CA Technologies
CA, INC. (Form: 10-Q, Received: 01/30/2009 16:19:48)
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
     
þ   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended December 31, 2008
or
     
o   Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period ended from                      to                     
Commission File Number 1-9247
CA, Inc.
(Exact name of registrant as specified in its charter)
     
Delaware   13-2857434
(State or other jurisdiction of   (I.R.S. Employer Identification
incorporation or organization)   Number)
     
One CA Plaza    
Islandia, New York   11749
(Address of principal executive offices)   (Zip Code)
1-800-225-5224
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
     
Large accelerated filer þ
  Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)
  Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o      No þ
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
     
Title of Class   Shares Outstanding
Common Stock   as of January 22, 2009
par value $0.10 per share   518,867,425
 
 

 


 

CA, INC. AND SUBSIDIARIES
INDEX
             
        Page
PART I.          
   
 
       
        1  
   
 
       
Item 1.          
   
 
       
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        36  
   
 
       
        42  
   
 
       
Item 3.       44  
   
 
       
Item 4.       44  
   
 
       
PART II.          
   
 
       
Item 1.       45  
   
 
       
Item 1A.       45  
   
 
       
Item 2.       46  
   
 
       
Item 3.       46  
   
 
       
Item 4.       46  
   
 
       
Item 5.       46  
   
 
       
Item 6.       47  
   
 
       
        48  
  EX-10.1: FIRST AMENDMENT TO COMPENSATORY PLAN
  EX-10.2: AMENDMENT TO EMPLOYMENT AGREEMENT
  EX-10.3: AMENDMENT TO EMPLOYMENT AGREEMENT
  EX-10.4: AMENDMENT TO EMPLOYMENT AGREEMENT
  EX-10.5: AMENDMENT TO EMPLOYMENT AGREEMENT
  EX-10.6: AMENDMENT TO EMPLOYMENT AGREEMENT
  EX-10.7: LETTER REGARDING TERMS OF EMPLOYMENT
  EX-10.8: AMENDMENT TO LETTER REGARDING TERMS OF EMPLOYMENT
  EX-12.1: STATEMENT OF RATIOS OF EARNINGS TO FIXED CHARGES
  EX-15: ACCOUNTANTS' ACKNOWLEDGEMENT LETTER
  EX-31.1: CERTIFICATION
  EX-31.2: CERTIFICATION
  EX-32: CERTIFICATION

 


Table of Contents

PART I. FINANCIAL INFORMATION
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
CA, Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of CA, Inc. and subsidiaries as of December 31, 2008, the related condensed consolidated statements of operations for the three-month and nine-month periods ended December 31, 2008 and 2007, and the related condensed consolidated statements of cash flows for the nine-month periods ended December 31, 2008 and 2007. These condensed consolidated financial statements are the responsibility of the Company’s management.
We conducted our review in accordance with standards established by the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with standards established by the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of CA, Inc. and subsidiaries as of March 31, 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated May 23, 2008, which contains an explanatory paragraph relating to the adoption, effective April 1, 2007, of the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 and an explanatory paragraph relating to the Company’s change, during the fourth quarter of fiscal year 2008, of its method of accounting for accounts receivable and unearned revenue on billed and uncollected amounts due from customers from a “net method of presentation” to a “gross method of presentation,” we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2008, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ KPMG LLP
New York, New York
January 30, 2009

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Item 1.
CA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share amounts)
                 
    December 31,     March 31,  
    2008     2008  
    (unaudited)          
ASSETS
               
CURRENT ASSETS
               
Cash, cash equivalents and marketable securities
  $ 2,369     $ 2,796  
Trade and installment accounts receivable, net
    879       970  
Deferred income taxes — current
    453       623  
Other current assets
    139       79  
 
           
TOTAL CURRENT ASSETS
    3,840       4,468  
Installment accounts receivable, due after one year, net
    129       234  
Property and equipment, net of accumulated depreciation of $1,010 and $996, respectively
    452       496  
Purchased software products, net
    165       171  
Goodwill
    5,348       5,351  
Deferred income taxes — noncurrent
    237       293  
Other noncurrent assets, net
    721       743  
 
           
TOTAL ASSETS
  $ 10,892     $ 11,756  
 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
CURRENT LIABILITIES
               
Current portion of long-term debt and loans payable
  $ 826     $ 361  
Accounts payable
    91       152  
Accrued salaries, wages and commissions
    258       400  
Accrued expenses and other current liabilities
    382       439  
Deferred revenue (billed or collected) — current
    2,146       2,664  
Taxes payable, other than income taxes payable — current
    73       97  
Federal, state and foreign income taxes payable — current
    127       59  
Deferred income taxes — current
    90       106  
 
           
TOTAL CURRENT LIABILITIES
    3,993       4,278  
Long-term debt, net of current portion
    1,292       2,221  
Deferred income taxes — noncurrent
    115       200  
Deferred revenue (billed or collected) — noncurrent
    956       1,036  
Federal, state and foreign income taxes payable — noncurrent
    195       225  
Other noncurrent liabilities
    72       87  
 
           
TOTAL LIABILITIES
    6,623       8,047  
 
           
STOCKHOLDERS’ EQUITY
               
Preferred stock, no par value, 10,000,000 shares authorized; No shares issued and outstanding
           
Common stock, $0.10 par value, 1,100,000,000 shares authorized; 589,695,081 and 589,695,081 shares issued; 514,182,668 and 509,782,514 shares outstanding, respectively
    59       59  
Additional paid-in capital
    3,527       3,566  
Retained earnings
    2,733       2,173  
Accumulated other comprehensive loss
    (174 )     (101 )
Treasury stock, at cost, 75,512,413 shares and 79,912,567 shares, respectively
    (1,876 )     (1,988 )
 
           
TOTAL STOCKHOLDERS’ EQUITY
    4,269       3,709  
 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 10,892     $ 11,756  
 
           
See accompanying Notes to the Condensed Consolidated Financial Statements.

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CA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in millions, except per share amounts)
                                 
    For the Three     For the Nine  
    Months Ended     Months Ended  
    December 31,     December 31,  
    2008     2007     2008     2007  
REVENUE
                               
Subscription and maintenance revenue
  $ 919     $ 968     $ 2,859     $ 2,811  
Professional services
    87       92       274       280  
Software fees and other
    36       40       103       101  
 
                       
TOTAL REVENUE
    1,042       1,100       3,236       3,192  
 
                       
 
                               
EXPENSES
                               
Costs of licensing and maintenance
    70       64       225       199  
Cost of professional services
    76       92       239       278  
Amortization of capitalized software costs
    31       29       91       87  
Selling and marketing
    307       333       915       956  
General and administrative
    110       123       342       406  
Product development and enhancements
    115       135       358       390  
Depreciation and amortization of other intangible assets
    36       40       109       117  
Other (gains) expenses, net
    (14 )     13       4       8  
Restructuring and other
    2       22       6       47  
 
                       
TOTAL EXPENSES BEFORE INTEREST AND TAXES
    733       851       2,289       2,488  
 
                       
Income before interest and income taxes
    309       249       947       704  
Interest expense, net
    8       10       14       37  
 
                       
Income before income taxes
    301       239       933       667  
Income tax expense
    88       76       311       238  
 
                       
NET INCOME
  $ 213     $ 163     $ 622     $ 429  
 
                       
BASIC INCOME PER SHARE
  $ 0.41     $ 0.32     $ 1.21     $ 0.83  
 
                       
Basic weighted average shares used in computation
    514       510       513       515  
DILUTED INCOME PER SHARE
  $ 0.40     $ 0.31     $ 1.16     $ 0.80  
 
                       
Diluted weighted average shares used in computation
    539       536       540       541  
See accompanying Notes to the Condensed Consolidated Financial Statements.

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CA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (in millions)
                 
    For the Nine Months  
    Ended December 31,  
    2008     2007  
OPERATING ACTIVITIES:
               
Net income
  $ 622     $ 429  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    200       204  
Provision for deferred income taxes
    65       46  
Provision for bad debts
    10       22  
Non-cash stock based compensation expense and defined contribution plan
    86       96  
(Gain) loss on sale and disposal of assets and repayment of debt, net
    (2 )     4  
Foreign currency transaction loss (gain), before taxes
    62       (19 )
Changes in other operating assets and liabilities, net of effect of acquisitions:
               
Decrease in trade and current installment accounts receivable, net
    32       36  
Decrease in noncurrent installment accounts receivable, net
    143       71  
Decrease in deferred revenue (billed and collected) — current & noncurrent
    (414 )     (277 )
Increase in taxes payable, net
    7       7  
Decrease in accounts payable, accrued expenses and other
    (95 )     (109 )
Decrease in accrued salaries, wages and commissions
    (61 )     (25 )
Restructuring and other, net
    (79 )     (37 )
Changes in other operating assets and liabilities
    (12 )     (35 )
 
           
NET CASH PROVIDED BY OPERATING ACTIVITIES
    564       413  
INVESTING ACTIVITIES:
               
Acquisitions, primarily goodwill, purchased software, and other intangible assets, net of cash acquired
    (54 )     (27 )
Settlements of purchase accounting liabilities
    (4 )     (7 )
Purchases of property and equipment
    (64 )     (81 )
Proceeds from sale of assets
    6       35  
Purchases of marketable securities, net
          (3 )
Decrease in restricted cash
    5        
Capitalized software development costs
    (102 )     (79 )
 
           
NET CASH USED IN INVESTING ACTIVITIES
    (213 )     (162 )
FINANCING ACTIVITIES:
               
Dividends paid
    (62 )     (63 )
Purchases of treasury stock (common stock)
    (4 )     (500 )
Debt repayments
    (501 )     (758 )
Debt borrowings
          750  
Debt issuance costs
          (3 )
Exercise of common stock options and other
    7       19  
 
           
NET CASH USED IN FINANCING ACTIVITIES
    (560 )     (555 )
DECREASE IN CASH AND CASH EQUIVALENTS BEFORE EFFECT OF EXCHANGE RATE CHANGES ON CASH
    (209 )     (304 )
Effect of exchange rate changes on cash
    (217 )     106  
 
           
DECREASE IN CASH AND CASH EQUIVALENTS
    (426 )     (198 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    2,795       2,275  
 
           
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 2,369     $ 2,077  
 
           
See accompanying Notes to the Condensed Consolidated Financial Statements.

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
NOTE A — BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements of CA, Inc. (the Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal, recurring nature.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, these estimates may ultimately differ from actual results.
Operating results for the three- and nine-month periods ended December 31, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2009. For further information, refer to the Company’s Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2008 (2008 Form 10-K).
Basis of Revenue Recognition:
The Company generates revenue from the following primary sources: (1) licensing software products; (2) providing customer technical support (referred to as “maintenance”); and (3) providing professional services, such as consulting and education. Revenue is recorded net of applicable sales taxes.
The Company recognizes revenue pursuant to the requirements of Statement of Position (SOP) 97-2, " Software Revenue Recognition ,” issued by the American Institute of Certified Public Accountants, as amended by SOP 98-9, “ Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions. ” In accordance with SOP 97-2, the Company begins to recognize revenue from licensing and maintenance when all of the following criteria are met: (1) the Company has evidence of an arrangement with a customer; (2) the Company delivers the products; (3) license agreement terms are fixed or determinable and free of contingencies or uncertainties that may alter the agreement such that it may not be complete and final; and (4) collection is probable.
The Company’s software licenses generally do not include acceptance provisions. An acceptance provision allows a customer to test the software for a defined period of time before committing to license the software. If a license agreement includes an acceptance provision, the Company does not recognize revenue until the earlier of the receipt of a written customer acceptance or, if not notified by the customer to cancel the license agreement, the expiration of the acceptance period.
Under the Company’s subscription model, implemented in October 2000, software license agreements typically combine the right to use specified software products, the right to maintenance, and the right to receive unspecified future software products for no additional fee during the term of the agreement. Under these subscription licenses, once all four of the above-noted revenue recognition criteria are met, the Company is required under GAAP to recognize revenue ratably over the term of the license agreement.
For license agreements signed prior to October 2000, once all four of the above-noted revenue recognition criteria were met, software license fees were recognized as revenue generally when the software was delivered to the customer, or “up-front” (as the contracts did not include a right to unspecified future software products), and the maintenance fees were deferred and subsequently recognized as revenue over the term of the license. Currently, a relatively small amount of the Company’s revenue from software licenses is recognized on an up-front basis, subject to meeting the same revenue recognition criteria in accordance with SOP 97-2 as described above. Software fees from such licenses are recognized up-front and are reported in the “Software fees and other” line item in the Condensed Consolidated Statements of Operations. Maintenance fees from such licenses are recognized ratably over the term of the license and are recorded on the “Subscription and maintenance revenue” line item in the Condensed Consolidated Statements of Operations. License agreements with software fees that are recognized up-front do not include the right to

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
receive unspecified future software products. However, in the event such license agreements are executed within close proximity to or in contemplation of other license agreements that are signed under the Company’s subscription model with the same customer, the licenses together may be considered a single multi-element agreement, and all such revenue is required to be recognized ratably and is recorded as “Subscription and maintenance revenue” in the Condensed Consolidated Statements of Operations.
Since the Company implemented its subscription model in October 2000, the Company’s practice with respect to products of newly acquired businesses with established vendor specific objective evidence (VSOE) of fair value has been to record revenue initially on the acquired company’s systems, generally under an up-front model; and, starting within the first fiscal year after the acquisition, to enter new licenses for such products under the Company’s subscription model, following which revenue is recognized ratably and recorded as “Subscription and maintenance revenue.” In some instances, the Company sells newly developed and recently acquired products on an up-front model. The software license fees from these contracts are presented as “Software fees and other.” Selling such licenses under an up-front model may result in higher total revenue in a current reporting period than if such licenses were based on the Company’s subscription model and the associated revenue recognized ratably.
Revenue from professional service arrangements is generally recognized as the services are performed. Revenue from committed professional services that are sold as part of a subscription license agreement is deferred and recognized on a ratable basis over the term of the related software license. If it is not probable that a project will be completed or the payment will be received, revenue recognition is deferred until the uncertainty is removed.
Revenue from sales to distributors, resellers, and value-added resellers commences when all four of the SOP 97-2 revenue recognition criteria noted above are met and when these entities sell the software product to their customers. This is commonly referred to as the sell-through method. Revenue from the sale of products to distributors, resellers and value-added resellers that include licensing terms that provide the right for the end-users to receive certain unspecified future software products is recognized on a ratable basis.
For further information, refer to the Company’s Consolidated Financial Statements and Notes thereto included in the Company’s 2008 Form 10-K.
Cash Dividends:
In November 2008, the Company’s Board of Directors declared a quarterly cash dividend of $0.04 per share. The dividend totaled approximately $21 million and was paid on December 16, 2008 to stockholders of record at the close of business on December 2, 2008. In September 2008, the Company’s Board of Directors declared a quarterly cash dividend of $0.04 per share. The dividend totaled approximately $20 million and was paid on September 30, 2008 to stockholders of record at the close of business on September 22, 2008. In June 2008, the Company’s Board of Directors declared a quarterly cash dividend of $0.04 per share. The dividend totaled approximately $21 million and was paid on June 27, 2008 to stockholders of record at the close of business on June 17, 2008.
In November 2007, the Company’s Board of Directors declared a quarterly cash dividend of $0.04 per share. The dividend totaled approximately $21 million and was paid on December 28, 2007 to stockholders of record at the close of business on December 14, 2007. In August 2007, the Company’s Board of Directors declared a quarterly cash dividend of $0.04 per share. The dividend totaled approximately $21 million and was paid on September 26, 2007 to stockholders of record at the close of business on September 12, 2007. In June 2007, the Company’s Board of Directors declared a quarterly cash dividend of $0.04 per share. The dividend totaled approximately $21 million and was paid on June 29, 2007 to stockholders of record at the close of business on June 22, 2007.
Cash, Cash Equivalents and Marketable Securities:
The Company’s cash, cash equivalents and marketable securities are held in numerous locations throughout the world, with approximately 50% residing outside the

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
United States at December 31, 2008. Marketable securities were less than $1 million at December 31, 2008 and March 31, 2008.
Restricted Cash:
The Company’s insurance subsidiary requires a minimum restricted cash balance of $50 million. In addition, the Company has other restricted cash balances, including cash collateral for letters of credit. The total amount of restricted cash was approximately $56 million and $62 million as of December 31, 2008 and March 31, 2008, respectively, and is included in the “Other noncurrent assets, net” line item in the Condensed Consolidated Balance Sheets.
Deferred Revenue (Billed or Collected) :
The Company accounts for unearned revenue on billed amounts due from customers on a “gross method” of presentation. Under the gross method, unearned revenue on billed installments (collected or uncollected) is reported as deferred revenue in the liability section of the balance sheet. The components of “Deferred revenue (billed or collected) — current “ and “Deferred revenue (billed or collected) — noncurrent “ as of December 31, 2008 and March 31, 2008 are as follows:
                 
    December 31,     March 31,  
    2008     2008  
    (in millions)  
Current:
               
Subscription and maintenance
  $ 1,981     $ 2,455  
Professional services
    155       166  
Financing obligations and other
    10       43  
 
           
Total deferred revenue (billed or collected) — current
    2,146       2,664  
 
           
Noncurrent:
               
Subscription and maintenance
    941       1,001  
Professional services
    12       22  
Financing obligations and other
    3       13  
 
           
Total deferred revenue (billed or collected) — noncurrent
    956       1,036  
 
           
Total deferred revenue (billed or collected)
  $ 3,102     $ 3,700  
 
           
Deferred revenue (billed or collected) excludes unrealized revenue from contractual obligations that will be billed by the Company in future periods.
Concentration of Credit Risk:
Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash equivalents, marketable securities, derivatives and accounts receivable.
The Company holds cash and cash equivalents in major financial institutions and related money market funds, some of which are protected by the US Treasury’s Temporary Guarantee Program for Money Market Funds. Amounts invested in international funds enjoy different levels of protection depending upon the jurisdiction. The Company historically has not experienced any losses in its cash and cash equivalent portfolios.
Amounts included in accounts receivable expected to be collected from customers, as disclosed in Note E, “Trade and Installment Accounts Receivable,” have limited exposure to concentration of credit risk due to the diverse customer base and geographic areas covered by operations. Unbilled amounts due under the Company’s prior business model that are expected to be collected from customers include one large IT

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
outsourcer with a license arrangement that extends through fiscal year 2012 with a net unbilled receivable balance of approximately $232 million.
Prior to fiscal 2001, we sold individual accounts receivable from certain financial institutions to a third party subject to certain recourse provisions. The outstanding principal balance subject to recourse of these receivables approximated $45 million and $81 million as of December 31, 2008 and March 31, 2008, respectively. As of December 31, 2008, the Company has established a liability for the fair value of the recourse provision of approximately $2 million associated with these receivables.
Statement of Cash Flows:
For the nine-month periods ended December 31, 2008 and 2007, interest payments were $95 million and $122 million, respectively, and income taxes paid were $180 million and $170 million, respectively.
In June 2007, the Company entered into an Accelerated Share Repurchase program (ASR) with a third-party financial institution and paid $500 million to repurchase shares of its common stock. In June 2007, the Company purchased approximately 16.9 million shares under the ASR. Based on the terms of the agreement between the Company and the third-party financial institution, the Company received approximately 3.0 million additional shares of its common stock at the conclusion of the program in November 2007 at no additional cost. The average price paid under the Accelerated Share Repurchase program was $25.13 per share and total shares repurchased were approximately 19.9 million. The $500 million paid in June 2007 under the ASR is included in cash used in financing activities in the Company’s Condensed Consolidated Statement of Cash Flows for the nine-month period ended December 31, 2007 and is recorded as treasury stock in the stockholders’ equity section of the Condensed Consolidated Balance Sheets at December 31, 2008 and March 31, 2008.
In the first quarter of fiscal year 2009, the Company paid the remaining $350 million principal amount of its 6.500% Senior Notes due 2009 that was due and payable at that time. The $350 million payment is included in “Cash used in financing activities” in the Company’s Condensed Consolidated Statement of Cash Flows for the nine-month period ended December 31, 2008.
During the third quarter of fiscal year 2009, the Company repurchased approximately $148 million principal amount of its 4.750% Senior Notes due 2009 at a price of approximately $143 million in cash. As a result of this repurchase, the Company recognized a gain of approximately $5 million in the “Other (gains) expenses, net” line of the Condensed Consolidated Statements of Operations. At December 31, 2008, approximately $352 million principal of the 4.750% Senior Notes due 2009 remains outstanding. The approximate $143 million payment is included in “Cash used in financing activities” in the Company’s Condensed Consolidated Statement of Cash Flows for the nine-month period ended December 31, 2008.
During the third quarter of fiscal year 2009, the Company paid approximately $4 million to repurchase approximately 0.3 million of its common shares at an average price of $15.84. The repurchase is included in “Cash used in financing activities” in the Company’s Condensed Consolidated Statement of Cash Flows for the nine-month period ended December 31, 2008. As of December 31, 2008, the Company remained authorized to purchase an aggregate amount of up to approximately $246 million of additional common shares under the current stock repurchase program.
Non-cash financing activities for the nine-month periods ended December 31, 2008 and 2007 consisted of treasury shares issued in connection with the following: share-based incentive awards issued under the Company’s equity compensation plans of approximately $53 million (net of approximately $24 million of tax withholding) and $38 million (net of approximately $15 million of tax withholding), respectively; the Company’s Employee Stock Purchase Plan of approximately $36 million and $32 million, respectively; and discretionary stock contributions to the CA, Inc. Savings Harvest Plan of approximately $19 million and $22 million, respectively.

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
Adoption of new accounting principles:
Effective April 1, 2008, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements,” as modified by the Financial Accounting Standards Board (FASB) Staff Position (FSP) Financial Accounting Standard (FAS) 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Its Related Interpretive Accounting Pronouncements That Address Leasing Transactions,” and FSP FAS 157-2 , “Effective Date of FASB Statement No. 157.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. FSP FAS 157-1 removes leasing from the scope of SFAS No. 157. FSP FAS 157-2 delays the effective date of SFAS No. 157 from the Company’s fiscal year ending March 31, 2009 to the Company’s fiscal year ending March 31, 2010 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).
The provisions of SFAS No. 157 as amended by FSP FAS 157-1 were applied prospectively to fair value measurements and disclosures for financial assets and financial liabilities recognized or disclosed at fair value in the financial statements. The adoption of these Statements did not have an effect on the Company’s consolidated results of operations or financial position for the first nine months of fiscal year 2009. While the Company does not expect the adoption of this Statement to have a material effect on its consolidated results of operations or financial position in subsequent reporting periods, the Company will continue to monitor any additional implementation guidance that is issued that addresses the fair value measurements for certain financial assets, and non-financial assets and non-financial liabilities not disclosed at fair value in the financial statements on at least an annual basis as required by SFAS No. 157.
Refer to Note G, “Derivatives and Fair Value Measurements,” for additional information regarding the assets and liabilities carried at fair value on the Company’s financial statements.
Effective April 1, 2008, the Company adopted the provisions of SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to elect to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. As permitted by SFAS No. 159 implementation options, the Company chose not to elect the fair value option for its financial assets and liabilities that had not been previously measured at fair value. Therefore, material financial assets and liabilities, such as the Company’s short and long-term debt obligations, are reported at their historical carrying amounts.
Effective April 1, 2008, the Company elected to adopt the provisions of SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an Amendment of FASB Statement No. 133.” SFAS No. 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The adoption of SFAS No. 161 did not have an effect on the Company’s consolidated results of operations or financial position for the first nine months of fiscal year 2009.
Refer to Note G, “Derivatives and Fair Value Measurements,” for additional information regarding the Company’s derivative activities.
Reclassification and revisions:
Certain prior year balances have been reclassified to conform to the current period’s presentation as described below.

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
Effective with the filing of the Company’s fiscal year 2008 Form 10-K, the Company modified its financial statements by adding line items for “Selling and marketing” costs and “General and administrative” expenses. Costs applicable to these new line items were reclassified from the prior line item entitled “Selling, general and administrative” costs.
Effective with the filing of the first quarter of fiscal year 2009 Quarterly Report on Form 10-Q, the Company refined the classification of certain costs reported on its Condensed Consolidated Statement of Operations to better reflect the allocation of various expenses to the new line items and to better align the Company’s reported financial statements with the Company’s internal view of its business performance. To maintain consistency and comparability, the Company reclassified prior-year amounts to conform to the current-year Condensed Consolidated Statements of Operations presentation. These expense reclassifications had no effect on previously reported total expenses or total revenue.
The following table summarizes the expense section of the Company’s Condensed Consolidated Statements of Operations for the reported prior periods indicated, giving effect to the reclassifications described above.
                                 
    Three Months     Nine Months  
    Ended December 31, 2007     Ended December 31, 2007  
    Previously             Previously        
    Reported (1)     Revised     Reported (1)     Revised  
    (in millions)     (in millions)  
Costs of licensing and maintenance
  $ 63     $ 64     $ 195     $ 199  
Cost of professional services
    87       92       265       278  
Amortization of capitalized software costs
    29       29       87       87  
Selling and marketing
          333             956  
Selling, general and administrative
    464             1,386        
General and administrative
          123             406  
Product development and enhancements
    133       135       383       390  
Depreciation and amortization of other intangible assets
    40       40       117       117  
Other gains, net
    13       13       8       8  
Restructuring and other
    22       22       47       47  
Total expenses before interest and taxes
  $ 851     $ 851     $ 2,488     $ 2,488  
 
                       
 
(1)   As reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2007.

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
NOTE B — COMPREHENSIVE INCOME
Comprehensive income includes net income, unrealized losses on derivative transactions and marketable securities and foreign currency translation adjustments. The components of comprehensive income for the three- and nine-month periods ended December 31, 2008 and 2007 are as follows:
                                 
    Three Months     Nine Months  
    Ended December 31,     Ended December 31,  
    2008     2007     2008     2007  
    (in millions)  
Net income
  $ 213     $ 163     $ 622     $ 429  
Net unrealized losses on marketable securities, net of tax
          (1 )           (1 )
Net unrealized losses on derivative transactions, net of tax
    (5 )           (5 )      
Foreign currency translation adjustments
    (21 )     (4 )     (68 )     (3 )
 
                       
Total comprehensive income
  $ 187     $ 158     $ 549     $ 425  
 
                       
NOTE C — INCOME PER SHARE
Basic income per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted income per share is computed by dividing (i) the sum of net income and the after-tax amount of interest expense recognized in the period associated with the outstanding dilutive 1.625% Convertible Senior Notes due December 2009 (Convertible Senior Notes) by (ii) the sum of the weighted average number of common shares and the weighted average dilutive common share equivalents outstanding for the period.
For the three-month periods ended December 31, 2008 and 2007, approximately 15 million and 13 million of restricted stock awards and options to purchase common stock, respectively, were excluded from the calculation of diluted income per share, as their effect on income per share was anti-dilutive during the respective periods. For the nine-month periods ended December 31, 2008 and 2007, approximately 14 million of restricted stock awards and options to purchase common stock were excluded from the calculation in each period, as their effect on income per share was anti-dilutive during the respective periods.
                                 
    Three     Nine  
    Months Ended     Months Ended  
    December 31,     December 31,  
    2008     2007     2008     2007  
    (in millions, except per share amounts)  
Net income
  $ 213     $ 163     $ 622     $ 429  
Interest expense associated with Convertible Senior Notes, net of tax
    1       1       3       3  
 
                       
Numerator in calculation of diluted income per share
  $ 214     $ 164     $ 625     $ 432  
 
                       
Weighted average shares outstanding and common share equivalents
                               
Weighted average common shares outstanding
    514       510       513       515  
Weighted average shares outstanding upon conversion of Convertible Senior Notes
    23       23       23       23  
Weighted average equity awards outstanding
    2       3       4       3  
 
                       
Denominator in calculation of diluted income per share
    539       536       540       541  
 
                       
Diluted income per share
  $ 0.40     $ 0.31     $ 1.16     $ 0.80  

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
NOTE D — ACCOUNTING FOR SHARE-BASED COMPENSATION
Effective April 1, 2005, the Company adopted, under the modified retrospective basis, the provisions of SFAS No. 123(R), “ Share-based payment, ” which requires share-based awards exchanged for employee services to be accounted for under the fair value method. Accordingly, share-based compensation cost is measured at the grant date, based on the fair value of the award. The Company uses the straight-line attribution method to recognize share-based compensation costs related to awards with only service conditions. The expense is recognized over the employee’s requisite service period (generally the vesting period of the award).
The Company recognized share-based compensation in the following line items on the Condensed Consolidated Statements of Operations for the periods indicated:
                                 
    Three Months     Nine Months  
    Ended December 31,     Ended December 31,  
    2008     2007     2008     2007  
    (in millions)  
Cost of professional services
  $ 1     $ 1     $ 3     $ 3  
Costs of licensing and maintenance
    - (1)     - (1)     2       2  
Selling and marketing
    7       9       21       21  
General and administrative
    7       11       23       31  
Product development and enhancements
    5       8       19       21  
 
                       
Share-based compensation expense before tax
    20       29       68       78  
Income tax benefit
    6       9       22       25  
 
                       
Net share-based compensation expense
  $ 14     $ 20     $ 46     $ 53  
 
                       
 
(1)   Less than $1 million
There were no capitalized share-based compensation costs at December 31, 2008 or 2007.
The following table summarizes information about unrecognized share-based compensation costs as of December 31, 2008:
                 
            Weighted  
    Unrecognized     Average Period  
    Compensation     Expected to be  
    Costs     Recognized  
    (in millions)     (in years)  
Stock option awards
  $ 3       1.0  
Restricted stock units
    8       1.5  
Restricted stock awards
    59       1.4  
Performance share units
    26       1.8  
 
             
Total unrecognized share-based compensation costs
  $ 96       1.5  
 
             
Share-based incentive awards are provided to employees under the terms of the Company’s equity compensation plans (the Plans). The Plans are administered by the Compensation and Human Resources Committee of the Board of Directors (the Committee). Awards under the Plans may include at-the-money stock options, premium-priced stock options, restricted stock awards (RSAs), restricted stock units (RSUs), performance share units (PSUs), or any combination thereof. The non-employee members of the Company’s Board of Directors receive deferred stock units under a separate director compensation plan.
Additional information relating to the Company’s other Plans which have been approved by stockholders and a description of the awards issued under these Plans can be found in Note 10, “Stock Plans” in the Company’s fiscal year 2008 Form 10-K.
Under the Company’s long-term incentive program for fiscal years 2009, 2008 and 2007, senior executives were issued PSUs under which they are eligible to receive RSAs or RSUs and unrestricted shares at the end

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
of the performance period if certain performance targets are achieved. Quarterly, PSU values are marked to the closing price of the Company’s common stock on the last trading day of the quarter until the PSU’s are granted. Compensation costs for the PSUs are amortized over the requisite service periods based on the expected level of achievement of the performance targets. At the conclusion of the performance periods for the fiscal year 2009 1-year and 3-year PSUs and the performance periods for the fiscal year 2008 and 2007 3-year PSUs, the applicable number of shares of RSAs or RSUs and unrestricted stock granted may vary based upon the level of achievement of the performance targets and the approval of the Committee (which has discretion to reduce any award for any reason). The related compensation cost recognized will be based on the number of shares granted and the closing stock price on the day of grant.
When the Company grants a stock option award, the fair value of the option is estimated at the grant date using the Black-Scholes option pricing model, consistent with the provisions of SFAS No. 123(R) and the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 107, “ Interaction Between FASB Statement No. 123(R), and Certain SEC Rules and Regulations Regarding the Valuation of Share-Based Payment Arrangements for Public Companies” (SAB 107). The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company’s stock options. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive stock option awards.
For the three-month periods ended December 31, 2008 and 2007 and nine-month period ended December 31, 2008, the Company did not issue options. For the nine-month period ended December 31, 2007, the Company issued options covering fewer than 0.1 million shares of common stock.
The table below summarizes the RSUs and RSAs granted, including grants provided pursuant to the long term incentive plans:
                                 
    Three Months   Nine Months
    Ended December 31,   Ended December 31,
    2008   2007   2008   2007
    (shares in millions)
RSUs
                       
Shares
                0.3       0.2  
Weighted Avg. Grant Date Fair Value (2)
    N/A           $ 24.36     $ 25.23  
RSAs
                               
Shares
    (1)     (1)     3.8       2.6  
Weighted Avg. Grant Date Fair Value (3)
  $ 16.34     $ 26.01     $ 25.28     $ 25.93  
 
(1)   Shares granted amounted to less than 0.1 million.
 
