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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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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Emerging growth 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 31, 2018
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par value $0.10 per share
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418,222,273
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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,
2018 |
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March 31,
2018 |
||||
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(unaudited)
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|
|
||||
Assets
|
|
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|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,931
|
|
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$
|
3,405
|
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Trade accounts receivable, net of allowance for doubtful accounts of $9 and $10, respectively
|
507
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|
|
793
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||
Contract assets
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817
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|
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—
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|
||
Other current assets
|
107
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|
|
210
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|
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Total current assets
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$
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4,362
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|
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$
|
4,408
|
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Property and equipment, net of accumulated depreciation of $822 and $865, respectively
|
213
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|
|
237
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|
||
Goodwill
|
6,790
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6,804
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|
||
Capitalized software and other intangible assets, net
|
981
|
|
|
1,111
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|
||
Deferred income taxes
|
124
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|
|
346
|
|
||
Contract assets
|
112
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|
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—
|
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||
Contract costs
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400
|
|
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—
|
|
||
Other noncurrent assets, net
|
121
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|
|
154
|
|
||
Total assets
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$
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13,103
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|
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$
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13,060
|
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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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$
|
20
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|
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$
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269
|
|
Accounts payable
|
81
|
|
|
85
|
|
||
Accrued salaries, wages and commissions
|
201
|
|
|
242
|
|
||
Accrued expenses and other current liabilities
|
309
|
|
|
340
|
|
||
Deferred revenue and advanced payments
|
1,002
|
|
|
2,289
|
|
||
Taxes payable, other than income taxes payable
|
25
|
|
|
55
|
|
||
Federal, state and foreign income taxes payable
|
72
|
|
|
41
|
|
||
Total current liabilities
|
$
|
1,710
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|
|
$
|
3,321
|
|
Long-term debt, net of current portion
|
2,506
|
|
|
2,514
|
|
||
Federal, state and foreign income taxes payable
|
297
|
|
|
311
|
|
||
Deferred income taxes
|
171
|
|
|
111
|
|
||
Deferred revenue and advanced payments
|
419
|
|
|
820
|
|
||
Other noncurrent liabilities
|
98
|
|
|
88
|
|
||
Total liabilities
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$
|
5,201
|
|
|
$
|
7,165
|
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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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—
|
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Common stock, $0.10 par value, 1,100,000,000 shares authorized; 589,695,081 and 589,695,081 shares issued; 413,476,935 and 412,056,923 shares outstanding, respectively
|
59
|
|
|
59
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|
||
Additional paid-in capital
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3,735
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|
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3,744
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Retained earnings
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9,156
|
|
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6,971
|
|
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Accumulated other comprehensive loss
|
(463
|
)
|
|
(290
|
)
|
||
Treasury stock, at cost, 176,218,146 and 177,638,158 shares, respectively
|
(4,585
|
)
|
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(4,589
|
)
|
||
Total stockholders’ equity
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$
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7,902
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|
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$
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5,895
|
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Total liabilities and stockholders’ equity
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$
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13,103
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|
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$
|
13,060
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|
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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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2018
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2017
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2018
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2017
|
||||||||
Revenue:
|
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||||||||
Software licenses and maintenance
|
$
|
824
|
|
|
$
|
959
|
|
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$
|
1,694
|
|
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$
|
1,909
|
|
Professional services
|
71
|
|
|
75
|
|
|
139
|
|
|
150
|
|
||||
Total revenue
|
$
|
895
|
|
|
$
|
1,034
|
|
|
$
|
1,833
|
|
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$
|
2,059
|
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Expenses:
|
|
|
|
|
|
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|
||||||||
Costs of licensing and maintenance
|
$
|
74
|
|
|
$
|
73
|
|
|
$
|
150
|
|
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$
