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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520 Madison Avenue,
New York, New York
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10022
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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 21, 2016
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par value $0.10 per share
|
|
417,837,016
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Page
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PART I.
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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,
2016 |
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March 31,
2016 |
||||
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(unaudited)
|
|
|
||||
Assets
|
|
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|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,585
|
|
|
$
|
2,812
|
|
Trade accounts receivable, net
|
445
|
|
|
625
|
|
||
Other current assets
|
148
|
|
|
124
|
|
||
Total current assets
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$
|
3,178
|
|
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$
|
3,561
|
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Property and equipment, net of accumulated depreciation of $842 and $832, respectively
|
$
|
222
|
|
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$
|
242
|
|
Goodwill
|
6,083
|
|
|
6,086
|
|
||
Capitalized software and other intangible assets, net
|
662
|
|
|
795
|
|
||
Deferred income taxes
|
422
|
|
|
407
|
|
||
Other noncurrent assets, net
|
120
|
|
|
113
|
|
||
Total assets
|
$
|
10,687
|
|
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$
|
11,204
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
4
|
|
|
$
|
6
|
|
Accounts payable
|
76
|
|
|
77
|
|
||
Accrued salaries, wages and commissions
|
159
|
|
|
205
|
|
||
Accrued expenses and other current liabilities
|
352
|
|
|
352
|
|
||
Deferred revenue (billed or collected)
|
1,790
|
|
|
2,197
|
|
||
Taxes payable, other than income taxes payable
|
27
|
|
|
55
|
|
||
Federal, state and foreign income taxes payable
|
—
|
|
|
2
|
|
||
Total current liabilities
|
$
|
2,408
|
|
|
$
|
2,894
|
|
Long-term debt, net of current portion
|
$
|
1,946
|
|
|
$
|
1,947
|
|
Federal, state and foreign income taxes payable
|
135
|
|
|
148
|
|
||
Deferred income taxes
|
3
|
|
|
3
|
|
||
Deferred revenue (billed or collected)
|
580
|
|
|
737
|
|
||
Other noncurrent liabilities
|
86
|
|
|
97
|
|
||
Total liabilities
|
$
|
5,158
|
|
|
$
|
5,826
|
|
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, no par value, 10,000,000 shares authorized; No shares issued and outstanding
|
$
|
—
|
|
|
$
|
—
|
|
Common stock, $0.10 par value, 1,100,000,000 shares authorized; 589,695,081 and 589,695,081 shares issued; 413,149,727 and 412,596,452 shares outstanding, respectively
|
59
|
|
|
59
|
|
||
Additional paid-in capital
|
3,652
|
|
|
3,664
|
|
||
Retained earnings
|
6,771
|
|
|
6,575
|
|
||
Accumulated other comprehensive loss
|
(435
|
)
|
|
(416
|
)
|
||
Treasury stock, at cost, 176,545,354 and 177,098,629 shares, respectively
|
(4,518
|
)
|
|
(4,504
|
)
|
||
Total stockholders’ equity
|
$
|
5,529
|
|
|
$
|
5,378
|
|
Total liabilities and stockholders’ equity
|
$
|
10,687
|
|
|
$
|
11,204
|
|
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For the Three
Months Ended September 30, |
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For the Six
Months Ended September 30, |
||||||||||||
|
2016
|
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2015
|
|
2016
|
|
2015
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Subscription and maintenance
|
$
|
824
|
|
|
$
|
832
|
|
|
$
|
1,650
|
|
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$
|
1,668
|
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Professional services
|
75
|
|
|
83
|
|
|
152
|
|
|
162
|
|
||||
Software fees and other
|
119
|
|
|
90
|
|
|
215
|
|
|
152
|
|
||||
Total revenue
|
$
|
1,018
|
|
|
$
|
1,005
|
|
|
$
|
2,017
|
|
|
$
|
1,982
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Costs of licensing and maintenance
|
$
|
66
|
|
|
$
|
70
|
|
|
$
|
134
|
|
|
$
|
136
|
|
Cost of professional services
|
73
|
|
|
78
|
|
|
148
|
|
|
149
|
|
||||
Amortization of capitalized software costs
|
59
|
|
|
67
|
|
|
125
|
|
|
127
|
|
||||
Selling and marketing
|
235
|
|
|
248
|
|
|
477
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|
|
474
|
|
||||
General and administrative
|
84
|
|
|
99
|
|
|
172
|
|
|
189
|
|
||||
Product development and enhancements
|
136
|
|
|
151
|
|
|
284
|
|
|
287
|
|
||||
Depreciation and amortization of other intangible assets
|
18
|
|
|
29
|
|
|
38
|
|
|
56
|
|
||||
Other expenses, net
|
27
|
|
|
4
|
|
|
27
|
|
|
1
|
|
||||
Total expenses before interest and income taxes
|
$
|
698
|
|
|
$
|
746
|
|
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$
|
1,405
|
|
|
$
|
1,419
|
|
Income from continuing operations before interest and income taxes
|
$
|
320
|
|
|
$
|
259
|
|
|
$
|
612
|
|
|
$
|
563
|
|
Interest expense, net
|
14
|
|
|
12
|
|
|
29
|
|
|
21
|
|
||||
Income from continuing operations before income taxes
|
$
|
306
|
|
|
$
|
247
|
|
|
$
|
583
|
|
|
$
|
542
|
|
Income tax expense
|
94
|
|
|
75
|
|
|
173
|
|
|
163
|
|
||||
Income from continuing operations
|
$
|
212
|
|
|
$
|
172
|
|
|
$
|
410
|
|
|
$
|
379
|
|
Income from discontinued operations, net of income taxes
|
—
|
|
|
2
|
|
|
—
|
|
|
7
|
|
||||
Net income
|
$
|
212
|
|
|
$
|
174
|
|
|
$
|
410
|
|
|
$
|
386
|
|
|
|
|
|
|
|
|
|
||||||||
Basic income per common share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.50
|
|
|
$
|
0.39
|
|
|
$
|
0.98
|
|
|
$
|
0.86
|
|
Income from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
||||
Net income
|
$
|
0.50
|
|
|
$
|
0.39
|
|
|
$
|
0.98
|
|
|
$
|
0.88
|
|
Basic weighted average shares used in computation
|
414
|
|
|
436
|
|
|
414
|
|
|
436
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Diluted income per common share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.50
|
|
|
$
|
0.39
|
|
|
$
|
0.98
|
|
|
$
|
0.86
|
|
Income from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
||||
Net income
|
$
|
0.50
|
|
|
$
|
0.39
|
|
|
$
|
0.98
|
|
|
$
|
0.88
|
|
Diluted weighted average shares used in computation
|
415
|
|
|
437
|
|
|
415
|
|
|
437
|
|
|
For the Three
Months Ended September 30, |
|
For the Six
Months Ended September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
212
|
|
|
$
|
174
|
|
|
$
|
410
|
|
|
$
|
386
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
10
|
|
|
(53
|
)
|
|
(19
|
)
|
|
(21
|
)
|
||||
Total other comprehensive income (loss)
|
$
|
10
|
|
|
$
|
(53
|
)
|
|
$
|
(19
|
)
|
|
$
|
(21
|
)
|
Comprehensive income
|
$
|
222
|
|
|
$
|
121
|
|
|
$
|
391
|
|
|
$
|
365
|
|
|
For the Six
Months Ended September 30, |
||||||
|
2016
|
|
2015
|
||||
Operating activities from continuing operations:
|
|
|
|
||||
Net income
|
$
|
410
|
|
|
$
|
386
|
|
Income from discontinued operations
|
—
|
|
|
(7
|
)
|
||
Income from continuing operations
|
$
|
410
|
|
|
$
|
379
