CA Reports First Quarter Fiscal Year 2009 Results

-- Revenue up 6 percent to $1.087 billion

-- GAAP earnings per share increases 54 percent to $0.37

-- GAAP operating margin increases 7 points

-- Non-GAAP earnings per share up 38 percent to $0.40

-- Records strongest first quarter cash flow from operations in
three years

-- Reaffirms full fiscal year 2009 outlook
ISLANDIA, N.Y.--(Business Wire)--
CA, Inc. (NASDAQ:CA), the world's leading independent IT
management software company, today announced results for its first
quarter fiscal year 2009, ended June 30, 2008.

"I am pleased that the first quarter of fiscal 2009 was a good one
for CA, our seventh consecutive quarter of solid performance," said
John Swainson, CA's chief executive officer. "We built on the momentum
we established and sustained in fiscal year 2008 and recorded strong
bookings and profit growth with cash flow from operations and revenue
meeting our expectations.

"Our results indicate that CA has innovative products that are
operationally critical to our customers' success; a sound, reliable
financial model; and strong relationships with customers, which we are
able to nurture and grow quarter after quarter, year after year," he
continued.

"These advantages are the bedrock of CA's continuing success.
That's why I am confident about CA's position in the marketplace and
why we are reaffirming our outlook for fiscal year 2009," Swainson
concluded.

Total revenue for the first quarter was $1.087 billion, up 6
percent, or flat in constant currency, from the $1.025 billion
reported in the similar period last fiscal year.

Total North American revenue was up 3 percent in the first quarter
while revenue from international operations was up 10 percent, or down
2 percent on a constant currency basis, compared with the same period
last year.

Total bookings* in the first quarter were $1.030 billion, up 15
percent compared with $895 million in the prior year comparable
period. During the quarter, the Company signed 13 license agreements
with incremental values greater than $10 million, for a total of about
$371 million, compared with 10 license agreements totaling about $202
million in the first quarter of fiscal year 2008. Weighted average
life of subscription and maintenance bookings* in the first quarter
was 3.37 years, compared with 2.95 years in the prior fiscal year
period. When annualized, the year-over-year increase in annualized
subscription and maintenance bookings for the quarter was 5 percent.

Total expenses, before interest and income taxes, for the first
quarter were $779 million, a decrease of 4 percent, compared with $814
million in the prior year period. In the first quarter, GAAP operating
income, before interest and income taxes, was $308 million,
representing an operating margin of 28 percent, a 7 percentage point
improvement from the prior year period.

On a non-GAAP basis, which excludes purchased software and
intangibles amortization, restructuring and other costs and gains and
losses on hedges of operating income relating to future periods, the
Company reported first quarter operating expenses of $745 million,
down 3 percent from the $769 million reported in the prior year
period. Excluding the negative impact of currency, first quarter
non-GAAP operating expenses were down 7 percent year-over-year. For
the first quarter, non-GAAP operating income, before interest and
incomes taxes, was $342 million, up 34 percent from the prior year
period and representing a non-GAAP operating margin of 31 percent, a 6
percentage point improvement from the first quarter of fiscal year
2008.

The Company reported first-quarter GAAP income of $200 million or
$0.37 per diluted common share, compared with income of $129 million
or $0.24 per diluted common share a year earlier, representing a 54
percent increase in earnings per share.

CA recorded non-GAAP income of $214 million for the first quarter,
or $0.40 per diluted common share, compared with $159 million, or
$0.29 per diluted common share, reported a year earlier, representing
a 38 percent increase in earnings per share.

The Company reported cash flow from operations of $54 million in
the first quarter, up from a negative $13 million recorded in the
first quarter of fiscal year 2008. Cash flow was affected positively
by a duplicate payment of $23 million received from a customer that
was returned in the second quarter.

Capital Structure

The balance of cash, cash equivalents and marketable securities at
June 30, 2008, was $2.411 billion. With $2.230 billion in total debt
outstanding, the Company has a net cash position of $181 million.

Outlook for Fiscal Year 2009

The Company reaffirmed its fiscal year 2009 annual outlook based
on current expectations. The following represents "forward-looking
statements" (as defined below).