(2)   The fair value is determined and fixed based on the quoted market value of the Company’s common stock on the grant date reduced by the present value of dividends expected to be paid on the Company’s common stock prior to vesting of the RSUs which is calculated using a risk free interest rate.
 
(3)   The fair value is determined and fixed based on the quoted market value of the Company’s common stock on the grant date.
NOTE E — TRADE AND INSTALLMENT ACCOUNTS RECEIVABLE
The Company uses installment license agreements as a standard business practice and has a history of successfully collecting substantially all amounts due under the original payment terms without making concessions on payments, software products, maintenance, or professional services. Net trade and installment accounts receivable represent financial assets derived from the committed amounts due from the Company’s customers. These accounts receivable balances are reflected net of unamortized discounts based on imputed interest for the time value of money for license agreements under our prior business model and allowances for doubtful accounts. These balances do not include unbilled contractual commitments executed under the

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
Company’s current business model. Trade and installment accounts receivable are comprised of the following components:
                 
    December 31,     March 31,  
    2008     2008  
    (in millions)  
Current:
               
Accounts receivable
  $ 692     $ 817  
Other receivables
    114       107  
Unbilled amounts due within the next 12 months — prior business model
    109       103  
Less: Allowance for doubtful accounts
    (27 )     (30 )
Less: Unamortized discounts
    (9 )     (27 )
 
           
Net trade and installment accounts receivable — current
  $ 879     $ 970  
 
           
 
               
Noncurrent:
               
Unbilled amounts due beyond the next 12 months — prior business model
  $ 135     $ 239  
Less: Allowance for doubtful accounts
    (1 )     (1 )
Less: Unamortized discounts
    (5 )     (4 )
 
           
Net installment accounts receivable — noncurrent
  $ 129     $ 234  
 
           
During the first nine months of fiscal year 2008, the Company transferred its rights and interest in future committed installments under certain software license agreements to a third party financial institution with an aggregate contract value of approximately $17 million, for which cash was received in the amount of approximately $14 million, which reflects a discount based on the present value of the future committed installments. The Company did not have any similar transactions during the first nine months of fiscal year 2009. As of December 31, 2008 and March 31, 2008, the aggregate remaining amounts due to third party financial institutions included within “Deferred revenue (billed or collected)” were approximately $11 million and $56 million, respectively. The financing agreements may contain limited recourse provisions in the event the Company does not meet its continued performance obligations under the license agreements. Based on historical experience, the Company believes that any liability that may be incurred as a result of these limited recourse provisions is remote.
NOTE F — IDENTIFIED INTANGIBLE ASSETS
In the table below, capitalized software includes both purchased and internally developed software costs; other identified intangible assets include both purchased customer relationships and trademarks/trade name costs. Internally developed capitalized software costs and other identified intangible asset costs are included in “Other noncurrent assets, net” on the Condensed Consolidated Balance Sheets.
The gross carrying amounts and accumulated amortization for identified intangible assets are as follows:
                         
    December 31, 2008  
    Gross     Accumulated     Net  
    Assets     Amortization     Assets  
            (in millions)          
Capitalized software:
                       
Purchased
  $ 4,865     $ 4,700     $ 165  
Internally developed
    837       511       326  
Other identified intangible assets subject to amortization
    660       429       231  
Other identified intangible assets not subject to amortization
    14             14  
 
                 
Total
  $ 6,376     $ 5,640     $ 736  
 
                 

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
                         
    March 31, 2008  
    Gross     Accumulated     Net  
    Assets     Amortization     Assets  
            (in millions)          
Capitalized software:
                       
Purchased
  $ 4,833     $ 4,662     $ 171  
Internally developed
    742       466       276  
Other identified intangible assets subject to amortization
    660       389       271  
Other identified intangible assets not subject to amortization
    14             14  
 
                 
Total
  $ 6,249     $ 5,517     $ 732  
 
                 
Amortization of capitalized software costs was $31 million and $29 million in the third quarter of fiscal years 2009 and 2008, respectively. Amortization of other identified intangible assets was $13 million and $16 million in the third quarter of fiscal years 2009 and 2008, respectively.
For the first nine months of fiscal years 2009 and 2008, amortization of capitalized software costs was $91 million and $87 million, respectively, and amortization of other identified intangible assets was $39 million and $51 million, respectively.
Based on the identified intangible assets recorded through December 31, 2008, annual amortization expense is expected to be as follows:
                                         
    Year Ended March 31,  
    2009     2010     2011     2012     2013  
    (in millions)  
Capitalized software:
                                       
Purchased
  $ 57     $ 50     $ 39     $ 27     $ 19  
Internally developed
    65       85       78       62       48  
Other identified intangible assets subject to amortization
    53       52       51       31       25  
 
                             
Total
  $ 175     $ 187     $ 168     $ 120     $ 92  
 
                             
The carrying value of goodwill was $5.348 billion and $5.351 billion as of December 31, 2008 and March 31, 2008, respectively. During the nine-month period ended December 31, 2008, goodwill decreased by approximately $3 million, primarily due to tax settlements relating to the Company’s prior acquisitions offset by additions for companies acquired during the first nine months of fiscal year 2009.
NOTE G — DERIVATIVES AND FAIR VALUE MEASUREMENT
The Company is exposed to certain financial market risks relating to its business operations, including changes in interest rates, which could include monetary assets and liabilities and foreign exchange rate risk associated with the Company’s operating exposures, which could include its exposure to foreign currency denominated monetary assets and liabilities and forecasted transactions. The Company enters into derivative contracts with the intent of mitigating a certain portion of these risks.
Derivatives are accounted for in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS No. 133). During the first nine months of fiscal year 2009 and the year ended March 31, 2008, the Company did not designate its foreign exchange derivatives as hedges under SFAS No. 133. Accordingly, all foreign exchange derivatives are recognized on the balance sheet at fair value and unrealized or realized changes in fair value from these contracts are recorded as “Other (gains) expenses, net” in the Company’s Condensed Consolidated Statements of Operations.
During the third quarter of fiscal year 2009, the Company entered into interest rate swaps with a total notional value of $250 million to hedge a portion of its variable interest rate payments. These derivatives

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
are designated as cash flow hedges under SFAS No. 133. The effective portion of these cash flow hedges are recorded as “Accumulated other comprehensive loss” in the Company’s Condensed Consolidated Balance Sheet and reclassified into “Interest expense, net”, in the Company’s Condensed Consolidated Statements of Operations in the same period during which the hedged transaction affects earnings. Any ineffective portion of the cash flow hedges would be recorded immediately to “Interest expense, net;” however, no ineffectiveness existed at December 31, 2008.
As described in Note A, the Company adopted the provisions of SFAS No. 157 as amended by FSP FAS 157-1 and FSP FAS 157-2 on April 1, 2008. Pursuant to the provisions of FSP FAS 157-2, the Company will not apply the provisions of SFAS No. 157 to any nonfinancial assets and nonfinancial liabilities until April 1, 2009. The Company recorded no change to its opening balance of retained earnings as of April 1, 2008 as it did not have any financial instruments requiring retrospective application under the provisions of SFAS No. 157.
Fair Value Hierarchy
SFAS No. 157 specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect the company’s own assumptions of market participant valuation (unobservable inputs). In accordance with SFAS No. 157, these two types of inputs have created the following fair value hierarchy:
    Level 1—Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
 
    Level 2—Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;
 
    Level 3—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
SFAS No. 157 requires the use of observable market data if such data is available without undue cost and effort.

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
Items Measured at Fair Value on a Recurring Basis
The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2008 consistent with the fair value hierarchy provisions of SFAS No. 157 (in millions):
                         
    Fair Value Measurement at Reporting Date Using  
    (amounts in millions)  
            Quoted Prices in     Significant Other  
    Estimated Fair     Active Markets for     Observable  
    Value at     Identical Assets     Inputs  
Description   December 31, 2008     (Level 1)     (Level 2)  
 
Assets:
                       
Money market funds
  $ 1,636     $ 1,636     $  
Foreign exchange derivatives (1)
    9             9  
 
                 
Total Assets
  $ 1,645     $ 1,636     $ 9  
 
                 
 
                       
Liabilities:
                       
Foreign exchange derivatives (1)
  $ 4     $     $ 4  
Interest Rate Derivatives (2)
    8             8  
 
                 
Total Liabilities
  $ 12     $     $ 12  
 
                 
 
(1)   Foreign exchange derivatives are not designated as hedges under SFAS No. 133
 
(2)   Interest rate derivatives are designated as cash flow hedges under SFAS No. 133
At December 31, 2008, the Company had approximately $1.586 billion and $50 million of investments in money market funds classified as “Cash, cash equivalents and marketable securities” and “other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet. The money market funds are reported at fair value based on quoted prices that are equivalent to par value.
At December 31, 2008, approximately $9 million and $4 million of the Company’s foreign exchange derivatives were included in “Other current assets” and “Other current liabilities”, respectively, on the Condensed Consolidated Balance Sheet. At December 31, 2008, approximately $8 million of the Company’s interest rate derivatives are included in “Other current liabilities” on the Condensed Consolidated Balance Sheet.
At December 31, 2008, the Company did not have any assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3). The Company did not have any outstanding asset or liability derivatives at March 31, 2008.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
A summary of the effect of the foreign exchange derivatives on the Company’s Condensed Consolidated Statement of Operations is as follows:
                 
    Amount of Net Gain Recognized in Income on
    Derivative
    (amounts in millions)
Location of Net Gain Recognized in   Three Months ended   Nine Months ended
Income on Derivative   December 31, 2008   December 31, 2008
Other (gains) expenses, net
  $ (31 )   $ (64 )
For the Company’s interest rate derivatives, the amount of loss recorded in accumulated other comprehensive loss from the “Effective Portion” was approximately $8 million for the three and nine months ended December 31, 2008. The amount of loss reclassified from accumulated other comprehensive income into “Interest expense, net” was less than $1 million for both the three and nine months ended December 31, 2008. In the next twelve months, approximately $4 million is expected to be released from “Accumulated other comprehensive loss” on the Condensed Consolidated Balance Sheet to “Other (gains) expenses, net” on the Condensed Consolidated Statement of Operations.
NOTE H — RESTRUCTURING AND OTHER
Restructuring:
Fiscal 2007 Plan: In August 2006, the Company announced the fiscal 2007 plan to significantly improve the Company’s expense structure and increase its competitiveness. The fiscal 2007 plan’s objectives include a workforce reduction, global facilities consolidations and other cost reduction initiatives estimated to cost $275 million to $300 million in total. The Company currently estimates a reduction in workforce of approximately 2,800 individuals under the fiscal 2007 plan.
Through December 31, 2008, the Company has incurred approximately $247 million in expenses under the fiscal 2007 plan, which is comprised of approximately $186 million in severance costs and approximately $61 million in facilities abandonment costs. The Company anticipates total severance costs for the fiscal 2007 plan of approximately $190 million and total facilities abandonment costs of approximately $85 million to $105 million. The majority of the remaining expenses are expected to be recognized by the end of fiscal 2009.
Severance: The termination benefits the Company has offered in connection with the workforce reduction under the fiscal 2007 plan are substantially the same as the benefits the Company has provided historically for non-performance-based workforce reductions, and in certain countries have been provided based upon prior experiences. These costs have been recognized in accordance with SFAS No. 112, “ Employers Accounting for Post Employment Benefits, an Amendment of FASB Statements No. 5 and 43. ” Enhancements to termination benefits that exceed past practice are recognized as incurred in accordance with SFAS No. 146, “Accounting for Costs Associated With Exit or Disposal Activities.” Final payment of these amounts is dependent upon settlement with the works councils in certain international locations. The plans associated with the balance of the workforce reductions are still being finalized and the associated charges will be recorded once the actions are approved by management.
The Company recorded a reduction of approximately $8 million in severance costs in the first nine months of fiscal 2009, including less than $1 million in expenses during the third quarter of fiscal year 2009.
Facilities Abandonment : The Company records the costs associated with lease termination or abandonment when the Company ceases to utilize the leased property. Under SFAS No. 146, the liability associated with lease termination or abandonment is measured as the present value of the total remaining lease costs and associated operating costs, less probable sublease income. The Company accretes its obligations related to facilities abandonment to the then-present value and, accordingly, recognizes accretion expense as a restructuring expense in future periods. The Company recorded approximately $12 million of expenses

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
during the first nine months of fiscal year 2009, including less than $1 million in expenses recorded in the third quarter of fiscal year 2009.
For the nine-month period ended December 31, 2008, restructuring activity under the fiscal 2007 plan was as follows:
                 
            Facilities  
    Severance     Abandonment  
    (in millions)  
Accrued balance as of March 31, 2008
  $ 93     $ 27  
(Reductions) additions
    (8 )     12  
Payments
    (59 )     (18 )
 
           
Accrued balance as of December 31, 2008
  $ 26     $ 21  
 
           
The liability balance for the severance portion of the remaining reserve is included in the “Accrued salaries, wages and commissions” line on the Condensed Consolidated Balance Sheets. The liability balance for the facilities abandonment portion of the remaining reserve is included in the “Accrued expenses and other current liabilities” line item on the Condensed Consolidated Balance Sheets. The net costs are included in the “Restructuring and other” line item on the Condensed Consolidated Statements of Operations for the period ended December 31, 2008.
NOTE I — INCOME TAXES
Income tax expense for the three- and nine-month periods ended December 31, 2008 was $88 million and $311 million, respectively, compared with the three- and nine-month periods ended December 31, 2007 of $76 million and $238 million, respectively. For the three- and nine- month periods ended December 31, 2008, the Company’s income tax provision included a net benefit of approximately $12 million, primarily arising from the resolution of uncertain tax provisions and the reinstatement of the U.S. Research and Development Tax Credit. For the nine-month period ended December 31, 2008, the Company’s income tax provision included a benefit from the settlement of a U.S. federal income tax audit for the fiscal years 2001 through 2004, which resulted in a decrease in the liability for uncertain tax positions of $55 million. As a result of this settlement, during the first quarter of fiscal year 2009, the Company recognized a tax benefit of $11 million and a reduction of goodwill by $10 million, with the remainder offset against existing tax refund claims and deferred tax assets previously recorded.
NOTE J — COMMITMENTS AND CONTINGENCIES
Certain legal proceedings in which we are involved are discussed in Note 8, “Commitments and Contingencies,” in the Notes to the Consolidated Financial Statements included in the Company’s 2008 Form 10-K. The following discussion should be read in conjunction with the 2008 Form 10-K.
Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004 — Background
The Company, its former Chairman and CEO Charles B. Wang, its former Chairman and CEO Sanjay Kumar, its former Chief Financial Officer Ira Zar, and its Vice Chairman and Founder Russell M. Artzt were defendants in one or more stockholder class action lawsuits filed in July 1998, February 2002, and March 2002 in the United States District Court for the Eastern District of New York (the Federal Court), alleging, among other things, that a class consisting of all persons who purchased the Company’s Common Stock during the period from January 20, 1998 until July 22, 1998 were harmed by misleading statements, misrepresentations, and omissions regarding the Company’s future financial performance. In addition, in May 2003, a class action lawsuit captioned John A. Ambler v. Computer Associates International, Inc., et al. was filed in the Federal Court. The complaint in this matter, a purported class

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
action on behalf of the CA Savings Harvest Plan (the CASH Plan) and the participants in, and beneficiaries of, the CASH Plan for a class period from March 30, 1998 through May 30, 2003, asserted claims of breach of fiduciary duty under the federal Employee Retirement Income Security Act (ERISA). The named defendants were the Company, the Company’s Board of Directors, the CASH Plan, the Administrative Committee of the CASH Plan, and the following current or former employees and/or former directors of the Company: Messrs. Wang, Kumar, Zar, Artzt, Peter A. Schwartz, and Charles P. McWade; and various unidentified alleged fiduciaries of the CASH Plan. The complaint alleged that the defendants breached their fiduciary duties by causing the CASH Plan to invest in Company securities and sought damages in an unspecified amount.
A stockholder derivative lawsuit was filed by Charles Federman against certain current and former directors of the Company, based on essentially the same allegations as those contained in the February and March 2002 stockholder lawsuits discussed above. This action was commenced in April 2002 in the Delaware Chancery Court, and an amended complaint was filed in November 2002. The defendants named in the amended complaint were current Company director The Honorable Alfonse M. D’Amato and former Company directors Shirley Strum Kenny and Messrs. Wang, Kumar, Artzt, Willem de Vogel, Richard Grasso, Roel Pieper, and Lewis S. Ranieri. The Company was named as a nominal defendant. The derivative suit alleged breach of fiduciary duties on the part of all the individual defendants and, as against the former management director defendants, insider trading on the basis of allegedly misappropriated confidential, material information. The amended complaint sought an accounting and recovery on behalf of the Company of an unspecified amount of damages, including recovery of the profits allegedly realized from the sale of Common Stock.
On August 25, 2003, the Company announced the settlement of the above-described class action lawsuits against the Company and certain of its present and former officers and directors, alleging misleading statements, misrepresentations, and omissions regarding the Company’s financial performance, as well as breaches of fiduciary duty. At the same time, the Company also announced the settlement of a derivative lawsuit, in which the Company was named as a nominal defendant, filed against certain present and former officers and directors of the Company, alleging breaches of fiduciary duty and, against certain management directors, insider trading, as well as the settlement of an additional derivative action filed by Charles Federman that had been pending in the Federal Court. As part of the class action settlement, which was approved by the Federal Court in December 2003, the Company agreed to issue a total of up to 5.7 million shares of Common Stock to the stockholders represented in the three class action lawsuits, including payment of attorneys’ fees. The Company has completed the issuance of the settlement shares as well as payment of $3.3 million to the plaintiffs’ attorneys in legal fees and related expenses.
In settling the derivative suits, which settlement was also approved by the Federal Court in December 2003, the Company committed to maintain certain corporate governance practices. Under the settlement, the Company, the individual defendants and all other current and former officers and directors of the Company were released from any potential claim by stockholders arising from accounting-related or other public statements made by the Company or its agents from January 1998 through February 2002 (and from March 11, 1998 through May 2003 in the case of the employee ERISA action). The individual defendants were released from any potential claim by or on behalf of the Company relating to the same matters.
On October 5, 2004 and December 9, 2004, four purported Company stockholders served motions to vacate the Order of Final Judgment and Dismissal entered by the Federal Court in December 2003 in connection with the settlement of the derivative action. These motions primarily sought to void the releases that were granted to the individual defendants under the settlement. On December 7, 2004, a motion to vacate the Order of Final Judgment and Dismissal entered by the Federal Court in December 2003 in connection with the settlement of the 1998 and 2002 stockholder lawsuits discussed above (together with the October 5, 2004 and December 9, 2004 motions, the “60(b) Motions”) was filed by Sam Wyly and certain related parties (the “Wyly Litigants”). The motion sought to reopen the settlement to permit the moving stockholders to pursue individual claims against certain present and

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CA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
former officers of the Company. The motion stated that the moving stockholders did not seek to file claims against the Company.
Derivative Actions Filed in 2004
In June and July 2004, three purported derivative actions were filed in the Federal Court by Ranger Governance, Ltd. (Ranger), Bert Vladimir and Irving Rosenzweig against certain current or former employees and/or directors of the Company (the Derivative Actions). In November 2004, the Federal Court issued an order consolidating the Derivative Actions. The plaintiffs filed a consolidated amended complaint (the Consolidated Complaint) on January 7, 2005. The Consolidated Complaint names as defendants Messrs. Wang, Kumar, Zar, Artzt, D’Amato, Stephen Richards, Ranieri and Steven Woghin; David Kaplan, David Rivard, Lloyd Silverstein; Michael A. McElroy; Messrs. McWade and Schwartz; Gary Fernandes; Robert E. La Blanc; Jay W. Lorsch; Kenneth Cron; Walter P. Schuetze; Messrs. de Vogel and Grasso; Roel Pieper; KPMG LLP; and Ernst & Young LLP. The Company is named as a nominal defendant. The Consolidated Complaint seeks from one or more of the defendants (1) contribution towards the consideration the Company had previously agreed to provide current and former stockholders in settlement of certain class action litigation commenced against the Company and certain officers and directors in 1998 and 2002 (see “— Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004—Background”), (2) compensatory and consequential damages in an amount not less than $500 million in connection with the investigations giving rise to the deferred prosecution agreement (DPA) entered into between the Company and the United States Attorney’s Office (USAO) in 2004 and a consent to enter into a final judgment (Consent Judgment) in a parallel proceeding brought by the Securities and Exchange Commission (SEC) regarding certain of the Company’s past accounting practices, including its revenue recognition policies and procedures during certain periods prior to the adoption of the Company’s new business model (as described in the 2008 Form 10-K) in October 2000 (In May 2007, based upon the Company’s compliance with the terms of the DPA, the Federal Court ordered dismissal of the charges that had been filed against the Company in connection with the DPA and the DPA expired. The injunctive provisions of the Consent Judgment permanently enjoining the Company from violating certain provisions of the federal securities laws remain in effect). (3) unspecified relief for violations of Section 14(a) of the Exchange Act for alleged false and material misstatements made in the Company’s proxy statements issued in 2002 and 2003, (4) relief for alleged breach of fiduciary duty, (5) unspecified compensatory, consequential and punitive damages based upon allegations of corporate waste and fraud, (6) unspecified damages for breach of duty of reasonable care, (7) restitution and rescission of the compensation earned under the Company’s executive compensation plan and (8) pursuant to Section 304 of the Sarbanes-Oxley Act, reimbursement of bonus or other incentive-based equity compensation and alleged profits realized from sales of securities issued by the Company. Although no relief is sought from the Company, the Consolidated Complaint seeks monetary damages, both compensatory and consequential, from the other defendants, including current or former employees and/or directors of the Company, Ernst & Young LLP and KPMG LLP in an amount totaling not less than $500 million.
The consolidated derivative action was stayed pending resolution of the 60(b) Motions, which have been denied (see “—Current Procedural Status of Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004 and Derivative Actions Filed in 2004”). On February 1, 2005, the Company established a Special Litigation Committee of independent members of its Board of Directors to, among other things, control and determine the Company’s response to the Consolidated Complaint and the 60(b) Motions. On April 13, 2007, the Special Litigation Committee issued its reports, which announced the Special Litigation Committee’s conclusions, determinations, recommendations and actions with respect to the claims asserted in the Derivative Actions and in the 60(b) Motions. Also, in response to the Consolidated Complaint, the Special Litigation Committee served a motion which seeks to dismiss and realign the claims and parties in accordance with the Special Litigation Committee’s recommendations. As summarized below, the Special Litigation Committee concluded as follows:

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
 The Special Litigation Committee has concluded that it would be in the best interests of the Company to pursue certain of the claims against Charles Wang (the Company’s former Chairman and CEO) and former officer Peter Schwartz.
 The Special Litigation Committee has concluded that it would be in the best interests of the Company to pursue certain of the claims against the former Company executives who have pled guilty to various charges of securities fraud and/or obstruction of justice — including David Kaplan (CA’s former head of Financial Reporting), Stephen Richards (the Company’s former head of Worldwide Sales), David Rivard (the Company’s former head of Sales Accounting), Lloyd Silverstein (the Company’s former head of the Global Sales Organization), Steven Woghin (the Company’s former General Counsel) and Ira Zar (the Company’s former CFO). The Special Litigation Committee has determined and directed that these claims be pursued by the Company using counsel retained by the Company, unless the Special Litigation Committee is able to successfully conclude its ongoing settlement negotiations with these individuals.
 The Special Litigation Committee has reached a settlement (subject to court approval) with Sanjay Kumar (the Company’s former Chairman and CEO), Charles McWade (the Company’s former head of Financial Reporting and business development) and Russell Artzt (currently Vice Chairman and Founder and a former member of the Company’s Board of Directors).
 The Special Litigation Committee believes that the claims (the Director Claims) against current and former Company directors Kenneth Cron, Alfonse D’Amato, Willem de Vogel, Gary Fernandes, Richard Grasso, Shirley Strum Kenny, Robert La Blanc, Jay Lorsch, Roel Pieper, Lewis Ranieri, Walter Schuetze and Alex Vieux should be dismissed. The Special Litigation Committee has concluded that these directors did not breach their fiduciary duties and the claims against them lack merit.
 The Special Litigation Committee has concluded that it would be in the best interests of the Company to seek dismissal of the claims against the Company’s former independent auditor, Ernst & Young LLP, the Company’s current independent auditors, KPMG LLP and Michael McElroy (the Company’s former senior vice president of the Legal department).
The Special Litigation Committee has served motions which seek dismissal of the Director Claims, the claims against Ernst & Young LLP and KPMG LLP, and Michael McElroy and certain other claims. In addition, the Special Litigation Committee has asked for the Federal Court’s approval for the Company to be realigned as the plaintiff with respect to claims against certain other parties, including Messrs. Wang and Schwartz.
Current Procedural Status of Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004 and Derivative Actions Filed in 2004
By letter dated July 19, 2007, counsel for the Special Litigation Committee advised the Federal Court that the Special Litigation Committee had reached a settlement of the Derivative Actions with two of the three derivative plaintiffs — Bert Vladimir and Irving Rosenzweig. In connection with the settlement, both of these plaintiffs have agreed to support the Special Litigation Committee’s motion to dismiss and to realign. The Company has agreed to pay the attorney’s fees of Messrs. Vladimir and Rosenzweig in an amount up to $525,000 each. If finalized, this settlement would require approval of the Federal Court . On July 23, 2007, Ranger filed a letter with the Federal Court objecting to the proposed settlement. On October 29, 2007, the Federal Court denied the Special Litigation Committee’s motion to dismiss and realign, without prejudice to renewing the motion after a decision by the appellate court regarding the Federal Court’s decisions concerning the 60(b) Motions (see “—Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004 — Background”).
In a memorandum and order dated August 2, 2007, the Federal Court denied all of the 60(b) Motions and reaffirmed the 2003 settlements (the August 2 decision). On August 24, 2007, Ranger and the Wyly Litigants filed notices of appeal of the August 2 decision. On August 16, 2007, the Special Litigation Committee filed a motion to amend or clarify the August 2 decision, and the Company joined that motion. On September 12, 2007 and October 4, 2007, the Federal Court issued opinions denying the motions to amend or clarify. On September 18, 2007, the Wyly Litigants and Ranger filed notices of appeal of the September 12 decision. The Company filed notices of cross-appeal of the September 12 and October 4

