taxes, were $887 million, up 8 percent in constant currency and 7 percent as reported.
• Operating income, before interest and income taxes, was $301 million, down 1 percent in constant currency and up 1 percent as reported.
• Operating margin was 25 percent, down 2 percentage points from the prior year period.

Year-over-year non-GAAP results, which exclude purchased software and other intangibles amortization, fiscal year 2007 restructuring costs, and certain other gains and losses (including recoveries and certain costs associated with derivative litigation matters and share-based compensation expense), and which include gains and losses on hedges that mature within the quarter, but which exclude gains and losses on hedges that do not mature within the quarter:

• Operating expenses, before interest and income taxes, were $811 million, up 8 percent in constant currency and 5 percent as reported.
• Operating income, before interest and income taxes, was $377 million, up 1 percent in constant currency and 6 percent as reported.
• Operating margin was 32 percent, flat with the previous year.

For the fourth quarter of fiscal year 2012, the Company's effective GAAP tax rate was 27 percent, compared with 35 percent in the prior year. The Company's effective non-GAAP tax rate was 28 percent, down from 29 percent in the prior year.

Full Year

Year-over-year GAAP results:

• Operating expenses, before interest and income taxes, were $3.425 billion, up 7 percent in constant currency and 8 percent as reported.
• Operating income, before interest and income taxes, was $1.389 billion, up 6 percent in constant currency and 11 percent as reported.
• Operating margin was 29 percent, up from 28 percent in the prior year.

Year-over-year non-GAAP results:

• Operating expenses, before interest and income taxes, were $3.167 billion, up 7 percent in constant currency and 8 percent as reported.

• Operating income, before interest and income taxes, was $1.647 billion, up 6 percent in constant currency and 11 percent as reported.
• The Company recorded a non-GAAP operating margin of 34 percent, flat with fiscal year 2011.

For the full year, the Company's effective GAAP and non-GAAP tax rate was 31 percent, compared with 32 percent in the prior year.

SEGMENT INFORMATION

Beginning in the first quarter of fiscal year 2012, CA Technologies began reporting results in three segment areas: Mainframe Solutions, Enterprise Solutions and Services.

Fourth Quarter

• Mainframe Solutions revenue was $629 million, up 2 percent in constant currency and 1 percent as reported. Operating expense was $279 million and operating profit was $350 million. Operating margin was 56 percent, up from 52 percent a year ago.
• Enterprise Solutions revenue was $466 million, up 10 percent in constant currency and as reported. Operating expense was $445 million and operating profit was $21 million. Operating margin was 5 percent, down from 7 percent a year ago.
• Services revenue was $93 million, up 15 percent in constant currency and 13 percent as reported. Operating expense was $87 million and operating profit was $6 million. Operating margin was 6 percent, up from 2 percent a year ago.

Full Year

• Mainframe Solutions revenue was $2.612 billion, up 3 percent in constant currency and 5 percent as reported. Full year 2012 results were positively affected by a final license payment of $39 million in the third quarter and $55 million in revenue associated with the large IT outsourcer contract renewal. Operating expense was $1.140 billion and operating profit was $1.472 billion. Operating margin was 56 percent, up from 54 percent a year ago.
• Enterprise Solutions revenue was $1.820 billion, up 10 percent in constant currency and 12 percent as reported. Operating expense was $1.668 billion and operating profit was $152 million. Operating margin was 8 percent, flat from a year ago.
• Services revenue was $382 million, up 14 percent in constant currency and 17 percent as reported. Operating expense was $359 million and operating profit was $23 million. Operating margin was 6 percent, up from 5 percent a year ago.

CASH FLOW FROM CONTINUING OPERATIONS

• Cash flow from continuing operations in the fourth quarter was $776 million, compared with $634 million in the prior year. Cash flow was positively affected by an increase in collections over the previous year partially offset by higher cash taxes.
• For the full year, cash flow from continuing operations was $1.505 billion, compared with $1.377 billion in the prior fiscal year. Cash flow from operations was positively affected by increased collections and currency. This was partially offset by higher disbursements due primarily to acquisition costs and higher cash taxes.

CAPITAL STRUCTURE

• Cash, cash equivalents and marketable securities at March 31, 2012, were $2.679 billion.

• With $1.301 billion in total debt outstanding and $139 million in notional pooling, the Company's net cash, cash equivalents and marketable securities position was $1.239 billion.
• In the fourth quarter, the Company repurchased approximately 15 million shares of stock for a total of $375 million. For the year, the Company repurchased approximately 41 million shares for a total of $925 million. In January 2012, the Company announced an enhanced capital allocation program aimed at returning up to $2.5 billion to shareholders through the fiscal year ending March 31, 2014 through an increased dividend and stock repurchases. During the fiscal year, the Company distributed $192 million in dividends to shareholders.
• The Company's outstanding share count at March 31, 2012 was 466 million.

