Delaware
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13-2857434
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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|
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One CA Plaza
Islandia, New York
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11749
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(Address of principal executive offices)
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(Zip Code)
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(Check one:)
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Large accelerated filer
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þ
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Title of Class
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Shares Outstanding
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Common Stock
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as of October 18, 2013
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par value $0.10 per share
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451,274,478
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Page
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PART I.
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Financial Information
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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September 30,
2013 |
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March 31,
2013 |
||||
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(unaudited)
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|
|
||||
Assets:
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|
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|
||||
Current assets:
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|
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|
||||
Cash and cash equivalents
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$
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2,790
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|
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$
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2,593
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Short-term investments
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9
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|
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183
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||
Trade accounts receivable, net
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588
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|
|
856
|
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||
Deferred income taxes
|
358
|
|
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346
|
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Other current assets
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166
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|
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148
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Total current assets
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$
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3,911
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|
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$
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4,126
|
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Property and equipment, net of accumulated depreciation of $826 and $786, respectively
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$
|
306
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|
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$
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311
|
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Goodwill
|
5,920
|
|
|
5,871
|
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Capitalized software and other intangible assets, net
|
1,214
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|
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1,231
|
|
||
Deferred income taxes
|
76
|
|
|
77
|
|
||
Other noncurrent assets, net
|
168
|
|
|
195
|
|
||
Total assets
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$
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11,595
|
|
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$
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11,811
|
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Liabilities and stockholders' equity:
|
|
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|
||||
Current liabilities:
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|
||||
Current portion of long-term debt
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$
|
11
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|
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$
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16
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Accounts payable
|
80
|
|
|
93
|
|
||
Accrued salaries, wages and commissions
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232
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|
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304
|
|
||
Accrued expenses and other current liabilities
|
381
|
|
|
406
|
|
||
Deferred revenue (billed or collected)
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2,038
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|
|
2,482
|
|
||
Taxes payable, other than income taxes payable
|
43
|
|
|
77
|
|
||
Federal, state and foreign income taxes payable
|
58
|
|
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151
|
|
||
Deferred income taxes
|
12
|
|
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12
|
|
||
Total current liabilities
|
$
|
2,855
|
|
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$
|
3,541
|
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Long-term debt, net of current portion
|
$
|
1,768
|
|
|
$
|
1,274
|
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Federal, state and foreign income taxes payable
|
175
|
|
|
338
|
|
||
Deferred income taxes
|
122
|
|
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120
|
|
||
Deferred revenue (billed or collected)
|
856
|
|
|
975
|
|
||
Other noncurrent liabilities
|
144
|
|
|
113
|
|
||
Total liabilities
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$
|
5,920
|
|
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$
|
6,361
|
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Stockholders' equity:
|
|
|
|
||||
Preferred stock, no par value, 10,000,000 shares authorized; No shares issued and outstanding
|
$
|
—
|
|
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$
|
—
|
|
Common stock, $0.10 par value, 1,100,000,000 shares authorized; 589,695,081 and 589,695,081 shares issued; 446
,646,793
and 448,149,131 shares outstanding, respectively
|
59
|
|
|
59
|
|
||
Additional paid-in capital
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3,566
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3,593
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Retained earnings
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5,704
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|
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5,357
|
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Accumulated other comprehensive loss
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(175
|
)
|
|
(155
|
)
|
||
Treasury stock, at cost, 143
,048,288
and 141,545,950 shares, respectively
|
(3,479
|
)
|
|
(3,404
|
)
|
||
Total stockholders' equity
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$
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5,675
|
|
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$
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5,450
|
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Total liabilities and stockholders' equity
|
$
|
11,595
|
|
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$
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11,811
|
|
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For the Three
Months Ended September 30, |
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For the Six
Months Ended September 30, |
||||||||||||
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2013
|
|
2012
|
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2013
|
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2012
|
||||||||
Revenue:
|
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|
||||||||
Subscription and maintenance
|
$
|
945
|
|
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$
|
963
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$
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1,889
|
|
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$
|
1,940
|
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Professional services
|
97
|
|
|
95
|
|
|
195
|
|
|
186
|
|
||||
Software fees and other
|
98
|
|
|
94
|
|
|
184
|
|
|
171
|
|
||||
Total revenue
|
$
|
1,140
|
|
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$
|
1,152
|
|
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$
|
2,268
|
|
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$
|
2,297
|
|
Expenses:
|
|
|
|
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|
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|
||||||||
Costs of licensing and maintenance
|
$
|
73
|
|
|
$
|
69
|
|
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$
|
144
|
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$
|
138
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Cost of professional services
|
88
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|
88
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|
|
176
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|
|
174
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|
||||
Amortization of capitalized software costs
|
73
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67
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142
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131
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|
||||
Selling and marketing
|
260
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|
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317
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|
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541
|
|
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622
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|
||||
General and administrative
|
91
|
|
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98
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|
|
182
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|
|
208
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|
||||
Product development and enhancements
|
145
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123
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280
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|
|
248
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|
||||
Depreciation and amortization of other intangible assets
|
37
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|
40
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73
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81
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|
||||
Other (gains) expenses, net
|
14
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13
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143
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(23
|
)
|
||||
Total expenses before interest and income taxes
|
$
|
781
|
|
|
$
|
815
|
|
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$
|
1,681
|
|
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$
|
1,579
|
|
Income before interest and income taxes
|
$
|
359
|
|
|
$
|
337
|
|
|
$
|
587
|
|
|
$
|
718
|
|
Interest expense, net
|
13
|
|
|
10
|
|
|
24
|
|
|
21
|
|
||||
Income before income taxes
|
$
|
346
|
|
|
$
|
327
|
|
|
$
|
563
|
|
|
$
|
697
|
|
Income tax expense (benefit)
|
106
|
|
|
105
|
|
|
(12
|
)
|
|
235
|
|
||||
Net income
|
$
|
240
|
|
|
$
|
222
|
|
|
$
|
575
|
|
|
$
|
462
|
|
|
|
|
|
|
|
|
|
||||||||
Basic income per common share
|
$
|
0.53
|
|
|
$
|
0.48
|
|
|
$
|
1.27
|
|
|
$
|
0.99
|
|
Basic weighted average shares used in computation
|
448
|
|
|
458
|
|
|
449
|
|
|
462
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Diluted income per common share
|
$
|
0.53
|
|
|
$
|
0.48
|
|
|
$
|
1.26
|
|
|
$
|
0.99
|
|
Diluted weighted average shares used in computation
|
450
|
|
|
459
|
|
|
450
|
|
|
463
|
|
|
For the Three
Months Ended September 30, |
|
For the Six
Months Ended September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net income
|
$
|
240
|
|
|
$
|
222
|
|
|
$
|
575
|
|
|
$
|
462
|
|
Other comprehensive (loss) income
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
23
|
|
|
16
|
|
|
(20
|
)
|
|
(10
|
)
|
||||
Total other comprehensive (loss) income
|
$
|
23
|
|
|
$
|
16
|
|
|
$
|
(20
|
)
|
|
$
|
(10
|
)
|
Comprehensive income
|
$
|
263
|
|
|
$
|
238
|
|
|
$
|
555
|
|
|
$
|
452
|
|
|
For the Six
Months Ended September 30, |
||||||
|
2013
|
|
2012
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
575
|
|
|
$
|
462
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
215
|
|
|
212
|
|
||
Deferred income taxes
|
(59
|
)
|
|
(2
|
)
|
||
Provision for bad debts
|
5
|
|
|
3
|
|
||
Share-based compensation expense
|
41
|
|
|
44
|
|
||
Asset impairments and other non-cash items
|
4
|
|
|
3
|
|
||
Foreign currency transaction losses
|
2
|
|
|
19
|
|
||
Changes in other operating assets and liabilities, net of effect of acquisitions:
|
|
|
|
||||
Decrease in trade accounts receivable
|
259
|
|
|
306
|
|
||
Decrease in deferred revenue
|
(580
|
)
|
|
(677
|
)
|
||
(Decrease) increase in taxes payable, net
|
(270
|
)
|
|
17
|
|
||
Increase in accounts payable, accrued expenses and other
|
12
|
|
|
11
|
|
||
Decrease in accrued salaries, wages and commissions
|
(71
|
)
|
|
(113
|
)
|
||
Changes in other operating assets and liabilities
|
(35
|
)
|
|
(13
|
)
|
||
Net cash provided by operating activities
|
$
|
98
|
|
|
$
|
272
|
|
Investing activities:
|
|
|
|
||||
Acquisitions of businesses, net of cash acquired, and purchased software
|
$
|
(125
|
)
|
|
$
|
(12
|
)
|
Purchases of property and equipment
|
(35
|
)
|
|
(32
|
)
|
||
Capitalized software development costs
|
(35
|
)
|
|
(78
|
)
|
||
Purchases of short-term investments
|
(9
|
)
|
|
(154
|
)
|
||
Maturities of short-term investments
|
184
|
|
|
—
|
|
||
Other investing activities
|
—
|
|
|
2
|
|
||
Net cash used in investing activities
|
$
|
(20
|
)
|
|
$
|
(274
|
)
|
Financing activities:
|
|
|
|
||||
Dividends paid
|
$
|
(228
|
)
|
|
$
|
(235
|
)
|
Purchases of common stock
|
(200
|
)
|
|
(344
|
)
|
||
Notional pooling borrowings
|
1,609
|
|
|
513
|
|
||
Notional pooling repayments
|
(1,639
|
)
|
|
(481
|
)
|
||
Debt borrowings
|
498
|
|
|
—
|
|
||
Debt repayments
|
(8
|
)
|
|
(6
|
)
|
||
Debt issuance costs
|
(4
|
)
|
|
—
|
|
||
Exercise of common stock options and other
|
55
|
|
|
22
|
|
||
Net cash provided by (used in) financing activities
|
$
|
83
|
|
|
$
|
(531
|
)
|
Effect of exchange rate changes on cash
|
$
|
36
|
|
|
$
|
(60
|
)
|
Increase (decrease) in cash and cash equivalents
|
$
|
197
|
|
|
$
|
(593
|
)
|
Cash and cash equivalents at beginning of period
|
$
|
2,593
|
|
|
$
|
2,679
|
|
Cash and cash equivalents at end of period
|
$
|
2,790
|
|
|
$
|
2,086
|
|
•
|
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, or quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and
|
•
|
Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
|
(dollars in millions)
|
Layer 7
|
|
Estimated
Useful Life
|
|||
Finite-lived intangible assets
(1)
|
$
|
12
|
|
|
5 years
|
|
Purchased software
|
99
|
|
|
5 years
|
|
|
Goodwill
|
54
|
|
|
Indefinite
|
|
|
Deferred tax liabilities
|
(14
|
)
|
|
—
|
|
|
Other assets net of other liabilities assumed
(2)
|
4
|
|
|
—
|
|
|
Purchase price
|
$
|
155
|
|
|
|
(1)
|
Includes customer relationships and trade names.
