CA Technologies Reports Second Quarter Fiscal Year 2013 Results

**CC: Constant Currency

EXECUTIVE COMMENTARY

“While we had anticipated that several areas of our business would be down in the second quarter, our new product and capacity sales fell short of our expectations,” said Bill McCracken, chief executive officer, CA Technologies.  “Our performance was also affected by the weakening global economy, which elongated sales cycles. Despite this difficult environment, we were able to meet our expectations for margin through disciplined expense management.

"We will continue to implement our customer market segmentation model, introduce new products and solutions throughout the second half, and build out our partner network.  We also will manage carefully our expenses to drive healthy operating margins for the full year,” said McCracken.

REVENUE AND BOOKINGS

About 63 percent of the Company’s revenue came from North America, while 37 percent came from International operations.

Revenue year-over-year:

• Total revenue was $1.152 billion, flat in constant currency and down 4 percent as reported.
• Total revenue backlog was $7.460 billion, down 7 percent in constant currency and 8 percent as reported. The current portion of revenue backlog was $3.453 billion, down 2 percent in constant currency and 3 percent as reported. The Company continues to see a drop in backlog as contracts come off the balance sheet prior to an expected increase in the fiscal year 2014 renewal portfolio.
• North America revenue was $730 million, flat in constant currency and down 1 percent as reported.
• International revenue was $422 million, flat in constant currency and down 9 percent as reported.

Bookings year-over-year:

• Total bookings in the second quarter were $837 million, down 13 percent in constant currency and 14 percent as reported, due in part to lower Enterprise Solutions new product sales, mainframe capacity sales and renewals.
• The Company renewed a total of 10 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $232 million. During the second quarter of fiscal year 2012, the Company renewed a total of 10 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $321 million.
• The weighted average duration of subscription and maintenance bookings for the quarter was 3.11 years, compared with 3.59 years for the same period in fiscal year 2012.
• North America bookings were $500 million, down 25 percent in constant currency and as reported.
• International bookings were $337 million, up 14 percent in constant currency and 9 percent as reported.

EXPENSES AND MARGIN

Year-over-year GAAP results:

• Operating expenses, before interest and income taxes, were $815 million, down 5 percent in constant currency and 6 percent as reported.
• Operating income, before interest and income taxes, was $337 million, up 12 percent in constant currency and 1 percent as reported.
• Operating margin was 29 percent, up 1 percentage point from the prior year period.

Year-over-year non-GAAP results exclude purchased software and other intangibles amortization, share-based compensation, and certain other gains and losses. The results also include gains and losses on hedges that mature within the quarter, but exclude gains and losses of hedges that do not mature within the quarter.

• Operating expenses, before interest and income taxes, were $746 million, down 6 percent in constant currency and 9 percent as reported.
• Operating income, before interest and income taxes, was $406 million, up 12 percent in constant currency and 7 percent as reported.
• Operating margin was 35 percent, up 3 percentage points from the prior year period.

For the second quarter of fiscal year 2013, the Company’s effective GAAP tax rate was 32.1 percent, compared with 27.8 percent in the prior year period. The Company’s effective non-GAAP tax rate was 30.8 percent, compared with 31.5 percent in the prior year period.

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