|
|
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
163
|
|
|
183
|
|
||
Deferred income taxes
|
(11
|
)
|
|
(28
|
)
|
||
Provision for bad debts
|
2
|
|
|
1
|
|
||
Share-based compensation expense
|
54
|
|
|
45
|
|
||
Other non-cash items
|
3
|
|
|
—
|
|
||
Foreign currency transaction (gains) losses
|
(1
|
)
|
|
6
|
|
||
Changes in other operating assets and liabilities, net of effect of acquisitions:
|
|
|
|
||||
Decrease in trade accounts receivable
|
176
|
|
|
231
|
|
||
Decrease in deferred revenue
|
(562
|
)
|
|
(496
|
)
|
||
(Decrease) increase in taxes payable, net
|
(86
|
)
|
|
2
|
|
||
Increase (decrease) in accounts payable, accrued expenses and other
|
19
|
|
|
(9
|
)
|
||
Decrease in accrued salaries, wages and commissions
|
(47
|
)
|
|
(66
|
)
|
||
Changes in other operating assets and liabilities
|
(17
|
)
|
|
(17
|
)
|
||
Net cash provided by operating activities - continuing operations
|
$
|
103
|
|
|
$
|
231
|
|
Investing activities from continuing operations:
|
|
|
|
||||
Acquisitions of businesses, net of cash acquired, and purchased software
|
$
|
(1
|
)
|
|
$
|
(647
|
)
|
Purchases of property and equipment
|
(16
|
)
|
|
(23
|
)
|
||
Proceeds from sale of short-term investments
|
—
|
|
|
48
|
|
||
Net cash used in investing activities - continuing operations
|
$
|
(17
|
)
|
|
$
|
(622
|
)
|
Financing activities from continuing operations:
|
|
|
|
||||
Dividends paid
|
$
|
(214
|
)
|
|
$
|
(220
|
)
|
Purchases of common stock
|
(100
|
)
|
|
(115
|
)
|
||
Notional pooling borrowings
|
467
|
|
|
2,494
|
|
||
Notional pooling repayments
|
(456
|
)
|
|
(2,497
|
)
|
||
Debt borrowings
|
—
|
|
|
800
|
|
||
Debt repayments
|
(4
|
)
|
|
(406
|
)
|
||
Debt issuance costs
|
—
|
|
|
(3
|
)
|
||
Exercise of common stock options
|
26
|
|
|
4
|
|
||
Other financing activities
|
—
|
|
|
(18
|
)
|
||
Net cash (used in) provided by financing activities - continuing operations
|
$
|
(281
|
)
|
|
$
|
39
|
|
Effect of exchange rate changes on cash
|
$
|
(32
|
)
|
|
$
|
(1
|
)
|
Net change in cash and cash equivalents - continuing operations
|
$
|
(227
|
)
|
|
$
|
(353
|
)
|
Cash provided by operating activities - discontinued operations
|
$
|
—
|
|
|
$
|
7
|
|
Net effect of discontinued operations on cash and cash equivalents
|
$
|
—
|
|
|
$
|
7
|
|
Decrease in cash and cash equivalents
|
$
|
(227
|
)
|
|
$
|
(346
|
)
|
Cash and cash equivalents at beginning of period
|
$
|
2,812
|
|
|
$
|
2,804
|
|
Cash and cash equivalents at end of period
|
$
|
2,585
|
|
|
$
|
2,458
|
|
(dollars in millions)
|
Rally
|
|
Other Fiscal Year 2016 Acquisitions
|
|
Estimated
Useful Life
|
||||
Finite-lived intangible assets
(1)
|
$
|
78
|
|
|
$
|
14
|
|
|
1-15 years
|
Purchased software
|
178
|
|
|
96
|
|
|
5-7 years
|
||
Goodwill
|
257
|
|
|
59
|
|
|
Indefinite
|
||
Deferred tax liabilities, net
|
(45
|
)
|
|
(24
|
)
|
|
—
|
||
Other assets net of other liabilities assumed
(2)
|
51
|
|
|
2
|
|
|
—
|
||
Purchase price
|
$
|
519
|
|
|
$
|
147
|
|
|
|
(1)
|
Includes customer relationships and trade names.
|
(2)
|
Includes approximately
$13 million
of cash acquired and approximately
$48 million
of short-term investments acquired relating to Rally.
|
|
September 30,
2016 |
|
March 31,
2016 |
||||
|
(in millions)
|
||||||
Accounts receivable – billed
|
$
|
385
|
|
|
$
|
566
|
|
Accounts receivable – unbilled
|
60
|
|
|
55
|
|
||
Other receivables
|
10
|
|
|
13
|
|
||
Less: Allowances
|
(10
|
)
|
|
(9
|
)
|
||
Trade accounts receivable, net
|
$
|
445
|
|
|
$
|
625
|
|
|
At September 30, 2016
|
||||||||||||||||||
|
Gross
Amortizable
Assets
|
|
Less: Fully
Amortized
Assets
|
|
Remaining
Amortizable
Assets
|
|
Accumulated
Amortization
on Remaining
Amortizable
Assets
|
|
Net
Assets
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
5,991
|
|
|
$
|
4,908
|
|
|
$
|
1,083
|
|
|
$
|
590
|
|
|
$
|
493
|
|
Internally developed software products
|
1,467
|
|
|
1,030
|
|
|
437
|
|
|
356
|
|
|
81
|
|
|||||
Other intangible assets
|
927
|
|
|
762
|
|
|
165
|
|
|
77
|
|
|
88
|
|
|||||
Total capitalized software and other intangible assets
|
$
|
8,385
|
|
|
$
|
6,700
|
|
|
$
|
1,685
|
|
|
$
|
1,023
|
|
|
$
|
662
|
|
|
At March 31, 2016
|
||||||||||||||||||
|
Gross
Amortizable
Assets
|
|
Less: Fully
Amortized
Assets
|
|
Remaining
Amortizable
Assets
|
|
Accumulated
Amortization
on Remaining
Amortizable
Assets
|
|
Net
Assets
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
5,990
|
|
|
$
|
4,865
|
|
|
$
|
1,125
|
|
|
$
|
552
|
|
|
$
|
573
|
|
Internally developed software products
|
1,467
|
|
|
1,009
|
|
|
458
|
|
|
333
|
|
|
125
|
|
|||||
Other intangible assets
|
927
|
|
|
728
|
|
|
199
|
|
|
102
|
|
|
97
|
|
|||||
Total capitalized software and other intangible assets
|
$
|
8,384
|
|
|
$
|
6,602
|
|
|
$
|
1,782
|
|
|
$
|
987
|
|
|
$
|
795
|
|
|
Year Ended March 31,
|
||||||||||||||||||
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
156
|
|
|
$
|
147
|
|
|
$
|
107
|
|
|
$
|
82
|
|
|
$
|
40
|
|
Internally developed software products
|
79
|
|
|
36
|
|
|
9
|
|
|
1
|
|
|
—
|
|
|||||
Other intangible assets
|
16
|
|
|
8
|
|
|
7
|
|
|
6
|
|
|
6
|
|
|||||
Total
|
$
|
251
|
|
|
$
|
191
|
|
|
$
|
123
|
|
|
$
|
89
|
|
|
$
|
46
|
|
(in millions)
|
Mainframe Solutions
|
|
Enterprise Solutions
|
|
Services
|
|
Total
|
||||||||
Balance at March 31, 2016
|
$
|
4,178
|
|
|
$
|
1,827
|
|
|
$
|
81
|
|
|
$
|
6,086
|
|
Foreign currency translation adjustment
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Balance at September 30, 2016
|
$
|
4,178
|
|
|
$
|
1,824
|
|
|
$
|
81
|
|
|
$
|
6,083
|
|
|
September 30,
2016 |
|
March 31,
2016 |
||||
|
(in millions)
|
||||||
Current:
|
|
|
|
||||
Subscription and maintenance
|
$
|
1,596
|
|
|
$
|
1,990
|
|
Professional services
|
122
|
|
|
116
|
|
||
Software fees and other
|
72
|
|
|
91
|
|
||
Total deferred revenue (billed or collected) – current
|
$
|
1,790
|
|
|
$
|
2,197
|
|
Noncurrent:
|
|
|
|
||||
Subscription and maintenance
|
$
|
558
|
|
|
$
|
712
|
|
Professional services
|
18
|
|
|
21
|
|
||
Software fees and other
|
4
|
|
|
4
|
|
||
Total deferred revenue (billed or collected) – noncurrent
|
$
|
580
|
|
|
$
|
737
|
|
Total deferred revenue (billed or collected)
|
$
|
2,370
|
|
|
$
|
2,934
|
|
|
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)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Other expenses, net – foreign currency contracts
|
$
|
3
|
|
|
$
|
(8
|
)
|
|
$
|
6
|
|
|
$
|
3
|
|
|
At September 30, 2016
|
|
At March 31, 2016
|
||||||||||||||||||||
|
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)
|
$
|
347
|
|
|
$
|
—
|
|
|
$
|
347
|
|
|
$
|
617
|
|
|
$
|
—
|
|
|
$
|
617
|
|
Foreign exchange derivatives
(2)
|
—
|
|
|
8
|
|
|
8
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Total assets
|
$
|
347
|
|
|
$
|
8
|
|
|
$
|
355
|
|
|
$
|
617
|
|
|
$
|
2
|
|
|
$
|
619
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange derivatives
(2)
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
(1)
|
The Company’s investments in money market funds are classified as “Cash and cash equivalents” in its Condensed Consolidated Balance Sheets.