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2008
(unaudited)
decisions on November 2, 2007. All appellate briefs have been filed and the appeals are expected to be scheduled for oral argument for the week of March 9, 2009.
Texas Litigation
On August 9, 2004, a petition was filed by Sam Wyly and Ranger against the Company in the District Court of Dallas County, Texas, seeking to obtain a declaratory judgment that plaintiffs did not breach two separation agreements they entered into with the Company in 2002 (the 2002 Agreements). Plaintiffs seek to obtain this declaratory judgment in order to file a derivative suit on behalf of the Company (see “— Derivative Actions Filed in 2004”). On February 18, 2005, Mr. Wyly filed a separate lawsuit in the United States District Court for the Northern District of Texas (the Texas Federal Court) alleging that he is entitled to attorneys’ fees in connection with the original litigation filed in Texas. The two actions have been consolidated. On March 31, 2005, the plaintiffs amended their complaint to allege a claim that they were defrauded into entering the 2002 Agreements and to seek rescission of those agreements and damages. On September 1, 2005, the Texas Federal Court granted the Company’s motion to transfer the action to the Federal Court. On November 9, 2007, plaintiffs served a motion to reopen discovery for 90 days to permit unspecified additional document requests and depositions. The Federal Court denied plaintiffs’ discovery motion on August 29, 2008 and certified that discovery was complete on September 3, 2008. On September 15, 2008, the Company moved for summary judgment dismissing all of plaintiffs’ claims, and plaintiffs moved for reconsideration of the Federal Court’s August 29, 2008 order denying plaintiffs’ discovery motion. These motions are fully briefed and pending determination by the Court.
Other Civil Actions
In June 2004, a lawsuit captioned Scienton Technologies, Inc. et al. v. Computer Associates International, Inc. was filed in the Federal Court. The complaint seeks monetary damages in various amounts, some of which are unspecified, but which are alleged to exceed $868 million, based upon claims for, among other things, breaches of contract, misappropriation of trade secrets, and unfair competition. In December 2008, the Federal Court executed a stipulation and order by which plaintiffs agreed to “voluntarily strike from the Complaint all allegations that Scienton has incurred $800 million in damages because CA contends that no factual basis exists for such an allegation.”
The Company, various subsidiaries, and certain current and former officers have been or may be named as defendants in various other lawsuits and claims arising in the normal course of business. The Company believes that it has meritorious defenses in connection with such lawsuits and claims that have been asserted, and intends to vigorously contest each of them. In the opinion of the Company’s management, the results of these other lawsuits and claims that have been asserted, either individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position, annual results of operations, or annual cash flows, although the impact could be material to any interim reporting period.
Additional information about litigation involving the Company’s directors and executive officers is contained in the Company’s other reports filed with the SEC.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statement
This Quarterly Report on Form 10-Q ( Form 10-Q ) contains certain forward-looking information relating to CA, Inc. (the “Company,” “Registrant,” “CA,” “we,” “our,” or “us”), that is based on the beliefs of, and assumptions made by, our management as well as information currently available to management. When used in this Form 10-Q , the words “anticipate,” “believe,” “estimate,” “expect” and similar expressions are intended to identify forward-looking information. Such information includes, for example, the statements made in this Management Discussion and Analysis of Financial Condition and Results of Operations (MD&A), but also appears in other parts of this Form 10-Q . This forward-looking information reflects our current views with respect to future events and is subject to certain risks, uncertainties, and assumptions.
A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the timing of orders from customers and channel partners may cause fluctuations in some of our key financial metrics; given the global nature of our business, economic factors or political events beyond our control can affect our business in unpredictable ways; changes to the compensation of our sales organization and changes to our sales coverage model and organization could adversely affect our business, financial condition, operating results and cash flow; if we do not adequately manage and evolve our financial reporting and managerial systems and processes, including the successful implementation of our enterprise resource planning software, our ability to manage and grow our business may be harmed; we may encounter difficulty in successfully integrating acquired companies and products into our existing businesses; we are subject to intense competition in product and service offerings and pricing and increased competition is expected in the future; our business may suffer if it is not able to retain and attract qualified personnel, including key managerial, technical, marketing and sales personnel; failure to adapt to technological change in a timely manner could materially adversely affect our revenue and earnings; if our products do not remain compatible with ever-changing operating environments, we could lose customers and the demand for our products and services could decrease; we may lose access to third party operating systems or certain third party software that we use in daily operations, either of which could delay product development and production; certain software we use is from open source code sources, which, under certain circumstances, may lead to unintended consequences; discovery of errors in our software could materially adversely affect our revenue and earnings and subject us to product liability claims, which may be costly and time consuming; our credit ratings have been downgraded in the past and could be downgraded further which would require us to pay additional interest under our credit agreement and could adversely affect our ability to borrow; we have a significant amount of debt; the failure to protect our intellectual property rights and source code would weaken our competitive position; we may become dependent upon large transactions with customers; our sales to government customers subject us to risks, including early termination, audits, investigations, sanctions and penalties; our software products, our customers’ and our data centers and IT environments may be subject to hacking or other breaches, harming the market perception of the effectiveness of our products; general economic conditions, including concerns regarding a potential global recession and credit constraints, or unfavorable economic conditions in a particular region, business or industry sector, may lead our customers to delay or forgo technology investments and could have other impacts; the market for some or all of our key product areas may not grow; the use of third party microcode could negatively affect our product development; we may lose access to third party operating systems, which could negatively affect our product development; third parties could claim that our products infringe their intellectual property rights or that we owe royalty payments; fluctuations in foreign currencies could result in translation losses; we have outsourced various functions to third parties and these arrangements may not be successful; potential tax liabilities may materially adversely affect our results; and these factors and the other factors described more fully in our filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties occur, or should our assumptions prove incorrect, actual results may vary materially from those described in this Form 10-Q as anticipated, believed, estimated, or expected. We do not intend to update these forward-looking statements, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking

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CONDITION AND RESULTS OF OPERATIONS
statements that speak only as of the date hereof. This MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes to the financial statements.
OVERVIEW
We are one of the world’s leading independent information technology (IT) management software companies, helping organizations use IT to better perform, compete, innovate and grow. We help customers govern, manage and secure their entire IT operation — all of the people, information, processes, systems, networks, applications and databases, from a Web service to the mainframe, regardless of the hardware or software they are using.
We license our products worldwide, principally to large IT service providers, financial services companies, governmental agencies, retailers, manufacturers, educational institutions, and healthcare institutions. These customers typically maintain IT infrastructures that are both complex and central to their objectives for operational excellence.
We offer our software products and solutions directly to our customers through our direct sales force and indirectly through global systems integrators, value-added partners, original equipment manufacturers, and distribution partners.
For further discussion of our business and business model, see our Annual Report on Form 10-K for the fiscal year ended March 31, 2008 (the 2008 Form 10-K). For further discussion of our Critical Accounting Policies and Business Practices, see “Critical Accounting Policies and Business Practices.”
We have assessed and will continue to assess the impact on our business of the general economic downturn and the related impact on the financial services sector in particular. Approximately one third of our revenue comes from arrangements with financial institutions (i.e., banking, brokerage and insurance companies). The majority of these arrangements are for the renewal of mainframe capacity and maintenance associated with transactions processed by our financial institution customers. While we cannot predict what impact there may be on our business from further consolidation of the financial industry sector, or the impact from the economy in general on our business, to date the impact has not been material to our balance sheet, results of operations or cash flows. The vast majority of our subscription and maintenance revenue in any particular reporting period comes from contracts signed in prior periods, generally pursuant to contracts ranging in duration from three to five years.
In the ordinary course of business we review our cash and investment balances with respect to counterparty exposure. To date we have not experienced any significant impact as a result of the recent financial credit crisis. In the future, our (or our customer’s) ability to finance transactions, or our ability to obtain liquidity at favorable terms could be adversely affected.

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CONDITION AND RESULTS OF OPERATIONS
QUARTERLY UPDATE
    In October 2008, CA announced plans to expand its India Technology Center (ITC) with the construction of a new 180,000 square foot building on the CA campus in Hyderabad.
 
    In October 2008, CA announced that its Board of Directors approved a new stock repurchase program that authorizes the Company to buy up to $250 million of its common stock.
 
    In November 2008, CA announced the Software-as-a-Service (SaaS) delivery option for its leading enterprise-class PPM solution, CA Clarity Project & Portfolio Manager (PPM). By extending the availability options for its award-winning CA Clarity PPM product, CA now provides CIOs and business executives with best-in-class functionality through a flexible SaaS delivery model.
 
    In November 2008, CA announced that Kay Koplovitz was elected to its Board of Directors. Ms. Koplovitz was named to the Board’s Corporate Governance Committee.
 
    In November 2008, CA held its 13 th user conference CA World in Las Vegas. CA World 2008 brought together more than 5,000 IT professionals from more than 70 countries to exchange IT management strategies for transforming IT from a cost center into an enabler of innovation and business growth.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PERFORMANCE INDICATORS
Management uses several quantitative performance indicators to assess our financial results and condition. Following is a summary of the principal quantitative performance indicators that management uses to review performance:
                                 
    Three Months            
    Ended December 31,           Percent
    2008   2007   Change   Change
    (dollars in millions)
Total revenue
  $ 1,042     $ 1,100     $ (58 )     (5) %
Subscription and maintenance revenue
  $ 919     $ 968     $ (49 )     (5) %
Net income
  $ 213     $ 163     $ 50       31 %
Cash provided by operating activities
  $ 292     $ 233     $ 59       25 %
Total bookings
  $ 1,248     $ 1,270     $ (22 )     (2) %
Subscription and maintenance bookings
  $ 1,113     $ 1,113     $       %
Weighted average subscription and maintenance duration in years
    3.10       2.94       0.16       5 %
Annualized subscription and maintenance bookings
  $ 359     $ 379     $ (20 )     (5) %
                                 
    Nine Months            
    Ended December 31,           Percent
    2008   2007   Change   Change
            (dollars in millions)        
Total revenue
  $ 3,236     $ 3,192     $ 44       1 %
Subscription and maintenance revenue
  $ 2,859     $ 2,811     $ 48       2 %
Net income
  $ 622     $ 429     $ 193       45 %
Cash provided by operating activities
  $ 564     $ 413     $ 151       37 %
Total bookings
  $ 3,780     $ 3,206     $ 574       18 %
Subscription and maintenance bookings
  $ 3,424     $ 2,772     $ 652       24 %
Weighted average subscription and maintenance duration in years
    3.60       2.95       0.65       22 %
Annualized subscription and maintenance bookings
  $ 951     $ 940     $ 11       1 %
                                         
                    Change            
                    From           Change
    Dec. 31,   March 31,   Fiscal   Dec. 31,   From Prior
    2008   2008   Year End   2007   Year Quarter
    (in millions)
Cash, cash equivalents and marketable securities (1)
  $ 2,369     $ 2,796     $ (427 )   $ 2,078     $ 291  
Total debt
  $ 2,118     $ 2,582     $ (464 )   $ 2,575     $ (457 )
 
                                       
Total expected future cash collections from committed contracts (2)
  $ 4,937     $ 4,362     $ 575     $ 4,475     $ 462  
Total revenue backlog (2)
  $ 7,031     $ 6,858     $ 173     $ 6,354     $ 677  
 
(1)   Marketable securities were $0.2 million as of December 31, 2008 and $0.8 million as of March 31, 2008.
 
(2)   Refer to the discussion in the “Liquidity and Capital Resources” section of this MD&A for additional information on expected future cash collections from committed contracts, billings backlog and revenue backlog.
Analyses of our performance indicators, including general trends, can be found in the “Results of Operations” and “Liquidity and Capital Resources” sections of this MD&A. The performance indicators discussed below are those that we believe are unique because of our subscription-based business model.

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Subscription and Maintenance Revenue — Subscription and maintenance revenue is the amount of revenue recognized ratably during the reporting period from both: (i) subscription license agreements that were in effect during the period, which generally include maintenance that is bundled with and not separately identifiable from software usage fees or product sales, and (ii) maintenance agreements associated with providing customer technical support and access to software fixes and upgrades that are separately identifiable from software usage fees or product sales. These amounts include the sale of products directly by CA, as well as by distributors, resellers and value-added resellers to end-users, where the contracts incorporate the right for end-users to receive unspecified future software products and other contracts entered into in close proximity or contemplation of such agreements.
Total Bookings — Total bookings includes the incremental value of all subscription, maintenance and professional service contracts, software fees and other contracts entered into during the reporting period. Effective April 1, 2008, we changed our measurement of our new business activity from new deferred subscription value to total bookings. In addition to what was previously included in new deferred subscription value, subscription and maintenance bookings now includes the value of maintenance contracts committed by customers in the current period that were separate from license subscription contracts, whereas new deferred subscription value excluded certain of these types of agreements. The bookings amounts disclosed in this MD&A include the effects of this change. The incremental value of these agreements was $59 million for the quarter ended December 31, 2007. Total bookings also includes the value of new professional services and software fees and other contracts that were not previously included in new deferred subscription value.
Subscription and Maintenance Bookings — Subscription and maintenance bookings is the aggregate incremental amount we expect to collect from our customers over the terms of the underlying subscription and maintenance agreements entered into during a reporting period. These amounts include the sale of products directly by CA, as well as by distributors, resellers and value-added resellers to end-users, where the contracts incorporate the right for end-users to receive unspecified future software products, and other contracts without these rights entered into in close proximity or contemplation of such agreements. These amounts are expected to be recognized ratably as subscription and maintenance revenue over the applicable term of the agreement. Subscription and maintenance bookings typically excludes the value associated with certain perpetual based licenses, license-only indirect sales, and professional services arrangements.
The license and maintenance agreements that contribute to subscription and maintenance bookings represent binding payment commitments by customers over periods that range generally from three to five years, although in certain cases customer commitments can be for longer or shorter periods. The amount of new subscription and maintenance bookings recorded in a period is affected by the volume and value of contracts renewed during that period. Typically, our subscription and maintenance bookings increase in each consecutive quarter during a fiscal year, with the first quarter being the weakest and the fourth quarter being the strongest. However, as we make efforts to improve the balance of the distribution of our contract renewals throughout the fiscal year, subscription and maintenance bookings may not always follow the pattern of increasing in consecutive quarters during a fiscal year, and the quarter to quarter differences in subscription and maintenance bookings may be more moderate. Additionally, changes in subscription and maintenance bookings, relative to previous periods, do not necessarily correlate to changes in billings or cash receipts, relative to previous periods. The contribution to current period revenue from subscription and maintenance bookings from any single license or maintenance agreement is relatively small, since revenue is recognized ratably over the applicable agreement term.
Weighted Average Subscription and Maintenance Duration in Years — The weighted average subscription and maintenance duration in years reflects the duration of all subscription and maintenance agreements executed during a period, weighted by the contract value of each individual agreement. Effective April 1, 2008, our calculation of weighted average subscription and maintenance duration in years now includes all subscription and maintenance contracts from both direct and indirect channels, whereas the prior

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calculation reflected direct product subscription licenses only. This modification has also been reflected in the weighted average subscription and maintenance duration in years from the first quarter of fiscal year 2008 for comparison purposes and resulted in a decrease of 0.22 years for the third quarter of fiscal year 2008. The increase in the weighted average subscription and maintenance duration in years for the third quarter and first nine months of fiscal 2009 compared with the comparable prior year periods was attributable to an increase in the number and dollar values of contracts executed with contract terms longer than the historical averages.
Annualized Subscription and Maintenance Bookings — Annualized subscription and maintenance bookings is an indicator of future revenue to be realized on an annual basis from contracts signed during the period. It is calculated by dividing the total value of all new term-based software license agreements entered into during a period by the weighted average duration in years of all such license and maintenance agreements recorded during the same period.
Total Revenue Backlog — Total revenue backlog represents the aggregate amount the Company expects to recognize as revenue in the future as either subscription and maintenance revenue or professional services revenue associated with contractually committed amounts billed or to be billed as of the balance sheet date. Total revenue backlog is comprised of amounts recognized as a liability in our Condensed Consolidated Balance Sheets as “Deferred revenue (billed or collected)” as well as unearned amounts associated with balances yet to be billed under subscription and maintenance agreements. Amounts are classified as current or non-current depending on when they are expected to be earned and therefore recognized as revenue. The portion of the total revenue backlog that relates to subscription and maintenance agreements is recognized as revenue evenly on a monthly basis over the duration of the underlying agreements and is reported as “Subscription and maintenance revenue” in our Condensed Consolidated Statements of Operations.
“Deferred revenue (billed or collected)” is comprised of: (i) amounts received in advance of revenue recognition from the customer, (ii) amounts billed but not collected for which revenue has not yet been earned, and (iii) amounts received in advance of revenue recognition from financial institutions where the Company has transferred its interest in committed installments (referred to as “Financing obligations” in Note A, “Basis of Presentation” in the Condensed Consolidated Financial Statements).

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RESULTS OF OPERATIONS
The following table presents changes in the line items on our Condensed Consolidated Statement of Operations for the three- and nine-month periods ended December 31, 2008 and 2007 measured by Dollar Change, Percentage of Dollar Change, and Percentage of Total Revenue. Past financial results are not necessarily indicative of future results.
                                                 
    Three Months Ended December 31,
                            Percentage   Percentage
                    Dollar   of   of
                    Change   Dollar   Total
                    2008/   Change   Revenue
    2008   2007   2007   2008/2007   2008   2007
            (dollars in millions)                
Revenue
                                               
Subscription and maintenance revenue
  $ 919     $ 968     $ (49 )     (5 )%     88 %     88 %
Professional services
    87       92       (5 )     (5 )     8       8  
Software fees and other
    36       40       (4 )     (10 )     4       4  
     
Total revenue
    1,042       1,100       (58 )     (5 )%     100 %     100 %
     
Expenses
                                               
Costs of licensing and maintenance
    70       64       6       9 %     7 %     6 %
Cost of professional services
    76       92       (16 )     (17 )     7       8  
Amortization of capitalized software costs
    31       29       2       7       3       3  
Selling and marketing
    307       333       (26 )     (8 )     29       30  
General and administrative
    110       123       (13 )     (11 )     11       11  
Product development and enhancements
    115       135       (20 )     (15 )     11       12  
Depreciation and amortization of other intangible assets
    36       40       (4 )     (10 )     3       4  
Other (gains) expenses, net
    (14 )     13       (27 )     (208 )     (1 )     1  
Restructuring and other
    2       22       (20 )     (91 )           2  
     
Total expenses before interest and income taxes
    733       851       (118 )     (14 )     70       77  
     
Income before interest and income taxes
    309       249       60       24       30       23  
Interest expense, net
    8       10       (2 )     (20 )     1       1  
     
Income before income taxes
    301       239       62       26       29       22  
Income tax expense
    88       76       12       16       8       7  
     
Net income
  $ 213     $ 163     $ 50       31 %     20 %     15 %
Note — Amounts may not add to their respective totals due to rounding.

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CONDITION AND RESULTS OF OPERATIONS
                                                 
    Nine Months Ended December 31,
                            Percentage   Percentage
                    Dollar   of   of
                    Change   Dollar   Total
                    2008/   Change   Revenue
    2008   2007   2007   2008/2007   2008   2007
    (dollars in millions)
Revenue
                                               
Subscription and maintenance revenue
  $ 2,859     $ 2,811     $ 48       2 %     88 %     88 %
Professional services
    274       280       (6 )     (2 )     9       9  
Software fees and other
    103       101       2       2       3       3  
     
Total revenue
    3,236       3,192       44       1 %     100 %     100 %
     
Expenses
                                               
Costs of licensing and maintenance
    225       199       26       13 %     7 %     6 %
Cost of professional services
    239       278       (39 )     (14 )     7       9  
Amortization of capitalized software costs
    91       87       4       5       3       3  
Selling and marketing
    915       956       (41 )     (4 )     28       30  
General and administrative
    342       406       (64 )     (16 )     11       13  
Product development and enhancements
    358       390       (32 )     (8 )     11       12  
Depreciation and amortization of other intangible assets
    109       117       (8 )     (7 )     3       4  
Other expenses (gains), net
    4       8       (4 )     (50 )           0  
Restructuring and other
    6       47       (41 )     (87 )           1  
     
Total expenses before interest and income taxes
    2,289       2,488       (199 )     (8 )     71       78  
     
Income before interest and income taxes
    947       704       243       35       29       22  
Interest expense, net
    14       37       (23 )     (62 )           1  
     
Income before income taxes
    933       667       266       40       29       21  
Income tax expense
    311       238       73       31       10       7  
     
Net income
  $ 622     $ 429     $ 193       45 %     19 %     13 %
Note — Amounts may not add to their respective totals due to rounding.
Revenue
The decrease in total revenue for the three month period ended December 31, 2008 as compared to the prior year period was primarily due to an unfavorable foreign exchange variance of $58 million on subscription and maintenance revenue. The increase in total revenue for the nine month period ended December 31, 2008 was primarily due to a favorable foreign exchange variance of $42 million on subscription and maintenance revenue.
Price changes do not have a material impact on revenue in a given period as a result of our ratable subscription model.
Subscription and Maintenance Revenue
The decrease in subscription and maintenance revenue for the three month period ended December 31, 2008 and the increase in subscription and maintenance revenue for the nine month period ended December 31, 2008 as compared to the respective prior year periods was primarily due to the effects of foreign exchange.

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Subscription and Maintenance Bookings
For the three-month periods ended December 31, 2008 and 2007, we added subscription and maintenance bookings of $1,113 million for both periods. Bookings in the third quarter of fiscal 2009 were favorably affected by an increase in U.S. renewal bookings as compared with the prior year period. This was almost entirely offset by lower international bookings, which were adversely affected by several large contracts executed in the prior year period and by the timing of international renewals throughout the fiscal year. International Subscription and maintenance bookings for the three-month period ended December 31, 2008 were also adversely affected by foreign exchange. During the third quarter of fiscal 2009, we renewed a total of 18 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $471 million. During the third quarter of fiscal 2008, we renewed 16 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $303 million.
For the three month period ended December 31, 2008, annualized subscription and maintenance bookings decreased $20 million from the prior year period to $359 million. This decrease was driven by subscription and maintenance bookings that were flat for the period compared with the previous year combined with an increase of weighted average subscription and maintenance duration in years for the third quarter of fiscal 2009 to 3.10 years compared with 2.94 years from the year ago period.
For the nine months ended December 31, 2008 and 2007, we added subscription and maintenance bookings of $3,424 million and $2,772 million, respectively. The increase in subscription and maintenance bookings for the nine month period was primarily attributable to an increase in the dollar amounts of large contracts entered into, the growth in sales of new products, the growth in mainframe capacity, continued improvement in the management of contract renewals, and the favorable impact of foreign exchange as compared with the prior year periods.
For the nine-month period ended December 31, 2008, annualized subscription and maintenance bookings increased $11 million from the prior year period to $951 million. This increase was driven by the increase in subscription and maintenance bookings for the period that was almost entirely offset by the increase in weighted average subscription and maintenance duration in years to 3.60 from 2.95 in the prior year period. This increase was primarily attributable to the execution of several large contract extensions with terms of approximately five years in the second quarter, two of which had a combined contract value of approximately $550 million. While management will continue to examine proposed contract terms based on the facts of each individual transaction, it does not currently plan to increase the duration of contracts materially beyond historical levels.
Professional Services
Professional services revenue decreased in the third quarter of fiscal 2009, as compared to the same period in fiscal 2008, primarily due to an unfavorable foreign exchange effect of $5 million. The revenue decrease in the first nine months of fiscal 2009 as compared to the prior period was primarily due to our concerted efforts to reduce the number of low margin service contracts in all regions and revenue decreases in the APJ (Asia Pacific Japan) region, which resulted from our change in that region from a direct to an indirect sales model.
Software Fees and Other
Software fees and other revenue primarily consists of revenue that is recognized on an up-front basis as required by SOP 97-2. This includes revenue generated through transactions with distribution and original equipment manufacturer channel partners (sometimes referred to as our “indirect” or “channel” revenue) and certain revenue associated with new or acquired products sold on an up-front basis. Also included is financing fee revenue, which results from the discounting of product sales recognized on an up-front basis with extended payment terms to present value. Revenue recognized on an up-front basis

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results in higher revenue for the current period than if the same revenue had been recognized ratably under our subscription model.
Total Revenue by Geography
The following table presents revenue earned from the United States and international geographic regions and corresponding percentage changes for the three- and nine-month periods ended December 31, 2008 and 2007, respectively.
                                                 
    Three Months Ended December 31,        
                                    Dollar     Percentage  
    2008     %     2007     %     Change     Change  
            (dollars in millions)                  
United States
  $ 571       55 %   $ 558       51 %   $ 13       2 %
International
    471       45 %     542       49 %     (71 )     (13 )%
 
                                     
 
  $ 1,042       100 %   $ 1,100       100 %   $ (58 )     ( 5 )%
 
                                     
                                                 
    Nine Months Ended December 31,        
                                    Dollar     Percentage  
    2008     %     2007     %     Change     Change  
            (dollars in millions)                  
United States
  $ 1,697       52 %   $ 1,664       52 %   $ 33       2 %
International
    1,539       48 %     1,528       48 %     11       1 %
 
                                     
 
  $ 3,236       100 %   $ 3,192       100 %   $ 44       1 %
 
                                     
Revenue in the United States increased by 2% for each of the three- and nine-month periods ended December 31, 2008 as compared with the prior year comparable periods. International revenue decreased by 13% for the three-month period ended December 31, 2008, and increased 1%, for the nine-month period ended December 31, 2008, principally due to impacts from foreign exchange of $(58) and $42 million for the three- and nine-month periods, respectively, and revenue decreases in the APJ (Asia Pacific Japan) region, mostly due to our change in that region from a direct to an indirect sales model.
Expenses
Effective with the filing of the first quarter of fiscal year 2009 Quarterly Report on Form 10-Q, the Company further refined the classification of certain costs reported on its Condensed Consolidated Statement of Operations to better reflect the allocation of various expenses and to better align the Company’s reported financial statements with the Company’s internal view of its business performance. This refinement increased the amounts reported for the three-month period ended December 31, 2007 in the “Costs of licensing and maintenance,” “Cost of professional services,” “Selling and marketing,” and “Product development and enhancements” line items by $1 million, $5 million, $17 million and $2 million, respectively, and decreased the amount reported in “General and administrative” by $25 million. Total expenses before income taxes and net income were not affected by these reclassifications.
This refinement increased the amounts reported for the nine-month period ended December 31, 2007 in the “Costs of licensing and maintenance,” “Cost of professional services,” “Selling and marketing,” and “Product development and enhancements” line items by $4 million, $13 million, $50 million and $7 million, respectively, and decreased the amount reported in “General and administrative” by $74 million. Total expenses before income taxes and net income were not affected by these reclassifications.
Costs of Licensing and Maintenance
Costs of licensing and maintenance includes technical support, royalties, and other manufacturing and distribution costs. The increase in costs of licensing and maintenance for the third quarter and first nine months of fiscal 2009 as compared with the prior year periods was primarily due to the strategic

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partnership agreement that we signed with an outside third party relating to our Internet Security business during the fourth quarter of fiscal 2008, under which fees are paid based on sales volumes. Prior to this strategic partnership, the development costs relating to this business were included in Product Development and Enhancements. These increases in costs of licensing and maintenance were partially offset by decreases in product support expenses.
Cost of Professional Services
Cost of professional services consists primarily of our personnel-related costs associated with providing professional services and training to customers. The decrease in cost of professional services for the third quarter and first nine months of fiscal 2009 as compared with the prior year periods was primarily due to a reduced use of external consultants, reduced personnel costs resulting in savings realized from the fiscal 2007 cost reduction and restructuring plan (fiscal 2007 plan) and our effort to reduce the number of low margin service contracts. For further information on the fiscal 2007 plan refer to Note H, “Restructuring and Other,” in the Notes to the Condensed Consolidated Financial Statements.
As a result of the decreased costs of professional services, the margins on professional services revenue improved in the third quarter and first nine months of fiscal 2009 as compared with the prior year periods.
Amortization of Capitalized Software Costs
Amortization of capitalized software costs consists of the amortization of both purchased software and internally generated capitalized software development costs. Internally generated capitalized software development costs relate to new products and significant enhancements to existing software products that have reached the technological feasibility stage.
Selling and Marketing
Selling and marketing expenses include the costs relating to our sales force, costs relating to our channel partners, corporate and business marketing costs and our customer training programs. The decline in selling and marketing expenses for the third quarter of fiscal 2009 compared with the third quarter of fiscal 2008 was primarily due to improved cost management and lower personnel costs due to increased operating efficiencies, including a favorable foreign exchange effect of $19 million. Partially offsetting the favorable variances was an increase of approximately $9 million due to the timing of CA World, our flagship customer and partner trade show, which occurred in the third quarter of fiscal 2009 but in the first quarter of fiscal 2008.
The decline in selling and marketing expenses for the first nine months of fiscal 2009 compared with the first nine months of fiscal 2008 was primarily due to improved cost management and lower personnel costs due to increased operating efficiencies, partially offset by an unfavorable foreign exchange effect of $9 million.
General and Administrative
General and administrative expenses include the costs of corporate and support functions, including our executive leadership and administration groups, finance, legal, human resources, corporate communications and other costs, such as provisions for doubtful accounts. For the third quarter of fiscal 2009, general and administrative costs decreased compared to the third quarter of fiscal 2008 primarily due to a $10 million reduction in external consultant costs, a $4 million reduction in bad debt expenses, and a favorable foreign exchange effect of $4 million. The higher bad debt expenses recorded in the third quarter of fiscal 2008 were associated with amounts deemed uncollectible from professional service accounts receivable.
For the first nine months of fiscal 2009, general and administrative costs decreased compared to the first nine months of fiscal 2008 primarily due to reduced personnel costs resulting from increased operating efficiencies, reduced external consultant costs and lower bad debt expenses, partially offset by an unfavorable foreign exchange effect of $3 million.

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Product Development and Enhancements
For the third quarter of fiscal 2009 and fiscal 2008, product development and enhancements expenses represented approximately 11% and 12% of total revenue, respectively. Expenses declined during the third quarter as compared to the prior year period primarily due to the strategic partnership agreement signed relating to the development of products associated with our Internet Security business, increased capitalization of internally developed software, and a favorable foreign exchange effect of $8 million. During the third quarter of fiscal 2009, we increased our investment in product development and enhancements for emerging technologies, and broadened our enterprise product offerings.
For the first nine months of fiscal 2009, product development and enhancements expenses decreased as compared to the prior year period primarily due to the strategic partnership agreement signed relating to the development of products associated with our Internet Security business and increased capitalization of internally developed software, partially offset by higher personnel costs incurred in the first nine months of fiscal 2009.
Depreciation and Amortization of Other Intangible Assets
The decreases in depreciation and amortization of other intangible assets for the third quarter and first nine months of fiscal 2009 as compared with the comparable periods of fiscal 2008 were primarily due to decreased amortization costs of intangible assets relating to prior period acquisitions.
Other (Gains) Expenses, Net
Other (gains) expenses, net includes gains and losses attributable to divested assets, certain foreign currency exchange rate fluctuations, and certain infrequent events. In the third quarter and first nine months of fiscal 2009, we recorded net foreign exchange gains of $15 million and net foreign exchange losses of $1 million, respectively. The foreign exchange amounts recorded in the third quarter and first nine months of fiscal 2009 included net gains of $31 million and $64 million, respectively, associated with derivative foreign exchange contracts, which we use to mitigate our operating risks and exposures to foreign currency exchange rates. In the third quarter of fiscal year 2009 we recognized a gain of $5 million associated with our repurchase of $148 million principal amount of our 4.750% Senior Notes due 2009. For additional information, refer to Note A “Basis of Presentation” in the Notes to the Condensed Consolidated Financial Statements. Additionally, we incurred expenses in connection with litigation claims for the third quarter and first nine months of fiscal 2009 of $3 million and $8 million, respectively.
In the third quarter and first nine months of fiscal 2008, we recorded foreign exchange gains of $1 million and $19 million, respectively, and expenses in connection with litigation claims of $16 million and $29 million, respectively.
Restructuring and Other
For the first nine months of fiscal 2009, we recorded restructuring charges of $4 million for severance and other termination benefits and facility abandonment principally related to the fiscal 2007 plan. The total pre-tax cost of the fiscal 2007 plan is currently expected to be approximately $275 million to $300 million. The majority of the remaining expenses are expected to be recognized by the end of fiscal 2009. The fiscal 2007 plan’s objectives include a workforce reduction, global facilities consolidations and other cost reduction initiatives. Cumulatively under the fiscal 2007 plan, we have recognized approximately $247 million of expenses, of which $47 million remains unpaid at December 31, 2008. The severance portion of the remaining liability balance is included in the “Accrued salaries, wages and commissions” line on the Condensed Consolidated Balance Sheets. The facilities abandonment portion of the remaining liability balance is included in “Accrued expenses and other current liabilities” line on the Condensed Consolidated Balance Sheets. Final payment of these amounts is dependent upon settlement with the works councils in certain international locations and our ability to negotiate lease terminations. For further information on the fiscal 2007 plan refer to Note H, “Restructuring and Other,” in the Notes to the Condensed Consolidated Financial Statements.

