CA Technologies
Feb 1, 2007

CA Reports Third Quarter Fiscal Year 2007 Results

Quarter Driven by Bookings and Cash Flow Company Updates Financial Outlook

ISLANDIA, N.Y., Feb. 1 /PRNewswire-FirstCall/ -- CA, Inc. (NYSE: CA), one of the world's largest management software companies, today reported financial results for its third quarter of fiscal year 2007, ended December 31, 2006.

    Financial Overview

    (in millions, except share data)               Q3FY07    Q3FY06     Change
                                                           (Restated)
    Revenue                                        $1,002      $965        4%
    GAAP Diluted EPS from continuing operations     $0.10     $0.09       11%
    GAAP Income from continuing operations            $52       $56       (7%)
    GAAP Cash Flow from continuing operations        $587      $422       39%
    Non-GAAP Operating EPS*                         $0.24     $0.24        0%


     * Operating earnings per share is a non-GAAP financial measure, as noted
       in the discussion of non-GAAP results below. A reconciliation of GAAP
       diluted EPS to non-GAAP diluted EPS is included in the tables following
       this news release.

"I am pleased with our third quarter performance," said John Swainson, CA's president and chief executive officer. "We made progress executing on our second half plan and recorded a solid third quarter with significant growth in cash flow from operations and total bookings.

"Overall, we are seeing healthy demand in the marketplace for our Enterprise IT Management solutions and especially those solutions we have acquired over the past two years," Swainson said. "Our customers continue to turn to us to help them solve their most complex information technology management and security issues. Going forward, we will continue to focus on superior execution and on becoming even stronger partners with our customers."

Revenue for the third quarter was $1 billion, an increase of 4 percent or 1 percent in constant currency, over the $965 million reported in the comparable period last year. Aside from currency gains, the increase in revenue primarily was attributed to growth in subscription revenue, partially offset by declines in software fees and other revenue, maintenance and financing fees. Revenue from professional services increased 11 percent over the prior year. Total North America revenue was up 4 percent while revenue from international operations was up 3 percent, or down 3 percent in constant currency.

Subscription revenue for the third quarter was $773 million, an increase of 8 percent or 5 percent in constant currency, compared to $717 million reported in the third quarter of last year. The increase primarily was due to growth in new deferred subscription value from the sale of solutions in CA's Enterprise Systems Management, Business Service Optimization and Security Management business units, led by the sale of acquired products. Subscription revenue accounted for 77 percent of total revenue in the quarter, up from 74 percent reported in the third quarter of fiscal year 2006.

Total product and services bookings in the third quarter were $1.55 billion, up 65 percent from $944 million in the prior year period. This increase was attributed in part to growth in sales of new products and services, improved management of contract renewals, the benefits achieved from the realignment of CA's sales force earlier in the fiscal year and an increase in the volume, length and dollar amounts of large contracts. During the quarter, the Company renewed six license agreements valued in excess of $40 million for an aggregate value of approximately $472 million, with one contract valued at over $100 million. The average contract length grew to 3.7 years compared to 3.5 years during the prior year period due to an improved process and greater discipline in evaluating the financial implications of executing longer contracts. In the comparable period last year, the Company renewed two contracts each totaling more than $40 million with an aggregate value of approximately $108 million.

Total expenses, before interest and taxes, for the third quarter were $907 million, compared to the $910 million reported in the prior year period. On a constant currency basis, expenses were down 3 percent. The Company experienced significantly lower commission expenses associated with the Company's revised incentive compensation program. This was offset in part by costs associated with the delivery of professional services commensurate with the increase in professional services revenue. On a non-GAAP basis, the Company reported operating expenses of $791 million, which excludes restructuring, acquisition amortization, and certain legal expenses and was up 2 percent from the $775 million reported in the comparable period last year and slightly down on a constant currency basis. A reconciliation of GAAP expenses to non-GAAP operating expenses is included in the tables following this news release.

In the third quarter of fiscal year 2007, the Company recorded restructuring and other charges of approximately $32 million, of which $14 million was related to severance costs and $15 million was associated with the closure of facilities under the fiscal year 2007 cost reduction and restructuring plan. The Company continues to expect the total costs associated with the 2007 restructuring plan to be approximately $150 million, which will be recognized during the remainder of fiscal year 2007 and into fiscal year 2008.

The Company recorded GAAP income from continuing operations of $52 million for the third quarter, or $0.10 per diluted common share, compared to income from continuing operations of $56 million, or $0.09 per diluted common share, reported in the prior year period. The improvement in GAAP earnings per share reflects the reduced share count principally associated with the completion of the Company's $1 billion share repurchase in the second quarter of fiscal year 2007.