-- Total bookings growth in the mid-to-high single digits;

-- Total revenue growth of 2 to 4 percent in constant currency,
or $4.5 billion to $4.6 billion when translated at current
foreign currency exchange rates, representing reported growth
of 5 to 7 percent;

-- GAAP earnings per common diluted share of $1.28 to $1.35. The
outlook includes about $30 million in charges related to
previously disclosed restructuring plans;

-- Non-GAAP operating earnings per share of $1.45 to $1.52 per
diluted common share, an increase of 22 percent to 28 percent;
and

-- Full-year cash flow from operations of $1.150 billion to
$1.180 billion, an increase of 4 percent to 7 percent. The
outlook includes about $120 million in payments related to
previously disclosed restructuring plans and relatively flat
cash taxes year-over-year.

Except as otherwise noted, guidance reflects current foreign
currency exchange rates, assumes no acquisitions and a partial
currency hedge of operating income.

The Company anticipates approximately 517 million shares
outstanding at fiscal 2009 year-end and a weighted average diluted
share count of approximately 541 million for the fiscal year. The
Company also expects a full-year tax rate on non-GAAP income of
approximately 37 percent.

A reconciliation of each non-GAAP measure referenced in this press
release to its most directly comparable GAAP financial measure is
included in the tables provided as part of this news release.

This news release and the accompanying tables should be read in
conjunction with additional content that is available on the Company's
website, including a supplemental financial package as well as a
webcast that the Company will host at 5 p.m. ET today to discuss its
first quarter fiscal year 2009 results. The webcast will be archived
on the website. Individuals can access the webcast, as well as this
press release and supplemental financial information, at
http://ca.com/invest or listen to the call at
1-877-809-1564. International participants can listen to the call at
1-706-634-8757.

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* The Company has modified the way in which it reports bookings and
weighted average life duration in an effort to align these metrics
with amounts it expects to recognize as revenue.

Total bookings now includes the value of new maintenance contracts
executed by customers in the current period that were separate
from license subscription contracts, certain of which had
previously been excluded. This modification is reflected in the
bookings reported in the first quarter of fiscal year 2008 for
comparison purposes and resulted in an increase of $61 million for
the first quarter of fiscal year 2008.

Weighted average life duration now includes all license and
maintenance contracts for both direct and indirect channels
whereas the previous calculation reflected direct product licenses
only. This modification is reflected in the weighted average life
duration from the first quarter of fiscal year 2008 for comparison
purposes and resulted in a decrease of 0.40 years for the first
quarter of fiscal year 2008.
*T

About CA

CA (NASDAQ: CA) is the world's leading independent IT management
software company. With CA's Enterprise IT Management (EITM) vision and
expertise, organizations can more effectively govern, manage and
secure IT to optimize business performance and sustain competitive
advantage. For more information, visit www.ca.com.

