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CA Technologies Reports First Quarter Fiscal Year 2015 Results(ENP Newswire Via Acquire Media NewsEdge) ENP Newswire - 24 July 2014 Release date- 23072014 - NEW YORK - CA Technologies (NASDAQ:CA) today reported financial results for its first quarter fiscal 2015, ended June 30, 2014. Mike Gregoire, CA Technologies Chief Executive Officer, made the following comments: 'CA's results for the first quarter are in-line with our expectations, reflecting continued financial discipline and a strong performance in connection with renewals, which contributed to an uptick in Enterprise Solutions new sales. In addition, the investment focus and new capabilities we established last year allowed us to make important strategic progress in the quarter. We launched a highly differentiated, CA-built SaaS solution in the IT Service Management space with a powerful user experience and one of the industry's most attractive time-to-value offerings. And, we announced the divestiture of the arcserve business, further managing our portfolio and sharpening our focus. 'As we look ahead to the balance of FY2015, we know that there is still much work ahead of us to build CA for growth. We will continue to focus on our strengths, invest in key growth areas and drive the level of execution needed to advance our business strategy, serve our customers and deliver long-term value for our shareholders.' FINANCIAL OVERVIEW Note: All financial results have been adjusted to reflect the classification of the Company's arcserve data protection business as a discontinued operation. REVENUE AND BOOKINGS The decrease in revenue was primarily due to a decrease in subscription and maintenance revenue and a decrease in professional services revenue. The decrease in bookings was primarily due to lower year-over-year professional services bookings, due to a decrease in the size and number of professional services engagements, including non-core engagements with government customers that are not directly related to our software product sales. The Company executed a total of 8 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $330 million. During the first quarter of fiscal 2014, the Company executed a total of 9 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $323 million. The weighted average duration of subscription and maintenance bookings for the quarter was 3.60 years, compared with 3.10 years for the same period in fiscal 2014, primarily attributable to a contract renewal with a large financial services company. EXPENSES AND MARGIN GAAP and non-GAAP EPS in the first quarter of fiscal 2015 were negatively affected by $0.58 and $0.15, respectively, from an increase in the Company's GAAP and non-GAAP effective tax rates. The Company recognized a net discrete tax benefit of approximately $181 million in the first quarter of fiscal 2014, primarily from the resolution of uncertain tax positions relating to U.S. and non-U.S. jurisdictions. GAAP operating expenses include approximately $9 million in costs associated with the Fiscal 2014 Rebalancing Plan, compared with $117 million in the first quarter of fiscal 2014. This resulted in a positive impact of $0.39 on GAAP EPS. SELECTED HIGHLIGHTS FROM THE QUARTER Customer traction for CA innovations continued in the quarter. ?A large financial services company is incorporating the full suite of CA virtualization and automation solutions to improve speed and quality of application production. -Together with a partner, CA signed a multi-million dollar contract with a large government entity to help improve the quality of a high-profile, consumer-facing healthcare application. -Tata Sky - India's leading direct broadcast television provider - selected CA Application Performance Management, Nimsoft Monitoring and Workload Automation. -Dillard's - a US-based department store chain - chose CA as the company-wide API solution. CA launched Cloud Service Management, a CA-built solution that redefines SaaS in the segment by delivering rapid time to value and a differentiated user-experience. Further strengthened the leadership team: named Amit Chatterjee EVP, Enterprise Solutions and Technology Group. SEGMENT INFORMATION The increase in Mainframe Solutions and Enterprise Solutions operating margin in the first quarter of fiscal 2015 was primarily a result of timing of selling and marketing expenses and a reduction in personnel costs. The decrease in Enterprise Solutions revenue for the first quarter of fiscal 2015 was primarily due to a decrease in new product sales in the prior fiscal year. The decline in Services revenue was primarily due to a decrease in the size and number of professional services engagements including non-core engagements with government customers that are not directly related to our software product sales. CASH FLOW FROM OPERATIONS Cash flow from operations in the first quarter of fiscal 2015 was $166 million, compared with $3 million in the prior year. The increase was primarily due to a decrease in income tax payments. CAPITAL STRUCTURE Cash, cash equivalents and investments at June 30, 2014 were $3.255 billion. With $1.769 billion in total debt outstanding and $140 million in notional pooling, the Company's net cash, cash equivalents and investments position was $1.346 billion. In the first quarter of fiscal 2015, the Company repurchased 1.7 million shares of common stock for $50 