The Company reported non-GAAP income from continuing operations of $133 million for the third quarter, or $0.24 per diluted common share, compared to $146 million, or $0.24 per diluted common share a year earlier. A reconciliation of GAAP income from continuing operations to non-GAAP income is included in the tables following this news release.

For the third quarter, CA generated cash flow from operations of $587 million, up 39 percent compared to $422 million in cash flow from operations reported in the prior year comparable period. Third quarter cash flow was affected positively by the higher volume of bookings and associated billings and an increase of approximately $120 million in the aggregate amount of up- front single installment contract payments over the comparable period last fiscal year. In addition, the third quarter positively was affected by improved accounts receivable collections including the early receipt of one payment of approximately $46 million scheduled for the fourth quarter of fiscal year 2007.

During the third quarter, restructuring payments were $27 million, compared to restructuring payments of $11 million in the third quarter of fiscal year 2006. Adjusting for these payments, cash flow from operations was $614 million, up 42 percent from the prior year period.

The balance of cash and marketable securities at December 31, 2006, was $1.8 billion. With $2.6 billion in total debt outstanding, the Company has a net debt position of approximately $743 million.

The Company said it is continuing to evaluate its ongoing performance, as well as market conditions, before making a decision on the implementation of further stock repurchases. Year-to-date, CA has repurchased 51 million shares of common stock at a cost of about $1.2 billion.

    Outlook for Fiscal Year 2007

    CA updated its outlook for the fiscal year and believes it will:

     * Exceed revenue guidance of $3.9 billion;

     * Report GAAP earnings per share from continuing operations of $0.26 to
       $0.29 which includes estimated restructuring and other charges of
       approximately $130 million;

     * Report non-GAAP operating earnings per share of between $0.83 and
       $0.86, up from original guidance of $0.83; and,

     * Report cash flow from operations of $900 million to $1 billion,
       consistent with its most recent guidance. The Company expects cash flow
       generation during the fourth quarter will be affected by significantly
       higher tax payments than in the fourth quarter of fiscal year 2006. In
       addition, the Company does not expect to realize further improvements
       to accounts receivable collections in the fourth quarter.

The Company also anticipates total product and services bookings to grow in the range of 12 percent to 15 percent for the full fiscal year as it focuses on new product sales and continued discipline in its contract renewal process.

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 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 888-576-4172. The international participant number is 706-902-0518.

About CA

CA (NYSE: CA), one of the world's largest information technology (IT) management software companies, unifies and simplifies the management of enterprise-wide IT. Founded in 1976, CA is headquartered in Islandia, N.Y., and serves customers in more than 140 countries. For more information, please visit http://ca.com.

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, include financial measures for per share earnings and cash flows 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 "operating" earnings per share excludes the following items: non-cash amortization of acquired technology and other intangibles, in process research and development charges, the government investigation and class settlement charges, restructuring and other charges, and the tax resulting from the repatriation of approximately $584 million of foreign cash and interest on dilutive convertible bonds (the convertible shares, rather than the interest, are more dilutive, thus the interest is added back and the shares increased to calculate non-GAAP operating earnings). Non-GAAP taxes are provided based on the estimated effective annual non-GAAP tax rate. Non-GAAP adjusted cash flow excludes the following items: Restitution Fund payments, restructuring payments, and the impact of certain non-recurring tax payments or tax benefits. Free cash flow excludes capital expenditures. 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

Certain statements in this communication (such as statements containing the words "believes," "plans," "anticipates," "expects," "estimates" and similar expressions) constitute "forward-looking statements." A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the risks and uncertainties associated with the CA deferred prosecution agreement with the United States Attorney's Office of the Eastern District, including that CA could be subject to criminal prosecution or civil penalties if it violates this agreement; the risks and uncertainties associated with the agreement that CA entered into with the Securities and Exchange Commission ("SEC"), including that CA may be subject to criminal prosecution or substantial civil penalties and fines if it violates this agreement; civil litigation arising out of the matters that are the subject of the Department of Justice and the SEC investigations, including shareholder derivative litigation; changes to the CA incentive compensation plan, sales organization and sales coverage model may lead to outcomes that are not anticipated or intended as they are implemented; CA may not adequately manage and evolve its financial reporting and managerial systems and processes, including the successful implementation of its enterprise resource planning software; CA may encounter difficulty in successfully integrating acquired companies and products into its existing businesses; CA is subject to intense competition in product and service offerings and pricing and increased competition is expected in the future; if CA's products do not remain compatible with ever-changing operating environments, CA could lose customers and the demand for CA's products and services could decrease; certain software that CA uses in daily operations is licensed from third parties and thus may not be available to CA in the future, which has the potential to delay product development and production; CA's credit ratings have been downgraded and could be downgraded further which would require CA to pay additional interest under its credit agreement and could adversely affect CA's ability to borrow; CA has a significant amount of debt; the failure to protect CA's intellectual property rights would weaken its competitive position; CA may become dependent upon large transactions; general economic conditions may lead CA's customers to delay or forgo technology upgrades; the market for some or all of CA's key product areas may not grow; third parties could claim that CA's products infringe their intellectual property rights; fluctuations in foreign currencies could result in translation losses; and the other factors described in CA's Annual Report on Form 10-K for the fiscal year ended March 31, 2006 and CA's Quarterly Report on Form 10-Q for the fiscal quarter ended September, 30, 2006. CA 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 that speak only as of the date hereof.