|
(2)
|
Includes approximately
$9 million
of cash acquired.
|
(in millions)
|
Accrued
Balance at
March 31, 2013
|
|
Expense
|
|
Change in
Estimate
|
|
Payments
|
|
Accretion
and Other
|
|
Accrued
Balance at
September 30, 2013
|
||||||||||||
Severance charges
|
$
|
16
|
|
|
$
|
111
|
|
|
$
|
(9
|
)
|
|
$
|
(69
|
)
|
|
$
|
3
|
|
|
$
|
52
|
|
Facility exit charges
|
23
|
|
|
19
|
|
|
—
|
|
|
(6
|
)
|
|
(3
|
)
|
|
33
|
|
||||||
Total accrued liabilities
|
$
|
39
|
|
|
|
|
|
|
|
|
|
|
$
|
85
|
|
(in millions)
|
Accrued
Balance at
March 31, 2012
|
|
Expense
|
|
Change in
Estimate
|
|
Payments
|
|
Accretion
and Other
|
|
Accrued
Balance at
September 30, 2012
|
||||||||||||
Severance charges
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
$
|
3
|
|
Facility exit charges
|
40
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(3
|
)
|
|
32
|
|
||||||
Total accrued liabilities
|
$
|
53
|
|
|
|
|
|
|
|
|
|
|
$
|
35
|
|
|
September 30,
2013 |
|
March 31,
2013 |
||||
|
(in millions)
|
||||||
Accounts receivable – billed
|
$
|
523
|
|
|
$
|
796
|
|
Accounts receivable – unbilled
|
67
|
|
|
63
|
|
||
Other receivables
|
19
|
|
|
21
|
|
||
Less: Allowances
|
(21
|
)
|
|
(24
|
)
|
||
Trade accounts receivable, net
|
$
|
588
|
|
|
$
|
856
|
|
|
At September 30, 2013
|
||||||||||||||||||
|
Gross
Amortizable
Assets
|
|
Less: Fully
Amortized
Assets
|
|
Remaining
Amortizable
Assets
|
|
Accumulated
Amortization
on Remaining
Amortizable
Assets
|
|
Net
Assets
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
5,703
|
|
|
$
|
4,779
|
|
|
$
|
924
|
|
|
$
|
323
|
|
|
$
|
601
|
|
Internally developed software products
|
1,559
|
|
|
675
|
|
|
884
|
|
|
396
|
|
|
488
|
|
|||||
Other intangible assets
|
832
|
|
|
480
|
|
|
352
|
|
|
227
|
|
|
125
|
|
|||||
Total capitalized software and other intangible assets
|
$
|
8,094
|
|
|
$
|
5,934
|
|
|
$
|
2,160
|
|
|
$
|
946
|
|
|
$
|
1,214
|
|
|
At March 31, 2013
|
||||||||||||||||||
|
Gross
Amortizable
Assets
|
|
Less: Fully
Amortized
Assets
|
|
Remaining
Amortizable
Assets
|
|
Accumulated
Amortization
on Remaining
Amortizable
Assets
|
|
Net
Assets
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
5,597
|
|
|
$
|
4,735
|
|
|
$
|
862
|
|
|
$
|
309
|
|
|
$
|
553
|
|
Internally developed software products
|
1,528
|
|
|
661
|
|
|
867
|
|
|
327
|
|
|
540
|
|
|||||
Other intangible assets
|
816
|
|
|
429
|
|
|
387
|
|
|
249
|
|
|
138
|
|
|||||
Total capitalized software and other intangible assets
|
$
|
7,941
|
|
|
$
|
5,825
|
|
|
$
|
2,116
|
|
|
$
|
885
|
|
|
$
|
1,231
|
|
|
Year Ended March 31,
|
||||||||||||||||||
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
118
|
|
|
$
|
111
|
|
|
$
|
109
|
|
|
$
|
107
|
|
|
$
|
104
|
|
Internally developed software products
|
166
|
|
|
150
|
|
|
120
|
|
|
86
|
|
|
40
|
|
|||||
Other intangible assets
|
54
|
|
|
46
|
|
|
28
|
|
|
11
|
|
|
7
|
|
|||||
Total
|
$
|
338
|
|
|
$
|
307
|
|
|
$
|
257
|
|
|
$
|
204
|
|
|
$
|
151
|
|
(in millions)
|
Mainframe Solutions
|
|
Enterprise Solutions
|
|
Services
|
|
Total
|
||||||||
Balance at March 31, 2013
|
$
|
4,178
|
|
|
$
|
1,612
|
|
|
$
|
81
|
|
|
$
|
5,871
|
|
Revision to preliminary purchase price allocation of prior year acquisition
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
||||
Balance at March 31, 2013 as revised
|
$
|
4,178
|
|
|
$
|
1,606
|
|
|
$
|
81
|
|
|
$
|
5,865
|
|
Acquisitions
|
—
|
|
|
54
|
|
|
—
|
|
|
54
|
|
||||
Foreign currency translation adjustment
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Balance at September 30, 2013
|
$
|
4,178
|
|
|
$
|
1,661
|
|
|
$
|
81
|
|
|
$
|
5,920
|
|
|
September 30,
2013 |
|
March 31,
2013 |
||||
|
(in millions)
|
||||||
Current:
|
|
|
|
||||
Subscription and maintenance
|
$
|
1,882
|
|
|
$
|
2,307
|
|
Professional services
|
136
|
|
|
154
|
|
||
Software fees and other
|
20
|
|
|
21
|
|
||
Total deferred revenue (billed or collected) – current
|
$
|
2,038
|
|
|
$
|
2,482
|
|
Noncurrent:
|
|
|
|
||||
Subscription and maintenance
|
$
|
824
|
|
|
$
|
940
|
|
Professional services
|
30
|
|
|
33
|
|
||
Software fees and other
|
2
|
|
|
2
|
|
||
Total deferred revenue (billed or collected) – noncurrent
|
$
|
856
|
|
|
$
|
975
|
|
Total deferred revenue (billed or collected)
|
$
|
2,894
|
|
|
$
|
3,457
|
|
|
September 30, 2013
|
|
March 31, 2013
|
||
Applicable margin on Base Rate borrowing
|
0.125
|
%
|
|
0.250
|
%
|
Weighted average interest rate on outstanding borrowings
|
—
|
%
|
|
—
|
%
|
Applicable margin on Eurocurrency Rate borrowing
|
1.000
|
%
|
|
1.100
|
%
|
Facility commitment fee
|
0.125
|
%
|
|
0.150
|
%
|
|
Amount of Net (Gain)/Loss Recognized in the Condensed Consolidated Statements of Operations
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
(in millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Interest expense, net – interest rate swaps designated as fair value hedges
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
|
$
|
(6
|
)
|
|
$
|
(6
|
)
|
Other (gains) expenses, net – foreign currency contracts
|
$
|
(6
|
)
|
|
$
|
2
|
|
|
$
|
(15
|
)
|
|
$
|
10
|
|
|
At September 30, 2013
|
|
At March 31, 2013
|
|
||||||||||||||||||||
|
Fair Value
Measurement Using
Input Types
|
|
Estimated
Fair
Value
|
|
Fair Value
Measurement Using
Input Types
|
|
Estimated
Fair
Value
|
|
||||||||||||||||
(in millions)
|
Level 1
|
|
Level 2
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Total
|
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
$
|
1,003
|
|
|
$
|
—
|
|
|
$
|
1,003
|
|
(1)
|
$
|
1,280
|
|
|
$
|
—
|
|
|
$
|
1,280
|
|
(2)
|
Foreign exchange derivatives
(3)
|
—
|
|
|
9
|
|
|
9
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
||||||
Interest rate derivatives
(3)
|
—
|
|
|
14
|
|
|
14
|
|
|
—
|
|
|
19
|
|
|
19
|
|
|
||||||
Total assets
|
$
|
1,003
|
|
|
$
|
23
|
|
|
$
|
1,026
|
|
|
$
|
1,280
|
|
|
$
|
20
|
|
|
$
|
1,300
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange derivatives
(3)
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(1)
|
At
September 30, 2013
, the Company had approximately
$953 million
and
$50 million
of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.
|
(2)
|
At
March 31, 2013
, the Company had approximately
$1,230 million
and
$50 million
of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.
|
(3)
|
See Note H, “Derivatives” for additional information. Interest rate derivatives fair value excludes accrued interest.
|
|
At September 30, 2013
|
|
At March 31, 2013
|
||||||||||||
(in millions)
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Total debt
(1)
|
$
|
1,779
|
|
|
$
|
1,892
|
|
|
$
|
1,290
|
|
|
$
|
1,413
|
|
Facility exit reserve
(2)
|
$
|
32
|
|
|
$
|
35
|
|
|
$
|
23
|
|
|
$
|
27
|
|
(1)
|
Estimated fair value of total debt is based on quoted prices for similar liabilities for which significant inputs are observable except for certain long-term lease obligations, for which fair value approximates carrying value (Level 2).