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Interest Expense, Net
The decrease in interest expense, net, for the three- and nine-month periods ended December 31, 2008 compared with the three- and nine-month periods ended December 31, 2007 was primarily due to decreased interest expenses as a result of the repayment of the remaining $350 million portion of the Company’s 6.500% Senior Notes due April 2008 (the fiscal 1999 Senior Notes).
Income Taxes
Income tax expense for the three- and nine-month periods ended December 31, 2008 was $88 million and $311 million, respectively, compared with the three- and nine-month periods ended December 31, 2007 of $76 million and $238 million, respectively. The effective tax rates for the nine-month periods ended December 31, 2008 and 2007 were 33.3% and 35.7%, respectively. For the three- and nine-month periods ended December 31, 2008 our income tax provision included a net benefit of approximately $12 million, primarily arising from the resolution of uncertain tax provisions and the reinstatement of the U. S. Research and Development Tax Credit. During the first quarter of fiscal year 2009, we settled a U.S. federal income tax audit for the fiscal years 2001 through 2004 which resulted in a decrease in the liability for uncertain tax positions of $55 million. As a result of this settlement, during the first quarter of fiscal year 2009, we recognized a tax benefit of $11 million and a reduction in goodwill of $10 million, with the remainder offset against existing tax refund claims and deferred tax assets previously recorded.
Liquidity and Capital Resources
Our cash balances, including cash equivalents and marketable securities, are held in numerous locations throughout the world, with 50% residing outside the United States at December 31, 2008. Cash and cash equivalents totaled $2.369 billion as of December 31, 2008, representing a decrease of $427 million from the March 31, 2008 balance of $2.796 billion, primarily due to the repayment of the remaining $350 million principal amount of our 6.500% Senior Notes due 2009 that was due and payable during the first quarter of fiscal 2009 and the repurchase of $148 million principal amount of our 4.750% Senior Notes at a price of $143 million in cash during the third quarter of fiscal 2009 (refer to Debt Arrangements below for further information). Cash and cash equivalents decreased by $30 million during the third quarter of fiscal 2009 due to the unfavorable translation effect that foreign currency exchange rates had on cash held outside the United States in currencies other than the U.S. dollar.
During the third quarter of fiscal year 2009, we paid $4 million to repurchase 0.3 million of our common shares at an average price of $15.84. As of December 31, 2008, we remain authorized to purchase an aggregate amount of up to $246 million of additional common shares under the current stock repurchase program, which was approved by the our Board of Directors in October 2008. We will fund the program with available cash on hand and may repurchase shares on the open market from time to time based on market conditions and other factors.
Sources and Uses of Cash
Cash generated by operating activities, which represents our primary source of liquidity, increased $151 million in the first nine months of fiscal 2009 to $564 million from $413 million in the first nine months of fiscal 2008, primarily due to a reduction of $79 million in vendor disbursements and payroll due to increased operating efficiencies, $61 million received from settlements of derivative contracts primarily resulting from the strengthening of the US dollar against the euro, which was mostly offset by the reduced value in dollars of net cash received due to foreign exchange movements, and a $20 million increase in cash collections from billings. For the first nine months of fiscal 2009, accounts receivable decreased by $175 million, compared with a decline in the comparable prior year period of $107 million. For the first nine months of fiscal 2009, accounts payable, accrued expenses and other liabilities decreased $95 million compared with a decrease in the comparable prior year period of $109 million.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Under our subscription and maintenance agreements, customers generally make installment payments over the term of the agreement, often with at least one payment due at contract execution, for the right to use our software products and receive product support, software fixes and new products when available. The timing and actual amounts of cash received from committed customer installment payments under any specific agreement can be affected by several factors, including the time value of money and the customer’s credit rating. Often, the amount received is the result of direct negotiations with the customer when establishing pricing and payment terms. In certain instances, the customer negotiates a price for a single up-front installment payment and seeks its own internal or external financing sources. In other instances, we may assist the customer by arranging financing on their behalf through a third party financial institution. Alternatively, we may decide to transfer our rights to the future committed installment payments due under the license agreement to a third party financial institution in exchange for a cash payment. Once transferred, the future committed installments are payable by the customer to the third party financial institution. Whether the future committed installments have been financed directly by the customer with our assistance or by the transfer of our rights to future committed installments to a third party, such financing agreements may contain limited recourse provisions with respect to our continued performance under the license agreements. Based on our historical experience, we believe that any liability that we may incur as a result of these limited recourse provisions will be immaterial.
Amounts billed or collected as a result of a single installment for the entire contract value, or a substantial portion of the contract value, rather than being invoiced and collected over the life of the license agreement are reflected in the liability section of the Condensed Consolidated Balance Sheets as “Deferred revenue (billed or collected).” Amounts received from either the customer or a third party financial institution in the current period that are attributable to later years of a license agreement have a positive impact on billings and cash provided by operating activities. Accordingly, to the extent such collections are attributable to the later years of a license agreement, billings and cash provided by operating activities during the license’s later years will be lower than if the payments were received over the license term. We are unable to predict with certainty the amount of cash to be collected from single installments for the entire contract value, or a substantial portion of the contract value, under new or renewed license agreements to be executed in future periods.
For the third quarter of fiscal 2009, gross receipts related to single installments for the entire contract value, or a substantial portion of the contract value, were $89 million, compared with $105 million in the third quarter of fiscal 2008. Included in the collections from single installments for the third quarter of fiscal 2009 and fiscal 2008 were transactions financed through third parties of $50 million and $42 million, respectively. We did not transfer our financial interest in any committed payments to a third party financial institution during the third quarter of fiscal year 2009 or fiscal year 2008.
For the first nine months of fiscal 2009, gross receipts related to single installments for the entire contract value, or a substantial portion of the contract value, were $282 million compared with $351 million in the first nine months of fiscal 2008. Transactions financed through third parties that were included within the collections from single installments for the first nine months of fiscal 2009 and 2008 were $92 million and $171 million, respectively. We did not transfer our financial interest in any committed payments to a third party financial institution during the first nine months of fiscal year 2009. Receipts from the transfer of our financial interest in committed payments to a third party financial institution during the first nine months of fiscal 2008 were $14 million.
In any quarter, we may receive payments in advance of the contractually committed date on which the payments were otherwise due. In limited circumstances, we may offer discounts to customers to ensure payment in the current period of invoices that have been billed, but might not otherwise be paid until a subsequent period because of payment terms or other factors. Historically, any such discounts have not been material.
Our estimate of the fair value of net installment accounts receivable recorded under the prior business model approximates carrying value. Amounts due from customers under our current business model are offset by

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CONDITION AND RESULTS OF OPERATIONS
deferred revenue related to these license agreements, leaving no or minimal net carrying value on the balance sheet for such amounts. The fair value of such amounts may exceed or be less than this carrying value but cannot be practically assessed since there is no existing market for a pool of customer receivables with contractual commitments similar to those owned by us. The actual fair value may not be known until these amounts are sold, securitized or collected. Although these customer license agreements commit the customer to payment under a fixed schedule, to the extent amounts are not yet due and payable by the customer, the agreements are considered executory in nature due to our ongoing commitment to provide maintenance and unspecified future software products as part of the agreement terms.
We can estimate the total amounts to be billed from committed contracts, referred to as our “Billings Backlog,” and the total amount to be recognized as revenue from committed contracts, referred to as our “Revenue Backlog.” The aggregate amounts of our Billings Backlog and trade and installment receivables already reflected on our Condensed Consolidated Balance Sheets represent the amounts we expect to collect in the future from committed contracts.
                         
    Dec. 31,     March 31,     Dec. 31,  
    2008     2008     2007  
    (in millions)     (in millions)     (in millions)  
Billings Backlog:
                       
Amounts to be billed — current
  $ 1,752     $ 1,716     $ 1,821  
Amounts to be billed — non-current
    2,177       1,442       1,455  
 
                 
Total billings backlog
  $ 3,929     $ 3,158     $ 3,276  
 
                 
 
                       
Revenue Backlog:
                       
Revenue to be recognized within the next 12 months — current
  $ 3,203     $ 3,478     $ 3,254  
Revenue to be recognized beyond the next 12 months — non-current
    3,828       3,380       3,100  
 
                 
Total revenue backlog
  $ 7,031     $ 6,858     $ 6,354  
 
                 
 
                       
Deferred revenue (billed or collected)
  $ 3,102     $ 3,700     $ 3,078  
Unearned revenue yet to be billed
    3,929       3,158       3,276  
 
                 
Total revenue backlog
  $ 7,031     $ 6,858     $ 6,354  
 
                 
Note: Revenue Backlog includes deferred subscription and maintenance and professional services revenue
We can also estimate the total cash to be collected in the future from committed contracts, referred to as our “Expected future cash collections” by adding the total billings backlog to the current and non-current Trade and installment accounts receivable from our Condensed Consolidated Balance Sheet.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
                         
    Dec. 31,     March 31,     Dec. 31,  
    2008     2008     2007  
    (in millions)     (in millions)     (in millions)  
Expected future cash collections:
                       
Total billings backlog
  $ 3,929     $ 3,158     $ 3,276  
Trade and installment accounts receivable — current, net
    879       970       968  
Installment accounts receivable — non- current, net
    129       234       231  
 
                 
Total expected future cash collections
  $ 4,937     $ 4,362     $ 4,475  
 
                 
The increases in our revenue and billings backlog as well as our expected future cash collections were driven by increased bookings and the increased duration associated with those bookings. In any fiscal year, cash generated by operating activities has typically increased in each consecutive quarter throughout the fiscal year, with the fourth quarter being the highest and the first quarter being the lowest, which may even be negative. The timing of cash generated during the fiscal year is affected by many factors, including the timing of new or renewed contracts and the associated billings, as well as the timing of any customer financing or transfer of our interests in contractual installments. Other factors that influence the levels of cash generated throughout the quarter can include the level and timing of expenditures.
Cash Generated by Operating Activities
                         
    Three Months        
    Ended December 31,     Change  
    2008     2007     2008 / 2007  
    (in millions)          
Cash collections from billings (1)
  $ 1,015     $ 1,082     $ (67 )
Vendor disbursements and payroll (1)
    (698 )     (790 )     92  
Income tax (payments) receipts, net
    (43 )     5       (48 )
Other receipts (disbursements), net (2)
    18       (64 )     82  
 
                 
Cash generated by operating activities
  $ 292     $ 233     $ 59  
 
                 
 
(1)   Amounts include VAT and sales taxes.
 
(2)   Amounts include interest, restructuring and miscellaneous receipts and disbursements.
                         
    Nine Months        
    Ended December 31,     Change  
    2008     2007     2008 / 2007  
    (in millions)          
Cash collections from billings (1)
  $ 3,208     $ 3,188       $ 20  
Vendor disbursements and payroll (1)
    (2,395 )     (2,474 )     79  
Income tax payments, net
    (180 )     (165 )     (15 )
Other disbursements, net (2)
    (69 )     (136 )     67  
 
                 
Cash generated by operating activities
  $ 564     $ 413     $ 151  
 
                 
 
(1)   Amounts include VAT and sales taxes.
 
(2)   Amounts include interest, restructuring and miscellaneous receipts and disbursements.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Third Quarter Comparison — Fiscal Year 2009 versus Fiscal Year 2008
Operating Activities:
Cash generated by operating activities for the third quarter of fiscal 2009 was $292 million, representing an increase of $59 million compared with the third quarter of fiscal 2008. The increase was driven primarily by lower vendor disbursements and payroll of $92 million, mostly due to lower personnel costs resulting from increased operating efficiencies, and $53 million received from the settlement of derivative contracts, primarily resulting from the strengthening of the US dollar against the euro. This increase was partially offset by reduced cash collections from billings, due to lower single installments received, and higher net taxes paid, partially due to the receipt of a $45 million refund received in the third quarter of fiscal year 2008 relating to an overpayment made earlier in the fiscal year.
Investing Activities:
Cash used in investing activities for the third quarter of fiscal 2009 was $85 million compared with $46 million for the third quarter of fiscal 2008. The increase in cash used in investing activities was primarily due to the company’s acquisitions that occurred during the third quarter of fiscal year 2009.
Financing Activities:
Cash used in financing activities for the third quarter of fiscal 2009 and 2008 was $170 million and $18 million, respectively. The increase in cash used in financing activities was primarily due to the repurchases of $148 million principal amount of our 4.750% Senior Notes due 2009 at a price of $143 million during the third quarter of fiscal year 2009. Refer to “Debt Arrangements” section for additional disclosure concerning the Company’s outstanding debt balances at December 31, 2008. During the third quarter of fiscal 2009, we paid $4 million to repurchase 0.3 million of our common shares.
First Nine Months Comparison — Fiscal Year 2009 versus Fiscal Year 2008
Operating Activities:
Cash generated by operating activities for the first nine months of fiscal 2009 was $564 million, representing an increase of $151 million compared with the comparable prior year period. The increase was driven primarily by a $79 million reduction in vendor disbursements and payroll costs resulting from increased operating efficiencies and $61 million received from settlements of derivative contracts, primarily resulting from the strengthening of the US dollar against the euro.
Investing Activities:
Cash used in investing activities for the first nine months of fiscal 2009 was $213 million compared with $162 million for the comparable prior year period. The increase in cash used in investing activities was primarily due to the Company’s acquisitions during the third quarter of fiscal year 2009. In addition, there was an increase of $23 million in capitalized software development costs as compared with the prior comparable period of fiscal 2008.
Financing Activities:
Cash used in financing activities for the first nine months of fiscal 2009 was $560 million compared with $555 million in the comparable prior year period. The primary financing activities for the first nine months of fiscal 2009 were the payment of the remaining $350 million principal amount of our 6.500% Senior Notes due 2009 that was due and payable, the repurchase of approximately $148 million principal amount of our 4.750% Senior Notes due 2009 at a price of $143 million in cash (refer to Debt Arrangements below for further information), and dividends paid of $62 million. During the first nine months of fiscal 2009, we paid $4 million to repurchase 0.3 million of our common shares. During the first nine months of fiscal 2008, we repurchased $500 million of our own common stock, and paid dividends of $63 million.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Debt Arrangements
As of December 31, 2008 and March 31, 2008, our debt arrangements consisted of the following:
                                 
    December 31, 2008     March 31, 2008  
    Maximum     Outstanding     Maximum     Outstanding  
    Available     Balance     Available     Balance  
    (in millions)  
Debt Arrangements:
                               
2008 Revolving Credit Facility (expires August 2012)
  $1,000     $  750     $1,000     $  750  
6.500% Senior Notes due April 2008
                      350  
4.750% Senior Notes due December 2009
          352             500  
1.625% Convertible Senior Notes due December 2009
          460             460  
6.125% Senior Notes due December 2014
          500             500  
International line of credit
    25             25        
Capital lease obligations and other
          56             22  
 
                           
Total
          $ 2,118             $ 2,582  
 
                           
Our debt arrangements at December 31, 2008 remain unchanged from March 31, 2008, except as follows:
6.500% Senior Notes
In the first quarter of fiscal year 2009, we paid the remaining $350 million portion of the 6.500% Senior Notes that was due and payable at that time. Subsequent to this scheduled payment, there were no further amounts due under this issuance.
4.750% Senior Notes
During the third quarter of fiscal year 2009, we repurchased $148 million principal amount of our 4.750% Senior Notes due 2009 at a price of $143 million in cash. As a result of this repurchase, the Company recognized a gain of $5 million in the “Other (gains) expenses, net” line of the Condensed Consolidated Statements of Operations. At December 31, 2008, $352 million of the 4.750% Senior Notes remains outstanding.
For further information concerning our debt arrangements, refer to our Consolidated Financial Statements and Notes thereto included in our 2008 Form 10-K.
Other Matters
As of December 31, 2008, our senior unsecured notes were rated Ba1, BB+, and BB+ by Moody’s Investors Service (Moody’s), Standard and Poor’s (S&P) and Fitch Ratings (Fitch), respectively. The outlook on these unsecured notes is stable, positive, and positive by Moody’s, S&P and Fitch, respectively. As of January 2009, these ratings and outlooks remained unchanged. Peak borrowings under all debt arrangements during the third quarter of fiscal 2009 totaled $2.254 billion, with a weighted average interest rate of 4.030%.
It is expected that existing cash, cash equivalents, marketable securities, the availability of borrowings under existing and renewable credit lines, and cash expected to be provided from operations will be sufficient to meet ongoing cash requirements. We expect our long-standing history of providing extended payment terms to our customers to continue.
We expect to use existing cash balances and future cash generated from operations to fund capital spending, including our continued investment in our enterprise resource planning implementation, future acquisitions and financing activities, such as the repayment of our debt balances either before or as they mature, the payment of dividends, and the repurchase of shares of common stock in accordance with any plans approved by our Board of Directors.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Subject to market and other conditions, we may purchase additional amounts of our outstanding debt securities including our 4.75% Senior Notes due 2009 and our 1.625% Convertible Senior Notes due 2009 from time to time through open market purchases or in privately negotiated transactions. The amounts involved may be material.
Effect of Exchange Rate Changes
There was a $217 million unfavorable impact to our cash balances in the first nine months of fiscal 2009 predominantly due to the strengthening of the U.S. dollar against the Australian dollar, Brazilian real, British pound and euro of 22%, 24%, 27% and 12%, respectively. This is compared with a favorable impact of $106 million to our cash balances in the first nine months of fiscal 2008, which was predominantly due to the weakening of the U.S. dollar against the euro, Australian dollar and Canadian dollar of approximately 9%, 8% and 16%, respectively, and higher international cash balances.
CRITICAL ACCOUNTING POLICIES AND BUSINESS PRACTICES
The preparation of financial statements in accordance with generally accepted accounting principles requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. Our estimates form the basis for making judgments about amounts and timing of revenue and expenses, the carrying values of assets and the recorded amounts of liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and such estimates may change if the underlying conditions or assumptions change. Information with respect to our critical accounting policies that we believe could have the most significant effect on our reported results or require subjective or complex judgments by management is contained in our 2008 Form 10-K under Management’s Discussion and Analysis of Financial Condition and Results of Operations. We believe that at December 31, 2008, there has been no material change to this information.
New Accounting Pronouncements
In May 2008, the Financial Accounting Standards Board (FASB) issued Financial Staff Position (FSP) No. APB 14-1, “ Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).” FSP No. APB 14-1 requires the issuer of convertible debt instruments with cash settlement features to account separately for the liability and equity components of the instrument. The debt would be recognized at the present value of its cash flows discounted using the issuer’s nonconvertible debt borrowing rate at the time of issuance. The equity component would be recognized as the difference between the proceeds from the issuance of the convertible debt instrument and the fair value of the liability. FSP No. APB 14-1 will also require an accretion of the resultant debt discount over the expected life of the debt. The proposed transition guidance requires retrospective application to all periods presented, and does not grandfather existing instruments. FSP No. APB 14-1 is effective for fiscal years beginning after December 15, 2008. The adoption of FSP No. APB 14-1 is not expected to affect our future cash flows from operations. However, upon adoption, FSP No. APB 14-1 will require us to recognize higher interest expense associated with our convertible senior notes.
In June 2008, the FASB issued Emerging Issues Task Force (“EITF”) 03-6-1, “ Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities .” FSP EITF No. 03-6-1 clarifies that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are to be included in the computation of earnings per share under the two-class method described in SFAS No. 128, “ Earnings Per Share .” FSP EITF No. 03-6-1 is effective for fiscal years beginning after December 15, 2008 and requires

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CONDITION AND RESULTS OF OPERATIONS
all presented prior-period earnings per share data to be adjusted retrospectively. FSP EITF No. 03-6-1 will not have a material impact on our Consolidated Financial Statements.

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Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to a variety of risks, including foreign currency exchange rate fluctuations and changes in the market value of our investments. In the normal course of business, we employ established policies and procedures to manage these risks, including the use of derivative instruments. In the first nine months of fiscal 2009, we increased our hedging activity for certain portions of our expected operating income and cash flow which could have an impact on future results. In January 2009, the Company entered into similar foreign exchange derivative contracts as those entered during the third quarter of fiscal year 2009 relating to the Company’s operating exposures. There have been no other material changes in our foreign exchange risk management strategy or our portfolio management strategy subsequent to March 31, 2008; therefore, other aspects of the risk profile of our market risk sensitive instruments remains substantially unchanged from the description in our 2008 Form 10-K.
Item 4: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
As previously disclosed in Item 9A of our 2008 Form 10-K, the Company began the migration of certain financial and sales processing systems to an enterprise resource planning (ERP) system in fiscal year 2007 as part of its on-going project to implement ERP at the Company’s facilities worldwide. In addition, during the first quarter ended June 30, 2008, the Company implemented a new financial reporting and consolidation software package designed to provide additional financial reporting functionality and to improve overall control and efficiency associated with the financial reporting process. The Company will continue to monitor and test these systems as part of management’s annual evaluation of internal control over financial reporting.

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PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On April 9, 2007, the Company filed a complaint in the United States District Court for the Eastern District of New York (the Federal Court) against Rocket Software, Inc. (Rocket). On August 1, 2007, the Company filed an amended complaint alleging that Rocket misappropriated intellectual property associated with a number of the Company’s database management software products. The amended complaint includes causes of action for copyright infringement, misappropriation of trade secrets, unfair competition, and unjust enrichment. In the amended complaint, the Company seeks damages of at least $200 million for Rocket’s alleged theft and misappropriation of CA’s intellectual property, as well as an injunction preventing Rocket from continuing to distribute the database management software products at issue. On November 14, 2007, Rocket filed a motion to dismiss the amended complaint. By Order dated September 17, 2008, the Federal Court denied the majority of Rocket’s motion, permitting the Company to further pursue its claims for copyright infringement and misappropriation of trade secrets. On April 9, 2008, the Company submitted a motion for a preliminary injunction, which was predicated upon newly-discovered evidence of literal copying of certain portions of the Company’s source code by Rocket. That motion was denied on January 24, 2009. Jury selection has been scheduled for February 9, 2009. The Company can make no prediction as to the outcome of this litigation, including with respect to amounts to be awarded if it prevails.
Refer to Note J, “Commitments and Contingencies,” in the Notes to the Condensed Consolidated Financial Statements for information regarding certain other legal proceedings.
Item 1A. RISK FACTORS
Current and potential stockholders should consider carefully the risk factors described in more detail in our 2008 Form 10-K for the fiscal year ended March 31, 2008. We believe that as of December 31, 2008, there has been no material change to this information other than described below. Any of these factors, or others, many of which are beyond our control, could negatively affect our revenue, profitability and cash flow.
General economic conditions, including concerns regarding a global recession and credit constraints, or unfavorable economic conditions in a particular region, business or industry sector, may lead our customers to delay or forgo technology investments and could have other impacts, any of which could adversely affect our business, financial condition, operating results and cash flow.
Our products are designed to improve the productivity and efficiency of our customers’ information processing resources. However, a general slowdown or recession in the global economy, or in a particular region, or business or industry sector (such as the financial services sector), or tightening of credit markets, could cause customers to: have difficulty accessing credit sources; delay contractual payments; or delay or forgo decisions to (i) license new products (particularly with respect to discretionary spending for software), (ii) upgrade their existing environments or (iii) purchase services. Any such impacts could adversely affect our business, financial condition, operating results and cash flow.
Such a general slowdown or recession in the global economy may also materially impact the global banking system including individual institutions as well as a particular business or industry sector, which could cause further consolidations or failures in such a sector. These adverse financial events could also result in further government intervention in the U.S. and world markets. Any of these results could impact the manner in which we are able to conduct business including within a particular industry sector or market and could adversely affect our business, financial condition, operating results and cash flow or cash position.

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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth, for the months indicated, our purchases of common stock in the third quarter of fiscal year 2009:
                                 
                            Approximate
                    Total Number   Dollar Value of
                    of Shares   Shares that
                    Purchased as   May Yet Be
    Total Number   Average   Part of Publicly   Purchased Under
    of Shares   Price Paid   Announced Plans   the Plans
Period   Purchased   per Share   or Programs   or Programs
    (in thousands, except average price paid per share)
October 1, 2008 – October 31, 2008
        $           $ 250,000  
November 1, 2008 – November 30, 2008
    258       15.84       258     $ 245,908  
December 1, 2008 – December 31, 2008
                    $ 245,908  
 
                               
Total
    258               258          
 
                               
On October 29, 2008, the Company’s Board of Directors approved a stock repurchase plan that authorizes the Company to acquire up to $250 million of its common stock. The Company will fund the program with available cash on hand and may repurchase shares on the open market from time to time based on market conditions and other factors.
During the third quarter of fiscal year 2009, the Company paid approximately $4 million to repurchase approximately 0.3 million of its common shares at an average price of $15.84. The timing and amount of future purchases will be based on market and other conditions.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.

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Item 6. EXHIBITS
Regulation S-K
Exhibit Number
         
3.1
  Amended and Restated Certificate of Incorporation.   Previously filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K dated March 6, 2006, and incorporated herein by reference.
 
       
3.2
  By-Laws of the Company, as amended.   Previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated February 23, 2007, and incorporated herein by reference.
 
       
10.1*
  First Amendment to CA, Inc. 2003 Compensatory Plan for Non-Employee Directors.   Filed herewith.
 
       
10.2*
  Amendment to Employment Agreement, dated December 8, 2008, between the Company and John Swainson.   Filed herewith.
 
       
10.3*
  Amendment to Employment Agreement, dated December 29, 2008, between the Company and Michael Christenson.   Filed herewith.
10.4*
  Amendment to Employment Agreement, dated December 12, 2008, between the Company and Nancy Cooper.   Filed herewith.
 
       
10.5*
  Amendment to Employment Agreement, dated December 18, 2008, between the Company and Amy Olli.   Filed herewith.
 
       
10.6*
  Amendment to Employment Agreement, dated December 29, 2008, between the Company and James Bryant.   Filed herewith.
 
       
10.7*
  Letter dated July 21, 2006 from the Company to Ajei S. Gopal regarding terms of employment.   Filed herewith.
 
       
10.8*
  Amendment dated December 12, 2008 to letter dated July 21, 2006 from the Company to Ajei S. Gopal regarding terms of employment.   Filed herewith.
 
       
12.1
  Statement of Ratios of Earnings to Fixed Charges.   Filed herewith.
 
       
15
  Accountants’ acknowledgment letter.   Filed herewith.
 
       
31.1
  Certification of the CEO pursuant to §302 of the Sarbanes-Oxley Act of 2002.   Filed herewith.
 
       
31.2
  Certification of the CFO pursuant to §302 of the Sarbanes-Oxley Act of 2002.   Filed herewith.
 
       
32
  Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002.   Filed herewith.
 
*   Management contract or compensatory plan or arrangement

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Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
 

CA, INC.
 
 
  By:    /s/ John A. Swainson  
    John A. Swainson    
    Chief Executive Officer   
 
     
  By:   /s/ Nancy E. Cooper  
    Nancy E. Cooper    
    Executive Vice President and Chief Financial Officer   
 
Dated: January 30, 2009

48

Exhibit 10.1
FIRST AMENDMENT TO
CA, INC. 2003 COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
          THIS AMENDMENT (the “Amendment”) is made effective November 19, 2008 by CA, Inc. (the “Company”).
WITNESSETH:
          WHEREAS, the Company maintains the CA, Inc. 2003 Compensation Plan for Non-Employee Directors (the “Plan”);
          WHEREAS, the Company desires to amend the 2003 Plan in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“the Code”), and the US Treasury Regulations issued thereunder;
          WHEREAS, the Company reserves the right to amend the 2003 Plan from time to time
          NOW, THEREFORE, the 2003 Plan is hereby amended as follows:
Section 2.13: “Payment Commencement Date” means the first business day of the calendar year following the Director Service Year in which the Eligible Director ceases to be a member of the Board for any reason, including without limitation, resignation, removal, death or Disability, provided that such cessation of Board service must constitute a “separation from service” within the meaning of Section 409A of the Code.
Section 4.02(c)(ii): that portion of an Eligible Director’s Director Fees for a Director Service Year that is subject to a cash election made in accordance with Section 4.04 shall be paid in arrears in substantially equal quarterly cash payments as of the last business day of each fiscal quarter of the Company that ends within such Director Service Year, but in no event shall any such cash payments be paid later than two and one-half (2 1 / 2 ) months after the end of the calendar year in which the Director Service Year for which such Director Fees were earned.
Section 4.03(c): Payment of Stock Deferrals. Subject to Paragraph (d) of this Section 4.03, Shares in respect of Stock Deferrals credited to a Deferred Stock Compensation Account shall be issued in one lump-sum on the Payment Commencement Date, but in no event shall any such Shares be issued later than two and one-half (2 1 / 2 ) months after the end of the calendar year in which the Payment Commencement Date occurs.
Section 4.03(d): Election to Receive Installment Payments. An Eligible Director may elect, on a form and manner prescribed by the Committee, to be issued Shares in respect of his or her Stock Deferrals in annual installments rather than a lump sum, provided, however, that (i) such election is made and received by the Committee prior to December 31 of the year preceding the Director Service Year to which such Stock Deferrals pertain, and (ii) the payment period for the installment payments does not exceed ten (10) years following the Payment Commencement Date.