|
144
|
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Cost of professional services
|
64
|
|
|
74
|
|
|
134
|
|
|
147
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|
||||
Amortization of capitalized software costs
|
49
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|
|
67
|
|
|
109
|
|
|
137
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|
||||
Selling and marketing
|
252
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|
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244
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|
487
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|
|
490
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|
||||
General and administrative
|
99
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|
|
97
|
|
|
203
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|
|
204
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|
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Product development and enhancements
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158
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161
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320
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|
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319
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|
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Depreciation and amortization of other intangible assets
|
28
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27
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54
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|
53
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|
||||
Other expenses, net
|
4
|
|
|
9
|
|
|
107
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|
|
20
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|
||||
Total expenses before interest and income taxes
|
$
|
728
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|
|
$
|
752
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|
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$
|
1,564
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|
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$
|
1,514
|
|
Income before interest and income taxes
|
$
|
167
|
|
|
$
|
282
|
|
|
$
|
269
|
|
|
$
|
545
|
|
Interest expense, net
|
19
|
|
|
24
|
|
|
39
|
|
|
49
|
|
||||
Income before income taxes
|
$
|
148
|
|
|
$
|
258
|
|
|
$
|
230
|
|
|
$
|
496
|
|
Income tax expense (benefit)
|
19
|
|
|
74
|
|
|
(65
|
)
|
|
134
|
|
||||
Net income
|
$
|
129
|
|
|
$
|
184
|
|
|
$
|
295
|
|
|
$
|
362
|
|
|
|
|
|
|
|
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||||||||
Basic income per common share
|
$
|
0.31
|
|
|
$
|
0.44
|
|
|
$
|
0.70
|
|
|
$
|
0.86
|
|
Basic weighted average shares used in computation
|
413
|
|
|
415
|
|
|
414
|
|
|
415
|
|
||||
|
|
|
|
|
|
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|
||||||||
Diluted income per common share
|
$
|
0.31
|
|
|
$
|
0.44
|
|
|
$
|
0.70
|
|
|
$
|
0.86
|
|
Diluted weighted average shares used in computation
|
416
|
|
|
416
|
|
|
416
|
|
|
416
|
|
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For the Three
Months Ended September 30, |
|
For the Six
Months Ended September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
129
|
|
|
$
|
184
|
|
|
$
|
295
|
|
|
$
|
362
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(23
|
)
|
|
48
|
|
|
(164
|
)
|
|
132
|
|
||||
Total other comprehensive (loss) income
|
$
|
(23
|
)
|
|
$
|
48
|
|
|
$
|
(164
|
)
|
|
$
|
132
|
|
Comprehensive income
|
$
|
106
|
|
|
$
|
232
|
|
|
$
|
131
|
|
|
$
|
494
|
|
|
For the Six
Months Ended September 30, |
||||||
|
2018
|
|
2017
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
295
|
|
|
$
|
362
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
163
|
|
|
190
|
|
||
Deferred income taxes
|
(12
|
)
|
|
(23
|
)
|
||
Provision for bad debts
|
—
|
|
|
2
|
|
||
Share-based compensation expense
|
68
|
|
|
61
|
|
||
Other non-cash items
|
5
|
|
|
2
|
|
||
Foreign currency transaction (gains) losses
|
(4
|
)
|
|
9
|
|
||
Changes in other operating assets and liabilities, net of effect of acquisitions:
|
|
|
|
||||
Decrease in trade accounts receivable
|
279
|
|
|
317
|
|
||
Increase in contract assets
|
(26
|
)
|
|
—
|
|
||
Decrease in contract costs
|
18
|
|
|
—
|
|
||
Decrease in deferred revenue and advanced payments
|
(314
|
)
|
|
(460
|
)
|
||
Decrease in taxes payable, net
|
(258
|
)
|
|
(58
|
)
|
||
Increase in accounts payable, accrued expenses and other
|
33
|
|
|
11
|
|
||
Decrease in accrued salaries, wages and commissions
|
(34
|
)
|
|
(81
|
)
|
||
Changes in other operating assets and liabilities, net
|
38
|
|
|
3
|
|
||
Net cash provided by operating activities
|
$
|
251
|
|
|
$
|
335
|
|
Investing activities:
|
|
|
|
||||
Acquisitions of businesses, net of cash acquired, and purchased software
|
$
|
(25
|
)
|
|
$
|
(15
|
)
|
Purchases of property and equipment
|
(24
|
)
|
|
(22
|
)
|
||
Other investing activities
|
(1
|
)
|
|
(1
|
)
|
||
Net cash used in investing activities
|
$
|
(50
|
)
|
|
$
|
(38
|
)
|
Financing activities:
|
|
|
|
||||
Dividends paid
|
$
|
(214
|
)
|
|
$
|
(215
|
)
|
Purchases of common stock
|
(80
|
)
|
|
(90
|
)
|
||
Notional pooling borrowings
|
1,076
|
|
|
1,173
|
|
||
Notional pooling repayments
|
(1,053
|
)
|
|
(1,204
|
)
|
||
Debt repayments
|
(259
|
)
|
|
(9
|
)
|
||
Debt issuance costs
|
—
|
|
|
(3
|
)
|
||
Exercise of common stock options
|
21
|
|
|
5
|
|
||
Payments related to tax withholding for share-based compensation
|
(40
|
)
|
|
(35
|
)
|
||
Other financing activities
|
(9
|
)
|
|
(3
|
)
|
||
Net cash used in financing activities
|
$
|
(558
|
)
|
|
$
|
(381
|
)
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(118
|
)
|
|
136
|
|
||
(Decrease) increase in cash, cash equivalents and restricted cash
|
$
|
(475
|
)
|
|
$
|
52
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
3,407
|
|
|
2,772
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
2,932
|
|
|
$
|
2,824
|
|
•
|
On-premise term licenses
: The Company sells term licenses which provide customers the right to use software for a specified period of time. Like perpetual licenses, the Company’s term licenses have standalone functionality from which customers derive a substantial portion of the benefit. Accordingly, for on-premise term licenses, revenue is generally recognized at the point-in-time when the customer is able to use and benefit from the software, which is generally upon delivery to the customer or upon the commencement of the renewal term. Payments for term licenses may be paid either at contract inception or in installments over the period of the term licenses.
|
•
|
SaaS solutions
: The Company offers cloud-based solutions that provide customers the right to access the Company’s software through the internet for a period of time. The payment for SaaS solutions may be received either at inception of the arrangement, or over the term of the arrangement. The Company’s SaaS solutions represent a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. Revenue from a SaaS solution is generally recognized ratably over the term of the arrangement. Revenue related to SaaS solutions provided on a usage basis, such as the number of users, is recognized based on customer’s utilization of the service in a given period.