|
(2)
|
Estimated fair value for the facility exit reserve is determined using the Company’s incremental borrowing rate at
September 30, 2013
and
March 31, 2013
. At
September 30, 2013
and
March 31, 2013
, the facility exit reserve included approximately
$10 million
and
$6 million
, respectively, in “Accrued expenses and other current liabilities” and approximately
$22 million
and
$17 million
, respe
ctively, in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3).
|
Declaration Date
|
|
Dividend Per Share
|
|
Record Date
|
|
Total Amount
|
|
Payment Date
|
May 9, 2013
|
|
$0.25
|
|
May 23, 2013
|
|
$114
|
|
June 11, 2013
|
August 1, 2013
|
|
$0.25
|
|
August 22, 2013
|
|
$114
|
|
September 10, 2013
|
Declaration Date
|
|
Dividend Per Share
|
|
Record Date
|
|
Total Amount
|
|
Payment Date
|
May 8, 2012
|
|
$0.25
|
|
May 22, 2012
|
|
$119
|
|
June 12, 2012
|
August 2, 2012
|
|
$0.25
|
|
August 14, 2012
|
|
$116
|
|
September 11, 2012
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
Basic income per common share:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
240
|
|
|
$
|
222
|
|
|
$
|
575
|
|
|
$
|
462
|
|
Less: Net income allocable to participating securities
|
(2
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|
(5
|
)
|
||||
Net income allocable to common shares
|
$
|
238
|
|
|
$
|
220
|
|
|
$
|
569
|
|
|
$
|
457
|
|
Weighted average common shares outstanding
|
448
|
|
|
458
|
|
|
449
|
|
|
462
|
|
||||
Basic income per common share
|
$
|
0.53
|
|
|
$
|
0.48
|
|
|
$
|
1.27
|
|
|
$
|
0.99
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted income per common share:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
240
|
|
|
$
|
222
|
|
|
$
|
575
|
|
|
$
|
462
|
|
Less: Net income allocable to participating securities
|
(2
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|
(5
|
)
|
||||
Net income allocable to common shares
|
$
|
238
|
|
|
$
|
220
|
|
|
$
|
569
|
|
|
$
|
457
|
|
Weighted average shares outstanding and common share equivalents:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
448
|
|
|
458
|
|
|
449
|
|
|
462
|
|
||||
Weighted average effect of share-based payment awards
|
2
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Denominator in calculation of diluted income per share
|
450
|
|
|
459
|
|
|
450
|
|
|
463
|
|
||||
Diluted income per common share
|
$
|
0.53
|
|
|
$
|
0.48
|
|
|
$
|
1.26
|
|
|
$
|
0.99
|
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(in millions)
|
||||||||||||||
Costs of licensing and maintenance
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
Cost of professional services
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||
Selling and marketing
|
8
|
|
|
8
|
|
|
15
|
|
|
18
|
|
||||
General and administrative
|
6
|
|
|
7
|
|
|
12
|
|
|
15
|
|
||||
Product development and enhancements
|
5
|
|
|
4
|
|
|
10
|
|
|
8
|
|
||||
Share-based compensation expense before tax
|
$
|
21
|
|
|
$
|
21
|
|
|
$
|
41
|
|
|
$
|
44
|
|
Income tax benefit
|
(6
|
)
|
|
(8
|
)
|
|
(13
|
)
|
|
(16
|
)
|
||||
Net share-based compensation expense
|
$
|
15
|
|
|
$
|
13
|
|
|
$
|
28
|
|
|
$
|
28
|
|
|
Unrecognized Share-Based Compensation Costs
|
|
Weighted Average Period Expected to be Recognized
|
||
|
(in millions)
|
|
(in years)
|
||
Stock option awards
|
$
|
10
|
|
|
2.4
|
Restricted stock units
|
24
|
|
|
2.2
|
|
Restricted stock awards
|
75
|
|
|
2.1
|
|
Performance share units
|
22
|
|
|
2.8
|
|
Total unrecognized share-based compensation costs
|
$
|
131
|
|
|
2.3
|
|
Six Months Ended
September 30, |
||||
|
2013
|
|
2012
|
||
Weighted average fair value
|
5.19
|
|
|
4.84
|
|
Dividend yield
|
4.05
|
%
|
|
3.96
|
%
|
Expected volatility factor
(1)
|
30
|
%
|
|
34
|
%
|
Risk-free interest rate
(2)
|
1.5
|
%
|
|
0.8
|
%
|
Expected life (in years)
(3)
|
6.0
|
|
|
4.5
|
|
(1)
|
Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options.
|
(2)
|
The risk-free rate for periods within the contractual term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant.
|
(3)
|
The expected life is the number of years the Company estimates that options will be outstanding prior to exercise.
The Company’s computation of expected life was determined based on the simplified method (the average of the vesting period and option term).
|
|
|
|
RSAs
|
|
RSUs
|
||||
Incentive Plans for Fiscal Years
|
Performance Period
|
|
Shares
(in millions)
|
|
Weighted Average Grant Date Fair Value
|
|
Shares
(in millions)
|
|
Weighted Average Grant Date Fair Value
|
2013
|
1 year
|
|
0.4
|
|
$27.11
|
|
0.1
|
|
$26.12
|
2012
|
1 year
|
|
1.2
|
|
$26.39
|
|
0.2
|
|
$25.40
|
Incentive Plans
for Fiscal Years
|
Performance
Period
|
|
Unrestricted Shares
(in millions)
|
|
Weighted Average
Grant Date Fair Value
|
2010
|
3 years
|
|
0.2
|
|
$26.39
|
|
|
|
RSAs
|
|
RSUs
|
||||
Incentive Plans for Fiscal Years
|
Performance Period
|
|
Shares
(in millions)
|
|
Weighted Average Grant Date Fair Value
|
|
Shares
(in millions)
|
|
Weighted Average Grant Date Fair Value
|
2013
|
1 year
|
|
0.2
|
|
$27.11
|
|
0.1
|
|
$24.13
|
2012
|
1 year
|
|
0.2
|
|
$26.39
|
|
0.1
|
|
$23.41
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(shares in millions)
|
||||||||||||||
RSAs
|
|
|
|
|
|
|
|
||||||||
Shares
|
—
|
|
(1)
|
—
|
|
(1)
|
2.7
|
|
|
3.6
|
|
||||
Weighted average grant date fair value
(2)
|
$
|
30.39
|
|
|
$
|
25.54
|
|
|
$
|
27.01
|
|
|
$
|
26.23
|
|
RSUs
|
|
|
|
|
|
|
|
||||||||
Shares
|
—
|
|
(1)
|
—
|
|
(1)
|
0.8
|
|
|
0.7
|
|
||||
Weighted average grant date fair value
(3)
|
$
|
30.13
|
|
|
$
|
23.63
|
|
|
$
|
25.37
|
|
|
$
|
24.29
|
|
(1)
|
Less than 0.1 million.
|
(2)
|
The fair value is based on the quoted market value of the Company's common stock on the grant date.
|
(3)
|
The fair value is 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.
|
|
Six Months Ended
September 30, |
||||||
|
2013
|
|
2012
|
||||
|
(in millions)
|
||||||
Total borrowing position outstanding at beginning of period
(1)
|
$
|
136
|
|
|
$
|
139
|
|
Borrowings
|
1,609
|
|
|
513
|
|
||
Repayments
|
(1,639
|
)
|
|
(481
|
)
|
||
Foreign currency exchange effect
|
20
|
|
|
(7
|
)
|
||
Total borrowing position outstanding at end of period
(1)
|
$
|
126
|
|
|
$
|
164
|
|
(1)
|
Included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.
|
Three Months Ended September 30, 2013
|
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
||||||||||||||||
Revenue
|
|
$
|
624
|
|
|
$
|
419
|
|
|
$
|
97
|
|
|
$
|
1,140
|
|
Expenses
|
|
228
|
|
|
357
|
|
|
88
|
|
|
673
|
|
||||
Segment profit
|
|
$
|
396
|
|
|
$
|
62
|
|
|
$
|
9
|
|
|
$
|
467
|
|
Segment operating margin
|
|
63
|
%
|
|
15
|
%
|
|
9
|
%
|
|
41
|
%
|
||||
Depreciation
|
|
$
|
13
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
22
|
|
(1)
|
Other (gains) expenses, net consist
s of approximately
$2 million
of costs associated with the Fiscal 2014 Plan, certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
Six Months Ended September 30, 2013
|
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
||||||||||||||||
Revenue
|
|
$
|
1,243
|
|
|
$
|
830
|
|
|
$
|
195
|
|
|
$
|
2,268
|
|
Expenses
|
|
470
|
|
|
727
|
|
|
178
|
|
|
1,375
|
|
||||
Segment profit
|
|
$
|
773
|
|
|
$
|
103
|
|
|
$
|
17
|
|
|
$
|
893
|
|
Segment operating margin
|
|
62
|
%
|
|
12
|
%
|
|
9
|
%
|
|
39
|
%
|
||||
Depreciation
|
|
$
|
26
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
44
|
|
(1)
|
Other (gains) expenses, net consists of
approximately
$122 million
of costs associated with the Fiscal 2014 Plan, certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
Three Months Ended September 30, 2012
|
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
||||||||||||||||
Revenue
|
|
$
|
619
|
|
|
$
|
438
|
|
|
$
|
95
|
|
|
$
|
1,152
|
|
Expenses
|
|
250
|
|
|
409
|
|
|
89
|
|
|
748
|
|
||||
Segment profit
|
|
$
|
369
|
|
|
$
|
29
|
|
|
$
|
6
|
|
|
$
|
404
|
|
Segment operating margin
|
|
60
|
%
|
|
7
|
%
|
|
6
|
%
|
|
35
|
%
|
||||
Depreciation
|
|
$
|
16
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
27
|
|
(1)
|
Other (gains) expenses, net consists of certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
Six Months Ended September 30, 2012
|
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
||||||||||||||||
Revenue
|
|
$
|
1,247
|
|
|
$
|
864
|
|
|
$
|
186
|
|
|
$
|
2,297
|
|
Expenses
|
|
511
|
|
|
766
|
|
|
176
|
|
|
1,453
|
|
||||
Segment profit
|
|
$
|
736
|
|
|
$
|
98
|
|
|
$
|
10
|
|
|
$
|
844
|
|
Segment operating margin
|
|
59
|
%
|
|
11
|
%
|
|
5
|
%
|
|
37
|
%
|
||||
Depreciation
|
|
$
|
32
|
|
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
54
|
|
(1)
|
Other (gains) expenses, net consists of certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
|
(in millions)
|
||||||||||||||
United States
|
$
|
687
|
|
|
$
|
685
|
|
|
$
|
1,360
|
|
|
$
|
1,368
|
|
Europe
|
267
|
|
|
266
|
|
|
531
|
|
|
538
|
|
||||
Other
|
186
|
|
|
201
|
|
|
377
|
|
|
391
|
|
||||
Total revenue
|
$
|
1,140
|
|
|
$
|
1,152
|
|
|
$
|
2,268
|
|
|
$
|
2,297
|
|
•
|
Total revenue declined
1%
as a result of a decrease in subscription and maintenance revenue. The decrease in subscription and maintenance revenue was partially offset by an increase in software fees and other revenue and professional services revenue.
