CA Technologies
Jul 24, 2013

CA Technologies Reports First Quarter Fiscal Year 2014 Results

NEW YORK--(BUSINESS WIRE)-- CA Technologies (NASDAQ:CA) today reported financial results for its first quarter fiscal year 2014, ended June 30, 2013.

FINANCIAL OVERVIEW

 
First Quarter FY14 vs. FY13

(dollars in millions,
except share data)

FY14   FY13   % Change  

% Change
CC**

Revenue $1,128   $1,145   (1%)   (1%)
GAAP Net Income $335   $240   40%   42%
Non-GAAP Income* $357   $298   20%   21%
GAAP Diluted EPS $0.73   $0.51   43%   47%
Non-GAAP Diluted EPS* $0.78   $0.63   24%   25%
Cash Flow from Operations $11   $183   (94%)   (83%)

* 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

"I am pleased with our performance in the first quarter and the start we made to fiscal year 2014," said CA Technologies Chief Executive Officer Mike Gregoire. "We did better than expected on the revenue line and were able to capitalize on organizational efficiencies, expense management and a tax benefit to drive earnings growth. Our cash flow from operations was down, but that was expected and we are confident in meeting our full year outlook in all areas.

"We are beginning to make progress in driving efficiencies across our business, getting traction in SaaS, Mobility and new customer acquisition, as well as improving the overall competitiveness of our products," Gregoire said.

REVENUE AND BOOKINGS

 
First Quarter FY14 vs. FY13
(dollars in millions) FY14  

% of
Total

  FY13  

% of
Total

 

%
Change

 

%
Change
CC**

North America Revenue $717   64%   $726   63%   (1%)   (1%)
International Revenue $411   36%   $419   37%   (2%)   0%
Total Revenue $1,128       $1,145       (1%)   (1%)
North America Bookings $423   51%   $326   59%   30%   30%
International Bookings $401   49%   $227   41%   77%   85%
Total Bookings $824       $553       49%   53%
Current Revenue Backlog $3,429       $3,527       (3%)   (2%)
Total Revenue Backlog $7,385       $7,771       (5%)   (4%)

**CC: Constant Currency

EXPENSES AND MARGIN

 
First Quarter FY14 vs. FY13
(dollars in millions)

FY14

  FY13  

%
Change

 

%
Change
CC**

GAAP              

Operating Expenses Before Interest
and Income Taxes

$900   $764   18%   18%

Operating Income Before Interest
and Income Taxes

$228   $381   (40%)  

(39%)

Operating Margin 20%   33%        
Effective Tax Rate (54%)   35%        

Non-GAAP*

             

Operating Expenses Before Interest
and Income Taxes

$702   $705  

0%

  0%

Operating Income Before Interest
and Income Taxes

$426   $440   (3%)   (2%)
Operating Margin 38%   38%        
Effective Tax Rate 14%   31%        

*A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release. Year-over-year non-GAAP results exclude purchased software and other intangibles amortization, share-based compensation, capitalization (an add-back) and amortization of internal software costs, Board approved rebalancing initiatives 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 on hedges that do not mature within the quarter.

**CC: Constant Currency

SEGMENT INFORMATION

Starting in the first quarter of fiscal year 2014, the measure of segment expenses and segment profit was revised to treat all costs of internal software development as segment expense in the period the costs are incurred. As a result, the Company will add back capitalized internal software costs and exclude amortization of internally developed software costs previously capitalized from segment expenses. Segment expenses also exclude the effects of the Company's fiscal year 2014 rebalancing plan. Prior period segment expenses and profit information has been revised to present segment profit and expenses on a consistent basis and is available in the 8-K filed today and in the Company's supplemental financial package, both of which are available at www.ca.com/invest.

 
First Quarter FY14 vs. FY13
Revenue  

%
Change

 

%
Change
CC**

  Operating Margin
(dollars in millions) FY14   FY13       FY14   FY13
Mainframe Solutions $619   $628   (1%)   (1%)   61%   58%
Enterprise Solutions $411   $426   (4%)   (3%)   10%   16%
Services $98   $91   8%  

8%

  8%   4%

**CC: Constant Currency

CASH FLOW FROM OPERATIONS

CAPITAL STRUCTURE

OUTLOOK FOR FISCAL YEAR 2014

The Company reaffirmed the following outlook, which represents "forward-looking statements" (as defined below). It takes into account the change in business practice regarding internally developed software costs, the costs and payments associated with the rebalancing initiative announced on May 7, 2013 and the resolution of the U.S. tax matter mentioned above.

The Company expects the following:

Outlook for cash flow from operations is being adversely affected by costs associated with the rebalancing of resources during the fiscal year, an increase in cash taxes, and an increase in operating cash outflows relating to product development and enhancements expense for fiscal year 2014. In fiscal year 2013, cash flow from operations did not reflect $165 million of capitalized software development costs that appeared as an investment activity in our Statement of Cash Flows.

This outlook also assumes no material acquisitions and a partial currency hedge of operating income. The Company continues to expect a full-year GAAP operating margin of 23 percent and non-GAAP operating margin of 36 percent. The Company expects a fiscal year 2014 GAAP and non-GAAP effective tax rate of approximately 14 percent.

The Company anticipates approximately 437 million shares outstanding at fiscal year 2014 year-end and weighted average diluted shares outstanding of approximately 446 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 conference call and webcast that the Company will host at 5 p.m. ET today to discuss its unaudited first quarter results. The webcast will be archived on the website. Individuals can access the webcast, as well as the press release and supplemental financial information at http://ca.com/invest or can listen to the call at 1-877-561-2748. The international participant number is 1-720-545-0044.

About CA Technologies