Non-GAAP Financial Measures

This news release, the accompanying tables and the additional
content that is available on the Company's website, including a
supplemental financial package, includes certain financial measures
that exclude the impact of certain items and therefore have not been
calculated in accordance with U.S. generally accepted accounting
principles (GAAP). Non-GAAP metrics for operating expenses, operating
income, operating margin, income from operations and diluted earnings
per share exclude the following items: non-cash amortization of
purchased software and other intangibles, charges for in-process
research and development costs, restructuring and other charges and
the gains and losses on hedges of operating income relating to future
periods. Non-GAAP income also excludes the interest on convertible
bonds. The effective tax rate on GAAP and non-GAAP income from
operations is the Company's provision for income taxes expressed as a
percentage of pre-tax GAAP and non-GAAP income from operations,
respectively. Such tax rates are determined based on an estimated
effective full year tax rate, with the effective tax rate for GAAP
generally including the impact of discrete items in the quarter such
items arise and the effective tax rate for Operating generally
allocating the impact of such items pro rata to the fiscal year's
remaining reporting periods. Non-GAAP adjusted cash flow excludes
restructuring and other payments. Free cash flow excludes capital
expenditures. These non-GAAP financial measures may be different from
non-GAAP financial measures used by other companies. Non-GAAP
financial measures should not be considered as a substitute for, or
superior to, measures of financial performance prepared in accordance
with GAAP. By excluding these items, non-GAAP financial measures
facilitate management's internal comparisons to the Company's
historical operating results and cash flows, to competitors' operating
results and cash flows, and to estimates made by securities analysts.
Management uses these non-GAAP financial measures internally to
evaluate its performance and they are key variables in determining
management incentive compensation. The Company believes these non-GAAP
financial measures are useful to investors in allowing for greater
transparency of supplemental information used by management in its
financial and operational decision-making. In addition, the Company
has historically reported similar non-GAAP financial measures to its
investors and believes that the inclusion of comparative numbers
provides consistency in its financial reporting. Investors are
encouraged to review the reconciliation of the non-GAAP financial
measures used in this news release to their most directly comparable
GAAP financial measures, which are attached to this news release.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this communication (such as statements
containing the words "believes," "plans," "anticipates," "expects,"
"estimates" and similar expressions) constitute "forward-looking
statements" that are based upon the beliefs of, and assumptions made
by, the Company's management, as well as information currently
available to management. These forward-looking statements reflect the
Company's current views with respect to future events and are 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 the Company's key financial metrics;
given the global nature of the Company's business, economic factors or
political events beyond the Company's control can affect its business
in unpredictable ways; changes to the compensation of the Company's
sales organization and changes to the Company's sales coverage model
and organization could adversely affect the Company's business,
financial condition, operating results and cash flow; if the Company
does not adequately manage and evolve its financial reporting and
managerial systems and processes, including the successful
implementation of its enterprise resource planning software, its
ability to manage and grow its business may be harmed; the Company may
encounter difficulty in successfully integrating acquired companies
and products into its existing businesses; the Company is subject to
intense competition in product and service offerings and pricing and
increased competition is expected in the future; the Company's
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 the Company's revenue and earnings;
if the Company's products do not remain compatible with ever-changing
operating environments, it could lose customers and the demand for its
products and services could decrease; the Company may lose access to
third party operating systems or certain third party software that the
Company uses in daily operations, either of which could delay product
development and production; certain software the Company uses is from
open source code sources, which, under certain circumstances, may lead
to unintended consequences; discovery of errors in the Company's
software could materially adversely affect the Company's revenue and
earnings and subject the Company to product liability claims, which
may be costly and time consuming; the Company's credit ratings have
been downgraded in the past and could be downgraded further which
would require the Company to pay additional interest under its credit
agreement and could adversely affect its ability to borrow; the
Company has a significant amount of debt; the failure to protect the
Company's intellectual property rights and source code would weaken
its competitive position; the Company may become dependent upon large
transactions with customers; the Company's sales to government
customers subject it to risks, including early termination, audits,
investigations, sanctions and penalties; the Company's software
products and the Company's and customers' data centers and IT
environments may be subject to hacking or other breaches, harming the
market perception of the effectiveness of the Company's products;
general economic conditions may lead the Company's customers to delay
or forgo technology upgrades; the market for some or all of the
Company's key product areas may not grow; the use of third party
microcode could negatively affect the Company's product development;
the Company may lose access to third party operating systems, which
could negatively affect the Company's product development; third
parties could claim that the Company's products infringe their
intellectual property rights or that the Company owes royalty
payments; fluctuations in foreign currencies could result in
translation losses; the Company has outsourced various functions to
third parties and these arrangements may not be successful; potential
tax liabilities may materially adversely affect the Company's results;
and the other factors described in the Company's filings with the
Securities and Exchange Commission. The Company assumes no obligation
to update the information in this communication, except as otherwise
required by law. Readers are cautioned not to place undue reliance on
these forward-looking statements that speak only as of the date
hereof.

Copyright (C) 2008 CA, Inc. All Rights Reserved. One CA Plaza,
Islandia, N.Y. 11749. All trademarks, trade names, service marks, and
logos referenced herein belong to their respective companies.

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

Three Months Ended
June 30,
------------------
2008 2007(1)
-------- --------
Revenue:

Subscription and maintenance revenue $ 965 $ 907
Professional services 93 93
Software fees and other 29 25
-------- ---------
Total revenue 1,087 1,025
-------- ---------
Expenses:
Costs of licensing and maintenance 75 66
Costs of professional services 79 95
Amortization of capitalized software costs 31 29
Selling and marketing 297 306
General and administrative 122 132
Product development and enhancements 123 129
Depreciation and amortization of other intangible
assets 36 39
Other expenses, net 12 6
Restructuring and other 4 12
-------- ---------
Total expenses before interest and income taxes 779 814
-------- ---------
Income before interest and income taxes 308 211
Interest expense, net 4 14
-------- ---------
Income before income taxes 304 197
Income tax expense 104 68
-------- ---------
NET INCOME $ 200 $ 129
======== =========

Basic income per share $ 0.39 $ 0.25
Basic weighted average shares used in computation 512 525
Diluted income per share (2) $ 0.37 $ 0.24
Diluted weighted average shares used in
computation(2) 537 551
*T

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

(2) Net income and the number of shares used in the computation of
diluted EPS was computed by dividing (i) the sum of net income
and the after-tax amount of interest expense recognized in the
period associated with outstanding dilutive convertible senior
notes by (ii) the sum of the weighted average number of common
shares outstanding for the period and the weighted average
dilutive common share equivalents.
*T

