CA Technologies Reports Fourth Quarter and Full Fiscal Year 2012 Results - CA Technologies
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CA Technologies Reports Fourth Quarter and Full Fiscal Year 2012 Results


  • Fourth Quarter Revenue Grows 6 Percent in Constant Currency and 5 Percent as Reported
  • Fourth Quarter GAAP EPS Grows 19 Percent in Constant Currency and 22 Percent as Reported; Non-GAAP EPS Grows 10 Percent in Constant Currency and 17 Percent as Reported
  • Fourth Quarter Cash Flow From Continuing Operations Increases 20 Percent in Constant Currency and 22 Percent as Reported
  • Issues Full Fiscal Year 2013 Outlook

ISLANDIA, N.Y., May 10, 2012 – 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.

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 © 2012 CA, Inc. All Rights Reserved. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.

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