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February 5, 2008 |
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CA INC: Earns US$163 Million in Third Quarter Ended Dec. 31 CA Inc. reported US$163 million of net income for the three months ended Dec. 31, 2007, compared to US$50 million of net income for the same period in 2006. "CA has recorded another solid quarter – our fifth in a row," said John Swainson, CA's president and chief executive officer. "Most importantly, we remain on course to finish the year with revenue and earnings per share exceeding the updated annual outlook provided at our financial analyst day last December. "I am very satisfied with our continued performance improvement, and I am very proud of the people of CA for their efforts and accomplishments," Mr. Swainson continued. "Our EITM strategy enables us to communicate CA's value proposition to customers in a clear and compelling way, and we have made considerable progress in our efforts to cross-sell and up-sell a broader portfolio of CA products to new and existing customers. "I am confident that CA's stable customer base and rich product portfolio puts us in a strong position in today's competitive environment. Our results are clearly showing the benefits of the transformation efforts we began three years ago. We continue to manage our business prudently: controlling costs, increasing efficiency and improving margins at the same time as we focus on delivering innovative products and driving revenue growth," Mr. Swainson concluded. Third Quarter Results Total revenue for the third quarter was US$1.100 billion, an increase of 10 percent, or 4 percent in constant currency, compared to US$1.002 billion reported in the comparable prior year period. For the first three quarters of fiscal year 2008, total revenue was US$3.192 billion, up 9 percent, or 5 percent in constant currency, over the first three quarters of fiscal year 2007. Total North American revenue was up 5 percent in the third quarter while revenue from international operations was up 17 percent, or 4 percent on a constant currency basis, compared to the same period last year. Total product and services bookings in the third quarter were US$1.228 billion, compared to US$1.553 billion reported in the comparable prior year period, and, as expected, declined 21 percent on a year-over-year basis. During the third quarter of fiscal year 2008, the company renewed 16 license agreements greater than US$10 million, totaling US$303 million, compared to 18 such deals, totaling US$700 million, in the prior year period. The weighted average duration of new direct bookings in the third quarter was 3.16 years, compared to 3.74 years in the prior year's third quarter. When annualized, the year-over-year decrease from new direct bookings was 9 percent. For the first three quarters of fiscal year 2008, total product and services bookings were US$3.069 billion, up 9 percent from the US$2.805 billion reported in the first three quarters of fiscal year 2007. In addition, annualized direct bookings for the first three quarters of the fiscal year increased 17 percent over the same period last year. The company now expects total product and services bookings for the full 2008 fiscal year to grow at a percentage in the mid-teens over the prior year. Total expenses, before interest and income taxes, for the third quarter were US$851 million, a decrease of 6 percent, compared to US$907 million in the prior year period. The third quarter was positively affected by a decrease in amortization of capitalized software from the comparable quarter last year. In the third quarter, GAAP operating income was US$249 million, representing an operating margin of 23 percent, a 14 percentage point improvement from the prior year period. Total expenses, before interest and income taxes, for the first three quarters were US$2.488 billion, a decrease of 8 percent, compared to the US$2.712 billion reported in the first three quarters of fiscal year 2007. The decline in expenses was driven primarily by a decrease in amortization of capitalized software, lower restructuring costs and improved expense management. On a non-GAAP basis, which excludes purchased software and intangibles, amortization, restructuring and other costs, the company reported third quarter operating expenses of US$800 million, up one percent from the US$791 million reported in the prior year period. Excluding the negative impact of currency, non-GAAP operating expenses were down 3 percent year-over-year. In the third quarter, non-GAAP operating income was US$300 million, up 42 percent from the prior year period and representing a non-GAAP operating margin of 27 percent – a 6 percentage point improvement from the third quarter of fiscal year 2007. The company recorded GAAP income from continuing operations of US$163 million for the third quarter compared to US$52 million in the prior year period. This improvement is a result of higher revenue, expense control and the decrease in amortization of purchased software and restructuring costs. For the first three quarters of fiscal year 2008, GAAP income from continuing operations was US$429 million, up from the US$141 million reported in the same period in fiscal year 2007. The company recorded non-GAAP income from continuing operations of US$192 million for the third quarter compared to US$133 million reported a year earlier. For the first three quarters of fiscal year 2008, non-GAAP income from continuing operations was US$524 million, up 34 percent from the first three quarters of fiscal year 2007, while non-GAAP earnings per diluted common share were US$0.97 in the first three quarters of fiscal year 2008, an increase of 43 percent, over the US$0.68 reported in the same period in fiscal year 2007. For the third quarter of fiscal year 2008, CA reported cash flow from operations of US$233 million, compared to US$587 million in cash flow from operations in the third quarter of fiscal year 2007. The year-over-year decline was due primarily to last year's stronger than usual bookings in the third quarter, the result of a catch-up from a weaker than normal first half of fiscal year 2007. Cash flow also was affected by an investment in working capital in the third quarter, the majority of which the Company expects to recover in the fourth quarter of 2008. Additionally, third quarter cash flow was affected by lower than expected cash taxes due principally to a tax refund. For the first three quarters of the fiscal year, the Company recorded US$413 million in cash flow from operations compared to US$547 million reported in the prior year period. Capital Structure The balance of cash, cash equivalents and marketable securities at Dec. 31, 2007, was US$2.078 billion. With US$2.575 billion in total debt outstanding, the company has a net debt position of US$497 million. The company anticipated approximately 514 million shares outstanding at fiscal year-end and a weighted average diluted share count of approximately 541 million shares for the fiscal year. The company also expected a full-year tax rate on non-GAAP income of approximately 36 percent. Headquartered in Islandia, New York, CA Inc. (NYSE:CA) -- http://www.ca.com/ -- is an information technology management software company that unifies and simplifies the management ofenterprise-wide IT. Founded in 1976, CA serves customers in more than 140 countries. The company has operations in Brazil, Indonesia, Luxembourg, Philippines and Thailand. * * * As reported in the Troubled Company Reporter-Latin America on Dec. 19, 2007, Fitch Ratings affirmed these ratings of CA, Inc.: -- Issuer Default Rating at 'BB+'; -- Senior unsecured revolving credit facility at 'BB+'; -- Senior unsecured debt at 'BB+'. Additionally, Fitch revised the Rating Outlook on CA Inc. to Stable from Negative. Fitch's actions affect approximately US$2.8 billion of total debt, including the company's US$1.0 billion revolving credit facility. |
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