CA Reports Third Quarter Fiscal Year 2010 Results

Jan 28, 2010, 16:03 ET from CA

ISLANDIA, N.Y., Jan. 28 /PRNewswire-FirstCall/ --

  • Revenue Up 4 percent in Constant Currency, 8 Percent as Reported

  • GAAP and Non-GAAP Operating Margins Improve

  • Cash Flow From Operations Up 36 Percent in Constant Currency, 17 Percent as Reported

  • Names William E. McCracken as CEO

CA, Inc. (Nasdaq: CA), the world's leading independent IT management software company, today reported financial results for its third quarter of fiscal year 2010, ended December 31, 2009.

Financial Overview

    
    
                                                               Change in
    (in millions,                                              Constant
     except share data)         Q3FY10    Q3FY09    Change     Currency
    -------------------         ------    ------    ------     ---------
    
    Revenue                     $1,128    $1,042         8%         4%
    -------                     ------    ------       ---        ---
    GAAP Net Income               $257      $208        24%        21%
    ---------------               ----      ----       ---        ---
    Non-GAAP Net Income*          $233      $233         0%       (1%)
    --------------------          ----      ----       ---       ----
    GAAP Diluted EPS             $0.49     $0.39        26%        22%
    ----------------             -----     -----       ---        ---
    Non-GAAP Diluted EPS*        $0.43     $0.43         0%       (2%)
    ---------------------        -----     -----       ---       ----
    Cash Flow from Operations     $342      $292        17%        36%
    -------------------------     ----      ----       ---        ---
    
    * Non-GAAP net income and non-GAAP earnings per share are non-GAAP
      financial measures, as noted in the discussion of non-GAAP results
      below. A reconciliation of non-GAAP financial measures to their
      comparable GAAP financial measures is included in the tables 
      following this news release.
    

New CEO Named

The CA Board of Directors today announced the unanimous election of William E. McCracken, as CA's chief executive officer. McCracken previously served as executive chairman since John A. Swainson's retirement as CEO was announced in September 2009. McCracken now holds both the CEO and chairman of the board positions at the Company (see related news release).

"We are very pleased with our third quarter performance," said McCracken. "We achieved robust revenue growth, improved both GAAP and non-GAAP operating margins by a percentage point year-over-year, and reported strong cash flow from operations of $342 million.

"We also continued to aggressively build out our technology capabilities to help customers optimize the effectiveness of their IT," he continued. "Over the past few months, CA has introduced a number of new and enhanced products in the security, IT management, virtualization and automation spaces and made investments to bolster our cloud computing offerings by acquiring NetQoS and Oblicore. These moves strengthen our position as a leader in next-generation infrastructure management."

Revenue and Bookings  

North American revenue was $655 million, up 7 percent in constant currency and 8 percent as reported from the prior year period, while international revenue was $473 million, down 1 percent in constant currency and up 9 percent as reported year-over-year.

Total revenue backlog was $7.916 billion, up 9 percent in constant currency and up 13 percent as reported over the prior year period. Revenue backlog was up both in terms of revenue to be recognized over the next 12 months and revenue to be recognized beyond 12 months.  

Third quarter results include an approximate $10 million contribution to revenue from the acquisition of NetQoS® Inc., which closed Nov. 19, 2009. Currency exchange  rates had a favorable impact on total revenue of approximately $48 million in the third quarter of fiscal year 2010 compared to the third quarter of fiscal year 2009.

Total bookings in the third quarter were $1.371 billion, up 5 percent in constant currency and up 10 percent as reported, compared to the prior year period. During the third quarter, the Company signed 16 license agreements with aggregate values greater than $10 million for a total of $514 million, compared with 18 license agreements totaling $471 million in the third quarter of fiscal year 2009. The weighted average duration of subscription and maintenance bookings for the quarter was 3.2 years, compared with 3.1 years for the same period in fiscal year 2009.

CA saw significant demand for Mainframe 2.0 products, its Identity and Access Management security offerings and its CA Wily application performance management products. The Company also experienced healthy demand for Software-as-a-Service offerings based on CA Clarity.

Expenses and Margin

Total GAAP expenses, before interest and income taxes, for the third quarter were $777 million, up 1 percent in constant currency and up 6 percent as reported from the prior year. GAAP operating income, before interest and income taxes, was $351 million, up 11 percent in constant currency and 14 percent as reported compared to the prior year period. The Company recorded a GAAP operating margin of 31 percent, a 1 percentage point improvement as reported from the prior year period.