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Section 4.03(e): Hardship Withdrawals. * * * For this purpose, an unforeseeable emergency is an unanticipated emergency caused by an event that is beyond the control of the Eligible Director, and that would result in severe financial hardship to the Eligible Director resulting from an illness or accident of the service provider, the service provider’s spouse, the service provider’s beneficiary, or the service provider’s dependent (as defined in Section 152 of the Code, without regard to Sections 152(b)(1), (b)(2), and (d)(1)(B) of the Code); loss of the service provider’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the service provider. In addition, the need to pay for medical expenses, including nonrefundable deductibles, as well as for the costs of prescription drug medication, may constitute an unforeseeable emergency. Finally, the need to pay for the [Section?] 353 funeral expenses of a spouse, a beneficiary, or a dependent (as defined in Section 152 of the Code, without regard to section 152(b)(1), (b)(2), and (d)(1)(B)) of the Code may also constitute an unforeseeable emergency. The Eligible Director shall provide to the Committee such evidence as the Committee, in its discretion, may require to demonstrate that such emergency exists and financial hardship would occur if the withdrawal were not permitted. The withdrawal shall be limited to the number of Shares necessary to meet the unforeseen financial hardship if the Eligible Director has an unexpected need for cash to pay for expenses incurred by him or her or a member of his or her immediate family (spouse and/or natural or adopted children), such as those arising from illness, casualty loss or death. Cash needs arising from foreseeable events, such as the purchase or building of a house or education expenses, will not be considered to be the result of an unforeseen financial emergency.  
Eligible Director resulting from an illness or accident of the service provider, the service provider’s spouse, the service provider’s beneficiary, or the service provider’s dependent (as defined in Section 152 of the Code, without regard to Sections 152(b)(1), (b)(2), and (d)(1)(B) of the Code); loss of the service provider’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the service provider. In addition, the need to pay for medical expenses, including nonrefundable deductibles, as well as for the costs of prescription drug medication, may constitute an unforeseeable emergency. Finally, the need to pay for the Section 353 funeral expenses of a spouse, a beneficiary, or a dependent (as defined in Section 152 of the Code, without regard to Section 152(b)(1), (b)(2), and (d)(1)(B)) of the Code may also constitute an unforeseeable emergency. The Eligible Director shall provide to the Committee such evidence as the Committee, in its discretion, may require to demonstrate that such emergency exists and financial hardship would occur if the withdrawal were not permitted. The withdrawal shall be limited to the number of Shares necessary to meet the unforeseen financial hardship if the Eligible Director has an unexpected need for cash to pay for expenses incurred by him or her or a member of his or her immediate family (spouse and/or natural or adopted children), such as those arising from illness, casualty loss or death. Cash needs arising from foreseeable events, such as the purchase or building of a house or education expenses, will not be considered to be the result of an unforeseen financial emergency.  

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Section 409A. To extent an Eligible Director would otherwise be entitled to any payment that, under this Plan, constitutes “deferred compensation” subject to Section 409A, such payments shall be paid or provided to an Eligible Director only upon a “separation from service” as defined in Treasury Regulation §1.409A-1(h). Notwithstanding anything to the contrary in the Plan or elsewhere, any payment or benefit under this Plan that is exempt from Section 409A pursuant to Treasury Regulation §1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Eligible Director only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the Eligible Director’s second taxable year following the taxable year in which the “separation from service” occurs; and provided further that such expenses are reimbursed no later than the last day of the third taxable year following the taxable year in which an Eligible Director’s “separation from service” occurs.  Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Plan is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which you incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.
          IN WITNESS WHEREOF, the Company has caused this First Amendment to the 2003 Plan to be executed by its duly executed designated officers to be effective as of the date hereof.
CA, INC>
         
By:
  /s/ Andrew Goodman    
 
 
 
   
 
      Andrew Goodman
    Executive Vice President, Global Human Resource
   

3

Exhibit 10.2
November 22, 2004 and as Amended and Restated through December 8, 2008
Mr. John A. Swainson
          Re: Employment Agreement
Dear John:
          This is your Employment Agreement ( the “ Agreement ”) with Computer Associates International, Inc. , a Delaware corporation (the “ Company ”). It sets forth the terms of your employment with the Company and its affiliates from time to time (together, the “ Group ”).
1. Your Position, Performance and Other Activities
          (a) Position. You will be employed in the position of Chief Executive Officer of the Company. It is anticipated that you will be employed in the position of Chief Executive Officer of the Company within six (6) months of your Start Date (as defined in Section 2). You will be appointed to the Company’s Board of Directors (the “ Board ”) as of your Start Date (as defined in Section 2) and the Company will use all reasonable efforts to cause you to be nominated for re-election each time your term expires during your employment. You agree to serve as a member of the Board, as well as a member of any Board committee to which you may be elected or appointed. You also agree that you will be deemed to have resigned from the Board and each Board committee voluntarily, without any further action by you, as of the end of your employment.
          (b) Authority, Responsibilities and Reporting. You will have the authority, responsibilities and reporting relationships that correspond to your position, including any particular authority, responsibilities and reporting relationships consistent with your position that the Board may assign to you from time to time and compliance with such policies of the Company as may be adopted from time to time.
          (c) Performance. During your employment, you will devote substantially all of your business time and attention to the Group and will use good faith efforts to discharge your responsibilities under this Agreement to the best of your ability. During your employment, your place of performance will be Islandia, New York or such other place as the Board determines.
          (d) Other Activities. During your employment, you will not render any business, commercial or professional services to any non-member of the Group. However, you may (1) serve on corporate, civic or charitable boards, (2) manage personal investments, or (3) deliver lectures, or fulfill speaking engagements or teach at educational institutions, so long as (A) these activities do not interfere with your performance of your responsibilities under this Agreement and (B) any service on a corporate, civic or charitable board is approved by the Board.

 


 

2. Term of Your Employment
Subject to your satisfactory completion of pre- and post-employment background, reference and other checks, your employment under this Agreement will (a) begin on November 22, 2004 (the “ Start Date ” of this Agreement) and (b) end at the close of business on the earlier of (1) the end of the Compensation Period or (2) the effective date of early termination of your employment. Your “ Compensation Period ” begins on your Start Date and is initially scheduled to end on the fifth anniversary of your Start Date. Beginning on the fifth anniversary of your Start Date and on each following anniversary, your Compensation Period will automatically extend for one year unless either you or the Company gives at least 90 days’ prior notice of non-extension. In no event, however, will your Compensation Period extend beyond the end of the Company’s fiscal year in which your 65 th birthday occurs. References in this Agreement to “ your employment ” are to your employment under this Agreement.
3. Your Compensation
          (a) Salary. During your employment, you will receive an annual base salary (as increased from time to time, your “ Salary ”). The starting amount of your Salary is $1,000,000. The Company will review your Salary at least annually and may increase it at any time for any reason. However, your Salary may not be decreased at any time (including after any increase) without your written consent and any increase in your Salary will not reduce or limit any other obligation to you under this Agreement. Your Salary will be paid in accordance with the Group’s normal practices for senior executives.
          (b) Bonus. You will be eligible to receive an annual cash bonus (your “ Bonus ”) for each fiscal year of the Company ending during your employment. The target level for your Bonus in each full fiscal year of your employment will be at least 100% of your Salary (the “ Target Annual Bonus ”) and the maximum level for your Bonus will be 200% of your Salary. You will be entitled to a minimum Bonus of $333,334 for the Company’s fiscal year ending March 31, 2005. Your Bonus will be paid at the same time as such bonuses are paid to other senior executives of the Company.
          (c) Long-Term Incentive Awards. You will be eligible to receive long-term incentive awards (“ Long-Term Incentive Awards ”) as determined by the Company in accordance with the Company’s Long-Term Incentive Plan (and any successor plan) in which you will begin to participate for the performance period starting April 1, 2005. The target award level under the Company’s Long-Term Incentive Plan initially will be 2.5 times your Salary. The maximum award level under the Company’s Long-Term Incentive Plan initially will be 3.75 times your Salary.
          (d) Initial Incentive Awards. (1) In addition to your Salary and Bonus, on your Start Date you will be awarded (A) stock options to purchase 350,000 shares of the Company’s common stock (your “ Sign-On Options” ) and (B) 100,000 restricted shares of the Company’s common stock (your “ Sign-On Stock ”).
     (2) Your Sign-On Options will be granted under the Company’s 2002 Incentive Plan and will have an exercise price equal to the Start Date

2


 

Closing Price. Your Sign-On Options will vest 34%, 33% and 33% on the first, second and third anniversaries of the Start Date.
     (3) Your Sign-On Stock will be granted under the Company’s 2002 Incentive Plan. Initially, your Sign-On Stock may not be transferred or assigned and will be forfeited to the Company for zero (0) consideration if your employment with the Company is terminated for any reason prior to vesting. Your Sign-On Stock will vest in equal installments on each of the first three one-year anniversaries of your Start Date (such restricted stock is “vested” when it is no longer subject to such transfer restrictions and forfeiture provisions).
     (4) Except as provided in this Agreement, your Sign-On Options and Sign-On Stock will be subject to the terms of the Company’s 2002 Incentive Plan and to the terms of your award agreement under it (which will contain the Group’s normal provisions for senior executives).
          (e) Relocation Benefit. In accordance with the Company’s Relocation Policy, you will be eligible to be reimbursed for your reasonable costs incurred in connection with your relocation to the Company’s headquarters in Islandia, New York. In addition, you shall receive temporary corporate housing in accordance with the Company’s policies and you shall be eligible to receive relocation benefits in accordance with the Company’s policies, in each case, until no later than November 22, 2006.
          (f) Restricted Stock Units . In addition to your Sign-On Stock, on your Start Date you will be awarded restricted stock units with respect to 100,000 shares of the Company’s common stock (your “ RSUs ”). Your RSUs will be granted under the Company’s 2002 Incentive Plan. Your RSUs may not be transferred or assigned until six (6) months after the date on which your employment with the Group terminates for any reason. Six (6) months after your date of termination, your RSUs will fully vest, be transferable and be paid to you. You will also receive dividend equivalent rights entitling you to be paid, at the same time as other shareholders of the Company, any dividends declared and paid in respect of the 100,000 shares of the Company’s common stock underlying your RSUs.
          (g) Signing Bonus . Within 30 days of your Start Date, you will receive a signing bonus equal to $2.5 million in cash. Additionally, you will receive the present value of $2.8 million, the form and manner of such payment to be agreed by you and the Company; provided, however, if you and the Company fail to agree on a form and manner of this payment within 60 days of the Start Date, the Company has the right to make the $2.8 million payment in cash.
4. Other Employee Benefits
          (a) Vacation. You will be entitled to paid annual vacation during your employment (totaling at least four (4) weeks a year) on a basis that is at least as favorable as that provided to other senior executives of the Group.
          (b) Business Expenses. You will be reimbursed for all business and entertainment expenses incurred by you in performing your responsibilities under this Agreement. The Company is responsible for ensuring that business expenses

3


 

under 4(b) are reimbursed to you as soon as practicable but in no event later than the end of the calendar year following the year in which such reimbursable expenses were incurred. Any such reimbursements under 4(b) shall be subject to the Group’s normal practice for senior executives.
          (c) Facilities. During your employment, you will be provided with office space, facilities, secretarial support and other business services consistent with your position on a basis that is at least as favorable as that provided to other senior executives of the Group.
          (d) Indemnification. To the extent permitted by law, the Company will indemnify you against any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, arising by reason of your status as a director, officer, employee and/or agent of the Group during your employment. In addition, to the extent permitted by law, the Company will pay or reimburse any expenses, including reasonable attorney’s fees, you incur in investigating and defending any actual or threatened action, suit or proceeding for which you may be entitled to indemnification under this Section 4(d). However, you agree to repay any expenses paid or reimbursed by the Company if it is ultimately determined that you are not legally entitled to be indemnified by the Company. If the Company’s ability to make any payment contemplated by this Section 4(d) depends on an investigation or determination by the board of directors of any member of the Group, at your request the Company will use its best efforts to cause the investigation to be made (at the Company’s expense) and to have the relevant board reach a determination as soon as reasonably possible. This indemnification will be at least as favorable as that provided to other senior executives and directors of the Group.
          (e) Employee Benefit Plans. During your employment, you will be eligible to participate in the Group’s employee benefit and welfare plans, including plans providing retirement benefits, medical, dental, hospitalization, life or disability insurance, on a basis that is at least as favorable as that provided to other senior executives of the Group.
5. Early Termination of Your Employment
          (a) No Reason Required. You or the Company may terminate your employment early at any time for any reason, or for no reason, subject to compliance with Section 5(e).
          (b) Termination by the Company for Cause.
     (1) “ Cause ” means any of the following:
     (A) Your continued failure, either due to willful action or as a result of gross neglect, to substantially perform your duties and responsibilities to the Group under this Agreement (other than any such failure resulting from your incapacity due to physical or mental illness) that, if capable of being cured, has not been cured within thirty (30) days after written notice is delivered to you by the Board, which notice specifies in reasonable detail the manner in which the

4


 

Company believes you have not substantially performed your duties and responsibilities.
     (B) Your engagement in conduct which is demonstrably and materially injurious to the Group, or that materially harms the reputation or financial position of the Group, unless the conduct in question was undertaken in good faith on an informed basis with due care and with a rational business purpose and based upon the honest belief that such conduct was in the best interest of the Group.
     (C) Your indictment or conviction of, or plea of guilty or nolo contendere to, a felony or any other crime involving dishonesty, fraud or moral turpitude.
     (D) Your being found liable in any SEC or other civil or criminal securities law action or entering any cease and desist order with respect to such action (regardless of whether or not you admit or deny liability).
     (E) Your breach of your fiduciary duties to the Group which may reasonably be expected to have a material adverse effect on the Group. However , to the extent the breach is curable, the Company must give you notice and a reasonable opportunity to cure.
     (F) Your (i) obstructing or impeding, (ii) endeavoring to influence, obstruct or impede or (iii) failing to materially cooperate with, any investigation authorized by the Board or any governmental or self-regulatory entity (an “ Investigation ”). However, your failure to waive attorney-client privilege relating to communications with your own attorney in connection with an Investigation shall not constitute “Cause”.
     (G) Your removing, concealing, destroying, purposely withholding, altering or by any other means falsifying any material which is requested in connection with an Investigation.
     (H) Your disqualification or bar by any governmental or self-regulatory authority from serving in the capacity contemplated by this Agreement or your loss of any governmental or self-regulatory license that is reasonably necessary for you to perform your responsibilities to the Group under this Agreement, if (i) the disqualification, bar or loss continues for more than 30 days and (ii) during that period the Group uses its good faith efforts to cause the disqualification or bar to be lifted or the license replaced. While any disqualification, bar or loss continues during your employment, you will serve in the capacity contemplated by this Agreement to whatever extent legally permissible and, if your employment is not permissible, you will be placed on leave (which will be paid to the extent legally permissible).
     (I) Your unauthorized use or disclosure of confidential or proprietary information, or related materials, or the violation of any of

5


 

the terms of the Company’s standard confidentiality policies and procedures, in the case of any item identified in this clause (I) which may reasonably be expected to have a material adverse effect on the Group and that, if capable of being cured, has not been cured within thirty (30) days after written notice is delivered to you by the Company, which notice specifies in reasonable detail the alleged unauthorized use or disclosure or violation.
     (J) Your violation of the Group’s (i) Workplace Violence Policy or (ii) policies on discrimination, unlawful harassment or substance abuse.
For this definition, no act or omission by you will be “willful” unless it is made by you in bad faith or without a reasonable belief that your act or omission was in the best interests of the Group.
     (2) To terminate your employment “for Cause”, the Board must determine in good faith that Cause has occurred, the Company must comply with Section 5(e) and the Company must deliver to you a copy of a resolution duly adopted by a majority of the entire Board (excluding you) at a meeting of the Board called and held for such purpose (after reasonable notice to you and a reasonable opportunity for you and your counsel to be heard) that finds that in the good faith opinion of the Board, Cause has occurred and states the basis for that belief.
          (c) Termination by You for Good Reason.
     (1) “ Good Reason ” means any of the following:
     (A) Any material and adverse change in your position with the Group (including by reason of the Company’s failure to cause you to be nominated to the Board).
     (B) Any material failure by the Company to provide you with authority, responsibilities and reporting relationships as provided in Section 1(b) or any material and adverse reduction in your authority, responsibility or reporting relationships or the assignment of any duties inconsistent in any material respect with your position, authority, duties or responsibilities, in each case other than any isolated, insubstantial and inadvertent failure by the Company that is not in bad faith and is cured promptly on your giving the Company notice.
     (C) Any material reduction by the Company in your Salary or Target Annual Bonus, other than any such reduction agreed to by you in writing or any insubstantial or inadvertent reduction by the Company that is cured promptly on your giving the Company notice.
     (D) Any material failure by the Company to comply with Section 3, other than any isolated, insubstantial and inadvertent failure by the Company that is not in bad faith and is cured promptly on your giving the Company notice.

6


 

     (E) Any purported termination by the Company of your employment that is in breach of this Agreement.
     (F) Any failure by the Company to comply with Section 11(c).
     (2) The Company’s placing you on paid leave for up to 90 consecutive days while it is determining whether there is a basis to terminate your employment for Cause will not constitute Good Reason.
     (3) To terminate your employment “for Good Reason”, Good Reason must have occurred and you must comply with Section 5(e). However , (A) if you do not give a Termination Notice within 90 days after you have knowledge that an event constituting Good Reason has occurred, the event will no longer constitute Good Reason; (B) you must give the Company notice and a 30-day period to cure the event constituting Good Reason under Section 5(c)(1); and (C) you must terminate your employment within the two years after the initial existence of an event constituting Good Reason.
          (d) Termination on Disability or Death.
     (1) The term “ Disability ” means your absence from your responsibilities with the Company on a full-time basis for 180 business days in any consecutive 12 months as a result of incapacity due to mental or physical illness or injury. If a doctor mutually acceptable to you and the Company determines in good faith that your Disability has occurred, the Company may give you Termination Notice. If within 30 days of the Termination Notice you do not return to full-time performance of your responsibilities, your employment will terminate. If you do return to full-time performance in that 30-day period, the Termination Notice will be cancelled for all purposes of this Agreement. Except as provided in this Section 5(d), your incapacity due to mental or physical illness or injury will not affect the Company’s obligations under this Agreement.
     (2) Your employment will terminate automatically on your death. If you die before your employment starts, all the provisions of this Agreement will also terminate and there will be no liability of any kind under this Agreement.
          (e) Advance Notice Generally Required.
     (1) To terminate your employment before the end of your Compensation Period, either you or the Company must provide a Termination Notice to the other. A “ Termination Notice ” is a written notice that states the specific provision of this Agreement on which termination is based, including, if applicable, the specific clause of the definition of Cause or Good Reason and a reasonably detailed description of the facts that permit termination under that clause. (The failure to include any fact in a Termination Notice that contributes to a showing of Cause or Good Reason does not preclude either party from asserting that fact in enforcing its rights under this Agreement.)

7


 

     (2) You and the Company agree to provide 90 days’ advance Termination Notice of any early termination, unless your employment is terminated by the Company for Cause or because of your Disability or death. Accordingly, the effective date of early termination of your employment will be 90 days after Termination Notice is given except that (A) the effective date will be the date of the Company’s Termination Notice if your employment is terminated by the Company for Cause, although the Company may provide a later effective date in the Termination Notice, (B) the effective date will be 30 days after Termination Notice is given if your employment is terminated because of your Disability, and (C) the effective date will be the time of your death if your employment is terminated because of your death. The Company may elect to place you on paid leave for all or part of the advance notice period.
6. The Company’s Obligations in Connection With Your Termination
          (a) General Effect. On termination in accordance with Sections 2 and 5, your employment will end and the Group will have no further obligations to you except as provided in this Section 6.
          (b) With Good Reason or Without Cause. If, during your Compensation Period, the Company terminates your employment without Cause or you terminate your employment for Good Reason:
     (1) The Company will pay you the following as of the end of your employment: (A) your unpaid Salary through the date of termination, (B) your Salary for any accrued but unused vacation, (C) any accrued expense reimbursements and other cash entitlements, (D) any unpaid but awarded Bonus and (E) any unpaid compensation deferred by you (together with any interest and/or earnings through the end of your employment) other than pursuant to a tax-qualified plan (together, your “ Accrued Compensation ”). In addition, the Company will timely pay you any amounts and provide to you any benefits that are required, or to which you are entitled, under any plan, contract or arrangement of the Group (together, the “ Other Benefits ”).
     (2) The Company will pay you your Accrued Bonus. Your “ Accrued Bonus ” means, to the extent not previously awarded or paid, your Target Annual Bonus for the fiscal year in which the Termination Notice is given multiplied by the number of days of your employment since the fiscal year ending before Termination Notice is given divided by 365.
     (3) The Company will pay you a lump sum cash amount equal to two (2) times the sum of your (A) then current Salary and (B) average Bonus earned over the three (3) most recently completed fiscal years (or, if you have worked less than three (3) fiscal years, the number of fiscal years worked) prior to the date of termination, but in no event will this bonus amount be greater than your Target Annual Bonus for the fiscal year in which the Termination Notice is given.
     (4) The unvested stock options issued by the Group to you, that, absent the end of your employment, would have vested in the 24-month

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period following your termination, will immediately vest and become exercisable. The restricted stock and other equity-based compensation (excluding any Long-Term Incentive Awards not yet granted for any then outstanding performance cycles) awarded by the Group to you, that, absent the end of your employment, would have vested in the 24-month period following your termination, will vest and become immediately payable.
     (5) The Company will pay you a lump-sum payment equal to your continuation coverage cost under COBRA for 18 months. The payments in this Section 6(b)(5) are referred to as your “ Welfare Benefits ”.
          (c) Company Non-Renewal of Compensation Period. If the Company elects not to renew your Compensation Period in accordance with Section 2:
     (1) The Company will pay you your Accrued Compensation, Accrued Bonus and your Other Benefits.
     (2) The unvested stock options issued by the Group to you, that, absent the end of your employment, would have vested in the 12-month period following your termination will immediately vest and become exercisable. The restricted stock and other equity-based compensation (excluding any Long-Term Incentive Awards not yet granted for any then outstanding performance cycles) awarded by the Group to you, that, absent the end of your employment, would have vested in the 12-month period following your termination will vest and become immediately payable. The benefits in this Section 6(c)(2) are referred to as your “ Accelerated Equity Vesting .”
     (3) The Company will pay you a lump sum amount equal to one (1) times your then current Salary.
     (4) The Company will pay you a lump-sum payment equal to your continuation coverage cost under COBRA for 12 months.
          (d) For Cause or without Good Reason. If the Company terminates your employment for Cause or you terminate your employment without Good Reason, the Company will pay your Accrued Compensation and provide your Other Benefits.
          (e) For Your Disability or Death. If, during the Compensation Period, your employment terminates as a result of your death or Disability, the Company will pay your Accrued Compensation and Accrued Bonus and will provide Accelerated Equity Vesting and your Other Benefits and Welfare Benefits.
          (f) Change in Control. If there is a “Change in Control”, as defined in the Company’s Change in Control Severance Policy (the “ CIC Severance Policy ”), and you are entitled to the payments and benefits provided in the CIC Severance Policy they will reduce (but not below zero) the corresponding payment or benefit provided under this Agreement. It is the intent of this provision to pay or to provide to you the greater of the two payments or benefits but not to duplicate them. The equity awards granted in this Agreement shall have the benefit of the potential accelerated vesting contained in the Company’s 2002 Incentive Plan as in effect on the Start

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Date. Under the terms of the CIC Severance Policy you will be considered a Schedule A participant. If the CIC Severance Policy were to be changed during your Compensation Period, the Company will establish change in control terms applicable to you on a basis no less favorable to you than as are set forth in the CIC Severance Policy on the Start Date.
          (g) Condition. The Company will not be required to make the payments and provide the benefits stated in this Section 6 unless within fifty-five (55) days following the termination of your employment you execute and deliver to the Company, and do not revoke, an agreement releasing from all liability (other than the payments and benefits contemplated by this Agreement) each member of the Group and any of their respective past or present officers, directors, employees or agents. This agreement will be in the form normally used by the Group senior executives at the time.
          (h) Timing. The payments and benefits provided in this Section 6 will begin within sixty (60) days of the end of your employment, subject to your compliance with the requirements of Section 6(g), but in any event no later than two and one-half (2 1 / 2 ) months following the end of the year in which your employment terminates.
          (i) Section 409A .
          To extent you would otherwise be entitled to any payment that under this Agreement, or any plan or arrangement of the Company or its affiliates, constitutes “deferred compensation” subject to Section 409A and that if paid during the six months beginning on the date of termination of your employment would be subject to the Section 409A additional tax because you are a “specified employee” (within the meaning of Section 409A and as determined by the Company), the payment will be paid to you on the earlier of the six-month anniversary of your date of termination, a change in ownership or effective control of the Company (within the meaning of Section 409A) or your death. Similarly, to the extent you would otherwise be entitled to any benefit (other than a payment) during the six months beginning on termination of your employment that would be subject to the Section 409A additional tax, the benefit will be delayed and will begin being provided on the earlier of the six-month anniversary of your date of termination, a change in ownership or effective control of the Company (within the meaning of Section 409A) or your death. In addition, any payment or benefit due upon a termination of your employment that represents a “deferral of compensation” within the meaning of Section 409A shall be paid or provided to you only upon a “separation from service” as defined in Treas. Reg. 1.409A-1(h). Each severance payment made under this Agreement shall be deemed to be separate payments, amounts payable under Section 6 of this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treas. Reg. 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treas. Reg. 1.409A-1 through 1.409A-6.
          Notwithstanding anything to the contrary in this Agreement or elsewhere, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treas. Reg. 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to you only to the extent that the expenses are not incurred, or the

10


 

benefits are not provided, beyond the last day of your second taxable year following your taxable year in which the “separation from service” occurs; and provided further that such expenses are reimbursed no later than the last day of your third taxable year following the taxable year in which your “separation from service” occurs. Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which you incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.
7. Proprietary Information
          (a) Definition. Proprietary Information ” means confidential or proprietary information, knowledge or data concerning (1) the Group’s businesses, strategies, operations, financial affairs, organizational matters, personnel matters, budgets, business plans, marketing plans, studies, policies, procedures, products, ideas, processes, software systems, trade secrets and technical know-how, (2) any other matter relating to the Group and (3) any matter relating to clients of the Group or other third parties having relationships with the Group. Proprietary Information includes (1) information regarding any aspect of your tenure as an employee of the Group or the termination of your employment, (2) the names, addresses, and phone numbers and other information concerning clients and prospective clients of the Group, (3) investment techniques and trading strategies used in, and the performance records of, client accounts or other investment products, and (4) information and materials concerning the personal affairs of employees of the Group. In addition, Proprietary Information may include information furnished to you orally or in writing (whatever the form or storage medium) or gathered by inspection, in each case before or after the date of this Agreement. However , Proprietary Information does not include information (1) that was or becomes generally available to the public, other than as a result of a disclosure by you, directly or indirectly, or as a result of the violation by a third party of the Group’s confidentiality rights, or (2) that you can establish was independently developed by you without reference to any Proprietary Information.
          (b) Use and Disclosure. You will obtain or create Proprietary Information in the course of your involvement in the Group’s activities and may already have Proprietary Information. You agree that the Proprietary Information is the exclusive property of the Group, and that, during your employment, you will use and disclose Proprietary Information only for the Group’s benefit and in accordance with any restrictions placed on its use or disclosure by the Group. After your employment, you will not use or disclose any Proprietary Information. In addition, nothing in this Agreement will operate to weaken or waive any rights that the Group may have under statutory or common law, or any other agreement, to the protection of trade secrets, confidential business information and other confidential information.
          (c) Limitations. Nothing in this Agreement prohibits you from providing truthful testimony or information concerning the Group to governmental, regulatory

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or self-regulatory authorities. Also, the parties (and their respective employees, representatives and agents) may disclose to any and all persons, without any limitation of any kind, the tax treatment and tax structure of this Agreement and all materials of any kind (including opinions and other tax analysis) that are provided to either party related to such tax treatment and structure.
8. Ongoing Restrictions on Your Activities
          (a) General Effect. This Section 8 applies during your employment and for the 12-month period after your employment ends. This Section uses the following defined terms:
     “ Competitive Enterprise ” means any business enterprise that either (1) engages in any material activity that competes anywhere with any material activity in which the Group is then engaged or (2) holds a 5% or greater equity, voting or profit participation interest in any enterprise that engages in such a competitive activity.
     “ Client ” means any client or prospective client of the Group to whom you provided services, or for whom you transacted business, or whose identity became known to you in connection with your relationship with or employment by the Group.
     “ Solicit ” means any direct or indirect communication of any kind, regardless of who initiates it, that in any way invites, advises, encourages or requests any person to take or refrain from taking any action. A general employment advertisement by an entity of which you are a part is excluded from the definition of Solicit.
          (b) Your Importance to the Group and the Effect of this Section 8. You acknowledge that:
     (1) In the course of your involvement in the Group’s activities, you will have access to Proprietary Information and the Group’s client base and will profit from the goodwill associated with the Group. On the other hand, in view of your access to Proprietary Information and your importance to the Group, if you compete with the Group for some time after your employment, the Group will likely suffer significant harm. In return for the benefits you will receive from the Group and to induce the Group to enter into this Agreement, and in light of the potential harm you could cause the Group, you agree to the provisions of this Section 8. The Company would not have entered into this Agreement if you did not agree to this Section 8.
     (2) In light of Section 8(b)(1), if you breach any provision of this Section 8, the loss to the Company would be material but the amount of loss would be uncertain and not readily ascertainable.
     (3) This Section 8 limits your ability to earn a livelihood in a Competitive Enterprise and your relationships with Clients. You acknowledge, however, that complying with this Section 8 will not result in severe economic hardship for you or your family.

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(c) Your Payment Obligations. If you fail to comply with this Section 8 during the Compensation Period and for a 12-month period thereafter, other than any isolated, insubstantial and inadvertent failure that is not in bad faith, you will forfeit all (i) remaining payments owed to you under Section 6 and (ii) restricted stock and other equity-based compensation (without features similar to exercise) that have been awarded by the Group and not vested at the time of determination.
          (d) Non-Competition. During your Compensation Period and for a 12-month period after termination of your employment, you will not directly or indirectly:
     (1) hold a 10% or greater equity, voting or profit participation interest in a Competitive Enterprise; or
     (2) associate (including as a director, officer, employee, partner, consultant, agent or advisor) with a Competitive Enterprise and in connection with your association engage, or directly or indirectly manage or supervise personnel engaged, in any activity:
     (A) that is substantially related to any activity that you were engaged in,
     (B) that is substantially related to any activity for which you had direct or indirect managerial or supervisory responsibility, or
     (C) that calls for the application of specialized knowledge or skills substantially related to those used by you in your activities;
in each case , for the Group at any time during the year before the end of your employment (or, if earlier, the year before the date of determination).
          (e) Non-Solicitation of Clients. During your Compensation Period and for a 12-month period after termination of your employment, you will not attempt to:
     (1) Solicit any Client to transact business with a Competitive Enterprise or to reduce or refrain from doing any business with the Group (excluding any business that is not a material activity of the Group),
     (2) transact business with any Client that would cause you to be a Competitive Enterprise or that would cause any Client to reduce or refrain from doing any business with the Group, or
     (3) interfere with or damage any relationship between the Group and a Client.
          (f) Non-Solicitation of Group Employees. During your Compensation Period and for a 12-month period after termination of your employment, you will not attempt to Solicit anyone who is then an employee of the Group (or who was an employee of the group within the prior three (3) months) to resign from the Group or to apply for or accept employment with any Competitive Enterprise, except that you may Solicit your administrative assistant.