|
•
|
Maintenance
:
Maintenance is provided for both perpetual and on-premise term license arrangements, and consists primarily of telephone support and the provision of unspecified updates and upgrades on a when-and-if-available basis. Maintenance for perpetual licenses is renewable, generally on an annual basis, at the option of the customer. Maintenance for on-premise term-based licenses is always renewed concurrently with the term-based licenses for the same duration of time. Maintenance represents stand-ready obligations for which revenue is recognized ratably over the term of the arrangement. Payments for maintenance may be paid either at inception of the maintenance period or in installments over the term of the maintenance period.
|
(in millions)
|
Three Months Ended September 30, 2018
|
|
Six Months Ended September 30, 2018
|
||||
Revenue by region:
|
|
|
|
||||
United States
|
$
|
592
|
|
|
$
|
1,164
|
|
EMEA
(1)
|
186
|
|
|
415
|
|
||
Other
|
117
|
|
|
254
|
|
||
Total revenue
|
$
|
895
|
|
|
$
|
1,833
|
|
|
|
|
|
||||
Revenue by type of performance obligation:
|
|
|
|
||||
Perpetual licenses
|
$
|
70
|
|
|
$
|
146
|
|
Renewable:
|
|
|
|
||||
On-premise term licenses
|
157
|
|
|
350
|
|
||
Maintenance
|
473
|
|
|
960
|
|
||
SaaS
|
124
|
|
|
238
|
|
||
Professional services
|
71
|
|
|
139
|
|
||
Total revenue
|
$
|
895
|
|
|
$
|
1,833
|
|
|
|
|
|
||||
Timing of revenue recognition:
|
|
|
|
||||
Point-in-time, including professional services
|
$
|
297
|
|
|
$
|
634
|
|
Over time
|
598
|
|
|
1,199
|
|
||
Total revenue
|
$
|
895
|
|
|
$
|
1,833
|
|
|
|
|
|
||||
Revenue by segment:
|
|
|
|
||||
Mainframe Solutions
|
$
|
388
|
|
|
$
|
828
|
|
Enterprise Solutions
|
436
|
|
|
866
|
|
||
Services
|
71
|
|
|
139
|
|
||
Total revenue
|
$
|
895
|
|
|
$
|
1,833
|
|
(1)
|
Consists of Europe, the Middle East and Africa.
|
(in millions)
|
Contract Assets
|
|
Deferred Revenue
|
||||
Balance at April 1, 2018
|
$
|
931
|
|
|
$
|
1,751
|
|
Balance at September 30, 2018
|
$
|
929
|
|
|
$
|
1,421
|
|
(1)
|
Of the amount of performance obligations greater than 12 months, the portion that is
2
to
3 years
is approximately
$1.7 billion
and the remaining amount is generally between
4
and
5 years
.
|
Condensed Consolidated Balance Sheet
(in millions)
|
As Reported
March 31, 2018 |
|
Adjustments Due to Topic 606
|
|
Adjusted
April 1, 2018 |
||||||
Assets
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
3,405
|
|
|
$
|
—
|
|
|
$
|
3,405
|
|
Trade accounts receivable, net
|
793
|
|
|
9
|
|
|
802
|
|
|||
Contract assets
|
—
|
|
|
772
|
|
|
772
|
|
|||
Other current assets
|
210
|
|
|
(38
|
)
|
|
172
|
|
|||
Total current assets
|
$
|
4,408
|
|
|
$
|
743
|
|
|
$
|
5,151
|
|
Property and equipment, net
|
237
|
|
|
—
|
|
|
237
|
|
|||
Goodwill
|
6,804
|
|
|
—
|
|
|
6,804
|
|
|||
Capitalized software and other intangible assets, net
|
1,111
|
|
|
—
|
|
|
1,111
|
|
|||
Deferred income taxes
|
346
|
|
|
(221
|
)
|
|
125
|
|
|||
Contract assets
|
—
|
|
|
159
|
|
|
159
|
|
|||
Contract costs
|
—
|
|
|
427
|
|
|
427
|
|
|||
Other noncurrent assets, net
|
154
|
|
|
(19
|
)
|
|
135
|
|
|||
Total assets
|
$
|
13,060
|
|
|
$
|
1,089
|
|
|
$
|
14,149
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Current portion of long-term debt
|
$
|
269
|
|
|
$
|
—
|
|
|
$
|
269
|
|
Accounts payable
|
85
|
|
|
—
|
|
|
85
|
|
|||
Accrued salaries, wages and commissions
|
242
|
|
|
—
|
|
|
242
|
|
|||
Accrued expenses and other current liabilities
|
340
|
|
|
(8
|
)
|
|
332
|
|
|||
Deferred revenue and advanced payments
|
2,289
|
|
|
(1,067
|
)
|
|
1,222
|
|
|||
Taxes payable, other than income taxes payable
|
55
|
|
|
—
|
|
|
55
|
|
|||
Federal, state and foreign income taxes payable
|
41
|
|
|
170
|
|
|
211
|
|
|||
Total current liabilities
|
$
|
3,321
|
|
|
$
|
(905
|
)
|
|
$
|
2,416
|
|
Long-term debt, net of current portion
|
2,514
|
|
|
—
|
|
|
2,514
|
|
|||