All Rights Reserved. One CA Plaza, Islandia, N.Y. 11749. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.


                                   Table 1
                                   CA, INC.
                    Consolidated Statements of Operations
                   (in millions, except per share amounts)
                                 (unaudited)

                                      Three Months Ended   Nine Months Ended
                                         December 31,         December 31,
                                       2006       2005     2006        2005
                                                (Restated)          (Restated)
    Revenue:
    Subscription revenue               $773       $717    $2,274      $2,123
    Maintenance                         100        104      306         317
    Software fees and other              30         49       80         127
    Financing fees                        6         11       20          38
    Professional services                93         84      258         225
    Total revenue                     1,002        965    2,938       2,830

    Operating expenses:
    Amortization of capitalized
     software costs                      83        111      271         335
    Cost of professional services        81         66      228         187
    Selling, general and
     administrative                     403        400    1,240       1,164
    Product development and
     enhancements                       176        171      533         522
    Commissions, royalties and bonuses   92        118      235         248
    Depreciation and amortization of
     other intangible assets             36         33      107          95
    Other expenses (gains), net           4        (10)     (13)        (17)
    Restructuring and other              32         21      101          66
    Charge for in-process research and
     development costs                    -          -       10          18
    Total expenses before interest and
     taxes                              907        910    2,712       2,618

    Income before interest and taxes     95         55      226         212
    Interest expense, net                25         12       45          31
    Income before income taxes           70         43      181         181
    Income tax expense (benefit)         18        (13)      40         (18)

    Income from continuing operations    52         56      141         199
    Income (loss) from discontinued
     operations, inclusive of realized
     gain (loss) on sale, net of income
     taxes                               (2)         1       (3)          1
    Net income                          $50        $57     $138        $200

    Basic income per share
    Income from continuing operations $0.10      $0.10    $0.26       $0.34
    Discontinued operations            0.00       0.00    (0.01)       0.00
    Net income                        $0.10      $0.10    $0.25       $0.34
    Basic weighted-average shares
     used in computation                524        579      551         583

    Diluted income per share(1)
    Income from continuing operations $0.10      $0.09    $0.25       $0.33
    Discontinued operations           (0.01)      0.01     0.00        0.00
    Net income                        $0.09      $0.10    $0.25       $0.33
    Diluted weighted-average shares
     used in computation(1)             549        606      575         610


     (1) Net income and the number of shares used in the computation of
         diluted GAAP EPS for all periods presented have been adjusted to
         reflect the dilutive impact of the Company's 1.625 percent
         Convertible Senior Notes and stock awards outstanding.



                                   Table 2
                                   CA, INC.
                    Consolidated Condensed Balance Sheets
                                (in millions)
                                 (unaudited)

                                                        December 31, March 31,
                                                           2006       2006(1)

    Cash, cash equivalents and marketable securities      $1,842     $1,865
    Trade and installment accounts receivable, net           290        505
    Deferred income taxes                                    477        260
    Other current assets                                      66         50

    Total Current Assets                                   2,675      2,680

    Installment accounts receivables, due after
     one year, net                                           344        449
    Property and equipment, net                              469        634
    Purchased software products, net                         273        461
    Goodwill, net                                          5,366      5,308
    Deferred income taxes                                    160        158
    Other noncurrent assets, net                             822        788

    Total Assets                                         $10,109    $10,478

    Current portion of long-term debt and loans payable      $10         $3
    Deferred subscription revenue (collected)-current      1,437      1,492
    Financing obligations (collected) - current               71         25
    Deferred maintenance revenue                             198        250
    Other current liabilities                              1,648      1,604

    Total Current Liabilities                              3,364      3,374

    Long-term debt, net of current portion                 2,575      1,813
    Deferred income taxes                                     15         39
    Deferred subscription revenue (collected)-noncurrent     412        423
    Financing obligations (collected) - noncurrent            49         25
    Other noncurrent liabilities                              70         77

    Total Liabilities                                      6,485      5,751

    Stockholders' equity                                   3,624      4,727

    Total Liabilities and Stockholders' Equity           $10,109    $10,478


      (1) Certain balances have been reclassified to conform with current
          period presentation.