|
(2)
|
Refer to Note F, “Derivatives” for additional information.
|
|
At September 30, 2016
|
|
At March 31, 2016
|
||||||||||||
(in millions)
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Total debt
(1)
|
$
|
1,950
|
|
|
$
|
2,079
|
|
|
$
|
1,953
|
|
|
$
|
2,058
|
|
Facility exit reserve
(2)
|
$
|
13
|
|
|
$
|
14
|
|
|
$
|
16
|
|
|
$
|
17
|
|
(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, 2016
and
March 31, 2016
. At
September 30, 2016
and
March 31, 2016
, the facility exit reserve included carrying values of approximately
$4 million
and
$4 million
, respectively, in “Accrued expenses and other current liabilities” and approximately
$9 million
and
$12 million
, respectively, 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 4, 2016
|
|
$0.255
|
|
May 26, 2016
|
|
$107
|
|
June 14, 2016
|
August 3, 2016
|
|
$0.255
|
|
August 25, 2016
|
|
$107
|
|
September 13, 2016
|
Declaration Date
|
|
Dividend Per Share
|
|
Record Date
|
|
Total Amount
|
|
Payment Date
|
May 5, 2015
|
|
$0.25
|
|
May 28, 2015
|
|
$110
|
|
June 16, 2015
|
August 6, 2015
|
|
$0.25
|
|
August 27, 2015
|
|
$110
|
|
September 15, 2015
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
Basic income from continuing operations per common share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
212
|
|
|
$
|
172
|
|
|
$
|
410
|
|
|
$
|
379
|
|
Less: Income from continuing operations allocable to participating securities
|
(3
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|
(4
|
)
|
||||
Income from continuing operations allocable to common shares
|
$
|
209
|
|
|
$
|
170
|
|
|
$
|
405
|
|
|
$
|
375
|
|
Weighted average common shares outstanding
|
414
|
|
|
436
|
|
|
414
|
|
|
436
|
|
||||
Basic income from continuing operations per common share
|
$
|
0.50
|
|
|
$
|
0.39
|
|
|
$
|
0.98
|
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted income from continuing operations per common share:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
212
|
|
|
$
|
172
|
|
|
$
|
410
|
|
|
$
|
379
|
|
Less: Income from continuing operations allocable to participating securities
|
(3
|
)
|
|
(2
|
)
|
|
(5
|
)
|
|
(4
|
)
|
||||
Income from continuing operations allocable to common shares
|
$
|
209
|
|
|
$
|
170
|
|
|
$
|
405
|
|
|
$
|
375
|
|
Weighted average shares outstanding and common share equivalents:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
414
|
|
|
436
|
|
|
414
|
|
|
436
|
|
||||
Weighted average effect of share-based payment awards
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Denominator in calculation of diluted income per share
|
415
|
|
|
437
|
|
|
415
|
|
|
437
|
|
||||
Diluted income from continuing operations per common share
|
$
|
0.50
|
|
|
$
|
0.39
|
|
|
$
|
0.98
|
|
|
$
|
0.86
|
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions)
|
||||||||||||||
Costs of licensing and maintenance
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Cost of professional services
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||
Selling and marketing
|
9
|
|
|
8
|
|
|
19
|
|
|
16
|
|
||||
General and administrative
|
8
|
|
|
9
|
|
|
19
|
|
|
16
|
|
||||
Product development and enhancements
|
6
|
|
|
4
|
|
|
11
|
|
|
8
|
|
||||
Share-based compensation expense before tax
|
$
|
25
|
|
|
$
|
23
|
|
|
$
|
54
|
|
|
$
|
45
|
|
Income tax benefit
|
(8
|
)
|
|
(7
|
)
|
|
(18
|
)
|
|
(14
|
)
|
||||
Net share-based compensation expense
|
$
|
17
|
|
|
$
|
16
|
|
|
$
|
36
|
|
|
$
|
31
|
|
|
Unrecognized Share-Based Compensation Costs
|
|
Weighted Average Period Expected to be Recognized
|
||
|
(in millions)
|
|
(in years)
|
||
Stock option awards
|
$
|
5
|
|
|
2.2
|
Restricted stock units
|
24
|
|
|
2.2
|
|
Restricted stock awards
|
89
|
|
|
2.1
|
|
Performance share units
|
40
|
|
|
2.7
|
|
Total unrecognized share-based compensation costs
|
$
|
158
|
|
|
2.3
|
|
Six Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
Weighted average fair value
|
$
|
4.41
|
|
|
$
|
4.68
|
|
Dividend yield
|
3.57
|
%
|
|
3.37
|
%
|
||
Expected volatility factor
(1)
|
22
|
%
|
|
23
|
%
|
||
Risk-free interest rate
(2)
|
1.5
|
%
|
|
1.9
|
%
|
||
Expected life (in years)
(3)
|
6.0
|
|
|
6.0
|
|
(1)
|
Expected volatility is measured using historical daily price changes of the Company’s common 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
|
2016
|
|
1 year
|
|
0.6
|
|
$31.53
|
|
0.1
|
|
$30.53
|
2015
|
|
1 year
|
|
0.5
|
|
$31.41
|
|
0.1
|
|
$30.42
|
Incentive Plans
for Fiscal Years
|
|
Performance Period
|
|
Shares of Common Stock
(in millions)
|
|
Weighted Average Grant Date Fair Value
|
2014
|
|
3 years
|
|
0.3
|
|
$31.53
|
2013
|
|
3 years
|
|
0.1
|
|
$31.41
|
|
|
|
|
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
|
2016
|
|
1 year
|
|
0.3
|
|
$31.53
|
|
0.1
|
|
$28.52
|
2015
|
|
1 year
|
|
0.2
|
|
$30.45
|
|
0.1
|
|
$27.50
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(shares in millions)
|
||||||||||||||
RSAs:
|
|
|
|
|
|
|
|
||||||||
Shares
|
—
|
|
(3)
|
0.1
|
|
|
2.9
|
|
|
2.8
|
|
||||
Weighted average grant date fair value
(1)
|
$
|
34.31
|
|
|
$
|
29.86
|
|
|
$
|
31.55
|
|
|
$
|
30.64
|
|
RSUs:
|
|
|
|
|
|
|
|
||||||||
Shares
|
—
|
|
(3)
|
0.1
|
|
|
1.0
|
|
|
0.9
|
|
||||
Weighted average grant date fair value
(2)
|
$
|
31.82
|
|
|
$
|
27.72
|
|
|
$
|
30.16
|
|
|
$
|
28.72
|
|
(1)
|
The fair value is based on the quoted market value of the Company’s common stock on the grant date.
|
(2)
|
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.
|
(3)
|
Less than 0.1 million.
|
|
Six Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Total borrowings outstanding at beginning of period
(1)
|
$
|
139
|
|
|
$
|
138
|
|
Borrowings
|
467
|
|
|
2,494
|
|
||
Repayments
|
(456
|
)
|
|
(2,497
|
)
|
||
Foreign exchange effect
|
(11
|
)
|
|
4
|
|
||
Total borrowings outstanding at end of period
(1)
|
$
|
139
|
|
|
$
|
139
|
|
(1)
|
Included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.