BUSINESS HIGHLIGHTS

During the fourth quarter the Company:

• Announced an enhanced capital allocation program that targets the return of up to $2.5 billion to CA Technologies shareholders through fiscal year ending March 31, 2014.
• Announced that 12 CA Technologies software products are now certified by VCE to run on Vblock™ Infrastructure Platforms. CA Technologies Vblock Ready™ offerings span IT automation and management capabilities including service management, virtualization, automation, service assurance and capacity management, allowing customers using VCE technology to automate their cloud deployments more quickly while containing costs.
• Announced new and enhanced offerings in its CA ecoSoftware solution designed to further extend the Company's support for Data Center Infrastructure Management (DCIM) and IT energy management.
• Announced a new release of its CA Cross-Enterprise Application Performance Management (CA CE APM) which extends mainframe monitoring capabilities and provides richer information about the health and performance of key IT services.
• Announced several significant new features, partners, offerings and growth milestones in the Cloud Commons® ecosystem. Since the launch of the Cloud Commons Marketplace and Developer Studio in November, membership has increased by more than 40 percent and more than 500 members have joined the Developer Studio.
• Announced that the Federal Court of Australia has found that Independent Systems Integrators (ISI) of Sydney, Australia violated copyright laws and breached its duty of confidentiality in developing and selling a product using intellectual property from CA Technologies CA Datacom relational database management system.

OUTLOOK FOR FISCAL YEAR 2013

The Company provided its outlook for fiscal year 2013. The following guidance consists of "forward-looking statements" (as defined below).

The Company expects the following:

• Total revenue growth in a range of 2 percent to 4 percent in constant currency. At March 31, 2012 exchange rates, this translates to reported revenue of $4.85 billion to $4.95 billion.
• GAAP diluted earnings per share growth in constant currency in a range of 10 percent to 14 percent. At March 31, 2012 exchange rates, this translates to GAAP reported diluted earnings per share of $2.07 to $2.14.
• Non-GAAP diluted earnings per share growth in constant currency in a range of 9 percent to 12 percent. At March 31, 2012 exchange rates, this translates to reported non-GAAP diluted earnings per share of $2.45 to $2.53.
• Cash flow from continuing operations growth in a range of 4 percent to 6 percent in constant currency. At March 31, 2012 exchange rates, this translates to reported cash flow from operations of $1.56 billion to $1.59 billion.

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 30 percent and non-GAAP operating margin of 35 percent. The Company also expects an effective full-year GAAP and non-GAAP tax rate in a range of 30 to 31 percent.

The Company anticipates approximately 448 million shares outstanding at fiscal year 2013 year-end and weighted average diluted shares outstanding of approximately 461 million for the fiscal year.

"We believe the results in fiscal year 2012 and our outlook for fiscal year 2013 are the right steps towards achieving the long term guidance we issued to financial analysts in July of 2011," McCracken said. "We reaffirmed that long term outlook in January when we announced our Enhanced Capital Allocation Program and are reaffirming that outlook now," said McCracken.

Webcast

This news release and the accompanying tables should be read in conjunction with additional content that is available on the Company's website, including a supplemental financial package, as well as a webcast that the Company will host at 5 p.m. ET today to discuss its unaudited fourth quarter results. The webcast will be archived on the website. Individuals can access the webcast, as well as this press release and supplemental financial information, at http://ca.com/invest or listen to the call at 1-877-561-2748. The international participant number is 1-720-545-0044.

About CA Technologies

CA Technologies (NASDAQ: CA) is an IT management software and solutions company with expertise across all IT environments - from mainframe and distributed, to virtual and cloud. CA Technologies manages and secures IT environments and enables customers to deliver more flexible IT services. CA Technologies innovative products and services provide the insight and control essential for IT organizations to power business agility. The majority of the Global Fortune 500 relies on CA Technologies to manage evolving IT ecosystems. For additional information, visit CA Technologies at www.ca.com.

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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 and certain other gains and losses, which includes recoveries and certain costs associated with derivative litigation matters and includes the gains and losses since inception of hedges that mature within the quarter, but exclude gains and losses of hedges that do not mature within the quarter. Prior to fiscal year 2011, non-GAAP income also excludes the interest on convertible bonds. The effective tax rate on GAAP and non-GAAP income from operations is the Company's provision for income taxes expressed as a percentage of pre-tax GAAP and non-GAAP income from continuing operations, respectively. Such tax rates are determined based on an estimated effective full year tax rate, with the effective tax rate for GAAP generally including the impact of discrete items in the period such items arise and the effective tax rate for non-GAAP income generally allocating the impact of discrete items pro rata to the fiscal year's remaining reporting periods. Adjusted cash flow from operations excludes restructuring and other payments. Free cash flow excludes purchases of property, 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 US dollars are converted into US dollars at the exchange rate in effect on March 31, 2011, which was the last day of our prior fiscal year. Constant currency excludes the impacts from the Company's hedging program. The constant currency calculation for annualized subscription and maintenance bookings is calculated by dividing the subscription and maintenance bookings in constant currency by the weighted average subscription and maintenance duration in years. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, non-GAAP financial measures facilitate management's internal comparisons to the Company's historical operating results and cash flows, to competitors' operating results and cash flows, and to estimates made by securities analysts. Management uses these non-GAAP financial measures internally to evaluate its performance and they are key variables in determining management incentive compensation. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, the Company has historically reported similar non-GAAP financial measures to its investors and believes that the inclusion of comparative numbers provides consistency in its financial reporting. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures, which are attached to this news release.

Cautionary Statement Regarding Forward-Looking Statements

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) 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 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, Software-as-a-Service and other new offerings address the needs of a rapidly changing market, while not adversely affecting the demand for the Company's traditional products or its profitability; global economic factors or political events beyond the Company's control; general economic conditions and credit constraints, or unfavorable economic conditions in a particular region, industry or business sector; the ability to adapt to rapid 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 and evolve financial reporting and managerial 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 in the Company's software 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; 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; successful outsourcing of various functions to third parties; events or circumstances that would require us to record a goodwill impairment charge; 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 or targeted. 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 © 2012 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.

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