                                   Table 3
                                   CA, INC.
                 Quarterly Condensed Statements of Cash Flows
                                (in millions)
                                 (unaudited)

                                                            Three Months Ended
                                                               December 31,
                                                               2006    2005
                                                                    (Restated)
    OPERATING ACTIVITIES:
      Net income                                                $50     $57
      Discontinued operations, net of income taxes               (2)     (1)
      Income from continuing operations                          52      56

      Adjustments to reconcile income from continuing
       operations to net cash provided by continuing
       operating activities:
        Depreciation and amortization                           119     144
        Provision for deferred income taxes                    (132)    (20)
        Non-cash compensation expense related to stock and
         defined contribution plans                              32      29
        Gain on sale of assets                                    -      (8)
        Foreign currency transaction loss (gain), before taxes    5      (3)
      Changes in other operating assets and liabilities,
       net of effect of acquisitions:
        Decrease (increase) in trade and current installment
         A/R, net                                               156     (57)
        Decrease in noncurrent installment A/R, net              46      55
        Increase in deferred subscription revenue (collected)
         - current                                               85     135
        Decrease in deferred subscription revenue (collected)
         - noncurrent                                           (41)    (35)
        Increase in financing obligations (collected)
         - current                                               47      13
        Increase in financing obligations (collected)
         - noncurrent                                            26      14
        (Decrease) increase in deferred maintenance revenue     (32)      2
        Increase (decrease) in taxes payable, net               167      (9)
        (Decrease) increase in accounts payable, accrued
         expense and other                                       (3)     79
        Restructuring and other, net                             27       -
        Changes in other operating assets and liabilities        33      27
    NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES        587     422

    INVESTING ACTIVITIES:
        Acquisitions, primarily goodwill, purchased software,
         and other intangible assets, net of cash acquired        -     (54)
        Settlements of purchase accounting liabilities           (2)    (10)
        Purchases of property and equipment                     (37)    (56)
        Proceeds from sale of assets                              1      41
        Proceeds from sale of marketable securities, net          -      39
        (Increase) decrease in restricted cash                   (9)      1
        Capitalized software development costs                  (24)    (23)
    NET CASH USED IN INVESTING ACTIVITIES                       (71)    (62)

    FINANCING ACTIVITIES:
        Dividends paid                                          (21)    (23)
        Purchases of common stock                                 -    (107)
        Debt repayments                                          (3)      -
        Exercise of common stock options and other                4      26
    NET CASH USED IN FINANCING ACTIVITIES                       (20)   (104)

    INCREASE IN CASH AND CASH EQUIVALENTS BEFORE EFFECT
     OF EXCHANGE RATE CHANGES ON CASH                           496     256
    Effect of exchange rate changes on cash                      42     (23)
    INCREASE IN CASH AND CASH EQUIVALENTS                       538     233
    CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD          1,295   1,529
    CASH AND CASH EQUIVALENTS AT END OF PERIOD               $1,833  $1,762



                                   Table 4
                                   CA, INC.
            Reconciliation of GAAP Results to Net Operating Income
                     (in millions, except per share data)
                                 (unaudited)

                                         Three Months Ended  Nine Months Ended
                                             December 31,       December 31,
                                            2006     2005      2006     2005

    Total revenue                          $1,002    $965     $2,938   $2,830

    Total expenses                            932     922      2,757    2,649

    Income before income taxes                 70      43        181      181

    Non-GAAP adjustments:
      Purchased software amortization          70     100        230      300
      Intangibles amortization                 14      14         41       37
      Restructuring and other(2)               32      21        101       66
      Acquisition IPR&D                         -       -         10       18
    Total Non-GAAP adjustments                116     135        382      421

    Operating income before interest adj.
     and taxes                                186     178        563      602

    Interest on dilutive convertible bonds      2       2          6        6

    Operating income before taxes             188     180        569      608

    Income tax provision                       55      34        178      175

    Net operating income(1)                  $133    $146       $391     $433

    Diluted operating EPS(1)                $0.24   $0.24      $0.68    $0.71

    # of Shares Used(1)                       549     605        575      610


     (1) Net operating income and the number of shares used in the computation
         of diluted operating EPS for all periods presented have been adjusted
         to reflect the dilutive impact of the Company's 1.625 percent
         Convertible Senior Notes and stock awards outstanding.