|
•
|
We continue to expect a year-over-year decrease in total revenue for fiscal 2014 compared with fiscal 2013 due to our sales underperformance in fiscal 2013 and the high percentage of our revenue that is recognized from license agreements with customers signed in prior periods that are being recognized ratably.
|
•
|
Total bookings increased
5%
primarily as a result of a year-over-year increase in renewals within subscription and maintenance bookings, partially offset by a decrease in professional service bookings and software fees and other bookings.
|
•
|
Subscription and maintenance bookings increased primarily due to higher mainframe renewals.
|
•
|
Our new product and mainframe capacity sales, a subset of our total bookings, decreased by a high single digit percentage.
|
•
|
Mainframe new product sales decreased more than 40%, while enterprise solutions new product sales decreased by a high single digit percentage. The decreases were primarily due to an uneven consumer spending environment as well as a decline in sales from certain mature product lines. Mainframe capacity sales increased more than 30%, partially related to an increase in mainframe renewals.
|
•
|
We continue to expect the value of our fiscal 2014 renewals to increase by a high single digit percentage, excluding a large customer renewal that is expected to occur in the second half of fiscal
2014
. We expect a majority of the increase in renewal value to occur in the second half of fiscal
2014
.
|
•
|
Total expenses before interest and income taxes
decreased
4%
primarily due to a decrease in personnel-related expenses, driven mostly by the lower number of employees within selling and marketing. This was partially offset by an increase in product development and enhancements expenses due to the decrease in the amount capitalized for internally developed software costs.
|
•
|
Product development and enhancements expenses are expected to increase in future periods as the amount capitalized for internally developed software costs decreases. While this would ultimately result in lower future amortization expense for these assets, we do not expect a material effect in fiscal 2014.
|
•
|
We currently expect an increase in product development and enhancements expenses in the second half of fiscal 2014 as compared with the first half of fiscal 2014 as we continue to focus on hiring new employees that have skills to enable us to better focus our resources on developing software products.
|
•
|
We also currently expect an increase in selling and marketing spending in the second half of fiscal 2014 compared with the first half of fiscal 2014 as we focus on new marketing initiatives.
|
•
|
Income tax expense for the
second
quarter of fiscal
2014
and fiscal
2013
was
$106 million
and
$105 million
, respectively.
|
•
|
We expect a fiscal
2014
effective tax rate of
14%
.
|
•
|
Diluted income per common share
increased
to
$0.53
from
$0.48
, primarily due to the decrease in expenses.
|
•
|
Mainframe Solutions revenue increased primarily due to an increase in new product sales in the first quarter of fiscal 2014, an increase in mainframe capacity sales in the first half of fiscal 2014 and improved renewal yields. The increase in operating margin for the
second
quarter of fiscal
2014
was primarily a result of a decrease in selling and marketing expenses, driven mostly by the lower number of employees.
|
•
|
Enterprise Solutions revenue decreased primarily due to a decrease in new product sales in prior periods. The increase in operating margin for the
second
quarter of fiscal
2014
was primarily a result of a decrease in selling and marketing expenses, driven mostly by the lower number of employees.
|
•
|
Services revenue increased primarily due to an increase in professional services engagements resulting from prior period bookings. Operating margin for Services increased as a result of operating efficiencies associated with the Fiscal 2014 Plan.
|
•
|
Net cash provided by operating activities
decreased
2%
primarily due to the payments associated with our Fiscal 2014 Plan of $39 million and an increase in income tax payments of
$31 million
, partially offset by an increase in our cash collections. In addition, there was an unfavorable effect on cash flows from operations of approximately $30 million due to the decrease in the amount capitalized for internally developed software costs.
|
•
|
We expect a year-over-year decrease in cash flows from operations for fiscal 2014 compared with fiscal 2013 due to payments associated with the Fiscal 2014 Plan of over $100 million, an increase in tax payments and an increase in operating cash outflows relating to product development and enhancements as a result of the decrease in amounts capitalized for internally developed software costs.
|
•
|
In August 2013, Lauren P. Flaherty joined the Company as its Executive Vice President and Chief Marketing Officer. Ms. Flaherty previously served as Chief Marketing Officer of Juniper Networks, Inc. and Nortel Networks Corporation and prior thereto spent more than 25 years at International Business Machines Corporation in a number of senior positions.
|
•
|
In August 2013, we issued
$250 million
of
2.875%
Senior Notes due August 2018 and
$250 million
of
4.500%
Senior Notes due August 2023, for an aggregate principal amount of $500 million.
|
|
Second Quarter Comparison
Fiscal
|
|
|
|
Percent
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
Change
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
Total revenue
|
$
|
1,140
|
|
|
$
|
1,152
|
|
|
$
|
(12
|
)
|
|
(1
|
)%
|
Net income
|
$
|
240
|
|
|
$
|
222
|
|
|
$
|
18
|
|
|
8
|
%
|
Net cash provided by operating activities
|
$
|
87
|
|
|
$
|
89
|
|
|
$
|
(2
|
)
|
|
(2
|
)%
|
Total bookings
|
$
|
877
|
|
|
$
|
837
|
|
|
$
|
40
|
|
|
5
|
%
|
Subscription and maintenance bookings
|
$
|
713
|
|
|
$
|
626
|
|
|
$
|
87
|
|
|
14
|
%
|
Weighted average subscription and maintenance license
agreement duration in years
|
3.32
|
|
|
3.11
|
|
|
0.21
|
|
|
7
|
%
|
|
First Half Comparison
Fiscal
|
|
|
|
Percent
|
|||||||||
|
2014
|
|
2013
|
|
Change
|
|
Change
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
Total revenue
|
$
|
2,268
|
|
|
$
|
2,297
|
|
|
$
|
(29
|
)
|
|
(1
|
)%
|
Net income
|
$
|
575
|
|
|
$
|
462
|
|
|
$
|
113
|
|
|
24
|
%
|
Net cash provided by operating activities
|
$
|
98
|
|
|
$
|
272
|
|
|
$
|
(174
|
)
|
|
(64
|
)%
|
Total bookings
|
$
|
1,701
|
|
|
$
|
1,390
|
|
|
$
|
311
|
|
|
22
|
%
|
Subscription and maintenance bookings
|
$
|
1,347
|
|
|
$
|
1,009
|
|
|
$
|
338
|
|
|
33
|
%
|
Weighted average subscription and maintenance license
agreement duration in years
|
3.22
|
|
|
2.99
|
|
|
0.23
|
|
|
8
|
%
|
|
September 30, 2013
|
|
March 31, 2013
|
|
Change
From
Year End
|
|
September 30, 2012
|
|
Change
From Prior
Year Quarter
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Cash, cash equivalents and investments
(1)
|
$
|
2,799
|
|
|
$
|
2,776
|
|
|
$
|
23
|
|
|
$
|
2,248
|
|
|
$
|
551
|
|
Total debt
|
$
|
1,779
|
|
|
$
|
1,290
|
|
|
$
|
489
|
|
|
$
|
1,294
|
|
|
$
|
485
|
|
Total expected future cash collections
from committed contracts
(2)
|
$
|
4,935
|
|
|
$
|
5,173
|
|
|
$
|
(238
|
)
|
|
$
|
5,117
|
|
|
$
|
(182
|
)
|
Total revenue backlog
(2)
|
$
|
7,241
|
|
|
$
|
7,774
|
|
|
$
|
(533
|
)
|
|
$
|
7,460
|
|
|
$
|
(219
|
)
|
Total current revenue backlog
(2)
|
$
|
3,382
|
|
|
$
|
3,563
|
|
|
$
|
(181
|
)
|
|
$
|
3,453
|
|
|
$
|
(71
|
)
|
(1)
|
At
September 30, 2013
and
March 31, 2013
, investments were
$9 million
and
$183 million
, respectively. At
September 30, 2012
, investments were $162 million.
|
(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 and revenue backlog.