On a non-GAAP basis, which excludes purchased software and intangibles amortization, restructuring and other costs, and includes gains and losses of hedges that mature within the quarter, but excludes gains and losses of hedges that do not mature within the quarter, the Company reported third quarter operating expenses of $754 million, up 1 percent in constant currency and up 7 percent as reported from the prior year. Non-GAAP operating income, before interest and income taxes, was $374 million, up 9 percent in constant currency and 11 percent as reported compared to the prior year period. The Company recorded a third quarter non-GAAP operating margin of 33 percent, up a percentage point from the third quarter of fiscal year 2009 as reported. 

Expenses were adversely affected by a weakening of the U.S. dollar, costs associated with strategic initiatives and increased commissions. Expenses were positively affected by streamlining efforts undertaken in the Company's Services operation.

Earnings Per Share

GAAP diluted earnings per share for the third quarter were up 22 percent in constant currency and 26 percent as reported from the prior year period. In addition, when compared to the prior year period, GAAP earnings per share were positively affected by approximately $0.04 due to a lower GAAP tax rate in the current year period. The Company recorded a GAAP tax rate of 21.6 percent during the quarter.

Non-GAAP diluted earnings per share for the quarter were down 2 percent in constant currency and flat as reported. When compared to the prior year period, non-GAAP EPS was adversely affected by approximately $0.04 due to the lower non-GAAP tax rate in the prior year period. The Company recorded a non-GAAP tax rate in the third quarter of 35.5 percent.

Cash Flow and Capital Structure

The Company reported third quarter cash flow from operations of $342 million, compared with $292 million in the prior year period. Cash flow from operations in the quarter was positively affected by increased collections and lower cash taxes paid.

The balance of cash and cash equivalents at Dec. 31, 2009, was $2.624 billion. With $1.545 billion in total debt outstanding, the Company had a net cash position of $1.079 billion at Dec. 31, 2009.

During the quarter, the Company issued $750 million of 10-year Senior Notes at 5.375 percent and utilized the proceeds to pay down $500 million of the $750 million drawn on the Company's $1 billion revolving credit facility. The Company also paid down $636 million of debt, which matured in December, with cash on hand. Included in this debt payment was approximately $460 million in convertible debt.

The third quarter of fiscal year 2010 included a $200 million cash payment for the above mentioned acquisition of NetQoS.

During the quarter, the Company repurchased about $40 million of its common stock under its previously announced $250 million stock repurchase program.

Business Highlights

During the quarter, CA announced:

  • The completion of its acquisition of NetQoS Inc., a leading provider of network performance management and service delivery management solutions.
  • The release of 12 new and updated products that will help enterprises and service providers gain increased business value from virtualized environments. CA's solutions allow organizations to realize greater cost savings, efficiency and flexibility from virtualized computing environments through comprehensive capabilities for IT management, governance, automation and security.
  • The release of CA ecoSoftware products designed to help enterprises manage the implementation, progress and outcomes of global sustainability initiatives more effectively; to measure and report reliably on energy and natural resource consumption; and to account for carbon emissions and to reduce energy costs across the datacenter and facilities.
  • The election of Richard Sulpizio to its Board of Directors. Sulpizio also has been named to both the Board's Compensation and Human Resources and Corporate Governance Committees.

Outlook for Fiscal Year 2010

The Company reaffirmed its outlook for fiscal year 2010. The following represents "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, which translates to reported revenue of $4.3 billion to $4.4 billion;
  • GAAP diluted earnings per share growth in constant currency in a range of 18 percent to 26 percent. At current exchange rates, this translates to reported diluted earnings per share of $1.46 to $1.57;
  • Non-GAAP diluted earnings per share growth in constant currency in a range of 7 percent to 15 percent. At current exchange rates, this translates to reported non-GAAP diluted earnings per share of $1.60 to $1.71; and, 
  • Cash flow from operations growth in a range of 12 percent to 19 percent in constant currency. At current exchange rates, this translates to reported cash flow from operations of $1.3 billion to $1.4 billion. The cash flow from operations outlook includes approximately $50 million in restructuring payments accrued during fiscal year 2009.