Federal, state and foreign income taxes payable
|
311
|
|
|
110
|
|
|
421
|
|
|||
Deferred income taxes
|
111
|
|
|
80
|
|
|
191
|
|
|||
Deferred revenue and advanced payments
|
820
|
|
|
(291
|
)
|
|
529
|
|
|||
Other noncurrent liabilities
|
88
|
|
|
—
|
|
|
88
|
|
|||
Total liabilities
|
$
|
7,165
|
|
|
$
|
(1,006
|
)
|
|
$
|
6,159
|
|
Stockholders’ equity:
|
|
|
|
|
|
||||||
Preferred stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Common stock
|
59
|
|
|
—
|
|
|
59
|
|
|||
Additional paid-in capital
|
3,744
|
|
|
—
|
|
|
3,744
|
|
|||
Retained earnings
|
6,971
|
|
|
2,104
|
|
|
9,075
|
|
|||
Accumulated other comprehensive loss
|
(290
|
)
|
|
(9
|
)
|
|
(299
|
)
|
|||
Treasury stock
|
(4,589
|
)
|
|
—
|
|
|
(4,589
|
)
|
|||
Total stockholders’ equity
|
$
|
5,895
|
|
|
$
|
2,095
|
|
|
$
|
7,990
|
|
Total liabilities and stockholders’ equity
|
$
|
13,060
|
|
|
$
|
1,089
|
|
|
$
|
14,149
|
|
|
At September 30, 2018
|
||||||||||
Condensed Consolidated Balance Sheet
(in millions)
|
As Reported under Topic 606
|
|
Proforma as if the previous accounting of Topic 605 was in effect
|
|
Effect of Change
Higher/(Lower)
|
||||||
Assets
|
|
|
|
|
|
||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
2,931
|
|
|
$
|
2,931
|
|
|
$
|
—
|
|
Trade accounts receivable, net
|
507
|
|
|
502
|
|
|
5
|
|
|||
Contract assets
|
817
|
|
|
—
|
|
|
817
|
|
|||
Other current assets
|
107
|
|
|
183
|
|
|
(76
|
)
|
|||
Total current assets
|
$
|
4,362
|
|
|
$
|
3,616
|
|
|
$
|
746
|
|
Property and equipment, net
|
213
|
|
|
213
|
|
|
—
|
|
|||
Goodwill
|
6,790
|
|
|
6,790
|
|
|
—
|
|
|||
Capitalized software and other intangible assets, net
|
981
|
|
|
981
|
|
|
—
|
|
|||
Deferred income taxes
|
124
|
|
|
338
|
|
|
(214
|
)
|
|||
Contract assets
|
112
|
|
|
—
|
|
|
112
|
|
|||
Contract costs
|
400
|
|
|
—
|
|
|
400
|
|
|||
Other noncurrent assets, net
|
121
|
|
|
136
|
|
|
(15
|
)
|
|||
Total assets
|
$
|
13,103
|
|
|
$
|
12,074
|
|
|
$
|
1,029
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
||||||
Current portion of long-term debt
|
$
|
20
|
|
|
$
|
20
|
|
|
$
|
—
|
|
Accounts payable
|
81
|
|
|
81
|
|
|
—
|
|
|||
Accrued salaries, wages and commissions
|
201
|
|
|
201
|
|
|
—
|
|
|||
Accrued expenses and other current liabilities
|
309
|
|
|
319
|
|
|
(10
|
)
|
|||
Deferred revenue and advanced payments
|
1,002
|
|
|
1,826
|
|
|
(824
|
)
|
|||
Taxes payable, other than income taxes payable
|
25
|
|
|
25
|
|
|
—
|
|
|||
Federal, state and foreign income taxes payable
|
72
|
|
|
—
|
|
|
72
|
|
|||
Total current liabilities
|
$
|
1,710
|
|
|
$
|
2,472
|
|
|
$
|
(762
|
)
|
Long-term debt, net of current portion
|
2,506
|
|
|
2,506
|
|
|
—
|
|
|||
Federal, state and foreign income taxes payable
|
297
|
|
|
187
|
|
|
110
|
|
|||
Deferred income taxes
|
171
|
|
|
98
|
|
|
73
|
|
|||
Deferred revenue and advanced payments
|
419
|
|
|
638
|
|
|
(219
|
)
|
|||
Other noncurrent liabilities
|
98
|
|
|
98
|
|
|
—
|
|
|||
Total liabilities
|
$
|
5,201
|
|
|
$
|
5,999
|
|
|
$
|
(798
|
)
|
Stockholders’ equity:
|
|
|
|
|
|
||||||
Preferred stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Common stock
|
59
|
|
|
59
|
|
|
—
|
|
|||
Additional paid-in capital
|
3,735
|
|
|
3,735
|
|
|
—
|
|
|||
Retained earnings
|
9,156
|
|
|
7,263
|
|
|
1,893
|
|
|||
Accumulated other comprehensive loss
|
(463
|
)
|
|
(397
|
)
|
|
(66
|
)
|
|||
Treasury stock
|
(4,585
|
)
|
|
(4,585
|
)
|
|
—
|
|
|||
Total stockholders’ equity
|
$
|
7,902
|
|
|
$
|
6,075
|
|
|
$
|
1,827
|
|
Total liabilities and stockholders’ equity
|
$
|
13,103
|
|
|
$
|
12,074
|
|
|
$
|
1,029
|
|
|
For the Three Months Ended September 30, 2018
|
||||||||||
Condensed Consolidated Statement of Operations
(in millions)
|
As Reported under Topic 606
|
|
Proforma as if the previous accounting of Topic 605 was in effect
|
|
Effect of Change
Higher/(Lower)
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Software licenses and maintenance