|
|
Second Quarter Comparison Fiscal 2014 Versus Fiscal 2013
|
|||||||||||||||||||
|
|
|
|
|
Dollar Change
|
|
Percentage Change
|
|
Percentage of
Total Revenue
|
|||||||||||
|
2014
|
|
2013
|
|
2014 / 2013
|
|
2014 / 2013
|
|
2014
|
|
2013
|
|||||||||
|
(dollars in millions)
|
|
|
|
|
|
|
|||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Subscription and maintenance
|
$
|
945
|
|
|
$
|
963
|
|
|
$
|
(18
|
)
|
|
(2
|
)%
|
|
83
|
%
|
|
84
|
%
|
Professional services
|
97
|
|
|
95
|
|
|
2
|
|
|
2
|
|
|
8
|
|
|
8
|
|
|||
Software fees and other
|
98
|
|
|
94
|
|
|
4
|
|
|
4
|
|
|
9
|
|
|
8
|
|
|||
Total revenue
|
$
|
1,140
|
|
|
$
|
1,152
|
|
|
$
|
(12
|
)
|
|
(1
|
)%
|
|
100
|
%
|
|
100
|
%
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Costs of licensing and maintenance
|
$
|
73
|
|
|
$
|
69
|
|
|
$
|
4
|
|
|
6
|
%
|
|
6
|
%
|
|
6
|
%
|
Cost of professional services
|
88
|
|
|
88
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
|||
Amortization of capitalized software costs
|
73
|
|
|
67
|
|
|
6
|
|
|
9
|
|
|
6
|
|
|
6
|
|
|||
Selling and marketing
|
260
|
|
|
317
|
|
|
(57
|
)
|
|
(18
|
)
|
|
23
|
|
|
28
|
|
|||
General and administrative
|
91
|
|
|
98
|
|
|
(7
|
)
|
|
(7
|
)
|
|
8
|
|
|
9
|
|
|||
Product development and enhancements
|
145
|
|
|
123
|
|
|
22
|
|
|
18
|
|
|
13
|
|
|
11
|
|
|||
Depreciation and amortization of other intangible assets
|
37
|
|
|
40
|
|
|
(3
|
)
|
|
(8
|
)
|
|
3
|
|
|
3
|
|
|||
Other (gains) expenses, net
|
14
|
|
|
13
|
|
|
1
|
|
|
8
|
|
|
1
|
|
|
1
|
|
|||
Total expenses before interest and income taxes
|
$
|
781
|
|
|
$
|
815
|
|
|
$
|
(34
|
)
|
|
(4
|
)%
|
|
69
|
%
|
|
71
|
%
|
Income before interest and income taxes
|
$
|
359
|
|
|
$
|
337
|
|
|
$
|
22
|
|
|
7
|
%
|
|
31
|
%
|
|
29
|
%
|
Interest expense, net
|
13
|
|
|
10
|
|
|
3
|
|
|
30
|
|
|
1
|
|
|
1
|
|
|||
Income before income taxes
|
$
|
346
|
|
|
$
|
327
|
|
|
$
|
19
|
|
|
6
|
%
|
|
30
|
%
|
|
28
|
%
|
Income tax expense (benefit)
|
106
|
|
|
105
|
|
|
1
|
|
|
1
|
|
|
9
|
|
|
9
|
|
|||
Net income
|
$
|
240
|
|
|
$
|
222
|
|
|
$
|
18
|
|
|
8
|
%
|
|
21
|
%
|
|
19
|
%
|
|
First Half Comparison Fiscal 2014 Versus Fiscal 2013
|
|||||||||||||||||||
|
|
|
|
|
Dollar Change
|
|
Percentage Change
|
|
Percentage of
Total Revenue
|
|||||||||||
|
2014
|
|
2013
|
|
2014 / 2013
|
|
2014 / 2013
|
|
2014
|
|
2013
|
|||||||||
|
(dollars in millions)
|
|
|
|
|
|
|
|||||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Subscription and maintenance
|
$
|
1,889
|
|
|
$
|
1,940
|
|
|
$
|
(51
|
)
|
|
(3
|
)%
|
|
83
|
%
|
|
85
|
%
|
Professional services
|
195
|
|
|
186
|
|
|
9
|
|
|
5
|
|
|
9
|
|
|
8
|
|
|||
Software fees and other
|
184
|
|
|
171
|
|
|
13
|
|
|
8
|
|
|
8
|
|
|
7
|
|
|||
Total revenue
|
$
|
2,268
|
|
|
$
|
2,297
|
|
|
$
|
(29
|
)
|
|
(1
|
)%
|
|
100
|
%
|
|
100
|
%
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Costs of licensing and maintenance
|
$
|
144
|
|
|
$
|
138
|
|
|
$
|
6
|
|
|
4
|
%
|
|
6
|
%
|
|
6
|
%
|
Cost of professional services
|
176
|
|
|
174
|
|
|
2
|
|
|
1
|
|
|
8
|
|
|
8
|
|
|||
Amortization of capitalized software costs
|
142
|
|
|
131
|
|
|
11
|
|
|
8
|
|
|
6
|
|
|
6
|
|
|||
Selling and marketing
|
541
|
|
|
622
|
|
|
(81
|
)
|
|
(13
|
)
|
|
24
|
|
|
27
|
|
|||
General and administrative
|
182
|
|
|
208
|
|
|
(26
|
)
|
|
(13
|
)
|
|
8
|
|
|
9
|
|
|||
Product development and enhancements
|
280
|
|
|
248
|
|
|
32
|
|
|
13
|
|
|
12
|
|
|
11
|
|
|||
Depreciation and amortization of other intangible assets
|
73
|
|
|
81
|
|
|
(8
|
)
|
|
(10
|
)
|
|
3
|
|
|
4
|
|
|||
Other (gains) expenses, net
|
143
|
|
|
(23
|
)
|
|
166
|
|
|
NM
|
|
6
|
|
|
(1
|
)
|
||||
Total expenses before interest and income taxes
|
$
|
1,681
|
|
|
$
|
1,579
|
|
|
$
|
102
|
|
|
6
|
%
|
|
74
|
%
|
|
69
|
%
|
Income before interest and income taxes
|
$
|
587
|
|
|
$
|
718
|
|
|
$
|
(131
|
)
|
|
(18
|
)%
|
|
26
|
%
|
|
31
|
%
|
Interest expense, net
|
24
|
|
|
21
|
|
|
3
|
|
|
14
|
|
|
1
|
|
|
1
|
|
|||
Income before income taxes
|
$
|
563
|
|
|
$
|
697
|
|
|
$
|
(134
|
)
|
|
(19
|
)%
|
|
25
|
%
|
|
30
|
%
|
Income tax expense (benefit)
|
(12
|
)
|
|
235
|
|
|
(247
|
)
|
|
(105
|
)
|
|
(1
|
)
|
|
10
|
|
|||
Net income
|
$
|
575
|
|
|
$
|
462
|
|
|
$
|
113
|
|
|
24
|
%
|
|
25
|
%
|
|
20
|
%
|
|
Second Quarter Comparison Fiscal 2014 Versus Fiscal 2013
|
|||||||||||||||||||
|
2014
|
|
%
|
|
2013
|
|
%
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
United States
|
$
|
687
|
|
|
60
|
%
|
|
$
|
685
|
|
|
59
|
%
|
|
$
|
2
|
|
|
—
|
%
|
International
|
453
|
|
|
40
|
|
|
467
|
|
|
41
|
|
|
(14
|
)
|
|
(3
|
)
|
|||
Total Revenue
|
$
|
1,140
|
|
|
100
|
%
|
|
$
|
1,152
|
|
|
100
|
%
|
|
$
|
(12
|
)
|
|
(1
|
)%
|
|
First Half Comparison Fiscal 2014 Versus Fiscal 2013
|
|||||||||||||||||||
|
2014
|
|
%
|
|
2013
|
|
%
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
United States
|
$
|
1,360
|
|
|
60
|
%
|
|
$
|
1,368
|
|
|
60
|
%
|
|
$
|
(8
|
)
|
|
(1
|
)%
|
International
|
908
|
|
|
40
|
|
|
929
|
|
|
40
|
|
|
(21
|
)
|
|
(2
|
)
|
|||
Total Revenue
|
$
|
2,268
|
|
|
100
|
%
|
|
$
|
2,297
|
|
|
100
|
%
|
|
$
|
(29
|
)
|
|
(1
|
)%
|
|
Second Quarter
Fiscal 2014 |
|
Second Quarter
Fiscal 2013 |
||||
|
(dollars in millions)
|
||||||
Fiscal 2014 Plan
|
$
|
2
|
|
|
$
|
—
|
|
Legal Settlements
|
6
|
|
|
2
|
|
||
(Gains) losses from foreign exchange derivative contracts
|
(6
|
)
|
|
2
|
|
||
(Gains) losses from foreign exchange rate fluctuations
|
13
|
|
|
9
|
|
||
Other miscellaneous items
|
(1
|
)
|
|
—
|
|
||
Total
|
$
|
14
|
|
|
$
|
13
|
|
|
First Half
Fiscal 2014 |
|
First Half
Fiscal 2013 |
||||
|
(dollars in millions)
|
||||||
Fiscal 2014 Plan
|
$
|
122
|
|
|
$
|
—
|
|
Legal Settlements
|
16
|
|
|
6
|
|
||
(Gains) losses from foreign exchange derivative contracts
|
(15
|
)
|
|
10
|
|
||
(Gains) losses from foreign exchange rate fluctuations
|
20
|
|
|
(3
|
)
|
||
Assignment of rights to intellectual property
|
—
|
|
|
(35
|
)
|
||
Other miscellaneous items
|
—
|
|
|
(1
|
)
|
||
Total
|
$
|
143
|
|
|
$
|
(23
|
)
|
Mainframe Solutions
|
|
|
|
||||
|
Second Quarter
Fiscal 2014 |
|
Second Quarter
Fiscal 2013 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
624
|
|
|
$
|
619
|
|
Expenses
|
228
|
|
|
250
|
|
||
Segment profit
|
$
|
396
|
|
|
$
|
369
|
|
Segment operating margin
|
63
|
%
|
|
60
|
%
|
|
First Half
Fiscal 2014 |
|
First Half
Fiscal 2013 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
1,243
|
|
|
$
|
1,247
|
|
Expenses
|
470
|
|
|
511
|
|
||
Segment profit
|
$
|
773
|
|
|
$
|
736
|
|
Segment operating margin
|
62
|
%
|
|
59
|
%
|
Enterprise Solutions
|
|
|
|
||||
|
Second Quarter
Fiscal 2014 |
|
Second Quarter
Fiscal 2013 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
419
|
|
|
$
|
438
|
|
Expenses
|
357
|
|
|
409
|
|
||
Segment profit
|
$
|
62
|
|
|
$
|
29
|
|
Segment operating margin
|
15
|
%
|
|
7
|
%
|
|
First Half
Fiscal 2014 |
|
First Half
Fiscal 2013 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
830
|
|
|
$
|
864
|
|
Expenses
|
727
|
|
|
766
|
|
||
Segment profit
|
$
|
103
|
|
|
$
|
98
|
|
Segment operating margin
|
12
|
%
|
|
11
|
%
|
Services
|
|
|
|
||||
|
Second Quarter
Fiscal 2014 |
|
Second Quarter
Fiscal 2013 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
97
|
|
|
$
|
95
|
|
Expenses
|
88
|
