CA Technologies Reports Fourth Quarter and Full Fiscal Year 2011 Results - CA Technologies
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CA Technologies Reports Fourth Quarter and Full Fiscal Year 2011 Results


  • Reports Full Year Revenue , GAAP and Non-GAAP EPS and Cash Flow from Operations Growth; Meets Full Year Company Outlook
  • Issues Fiscal Year 2012 Outlook Including Revenue Growth of 6-8 Percent in Constant Currency, Translating to $4.8 Billion to $4.9 Billion as Reported
  • Board of Directors Approves New $500 Million Stock Repurchase Plan and Increases Dividend 25 Percent
  • Announces Five-Year, $500 Million Deal with Large IT Outsourcer
  • Announces Agreement to Sell Internet Security Business
  • CFO Nancy Cooper Announces Intention To Retire

ISLANDIA, N.Y., May 12, 2011 – CA Technologies (NASDAQ:CA) today reported financial results for its fourth quarter and full fiscal year 2011, ended March 31, 2011.

FINANCIAL OVERVIEW

Note:  All financial results have been adjusted to reflect the classification of the Company’s Internet Security Business as a discontinued operation.

* Non-GAAP income and earnings per share are non-GAAP financial measures, as noted in the discussion of non-GAAP results below. A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release.
**CC: Constant Currency

EXECUTIVE COMMENTARY

“We said at the beginning of fiscal year 2011, that it would be a year of growth and investment, and it was.” said CEO Bill McCracken.  “We grew our revenue, earnings per share and cash flow while building our technology portfolio, bringing new talent to the team, further focusing our business on areas of strategic importance and investing in new routes to market.

“The guidance we issued today, and the announcement of a new stock repurchase plan and dividend increase, reflects our confidence in our strategic direction and our commitment to enhancing shareholder value,” McCracken concluded. 

REVENUE AND BOOKINGS

During the fourth quarter, the Company saw demand for its virtualization and service automation, service portfolio management, and Nimsoft solutions, as well as mainframe capacity.  This was offset by softness in new mainframe product demand.  About 2 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 the acquisitions of Nimsoft, Inc., Hyperformix, Inc. and Arcot Systems, Inc.  About 61 percent of the Company’s revenue came from North America, while 39 percent came from International operations.

Fourth Quarter

Total revenue year-over-year:

  • Total revenue was $1.128 billion, up 4 percent in constant currency and 5 percent as reported.
  • Total revenue backlog was $8.763 billion, up 6 percent in constant currency and 8 percent as reported.  The current portion of revenue backlog was $3.727 billion, up 5 percent in constant currency and 7 percent as reported.
  • North America revenue was $689 million, up 5 percent in constant currency and as reported.
  • International revenue was $439 million, up 2 percent in constant currency and 4 percent as reported.
  • Total bookings in the fourth quarter were $1.889 billion, up 31 percent in constant currency and 33 percent as reported.  Fourth quarter bookings were positively affected by a five-year contract renewal of approximately $500 million with a large IT outsourcer.
  • 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, including the one renewal of approximately $500 million mentioned above.  During the fourth quarter of 2010, 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 $632 million.
  • The weighted average duration of subscription and maintenance bookings for the quarter was 3.82 years, compared with 3.45 years for the same period in fiscal year 2010.
  • North America bookings were $1.380 million, up 61 percent in constant currency and 60 percent as reported.  North America bookings in the fourth quarter were positively affected by the large contract renewal  mentioned above.
  • International bookings were $509 million, down 14 percent in constant currency and 9 percent as reported.  The Company continued to see softness in its EMEA operations.

Full Year

  • Total revenue was $4.429 billion, up 5 percent in constant currency and as reported.
  • North America revenue was $2.694 billion, up 7 percent in constant currency and 8 percent as reported.
  • International revenue was $1.735 billion, up 1 percent in constant currency and as reported.
  • Total bookings were $4.888 billion, up 2 percent in constant currency and  1 percent as reported.
  • The Company renewed a total of 56 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1.994 billion, including the one contract renewal of approximately $500 million mentioned above.  During fiscal year 2010, the Company renewed a total of 68 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $2.146 billion.
  • The weighted average duration of subscription and maintenance bookings for the full fiscal year was 3.46 years, compared to 3.54 years for the previous fiscal year.
  • North America bookings were $3.253 billion, up 12 percent in constant currency and as reported.  Fiscal year 2011 bookings comparisons were positively affected by the aforementioned large contract renewal.
  • International bookings were $1.635 billion, down 14 percent in constant currency and 16 percent as reported.  As mentioned above, International bookings were adversely affected by softness in the Company’s EMEA operations.