|
Three Months Ended September 30, 2016
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
|||||||||||||||
Revenue
|
$
|
550
|
|
|
$
|
393
|
|
|
$
|
75
|
|
|
$
|
1,018
|
|
Expenses
|
211
|
|
|
324
|
|
|
73
|
|
|
608
|
|
||||
Segment profit
|
$
|
339
|
|
|
$
|
69
|
|
|
$
|
2
|
|
|
$
|
410
|
|
Segment operating margin
|
62
|
%
|
|
18
|
%
|
|
3
|
%
|
|
40
|
%
|
||||
Depreciation
|
$
|
8
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
14
|
|
(1)
|
Other expenses, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
Six Months Ended September 30, 2016
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
|||||||||||||||
Revenue
|
$
|
1,101
|
|
|
$
|
764
|
|
|
$
|
152
|
|
|
$
|
2,017
|
|
Expenses
|
419
|
|
|
648
|
|
|
148
|
|
|
1,215
|
|
||||
Segment profit
|
$
|
682
|
|
|
$
|
116
|
|
|
$
|
4
|
|
|
$
|
802
|
|
Segment operating margin
|
62
|
%
|
|
15
|
%
|
|
3
|
%
|
|
40
|
%
|
||||
Depreciation
|
$
|
17
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
29
|
|
(1)
|
Other expenses, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
Three Months Ended September 30, 2015
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
|||||||||||||||
Revenue
|
$
|
554
|
|
|
$
|
368
|
|
|
$
|
83
|
|
|
$
|
1,005
|
|
Expenses
|
212
|
|
|
357
|
|
|
79
|
|
|
648
|
|
||||
Segment profit
|
$
|
342
|
|
|
$
|
11
|
|
|
$
|
4
|
|
|
$
|
357
|
|
Segment operating margin
|
62
|
%
|
|
3
|
%
|
|
5
|
%
|
|
36
|
%
|
||||
Depreciation
|
$
|
9
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
15
|
|
(1)
|
Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
Six Months Ended September 30, 2015
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
|||||||||||||||
Revenue
|
$
|
1,114
|
|
|
$
|
706
|
|
|
$
|
162
|
|
|
$
|
1,982
|
|
Expenses
|
423
|
|
|
647
|
|
|
150
|
|
|
1,220
|
|
||||
Segment profit
|
$
|
691
|
|
|
$
|
59
|
|
|
$
|
12
|
|
|
$
|
762
|
|
Segment operating margin
|
62
|
%
|
|
8
|
%
|
|
7
|
%
|
|
38
|
%
|
||||
Depreciation
|
$
|
18
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
31
|
|
(1)
|
Other expenses, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in millions)
|
||||||||||||||
United States
|
$
|
657
|
|
|
$
|
645
|
|
|
$
|
1,294
|
|
|
$
|
1,264
|
|
EMEA
(1)
|
219
|
|
|
228
|
|
|
444
|
|
|
449
|
|
||||
Other
|
142
|
|
|
132
|
|
|
279
|
|
|
269
|
|
||||
Total revenue
|
$
|
1,018
|
|
|
$
|
1,005
|
|
|
$
|
2,017
|
|
|
$
|
1,982
|
|
(1)
|
Consists of Europe, the Middle East and Africa.
|
•
|
Agile Management
enables customers to more effectively plan and manage the software development process and the business of IT service delivery. Our solutions enable customers to improve delivery time on large projects, reduce costs and optimize resources.
|
•
|
DevOps
is adjacent to Agile Management and comprises a range of solutions that allow customers to efficiently deliver and manage applications and IT infrastructure. With our portfolio of solutions, customers can reduce the delivery time of new applications, increase the frequency of new releases and dramatically improve quality.
|
•
|
Security
includes a comprehensive set of solutions to address the growing concern across all enterprises and organizations regarding external and internal threats to their environments and the critical data they contain. Our identity-centric security portfolio allows customers to manage identities and regulate access from the device to the data center, providing a complete, end-to-end, and multi-channel security solution.
|
•
|
Application Development
solutions help enable agile development processes, modernize applications and enable collaboration across the mobile to mainframe teams.
|
•
|
Databases and Database Management
solutions help customers manage the growth and increasing complexity of data and allow them to address their ever-evolving data management needs and enable web and mobile access of data.
|
•
|
Security & Compliance
solutions manage risk and ensure regulatory compliance across the enterprise with modern tools. Our solutions reduce risk from unauthorized access, secure mainframe assets, monitor instances that affect compliance and help discover sensitive data. Our solutions secure data at rest and in motion, across the enterprise.
|
•
|
Systems and Operations Management
portfolio provides customers with a unified view of their z Systems performance, including their applications, middleware, networks, systems, storage and data.
|
•
|
Drive organic innovation.
Our product development strategy is built around key growth areas, where we are focused on innovating and delivering differentiated products and solutions across both distributed and mainframe. A key element of our organic innovation approach is the broad adoption of the Agile methodology to govern our software development process, which we believe will improve our product development time-to-market, quality and relevance, and support our customer success initiatives.
|
•
|
Incubate technology for next generation products.
We are researching and dedicating resources to the development of emerging technologies that are logical extensions of our core areas of focus. We are working on opportunities in areas such as containers, data analytics, big data and open source, some of which may become enhancements or extensions of our current product portfolio and others may evolve to new product categories.
|
•
|
Pursue new business models and expanded routes to market.
While our traditional on-premise software delivery remains core to many enterprise customers, we see cloud-based and try-and-buy models as increasingly attractive for our customers.
|
•
|
Expand relationships with our global customer base and address opportunities with new and underserved customers.
We are focused on maintaining and expanding the strong relationships with our established customer base, and will proactively target growth with other potential customers that we do not currently serve. In parallel, we are seeking to broaden our customer base to new buyers in geographic regions we have underserved. The emerging roles of Chief Information Security Officers and Chief Development Officers align with the shifts we are driving across our portfolio to meet the needs of speed and agility.
|
•
|
Execute strategic and disciplined technology acquisitions.
We intend to supplement our organic innovation efforts with key technology acquisitions that are within or adjacent to our core areas of focus. We conduct a thorough acquisition process, which includes build vs. buy analysis and opportunity identification, detailed business case modeling, rigorous due diligence and extensive integration, to fully realize the value of our acquisitions.
|
•
|
Total revenue
increased
$13 million
primarily due to an increase in software fees and other revenue, partially offset by decreases in professional services revenue and subscription and maintenance revenue.
|
•
|
We expect revenue for fiscal 2017 to be consistent or increase slightly compared with fiscal 2016. We currently expect foreign exchange not to have a significant effect on revenue for fiscal 2017.
|
•
|
Total bookings
decreased
primarily due to the renewal with a large system integrator in excess of $500 million for a term greater than five years that occurred during the second quarter of fiscal 2016 and, to a lesser extent, a decrease in mainframe renewals.
|
•
|
Renewal bookings decreased by a percentage in the mid-50s primarily due to the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016 and, to a lesser extent, a decrease in mainframe renewals due to the timing of our renewal portfolio. Excluding the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016, renewal bookings decreased by a percentage in the high single digits primarily due to a decrease in mainframe renewals as set forth above.
|
•
|
Total new product sales decreased by a percentage in the mid-20s primarily due to new product sales in connection with the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016 and, to a lesser extent, a decrease in mainframe capacity sales that were not associated with this transaction. Excluding the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016, total new product sales decreased by a percentage in the low teens primarily due to a decrease in mainframe capacity sales.
|
•
|
Mainframe solutions new product sales decreased by a percentage in the mid-40s primarily due to new product sales in connection with the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016 and, to a lesser extent, a decrease in mainframe capacity sales. Excluding the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016, mainframe solutions new product sales decreased by a percentage in the mid-20s primarily due to a decrease in mainframe capacity sales.
|
•
|
Enterprise solutions new product sales decreased by a percentage in the high teens primarily due to new product sales in connection with the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016. Excluding the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016, enterprise solutions new product sales decreased by a percentage in the high single digits due to the decline in the overall renewal portfolio.
|
•
|
We expect fiscal 2017 renewals to increase by a percentage in the high teens compared with fiscal 2016.
|
•
|
Operating expenses
decreased
primarily due to the overall decreases in personnel-related costs of $18 million as a result of lower headcount, a decrease in amortization expense related to capitalized software and other intangible assets of $18 million and transaction costs of $17 million associated with our acquisitions of Rally Software Development Corp. (Rally) and Xceedium, Inc. (Xceedium) that occurred during the second quarter of fiscal 2016, partially offset by an increase in legal settlement expense included in other expenses, net of $25 million.
|
•
|
We anticipate a fiscal
2017
effective tax rate between
28%
and
29%
.
|
•
|
Diluted income per common share from continuing operations
increased
to
$0.50
from
$0.39
primarily due to a decrease in operating expenses.
|
•
|
Mainframe Solutions revenue
decreased
primarily due to insufficient revenue from prior period new sales to offset the decline in revenue contribution from renewals. Mainframe Solutions operating margin was consistent compared with the year-ago period.
|
•
|
Enterprise Solutions revenue
increased
primarily due to an increase in sales of our enterprise solutions products recognized on an upfront basis and an increase in SaaS revenue, primarily from our CA Agile Central products (acquired from Rally). Enterprise Solutions operating margin increased primarily due to the transaction costs associated with our acquisitions of Rally and Xceedium that occurred during the second quarter of fiscal 2016.