Except as otherwise noted, guidance reflects current foreign currency exchange rates as of Dec. 31, 2009. This outlook also assumes no future material acquisitions and a partial currency hedge of operating income. In addition, the Company expects the combination of NetQoS and Oblicore to be approximately $0.01 dilutive to both GAAP and non-GAAP earnings per share. The Company also anticipates incremental fourth quarter expenses of approximately $20 million to $25 million related to real estate and other costs. The Company expects a full-year GAAP and non-GAAP tax rate in a range of 35 to 36 percent.

The Company anticipates approximately 513 million shares outstanding at fiscal 2010 year-end and a weighted average diluted share count of approximately 533 million for the fiscal year.

Webcast

This news release and the accompanying tables should be read in conjunction with additional content that is available on the Company's website, including a supplemental financial package, as well as a webcast that the Company will host at 4:30 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 this press release and supplemental financial information, at http://ca.com/invest or listen to the call at 1-877-857-6163. The international participant number is 1-719-325-4835.

(Logo:  http://www.newscom.com/cgi-bin/prnh/20090402/NYTH500LOGO)

About CA

CA (Nasdaq: CA), the world's leading independent IT management software company, helps customers optimize IT for better business results. CA's Enterprise IT Management solutions for mainframe and distributed computing enable Lean IT — empowering organizations to more effectively govern, manage and secure their IT operations. For more information, visit www.ca.com.

Connect with CA

Non-GAAP Financial Measures

This news release, the accompanying tables and the additional content that is available on the Company's website, including a supplemental financial package, includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). Non-GAAP metrics for operating expenses, operating income, operating margin, income from operations and diluted earnings per share exclude the following items: non-cash amortization of purchased software and other intangibles, charges for in-process research and development costs, restructuring and other charges and 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. Non-GAAP income also excludes the interest on convertible bonds. The effective tax rate on GAAP and non-GAAP income from operations is the Company's provision for income taxes expressed as a percentage of pre-tax GAAP and non-GAAP income from operations, respectively. Such tax rates are determined based on an estimated effective full year tax rate, with the effective tax rate for GAAP generally including the impact of discrete items in the  period such items arise and the effective tax rate for non-GAAP income generally allocating the impact of discrete items pro rata to the fiscal year's remaining reporting periods. Non-GAAP adjusted cash flow excludes restructuring and other payments. Free cash flow excludes capital expenditures. We present constant currency information to provide a framework for assessing how our underlying businesses preformed 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, 2009, 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

We have assessed and will continue to assess the impact on our business of the general economic downturn and the related impact on the financial services sector in particular. Approximately one third of our revenue comes from arrangements with financial institutions (i.e., banking, brokerage and insurance companies). The majority of these arrangements are for the renewal of mainframe capacity and maintenance associated with transactions processed by such financial institutions. While we cannot predict what impact there may be on our business from further consolidation of the financial industry sector, or the impact from the economy in general on our business, to date the impact has not been material to our balance sheet, results of operations or cash flows. The vast majority of our subscription and maintenance revenue in any particular reporting period comes from contracts signed in prior periods, generally pursuant to contracts ranging in duration from three to five years.

Certain statements in this communication (such as statements containing the words "believes," "plans," "anticipates," "expects," "estimates" and similar expressions) constitute "forward-looking statements" that are based upon the beliefs of, and assumptions made by, the Company's management, as well as information currently available to management. These forward-looking statements reflect the Company's current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: global economic factors or political events beyond the Company's control; general economic conditions, including concerns regarding a global recession and credit constraints, or unfavorable economic conditions in a particular region, industry or business sector; impact of revenue recognition accounting policies on operating results; failure to expand channel partner programs; ability to adequately manage and evolve financial reporting and managerial systems and processes; ability to successfully integrate acquired companies and products into existing businesses; competition in product and service offerings and pricing; ability to retain and attract qualified key personnel; rapid technological and market changes; dependence on third party operating systems and software; use of software from open source code sources; discovery of errors in the Company's software and potential product liability claims; significant amounts of debt and possible future credit rating changes; the failure to protect the Company's intellectual property rights and source code; the timing of orders from customers and channel partners; reliance upon large transactions with customers; sales to government customers; breaches of the Company's software products and the Company's and customers' data centers and IT environments; lack of market growth in key product areas; use of third party microcode; third party claims of intellectual property infringement or royalty payments; fluctuations in foreign currencies; failure to successfully execute restructuring plans and related sales model changes; successful outsourcing of various functions to third parties; potential tax liabilities; and these factors and the other factors described more fully in the Company's filings with the Securities and Exchange Commission.  The Company assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