|
|
89
|
|
||
Segment profit
|
$
|
9
|
|
|
$
|
6
|
|
Segment operating margin
|
9
|
%
|
|
6
|
%
|
|
First Half
Fiscal 2014 |
|
First Half
Fiscal 2013 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
195
|
|
|
$
|
186
|
|
Expenses
|
178
|
|
|
176
|
|
||
Segment profit
|
$
|
17
|
|
|
$
|
10
|
|
Segment operating margin
|
9
|
%
|
|
5
|
%
|
(in millions)
|
September 30,
2013 |
|
March 31,
2013 |
|
September 30,
2012 |
||||||
Billings backlog:
|
|
|
|
|
|
||||||
Amounts to be billed – current
|
$
|
2,101
|
|
|
$
|
2,142
|
|
|
$
|
2,179
|
|
Amounts to be billed – noncurrent
|
2,246
|
|
|
2,175
|
|
|
2,354
|
|
|||
Total billings backlog
|
$
|
4,347
|
|
|
$
|
4,317
|
|
|
$
|
4,533
|
|
|
|
|
|
|
|
||||||
Revenue backlog:
|
|
|
|
|
|
||||||
Revenue to be recognized within the next 12 months – current
|
$
|
3,382
|
|
|
$
|
3,563
|
|
|
$
|
3,453
|
|
Revenue to be recognized beyond the next 12 months – noncurrent
|
3,859
|
|
|
4,211
|
|
|
4,007
|
|
|||
Total revenue backlog
|
$
|
7,241
|
|
|
$
|
7,774
|
|
|
$
|
7,460
|
|
|
|
|
|
|
|
||||||
Deferred revenue (billed or collected)
|
$
|
2,894
|
|
|
$
|
3,457
|
|
|
$
|
2,927
|
|
Unearned revenue yet to be billed
|
4,347
|
|
|
4,317
|
|
|
4,533
|
|
|||
Total revenue backlog
|
$
|
7,241
|
|
|
$
|
7,774
|
|
|
$
|
7,460
|
|
(in millions)
|
September 30,
2013 |
|
March 31,
2013 |
|
September 30,
2012 |
||||||
Expected future cash collections:
|
|
|
|
|
|
||||||
Total billings backlog
|
$
|
4,347
|
|
|
$
|
4,317
|
|
|
$
|
4,533
|
|
Trade accounts receivable, net
|
588
|
|
|
856
|
|
|
584
|
|
|||
Total expected future cash collections
|
$
|
4,935
|
|
|
$
|
5,173
|
|
|
$
|
5,117
|
|
|
Second Quarter of Fiscal
|
|
Change
|
||||||||
|
2014
|
|
2013
|
|
2014 / 2013
|
||||||
|
(in millions)
|
||||||||||
Cash collections from billings
(1)
|
$
|
883
|
|
|
$
|
836
|
|
|
$
|
47
|
|
Vendor disbursements and payroll
(1)
|
(701
|
)
|
|
(708
|
)
|
|
7
|
|
|||
Income tax (payments) receipts, net
|
(56
|
)
|
|
(25
|
)
|
|
(31
|
)
|
|||
Other disbursements, net
(2)
|
(39
|
)
|
|
(14
|
)
|
|
(25
|
)
|
|||
Net cash provided by operating activities
|
$
|
87
|
|
|
$
|
89
|
|
|
$
|
(2
|
)
|
(1)
|
Amounts include value added taxes and sales taxes.
|
(2)
|
For the
second
quarter of fiscal
2014
, amount includes $39 million of payments associated with the Fiscal 2014 Plan, interest, prior period restructuring plans and miscellaneous receipts and disbursements. For the second quarter of fiscal 2013, amount includes interest, restructuring payments and miscellaneous receipts and disbursements.
|
|
First Half of Fiscal
|
|
Change
|
||||||||
|
2014
|
|
2013
|
|
2014 / 2013
|
||||||
|
(in millions)
|
||||||||||
Cash collections from billings
(1)
|
$
|
2,048
|
|
|
$
|
2,015
|
|
|
$
|
33
|
|
Vendor disbursements and payroll
(1)
|
(1,600
|
)
|
|
(1,626
|
)
|
|
26
|
|
|||
Income tax (payments) receipts, net
|
(255
|
)
|
|
(150
|
)
|
|
(105
|
)
|
|||
Other disbursements, net
(2)
|
(95
|
)
|
|
33
|
|
|
(128
|
)
|
|||
Net cash provided by operating activities
|
$
|
98
|
|
|
$
|
272
|
|
|
$
|
(174
|
)
|
(1)
|
Amounts include value added taxes and sales taxes.
|
(2)
|
For the
first half
of fiscal
2014
, amount includes $62 million of payments associated with the Fiscal 2014 Plan, interest, prior period restructuring plans and miscellaneous receipts and disbursements. For the
first half
of fiscal
2013
, amount includes interest, restructuring payments and $35 million in cash proceeds received from the aforementioned intellectual property transaction in the first quarter of fiscal 2013 and miscellaneous receipts and disbursements.
|
|
September 30, 2013
|
|
March 31, 2013
|
||||
|
(in millions)
|
||||||
Revolving credit facility due June 2018
|
$
|
—
|
|
|
$
|
—
|
|
5.375% Notes due November 2019
|
750
|
|
|
750
|
|
||
6.125% Notes due December 2014, net of unamortized premium from fair value hedge
of $14 and $19
|
514
|
|
|
519
|
|
||
2.875% Notes due August 2018
|
250
|
|
|
—
|
|
||
4.500% Notes due August 2023
|
250
|
|
|
—
|
|
||
Other indebtedness, primarily capital leases
|
21
|
|
|
26
|
|
||
Unamortized discount for Notes
|
(6
|
)
|
|
(5
|
)
|
||
Total debt outstanding
|
$
|
1,779
|
|
|
$
|
1,290
|
|
Less the current portion
|
(11
|
)
|
|
(16
|
)
|
||
Total long-term debt portion
|
$
|
1,768
|
|
|
$
|
1,274
|
|
|
Six Months Ended
September 30, |
||||||
|
2013
|
|
2012
|
||||
|
(in millions)
|
||||||
Total borrowing position outstanding at beginning of period
(1)
|
$
|
136
|
|
|
$
|
139
|
|
Borrowings
|
1,609
|
|
|
513
|
|
||
Repayments
|
(1,639
|
)
|
|
(481
|
)
|
||
Foreign currency exchange effect
|
20
|
|
|
(7
|
)
|
||
Total borrowing position outstanding at end of period
(1)
|
$
|
126
|
|
|
$
|
164
|
|
(1)
|
Included in “Accrued expenses and other current liabilities” in our Condensed Consolidated Balance Sheets.
|
Period
|
Total Number
of Shares
Purchased
|
Average
Price Paid
per Share
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs
|
Approximate
Dollar Value of
Shares that
May Yet Be
Purchased Under
the Plans
or Programs
|
||||||
|
(in thousands, except average price paid per share)
|
|||||||||
July 1, 2013 - July 31, 2013
|
—
|
|
$
|
—
|
|
—
|
|
$
|
452,271
|
|
August 1, 2013 - August 31, 2013
|
4,807
|
|
$
|
30.16
|
|
4,807
|
|
$
|
307,271
|
|
September 1, 2013 - September 30, 2013
|
—
|
|
$
|
—
|
|
—
|
|
$
|
307,271
|
|
Total
|
4,807
|
|
|
4,807
|
|
|
3.1
|
Amended and Restated Certificate of Incorporation.
|
|
Filed as Exhibit 3.3 to the
Company’s Current Report on Form 8-K dated March 6, 2006.*
|
|
|
|
|
3.2
|
By-Laws of the Company, as amended.
|
|
Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated
February 23, 2007.*
|
|
|
|
|
4.1
|
Stockholder Protection Rights Agreement dated November 8, 2012 between the Company and Computershare Shareowner Services LLC, as Rights Agent, including as Exhibit A the forms of Rights Certificate and of Election to Exercise and as Exhibit B the form of Certificate of Designation and Terms of the Participating Preferred Stock of the Company.
|
|
Filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated November 8, 2012.*
|
|
|
|
|
4.2
|
Officers’ Certificate dated August 16, 2013 establishing the terms of the 2.875% Senior Notes due 2018 and the 4.500% Senior Notes due 2023 (including the forms of the Senior Notes) pursuant to the Company’s Indenture dated as of June 1, 2008 with U.S. Bank National Association, as trustee.
|
|
Filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K dated August 16, 2013.*
|
|
|
|
|
10.1**
|
Schedules A, B, and C (as amended) to CA, Inc. Change in Control Severance Policy.
|
|
Filed herewith.
|
|
|
|
|
10.2**
|
Form of Sign-On Award Agreement for Lauren P. Flaherty under the CA, Inc. 2011 Incentive Plan - Restricted Stock Units.
|
|
Filed herewith.
|
|
|
|
|
10.3**
|
Form of Sign-On Award Agreement for Lauren P. Flaherty under the CA, Inc. 2011 Incentive Plan - Nonqualified Stock Options.
|
|
Filed herewith.
|
|
|
|
|
12.1
|
Statement of Ratio of Earnings to Fixed Charges.
|
|
Filed herewith.
|
|
|
|
|
15
|
Accountants’ acknowledgment letter.
|
|
Filed herewith.
|
|
|
|
|
31.1
|
Certification of the Principal Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
31.2
|
Certification of the Principal Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.