|
$
|
824
|
|
|
$
|
971
|
|
|
$
|
(147
|
)
|
Professional services
|
71
|
|
|
74
|
|
|
(3
|
)
|
|||
Total revenue
|
$
|
895
|
|
|
$
|
1,045
|
|
|
$
|
(150
|
)
|
Expenses:
|
|
|
|
|
|
||||||
Costs of licensing and maintenance
|
$
|
74
|
|
|
$
|
74
|
|
|
$
|
—
|
|
Cost of professional services
|
64
|
|
|
70
|
|
|
(6
|
)
|
|||
Amortization of capitalized software costs
|
49
|
|
|
49
|
|
|
—
|
|
|||
Selling and marketing
|
252
|
|
|
246
|
|
|
6
|
|
|||
General and administrative
|
99
|
|
|
99
|
|
|
—
|
|
|||
Product development and enhancements
|
158
|
|
|
158
|
|
|
—
|
|
|||
Depreciation and amortization of other intangible assets
|
28
|
|
|
28
|
|
|
—
|
|
|||
Other expenses, net
|
4
|
|
|
4
|
|
|
—
|
|
|||
Total expenses before interest and income taxes
|
$
|
728
|
|
|
$
|
728
|
|
|
$
|
—
|
|
Income before interest and income taxes
|
$
|
167
|
|
|
$
|
317
|
|
|
$
|
(150
|
)
|
Interest expense, net
|
19
|
|
|
19
|
|
|
—
|
|
|||
Income before income taxes
|
$
|
148
|
|
|
$
|
298
|
|
|
$
|
(150
|
)
|
Income tax expense
|
19
|
|
|
53
|
|
|
(34
|
)
|
|||
Net income
|
$
|
129
|
|
|
$
|
245
|
|
|
$
|
(116
|
)
|
|
|
|
|
|
|
||||||
Basic income per common share
|
$
|
0.31
|
|
|
$
|
0.59
|
|
|
$
|
(0.28
|
)
|
Basic weighted average shares used in computation
|
413
|
|
|
413
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Diluted income per common share
|
$
|
0.31
|
|
|
$
|
0.58
|
|
|
$
|
(0.27
|
)
|
Diluted weighted average shares used in computation
|
416
|
|
|
416
|
|
|
—
|
|
|
For the Six Months Ended September 30, 2018
|
||||||||||
Condensed Consolidated Statement of Operations
(in millions)
|
As Reported under Topic 606
|
|
Proforma as if the previous accounting of Topic 605 was in effect
|
|
Effect of Change
Higher/(Lower)
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Software licenses and maintenance
|
$
|
1,694
|
|
|
$
|
1,949
|
|
|
$
|
(255
|
)
|
Professional services
|
139
|
|
|
148
|
|
|
(9
|
)
|
|||
Total revenue
|
$
|
1,833
|
|
|
$
|
2,097
|
|
|
$
|
(264
|
)
|
Expenses:
|
|
|
|
|
|
||||||
Costs of licensing and maintenance
|
$
|
150
|
|
|
$
|
150
|
|
|
$
|
—
|
|
Cost of professional services
|
134
|
|
|
143
|
|
|
(9
|
)
|
|||
Amortization of capitalized software costs
|
109
|
|
|
109
|
|
|
—
|
|
|||
Selling and marketing
|
487
|
|
|
471
|
|
|
16
|
|
|||
General and administrative
|
203
|
|
|
202
|
|
|
1
|
|
|||
Product development and enhancements
|
320
|
|
|
320
|
|
|
—
|
|
|||
Depreciation and amortization of other intangible assets
|
54
|
|
|
54
|
|
|
—
|
|
|||
Other expenses, net
|
107
|
|
|
112
|
|
|
(5
|
)
|
|||
Total expenses before interest and income taxes
|
$
|
1,564
|
|
|
$
|
1,561
|
|
|
$
|
3
|
|
Income before interest and income taxes
|
$
|
269
|
|
|
$
|
536
|
|
|
$
|
(267
|
)
|
Interest expense, net
|
39
|
|
|
39
|
|
|
—
|
|
|||
Income before income taxes
|
$
|
230
|
|
|
$
|
497
|
|
|
$
|
(267
|
)
|
Income tax benefit
|
(65
|
)
|
|
(9
|
)
|
|
(56
|
)
|
|||
Net income
|
$
|
295
|
|
|
$
|
506
|
|
|
$
|
(211
|
)
|
|
|
|
|
|
|
||||||
Basic income per common share
|
$
|
0.70
|
|
|
$
|
1.21
|
|
|
$
|
(0.51
|
)
|
Basic weighted average shares used in computation
|
414
|
|
|
414
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Diluted income per common share
|
$
|
0.70
|
|
|
$
|
1.20
|
|
|
$
|
(0.50
|
)
|
Diluted weighted average shares used in computation
|
416
|
|
|
416
|
|
|
—
|
|
|
For the Three
Months Ended September 30, |
|
For the Six
Months Ended September 30, |
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Subscription and maintenance
|
$
|
829
|
|
|
$
|
826
|
|
|
$
|
1,667
|
|
|
$
|
1,643
|
|
Professional services
|
74
|
|
|
75
|
|
|
148
|
|
|
150
|
|
||||
Software fees and other
|
142
|
|
|
133
|
|
|
282
|
|
|
266
|
|
||||
Total revenue
|
$
|
1,045
|
|
|
$
|
1,034
|
|
|
$
|
2,097
|
|
|
$
|
2,059
|
|
|
For the Six Months Ended September 30, 2018
|