Copyright © 2010 CA, Inc. All Rights Reserved. One CA Plaza, Islandia, N.Y. 11749. NetQoS is a registered trademark of NetQoS Inc. All other trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

Contacts:

Dan Kaferle

Carol Lu

Public Relations

Investor Relations

(631) 342-2111

(212) 415-6920

daniel.kaferle@ca.com

carol.lu@ca.com

    
    
                                     Table 1                                 
                                     CA, Inc.                                
                 Condensed Consolidated Statements of Operations             
                     (in millions, except per share amounts)                 
                                   (unaudited)                               
                                                                             
                                                Three Months     Nine Months 
                                                   Ended            Ended    
                                                December 31,    December 31, 
                                                ------------    ------------ 
      Revenue                                   2009   2008(1)   2009 2008(1)
                                                ----   -------   ---- -------
      Subscription and maintenance revenue    $1,000     $919  $2,919  $2,859
      Professional services                       74       87     216     274
      Software fees and other                     54       36     115     103
                                                  --       --     ---     ---
      Total revenue                            1,128    1,042   3,250   3,236
                                               -----    -----   -----   -----
      Expenses                                                               
      Costs of licensing and maintenance          73       70     212     225
      Cost of professional services               67       76     193     239
      Amortization of capitalized 
       software costs                             34       31     102      91
      Selling and marketing                      316      307     883     915
      General and administrative                 129      110     359     342
      Product development and enhancements       119      115     353     358
      Depreciation and amortization of other                                 
       intangible assets                          40       36     118     109
      Other (gains) expenses, net                 (3)     (14)     11       4
      Restructuring and other                      2        2       4       6
                                                 ---      ---     ---     ---
      Total expenses before interest and                                     
       income taxes                              777      733   2,235   2,289
                                                 ---      ---   -----   -----
      Income before interest and income taxes    351      309   1,015     947
      Interest expense, net                       23       16      62      40
                                                  --       --      --      --
      Income before income taxes                 328      293     953     907
      Income tax expense                          71       85     283     301
                                                 ---      ---     ---     ---
      NET INCOME                                $257     $208    $670    $606
                                                ====     ====    ====    ====
                                                                             
      Basic income per common share (1)        $0.49    $0.40   $1.28   $1.17
      Basic weighted average shares used in                                  
       computation (1)                           515      514     516     513
      Diluted income per common share (1)      $0.49    $0.39   $1.27   $1.15
      Diluted weighted average shares used                                   
       in computation (1)                        535      538     539     537
                                                                             
                                                                             
    (1) Certain balances and the calculations of income per common share and
        weighted average shares of common stock have been revised to reflect
        the retrospective adoption of recent accounting pronouncements. For
        further information refer to the Quarterly report on Form 10-Q for 
        the three and nine months ended December 31, 2009.    
    
    
    
                                    Table 2                             
                                    CA, Inc.                            
                     Condensed Consolidated Balance Sheets              
                                 (in millions)                          
                                  (unaudited)                           
                                                                        
                                                  December 31, March 31, 
                                                       2009     2009(1) 
                                                     -------   -------- 
                                                                        
      Cash and cash equivalents                       $2,624     $2,712 
      Trade and installment accounts 
       receivable, net                                   932        839 
      Deferred income taxes - current                    518        513 
      Other current assets                               144        105 
                                                         ---        --- 
      Total current assets                             4,218      4,169 
      Installment accounts receivable, due                              
       after one year, net                                46        128 
      Property and equipment, net                        454        442 
      Purchased software products, net                   150        155 
      Goodwill                                         5,513      5,364 
      Deferred income taxes - noncurrent                 234        268 
      Other noncurrent assets, net                       779        715 
                                                         ---        --- 
      Total assets                                   $11,394    $11,241 
                                                     =======    ======= 
                                                                        