     (2) Restructuring and other charges for the nine months ended December
         31, 2006 reflects a reclassification of $10 million in costs
         associated with the Special Litigation Committee of the Board of
         Directors from Selling, general and administrative expenses which
         were incurred in the second quarter of fiscal year 2007.




                                   Table 5
                                   CA, INC.
        Reconciliation of GAAP Expense to Non-GAAP Operating Expenses
                                (in millions)
                                 (unaudited)

                                         Three Months Ended  Nine Months Ended
                                             December 31,       December 31,
                                            2006     2005      2006     2005

    Total GAAP expenses before interest
     and taxes                              $907     $910     $2,712   $2,618

    Non-GAAP adjustments:
      Purchased software amortization        (70)    (100)      (230)    (300)
      Intangibles amortization               (14)     (14)       (41)     (37)
      Restructuring and other(1)             (32)     (21)      (101)     (66)
      Acquisition IPR&D                        -        -        (10)     (18)
    Total Non-GAAP adjustments              (116)    (135)      (382)    (421)

    Total Non-GAAP Operating expenses       $791     $775     $2,330   $2,197


      (1) Restructuring and other charges for the nine months ended December
          31, 2006 reflects a reclassification of $10 million in costs
          associated with the Special Litigation Committee of the Board of
          Directors from Selling, general and administrative expenses which
          were incurred in the second quarter of fiscal year 2007.

Refer to the discussion of Non-GAAP measures included in the accompanying press release for additional information.




                                   Table 6
                                   CA, INC.
         Reconciliation of GAAP Results to Non-GAAP Operating Results
                     (in millions, except per share data)
                                 (unaudited)

                                         Three Months Ended  Nine Months Ended
                                             December 31,       December 31,
                                            2006     2005      2006     2005

    Basic income per share                 $0.10    $0.10     $0.26    $0.34

    Non-GAAP adjustments, net of taxes

      Acquisition amortization              0.10     0.12      0.32     0.36
      Restructuring and other charges(2)    0.04     0.02      0.12     0.07
      Acquisition IPR&D                     0.00     0.00      0.01     0.02
      Non-GAAP effective tax rate
       adjustments(1)                       0.00     0.00     (0.03)   (0.08)

    Diluted operating EPS                  $0.24    $0.24     $0.68    $0.71


     (1) The Non-GAAP effective tax rate adjustment for the nine months ended
         December 31, 2006 reflects certain international tax benefits
         realized for GAAP purposes.  The Non-GAAP effective tax rate
         adjustment for the nine months ended December 31, 2005 reflects
         certain tax savings on the repatriation of cash from international
         locations realized for GAAP purposes.

     (2) Restructuring and other charges for the nine months ended December
         31, 2006 reflects a reclassification of $10 million in costs, or
         approximately $0.01 per diluted common share, associated with the
         Special Litigation Committee of the Board of Directors from Selling,
         general and administrative expenses which were incurred in the second
         quarter of fiscal year 2007.

Refer to the discussion of Non-GAAP measures included in the accompanying press release for additional information.


                                   Table 7
                                   CA, INC.
                 Reconciliation of Projected GAAP Results to
                         Projected Operating Results
                     (in millions, except per share data)
                                 (unaudited)

                                                         Fiscal Year Ending
                                                           March 31, 2007

    Projected GAAP EPS from continuing ops. range         $0.26  to  $0.29

    Non-GAAP adjustments, net of taxes

      Acquisition amortization                             0.40       0.40
      Restructuring and other charges(1)                   0.15       0.15
      Acquisition IPR&D                                    0.01       0.01
      Impact from convertible senior notes                 0.01       0.01

    Projected diluted operating EPS range(2)              $0.83  to  $0.86

Refer to the discussion of Non-GAAP measures included in the accompanying press release for additional information.



     (1) Reflects estimated total restructuring and other charges of $131
         million for fiscal year 2007.  The actual amount incurred may differ
         from this amount.

     (2) The Company has applied a tax rate of 36% on Non-GAAP adjustments,
         compared to the Company's expected GAAP tax rate of 26%.
         Accordingly, the Company's estimated Non-GAAP tax rate of 32% is
         higher than its GAAP tax rate as a result of these Non-GAAP
         adjustments.

SOURCE CA
CONTACT:
Dan Kaferle, Public Relations
1-631-342-2111
daniel.kaferle@ca.com

Sambit Pattanayak, Investor Relations


1-631-342-5208
sambit.pattanayak@ca.com

Julie Cunningham, Investor Relations
1-631-342-4687
julie.cunningham@ca.com