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

June 30, March 31,
2008 2008
----------- -----------
(unaudited)
Cash, cash equivalents and marketable
securities $ 2,411 $ 2,796
Trade and installment accounts receivable, net 712 970
Deferred income taxes - current 571 623
Other current assets 124 79
----------- -----------

Total current assets 3,818 4,468

Installment accounts receivable, due after one
year, net 185 234
Property and equipment, net 486 496
Purchased software products, net 157 171
Goodwill 5,341 5,351
Deferred income taxes - noncurrent 283 293
Other noncurrent assets, net 735 743
----------- -----------

Total assets $ 11,005 $ 11,756
=========== ===========

Current portion of long-term debt and loans
payable $ 11 $ 361
Deferred revenue (billed or collected) -
current 2,389 2,664
Deferred income taxes - current 106 106
Other current liabilities 826 1,147
----------- -----------

Total current liabilities 3,332 4,278

Long-term debt, net of current portion 2,219 2,221
Deferred income taxes - noncurrent 201 200
Deferred revenue (billed or collected) --
noncurrent 1,042 1,036
Other noncurrent liabilities 282 312
----------- -----------

Total liabilities 7,076 8,047
----------- -----------

Common stock 59 59
Additional paid-in capital 3,510 3,566
Retained earnings 2,352 2,173
Accumulated other comprehensive loss (95) (101)
Treasury stock (1,897) (1,988)
----------- -----------

Total stockholders' equity 3,929 3,709
----------- -----------

Total liabilities and stockholders' equity $ 11,005 $ 11,756
=========== ===========
*T

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Table 3
CA, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)

Three Months Ended
June 30,
-------------------
2008 2007(1)
--------- ---------

OPERATING ACTIVITIES:
Net income $ 200 $ 129
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 67 68
Deferred income taxes 62 38
Non-cash share based compensation expense and
defined contribution plan 31 27
Loss on sale and disposal of assets 2 4
Foreign currency transaction losses (gains) -
before taxes 11 (6)
Decrease in trade and current installment
accounts receivable, net 245 190
Decrease in noncurrent installment accounts
receivable, net 38 43
Decrease in deferred revenue (billed or
collected) - current & noncurrent (252) (175)
Decrease in taxes payable, net (151) (197)
Decrease in accounts payable, accrued expenses
and other (42) (57)
Decrease in accrued salaries, wages and
commissions (98) (64)
Restructuring and other, net (37) (23)
Changes in other operating assets and
liabilities (22) 10
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES INVESTING ACTIVITIES: 54 (13)
Acquisitions, primarily goodwill, purchased
software, and other intangible assets, net of
cash acquired (20) (16)
Settlements of purchase accounting liabilities (1) (3)
Purchases of property and equipment (23) (23)
Proceeds from sale of assets - 27
Purchases of marketable securities, net - (4)
Decrease in restricted cash 3 1
Capitalized software development costs (34) (25)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (75) (43)
FINANCING ACTIVITIES:
Dividends paid (21) (21)
Purchases of treasury stock (common stock) - (500)
Debt repayments (352) (3)
Exercise of common stock options and other 5 8
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES (368) (516)
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS BEFORE
EFFECT OF EXCHANGE RATE CHANGES ON CASH (389) (572)
Effect of exchange rate changes on cash 4 26
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (385) (546)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,795 2,275
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,410 $ 1,729
========= =========
*T

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

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

Three Months Ended
June 30,
-------------------
2008 2007
--------- ---------

Total revenue $ 1,087 $ 1,025
Total expenses before interest and income taxes 779 814
--------- ---------

Income before interest and income taxes (1) 308 211
GAAP Operating Margin (% of revenue) 28% 21%

Non-GAAP operating adjustments:
Purchased software amortization 15 15
Intangibles amortization 13 18
Restructuring and other 4 12
Hedging losses(2) 2 -
--------- ---------
Total non-GAAP operating adjustments 34 45
--------- ---------
Non-GAAP income before interest and income taxes 342 256

Non-GAAP Operating Margin (% of revenue) (3) 31% 25%

Interest expense, net 4 14
Interest on dilutive convertible bonds (2) (2)
--------- ---------
Non-GAAP income before income taxes 340 244

Income tax provision (4) 126 85
--------- ---------

Non-GAAP income $ 214 $ 159
========= =========

Non-GAAP diluted EPS(5) $ 0.40 $ 0.29
========= =========
Diluted weighted average shares used in
computation(5) 537 551
*T

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*T
(1) See the Condensed Consolidated Statement of Operations in Table 1
for a bridge from income before interest and income taxes to net
income.