|
•
|
Services revenue
decreased
primarily due to a decline in professional services engagements from prior periods. This decline in professional services engagements is a result of several factors including our products being easier to install and manage, an increase in the use of partners for services engagements and the completion of non-strategic projects during previous periods. Operating margin for Services decreased primarily due to the overall decline in professional services revenue.
|
•
|
Net cash used in operating activities from continuing operations for the
second
quarter of fiscal
2017
was
$58 million
, representing a
decrease
of
$101 million
compared with net cash provided by operating activities from continuing operations of
$43 million
in the
second
quarter of fiscal
2016
. The
decrease
in cash from operating activities was due to a decrease in cash collections from billings of
$86 million
primarily from lower single installment collections of $70 million and an increase in income tax payments, net of
$26 million
, partially offset by a decrease in vendor disbursements and payroll of
$29 million
.
|
•
|
Effective July 26, 2016, the Company’s Board of Directors appointed Kieran J. McGrath as Senior Vice President and interim Chief Financial Officer. Mr. McGrath was previously the Company’s Senior Vice President and Corporate Controller.
|
|
Second Quarter Comparison
Fiscal
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|
Percentage Change
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
Total revenue
|
$
|
1,018
|
|
|
$
|
1,005
|
|
|
$
|
13
|
|
|
1
|
%
|
Income from continuing operations
|
$
|
212
|
|
|
$
|
172
|
|
|
$
|
40
|
|
|
23
|
%
|
Net cash (used in) provided by operating activities - continuing operations
|
$
|
(58
|
)
|
|
$
|
43
|
|
|
$
|
(101
|
)
|
|
(235
|
)%
|
Total bookings
|
$
|
729
|
|
|
$
|
1,383
|
|
|
$
|
(654
|
)
|
|
(47
|
)%
|
Subscription and maintenance bookings
|
$
|
531
|
|
|
$
|
1,192
|
|
|
$
|
(661
|
)
|
|
(55
|
)%
|
Weighted average subscription and maintenance license
agreement duration in years
|
2.99
|
|
|
4.46
|
|
|
(1.47
|
)
|
|
(33
|
)%
|
|
First Half
Comparison Fiscal
|
|
|
|
|
|||||||||
|
2017
|
|
2016
|
|
Change
|
|
Percentage Change
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
Total revenue
|
$
|
2,017
|
|
|
$
|
1,982
|
|
|
$
|
35
|
|
|
2
|
%
|
Income from continuing operations
|
$
|
410
|
|
|
$
|
379
|
|
|
$
|
31
|
|
|
8
|
%
|
Net cash provided by operating activities - continuing operations
|
$
|
103
|
|
|
$
|
231
|
|
|
$
|
(128
|
)
|
|
(55
|
)%
|
Total bookings
|
$
|
2,082
|
|
|
$
|
2,045
|
|
|
$
|
37
|
|
|
2
|
%
|
Subscription and maintenance bookings
|
$
|
1,704
|
|
|
$
|
1,717
|
|
|
$
|
(13
|
)
|
|
(1
|
)%
|
Weighted average subscription and maintenance license
agreement duration in years
|
4.18
|
|
|
4.01
|
|
|
0.17
|
|
|
4
|
%
|
|
September 30, 2016
|
|
March 31, 2016
|
|
Change
From Fiscal
Year End
|
|
September 30, 2015
|
|
Change
From Prior
Year Quarter
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
2,585
|
|
|
$
|
2,812
|
|
|
$
|
(227
|
)
|
|
$
|
2,458
|
|
|
$
|
127
|
|
Total debt
(1)
|
$
|
1,950
|
|
|
$
|
1,953
|
|
|
$
|
(3
|
)
|
|
$
|
1,648
|
|
|
$
|
302
|
|
Total expected future cash collections
from committed contracts
(2)
|
$
|
4,933
|
|
|
$
|
4,520
|
|
|
$
|
413
|
|
|
$
|
4,537
|
|
|
$
|
396
|
|
Total revenue backlog
(2)
|
$
|
6,858
|
|
|
$
|
6,829
|
|
|
$
|
29
|
|
|
$
|
6,614
|
|
|
$
|
244
|
|
Total current revenue backlog
(2)
|
$
|
2,945
|
|
|
$
|
3,113
|
|
|
$
|
(168
|
)
|
|
$
|
3,006
|
|
|
$
|
(61
|
)
|
(1)
|
Total debt at September 30, 2015 has been adjusted to reflect the adoption of Accounting Standards Update No. 2015-03,
Simplifying the Presentation of Debt Issuance Costs
(Topic 835). Refer to Note 1, “Significant Accounting Policies” of our 2016 Form 10-K for additional information.
|
(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 2017 Versus Fiscal 2016
|
|||||||||||||||||||
|
|
|
|
|
Dollar Change
|
|
Percentage Change
|
|
Percentage of
Total Revenue
|
|||||||||||
|
2017
|
|
2016
|
|
2017 / 2016
|
|
2017 / 2016
|
|
2017
|
|
2016
|
|||||||||
|
(dollars in millions)
|
|
|
|
|
|
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Subscription and maintenance
|
$
|
824
|
|
|
$
|
832
|
|
|
$
|
(8
|
)
|
|
(1
|
)%
|
|
81
|
%
|
|
83
|
%
|
Professional services
|
75
|
|
|
83
|
|
|
(8
|
)
|
|
(10
|
)
|
|
7
|
|
|
8
|
|
|||
Software fees and other
|
119
|
|
|
90
|
|
|
29
|
|
|
32
|
|
|
12
|
|
|
9
|
|
|||
Total revenue
|
$
|
1,018
|
|
|
$
|
1,005
|
|
|
$
|
13
|
|
|
1
|
%
|
|
100
|
%
|
|
100
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Costs of licensing and maintenance
|
$
|
66
|
|
|
$
|
70
|
|
|
$
|
(4
|
)
|
|
(6
|
)%
|
|
6
|
%
|
|
7
|
%
|
Cost of professional services
|
73
|
|
|
78
|
|
|
(5
|
)
|
|
(6
|
)
|
|
7
|
|
|
8
|
|
|||
Amortization of capitalized software costs
|
59
|
|
|
67
|
|
|
(8
|
)
|
|
(12
|
)
|
|
6
|
|
|
7
|
|
|||
Selling and marketing
|
235
|
|
|
248
|
|
|
(13
|
)
|
|
(5
|
)
|
|
23
|
|
|
25
|
|
|||
General and administrative
|
84
|
|
|
99
|
|
|
(15
|
)
|
|
(15
|
)
|
|
8
|
|
|
10
|
|
|||
Product development and enhancements
|
136
|
|
|
151
|
|
|
(15
|
)
|
|
(10
|
)
|
|
13
|
|
|
15
|
|
|||
Depreciation and amortization of other intangible assets
|
18
|
|
|
29
|
|
|
(11
|
)
|
|
(38
|
)
|
|
2
|
|
|
3
|
|
|||
Other expenses, net
|
27
|
|
|
4
|
|
|
23
|
|
|
575
|
|
|
3
|
|
|
—
|
|
|||
Total expenses before interest and income taxes
|
$
|
698
|
|
|
$
|
746
|
|
|
$
|
(48
|
)
|
|
(6
|
)%
|
|
69
|
%
|
|
74
|
%
|
Income from continuing operations before interest and income taxes
|
$
|
320
|
|
|
$
|
259
|
|
|
$
|
61
|
|
|
24
|
%
|
|
31
|
%
|
|
26
|
%
|
Interest expense, net
|
14
|
|
|
12
|
|
|
2
|
|
|
17
|
|
|
1
|
|
|
1
|
|
|||
Income from continuing operations before income taxes
|
$
|
306
|
|
|
$
|
247
|
|
|
$
|
59
|
|
|
24
|
%
|
|
30
|
%
|
|
25
|
%
|
Income tax expense
|
94
|
|
|
75
|
|
|
19
|
|
|
25
|
|
|
9
|
|
|
7
|
|
|||
Income from continuing operations
|
$
|
212
|
|
|
$
|
172
|
|
|
$
|
40
|
|
|
23
|
%