      Current portion of long-term debt and                             
       loans payable                                     $15       $621 
      Deferred revenue (billed or collected) -                          
       current                                         2,287      2,431 
      Deferred income taxes - current                     50         40 
      Other current liabilities                          874        935 
                                                         ---        --- 
      Total current liabilities                        3,226      4,027 
                                                                        
      Long-term debt, net of current portion           1,530      1,287 
      Deferred income taxes - noncurrent                 121        136 
      Deferred revenue (billed or collected) -                          
       noncurrent                                      1,006      1,000 
      Other noncurrent liabilities                       491        429 
                                                         ---        --- 
      Total liabilities                                6,374      6,879 
                                                       -----      ----- 
                                                                        
      Common stock                                        59         59 
      Additional paid-in capital                       3,630      3,686 
      Retained earnings                                3,280      2,673 
      Accumulated other comprehensive loss              (111)      (183)
      Treasury stock                                  (1,838)    (1,873)
                                                      ------     ------ 
                                                                        
      Total stockholders’ equity                       5,020      4,362 
                                                       -----      ----- 
                                                                        
      Total liabilities and stockholders’ equity     $11,394    $11,241 
                                                     =======    ======= 
                                                                        
                                                                        
    (1) Certain balances have been revised to reflect the retrospective
        adoption of recent accounting pronouncements. For further 
        information refer to the Quarterly report on Form 10-Q for the 
        three and nine months ended December 31, 2009.    
    
    
    
                                     Table 3                                 
                                     CA, Inc.                                
                 Condensed Consolidated Statements of Cash Flows             
                                  (in millions)                              
                                   (unaudited)                               
                                                               Three Months  
                                                                   Ended     
                                                               December 31,  
                                                               ------------  
                                                               2009  2008(1) 
                                                               ----  ------- 
    OPERATING ACTIVITIES:                                                    
       Net income                                              $257     $208 
       Adjustments to reconcile net income to                              
        net cash provided by                                               
       operating activities:                                               
         Depreciation and amortization                           74       67 
         Provision for deferred income taxes                    (16)     (40)
         Provision for bad debts                                  -       (1)
         Share based compensation expense                        22       20 
         Amortization of discount on convertible debt             9        8 
         Loss (gain) on sale and disposal of assets               1       (3)
         Foreign currency transaction losses – before                        
          taxes, net                                              6       47 
       Changes in other operating assets and                               
        liabilities, net of effect of acquisitions:                       
         Increase in trade and installment accounts                          
          receivable, net                                      (177)    (124)
         Increase in deferred revenue (billed or collected)      51       14 
         Increase in taxes payable, net                         110       92 
         (Decrease) increase in accounts payable, accrued                    
          expenses and other                                    (26)       1 
         Increase in accrued salaries, wages and commissions     42       17 
         Decrease in accrued restructuring charges               (7)     (16)
         Changes in other operating assets and liabilities       (4)       2 
                                                                 --       -- 
    NET CASH PROVIDED BY OPERATING ACTIVITIES                   342      292 
                                                                ---      --- 
    INVESTING ACTIVITIES:                                                    
        Acquisitions, primarily goodwill, purchased                        
         software, and other intangible                                    
         assets, net of cash acquired                          (198)     (33)
        Purchases of property and equipment                     (15)     (19)
        Capitalized software development costs                  (46)     (33)
        Other investing activities                               (1)       - 
                                                                 --       -- 
    NET CASH USED IN INVESTING ACTIVITIES                      (260)     (85)
                                                               ----      --- 
    FINANCING ACTIVITIES:                                                    
        Dividends paid                                          (21)     (21)
        Purchases of common stock                               (45)      (4)
        Debt repayments, net                                   (406)    (145)
        Exercise of common stock options and other                4        - 
                                                                 --       -- 
    NET CASH USED IN FINANCING ACTIVITIES                      (468)    (170)
                                                               ----     ---- 
    (DECREASE) INCREASE IN CASH AND CASH                                     
      EQUIVALENTS BEFORE EFFECT OF EXCHANGE 
      RATE CHANGES ON CASH                                     (386)      37 
    Effect of exchange rate changes on cash                     (15)     (67)
                                                                ---      --- 
    DECREASE IN CASH AND CASH EQUIVALENTS                      (401)     (30)
    CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD          3,025    2,399 
                                                              -----    ----- 
    CASH AND CASH EQUIVALENTS AT END OF PERIOD               $2,624   $2,369 
                                                             ======   ====== 
                                                                             
    (1) Certain balances have been revised to reflect the retrospective
        adoption of recent accounting pronouncements. For further information
        refer to the Quarterly report on Form 10-Q for the three and nine
        months ended December 31, 2009.    
    