||||||||||
Condensed Consolidated Statement of Cash Flows
(in millions)
|
As Reported under Topic 606
|
|
Proforma as if the previous accounting of Topic 605 was in effect
|
|
Effect of Change
Higher/(Lower)
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
295
|
|
|
$
|
506
|
|
|
$
|
(211
|
)
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
163
|
|
|
163
|
|
|
—
|
|
|||
Deferred income taxes
|
(12
|
)
|
|
(10
|
)
|
|
(2
|
)
|
|||
Provision for bad debts
|
—
|
|
|
(1
|
)
|
|
1
|
|
|||
Share-based compensation expense
|
68
|
|
|
68
|
|
|
—
|
|
|||
Other non-cash items
|
5
|
|
|
5
|
|
|
—
|
|
|||
Foreign currency transaction (gains) losses
|
(4
|
)
|
|
2
|
|
|
(6
|
)
|
|||
Changes in other operating assets and liabilities, net of effect of acquisitions:
|
|
|
|
|
|
||||||
Decrease in trade accounts receivable
|
279
|
|
|
275
|
|
|
4
|
|
|||
Increase in contract assets
|
(26
|
)
|
|
—
|
|
|
(26
|
)
|
|||
Decrease in contract costs
|
18
|
|
|
—
|
|
|
18
|
|
|||
Decrease in deferred revenue and advanced payments
|
(314
|
)
|
|
(598
|
)
|
|
284
|
|
|||
Decrease in taxes payable, net
|
(258
|
)
|
|
(204
|
)
|
|
(54
|
)
|
|||
Increase in accounts payable, accrued expenses and other
|
33
|
|
|
35
|
|
|
(2
|
)
|
|||
Decrease in accrued salaries, wages and commissions
|
(34
|
)
|
|
(34
|
)
|
|
—
|
|
|||
Changes in other operating assets and liabilities, net
|
38
|
|
|
44
|
|
|
(6
|
)
|
|||
Net cash provided by operating activities
|
$
|
251
|
|
|
$
|
251
|
|
|
$
|
—
|
|
(in millions)
|
Accrued Balance at
March 31, 2018
|
|
Expense
|
|
Change in
Estimate
|
|
Payments
|
|
Accretion
and Other
|
|
Accrued
Balance at
September 30, 2018
|
||||||||||||
Severance charges
|
$
|
—
|
|
|
$
|
82
|
|
|
$
|
(6
|
)
|
|
$
|
(44
|
)
|
|
$
|
—
|
|
|
$
|
32
|
|
Facility exit charges
|
7
|
|
|
37
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
38
|
|
||||||
Total accrued liabilities
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
$
|
70
|
|
|
At September 30, 2018
|
||||||||||||||||||
|
Gross
Amortizable
Assets
|
|
Less: Fully
Amortized
Assets
|
|
Remaining
Amortizable
Assets
|
|
Accumulated
Amortization
on Remaining
Amortizable
Assets
|
|
Net
Assets
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
6,579
|
|
|
$
|
5,247
|
|
|
$
|
1,332
|
|
|
$
|
658
|
|
|
$
|
674
|
|
Internally developed software products
|
1,467
|
|
|
1,458
|
|
|
9
|
|
|
6
|
|
|
3
|
|
|||||
Other intangible assets
|
1,215
|
|
|
834
|
|
|
381
|
|
|
77
|
|
|
304
|
|
|||||
Total capitalized software and other intangible assets
|
$
|
9,261
|
|
|
$
|
7,539
|
|
|
$
|
1,722
|
|
|
$
|
741
|
|
|
$
|
981
|
|
|
At March 31, 2018
|
||||||||||||||||||
|
Gross
Amortizable
Assets
|
|
Less: Fully
Amortized
Assets
|
|
Remaining
Amortizable
Assets
|
|
Accumulated
Amortization
on Remaining
Amortizable
Assets
|
|
Net
Assets
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
6,572
|
|
|
$
|
4,961
|
|
|
$
|
1,611
|
|
|
$
|
845
|
|
|
$
|
766
|
|
Internally developed software products
|
1,467
|
|
|
1,347
|
|
|
120
|
|
|
109
|
|
|
11
|
|
|||||
Other intangible assets
|
1,226
|
|
|
823
|
|
|
403
|
|
|
69
|
|
|
334
|
|
|||||
Total capitalized software and other intangible assets
|
$
|
9,265
|
|
|
$
|
7,131
|
|
|
$
|
2,134
|
|
|
$
|
1,023
|
|
|
$
|
1,111
|
|
|
Year Ended March 31,
|
||||||||||||||||||
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
189
|
|
|
$
|
166
|
|
|
$
|
122
|
|
|
$
|
113
|
|
|
$
|
86
|
|
Internally developed software products
|
10
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other intangible assets
|
40
|
|
|
36
|
|
|
36
|
|
|
35
|
|
|
31
|
|
|||||
Total
|
$
|
239
|
|
|
$
|
203
|
|
|
$
|
158
|
|
|
$
|
148
|
|
|
$
|
117
|
|
(in millions)
|
Mainframe Solutions
|
|
Enterprise Solutions
|
|
Services
|
|
Total
|
||||||||
Balance at March 31, 2018
|
$
|
4,178
|
|
|
$
|
2,545
|
|
|
$
|
81
|
|
|
$
|
6,804
|
|
Acquisitions
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||
