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CA Technologies Reports Third Quarter Fiscal Year 2013 Results

**CC: Constant Currency

*** Third Quarter FY12 included a single license payment for $39 million in connection with a 2009 litigation settlement. In the third quarter of fiscal year 2012, the payment added $39 million in our Mainframe Solutions segment and in the software fees and other line of revenue; approximately 2 percentage points to GAAP and non-GAAP operating margin; GAAP and non-GAAP operating income of $36 million; GAAP and non-GAAP EPS of $0.05; and cash flow from continuing operations of $39 million.

EXECUTIVE COMMENTARY

“I am very pleased to be a part of the CA Technologies team,” said CA Technologies CEO Mike Gregoire. “While we are encouraged by improvements we saw in the business during our third quarter, including increased demand for our Nimsoft, Infrastructure Management and Service Virtualization offerings, we know that we need to do more to accelerate innovation, gain market share and better differentiate our solutions in the marketplace.

“We also know there is room for improvement in our cost of sales and in the speed and intensity with which we pursue our objectives,” he continued. “Over the next few months we will perform a detailed diagnostic of where we are, and lay out a plan on how to achieve our strategic and financial goals.”

REVENUE AND BOOKINGS

About 62 percent of the Company’s third quarter fiscal year 2013 revenue came from North America, while 38 percent came from International operations.

Revenue year-over-year:

  • Total revenue was $1.195 billion, down 4 percent in constant currency and 5 percent as reported. A $39 million single license payment the Company received in the third quarter of fiscal year 2012 added 3 percentage points to the decrease in the third quarter of fiscal year 2013 revenue.
  • Total revenue backlog was $7.488 billion, down 8 percent in constant currency and 7 percent as reported. The current portion of revenue backlog was $3.495 billion, down 2 percent in constant currency and 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 renewals.
  • North America revenue was $745 million, down 6 percent in constant currency and as reported. The single license payment contributed 5 percentage points to this decrease.
  • International revenue was $450 million, down 2 percent in constant currency and 5 percent as reported.

Bookings year-over-year:

  • Total bookings in the third quarter were $1.261 billion, down 2 percent in constant currency and as reported. The single license payment in the third quarter of fiscal year 2012 added 3 percentage points of decline to fiscal year 2013 total bookings. The Company executed a total of 18 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $477 million. During the third quarter of fiscal year 2012, the Company executed a total of 12 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $452 million.
  • The weighted average duration of subscription and maintenance bookings for the quarter was 2.97 years, compared with 3.53 years for the same period in fiscal year 2012.
  • North America bookings were $685 million, down 11 percent in constant currency and as reported. The single license payment in the third quarter of fiscal year 2012 added 5 percentage points of decline from the year ago period.
  • International bookings were $576 million, up 13 percent in constant currency and 11 percent as reported.

EXPENSES AND MARGIN

Year-over-year GAAP results:

  • Operating expenses, before interest and income taxes, were $825 million, down 2 percent in constant currency and 3 percent as reported.
  • Operating income, before interest and income taxes, was $370 million, down 10 percent in constant currency and as reported.
  • Operating margin was 31 percent, down 2 percentage points 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 $767 million, down 1 percent in constant currency and 3 percent as reported. The decrease in operating expenses was primarily due to lower general and administrative, sales and marketing and product development costs, offset in part by higher severance costs.
  • Operating income, before interest and income taxes, was $428 million, down 9 percent in constant currency and 10 percent as reported.
  • Operating margin was 36 percent, down 2 percentage points from the prior year period.

The single license payment added $0.05 to GAAP and non-GAAP earnings per share and 2 percentage points to GAAP and non-GAAP operating margin in the third quarter of fiscal year 2012.

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