    
    
                                      Table 4                  
                                      CA, Inc.                 
                              Constant Currency Summary         
                                  ($ in millions)              
                                    (unaudited)                
                                                                           
                                      Three Months Ended December 31,      
                                  --------------------------------------- 
                                                              % Increase   
                                                 % Increase     (Decrease)
                                                 (Decrease)     in Constant
                                  2009     2008    in $ US     Currency (1)
                                  ----     ----  -----------   -------------
                                                                           
    Bookings                    $1,371   $1,248      10%            5% 
                                                                       
    Revenue:                                                           
       North America              $655     $608       8%            7% 
       International               473      434       9%           (1%)
                                   ---      ---       -            --  
       Total revenue            $1,128   $1,042       8%            4% 
                                                                       
    Revenue:                                                           
       Subscription and                                                
        maintenance             $1,000     $919       9%            4% 
       Professional services        74       87     (15%)         (20%)
       Software fees and other      54       36      50%           45% 
                                    --       --      --            --  
       Total revenue            $1,128   $1,042       8%            4% 
                                                                       
    Total expenses before                                              
     interest and income taxes:                                        
       Total Non-GAAP (2)         $754     $704       7%            1% 
       Total GAAP                 $777     $733       6%            1% 
                                                            
               
                                       Nine Months Ended December 31,      
                                  ---------------------------------------  
                                                              % Increase   
                                                 % Increase     (Decrease)  
                                                 (Decrease)     in Constant 
                                  2009     2008    in $ US      Currency (1)
                                  ----     ----  -----------   -------------
                                                                            
    Bookings                    $3,516   $3,780      (7%)          (7%)
                                                                       
    Revenue:                                                           
       North America            $1,913   $1,819       5%            5% 
       International             1,337    1,417      (6%)          (1%)
                                 -----    -----      --            --  
       Total revenue            $3,250   $3,236       0%            3% 
                                                                       
    Revenue:                                                           
       Subscription and                                                
        maintenance             $2,919   $2,859       2%            5% 
       Professional services       216      274     (21%)         (20%)
       Software fees and other     115      103      12%           11% 
                                   ---      ---      --            --  
       Total revenue            $3,250   $3,236       0%            3% 
                                                                       
    Total expenses before                                              
     interest and income taxes:                                        
       Total Non-GAAP (2)       $2,147   $2,211      (3%)          (1%)
       Total GAAP               $2,235   $2,289      (2%)           0% 
                                                                     
                                                                           
    (1) Constant currency information is presented to provide a framework 
        to assess how the underlying businesses performed excluding the 
        effect of foreign currency rate fluctuations.  To present this 
        information, current and comparative prior period results for 
        entities reporting in currencies other than US dollars are 
        converted into US dollars at the exchange rate in effect on 
        March 31, 2009, which was the last day of fiscal year 2009.  
        Constant currency excludes the impacts from the Company's 
        hedging program.     
    (2) Refer to table 6 for a reconciliation of total expenses before
        interest and income taxes on a GAAP basis to total expenses before
        interest and income taxes on a non-GAAP basis. 
    
    
    
                                    Table 5                                
                                    CA, Inc.                                
             Reconciliation of GAAP Results to Non-GAAP Net Income          
                      (in millions, except per share data)                  
                                   (unaudited)                              
                                                                            
                                               Three Months    Nine Months  
                                                  Ended           Ended     
                                               December 31,    December 31,  
                                               ------------    ------------  
                                               2009    2008    2009    2008 
                                               ----    ----    ----    ---- 
                                                                            
      Total revenue                          $1,128  $1,042  $3,250  $3,236 
      Total expenses before interest 
       and income taxes                         777     733   2,235   2,289 
                                                ---     ---   -----   ----- 
                                                                            
      Income before interest 
       and income taxes (1)                     351     309   1,015     947 
         GAAP Operating Margin (% of revenue)    31%     30%     31%     29%
                                                                            