EXPENSES AND MARGIN

Fourth Quarter

Year-over-year GAAP results:

  • Operating expenses, before interest and income taxes, were $829 million, down 3 percent in constant currency and 2 percent as reported.
  • Operating income, before interest and income taxes, was $299 million, up 29 percent in constant currency and as reported.
  • Operating margin was 27 percent, up 6 percentage points.

Year-over-year non-GAAP results, which exclude purchased software and intangibles amortization, pre-fiscal year 2010 restructuring costs, and certain other gains and losses, which includes recoveries and certain costs associated with derivative litigation matters, share-based compensation expense, and includes gains and losses on hedges that mature within the quarter, but excludes gains and losses on hedges that do not mature within the quarter:

  • Operating expenses, before interest and income taxes, were $772 million, down 5 percent in constant currency and 3 percent as reported.
  • Operating income, before interest and income taxes, was $356 million, up 28 percent in constant currency and 26 percent as reported.
  • Operating margin was 32 percent, up 6 percentage points. 

The fourth quarter of fiscal year 2010 was adversely affected by a $50 million restructuring charge.

For the fourth quarter of fiscal year 2011, the Company’s effective GAAP tax rate was 35 percent, compared to 54 percent in the prior year.  The Company’s effective non-GAAP tax rate was 29 percent, up from 28 percent in the prior year. 

Full Year

Year-over-year GAAP results:

  • Operating expenses, before interest and income taxes, were $3.175 billion, up 5 percent in constant currency and 6 percent as reported.
  • Operating income, before interest and income taxes, was $1.254 billion, up 3 percent in constant currency and 2 percent as reported.
  • Operating margin was 28 percent, down 1 percentage point.

Year-over year non-GAAP results:

  • Operating expenses, before interest and income taxes, were $2.940 billion, up 5 percent in constant currency and as reported.
  • Operating income, before interest and income taxes, was $1.489 billion, up 5 percent in constant currency and 4 percent as reported.
  • The Company recorded a non-GAAP operating margin of 34 percent, flat from fiscal year 2010. 

For the full year, the Company’s effective GAAP and non-GAAP tax rates were 32 percent, compared to 34 percent in the prior year.

CASH FLOW FROM CONTINUING OPERATIONS

Cash flow from continuing operations in the fourth quarter was $634 million, compared to $631 million in the prior year.  Cash flow was positively affected by a decrease of about $70 million in cash paid for income taxes.

For the full year, cash flow from continuing operations was $1.377 billion, compared to $1.336 billion in the prior fiscal year.  Cash flow was positively affected by a decrease of about $107 million in cash paid for income taxes.

CAPITAL STRUCTURE

  • Cash, cash equivalents and marketable securities at March 31, 2011, were $3.228 billion.
  • With $1.551 billion in total debt outstanding, the Company’s net cash, cash equivalents and marketable securities position was $1.677 billion.
  • In the fourth quarter, the Company repurchased approximately 2 million shares of stock for a total of $48 million.  For the year, the Company purchased approximately 11 million shares for a total of $238 million, which includes approximately 0.8 million shares for a total of approximately $20 million that settled in April 2010, completing the $250 million stock repurchase program authorized by the Board of Directors on October 29, 2008. 
  • The Company’s outstanding share count at March 31, 2011 was 502 million.

STOCK REPURCHASE PLAN AND DIVIDEND INCREASE

The Company announced that its Board of Directors has authorized an additional $500 million for the repurchase of the Company’s shares.  This new authorization is in addition to the approximately $200 million remaining from the Board’s 2010 authorization of $500 million, and brings the total available for repurchase to approximately $700 million as of May 6, 2011.  