|
|
Filed herewith.
|
|
|
|
|
32
|
Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002.
|
|
Furnished herewith.
|
|
|
|
|
101
|
The following financial statements from CA, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 formatted in XBRL (eXtensible Business Reporting Language):
|
|
Filed herewith.
|
|
|
|
|
|
(i) Condensed Consolidated Balance Sheets — September 30, 2013 (Unaudited) and March 31, 2013.
|
|
|
|
|
|
|
|
(ii) Unaudited Condensed Consolidated Statements of Operations — Three and Six Months Ended September 30, 2013 and 2012.
|
|
|
|
|
|
|
|
(iii) Unaudited Condensed Consolidated Statements of Comprehensive Income — Three and Six Months Ended September 30, 2013 and 2012.
|
|
|
|
|
|
|
|
(iv) Unaudited Condensed Consolidated Statements of Cash Flows — Six Months Ended September 30, 2013 and 2012.
|
|
|
|
|
|
|
|
(v) Notes to Condensed Consolidated Financial Statements — September 30, 2013.
|
|
|
*
|
Incorporated herein by reference.
|
**
|
Management contract or compensatory plan or arrangement.
|
CA, INC.
|
|
|
|
By:
|
/s/ Michael P. Gregoire
|
|
Michael P. Gregoire
|
|
Chief Executive Officer
|
|
|
By:
|
/s/ Richard J. Beckert
|
|
Richard J. Beckert
|
|
Executive Vice President and Chief Financial Officer
|
Total Number of Restricted Stock Units Granted
|
[Number of Restricted Stock Units Granted]
|
Grant Date
|
[Grant Date]
|
1.
|
Grant of Restricted Stock Unit
|
2.
|
Vesting and Settlement of Restricted Stock Unit
|
3.
|
Termination of Employment.
In the event the Company terminates Participant’s employment without Cause or Participant terminates employment for Good Reason (as such terms are defined in Participant’s Offer of Employment) Any Restricted Stock Units awarded herein that have not vested and been paid as of Participant’s Terminate Date (as defined in the Offer of Employment) will vest and be settled in accordance with their original schedule set forth above, subject to compliance with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (“
Section 409A).
In the event of Participant’s termination of employment for any other reason including termination for Cause or death or disability Participant’s Restricted Stock Units awards shall be forfeited in accordance with the terms of the Plan.
|
4.
|
Tax and Withholding
|
5.
|
Changes In Stock
|
6.
|
No Guarantee of Employment or Service
|
7.
|
Forfeiture and Recovery of Restricted Shares
|
8.
|
Governing Law; Severability; Choice of Law
|
9.
|
Acceptance and Acknowledgment
|
(a)
|
accepts and acknowledges receipt of the Restricted Stock Unit which has been issued to the Participant under the terms and conditions of the Plan; acknowledges and confirms the Participant’s acceptance and agreement to the collection, use and transfer, in electronic or other form, of personal information about the Participant, including, without limitation, the Participant’s name, home address, and telephone number, date of birth, social security number or other identification number, and details of all the Participant’s shares held and transactions related thereto, by the Company and its Related Companies
|
10.
|
Entire Agreement
|
11.
|
Data Privacy
|
12.
|
Electronic Delivery
|
13.
|
Nature of Grant
|
1.
|
Prohibited Activities.
The Participant recognizes that the Company is engaged in a highly competitive business and that its customer, employee, licensee, supplier and financial relationships are of a highly sensitive nature. As a reasonable means to protect the Company's Confidential Information (as defined in the subclause (a) below), investment, relationships, and goodwill, and in consideration for this Restricted Stock Unit grant, the Participant agrees that, to the extent permitted by applicable law, the Participant will not, either during his or her employment or for a period of 12 months following the termination of his or her employment (or such longer period specified below) for any reason engage in any of the following "
Prohibited Activities
":
|
(a)
|
Engage in any business activity in a Restricted Area that competes with the business activities of the Company and its corporate affiliates about which Participant either had (i) a job responsibility to promote, or (ii) access to Confidential Information. "Restricted Area" for purposes of this Agreement, means a geographic area that the Participant served or covered on behalf of the Company at any time within the 18 months preceding the end of his or her employment with the Company. "
Confidential Information,
" for the purposes of this Agreement, means information, including information that is conceived or developed by the Participant that is not generally known to the public and that is used by the Company in connection with its business. By way of example, the term "Confidential Information" would include: trade secrets; processes; formulas; research data; program documentation; algorithms; source codes; object codes; know-how; improvements; inventions; techniques; training materials and methods; product information; corporate strategy; sales forecast and pipeline information; research and development; plans or strategies for marketing and pricing; and information concerning existing or potential customers, partners, or vendors. The Participant understands that this list is not all-inclusive and merely serves as examples of the types of information that falls within the definition of Confidential Information.
|
(b)
|
Solicit, call on, service or induce others to solicit, call on or service any "Customer" for the purpose of inducing it to license or lease a product or provide it with services that compete with a product or service offered by the Company. A "Customer," for purposes of this Agreement, means any person or business entity that licensed or leased a Company product or obtained Company services within the 18 months preceding the end of the Participant's employment with the Company and that the Participant had solicited, called on, or served on the Company's behalf anytime within that 18-month time period.
|
(c)
|
Solicit, call on, or induce others to solicit or call on, any "Prospective Customer" for the purpose of inducing it to license or lease a product or provide it with services which compete with a product or service offered by the Company. A "Prospective Customer," for purposes of this Agreement, is any person or business entity that the Participant solicited or called on
|
(d)
|
Directly or indirectly through others, hire any employee or contractor of the Company, or solicit or induce, or attempt to solicit or induce, any Company employee or contractor to leave the Company for any reason.
|
(e)
|
For any period following the termination of the Participant's employment, violate a non-competition, non-solicitation or non-disclosure covenant or agreement between the Participant and the Company or any Related Company (including, without limitation, the Employment and Confidentiality Agreement signed at or around the time of the Participant's hire).
|
2.
|
Tolling of Covenants in the Event of Breach.
In the event the Participant engages in any of the Prohibited Activities, the time period of the violated covenant(s) shall be tolled throughout the duration of any violation and shall continue until the Participant has complied with such covenant(s) for a period of 12 consecutive full months.
|
3.
|
Injunction.
The Participant acknowledges that, by virtue of the Participant's employment with the Company, the Participant will have access to Confidential Information of the Company, the disclosure of which will irreparably harm the Company. The Participant further acknowledges that the Company will suffer irreparable harm if the Participant breaches any of the Participant's obligations under this Agreement. Therefore, the Participant agrees that the Company will be entitled, in addition to its other rights, to enforce the Participant's obligations through an injunction or decree of specific performance from a court having proper jurisdiction. Any claims the Participant may assert against the Company shall not constitute a defense in any injunction action brought by the Company to force the Participant to keep the promises the Participant made in this Agreement.
|
4.
|
Authorization to Modify Restrictions.
The Participant agrees that the restrictions contained in this Agreement are reasonable. However, if any court having proper jurisdiction holds a particular restriction to be unreasonable, that restriction shall be modified only to the extent necessary in the
|
5.
|
General.
|
(a)
|
The Participant understands and agrees that, if the Company is successful in a suit or proceeding to enforce any of the terms of this Agreement, the Participant will pay the Company's costs of bringing such suit or proceeding, including its reasonable attorney's fees and litigation expenses (including expert witness and deposition expenses).
|
(b)
|
This Agreement shall inure to the benefit of and may be enforced by the Company, its successors and assigns. This Agreement is personal to the Participant and the Participant may not assign it.
|
(c)
|
The Company’s rights under this Agreement shall be in addition to any rights it may have under any other Agreement with Participant.
|
(d)
|
Any failure to enforce the terms of this Agreement with any other employee of the Company shall not be deemed a waiver by the Company to enforce its rights under this Agreement. Further, any waiver by the Company of any breach by the Participant of any provision of this Agreement, shall not operate or be construed as a waiver of any subsequent breach hereof.
|
Total Number of Shares Subject to Option Granted
|
[Number of Shares Granted]
|
Grant Date
|
[Grant Date]
|
Exercise Price
|
[Exercise Price]
|
Expiration Date
|
[Expiration Date]
|
1.
|
Grant of Option
|
2.
|
Vesting of Option
|
3.
|
Exercise of Option
|
4.
|
Payment of Exercise Price
|
5.
|
Delivery of Shares
|
6.
|
Transferability of Option
|
7.
|
Death or Termination of Employment Due to Disability
|
8.
|
Other Termination of Employment
|
(a)
|
Except as otherwise provided in this Agreement or the Plan, upon the Retirement of the Optionee, the portion of the Option that is not exercisable as of the date of such Retirement will be forfeited as of the date of such Retirement and the portion of the Option that is exercisable as of the date of such Retirement must be exercised, if at all, within one year after the date of such Retirement, but in no event after the Expiration Date.
|
(b)
|
In the event the Company terminates Optionee’s employment without Cause or Optionee terminates employment for Good Reason (as such terms are defined in Optionee’s Offer of Employment) any unvested Options shall immediately vest as of the Termination Date (as defined in the Offer of Employment) but will not be exercisable prior to their original vesting date set forth above. Each individual tranche of stock options shall remain exercisable for a period of one (1) year following their original vesting date, but in no event after the date such stock options would otherwise lapse
|
(c)
|
Except as otherwise provided in this Agreement or the Plan upon the Optionee's Termination of Employment, for any other reason other than death, Disability, Retirement, or Termination of Employment as set forth in Section 8 (b) above the portion of the Option that is not exercisable as of the Optionee's Termination of Employment will be forfeited as of the Optionee's Termination of Employment and the portion of the Option that is exercisable as of the Optionee's Termination of Employment must be exercised, if at all, within 90 days after such Termination of Employment.
|
9.
|
Forfeiture and Recovery and Reimbursement of Option Gain
|
10.