|
|
21
|
%
|
|
17
|
%
|
|
First Half Comparison Fiscal 2017 Versus Fiscal 2016
|
|||||||||||||||||||
|
|
|
|
|
Dollar Change
|
|
Percentage Change
|
|
Percentage of
Total Revenue
|
|||||||||||
|
2017
|
|
2016
|
|
2017 / 2016
|
|
2017 / 2016
|
|
2017
|
|
2016
|
|||||||||
|
(dollars in millions)
|
|
|
|
|
|
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Subscription and maintenance
|
$
|
1,650
|
|
|
$
|
1,668
|
|
|
$
|
(18
|
)
|
|
(1
|
)%
|
|
82
|
%
|
|
84
|
%
|
Professional services
|
152
|
|
|
162
|
|
|
(10
|
)
|
|
(6
|
)
|
|
7
|
|
|
8
|
|
|||
Software fees and other
|
215
|
|
|
152
|
|
|
63
|
|
|
41
|
|
|
11
|
|
|
8
|
|
|||
Total revenue
|
$
|
2,017
|
|
|
$
|
1,982
|
|
|
$
|
35
|
|
|
2
|
%
|
|
100
|
%
|
|
100
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Costs of licensing and maintenance
|
$
|
134
|
|
|
$
|
136
|
|
|
$
|
(2
|
)
|
|
(1
|
)%
|
|
7
|
%
|
|
7
|
%
|
Cost of professional services
|
148
|
|
|
149
|
|
|
(1
|
)
|
|
(1
|
)
|
|
7
|
|
|
8
|
|
|||
Amortization of capitalized software costs
|
125
|
|
|
127
|
|
|
(2
|
)
|
|
(2
|
)
|
|
6
|
|
|
6
|
|
|||
Selling and marketing
|
477
|
|
|
474
|
|
|
3
|
|
|
1
|
|
|
24
|
|
|
24
|
|
|||
General and administrative
|
172
|
|
|
189
|
|
|
(17
|
)
|
|
(9
|
)
|
|
9
|
|
|
10
|
|
|||
Product development and enhancements
|
284
|
|
|
287
|
|
|
(3
|
)
|
|
(1
|
)
|
|
14
|
|
|
14
|
|
|||
Depreciation and amortization of other intangible assets
|
38
|
|
|
56
|
|
|
(18
|
)
|
|
(32
|
)
|
|
2
|
|
|
3
|
|
|||
Other expenses, net
|
27
|
|
|
1
|
|
|
26
|
|
|
NM
|
|
|
1
|
|
|
—
|
|
|||
Total expenses before interest and income taxes
|
$
|
1,405
|
|
|
$
|
1,419
|
|
|
$
|
(14
|
)
|
|
(1
|
)%
|
|
70
|
%
|
|
72
|
%
|
Income from continuing operations before interest and income taxes
|
$
|
612
|
|
|
$
|
563
|
|
|
$
|
49
|
|
|
9
|
%
|
|
30
|
%
|
|
28
|
%
|
Interest expense, net
|
29
|
|
|
21
|
|
|
8
|
|
|
38
|
|
|
1
|
|
|
1
|
|
|||
Income from continuing operations before income taxes
|
$
|
583
|
|
|
$
|
542
|
|
|
$
|
41
|
|
|
8
|
%
|
|
29
|
%
|
|
27
|
%
|
Income tax expense
|
173
|
|
|
163
|
|
|
10
|
|
|
6
|
|
|
9
|
|
|
8
|
|
|||
Income from continuing operations
|
$
|
410
|
|
|
$
|
379
|
|
|
$
|
31
|
|
|
8
|
%
|
|
20
|
%
|
|
19
|
%
|
|
Second Quarter Comparison Fiscal 2017 Versus Fiscal 2016
|
|||||||||||||||||||
|
2017
|
|
Percentage of Total Revenue
|
|
2016
|
|
Percentage of Total Revenue
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
United States
|
$
|
657
|
|
|
65
|
%
|
|
$
|
645
|
|
|
64
|
%
|
|
$
|
12
|
|
|
2
|
%
|
International
|
361
|
|
|
35
|
|
|
360
|
|
|
36
|
|
|
1
|
|
|
—
|
|
|||
Total Revenue
|
$
|
1,018
|
|
|
100
|
%
|
|
$
|
1,005
|
|
|
100
|
%
|
|
$
|
13
|
|
|
1
|
%
|
|
First Half Comparison Fiscal 2017 Versus Fiscal 2016
|
|||||||||||||||||||
|
2017
|
|
Percentage of Total Revenue
|
|
2016
|
|
Percentage of Total Revenue
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
United States
|
$
|
1,294
|
|
|
64
|
%
|
|
$
|
1,264
|
|
|
64
|
%
|
|
$
|
30
|
|
|
2
|
%
|
International
|
723
|
|
|
36
|
|
|
718
|
|
|
36
|
|
|
5
|
|
|
1
|
|
|||
Total Revenue
|
$
|
2,017
|
|
|
100
|
%
|
|
$
|
1,982
|
|
|
100
|
%
|
|
$
|
35
|
|
|
2
|
%
|
|
Second Quarter
Fiscal 2017 |
|
Second Quarter
Fiscal 2016 |
||||
|
(dollars in millions)
|
||||||
Legal settlements
|
$
|
27
|
|
|
$
|
2
|
|
Losses (gains) from foreign exchange derivative contracts
|
3
|
|
|
(8
|
)
|
||
Losses from foreign exchange rate fluctuations
|
—
|
|
|
8
|
|
||
Other miscellaneous items
|
(3
|
)
|
|
2
|
|
||
Total
|
$
|
27
|
|
|
$
|
4
|
|
|
First Half
Fiscal 2017 |
|
First Half
Fiscal 2016 |
||||
|
(dollars in millions)
|
||||||
Legal settlements
|
$
|
27
|
|
|
$
|
(15
|
)
|
Losses from foreign exchange derivative contracts
|
6
|
|
|
3
|
|
||
(Gains) losses from foreign exchange rate fluctuations
|
(3
|
)
|
|
12
|
|
||
Other miscellaneous items
|
(3
|
)
|
|
1
|
|
||
Total
|
$
|
27
|
|
|
$
|
1
|
|
Mainframe Solutions
|
Second Quarter
Fiscal 2017 |
|
Second Quarter
Fiscal 2016 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
550
|
|
|
$
|
554
|
|
Expenses
|
211
|
|
|
212
|
|
||
Segment profit
|
$
|
339
|
|
|
$
|
342
|
|
Segment operating margin
|
62
|
%
|
|
62
|
%
|
Mainframe Solutions
|
First Half
Fiscal 2017 |
|
First Half
Fiscal 2016 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
1,101
|
|
|
$
|
1,114
|
|
Expenses
|
419
|
|
|
423
|
|
||
Segment profit
|
$
|
682
|
|
|
$
|
691
|
|
Segment operating margin
|
62
|
%
|
|
62
|
%
|
Enterprise Solutions
|
Second Quarter
Fiscal 2017 |
|
Second Quarter
Fiscal 2016 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
393
|
|
|
$
|
368
|
|
Expenses
|
324
|
|
|
357
|
|
||
Segment profit
|
$
|
69
|
|
|
$
|
11
|
|
Segment operating margin
|
18
|
%
|
|
3
|
%
|
Enterprise Solutions
|
First Half
Fiscal 2017 |
|
First Half
Fiscal 2016 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
764
|
|
|
$
|
706
|
|
Expenses
|
648
|
|
|
647
|
|
||
Segment profit
|
$
|
116
|
|
|
$
|
59
|
|
Segment operating margin
|
15
|
%
|
|
8
|
%
|
Services
|
Second Quarter
Fiscal 2017 |
|
Second Quarter
Fiscal 2016 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
75
|
|
|
$
|
83
|
|
Expenses
|
73
|
|
|
79
|
|
||
Segment profit
|
$
|
2
|
|
|
$
|
4
|
|
Segment operating margin
|
3
|
%
|
|
5
|
%
|
Services
|
First Half
Fiscal 2017 |
|
First Half
Fiscal 2016 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
152
|
|
|
$
|
162
|
|
Expenses
|
148
|
|
|
150
|
|
||
Segment profit
|
$
|
4
|
|
|
$
|
12
|
|
Segment operating margin
|
3
|
%
|
|
7
|
%
|
•
|
Renewal Yield:
For the
second
quarter of fiscal
2017
, our percentage renewal yield was in the low 90% range.
|
•
|
License Agreements over $10 million:
During the
second
quarter of fiscal
2017
, we executed a total of
11
license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of
$209 million
. During the
second
quarter of fiscal
2016
, we executed a total of
11
license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of
$887 million
. The decrease in value was primarily due to the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016.