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          (g) Notice to New Employers. Before you either apply for or accept employment with any other person or entity while any of Section 8(d), (e) or (f) is in effect, you will provide the prospective employer with written notice of the provisions of this Section 8 and will deliver a copy of the notice to the Group.
9. No Public Statements or Disparagement
You agree that you will not make any public statement that would libel, slander or disparage any member of the Group or any of their respective past or present officers, directors, employees or agents. This Section 9 is subject to Section 7(c).
10. Effect on Other Agreements; Entire Agreement
This Agreement is the entire agreement between you and the Company with respect to the relationship contemplated by this Agreement and supersedes any earlier agreement, written or oral, with respect to the subject matter of this Agreement. In entering into this Agreement, no party has relied on or made any representation, warranty, inducement, promise or understanding that is not in this Agreement. You hereby acknowledge that you are not subject to any obligation which would in any way restrict the performance of your duties hereunder.
11. Successors
          (a) Payments on Your Death. If you die and any amounts become payable under this Agreement, we will pay those amounts to your estate.
          (b) Assignment by You. You may not assign this Agreement without the Company’s consent. Also, except as required by law, your right to receive payments or benefits under this Agreement may not be subject to execution, attachment, levy or similar process. Any attempt to effect any of the preceding in violation of this Section 11(b), whether voluntary or involuntary, will be void.
          (c) Assumption by any Surviving Company. Before the effectiveness of any merger, consolidation, statutory share exchange or similar transaction (including an exchange offer combined with a merger or consolidation) involving the Company (a “ Reorganization ”) or any sale, lease or other disposition (including by way of a series of transactions or by way of merger, consolidation, stock sale or similar transaction involving one or more subsidiaries) of all or substantially all of the Company’s consolidated assets (a “ Sale ”), the Company will cause (1) the Surviving Company to unconditionally assume this Agreement in writing and (2) a copy of the assumption to be provided to you. After the Reorganization or Sale, the Surviving Company will be treated for all purposes as the Company under this Agreement. The “ Surviving Company ” means (i) in a Reorganization, the entity resulting from the Reorganization or (ii) in a Sale, the entity that has acquired all or substantially all of the assets of the Company.
12. Disputes
          (a) Employment Matter. This Section 12 applies to any controversy or claim between you and the Group arising out of or relating to or concerning this Agreement or any aspect of your employment with the Group or the Seller or the termination of that employment (together, an “ Employment Matter ”).

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          (b) Mandatory Arbitration. Subject to the provisions of this Section 12, any Employment Matter will be finally settled by arbitration in the County of New York administered by the American Arbitration Association under its Commercial Arbitration Rules then in effect. However, the rules will be modified in the following ways: (1) the decision must not be a compromise but must be the adoption of the submission by one of the parties, (2) each arbitrator will agree to treat as confidential evidence and other information presented to the same extent as the information is required to be kept confidential under Section 7, (3) there will be no authority to amend or modify the terms of this Agreement except as provided in Section 13(c) (and you and the Group agree not to request any such amendment or modification), (4) a decision must be rendered within 10 business days of the parties’ closing statements or submission of post-hearing briefs and (5) the arbitration will be conducted before a panel of three arbitrators, one selected by you within 10 days of the commencement of arbitration, one selected by the Company in the same period and the third selected jointly by these arbitrators (or, if they are unable to agree on an arbitrator within 30 days of the commencement of arbitration, the third arbitrator will be appointed by the American Arbitration Association; provided that the arbitrator shall be a partner or former partner at a nationally recognized law firm).
          (c) Limitation on Damages. You and the Group agree that there will be no punitive damages payable as a result of any Employment Matter and agree not to request punitive damages.
          (d) Injunctions and Enforcement of Arbitration Awards. You or the Group may bring an action or special proceeding in a state or federal court of competent jurisdiction sitting in the County of New York to enforce any arbitration award under Section 12(b). Also, the Group may bring such an action or proceeding, in addition to its rights under Section 12(b) and whether or not an arbitration proceeding has been or is ever initiated, to temporarily, preliminarily or permanently enforce any part of Sections 7 and 8. You agree that (1) your violating any part of Sections 7 and 8 would cause damage to the Group that cannot be measured or repaired, (2) the Group therefore is entitled to an injunction, restraining order or other equitable relief restraining any actual or threatened violation of those Sections, (3) no bond will need to be posted for the Group to receive such an injunction, order or other relief, (4) no proof will be required that monetary damages for violations of those Sections would be difficult to calculate and that remedies at law would be inadequate and (5) the General Counsel of the Company is irrevocably appointed as your agent for service of process in connection with any such action or proceeding (the General Counsel will promptly advise you of any such service of process).
          (e) Jurisdiction and Choice of Forum. You and the Group irrevocably submit to the exclusive jurisdiction of any state or federal court located in the County of New York over any Employment Matter that is not otherwise arbitrated or resolved according to Section 12(b). This includes any action or proceeding to compel arbitration or to enforce an arbitration award. Both you and the Group (1) acknowledge that the forum stated in this Section 12(e) has a reasonable relation to this Agreement and to the relationship between you and the Group and that the submission to the forum will apply even if the forum chooses to apply non-forum law, (2) waive, to the extent permitted by law, any objection to personal jurisdiction or to the laying of venue of any action or proceeding covered

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by this Section 12(e) in the forum stated in this Section, (3) agree not to commence any such action or proceeding in any forum other than the forum stated in this Section 12(e) and (4) agree that, to the extent permitted by law, a final and non-appealable judgment in any such action or proceeding in any such court will be conclusive and binding on you and the Group. However, nothing in this Agreement precludes you or the Group from bringing any action or proceeding in any court for the purpose of enforcing the provisions of Sections 12(b) and this 12(e).
          (f) Waiver of Jury Trial. To the extent permitted by law, you and the Group waive any and all rights to a jury trial with respect to any Employment Matter.
          (g) Governing Law. This Agreement will be governed by and construed in accordance with the law of the State of New York applicable to contracts made and to be performed entirely within that State.
          (h) Costs. To the extent permitted by law, the Company will reimburse any reasonable expenses, including reasonable attorney’s fees, you incur as a result of any Employment Matter, provided that you prevail on a material issue in such dispute. Additionally, the Company will reimburse your reasonable attorney’s fees, not to exceed $40,000, incurred to negotiate this Employment Agreement. Any reimbursements made to you by the Company under this Section 12(h) will be paid to you as soon as practicable but in no event later than the end of the calendar year following the year in which such reimbursable expenses were incurred.
13. General Provisions
          (a) Construction.
     (1) References (A) to Sections are to sections of this Agreement unless otherwise stated; (B) to any contract (including this Agreement) are to the contract as amended, modified, supplemented or replaced from time to time; (C) to any statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated under the statute) and to any section of any statute, rule or regulation include any successor to the section; (D) to any g overnmental authority include any successor to the governmental authority; (E) to any plan include any programs, practices and policies; (F) to any entity include any corporation, limited liability company, partnership, association, business trust and similar organization and include any governmental authority; and (G) to any affiliate of any entity are to any person or other entity directly or indirectly controlling, controlled by or under common control with the first entity.
     (2) The various headings in this Agreement are for convenience of reference only and in no way define, limit or describe the scope or intent of any provisions or Sections of this Agreement.
     (3) Unless the context requires otherwise, (A) words describing the singular number include the plural and vice versa , (B) words denoting any

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gender include all genders and (C) the words “ include ”, “ includes ” and “ including ” will be deemed to be followed by the words “without limitation.”
     (4) It is your and the Group’s intention that this Agreement not be construed more strictly with regard to you or the Group.
          (b) Withholding. You and the Group will treat all payments to you under this Agreement as compensation for services. Accordingly, the Group may withhold from any payment any taxes that are required to be withheld under any law, rule or regulation.
          (c) Severability. If any provision of this Agreement is found by any court of competent jurisdiction (or legally empowered agency) to be illegal, invalid or unenforceable for any reason, then (1) the provision will be amended automatically to the minimum extent necessary to cure the illegality or invalidity and permit enforcement and (2) the remainder of this Agreement will not be affected. In particular, if any provision of Section 8 is so found to violate law or be unenforceable because it applies for longer than a maximum permitted period or to greater than a maximum permitted area, it will be automatically amended to apply for the maximum permitted period and maximum permitted area.
          (d) No Set-off or Mitigation. Except as provided in Section 8(c) or if your employment is terminated by the Company for Cause, your and the Company’s respective obligations under this Agreement will not be affected by any set-off, counterclaim, recoupment or other right you or any member of the Group may have against each other or anyone else. You do not need to seek other employment or take any other action to mitigate any amounts owed to you under this Agreement.
          (e) Notices. All notices, requests, demands and other communications under this Agreement must be in writing and will be deemed given (1) on the business day sent, when delivered by hand or facsimile transmission (with confirmation) during normal business hours, (2) on the business day after the business day sent, if delivered by a nationally recognized overnight courier or (3) on the third business day after the business day sent if delivered by registered or certified mail, return receipt requested, in each case to the following address or number (or to such other addresses or numbers as may be specified by notice that conforms to this Section 13(e)):
          If to you, to your address then on file with the Company’s payroll department.
          If to the Company or any other member of the Group, to:
Computer Associates International, Inc.
World Headquarters
One Computer Associates Plaza
Islandia, New York 11749
Attention: General Counsel
Facsimile: (631) 342-4865
          (f) Consideration. This Agreement is in consideration of the mutual covenants contained in it. You and the Group acknowledge the receipt and

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sufficiency of the consideration to this Agreement and intend this Agreement to be legally binding.
          (g) Amendments and Waivers. Any provision of this Agreement may be amended or waived but only if the amendment or waiver is in writing and signed, in the case of an amendment, by you and the Company or, in the case of a waiver, by the party that would have benefited from the provision waived. Except as this Agreement otherwise provides, no failure or delay by you or the Group to exercise any right or remedy under this Agreement will operate as a waiver, and no partial exercise of any right or remedy will preclude any further exercise.
          (h) Third-Party Beneficiaries. Subject to Section 11, this Agreement will be binding on, inure to the benefit of and be enforceable by the parties and their respective heirs, personal representatives, successors and assigns. This Agreement does not confer any rights, remedies, obligations or liabilities to any entity or person other than you and the Company and your and the Company’s permitted successors and assigns, although (1) this Agreement will inure to the benefit of the Group and (2) Section 11(a) will inure to the benefit of the most recent persons named in a notice under that Section.
          (i) Counterparts. This Agreement may be executed in counterparts, each of which will constitute an original and all of which, when taken together, will constitute one agreement. However, this Agreement will not be effective until the date both parties have executed this Agreement.
         
  Very truly yours,
 
 
  /s/ Andrew Goodman    
  Andrew Goodman   
  Executive Vice President
Global Human Resources 
 
 
Accepted and agreed to:
     
/s/ John A. Swainson
   
 
John A. Swainson
   
Title: Chief Executive Officer
   
December 8, 2008
   

18

Exhibit 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
     This Amended and Restated Employment Agreement, dated as of December 29, 2008, amends and restates the original Agreement entered into by and between CA, Inc. (the “ Company ”) and Michael Christenson (the “ Employee ”) as of May 31, 2007 (the “ Effective Date ”), as subsequently amended.
      1. Employment, Duties, Authority and Work Standards . The Company hereby agrees to employ Employee as President, and Chief Operating Officer of the Company, and Employee hereby accepts such position and agrees to serve the Company and its affiliates from time to time (the “ Group ”) in such capacity during the Employment Period (as defined in the Employment Agreement). The Employee shall report directly to the Company’s Chief Executive Officer. The Employee’s duties, responsibilities and authorities shall include but not be limited to those he has on the date hereof and any other duties, responsibilities and authorities consistent with his job title as specified by the Chief Executive Officer from time to time. The Employee will (a) serve the Company (and such of its subsidiary companies as the Company may designate) faithfully, diligently and to the best of the Employee’s ability under the direction of the Chief Executive Officer, (b) devote his full working time and best efforts, attention and energy to the performance of his duties to the Company and (c) not do anything inconsistent with his duties to the Company.
     During the Employment Period, the Employee will not render any business, commercial or professional services to any entity other than the Company or any of its affiliates. However, the Employee may serve on corporate, civic or charitable boards, so long as these activities do not interfere with the performance of his responsibilities under this Agreement and such service is approved by the Board of Directors of the Company.
      2. Laws; Other Agreements . The Employee represents that his employment hereunder will not violate any law or duty by which he is bound, and will not conflict with or violate any agreement or instrument to which the Employee is a party or by which he is bound.
      3. Compensation .
          (a) In consideration of services that the Employee will render to the Company, the Company agrees to pay the Employee, during the Employment Period, the sum of $800,000 per annum (the “ Base Salary ”), payable semi-monthly concurrent with the Company’s normal payroll cycle.
          (b) In addition to the Base Salary, during the Employment Period, the Employee shall have an opportunity to earn an annual cash bonus (“ Annual Bonus ”) under the Company’s Annual Performance Bonus program in accordance with Section 4.4 of the Company’s 2002 Incentive Plan, as amended and restated, or any successor thereto (the “ Incentive Plan ”); provided that, with respect to the fiscal year ending March 31, 2008, management will recommend that the Employee’s Annual Performance Bonus target shall equal $800,000, provided that such targeted amount and the other terms and conditions of such Annual Performance Bonus shall be subject to determination and approval of the Compensation and Human Resource Committee of the Board of Directors (the “ Compensation Committee ”) in accordance with the terms of the Incentive Plan.
          (c) In addition, management will also recommend that the Employee be eligible to receive a targeted Long-Term Performance Bonus of $2,000,000 for the performance period commencing on April 1, 2007 under the Company’s Long-Term Performance Bonus program as set forth in Section 4.5 of the Incentive Plan, provided that such targeted amount and the other terms and conditions of such Long-Term Performance Bonus shall be subject to determination and approval of the Compensation Committee in accordance with the terms of the Incentive Plan.

 


 

          (d) Effective as of the Effective Date, the Employee will be granted an award of 140,000 restricted shares of the Company’s Common Stock (“ Restricted Stock ”), subject to restrictions on transferability as set forth in the Incentive Plan and the Restricted Stock grant agreement provided to the Employee. Such Restricted Stock grant agreement shall provide that the restrictions applicable to the Restricted Stock shall lapse on the second anniversary of the date of grant, provided the Employee remains employed through such anniversary.
          (e) All payments to the Employee shall be subject to applicable tax withholding.
      4. Benefits and Perquisites. During the term of the Employee’s employment, the Employee shall be eligible to participate in all pension, welfare and benefit plans and perquisites generally made available to other senior employees of the Company.
          Employee is currently a Schedule A participant of the Company’s Change in Control Severance Policy (the “ CIC Severance Policy ”) and the parties understand and agree that such participation and any other terms and conditions related to such participation shall be at the discretion of the Board in accordance with the terms of such CIC Severance Policy.
      5. Termination; Termination Payments.
          (a) Unless the Employee’s employment shall sooner terminate for any reason pursuant to paragraph 6 of this Agreement, the “ Employment Period ” shall commence on the Effective Date and shall initially terminate on the third anniversary of the Effective Date, except that beginning on such third anniversary and each anniversary thereafter, the Employment Period will automatically extend for one year unless either the Employee or the Company gives at least 60 days’ advanced written notice of non-extension.
          (b) In the event that the Employee’s employment is terminated during the Employment Period (i) by the Employee for Good Reason (as defined in Appendix A) or (ii) by the Company without Cause (as defined in Appendix A), other than as a result of the Employee’s death or disability (within the meaning of the Company’s long-term disability program then in effect), subject to the Employoee’s execution, delivery and non-revocation, within fifty-five (55) days following the Termination Date, of a valid and effective release and waiver in a form satisfactory to the Company, the Company shall pay the Employee a lump sum cash amount equal to (A) one (1) times Employee’s Base Salary and (B) Employee’s “ Pro-Rated Annual Bonus ”, such lump sum payment to be made no later than the sixtieth (60th) day (or the next following business day if the sixtieth day is not a business day) following the Termination Date. For purposes of this Agreement, the “ Pro-Rated Annual Bonus ” shall be an amount equal to the target level of Employee’s Annual Bonus for the fiscal year in which the Termination Date occurs multiplied by a fraction, the numerator of which is the number of days of the Employee’s employment since the beginning of such fiscal year and the denominator of which is 365.
          (c) Notwithstanding anything herein to the contrary, upon the termination of the Employee’s employment for any reason, the rights of the Employee with respect to any shares of restricted stock or options to purchase Common Stock held by the Employee which, as of the Termination Date, have not been forfeited shall be subject to the applicable rules of the plan or agreement under which such restricted stock or options were granted as they exist from time to time. In addition, upon the termination of the Employee’s employment for any reason, the Company shall pay to the Employee his Base Salary through the Termination Date, plus any unused vacation time accrued through the Termination Date. Any vested benefits and other amounts that the Employee is otherwise entitled to receive under any employee benefit plan, policy, practice or program of the Company or any of its affiliates shall be payable in accordance with such employee benefit plan, policy, practice or program as the case may be, provided that the Employee shall not be entitled to receive any other payments or benefits in the nature of severance or termination pay.
          (d) In the event that the Employee resigns other than for Good Reason, is terminated for Cause, dies or becomes disabled (within the meaning of the Company’s long-term disability program then in effect) during the Employment Period, no benefits shall be payable to the Employee under paragraph 5(b) of this Agreement, but the terms and conditions of paragraph 5(c) shall remain in effect.

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          (e) If the Employee is a participant in the Company’s CIC Severance Policy and a “ Change in Control ” occurs, any payments and benefits provided in the CIC Severance Policy that the Employee is entitled to will reduce (but not below zero) the corresponding payment or benefit provided under this Agreement. It is the intent of this provision to pay or to provide to the Employee the greater of the two payments or benefits but not to duplicate them.
      6. No Duration of Employment . Notwithstanding anything else contained in this Agreement to the contrary, the Company and the Employee each acknowledge and agree that the Employee’s employment with the Company may be terminated by either the Company upon 30 days’ written notice to the Employee (subject to the provisions of paragraph 5 of this Agreement) or by the Employee upon 60 days’ written notice to the Company (subject to the provisions of paragraph 5 of this Agreement), at any time and for any reason, with or without Cause; provided that this Agreement may be terminated for Cause immediately upon written notice from the Company to the Employee; and provided further that the Company may determine to waive all or part of the Employee’s 60 days’ notice period at its discretion. In addition, this Agreement shall automatically terminate upon Employee’s death or disability (determined in accordance with the Company’s practices and policies). Upon termination of the Employee’s employment for any reason whatsoever, the Company shall have no further obligations to the Employee other than those set forth in paragraph 5 of this Agreement. The effective date of the Employee’s termination of employment shall be referred to herein as the “ Termination Date .”
      7. General .
          (a) Any notice required or permitted to be given under this Agreement shall be made either:
               (i) by personal delivery to the Employee or, in the case of the Company, to the Company’s principal office (“ Principal Office ”) located at One CA Plaza, Islandia, New York 11749, Attention: Executive Vice President – Human Resources, or
               (ii) in writing and sent by registered mail, postage prepaid, to the Employee’s residence, or, in the case of the Company, to the Company’s Principal Office.
          (b) This Agreement shall be binding upon the Employee and his heirs, executors, assigns, and administrators and shall inure to the benefit of the Company, its successors and assigns and any subsidiary or parent of the Company.
          (c) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles. Any action relating to this Agreement shall be brought exclusively in the state or federal courts of the State of New York, County of Suffolk.
          (d) This Agreement, the Employment and Confidentiality Agreement executed by the Employee on or about the commencement of his employment with the Company and the other documents referred to herein represent the entire agreement between the Employee and the Company related to the Employee’s employment and supersede any and all previous oral or written communications, representations or agreements related thereto. This Agreement may only be modified, in writing, jointly by the Employee and a duly authorized representative of the Company. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
          (e) The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable in any respect, and the validity and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not in any way be impaired and shall remain enforceable to the fullest extent permitted by law. In addition, waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or his rights hereunder on

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any occasion or series of occasions.
          (f) To extent that the Employee would otherwise be entitled to any payment under this Agreement or any plan or arrangement of the Company or its affiliates, that constitutes “deferred compensation” subject to Section 409A of the Code (“Section 409A”) and that if paid during the six months beginning on the Termination Date would be subject to the Section 409A additional tax because the Employee is a “specified employee” (within the meaning of Section 409A and as determined by the Company), the payment will be paid to the Employee on the earlier of the six-month anniversary of the Termination Date, a change in ownership or effective control of the Company (within the meaning of Section 409A) or the Employee’s death. Similarly, to the extent that the Employee would otherwise be entitled to any benefit (other than a payment) during the six months beginning on the Termination Date that would be subject to the Section 409A additional tax, the benefit will be delayed and will begin being provided on the earlier of the six-month anniversary of the Termination Date, a change in ownership or effective control of the Company (within the meaning of Section 409A) or the Employee’s death. In addition, any payment or benefit due upon a termination of employment that represents a “deferral of compensation” within the meaning of Section 409A shall be paid or provided to the Employee only upon a “separation from service” as defined in Treas. Reg. 1.409A-1(h). To the extent applicable, each severance payment made under this Agreement shall be deemed to be separate payments, amounts payable under Section 5 of this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treas. Reg. 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treas. Reg. 1.409A-1 through 1.409A-6.
               Notwithstanding anything to the contrary in this Agreement or elsewhere, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treas. Reg. 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Employee only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the Employee’s second taxable year following the Employee’s taxable year in which the “separation from service” occurs; and provided further that such expenses shall reimbursed no later than the last day of the Employee’s third taxable year following the taxable year in which the Employee’s “separation from service” occurs. Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Employee incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

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CAUTION TO EXECUTIVE: This Agreement affects important rights. DO NOT sign it unless you have read it carefully and are satisfied that you understand it completely .
     
 
  CA, INC.
 
   
/s/ Michael Christenson
 
  By: /s/ Andrew Goodman
 
Michael Christenson
  Name: Andrew Goodman
Title: President and Chief Operating Officer
  Title: Executive Vice President,
Date: December 29, 2008
            Worldwide Human Resources
 
  Date: December 8, 2008

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Appendix A
     For purposes of this Agreement, “ Cause ” means any of the following:
          (1) The Employee’s continued failure, either due to willful action or as a result of gross neglect, to substantially perform his duties and responsibilities to the Company and its affiliates (the “ Group ”) under this Agreement (other than any such failure resulting from the Employee’s incapacity due to physical or mental illness) that, if capable of being cured, has not been cured within thirty (30) days after written notice is delivered to the Employee, which notice specifies in reasonable detail the manner in which the Company believes the Employee has not substantially performed his duties and responsibilities.
          (2) The Employee’s engagement in conduct which is demonstrably and materially injurious to the Group, or that materially harms the reputation or financial position of the Group, unless the conduct in question was undertaken in good faith on an informed basis with due care and with a rational business purpose and based upon the honest belief that such conduct was in the best interest of the Group.
          (3) The Employee’s indictment or conviction of, or plea of guilty or nolo contendere to, a felony or any other crime involving dishonesty, fraud or moral turpitude.
          (4) The Employee’s being found liable in any SEC or other civil or criminal securities law action or entering any cease and desist order with respect to such action (regardless of whether or not he admits or denies liability).
          (5) The Employee’s breach of his fiduciary duties to the Group which may reasonably be expected to have a material adverse effect on the Group. However, to the extent the breach is curable, the Company must give the Employee notice and a reasonable opportunity to cure.
          (6) The Employee’s (i) obstructing or impeding, (ii) endeavoring to influence, obstruct or impede or (iii) failing to materially cooperate with, any investigation authorized by the Board or any governmental or self-regulatory entity (an “ Investigation ”). However, the Employee’s failure to waive attorney-client privilege relating to communications with his own attorney in connection with an Investigation shall not constitute “Cause”.
          (7) The Employee’s withholding, removing, concealing, destroying, altering or by any other means falsifying any material which is requested in connection with an Investigation.
          (8) The Employee’s disqualification or bar by any governmental or self-regulatory authority from serving in the capacity contemplated by this Agreement or his loss of any governmental or self-regulatory license that is reasonably necessary for him to perform his responsibilities to the Group under this Agreement, if (a) the disqualification, bar or loss continues for more than 30 days and (b) during that period the Group uses its good faith efforts to cause the disqualification or bar to be lifted or the license replaced. While any disqualification, bar or loss continues during the Employee’s employment, he will serve in the capacity contemplated by this Agreement to whatever extent legally permissible and, if his employment is not permissible, he will be placed on leave (which will be paid to the extent legally permissible).
          (9) The Employee’s unauthorized use or disclosure of confidential or proprietary information, or related materials, or the violation of any of the terms of the Employment and Confidentiality Agreement executed by the Employee or any Company standard confidentiality policies and procedures, which may reasonably be expected to have a material adverse effect on the Group and that, if capable of being cured, has not been cured within thirty (30) days after written notice is delivered to the Employee by the Company, which notice specifies in reasonable detail the alleged unauthorized use or disclosure or violation.
          (10) The Employee’s violation of the Group’s (i) Workplace Violence Policy or (ii) policies on discrimination, unlawful harassment or substance abuse.

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     For this definition, no act or omission by the Employee will be “willful” unless it is made by the Employee in bad faith or without a reasonable belief that his act or omission was in the best interests of the Group.
     For purposes of this Agreement, “ Good Reason ” shall mean any of the following:
          (1) Any material and adverse change in the Employee’s title;
          (2) Any material and adverse reduction in the Employee’s authorities or responsibilities other than any isolated, insubstantial and inadvertent failure by the Company that is not in bad faith and is cured promptly on the Employee’s giving the Company notice (and for purposes of clarification, a change in the number of direct reports will not constitute a material and adverse reduction in the Employee’s authorities or responsibilities);
          (3) Any material reduction by the Company in the Employee’s Base Salary or target level of Annual Bonus as set forth in Sections 3(a) and (b), respectively, other than any such reduction agreed to by the Employee in writing; or
          (4) The Company’s material breach of this Agreement;
          provided that (A) no alleged action, reduction or breach set forth in (1) through (4) above shall be deemed to constitute “Good Reason” unless such action, reduction or breach remains uncured, as the case may be, after the expiration of thirty (30) days following delivery to the Company from the Employee of a written notice, setting forth such course of conduct deemed by the Employee to constitute “Good Reason”; (B) such written notice must be delivered to the Company within ninety (90) days after the Employee obtains knowledge of such breach constituting “Good Reason”; and (C) the Employee must terminate employment within two years after the Employee obtains knowledge of such breach constituting “Good Reason”. The Company’s placing the Employee on paid leave for up to ninety (90) consecutive days while it is determining whether there is a basis to terminate the Employee’s employment for Cause will not constitute “Good Reason”.

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Exhibit 10.4
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
     This Amended and Restated Employment Agreement, dated as of December 12, 2008, amends and restates the original Agreement entered into by and between CA, Inc. (the “ Company ”) and Nancy Cooper (the “ Employee ”) as of August `1, 2006, and effective on August 15, 2006 (the “ Effective Date ”).
      1. Employment, Duties, Authority and Work Standards . The Company hereby agrees to employ the Employee on the Effective Date as Executive Vice President and Chief Financial Officer (“ CFO ”) and the Employee hereby accepts such positions and agrees to serve the Company in such capacities during the Employment Period (as defined below). The Employee shall report directly to the Company’s Chief Executive Officer. The Employee’s duties, responsibilities and authority shall be such duties, responsibilities and authority as are consistent with the above job titles and such other duties, responsibilities and authority as the Chief Executive Officer shall from time to time specify. The Employee will (a) serve the Company (and such of its subsidiary companies as the Company may designate) faithfully, diligently and to the best of the Employee’s ability under the direction of the Chief Executive Officer, (b) devote her full working time and best efforts, attention and energy to the performance of her duties to the Company and (c) not do anything inconsistent with her duties to the Company; provided however, that the Company agrees that the Employee may continue to serve as a director of R.H. Donnelley, Inc., so long as such service does not significantly interfere with the Employee’s duties to the Company under this Agreement.
      2. Laws; Other Agreements . The Employee represents that her employment hereunder will not violate any law or duty by which she is bound, and will not conflict with or violate any agreement or instrument to which the Employee is a party or by which she is bound.
      3. Sign-On Bonus . The Company shall pay the Employee a cash payment equal to $250,000 (the “ Sign-On Bonus ”) in the following manner. The Company shall pay the Sign-On Bonus no later than the first scheduled payroll date after the first 30 days of the Employment Period. Notwithstanding the foregoing, in the event that the Employee is terminated for Cause or resigns without Good Reason prior to the first anniversary of the Effective Date, the Employee shall be obligated to immediately repay to the Company the Sign-On Bonus paid to her.
      4. Compensation .
          (a) In consideration of services that the Employee will render to the Company, the Company agrees to pay the Employee, during the Employment Period, the sum of $500,000 per annum (the “ Base Salary ”), payable semi-monthly concurrent with the Company’s normal payroll cycle.