In addition, the Board has authorized a dividend increase of 25 percent for fiscal year 2012 as and when declared by the Board.  For the first quarter, the Board has declared a quarterly cash dividend of $0.05 per common share, compared to the prior quarterly dividend of $0.04 per common share. 

“CA Technologies software business produces consistent earnings growth, cash flow of more than $1 billion annually and a strong balance sheet.  We have a balanced capital allocation approach, and we are constantly assessing organic investments and acquisitions in existing and new markets, as well as returns to shareholders via dividends and share repurchases,” said Nancy Cooper, CA Technologies chief financial officer. 

Any repurchases under the Company’s stock repurchase program will 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 or through solicited or unsolicited privately negotiated transactions or in such other manner that complies with the Securities Exchange Act of 1934.  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.

NANCY COOPER TO RETIRE AS CFO; PETER GRIFFITHS NAMED HEAD OF DEVELOPMENT

The Company announced that Cooper has indicated her intention to retire.  She will remain in her role until a new CFO is named and will assist through the transition.  In addition, the Company named  Peter Griffiths as its new head of research and development. (See separate news release).

BUSINESS HIGHLIGHTS

During the fourth quarter the Company:

  • Announced the general availability of three key products in the CA Automation Suite, launched in October 2010.  CA Configuration Automation r12, CA Process Automation r3 and CA Server Automation r12 are designed to help customers expedite their journey to a virtualized, dynamic cloud computing infrastructure and increase business agility, reduce cost and risk, and improve service delivery.
  • Announced the launch of the CA Partner Solution Center, a channel initiative for the CA Virtual portfolio.  The Center offers partners an extensive array of partner-specific sales, marketing and technical assets to support their efforts to resell and augment their virtualization practice with CA Virtual products.
  • Announced CA ERwin® Data Modeler r8, an industry-leading solution for collaboratively visualizing and managing data across the enterprise.  CA ERwin Data Modeler r8 features powerful visualization tools to help users represent data that is managed in multiple systems, applications, platforms and locations.  This solution enables users to more effectively manage the migration of data to the cloud and other new forms of IT infrastructure.
  • Announced an extended alliance with Unisys Corporation to offer joint solutions that accelerate customers’ path from virtualization to the cloud.  The solutions will combine CA Technologies virtualization management, service automation, and service management products with Unisys’ virtualization and cloud advisory, planning, design and implementation services.

AGREEMENT TO SELL INTERNET SECURITY BUSINESS

The Company announced that it has an agreement to sell its Internet Security business to Updata Partners of Edison, N.J.  Financial details were not disclosed.  The business includes anti-virus, anti-malware, gateway security and host-based intrusion prevention software.

OUTLOOK FOR FISCAL YEAR 2012

The Company provided its outlook for fiscal year 2012.  The following guidance represents "forward-looking statements" (as defined below).
The Company expects the following:

  • Total revenue growth in a range of 6 percent to 8 percent in constant currency.  At March 31, 2011 exchange rates, this translates to reported revenue of $4.8 billion to $4.9 billion.
  • GAAP diluted earnings per share growth in constant currency in a range of 6 percent to 11 percent.  At March 31, 2011 exchange rates, this translates to reported diluted earnings per share of $1.79 to $1.86.
  • Non-GAAP diluted earnings per share growth in constant currency in a range of 6 percent to 10 percent.  At March 31, 2011 exchange rates, this translates to reported non-GAAP diluted earnings per share of $2.12 to $2.19.
  • Cash flow from operations growth in a range of 3 percent to 5 percent in constant currency.  At March 31, 2011 exchange rates, this translates to reported cash flow from operations of $1.470 billion to $1.500 billion.

This outlook also assumes no material acquisitions and a partial currency hedge of operating income.  The Company also expects a full-year GAAP and non-GAAP tax rate in a range of 31 to 32 percent.  The Company anticipates approximately 492 million shares outstanding at fiscal year 2012 year-end and a weighted average diluted shares outstanding of approximately 499 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 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 1-877-627-6581.  The international participant number is 1-719-325-4800.

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.

LEGAL NOTICES

Copyright © 2011 CA, Inc. All Rights Reserved. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

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