|
•
|
Annualized Subscription and Maintenance Bookings and Weighted Average Subscription and Maintenance License Agreement Duration in Years:
Annualized subscription and maintenance bookings
decreased
from
$267 million
in the
second
quarter of fiscal
2016
to
$178 million
in the
second
quarter of fiscal
2017
. The weighted average subscription and maintenance license agreement duration in years
decreased
from
4.46
in the
second
quarter of fiscal
2016
to
2.99
in the
second
quarter of fiscal
2017
. These decreases were due to the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016 with a term greater than five years. Although each contract is subject to terms negotiated by the respective parties, we do not expect the weighted average subscription and maintenance agreement duration in years to change materially from historical levels for end-user contracts.
|
•
|
Within Total New Product Sales:
|
◦
|
Mainframe Solutions New Product Sales:
For the
second
quarter of fiscal
2017
,
mainframe solutions new product sales decreased by a percentage in the mid-40s compared with the year-ago period primarily due to new product sales in connection with the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016 and, to a lesser extent, a decrease in mainframe capacity sales due to a decrease in mainframe renewals not associated with the large system integrator transaction. Excluding the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016, mainframe solutions new product sales decreased by a percentage in the mid-20s for the
second
quarter of fiscal
2017
compared with the year-ago period primarily due to a decrease in mainframe capacity sales. Overall, we expect our Mainframe Solutions revenue to decline by a percentage in the low single digits over the medium term, which we believe is in line with the mainframe market.
|
◦
|
Enterprise Solutions New Product Sales:
For the
second
quarter of fiscal
2017
,
enterprise solutions new product sales decreased by a percentage in the high teens compared with the year-ago period primarily due to new product sales in connection with the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016. Excluding the aforementioned renewal with a large system integrator that occurred during the second quarter of fiscal 2016, enterprise solutions new product sales decreased by a percentage in the high single digits for the
second
quarter of fiscal
2017
compared with the year-ago period. The decrease was driven by the decline in the renewal portfolio, partially offset by a higher than historical average attach rate of new product sales to renewals. Enterprise Solutions new product sales performance was negatively affected by certain products that are more mature and not growing, but which positively affected segment operating margin and cash flow from operations.
|
•
|
License Agreements over $10 million:
During the
first half
of fiscal
2017
, we executed a total of
25
license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of
$1,119 million
. During the
first half
of fiscal
2016
, we executed a total of
17
license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of
$1,101 million
.
|
•
|
Annualized Subscription and Maintenance Bookings and Weighted Average Subscription and Maintenance License Agreement Duration in Years:
Annualized subscription and maintenance bookings
decreased
from
$428 million
in the
first half
of fiscal
2016
to
$408 million
in the
first half
of fiscal
2017
. The weighted average subscription and maintenance license agreement duration in years
increased
from
4.01
in the
first half
of fiscal
2016
to
4.18
in the
first half
of fiscal
2017
.
|
•
|
Full Year Fiscal 2017 Outlook:
We expect fiscal 2017 renewals to increase by a percentage in the high teens compared with fiscal 2016.
|
•
|
Within Total New Product Sales:
|
◦
|
Mainframe Solutions New Product Sales:
For the
first half
of fiscal
2017
,
mainframe solutions new product sales (which includes sales of mainframe products and mainframe capacity) increased by a percentage in the mid-teens compared with the year-ago period primarily due to an increase in sales of mainframe products, partially offset by a decrease in sales of mainframe capacity.
|
◦
|
Enterprise Solutions New Product Sales:
For the
first half
of fiscal
2017
,
enterprise solutions new product sales decreased by a percentage in the low single digits compared with the year-ago period, partially offset by the increase in new product sales from Rally and Xceedium in the first quarter of fiscal 2017. Enterprise Solutions new product sales performance was negatively affected by certain products that are more mature and not growing, but which positively affected segment operating margin and cash flow from operations.
|
(in millions)
|
September 30,
2016 |
|
March 31,
2016 |
|
September 30,
2015 |
||||||
Billings backlog:
|
|
|
|
|
|
||||||
Amounts to be billed – current
|
$
|
1,821
|
|
|
$
|
1,818
|
|
|
$
|
1,825
|
|
Amounts to be billed – noncurrent
|
2,667
|
|
|
2,077
|
|
|
2,273
|
|
|||
Total billings backlog
|
$
|
4,488
|
|
|
$
|
3,895
|
|
|
$
|
4,098
|
|
|
|
|
|
|
|
||||||
Revenue backlog:
|
|
|
|
|
|
||||||
Revenue to be recognized within the next 12 months – current
|
$
|
2,945
|
|
|
$
|
3,113
|
|
|
$
|
3,006
|
|
Revenue to be recognized beyond the next 12 months – noncurrent
|
3,913
|
|
|
3,716
|
|
|
3,608
|
|
|||
Total revenue backlog
|
$
|
6,858
|
|
|
$
|
6,829
|
|
|
$
|
6,614
|
|
|
|
|
|
|
|
||||||
Deferred revenue (billed or collected)
|
$
|
2,370
|
|
|
$
|
2,934
|
|
|
$
|
2,516
|
|
Total billings backlog
|
4,488
|
|
|
3,895
|
|
|
4,098
|
|
|||
Total revenue backlog
|
$
|
6,858
|
|
|
$
|
6,829
|
|
|
$
|
6,614
|
|
(in millions)
|
September 30,
2016 |
|
March 31,
2016 |
|
September 30,
2015 |
||||||
Expected future cash collections:
|
|
|
|
|
|
||||||
Total billings backlog
|
$
|
4,488
|
|
|
$
|
3,895
|
|
|
$
|
4,098
|
|
Trade accounts receivable, net
|
445
|
|
|
625
|
|
|
439
|
|
|||
Total expected future cash collections
|
$
|
4,933
|
|
|
$
|
4,520
|
|
|
$
|
4,537
|
|
|
Second Quarter of Fiscal
|
|
Change
|
||||||||
|
2017
|
|
2016
|
|
2017 / 2016
|
||||||
|
(in millions)
|
||||||||||
Cash collections from billings
(1)
|
$
|
735
|
|
|
$
|
821
|
|
|
$
|
(86
|
)
|
Vendor disbursements and payroll
(1)
|
(635
|
)
|
|
(664
|
)
|
|
29
|
|
|||
Income tax payments, net
|
(140
|
)
|
|
(114
|
)
|
|
(26
|
)
|
|||
Other disbursements, net
(2)
|
(18
|
)
|
|
—
|
|
|
(18
|
)
|
|||
Net cash (used in) provided by operating activities - continuing operations
|
$
|
(58
|
)
|
|
$
|
43
|
|
|
$
|
(101
|
)
|
(1)
|
Amounts include value added taxes and sales taxes.
|
(2)
|
Amount include payments associated with interest, prior period restructuring plans and miscellaneous receipts and disbursements.
|
|
First Half of Fiscal
|
|
Change
|
||||||||
|
2017
|
|
2016
|
|
2017 / 2016
|
||||||
|
(in millions)
|
||||||||||
Cash collections from billings
(1)
|
$
|
1,737
|
|
|
$
|
1,833
|
|
|
$
|
(96
|
)
|
Vendor disbursements and payroll
(1)
|
(1,393
|
)
|
|
(1,441
|
)
|
|
48
|
|
|||
Income tax payments, net
|
(202
|
)
|
|
(131
|
)
|
|
(71
|
)
|
|||
Other disbursements, net
(2)
|
(39
|
)
|
|
(30
|
)
|
|
(9
|
)
|
|||
Net cash provided by operating activities - continuing operations
|
$
|
103
|
|
|
$
|
231
|
|
|
$
|
(128
|
)
|
(1)
|
Amounts include value added taxes and sales taxes.
|
(2)
|
Amount include payments associated with interest, prior period restructuring plans and miscellaneous receipts and disbursements.