Foreign currency translation adjustment
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
||||
Balance at September 30, 2018
|
$
|
4,178
|
|
|
$
|
2,531
|
|
|
$
|
81
|
|
|
$
|
6,790
|
|
|
Amount of Net Loss (Gain) Recognized in the Condensed Consolidated Statements of Operations
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
(in millions)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Other expenses, net – foreign currency contracts
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
(10
|
)
|
|
$
|
8
|
|
|
At September 30, 2018
|
|
At March 31, 2018
|
||||||||||||||||||||
|
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)
|
$
|
906
|
|
|
$
|
—
|
|
|
$
|
906
|
|
|
$
|
1,281
|
|
|
$
|
—
|
|
|
$
|
1,281
|
|
Foreign exchange derivatives
(2)
|
—
|
|
|
18
|
|
|
18
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Total assets
|
$
|
906
|
|
|
$
|
18
|
|
|
$
|
924
|
|
|
$
|
1,281
|
|
|
$
|
2
|
|
|
$
|
1,283
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange derivatives
(2)
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
(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 6, “Derivatives,” for additional information.
|
|
At September 30, 2018
|
|
At March 31, 2018
|
||||||||||||
(in millions)
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Total debt
(1)
|
$
|
2,526
|
|
|
$
|
2,550
|
|
|
$
|
2,783
|
|
|
$
|
2,844
|
|
Facility exit reserves
(2)
|
$
|
38
|
|
|
$
|
39
|
|
|
$
|
7
|
|
|
$
|
8
|
|
(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 reserves is determined using the Company’s incremental borrowing rate at
September 30, 2018
and
March 31, 2018
. At
September 30, 2018
and
March 31, 2018
, the facility exit reserves included carrying values of approximately
$12 million
and
$2 million
, respectively, in “Accrued expenses and other current liabilities” and approximately
$26 million
and
$5 million
, respectively, in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3).
|
(i)
|
Kelli Harvey v. Michael Gregoire, Jens Alder, Raymond Bromark, Jean Hobby, Rohit Kapoor, Jeffrey Katz, Kay Koplovitz, Christopher Lofgren, Richard Sulpizio, Laura Unger, Arthur Weinbach, Collie Acquisition Corp., and Broadcom Inc.,
United States District Court for the Southern District of New York (1:18-cv-06996-JGK) (filed August 3, 2018);
|
(ii)
|
Vladimir Guzinsky Rev. Trust v. Michael P. Gregoire, Jens Alder, Raymond J. Bromark, Jean M. Hobby, Rohit Kapoor, Jeffrey G. Katz, Kay Koplovitz, Christopher B. Lofgren, Richard Sulpizio, Laura S. Unger, and Arthur Weinbach
, U.S. District Court for the District of Delaware (1:18-cv-01221-LPS) (filed August 9, 2018);
|
(iii)
|
Jacob Scheiner Retirement Account v. CA, Inc. Michael Gregoire, Jens Alder, Raymond Bromark, Jean Hobby, Rohit Kapoor, Jeffrey Katz, Kay Koplovitz, Christopher Lofgren, and Richard Sulpizio
, United States District Court for the District of Delaware (1:18-cv-01251-LPS) (filed August 15, 2018); and
|
(iv)
|
Kenneth Gilley v. CA, Inc. Michael Gregoire, Jens Alder, Raymond Bromark, Jean Hobby, Rohit Kapoor, Jeffrey Katz, Kay Koplovitz, Christopher Lofgren, and Richard Sulpizio
, U.S. District Court for the District of Delaware (1:18-cv-01286-LPS) (filed August 22, 2018),
|
Declaration Date
|
|
Dividend Per Share
|
|
Record Date
|
|
Total Amount
|
|
Payment Date
|
May 2, 2018
|
|
$0.255
|
|
May 17, 2018
|
|
$107
|
|
June 5, 2018
|
August 9, 2018
|
|
$0.255
|
|
August 23, 2018
|
|
$107
|
|
September 11, 2018
|
Declaration Date
|
|
Dividend Per Share
|
|
Record Date
|
|
Total Amount
|
|
Payment Date
|
May 9, 2017
|
|
$0.255
|
|
May 25, 2017
|
|
$107
|
|
June 13, 2017
|
August 9, 2017
|
|
$0.255
|
|
August 24, 2017
|
|
$108
|
|
September 12, 2017
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
Basic income per common share:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
129
|
|
|
$
|
184
|
|
|
$
|
295
|
|
|
$
|
362
|
|