 


 

          (b) In addition to the Base Salary, during the Employment Period, the Employee shall have an opportunity to earn an annual cash bonus (“ Annual Bonus ”) under the Company’s Annual Performance Bonus program in accordance with Section 4.4 of the Company’s 2002 Incentive Plan, as amended and restated, or any successor thereto (the “Incentive Plan”); provided that, with respect to the fiscal year ending March 31, 2007, the Employee’s Annual Performance Bonus target shall equal $500,000 and the other terms and conditions of such Annual Performance Bonus shall be subject to determination and approval of the Compensation and Human Resource Committee of the Board of Directors (the “ Compensation Committee ”) in accordance with the terms of the Incentive Plan.
          (c) In addition, the Employee shall also be eligible to receive a targeted Long-Term Performance Bonus of $1,500,000 for the performance period that commenced on April 1, 2006 under the Company’s Long-Term Performance Bonus program as set forth in Section 4.5 of the Incentive Plan and the other terms and conditions of such Long-Term Performance Bonus shall be subject to determination and approval of the Compensation Committee in accordance with the terms of the Incentive Plan.
          (d) Subject to applicable law, management will recommend that, following the Effective Date, the Employee will be granted an award of 50,000 restricted shares of the Company’s Common Stock (“ Restricted Stock ”), subject to restrictions on transferability as set forth in the Incentive Plan and the Restricted Stock grant agreement provided to the Employee. Such Restricted Stock grant agreement shall provide that the restrictions applicable to the Restricted Stock shall lapse in three (3) relatively equal annual installments commencing on the first anniversary of the date of grant, provided the Employee remains employed through each such anniversary.
          (e) Within four (4) months following the Effective Date, $500,000 will be notionally credited to a deferred compensation account maintained by the Company for the Employee’s benefit. The Employee will vest in the deferred compensation account on the first anniversary of the Effective Date.
          (f) All payments to the Employee shall be subject to applicable tax withholding.
      5. Benefits and Perquisites. During the term of the Employee’s employment, the Employee shall be eligible to participate in all pension, welfare and benefit plans and perquisites generally made available to other senior employees of the Company. Additionally, the Employee will be provided with corporate housing in accordance with the Company’s policy for at least 12 months following the Effective Date (the Company may, in its discretion, continue such corporate housing on an annual basis thereafter).
          Management will also recommend to the Board that the Employee be included as a participant in the Company’s Change in Control Severance Policy (the “ CIC Severance Policy ”), provided that such participation and any other terms and conditions related to such participation shall be at the discretion of the Board in accordance with the terms of such CIC Severance Policy.
      6. Termination; Termination Payments.
          (a) Unless the Employee’s employment shall sooner terminate for any reason pursuant to paragraph 7 of this Agreement, the “ Employment Period ” shall commence on the Effective Date and shall initially terminate on August 31, 2009, except that beginning on August 31, 2009 and each August 31 thereafter, the Employment Period will automatically extend for one year unless either the Employee or the Company gives at least 60 days’ advanced written notice of non-extension.
          (b) In the event that the Employee’s employment is terminated during the Employment Period (i) by the Employee for Good Reason (as defined in Appendix A) or (ii) by the Company without Cause (as defined in Appendix A), other than as a result of the Employee’s death or disability (within the meaning of the Company’s long-term disability program then in effect), subject to the Employee’s execution, delivery and non-revocation, within fifty-five (55) days following the Termination Date, of a valid and effective release and waiver in a form satisfactory to the Company, the Company shall pay the Employee a lump sum cash amount

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equal to one (1) times the Employee’s Base Salary, such lump sum payment to be made no later than the sixtieth (60th) day (or the next following business day if the sixtieth day is not a business day) following the Termination Date.
          (c) Notwithstanding anything herein to the contrary, upon the termination of the Employee’s employment for any reason, the rights of the Employee with respect to any shares of restricted stock or options to purchase Common Stock held by the Employee which, as of the Termination Date, have not been forfeited shall be subject to the applicable rules of the plan or agreement under which such restricted stock or options were granted as they exist from time to time. In addition, upon the termination of the Employee’s employment for any reason, the Company shall pay to the Employee her Base Salary through the Termination Date, plus any unused vacation time accrued through the Termination Date. Any vested benefits and other amounts that the Employee is otherwise entitled to receive under any employee benefit plan, policy, practice or program of the Company or any of its affiliates shall be payable in accordance with such employee benefit plan, policy, practice or program as the case may be, provided that the Employee shall not be entitled to receive any other payments or benefits in the nature of severance or termination pay.
          (d) In the event that the Employee resigns other than for Good Reason, is terminated for Cause, dies or becomes disabled (within the meaning of the Company’s long-term disability program then in effect) during the Employment Period, no benefits shall be payable to the Employee under paragraph 6(b) of this Agreement, but the terms and conditions of paragraph 6(c) shall remain in effect.
          (e) If the Employee is a participant in the Company’s CIC Severance Policy and a “ Change in Control ” occurs, any payments and benefits provided in the CIC Severance Policy that the Employee is entitled to will reduce (but not below zero) the corresponding payment or benefit provided under this Agreement. It is the intent of this provision to pay or to provide to the Employee the greater of the two payments or benefits but not to duplicate them.
      7. No Duration of Employment . Notwithstanding anything else contained in this Agreement to the contrary, the Company and the Employee each acknowledge and agree that the Employee’s employment with the Company may be terminated by either the Company upon 60 days’ written notice to the Employee (subject to the provisions of paragraph 6 of this Agreement) or by the Employee upon 60 days’ written notice to the Company (subject to the provisions of paragraph 6 of this Agreement), at any time and for any reason, with or without cause; provided that this Agreement may be terminated for Cause immediately upon written notice from the Company to the Employee; and provided further that the Company may determine to waive all or part of the Employee’s 60 days’ notice period at its discretion. In addition, this Agreement shall automatically terminate upon the Employee’s death or disability (determined in accordance with the Company’s practices and policies). Upon termination of the Employee’s employment for any reason whatsoever, the Company shall have no further obligations to the Employee other than those set forth in paragraph 6 of this Agreement. The effective date of the Employee’s termination of employment shall be referred to herein as the “ Termination Date .”
      8. General .
          (a) Any notice required or permitted to be given under this Agreement shall be made either:
               (i) by personal delivery to the Employee or, in the case of the Company, to the Company’s principal office (“ Principal Office ”) located at One CA Plaza, Islandia, New York 11749, Attention: Executive Vice President – Human Resources, or
               (ii) in writing and sent by registered mail, postage prepaid, to the Employee’s residence, or, in the case of the Company, to the Company’s Principal Office.
          (b) This Agreement shall be binding upon the Employee and her heirs, executors, assigns, and administrators and shall inure to the benefit of the Company, its successors and assigns and any subsidiary or parent of the Company.

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          (c) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles. Any action relating to this Agreement shall be brought exclusively in the state or federal courts of the State of New York, County of Suffolk.
          (d) This Agreement, the Employment and Confidentiality Agreement executed by the Employee on or about the Effective Date and the other documents referred to herein represent the entire agreement between the Employee and the Company related to the Employee’s employment and supersede any and all previous oral or written communications, representations or agreements related thereto. This Agreement may only be modified in writing jointly executed by the Employee and a duly authorized representative of the Company. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. However , this Agreement will not be effective until the date it has been executed by both parties.
          (e) The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable in any respect, and the validity and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not in any way be impaired and shall remain enforceable to the fullest extent permitted by law. In addition, waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or her rights hereunder on any occasion or series of occasions.
          (f) The parties agree that this Agreement is intended to comply with the requirements of Section 409A of the Code and the regulations promulgated thereunder (“Section 409A”) or an exemption from Section 409A. In the event that after the execution of this Agreement either party makes a determination inconsistent with the preceding sentence, it shall promptly notify the other party of the basis for its determination. The parties agree to renegotiate in good faith the terms of this Agreement at no additional cost to the Company, if the Employee determines that this Agreement as structured would have adverse tax consequences to her under applicable law. To extent that the Employee would otherwise be entitled to any payment under this Agreement<,> or any plan or arrangement of the Company or its affiliates, that constitutes “deferred compensation” subject to Section 409A and that if paid during the six months beginning on the Termination Date would be subject to the Section 409A additional tax because the Employee is a “specified employee” (within the meaning of Section 409A and as determined by the Company), the payment will be paid to the Employee on the earlier of the six-month anniversary of the Termination Date, a change in ownership or effective control of the Company (within the meaning of Section 409A) or the Employee’s death. Similarly, to the extent that the Employee would otherwise be entitled to any benefit (other than a payment) during the six months beginning on the Termination Date that would be subject to the Section 409A additional tax, the benefit will be delayed and will begin being provided on the earlier of the six-month anniversary of the Termination Date, a change in ownership or effective control of the Company (within the meaning of Section 409A) or the Employee’s death. In addition, any payment or benefit due upon a termination of employment that represents a “deferral of compensation” within the meaning of Section 409A shall be paid or provided to the Employee only upon a “separation from service” as defined in Treas. Reg. 1.409A-1(h). To the extent applicable, each severance payment made under this Agreement shall be deemed to be separate payments, amounts payable under Section 6 of this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treas. Reg. 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treas. Reg. 1.409A-1 through 1.409A-6.
               Notwithstanding anything to the contrary in this Agreement or elsewhere, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treas. Reg. 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Employee only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the Employee’s second taxable year following the Employee’s taxable year in which

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the “separation from service” occurs; and provided further that such expenses shall be reimbursed no later than the last day of the Employee’s third taxable year following the taxable year in which the Employee’s “separation from service” occurs. Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Employee incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

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CAUTION TO EXECUTIVE: This Agreement affects important rights. DO NOT sign it unless you have read it carefully and are satisfied that you understand it completely .
               
        CA, INC.  
 
             
/s/ Nancy E. Cooper
      By:   /s/ Andrew Goodman  
 
             
Nancy Cooper
      Name:   Andrew Goodman  
Title: Chief Financial Officer
      Title:   Executive Vice President  
Date: December 12, 2008
          Worldwide Human Resources  
 
      Date:   December 8, 2008  

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Appendix A
     For purposes of this Agreement, “ Cause ” means any of the following:
          (1) The Employee’s continued failure, either due to willful action or as a result of gross neglect, to substantially perform her duties and responsibilities to the Company and its affiliates (the “ Group ”) under this Agreement (other than any such failure resulting from the Employee’s incapacity due to physical or mental illness) that, if capable of being cured, has not been cured within thirty (30) days after written notice is delivered to the Employee, which notice specifies in reasonable detail the manner in which the Company believes the Employee has not substantially performed her duties and responsibilities.
          (2) The Employee’s engagement in conduct which is demonstrably and materially injurious to the Group, or that materially harms the reputation or financial position of the Group, unless the conduct in question was undertaken in good faith on an informed basis with due care and with a rational business purpose and based upon the honest belief that such conduct was in the best interest of the Group.
          (3) The Employee’s indictment or conviction of, or plea of guilty or nolo contendere to, a felony or any other crime involving dishonesty, fraud or moral turpitude.
          (4) The Employee’s being found liable in any SEC or other civil or criminal securities law action or entering any cease and desist order with respect to such action (regardless of whether or not she admits or denies liability).
          (5) The Employee’s breach of her fiduciary duties to the Group which may reasonably be expected to have a material adverse effect on the Group. However, to the extent the breach is curable, the Company must give the Employee notice and a reasonable opportunity to cure.
          (6) The Employee’s (i) obstructing or impeding, (ii) endeavoring to influence, obstruct or impede or (iii) failing to materially cooperate with, any investigation authorized by the Board or any governmental or self-regulatory entity (an “ Investigation ”). However, the Employee’s failure to waive attorney-client privilege relating to communications with her own attorney in connection with an Investigation shall not constitute “Cause”.
          (7) The Employee’s purposely withholding, removing, concealing, destroying, altering or by any other means falsifying any material which is requested in connection with an Investigation.
          (8) The Employee’s disqualification or bar by any governmental or self-regulatory authority from serving in the capacity contemplated by this Agreement or her loss of any governmental or self-regulatory license that is reasonably necessary for her to perform her responsibilities to the Group under this Agreement, if (a) the disqualification, bar or loss continues for more than 30 days and (b) during that period the Group uses its good faith efforts to cause the disqualification or bar to be lifted or the license replaced. While any disqualification, bar or loss continues during the Employee’s employment, she will serve in the capacity contemplated by this Agreement to whatever extent legally permissible and, if her employment is not permissible, she will be placed on leave (which will be paid to the extent legally permissible).
          (9) The Employee’s unauthorized use or disclosure of confidential or proprietary information, or related materials, or the violation of any of the terms of the Employment and Confidentiality Agreement executed by the Employee or any Company standard confidentiality policies and procedures, which may reasonably be expected to have a material adverse effect on the Group and that, if capable of being cured, has not been cured within thirty (30) days after written notice is delivered to the Employee by the Company, which notice specifies in reasonable detail the alleged unauthorized use or disclosure or violation.
          (10) The Employee’s violation of the Group’s (i) Workplace Violence Policy or (ii) policies on discrimination, unlawful harassment or substance abuse.

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     For this definition, no act or omission by the Employee will be “willful” unless it is made by the Employee in bad faith or without a reasonable belief that her act or omission was in the best interests of the Group.

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     For purposes of this Agreement, “ Good Reason ” shall mean any of the following:
          (1) Any material and adverse change in the Employee’s title;
          (2) Any material and adverse reduction in the Employee’s authorities or responsibilities other than any isolated, insubstantial and inadvertent failure by the Company that is not in bad faith and is cured promptly on the Employee’s giving the Company notice (and for purposes of clarification, a change in the number of direct reports will not constitute a material and adverse reduction in the Employee’s authorities or responsibilities);
          (3) Any material reduction by the Company in the Employee’s Base Salary or target level of Annual Bonus as set forth in Sections 4(a) and (b), respectively, other than any such reduction agreed to by the Employee in writing; or
          (4) The Company’s material breach of this Agreement;
          provided that (A) no alleged action, reduction or breach set forth in (1) through (4) above shall be deemed to constitute “Good Reason” unless such action, reduction or breach remains uncured, as the case may be, after the expiration of thirty (30) days following delivery to the Company from the Employee of a written notice, setting forth such course of conduct deemed by the Employee to constitute “Good Reason”; (B) such written notice must be delivered to the Company within ninety (90) days after the Employee obtains knowledge of such breach constituting “Good Reason”; and (C) the Employee must terminate employment within two years after the Employee obtains knowledge of such breach constituting “Good Reason”. The Company’s placing the Employee on paid leave for up to ninety (90) consecutive days while it is determining whether there is a basis to terminate the Employee’s employment for Cause will not constitute “Good Reason.”

9

Exhibit 10.5
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
     This Amended and Restated Employment Agreement, dated as of December 18, 2008, amends and restates the original Agreement entered into by and between CA, Inc. (the “ Company ”) and Amy Fliegelman Olli (the “ Employee ”) as of August 22, 2006, and effective on September 13, 2006 (the “ Effective Date ”).
      1. Employment, Duties, Authority and Work Standards . The Company hereby agrees to employ the Employee on the Effective Date as Executive Vice President and Co-General Counsel and the Employee hereby accepts such positions and agrees to serve the Company in such capacities during the Employment Period (as defined below). The Employee shall report directly to the Company’s Chief Executive Officer. The Employee’s duties, responsibilities and authority shall be such duties, responsibilities and authority as are consistent with the above job titles and such other duties, responsibilities and authority as the Chief Executive Officer shall from time to time specify commensurate with her position. Such duties shall include responsibility for all legal matters and the worldwide legal department, provided however, that while the current General Counsel remains with the Company, duties associated with oversight of internal audit department, corporate compliance and the role of corporate secretary are excluded. The Employee will (a) serve the Company (and such of its subsidiary companies as the Company may designate) faithfully, diligently and to the best of the Employee’s ability under the direction of the Chief Executive Officer, (b) devote her full working time and best efforts, attention and energy to the performance of her duties to the Company and (c) not do anything inconsistent with her duties to the Company.
      2. Laws; Other Agreements . The Employee represents that her employment hereunder will not violate any law or duty by which she is bound, and will not conflict with or violate any agreement or instrument to which the Employee is a party or by which she is bound.
      3. Sign-On Bonus . The Company shall pay the Employee a cash payment equal to $185,000 (the “ Sign-On Bonus ”) in the following manner. The Company shall pay the Sign-On Bonus no later than the first scheduled payroll date after the first 30 days of the Employment Period. Notwithstanding the foregoing, in the event that the Employee is terminated for Cause or resigns without Good Reason prior to the first anniversary of the Effective Date, the Employee shall be obligated to immediately repay to the Company the Sign-On Bonus paid to her.
      4. Compensation .
          (a) In consideration of services that the Employee will render to the Company, the Company agrees to pay the Employee, during the Employment Period, the sum of $450,000 per annum (the “ Base Salary ”), payable semi-monthly concurrent with the Company’s normal payroll cycle.

 


 

          (b) In addition to the Base Salary, during the Employment Period, the Employee shall have an opportunity to earn an annual cash bonus (“ Annual Bonus ”) under the Company’s Annual Performance Bonus program in accordance with Section 4.4 of the Company’s 2002 Incentive Plan, as amended and restated, or any successor thereto (the “ Incentive Plan ”); provided that, with respect to the fiscal year ending March 31, 2007, the Employee’s Annual Performance Bonus target shall equal $400,000, provided that such targeted amount and the other terms and conditions of such Annual Performance Bonus shall be subject to determination and approval of the Compensation and Human Resource Committee of the Board of Directors (the “ Compensation Committee ”) in accordance with the terms of the Incentive Plan.
          (c) In addition, the Employee shall also be eligible to receive a targeted Long-Term Performance Bonus of $1,000,000 for the performance period commencing on April 1, 2006 under the Company’s Long-Term Performance Bonus program as set forth in Section 4.5 of the Incentive Plan, provided that such targeted amount and the other terms and conditions of such Long-Term Performance Bonus shall be subject to determination and approval of the Compensation Committee in accordance with the terms of the Incentive Plan.
          (d) Subject to applicable law, management will recommend that, following the Effective Date, the Employee will be granted an award of 15,000 restricted shares of the Company’s Common Stock (“ Restricted Stock ”), subject to restrictions on transferability as set forth in the Incentive Plan and the Restricted Stock grant agreement provided to the Employee. Such Restricted Stock grant agreement shall provide that the restrictions applicable to the Restricted Stock shall lapse in three (3) relatively equal annual installments commencing on the first anniversary of the date of grant, provided the Employee remains employed through each such anniversary.
          (e) All payments to the Employee shall be subject to applicable tax withholding.
      5. Benefits and Perquisites. During the term of the Employee’s employment, the Employee shall be eligible to participate in all pension, welfare and benefit plans and perquisites generally made available to other senior employees of the Company. Additionally, for so long as the Employee resides more than 100 miles outside of Islandia, NY, the Company shall provide a stipend of not less than $5,000 per month for transportation to and from the Company’s offices from the Employee’s residence. Additionally, while in Islandia, NY, the Employee will be provided with corporate housing in accordance with the Company’s policy for at least 12 months following the Effective Date (the Company may, in its discretion, continue such corporate housing on an annual basis thereafter).
          Management will also recommend to the Board that the Employee be included as a Schedule B participant in the Company’s Change in Control Severance Policy (the “ CIC Severance Policy ”), provided that such participation and any other terms and conditions related to such participation shall be at the discretion of the Board in accordance with the terms of such CIC Severance Policy.
      6. Termination; Termination Payments.
          (a) Unless the Employee’s employment shall sooner terminate for any reason pursuant to paragraph 7 of this Agreement, the “ Employment Period ” shall commence on the Effective Date and shall initially terminate on September 30, 2009, except that beginning on September 30, 2009 and each September 30 thereafter, the Employment Period will automatically extend for one year unless either the Employee or the Company gives at least 60 days’ advanced written notice of non-extension.
          (b) In the event that the Employee’s employment is terminated during the Employment Period (i) by the Employee for Good Reason (as defined in Appendix A) or (ii) by the Company without Cause (as defined in Appendix A), other than as a result of the Employee’s death or disability (within the meaning of the Company’s long-term disability program then in effect), subject to the Employee’s execution, delivery and non-revocation, within fifty-five (55) days following the Termination Date, of a valid and effective release and waiver in a form satisfactory to the Company, the Company shall pay the Employee a lump sum cash amount equal to one (1) times Employee’s Base Salary, such lump sum payment to be made no later than

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the sixtieth (60th) day (or the next following business day if the sixtieth day is not a business day) following the Termination Date.
          (c) Notwithstanding anything herein to the contrary, upon the termination of the Employee’s employment for any reason, the rights of the Employee with respect to any shares of restricted stock or options to purchase Common Stock held by the Employee which, as of the Termination Date, have not been forfeited shall be subject to the applicable rules of the plan or agreement under which such restricted stock or options were granted as they exist from time to time. In addition, upon the termination of the Employee’s employment for any reason, the Company shall pay to the Employee her Base Salary through the Termination Date, plus any unused vacation time accrued through the Termination Date. Any vested benefits and other amounts that the Employee is otherwise entitled to receive under any employee benefit plan, policy, practice or program of the Company or any of its affiliates shall be payable in accordance with such employee benefit plan, policy, practice or program as the case may be, provided that the Employee shall not be entitled to receive any other payments or benefits in the nature of severance or termination pay.
          (d) In the event that the Employee resigns other than for Good Reason, is terminated for Cause, dies or becomes disabled (within the meaning of the Company’s long-term disability program then in effect) during the Employment Period, no benefits shall be payable to the Employee under paragraph 6(b) of this Agreement, but the terms and conditions of paragraph 6(c) shall remain in effect.
          (e) If the Employee is a participant in the Company’s CIC Severance Policy and a “ Change in Control ” occurs, any payments and benefits provided in the CIC Severance Policy that the Employee is entitled to will reduce (but not below zero) the corresponding payment or benefit provided under this Agreement. It is the intent of this provision to pay or to provide to the Employee the greater of the two payments or benefits but not to duplicate them.
      7. No Duration of Employment . Notwithstanding anything else contained in this Agreement to the contrary, the Company and the Employee each acknowledge and agree that the Employee’s employment with the Company may be terminated by either the Company upon 30 days’ written notice to the Employee (subject to the provisions of paragraph 6 of this Agreement) or by the Employee upon 60 days’ written notice to the Company (subject to the provisions of paragraph 6 of this Agreement), at any time and for any reason, with or without cause; provided that this Agreement may be terminated for Cause immediately upon written notice from the Company to the Employee; and provided further that the Company may determine to waive all or part of the Employee’s 60 days’ notice period at its discretion. In addition, this Agreement shall automatically terminate upon Employee’s death or disability (determined in accordance with the Company’s practices and policies). Upon termination of the Employee’s employment for any reason whatsoever, the Company shall have no further obligations to the Employee other than those set forth in paragraph 6 of this Agreement. The effective date of the Employee’s termination of employment shall be referred to herein as the “ Termination Date .”
      8. General .
          (a) Any notice required or permitted to be given under this Agreement shall be made either:
               (i) by personal delivery to the Employee or, in the case of the Company, to the Company’s principal office (“ Principal Office ”) located at One CA Plaza, Islandia, New York 11749, Attention: Executive Vice President – Human Resources, or
               (ii) in writing and sent by registered mail, postage prepaid, to the Employee’s residence, or, in the case of the Company, to the Company’s Principal Office.
          (b) This Agreement shall be binding upon the Employee and her heirs, executors, assigns, and administrators and shall inure to the benefit of the Company, its successors and assigns and any subsidiary or parent of the Company.

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          (c) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles. Any action relating to this Agreement shall be brought exclusively in the state or federal courts of the State of New York, County of Suffolk.
          (d) This Agreement, the Employment and Confidentiality Agreement executed by the Employee on or about the Effective Date and the other documents referred to herein represent the entire agreement between the Employee and the Company related to the Employee’s employment and supersede any and all previous oral or written communications, representations or agreements related thereto. This Agreement may only be modified, in writing, jointly by the Employee and a duly authorized representative of the Company. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. However, this Agreement will not be effective until the date it has been executed by both parties.
          (e) The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable in any respect, and the validity and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not in any way be impaired and shall remain enforceable to the fullest extent permitted by law. In addition, waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or her rights hereunder on any occasion or series of occasions.
          (f) To extent that the Employee would otherwise be entitled to any payment under this Agreement or any plan or arrangement of the Company or its affiliates, that constitutes “deferred compensation” subject to Section 409A of the Code (“Section 409A”) and that if paid during the six months beginning on the Termination Date would be subject to the Section 409A additional tax because the Employee is a “specified employee” (within the meaning of Section 409A and as determined by the Company), the payment will be paid to the Employee on the earlier of the six-month anniversary of the Termination Date, a change in ownership or effective control of the Company (within the meaning of Section 409A) or the Employee’s death. Similarly, to the extent that the Employee would otherwise be entitled to any benefit (other than a payment) during the six months beginning on the Termination Date that would be subject to the Section 409A additional tax, the benefit will be delayed and will begin being provided on the earlier of the six-month anniversary of the Termination Date, a change in ownership or effective control of the Company (within the meaning of Section 409A) or the Employee’s death. In addition, any payment or benefit due upon a termination of employment that represents a “deferral of compensation” within the meaning of Section 409A shall be paid or provided to the Employee only upon a “separation from service” as defined in Treas. Reg. 1.409A-1(h). To the extent applicable, each severance payment made under this Agreement shall be deemed to be separate payments, amounts payable under Section 6 of this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treas. Reg. 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treas. Reg. 1.409A-1 through 1.409A-6.
               Notwithstanding anything to the contrary in this Agreement or elsewhere, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treas. Reg. 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Employee only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the Employee’s second taxable year following the Employee’s taxable year in which the “separation from service” occurs; and provided further that such expenses shall be reimbursed no later than the last day of the Employee’s third taxable year following the taxable year in which the Employee’s “separation from service” occurs. Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one

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calendar year shall not affect the expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Employee incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.
CAUTION TO EXECUTIVE: This Agreement affects important rights. DO NOT sign it unless you have read it carefully and are satisfied that you understand it completely .
               
        CA, INC.  
 
             
/s/ Amy Fliegelman Olli
      By:   /s/ Andrew Goodman  
 
             
Amy Fliegelman Olli
      Name:   Andrew Goodman  
Title: General Counsel
      Title:   Executive Vice President, HR  
 
             
Date: December 18, 2008
      Date:   December 8, 2008  

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Appendix A
     For purposes of this Agreement, “ Cause ” means any of the following:
          (1) The Employee’s continued failure, either due to willful action or as a result of gross neglect, to substantially perform her duties and responsibilities to the Company and its affiliates (the “ Group ”) under this Agreement (other than any such failure resulting from the Employee’s incapacity due to physical or mental illness) that, if capable of being cured, has not been cured within thirty (30) days after written notice is delivered to the Employee, which notice specifies in reasonable detail the manner in which the Company believes the Employee has not substantially performed her duties and responsibilities.
          (2) The Employee’s engagement in conduct which is demonstrably and materially injurious to the Group, or that materially harms the reputation or financial position of the Group, unless the conduct in question was undertaken in good faith on an informed basis with due care and with a rational business purpose and based upon the honest belief that such conduct was in the best interest of the Group.
          (3) The Employee’s indictment or conviction of, or plea of guilty or nolo contendere to, a felony or any other crime involving dishonesty, fraud or moral turpitude.
          (4) The Employee’s being found liable in any SEC or other civil or criminal securities law action or entering any cease and desist order with respect to such action (regardless of whether or not she admits or denies liability).
          (5) The Employee’s breach of her fiduciary duties to the Group which may reasonably be expected to have a material adverse effect on the Group. However, to the extent the breach is curable, the Company must give the Employee notice and a reasonable opportunity to cure.
          (6) The Employee’s (i) obstructing or impeding, (ii) endeavoring to influence, obstruct or impede or (iii) failing to materially cooperate with, any investigation authorized by the Board (an “ Investigation ”). However, the Employee’s failure to waive attorney-client privilege relating to communications with her own attorney in connection with an Investigation shall not constitute “Cause”.
          (7) The Employee’s withholding, removing, concealing, destroying, altering or by any other means falsifying any material which is requested in connection with an Investigation.
          (8) The Employee’s disqualification or bar by any governmental or self-regulatory authority from serving in the capacity contemplated by this Agreement or her loss of any governmental or self-regulatory license that is reasonably necessary for her to perform her responsibilities to the Group under this Agreement, if (a) the disqualification, bar or loss continues for more than 30 days and (b) during that period the Group uses its good faith efforts to cause the disqualification or bar to be lifted or the license replaced. While any disqualification, bar or loss continues during the Employee’s employment, she will serve in the capacity contemplated by this Agreement to whatever extent legally permissible and, if her employment is not permissible, she will be placed on leave (which will be paid to the extent legally permissible).
          (9) The Employee’s unauthorized use or disclosure of confidential or proprietary information, or related materials, or the violation of any of the terms of the Employment and Confidentiality Agreement executed by the Employee or any Company standard confidentiality policies and procedures, which may reasonably be expected to have a material adverse effect on the Group and that, if capable of being cured, has not been cured within thirty (30) days after written notice is delivered to the Employee by the Company, which notice specifies in reasonable detail the alleged unauthorized use or disclosure or violation.
          (10) The Employee’s violation of the Group’s (i) Workplace Violence Policy or (ii) policies on discrimination, unlawful harassment or substance abuse.

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     For this definition, no act or omission by the Employee will be “willful” unless it is made by the Employee in bad faith or without a reasonable belief that her act or omission was in the best interests of the Group.

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     For purposes of this Agreement, “ Good Reason ” shall mean any of the following:
          (1) Any material and adverse change in the Employee’s title;
          (2) Any material and adverse reduction in the Employee’s authorities or responsibilities other than any isolated, insubstantial and inadvertent failure by the Company that is not in bad faith and is cured promptly on the Employee’s giving the Company notice (and for purposes of clarification, a change in the number of direct reports will not constitute a material and adverse reduction in the Employee’s authorities or responsibilities);
          (3) Any material reduction by the Company in the Employee’s Base Salary or target level of Annual Bonus as set forth in Sections 4(a) and (b), respectively, other than any such reduction agreed to by the Employee in writing; or
          (4) The Company’s material breach of this Agreement;
          provided that (A) no alleged action, reduction or breach set forth in (1) through (4) above shall be deemed to constitute “Good Reason” unless such action, reduction or breach remains uncured, as the case may be, after the expiration of thirty (30) days following delivery to the Company from the Employee of a written notice, setting forth such course of conduct deemed by the Employee to constitute “Good Reason”; (B) such written notice must be delivered to the Company within ninety (90) days after the Employee obtains knowledge of such breach constituting “Good Reason”; and (C) the Employee must terminate employment within two years after the Employee obtains knowledge of such breach constituting “Good Reason”. The Company’s placing the Employee on paid leave for up to ninety (90) consecutive days while it is determining whether there is a basis to terminate the Employee’s employment for Cause will not constitute “Good Reason”.