      Non-GAAP operating adjustments:                                       
         Purchased software amortization         13      14      40      43 
         Intangibles amortization                14      13      41      39 
         Restructuring and other                  2       2       4       6 
         Hedging (gains)/losses, net (2)         (6)      -       3     (10)
                                                 --      --      --     --- 
      Total non-GAAP operating adjustments       23      29      88      78 
                                                 --      --      --      -- 
      Non-GAAP income before interest                                       
       and income taxes                         374     338   1,103   1,025 
          Non-GAAP Operating Margin 
           (% of revenue)(3)                     33%     32%     34%     32%
                                                                            
      Interest expense, net                      23      16      62      40 
      Interest on dilutive convertible bonds    (11)    (10)    (35)    (32)
                                                ---     ---     ---     --- 
      Non-GAAP income before income taxes       362     332   1,076   1,017 
                                                                            
      Income tax provision (4)                  129      99     382     351 
                                                ---      --     ---     --- 
                                                                            
      Non-GAAP income (5)                      $233    $233    $694    $666 
                                               ====    ====    ====    ==== 
                                                                            
      Non-GAAP diluted EPS (5)(6)             $0.43   $0.43   $1.27   $1.23 
                                              =====   =====   =====   ===== 
      Diluted weighted average shares 
       used in computation(5)                   535     538     539     537 
                                                                            
    
    (1) See the Condensed Consolidated Statement of Operations on Table 1 
        for a bridge from income before interest and income taxes to net
        income.    
    (2) Consists of gains and losses on hedges of operating income relating 
        to prior periods.    
    (3) Excluding stock based compensation of $22 and $20, non-GAAP 
        operating margin would have been 35% and 34% for the three months
        ended December 31, 2009 and 2008, respectively.  On a year to date
        basis, excluding stock based compensation of $75 and $68, non-GAAP
        operating margin would have been 36% and 34% for the nine months 
        ended December 31, 2009 and 2008, respectively.     
    (4) The effective tax rate on non-GAAP income from operations is the
        Company’s provision for income taxes expressed as a percentage of 
        pre-tax non-GAAP income from operations. This tax rate is determined
        based on an estimated effective full year tax rate, allocating the 
        impact of discrete items pro rata to the fiscal year's remaining 
        reporting periods.    
    (5) Non-GAAP income and the number of shares used in the computation 
        of non-GAAP diluted EPS for all periods presented have been adjusted
        to reflect the dilutive impact of the Company’s 1.625% Convertible 
        Senior Notes and stock awards outstanding.    
    (6) The calculation of the Non-GAAP diluted EPS includes certain
        adjustments required by ASC 260-10-45 which treats certain stock
        awards as participating securities for the computation of earnings 
        per share.  As a result, Non-GAAP diluted EPS may not equal the 
        Non-GAAP income divided by the Diluted weighted average shares.     
    
        Refer to the discussion of Non-GAAP financial measures included in 
        the accompanying press release for additional information.    
    
    
    
                                   Table 6                              
                                   CA, Inc.                             
                     Reconciliation of GAAP to Non-GAAP                 
               Operating Expenses and Diluted Income per Share          
                                (in millions)                           
                                 (unaudited)                            
                                                                        
                                                                   
                                            Three Months     Nine Months  
                                                Ended           Ended     
                                            December 31,     December 31,  
                                            ------------     ------------  
      Operating Expenses                     2009   2008     2009    2008 
                                             ----   ----     ----    ---- 
      Total expenses before interest and                                  
       income taxes                          $777   $733   $2,235  $2,289 
                                                                          
      Non-GAAP operating adjustments:                                     
         Purchased software amortization       13     14       40      43 
         Intangibles amortization              14     13       41      39 
         Restructuring and other                2      2        4       6 
         Hedging (gains)/losses, net (1)       (6)     -        3     (10)
                                               --     --       --     --- 
      Total non-GAAP operating adjustments     23     29       88      78 
                                               --     --       --      -- 
                                                                          
      Total non-GAAP operating expenses      $754   $704   $2,147  $2,211 
                                             ====   ====   ======  ====== 
                                                                        
                                                                        
                                                                   
                                            Three Months     Nine Months  
                                                Ended           Ended     
                                            December 31,     December 31,  
                                            ------------     ------------  
      Diluted Income per Share               2009   2008     2009    2008 
      ------------------------               ----   ----     ----    ---- 
                                                                          