|
Changes In Stock
|
(a)
|
payment to the Company in cash or by certified check, bank draft, wire transfer or postal or express money order an amount sufficient to satisfy any applicable tax withholding obligations;
|
(b)
|
through any of the exercise price payment methods described in Section 4 of this Agreement; or
|
(c)
|
instructing the Company to withhold shares that would otherwise be issued on exercise having a Fair Market Value on the date of exercise equal to the applicable portion of the tax withholding obligations being so paid.
|
(a)
|
accepts and acknowledges receipt of the Option which has been issued to the Optionee under the terms and conditions of the Plan;
|
(b)
|
acknowledges and confirms the Optionee's acceptance and agreement to the collection, use and transfer, in electronic or other form, of personal information about the Optionee, including, without limitation, the Optionee's name, home address, and telephone number, date of birth, social security number or other identification number, and details of all the Optionee's shares held and transactions related thereto, by the Company and its Related Companies and agents for the purpose of implementing, administrating and managing the Optionee's participation in the Plan, and further understands and agrees that the Optionee's personal information may be transferred to third parties assisting in the implementation, administration and management of the Plan, that any recipient
|
(c)
|
acknowledges and confirms the Optionee's consent to receive electronically this Agreement, the Plan and the related Prospectus and any other Plan documents that the Company is required to deliver;
|
(d)
|
acknowledges that a copy of the Plan and the related Prospectus is posted on the Company's website and that the Optionee has access to such documents;
|
(e)
|
agrees to be bound by the terms and conditions of this Agreement and the Plan (including, but not limited to, Section 7.5 of the Plan, Section 9 of this Agreement and Appendix A to this Agreement), as may be amended from time to time;
|
(f)
|
agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee upon any questions related to the Plan or this Agreement;
|
(g)
|
understands that neither Plan nor this Agreement gives the Optionee any right to employment or service with the Company or any Related Company and that the Option is not part of the Optionee's normal or expected compensation, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or the Optionee's employer;
|
(h)
|
understands and acknowledges that the grant of the Option is expressly conditioned on the Optionee's adherence to the terms of the applicable policies and procedures of the Company and its Related Companies.
|
1.
|
Prohibited Activities.
The Optionee recognizes that the Company is engaged in a highly competitive business and that its customer, employee, licensee, supplier and financial relationships are of a highly sensitive nature. As a reasonable means to protect the Company's Confidential Information (as defined in the subclause (a) below), investment, relationships, and goodwill, and in consideration for the Option grant, the Optionee agrees that, to the extent permitted by applicable law, the Optionee will not, either during his or her employment or for a period of 12 months following the termination of his or her employment (or such longer period specified below) for any reason engage in any of the following "
Prohibited Activities
":
|
(a)
|
Engage in any business activity in a Restricted Area that competes with the business activities of the Company and its corporate affiliates about which Optionee either had (i) a job responsibility to promote, or (ii) access to Confidential Information. "Restricted Area" for purposes of this Agreement, means a geographic area that the Optionee served or covered on behalf of the Company at any time within the 18 months preceding the end of his or her employment with the Company. "
Confidential Information,
" for the purposes of this Agreement, means information, including information that is conceived or developed by the Optionee that is not generally known to the public and that is used by the Company in connection with its business. By way of example, the term "Confidential Information" would include: trade secrets; processes; formulas; research data; program documentation; algorithms; source codes; object codes; know-how; improvements; inventions; techniques; training materials and methods; product information; corporate strategy; sales forecast and pipeline information; research and development; plans or strategies for marketing and pricing; and information concerning existing or potential customers, partners, or vendors. The Optionee understands that this list is not all-inclusive and merely serves as examples of the types of information that falls within the definition of Confidential Information.
|
(b)
|
Solicit, call on, service or induce others to solicit, call on or service any "Customer" for the purpose of inducing it to license or lease a product or provide it with services that compete with a product or service offered by the Company. A "Customer," for purposes of this Agreement, means any person or business entity that licensed or leased a Company product or obtained Company services within the 18 months preceding the end of the Optionee's employment with the Company and that the Optionee had solicited, called on, or served on the Company's behalf anytime within that 18-month time period.
|
(c)
|
Solicit, call on, or induce others to solicit or call on, any "Prospective Customer" for the purpose of inducing it to license or lease a product or provide it with services which compete with a product or service offered by the Company. A "Prospective Customer," for purposes of this Agreement, is any person or business entity that the Optionee solicited or called on (whether directly or through another Company agent at the Optionee's direction) on behalf of the Company anytime within the 12 months preceding the end of the Optionee's employment with the Company.
|
(d)
|
Directly or indirectly through others, hire any employee or contractor of the Company, or solicit or induce, or attempt to solicit or induce, any Company employee or contractor to leave the Company for any reason.
|
(e)
|
For any period following the termination of the Optionee's employment, violate a non-competition, non-solicitation or non-disclosure covenant or agreement between the Optionee and the Company or any Related Company (including, without limitation, the Employment and Confidentiality Agreement signed at or around the time of the Optionee's hire).
|
2.
|
Tolling of Covenants in the Event of Breach.
In the event the Optionee engages in any of the Prohibited Activities, the time period of the violated covenant(s) shall be tolled throughout the duration of any violation and shall continue until the Optionee has complied with such covenant(s) for a period of 12 consecutive full months.
|
3.
|
Injunction.
The Optionee acknowledges that, by virtue of the Optionee's employment with the Company, the Optionee will have access to Confidential Information of the Company, the disclosure of which will irreparably harm the Company. The Optionee further acknowledges that the Company will suffer irreparable harm if the Optionee breaches any of the Optionee's obligations under this Agreement. Therefore, the Optionee agrees that the Company will be entitled, in addition to its other rights, to enforce the Optionee's obligations through an injunction or decree of specific performance from a court having proper jurisdiction. Any claims the Optionee may assert against the Company shall not constitute a defense in any injunction action brought by the Company to force the Optionee to keep the promises the Optionee made in this Agreement.
|
4.
|
Authorization to Modify Restrictions.
The Optionee agrees that the restrictions contained in this Agreement are reasonable. However, if any court having proper jurisdiction holds a particular restriction to be unreasonable, that restriction shall be modified only to the extent necessary in the court's opinion to make it reasonable and the remaining provisions of this Agreement including without limitation Appendix A shall nonetheless remain in full force and effect. The other provisions of this Agreement are likewise severable.
|
5.
|
General.
|
(a)
|
The Optionee understands and agrees that, if the Company is successful in a suit or proceeding to enforce any of the terms of this Agreement, the Optionee will pay the Company's costs of bringing such suit or proceeding, including its reasonable attorney's fees and litigation expenses (including expert witness and deposition expenses).
|
(b)
|
This Agreement shall inure to the benefit of and may be enforced by the Company, its successors and assigns. Except as otherwise permitted by this Agreement, this Agreement is personal to the Optionee and the Optionee may not assign it.
|
(c)
|
The Company’s rights under this Agreement shall be in addition to any rights it may have under any other Agreement with Optionee.
|
(d)
|
Any failure to enforce the terms of this Agreement with any other employee of the Company shall not be deemed a waiver by the Company to enforce its rights under this Agreement. Further, any waiver by the Company of any breach by the Optionee of any provision of this Agreement, shall not operate or be construed as a waiver of any subsequent breach hereof.
|
|
|
Fiscal Year
|
|
Six Months Ended
|
||||||||||||||||||||
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
September 30,
2013 |
||||||||||||
Earnings available for fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings from continuing operations before income taxes, minority interest and discontinued operations
|
|
$
|
1,049
|
|
|
$
|
1,152
|
|
|
$
|
1,209
|
|
|
$
|
1,354
|
|
|
$
|
1,318
|
|
|
$
|
563
|
|
Add: Fixed charges
|
|
191
|
|
|
156
|
|
|
121
|
|
|
123
|
|
|
119
|
|
|
50
|
|
||||||
Total earnings available for fixed charges
|
|
$
|
1,240
|
|
|
$
|
1,308
|
|
|
$
|
1,330
|
|
|
$
|
1,477
|
|
|
$
|
1,437
|
|
|
$
|
613
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense(1)
|
|
$
|
130
|
|
|
$
|
102
|
|
|
$
|
68
|
|
|
$
|
64
|
|
|
$
|
64
|
|
|
$
|
34
|
|
Interest portion of rental expense
|
|
61
|
|
|
54
|
|
|
53
|
|
|
59
|
|
|
55
|
|
|
16
|
|
||||||
Total fixed charges
|
|
$
|
191
|
|
|
$
|
156
|
|
|
$
|
121
|
|
|
$
|
123
|
|
|
$
|
119
|
|
|
$
|
50
|
|
RATIOS OF EARNINGS TO FIXED CHARGES
|
|
6.49
|
|
|
8.38
|
|
|
10.99
|
|
|
12.01
|
|
|
12.08
|
|
|
12.26
|
|
||||||
Deficiency of earnings to fixed charges
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
(1)
|
Includes amortization of discount related to indebtedness
|
1.
|
I have reviewed the Quarterly Report on Form 10-Q of CA, Inc. for its most recent fiscal quarter;
|
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:
|
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):
|
|
|
|
|
|
|
|
|
Date:
|
October 25, 2013
|
|
|
|
|
|
/s/ Michael P. Gregoire
|
|
|
|
|
|
|
|
Michael P. Gregoire
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
CA, Inc.
|
1.
|
I have reviewed the Quarterly Report on Form 10-Q of CA, Inc. for its most recent fiscal quarter;
|
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:
|
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):
|
|
|
|
|
|
|
|
|
Date:
|
October 25, 2013
|
|
|
|
|
|
/s/ Richard J. Beckert
|
|
|
|
|
|
|
|
Richard J. Beckert
|
|
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
CA, Inc.
|
|
/s/ Michael P. Gregoire
|
Michael P. Gregoire
|
Chief Executive Officer
|
October 25, 2013
|
|
/s/ Richard J. Beckert
|
Richard J. Beckert
|
Executive Vice President and Chief Financial Officer
|
October 25, 2013
|