8

Exhibit 10.6
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
     This Amended and Restated Employment Agreement, dated as of December 29, 2008, amends and restates the original Agreement entered into by and between CA, Inc. (the “ Company ”) and James Bryant (the “ Employee ”) as of June 28, 2006 (the “ Effective Date ”).
      1. Employment, Duties, Authority and Work Standards . The Company hereby agrees to employ the Employee as Executive Vice President and Chief Administration Officer (“ CAO ”) and the Employee hereby accepts such positions and agrees to serve the Company in such capacities during the Employment Period (as defined below). The Employee shall report directly to the Company’s Chief Executive Officer. The Employee’s duties, responsibilities and authority shall be such duties, responsibilities and authority as are consistent with the above job titles and such other duties, responsibilities and authority as the Chief Executive Officer shall from time to time specify. The Employee will (a) serve the Company (and such of its subsidiary companies as the Company may designate) faithfully, diligently and to the best of the Employee’s ability under the direction of the Chief Executive Officer, (b) devote his full working time and best efforts, attention and energy to the performance of his duties to the Company and (c) not do anything inconsistent with his duties to the Company.
      2. Laws; Other Agreements . The Employee represents that his employment hereunder will not violate any law or duty by which he is bound, and will not conflict with or violate any agreement or instrument to which the Employee is a party or by which he is bound.
      3. Sign-On Bonus . The Company shall pay the Employee a cash payment equal to $150,000 (the “ Sign-On Bonus ”) in the following manner. The Company shall pay 50% of the Sign-On Bonus no later than the first scheduled payroll date after the first 30 days of the Employment Period and the balance of the Sign-On bonus no later than the first scheduled payroll date after the first anniversary of the Effective Date, provided that the Employee remains employed with the Company through the applicable payment date. Notwithstanding the foregoing, in the event that the Employee is terminated for Cause at any time during the Employment Period, the Employee shall be obligated to immediately repay to the Company any portion of the Sign-On Bonus paid to him.
      4. Compensation .
          (a) In consideration of services that the Employee will render to the Company, the Company agrees to pay the Employee, during the Employment Period, the sum of $500,000 per annum (less applicable withholdings) (the “ Base Salary ”), payable semi-monthly concurrent with the Company’s normal payroll cycle.
          (b) In addition to the Base Salary, during the Employment Period, the Employee shall have an opportunity to earn an annual cash bonus (“ Annual Bonus ”) under the Company’s Annual Performance Bonus program in accordance with Section 4.4 of the Company’s 2002 Incentive Plan, as amended and restated, or any successor thereto (the “ Incentive Plan ”); provided that, with respect to the fiscal year ending March 31, 2007, the Employee’s Annual Performance Bonus target shall equal $200,000, provided that such targeted amount and the other terms and conditions of such Annual Performance Bonus shall be subject to determination and approval of the Compensation and Human Resource Committee of the Board of Directors (the “ Compensation Committee ”) in accordance with the terms of the Incentive Plan.
          (c) In addition, the Employee shall also be eligible to receive a targeted Long-Term Performance Bonus of $2,500,000 for the performance period commencing on April 1, 2006 under the Company’s Long-Term Performance Bonus program as set forth in Section 4.5 of the Incentive Plan, provided that such targeted amount and the other terms and conditions of such Long-Term Performance Bonus shall be subject to determination and approval of the Compensation Committee in accordance with the terms of the Incentive Plan. Notwithstanding the foregoing, to the extent any restricted stock is granted to the Employee in connection with the

 


 

one-year performance shares under the Long-Term Performance Bonus for the performance period commencing on April 1, 2006, such restricted stock shall vest with respect to all shares on the second anniversary of the grant date ( i.e. , the date on which a definitive number of shares are granted based on the determination of the Compensation Committee based on the achievement of the performance targets) provided he remains employed with the Company through such second anniversary; provided, however, that if the Employee’s employment is terminated without Cause or Employee resigns for Good Reason (i) prior to the first anniversary of the grant date, the shares shall vest with respect to 34% of the underlying shares as of the date of termination or (ii) on or after the first anniversary but prior to the second anniversary of the grant date, the shares shall vest with respect to 67% of the underlying shares as of the date of termination.
          (d) Subject to applicable law, management will recommend that, following the Effective Date, the Employee will be granted stock options to purchase 25,000 shares of the Company’s common stock (“ Common Stock ”), at an exercise price per share equal to the fair market value of a share of Common Stock on the date of grant (determined in accordance with the Incentive Plan), pursuant and subject to the terms and conditions set forth in the Incentive Plan and the option grant agreement provided to the Employee. Such option grant agreement shall provide that the options shall become exercisable in three (3) equal annual installments commencing on the first anniversary of the grant date, provided the Employee remains employed through such anniversary.
          (e) Subject to applicable law, management will recommend that, following the Effective Date, the Employee will be granted an award of 25,000 restricted shares (“ Restricted Stock ”) of Common Stock, subject to restrictions on transferability as set forth in the Incentive Plan and the Restricted Stock grant agreement provided to the Employee. Such Restricted Stock grant agreement shall provide that the restrictions applicable to the Restricted Stock shall lapse in three (3) equal annual installments commencing on the first anniversary of the date of grant, provided the Employee remains employed through such anniversary.
      5. Benefits and Perquisites. During the term of the Employee’s employment, the Employee shall be eligible to participate in all pension, welfare and benefit plans and perquisites generally made available to other senior employees of the Company.
          Management will also recommend to the Board that the Employee be included as a participant in the Company’s Change in Control Severance Policy (the “ CIC Severance Policy ”), provided that such participation and any other terms and conditions related to such participation shall be at the discretion of the Board in accordance with the terms of such CIC Severance Policy.
      6. Termination; Termination Payments.
          (a) Unless the Employee’s employment shall sooner terminate for any reason pursuant to paragraph 7 of this Agreement, the “ Employment Period ” shall commence on the Effective Date and shall terminate on the third anniversary of the Effective Date.
          (b) In the event that the Employee’s employment is terminated during the Employment Period (i) by the Employee for Good Reason (as defined in Appendix A) or (ii) by the Company without Cause (as defined in Appendix A), other than as a result of the Employee’s death or disability (within the meaning of the Company’s long-term disability program then in effect), subject to the Employee’s execution, delivery and non-revocation , within fifty-five (55) days following the Termination Date , of a valid and effective release and waiver in a form satisfactory to the Company, the Company shall pay the Employee a lump sum cash amount equal to one (1) times Employee’s Base Salary, such lump sum payment to be made no later than the sixtieth (60th) day (or the next following business day if the sixtieth day is not a business day) following the Termination Date.
          (c) Notwithstanding anything herein to the contrary, upon the termination of the Employee’s employment for any reason, the rights of the Employee with respect to any shares of restricted stock or options to purchase Common Stock held by the Employee which, as of the Termination Date, have not been forfeited shall be subject to the applicable rules of the plan or agreement under which such restricted stock or options were granted as they exist from time to

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time. In addition, upon the termination of the Employee’s employment for any reason, the Company shall pay to the Employee his Base Salary through the Termination Date, plus any unused vacation time accrued through the Termination Date. Any vested benefits and other amounts that the Employee is otherwise entitled to receive under any employee benefit plan, policy, practice or program of the Company or any of its affiliates shall be payable in accordance with such employee benefit plan, policy, practice or program as the case may be, provided that the Employee shall not be entitled to receive any other payments or benefits in the nature of severance or termination pay.
          (d) In the event that the Employee resigns other than for Good Reason, is terminated for Cause, dies or becomes disabled (within the meaning of the Company’s long-term disability program then in effect) during the Employment Period, no benefits shall be payable to the Employee under paragraph 6(b) of this Agreement, but the terms and conditions of paragraph 6(c) shall remain in effect.
          (e) If the Employee is a participant in the Company’s CIC Severance Policy and a “ Change in Control ” occurs, any payments and benefits provided in the CIC Severance Policy that the Employee is entitled to will reduce (but not below zero) the corresponding payment or benefit provided under this Agreement. It is the intent of this provision to pay or to provide to the Employee the greater of the two payments or benefits but not to duplicate them.
      7. No Duration of Employment . Notwithstanding anything else contained in this Agreement to the contrary, the Company and the Employee each acknowledge and agree that the Employee’s employment with the Company may be terminated by either the Company upon 30 days’ written notice to the Employee (subject to the provisions of paragraph 6 of this Agreement) or by the Employee upon 60 days’ written notice to the Company (subject to the provisions of paragraph 6 of this Agreement), at any time and for any reason, with or without cause; provided that this Agreement may be terminated for Cause immediately upon written notice from the Company to the Employee; and provided further that the Company may determine to waive all or part of the Employee’s 60 days’ notice period at its discretion. In addition, this Agreement shall automatically terminate upon Employee’s death or disability (determined in accordance with the Company’s practices and policies). Upon termination of the Employee’s employment for any reason whatsoever, the Company shall have no further obligations to the Employee other than those set forth in paragraph 6 of this Agreement. The effective date of the Employee’s termination of employment shall be referred to herein as the “ Termination Date .”
      8. General .
          (a) Any notice required or permitted to be given under this Agreement shall be made either:
               (i) by personal delivery to the Employee or, in the case of the Company, to the Company’s principal office (“ Principal Office ”) located at One CA Plaza, Islandia, New York 11749, Attention: Executive Vice President — Human Resources, or
               (ii) in writing and sent by registered mail, postage prepaid, to the Employee’s residence, or, in the case of the Company, to the Company’s Principal Office.
          (b) This Agreement shall be binding upon the Employee and his heirs, executors, assigns, and administrators and shall inure to the benefit of the Company, its successors and assigns and any subsidiary or parent of the Company.
          (c) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles. Any action relating to this Agreement shall be brought exclusively in the state or federal courts of the State of New York, County of Suffolk.
          (d) This Agreement, the Employment and Confidentiality Agreement executed by the Employee on or about the Effective Date and the other documents referred to herein represent the entire agreement between the Employee and the Company related to the Employee’s employment and supersede any and all previous oral or written communications, representations

3


 

or agreements related thereto. This Agreement may only be modified, in writing, jointly by the Employee and a duly authorized representative of the Company. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.
          (e) The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable in any respect, and the validity and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not in any way be impaired and shall remain enforceable to the fullest extent permitted by law. In addition, waiver by any party hereto of any breach or default by the other party of any of the terms of this Agreement shall not operate as a waiver of any other breach or default, whether similar to or different from the breach or default waived. No waiver of any provision of this Agreement shall be implied from any course of dealing between the parties hereto or from any failure by either party hereto to assert its or his rights hereunder on any occasion or series of occasions.
          (f) To extent that the Employee would otherwise be entitled to any payment under this Agreement or any plan or arrangement of the Company or its affiliates, that constitutes “deferred compensation” subject to Section 409A of the Code (“Section 409A”) and that if paid during the six months beginning on the Termination Date would be subject to the Section 409A additional tax because the Employee is a “specified employee” (within the meaning of Section 409A and as determined by the Company), the payment will be paid to the Employee on the earlier of the six-month anniversary of the Termination Date, a change in ownership or effective control of the Company (within the meaning of Section 409A) or the Employee’s death. Similarly, to the extent that the Employee would otherwise be entitled to any benefit (other than a payment) during the six months beginning on the Termination Date that would be subject to the Section 409A additional tax, the benefit will be delayed and will begin being provided on the earlier of the six-month anniversary of the Termination Date, a change in ownership or effective control of the Company (within the meaning of Section 409A) or the Employee’s death. In addition, any payment or benefit due upon a termination of employment that represents a “deferral of compensation” within the meaning of Section 409A shall be paid or provided to the Employee only upon a “separation from service” as defined in Treas. Reg. 1.409A-1(h). To the extent applicable, each severance payment made under this Agreement shall be deemed to be separate payments, amounts payable under Section 6 of this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treas. Reg. 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treas. Reg. 1.409A-1 through 1.409A-6.
               Notwithstanding anything to the contrary in this Agreement or elsewhere, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Treas. Reg. 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Employee only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the Employee’s second taxable year following the Employee’s taxable year in which the “separation from service” occurs; and provided further that such expenses shall be reimbursed no later than the last day of the Employee’s third taxable year following the taxable year in which the Employee’s “separation from service” occurs. Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Agreement is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Employee incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

4


 

CAUTION TO EXECUTIVE: This Agreement affects important rights. DO NOT sign it unless you have read it carefully and are satisfied that you understand it completely .
                 
        CA, INC.    
 
               
/s/ James Bryant
 
      By:   /s/ Andrew Goodman
 
   
Title: Chief Administrative Officer       Name:  Andrew Goodman  
James Bryant       Title:  Executive Vice President  
 
          Worldwide Human Resources    
Date: December 29, 2008       Date: December 8, 2008    

5


 

Appendix A
     For purposes of this Agreement, “ Cause ” means any of the following:
          (1) The Employee’s continued failure, either due to willful action or as a result of gross neglect, to substantially perform his duties and responsibilities to the Company and its affiliates (the “ Group ”) under this Agreement (other than any such failure resulting from the Employee’s incapacity due to physical or mental illness) that, if capable of being cured, has not been cured within thirty (30) days after written notice is delivered to the Employee, which notice specifies in reasonable detail the manner in which the Company believes the Employee has not substantially performed his duties and responsibilities.
          (2) The Employee’s engagement in conduct which is demonstrably and materially injurious to the Group, or that materially harms the reputation or financial position of the Group, unless the conduct in question was undertaken in good faith on an informed basis with due care and with a rational business purpose and based upon the honest belief that such conduct was in the best interest of the Group.
          (3) The Employee’s indictment or conviction of, or plea of guilty or nolo contendere to, a felony or any other crime involving dishonesty, fraud or moral turpitude.
          (4) The Employee’s being found liable in any SEC or other civil or criminal securities law action or entering any cease and desist order with respect to such action (regardless of whether or not he admits or denies liability).
          (5) The Employee’s breach of his fiduciary duties to the Group which may reasonably be expected to have a material adverse effect on the Group. However, to the extent the breach is curable, the Company must give the Employee notice and a reasonable opportunity to cure.
          (6) The Employee’s (i) obstructing or impeding, (ii) endeavoring to influence, obstruct or impede or (iii) failing to materially cooperate with, any investigation authorized by the Board or any governmental or self-regulatory entity (an “ Investigation ”). However, the Employee’s failure to waive attorney-client privilege relating to communications with his own attorney in connection with an Investigation shall not constitute “Cause”.
          (7) The Employee’s withholding, removing, concealing, destroying, altering or by any other means falsifying any material which is requested in connection with an Investigation.
          (8) The Employee’s disqualification or bar by any governmental or self-regulatory authority from serving in the capacity contemplated by this Agreement or his loss of any governmental or self-regulatory license that is reasonably necessary for him to perform his responsibilities to the Group under this Agreement, if (a) the disqualification, bar or loss continues for more than 30 days and (b) during that period the Group uses its good faith efforts to cause the disqualification or bar to be lifted or the license replaced. While any disqualification, bar or loss continues during the Employee’s employment, he will serve in the capacity contemplated by this Agreement to whatever extent legally permissible and, if his employment is not permissible, he will be placed on leave (which will be paid to the extent legally permissible).
          (9) The Employee’s unauthorized use or disclosure of confidential or proprietary information, or related materials, or the violation of any of the terms of the Employment and Confidentiality Agreement executed by the Employee or any Company standard confidentiality policies and procedures, which may reasonably be expected to have a material adverse effect on the Group and that, if capable of being cured, has not been cured within thirty (30) days after written notice is delivered to the Employee by the Company, which notice specifies in reasonable detail the alleged unauthorized use or disclosure or violation.
          (10) The Employee’s violation of the Group’s (i) Workplace Violence Policy or (ii) policies on discrimination, unlawful harassment or substance abuse.

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     For this definition, no act or omission by the Employee will be “willful” unless it is made by the Employee in bad faith or without a reasonable belief that his act or omission was in the best interests of the Group.

7


 

     For purposes of this Agreement, “ Good Reason ” shall mean any of the following:
          (1) Any material and adverse change in the Employee’s title;
          (2) Any material and adverse reduction in the Employee’s authorities or responsibilities other than any isolated, insubstantial and inadvertent failure by the Company that is not in bad faith and is cured promptly on the Employee’s giving the Company notice (and for purposes of clarification, a change in the number of direct reports will not constitute a material and adverse reduction in the Employee’s authorities or responsibilities);
          (3) Any material reduction by the Company in the Employee’s Base Salary or target level of Annual Bonus as set forth in Sections 4(a) and (b), respectively, other than any such reduction agreed to by the Employee in writing; or
          (4) The Company’s material breach of this Agreement;
          provided that (A) no alleged action, reduction or breach set forth in (1) through (4) above shall be deemed to constitute “Good Reason” unless such action, reduction or breach remains uncured, as the case may be, after the expiration of thirty (30) days following delivery to the Company from the Employee of a written notice, setting forth such course of conduct deemed by the Employee to constitute “Good Reason”; (B) such written notice must be delivered to the Company within ninety (90) days after the Employee obtains knowledge of such breach constituting “Good Reason”; and (C) the Employee must terminate employment within two years after the Employee obtains knowledge of such breach constituting “Good Reason”.

8

Exhibit 10.7
(CA LOGO)
July 21, 2006
Ajei Gopal
Dear Ajei:
Congratulations! CA, Inc. is pleased to offer you a position of SVP & General Manager, ESM reporting to Russ Artzt, Executive Vice President. Your start date will be on a mutually agreed upon date in August, 2006.
Your compensation will be an annual base salary of $450,000 paid semi-monthly. With respect to the fiscal year ending March 31, 2007, Executive Management will recommend to the Compensation and Human Resources Committee of the Board of Directors (the Compensation Committee) that you will be eligible to receive an annual cash bonus, with a non prorated incentive target of $350,000, pursuant and subject to the terms and conditions of the Fiscal 2007 annual bonus program established by the Compensation Committee for Senior Vice Presidents under the 2002 Incentive Plan. In addition, Executive Management will recommend to the Compensation Committee that you will be eligible to receive a long-term performance bonus (LTIP) with a non prorated target of $900,000 for the period commencing on April 1, 2006 pursuant and subject to the terms and conditions of the Fiscal 2007 long-term performance bonus program established by the Compensation Committee for Senior Vice Presidents under the 2002 Incentive Plan. The position offered is an exempt position and as such you will not be compensated for overtime.
In addition, you will receive a one time cash equalization payment of $150,000, which will be paid in two equal installments. The first installment of $75,000 will be payable with your first scheduled paycheck following your first thirty days of employment and the second and final installment of $75,000 will be payable following your anniversary of your first full year of employment, provided that you are still employed by CA on the date of payment.
The Executive Management of CA will recommend that the Compensation Committee will award you, upon hire or as soon as practical thereafter, a restricted stock grant of 25,000 shares at the fair market value based on the closing price on the date of grant. The shares will vest with respect to 60%, 30% and 10% of the total underlying shares on each of the first anniversary, second anniversary and third anniversary of the grant date, respectively, provided that you remain employed through the applicable vesting date. These restricted shares will be granted under and subject to the terms and conditions of CA’s 2002 Incentive Plan, as amended, and the grant agreements that will be provided to you. These restricted shares are granted at the sole discretion of the Compensation Committee.
You understand and agree that you will be executing the Company’s standard Employment and Confidentiality agreement, except that the covenant not to compete contained in Section [9(i)] of such agreement is hereby amended to specifically limit the businesses considered to “engage in any business activities that are competitive with the business activities of the Company or those of its subsidiary or parent companies” to the following: Any job or business unit that is competitive with any of CA’s ESM product offerings at International Business Machines Corporation, Microsoft Corporation, BMC Software Inc., Quest Software Inc., Hewlett Packard, and EMC Corporation, or their respective successors. The company agrees that any forfeiture or clawback provisions in any equity grant based on post employment activities shall not be deemed violated if the provisions of the Employment and Confidentiality agreement, as modified by this letter, are not violated.
Should your employment with CA terminate, for reasons other than (i) “for cause” or (ii) in connection with your death or disability and provided you execute a separation agreement, the terms of which will not provide for restrictive activity limitations broader then those set forth in this agreement, and general claims release in a form acceptable to CA, you will be entitled to a minimum severance in the amount of 12 months base salary. For purposes of this Offer, the term “for cause” shall mean any of the following:
          (1) The Employee’s continued failure, either due to willful action or as a result of gross neglect, to substantially perform his duties and responsibilities to the Company and its affiliates (the “Group”) under this Agreement (other than any such failure resulting from the Employee’s incapacity due to physical or mental illness) that, if capable of

 


 

being cured, has not been cured within thirty (30) days after written notice is delivered to the Employee, which notice specifies in reasonable detail the manner in which the Company believes the Employee has not substantially performed his duties and responsibilities.
          (2) The Employee’s engagement in conduct which is demonstrably and materially injurious to the Group, or that materially harms the reputation or financial position of the Group, unless the conduct in question was undertaken in good faith on an informed basis with due care and with a rational business purpose and based upon the honest belief that such conduct was in the best interest of the Group.
          (3) The Employee’s indictment or conviction of, or plea of guilty or nolo contendere to, a felony or any other crime involving dishonesty, fraud or moral turpitude.
          (4) The Employee’s being found liable in any SEC or other civil or criminal securities law action or entering any cease and desist order with respect to such action (regardless of whether or not he admits or denies liability).
          (5) The Employee’s breach of his fiduciary duties to the Group which may reasonably be expected to have a material adverse effect on the Group. However, to the extent the breach is curable, the Company must give the Employee notice and a reasonable opportunity to cure.
          (6) The Employee’s (i) obstructing or impeding, (ii) endeavoring to influence, obstruct or impede or (iii) failing to materially cooperate with, any investigation authorized by the Board or any governmental or self-regulatory entity (an “Investigation”). However, the Employee’s failure to waive attorney-client privilege relating to communications with his own attorney in connection with an Investigation shall not constitute “Cause”.
          (7) The Employee’s withholding, removing, concealing, destroying, altering or by any other means falsifying any material which is requested in connection with an Investigation.
          (8) The Employee’s disqualification or bar by any governmental or self-regulatory authority from serving in the capacity contemplated by this Agreement or his loss of any governmental or self-regulatory license that is reasonably necessary for him to perform his responsibilities to the Group under this Agreement, if (a) the disqualification, bar or loss continues for more than 30 days and (b) during that period the Group uses its good faith efforts to cause the disqualification or bar to be lifted or the license replaced. While any disqualification, bar or loss continues during the Employee’s employment, he will serve in the capacity contemplated by this Agreement to whatever extent legally permissible and, if his employment is not permissible, he will be placed on leave (which will be paid to the extent legally permissible).
          (9) The Employee’s unauthorized use or disclosure of confidential or proprietary information, or related materials, or the violation of any of the terms of the Employment and Confidentiality Agreement executed by the Employee or any Company standard confidentiality policies and procedures, which may reasonably be expected to have a material adverse effect on the Group and that, if capable of being cured, has not been cured within thirty (30) days after written notice is delivered to the Employee by the Company, which notice specifies in reasonable detail the alleged unauthorized use or disclosure or violation.
          (10) The Employee’s violation of the Group’s (i) Workplace Violence Policy or (ii) policies on discrimination, unlawful harassment or substance abuse.
For this definition, no act or omission by the Employee will be “willful” unless it is made by the Employee in bad faith or without a reasonable belief that his act or omission was in the best interests of the Group.
The Company agrees that it will reimburse you for any reasonable expenses, including reasonable attorney’s fees that you incur in connection with defending yourself against any lawsuit brought by Symantec, Corp (“Symantec”) against you specifically related to your prior involvement in the lawsuit of Symantec Corporation vs. Computer Associates International, Inc., Case No.: 02-CV-73740-DT, currently pending in the United States District Court for the Eastern District of Michigan, Southern Division (“the Lawsuit”). You understand that before CA will pay any expenses or attorney’s fees on your behalf, you must first contact CA’s General Counsel to discuss the nature of the legal claims being brought against you by Symantec, the proposed legal representation and the hourly fees to be charged. You further understand that CA will not pay any legal fees on your behalf until you have received the express, written approval of CA’s General Counsel (which shall not be unreasonably withheld). By signing this letter, you represent and warrant that you know of no reason why your employment with CA will breach any continuing obligation you may owe to Symantec, including any obligation related to the Lawsuit provided you comply with the Confidentiality agreements you have with Symantec; the only Symantec agreements you attest to being bound to. You also warrant that, to date, you have not discussed, except of behalf of Symantec, and in the future you will not discuss anything related to the Lawsuit, directly or indirectly, with any employee or representative of CA and that you will continue to honor all continuing obligations you may owe to Symantec, consistent with the terms and conditions of CA’s Employment and Confidentiality Agreement that you have reviewed and will sign prior to beginning employment

 


 

with CA. No member of CA has discussed with you, except on behalf of CA, previously or will they discuss with you in the future anything related to the Lawsuit, directly or indirectly.
Attached is a brief description of your benefits at CA. You will receive more information concerning your benefit programs with a link to our welcome to CA website shortly after your acceptance.
This offer is contingent upon your presentation of the original documentation required to establish your identity and permission to work in the United States in accordance with United States immigration law. We have attached the information required to identify the documentation you will need to bring with you on your first day. In the event you cannot produce proper documentation as outlined on the I-9 within 3 business days of your start date, this offer will be considered to have expired. In accordance with CA policy, your employment, like everyone’s employment at CA, is considered “employment at will”.
At CA, we’re in the business of IT management software, and our employees have always been the foundation upon which we have built our success. CA is one of the world’s largest IT management software providers. Our software and expertise unify and simplify complex IT environments in a secure way across the enterprise for greater business results, through the talent and dedication of our many loyal employees.
We look forward to having you join us and we expect that our relationship will be mutually rewarding. To confirm your acceptance of this offer, please forward this document directly back to me via e-mail within five days of receipt. If I have not received your confirmation within five days or if you are unable to begin work on the aforementioned start date, this offer will be considered to have expired.
We realize that this is an important decision and want to be certain you have all of the information that you require. Should you have questions or require information beyond what we have already discussed or what is contained in this letter, please call me at 631-342-2594 or e-mail me at paul.buonaiuto@ca.com .
Sincerely,
-S-&NBSP;PAUL&NBSP;BUONAIUTO&NBSP;
         
Paul Buonaiuto
VP, Human Resources Recruitment
  /s/ Ajei Gopal
 
   Ajei Gopal
   

 

Exhibit 10.8
Mr. Ajei Gopal
Re: Amendment to Offer Letter
Dear Ajei:
          Reference is made to your offer letter of employment dated August 26, 2008, (the “ Offer Letter ”) between you and CA, Inc. (the “ Company ”).
          As discussed, the Company wishes to amend the terms relating to your severance payment of a minimum of 12 months base salary in the event you are terminated other than for “cause” and terms relating to reimbursement of reasonable expenses as set forth in the Offer Letter in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“ Section 409A ”).
          By signing this letter of amendment you agree to amend the following terms of your Offer Letter:
          You and the Company hereby agree that in the event you are terminated other than for “cause” a severance payment of 12 months base salary (the “Severance Payment”) shall be paid to you provided that within 55 days from your termination of employment you execute, return and do not revoke a general release of claims in the form acceptable to the Company The Severance Payment shall be paid in a lump sum no later than 60 days following the date of your termination of employment.
          You and the Company hereby agree that any obligation of the Company to reimburse reasonable expenses as set forth in your Offer Letter shall be paid to you no later than the end of the calendar year following the year in which such expenses were incurred.
          You and the Company further agree that to the extent that any payments made under the terms of the Offer Letter, this amendment or any plan or arrangement of the Company constitute “deferred compensation” under Section 409A of the Internal Revenue Code (“Section 409A”) and that if paid would be subject to tax and penalties, the payment will be paid to you at such time as permitted under section 409A. Neither the Company nor any of its employees or representatives shall have any liability to you with respect to any taxes or penalties that may be owed under Section 409A to the extent that any payments, plan or arrangement of the Company pursuant to the terms of this agreement constitute “deferred compensation” under Section 409A.
          Except as otherwise amended herein all terms of your Offer Letter will remain in full force and effect. Please sign and date the agreement below.

 


 

         
/s/Andrew Goodman
 
CA, Inc.
  /s/ Ajei Gopal
 
Ajei Gopal
   
 
       
Date: December 8, 2008
  Date: December 12, 2008    

 

Exhibit 12.1
CA, Inc.
STATEMENT OF RATIOS OF EARNINGS TO FIXED CHARGES
(in millions, except ratios)
                                                 
                                            Nine Months Ended  
    Years Ended March 31     December 31,  
    2004     2005     2006     2007     2008     2008  
Earnings available for fixed charges:
                                               
 
                                               
Earnings from continuing operations before income taxes, minority interest and discontinued operations
    (114 )     34       125       160       808       933  
 
                                               
Add: Fixed charges
    205       221       165       199       215       111  
 
                                               
Less: Minority Interest in pre-tax loss of subsidiaries that have not incurred fixed charges
                1                    
 
                                               
           
Total earnings available for fixed charges
    91       255       291       359       1,023       1,044  
           
 
                                               
Fixed charges:
                                               
 
                                               
Interest expense(1)
    136       153       95       123       136       74  
 
                                               
Interest portion of rental expense
    69       68       70       76       79       37  
 
                                               
           
Total fixed charges
    205       221       165       199       215       111  
           
 
                                               
RATIOS OF EARNINGS TO FIXED CHARGES
    0.44       1.15       1.77       1.81       4.75       9.41  
 
                                               
Deficiency of earnings to fixed charges
    114       n/a       n/a       n/a       n/a       n/a  
 
(1) Includes amortization of discount related to indebtedness

 

Exhibit 15
January 30, 2009
CA, Inc.
One CA Plaza
Islandia, New York 11749
Re: Registration Statement No. 333-151619 on Form S-3 and Registration Statement Nos. 333-146173, 333-120849, 333-108665, 333-100896, 333-88916, 333-32942, 333-31284, 333-83147, 333-80883, 333-79727, 333-62055, 333-19071, 333-04801, 333-127602, 333-127601, 333-126273, 33-64377, 33-53915, 33-53572, 33-34607, 33-18322, 33-20797, 2-92355, 2-87495 and 2-79751 on Form S-8
With respect to the subject registration statements, we acknowledge our awareness of the use therein of our report dated January 30, 2009 related to our review of interim financial information.
Pursuant to Rule 436 under the Securities Act of 1933 (the Act), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.
/s/ KPMG LLP
New York, New York

 

Exhibit 31.1
CEO CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John A. Swainson, certify that:
1.   I have reviewed this Quarterly Report on Form 10-Q of CA, Inc.;
 
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
    (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
    (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
    (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
    (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
    (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
    (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
     
Date: January 30, 2009
  /s/ John A. Swainson
 
   
 
  John A. Swainson
 
  Chief Executive Officer

 

Exhibit 31.2
CFO CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Nancy E. Cooper, certify that:
1.   I have reviewed this Quarterly Report on Form 10-Q of CA, Inc.;
 
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
    (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
    (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
    (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
    (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
    (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
    (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
       
Date: January 30, 2009
  /s/ Nancy E. Cooper  
 
     
 
  Nancy E. Cooper  
 
  Executive Vice President and Chief Financial Officer  

 

Exhibit 32
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report on Form 10-Q of CA, Inc., a Delaware corporation (the “Company”), for the fiscal quarter ended December 31, 2008 as filed with the Securities and Exchange Commission (the “Report”), each of John A. Swainson, Chief Executive Officer of the Company, and Nancy E. Cooper, Executive Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to §906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350), that to his or her knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
         
/s/ John A. Swainson
 
John A. Swainson
       
Chief Executive Officer
       
January 30, 2009
       
 
       
/s/ Nancy E. Cooper
 
Nancy E. Cooper
       
Executive Vice President and Chief Financial Officer
       
January 30, 2009
       
The foregoing certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that Section. The foregoing certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates it by reference.