      GAAP diluted income per share         $0.49  $0.39    $1.27   $1.15 
                                                                          
      Non-GAAP adjustments, net of taxes                                  
                                                                          
        Purchased software and intangibles                                
         amortization                        0.03   0.04     0.10    0.10 
        Restructuring and other                 -      -        -    0.01 
         Hedging (gains)/losses, net (1)    (0.01)     -        -   (0.01)
        Non-GAAP effective tax rate                                       
         adjustments (2)                    (0.08)     -    (0.10)  (0.02)
                                            -----    ---    -----   ----- 
                                                                          
      Non-GAAP diluted income per share     $0.43  $0.43    $1.27   $1.23 
                                            =====  =====    =====   ===== 
                                                                          
                                                                        
    (1) Consists of gains and losses on hedges of operating income relating 
        to prior periods.    
    
    (2) The effective tax rate on non-GAAP income from operations is the
        Company’s provision for income taxes expressed as a percentage of 
        pre-tax non-GAAP income from operations. This tax rate is determined
        based on an estimated effective full year tax rate, with the impact 
        of discrete items allocated 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.    
    
    
    
                                    Table 7                                
                                    CA, Inc.                               
                       Effective Tax Rate Reconciliation                   
                               GAAP and Non-GAAP                           
                                 (in millions)                             
                                  (unaudited)                              
                                                                           
                                                                           
                                             Three Months       Nine Months  
                                                 Ended             Ended     
                                             December 31,      December 31,  
                                             ------------      ------------  
                                            GAAP  Non-GAAP    GAAP  Non-GAAP 
                                            ----  --------    ----  -------- 
                                                                           
      Income before income taxes(1)         $328      $362    $953    $1,076 
                                                                           
      Statutory tax rate                    35.0%     35.0%   35.0%     35.0%
                                                                           
      Tax at statutory rate                  115       127     334       377 
                                                                           
      Adjustments for discrete and                                         
       permanent items(2)                    (44)        2     (51)        5 
                                             ---       ---     ---       --- 
                                                                           
      Total tax expense                      $71      $129    $283      $382 
                                                                           
      Effective tax rate(3)                 21.6%     35.5%   29.7%     35.5%
                                                                           
                                                                           
    (1) Refer to Table 5 for a reconciliation of income before interest 
        and income taxes on a GAAP basis to income before income taxes on 
        a non-GAAP basis.    
    
    (2) For the three and nine months ended December 31, 2009, the 
        Company’s income tax provision included net benefits from discrete
        items of approximately $23 million and $30 million, respectively,
        resulting from reconciliations of tax returns to tax provisions, the
        resolution of uncertain tax positions relating to non-U.S.
        jurisdictions, and refinements of estimates ascribed to tax positions
        taken in prior periods relating to the Company’s international tax 
        profile.    
    
    (3) The effective tax rate on GAAP and non-GAAP income from operations 
        is the Company’s provision for income taxes expressed as a percentage
        of pre-tax GAAP and non-GAAP income from operations, respectively.
        Such tax rates are determined based on an estimated effective full 
        year tax rate, with the effective tax rate for GAAP generally 
        including the impact of discrete items in the period such items 
        arise and the effective tax rate for non-GAAP income generally 
        allocating the impact of discrete items pro rata to the fiscal 
        year's remaining reporting periods.     
    
        Refer to the discussion of Non-GAAP financial measures included in 
        the accompanying press release for additional information.    
    
    
    
                                      Table 8                        
                                      CA, Inc.                       
               Reconciliation of Projected GAAP Earnings per Share to 
                        Projected Non-GAAP Earnings per Share         
                                    (unaudited)                     
                                                           
                                                    Fiscal Year Ending 
                                                      March 31, 2010
                                                      --------------
    
    Projected GAAP diluted EPS  range                $1.46  to  $1.57
                                                               
    Non-GAAP adjustments, net of taxes:                        
         Purchased software and intangibles                    
          amortization                                0.14       0.14
                                                      ----       ----
    
    Non-GAAP projected diluted operating EPS range   $1.60  to  $1.71
                                                     =====      =====
                                                           
                                                           
    Refer to the discussion of Non-GAAP financial measures included 
    in the accompanying press release for additional information. 
    

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