|
|
September 30, 2016
|
|
March 31, 2016
|
||||
|
(in millions)
|
||||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
—
|
|
5.375% Senior Notes due December 2019
|
750
|
|
|
750
|
|
||
3.600% Senior Notes due August 2020
|
400
|
|
|
400
|
|
||
2.875% Senior Notes due August 2018
|
250
|
|
|
250
|
|
||
4.500% Senior Notes due August 2023
|
250
|
|
|
250
|
|
||
Term Loan due April 2022
|
300
|
|
|
300
|
|
||
Other indebtedness, primarily capital leases
|
10
|
|
|
15
|
|
||
Unamortized debt issuance costs
|
(7
|
)
|
|
(8
|
)
|
||
Unamortized discount for Senior Notes
|
(3
|
)
|
|
(4
|
)
|
||
Total debt outstanding
|
$
|
1,950
|
|
|
$
|
1,953
|
|
Less the current portion
|
(4
|
)
|
|
(6
|
)
|
||
Total long-term debt portion
|
$
|
1,946
|
|
|
$
|
1,947
|
|
|
Six Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Total borrowings outstanding at beginning of period
(1)
|
$
|
139
|
|
|
$
|
138
|
|
Borrowings
|
467
|
|
|
2,494
|
|
||
Repayments
|
(456
|
)
|
|
(2,497
|
)
|
||
Foreign exchange effect
|
(11
|
)
|
|
4
|
|
||
Total borrowings outstanding at end of period
(1)
|
$
|
139
|
|
|
$
|
139
|
|
(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, 2016 - July 31, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
700,000
|
|
August 1, 2016 - August 31, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
700,000
|
|
September 1, 2016 - September 30, 2016
|
|
1,483
|
|
|
$
|
33.70
|
|
|
1,483
|
|
|
$
|
650,000
|
|
Total
|
|
1,483
|
|
|
|
|
1,483
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
Filed or Furnished Herewith
|
3.1
|
|
Restated Certificate of Incorporation.
|
|
8-K
|
|
3.3
|
|
3/9/06
|
|
|
3.2
|
|
By-Laws of the Company, as amended.
|
|
10-K
|
|
3.2
|
|
5/8/15
|
|
|
10.1*
|
|
Separation Agreement and General Claims Release, dated September 26, 2016, between the Company and Richard J. Beckert.
|
|
8-K
|
|
10.1
|
|
9/27/16
|
|
|
10.2*
|
|
Letter, dated July 22, 2016, between the Company and Kieran J. McGrath.
|
|
|
|
|
|
|
|
X
|
10.3*
|
|
Schedules A, B and C (amended effective July 26, 2016) to CA, Inc. Change in Control Severance Policy.
|
|
|
|
|
|
|
|
X
|
12
|
|
Statement of Ratios of Earnings to Fixed Charges.
|
|
|
|
|
|
|
|
X
|
15
|
|
Accountants’ Acknowledgment Letter.
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Certification of the Principal Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification of the Principal Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
X
|
32†
|
|
Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
X
|
101
|
|
The following financial statements from CA, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language):
|
|
|
|
|
|
|
|
X
|
|
|
(i) Condensed Consolidated Balance Sheets - September 30, 2016 (Unaudited) and March 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
(ii) Unaudited Condensed Consolidated Statements of Operations - Three and Six Months Ended September 30, 2016 and 2015.
|
|
|
|
|
|
|
|
|
|
|
(iii) Unaudited Condensed Consolidated Statements of Comprehensive Income - Three and Six Months Ended September 30, 2016 and 2015.
|
|
|
|
|
|
|
|
|
|
|
(iv) Unaudited Condensed Consolidated Statements of Cash Flows - Six Months Ended September 30, 2016 and 2015.
|
|
|
|
|
|
|
|
|
|
|
(v) Notes to Condensed Consolidated Financial Statements - September 30, 2016.
|
|
|
|
|
|
|
|
|
*
|
Management contract or compensatory plan or arrangement.
|
†
|
Furnished herewith.
|
CA, INC.
|
|
|
|
By:
|
/s/ Michael P. Gregoire
|
|
Michael P. Gregoire
|
|
Chief Executive Officer
|
|
|
By:
|
/s/ Kieran J. McGrath
|
|
Kieran J. McGrath
|
|
Senior Vice President and interim Chief Financial Officer
|
|
|
|
|
|
|
Guy A. Di Lella
|
|
520 Madison Avenue
|
|
221 Main Street
|
|
Chief Human Resources Officer
|
|
23
rd
Floor
|
|
#1600
|
|
|
|
New York, New York 10022
|
|
San Francisco, California 94105
|
|
|
|
|
|
|
|
|
|
tel: +1 650 534 9888
|
|
|
|
|
|
guy.dilella@ca.com
|
|
|
•
|
The Employee's engagement in conduct which is demonstrably and materially injurious to the Company and its affiliates from time to time (the “Group”), or that materially harms the reputation or financial position of the Group, unless the conduct in question was undertaken in good faith on an informed basis with due care and with a rational business purpose and based upon the honest belief that such conduct was in the best interest of the Group.
|
•
|
The Employee's indictment or conviction of, or plea of guilty or nolo contendere to, a felony or any other crime involving dishonesty or fraud.
|
•
|
The Employee's being found liable in any SEC or other civil or criminal securities law action or entering any cease and desist order with respect to such action (regardless of whether or not he admits or denies liability).
|
•
|
The Employee's (i) obstructing or impeding, (ii) endeavoring to influence, obstruct or impede or (iii) failing to materially cooperate with, any investigation authorized by the Board or any governmental or self-regulatory entity (an "Investigation"). However, the Employee's failure to waive attorney-client privilege relating to communications with his own attorney in connection with an Investigation shall not constitute "Cause".
|
•
|
The Employee's withholding, removing, concealing, destroying, altering or by any other means falsifying any material which is requested in connection with an Investigation.
|
•
|
The Employee's disqualification or bar by any governmental or self-regulatory authority from serving in the capacity in which he was hired or his loss of any governmental or self-regulatory license that is reasonably necessary for him to perform his responsibilities to the Group under the terms of his employment, if (a) the disqualification, bar or loss continues for more than 30 days and (b) during that period the Group uses its good faith efforts to cause the disqualification or bar to be lifted or the license replaced.
|
•
|
The Employee's unauthorized use or disclosure of confidential or proprietary information, or related materials, or the violation of any of the terms of the Employment and Confidentiality Agreement executed by the Employee or any
|
•
|
For this definition, no act or omission by the Employee will be "willful" unless it is made by the Employee in bad faith or without a reasonable belief that his act or omission was in the best interests of the Group.
|
|
|
Fiscal Year
|
|
Six Months Ended
|
||||||||||||||||||||
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
September 30,
2016 |
||||||||||||
Earnings available for fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earnings from continuing operations before income taxes, minority interest and discontinued operations
|
|
$
|
1,291
|
|
|
$
|
1,260
|
|
|
$
|
1,016
|
|
|
$
|
1,115
|
|
|
$
|
1,084
|
|
|
$
|
583
|
|
Add: Fixed charges
|
|
115
|
|
|
113
|
|
|
123
|
|
|
125
|
|
|
128
|
|
|
58
|
|
||||||
Total earnings available for fixed charges
|
|
$
|
1,406
|
|
|
$
|
1,373
|
|
|
$
|
1,139
|
|
|
$
|
1,240
|
|
|
$
|
1,212
|
|
|
$
|
641
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
(1)
|
|
$
|
64
|
|
|
$
|
64
|
|
|
$
|
75
|
|
|
$
|
77
|
|
|
$
|
81
|
|
|
$
|
44
|
|
Interest portion of rental expense
|
|
51
|
|
|
49
|
|
|
48
|
|
|
48
|
|
|
47
|
|
|
14
|
|
||||||
Total fixed charges
|
|
$
|
115
|
|
|
$
|
113
|
|
|
$
|
123
|
|
|
$
|
125
|
|
|
$
|
128
|
|
|
$
|
58
|
|
RATIOS OF EARNINGS TO FIXED CHARGES
|
|
12.23
|
|
|
12.15
|
|
|
9.26
|
|
|
9.92
|
|
|
9.47
|
|
|
11.05
|
|
||||||
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 28, 2016
|
|
|
|
|
|
/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 28, 2016
|
|
|
|
|
|
/s/ Kieran J. McGrath
|
|
|
|
|
|
|
|
Kieran J. McGrath
|
|
|
|
|
|
|
|
Senior Vice President and interim Chief Financial Officer
|
|
|
|
|
|
|
|
CA, Inc.
|
|
/s/ Michael P. Gregoire
|
Michael P. Gregoire
|
Chief Executive Officer
|
October 28, 2016
|
|
/s/ Kieran J. McGrath
|
Kieran J. McGrath
|
Senior Vice President and interim Chief Financial Officer
|
October 28, 2016
|