(2) Consists of losses on hedges of operating income relating to
future periods.

(3) Excluding stock based compensation of $25 and $21, non-GAAP
operating margin would have been 34% and 27% for the three months
ended June 30, 2008 and 2007, respectively.

(4) The effective tax rate on non-GAAP income is the Company's
provision for income taxes expressed as a percentage of non-GAAP
income before income taxes. Such tax rate is determined based on
an estimated effective full year tax rate and the impacts of
certain discrete items (such as decreases in non-US tax rates,
reconciliations of tax returns to tax provisions and resolutions
of tax contingencies).

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

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

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Table 5
CA, Inc.
Reconciliation of GAAP to Non-GAAP
Operating Expenses and Diluted Income per Share
(in millions)
(unaudited)

Three Months Ended
June 30,
---------------------
Operating Expenses 2008 2007
------------------------------------------------ ---------- ----------

Total expenses before interest and income taxes $ 779 $ 814

Non-GAAP operating adjustments:
Purchased software amortization 15 15
Intangibles amortization 13 18
Restructuring and other 4 12
Hedging losses(1) 2 -
---------- ----------

Total non-GAAP operating adjustments 34 45
---------- ----------

Total non-GAAP operating expenses $ 745 $ 769
========== ==========

Three Months Ended
June 30,
---------------------
Diluted Income per Share 2008 2007
------------------------------------------------ ---------- ----------

GAAP diluted income per share $ 0.37 $ 0.24

Non-GAAP adjustments, net of taxes

Purchased software and intangibles
amortization 0.03 0.04
Restructuring and other charges 0.01 0.01
Non-GAAP effective tax rate adjustments (2) -0.01 -
---------- ----------

Non-GAAP diluted income per share $ 0.40 $ 0.29
========== ==========
*T

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(1) Consists of losses on hedges of operating income relating to
future periods.

(2) The effective tax rate on non-GAAP income is the Company's
provision for income taxes expressed as a percentage of non-GAAP
income from operations before income taxes. Such tax rate is
determined based on an estimated effective full year tax rate and
the impacts of certain discrete items (such as decreases in non-
US tax rates, reconciliations of tax returns to tax provisions
and resolutions of tax contingencies).

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

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Table 6
CA, Inc.
Effective Tax Rate Reconciliation
GAAP and Non-GAAP
(in millions)
(unaudited)

Three Months Ended
June 30, 2008
-----------------------
GAAP Non-GAAP
----------- -----------

Income before income taxes(1) $ 304 $ 340

Statutory tax rate 35% 35%

Tax at statutory rate 106 119

Adjustments for discrete items and state tax
provision(2) (2) 7
----------- -----------

Total tax expense $ 104 $ 126
=========== ===========

Effective tax rate(3) 34% 37%
*T

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(1) See Table 4 for a reconciliation of income before interest and
income taxes on a GAAP basis to income before income taxes on a
non-GAAP basis.

(2) The effective tax rate for GAAP generally includes the impact of
discrete items in the quarter such items arise, whereas the
effective tax rate for non-GAAP generally allocates the impact of
such items pro rata to the fiscal year's remaining reporting
periods.

(3) The effective tax rate on GAAP and non-GAAP income is the
Company's provision for income taxes expressed as a percentage of
GAAP and non-GAAP income before income taxes, respectively. Such
tax rates are determined based on an estimated effective full
year tax rate and the impacts of certain discrete items (such as
decreases in non-US tax rates, reconciliations of tax returns to
tax provisions and resolutions of tax contingencies).

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

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Table 7
CA, Inc.
Reconciliation of Projected GAAP Earnings per Share to
Projected Non-GAAP Earnings per Share
(unaudited)

Fiscal Year Ending
March 31, 2009
---------------------

Projected GAAP diluted EPS from operations range $ 1.28 to $ 1.35

Non-GAAP adjustments from operations, net of
taxes
Purchased software and intangibles
amortization 0.12 0.12
Restructuring and other charges 0.04 0.04
Impact from convertible senior notes 0.01 0.01
---------------------

Non-GAAP projected diluted operating EPS range $ 1.45 to $ 1.52
=====================
*T

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

CA, Inc.
Public Relations:
Dan Kaferle, 631-342-2111
daniel.kaferle@ca.com
or
Investor Relations:
Carol Lu, 212-415-6920
carol.lu@ca.com

Copyright Business Wire 2008