million. The Company is currently authorized to purchase $950 million of its common stock under its current stock repurchase program. The Company distributed $111 million in dividends to shareholders. The Company's outstanding share count at June 30, 2014 was 440 million. OUTLOOK FOR FISCAL YEAR 2015 The Company reaffirmed the following outlook, which represents 'forward-looking statements' (as defined below). It takes into account the effect of the definitive agreement to divest CA arcserve data protection business announced on July 7, 2014. The Company expects the following: Total revenue to decrease in a range of minus 2 percent to minus 1 percent in constant currency. At June 30, 2014 exchange rates, this translates to reported revenue of $4.34 billion to $4.40 billion. GAAP diluted earnings per share from continuing operations to decrease in a range of minus 12 percent to minus 8 percent in constant currency. At June 30, 2014 exchange rates, this translates to reported GAAP diluted earnings per share of $1.77 to $1.84. Non-GAAP diluted earnings per share from continuing operations to decrease in a range of minus 21 percent to minus 19 percent in constant currency. At June 30, 2014 exchange rates, this translates to reported non-GAAP diluted earnings per share of $2.42 to $2.49. Cash flow from continuing operations to increase in a range of 5 percent to 12 percent in constant currency. At June 30, 2014 exchange rates, this translates to reported cash flow from continuing operations of $1.04 billion to $1.11 billion. This outlook assumes no material acquisitions and a partial currency hedge of operating income. The Company expects a full-year GAAP operating margin of 28 percent and non-GAAP operating margin of 37 percent. The Company also expects to return to a normalized full-year GAAP and non-GAAP effective tax rate of approximately 30 percent, which results in a negative impact to GAAP and non-GAAP diluted earnings per share from continuing operations of approximately $0.43 and $0.59, respectively. The Company anticipates approximately 436 million shares outstanding at fiscal 2015 year-end and weighted average diluted shares outstanding of approximately 441 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 5:00 p.m. ET today to discuss its unaudited first quarter results. The webcast will be archived on the website. Individuals can access the webcast, as well as 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. 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: share-based compensation expense; non-cash amortization of purchased software and other intangible assets; charges relating to rebalancing initiatives that are large enough to require approval from the Company's Board of Directors, fiscal 2007 restructuring costs 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 began expensing costs for internally developed software where development efforts commenced in the first quarter of fiscal 2014. 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 also adds back capitalized internal software costs and excludes amortization of internally developed software costs previously capitalized from these non-GAAP metrics. 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 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. 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, 2014, March 31, 2013 and March 31, 2012, 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 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 managing the Company's sales force to enable the Company to maintain and enhance its strong relationships in its traditional customer base and to increase penetration and accelerate growth in customer segments and geographic regions where the Company currently may not have a strong presence or the Company has underserved, enabling the sales force to sell new products, improving the Company's brand, technology and innovation awareness 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 innovate and/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 failure to expand partner programs; the ability to retain and attract adequate qualified personnel; the ability of the Company's products to remain compatible with ever-changing operating environments, platforms or third party products; the ability to successfully integrate acquired companies and products into the Company's existing business; the ability to adequately manage, evolve and protect the Company's information systems, infrastructure and processes; risks associated with sales to government customers; breaches of the Company's data center, network and software products, and the IT environments of the Company's vendors and customers; 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; 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; 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; the failure to renew large license transactions on a satisfactory basis; potential tax liabilities; 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 rebalancing and facilities consolidations; successful and secure outsourcing of various functions to third parties; 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 the Company's 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 2014 CA, Inc. All Rights Reserved. All other trademarks, trade names, service marks, and logos referenced herein belong to their respective companies. (c) 2014 Electronic News Publishing - |