Less: Net income allocable to participating securities
|
(2
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(5
|
)
|
||||
Net income allocable to common shares
|
$
|
127
|
|
|
$
|
181
|
|
|
$
|
291
|
|
|
$
|
357
|
|
Weighted average common shares outstanding
|
413
|
|
|
415
|
|
|
414
|
|
|
415
|
|
||||
Basic income per common share
|
$
|
0.31
|
|
|
$
|
0.44
|
|
|
$
|
0.70
|
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted income per common share:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
129
|
|
|
$
|
184
|
|
|
$
|
295
|
|
|
$
|
362
|
|
Less: Net income allocable to participating securities
|
(2
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(5
|
)
|
||||
Net income allocable to common shares
|
$
|
127
|
|
|
$
|
181
|
|
|
$
|
291
|
|
|
$
|
357
|
|
Weighted average shares outstanding and common share equivalents:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
413
|
|
|
415
|
|
|
414
|
|
|
415
|
|
||||
Weighted average effect of share-based payment awards
|
3
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Denominator in calculation of diluted income per share
|
416
|
|
|
416
|
|
|
416
|
|
|
416
|
|
||||
Diluted income per common share
|
$
|
0.31
|
|
|
$
|
0.44
|
|
|
$
|
0.70
|
|
|
$
|
0.86
|
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Costs of licensing and maintenance
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
4
|
|
Cost of professional services
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Selling and marketing
|
11
|
|
|
10
|
|
|
21
|
|
|
20
|
|
||||
General and administrative
|
13
|
|
|
11
|
|
|
25
|
|
|
23
|
|
||||
Product development and enhancements
|
9
|
|
|
6
|
|
|
17
|
|
|
13
|
|
||||
Share-based compensation expense before tax
|
$
|
35
|
|
|
$
|
29
|
|
|
$
|
68
|
|
|
$
|
61
|
|
Income tax benefit
|
(8
|
)
|
|
(9
|
)
|
|
(16
|
)
|
|
(20
|
)
|
||||
Net share-based compensation expense
|
$
|
27
|
|
|
$
|
20
|
|
|
$
|
52
|
|
|
$
|
41
|
|
|
Unrecognized Share-Based Compensation Costs
|
|
Weighted Average Period Expected to be Recognized
|
||
|
(in millions)
|
|
(in years)
|
||
Stock option awards
|
$
|
6
|
|
|
2.1
|
Restricted stock awards (“RSAs”)
|
95
|
|
|
2.1
|
|
Restricted stock units (“RSUs”)
|
27
|
|
|
2.2
|
|
Performance share units
|
52
|
|
|
2.6
|
|
Total unrecognized share-based compensation costs
|
$
|
180
|
|
|
2.3
|
|
Six Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
Weighted average fair value
|
$
|
5.70
|
|
|
$
|
4.72
|
|
Dividend yield
|
3.07
|
%
|
|
3.17
|
%
|
||
Expected volatility factor
(1)
|
21
|
%
|
|
21
|
%
|
||
Risk-free interest rate
(2)
|
3.0
|
%
|
|
2.1
|
%
|
||
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).
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(shares in millions)
|
||||||||||||||
RSAs:
|
|
|
|
|
|
|
|
||||||||
Shares
|
—
|
|
|
—
|
|
(3)
|
2.9
|
|
|
2.9
|
|
||||
Weighted average grant date fair value
(1)
|
$
|
—
|
|
|
$
|
32.98
|
|
|
$
|
35.28
|
|
|
$
|
31.70
|
|
RSUs:
|
|
|
|
|
|
|
|
||||||||
Shares
|
—
|
|
(3)
|
—
|
|
|
1.2
|
|
|
1.1
|
|
||||
Weighted average grant date fair value
(2)
|
$
|
37.02
|
|
|
$
|
—
|
|
|
$
|
34.06
|
|
|
$
|
30.35
|
|
(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, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Total borrowings outstanding at beginning of period
(1)
|
$
|
137
|
|
|
$
|
137
|
|
Borrowings
|
1,076
|
|
|
1,173
|
|
||
Repayments
|
(1,053
|
)
|
|
(1,204
|
)
|
||
Foreign exchange effect
|
(24
|
)
|
|
31
|
|
||
Total borrowings outstanding at end of period
(1)
|
$
|
136
|
|
|
$
|
137
|
|
(1)
|
Included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Revenue by segment:
|
|
|
|
|
|
|
|
||||||||
Mainframe Solutions
|
$
|
548
|
|
|
$
|
539
|
|
|
$
|
1,101
|
|
|
$
|
1,075
|
|
Enterprise Solutions
|
423
|
|
|
420
|
|
|
848
|
|
|
834
|
|
||||
Services
|
74
|
|
|
75
|
|
|
148
|
|
|
150
|
|
||||
Total segment revenue
|
$
|
1,045
|
|
|
$
|
1,034
|
|
|
$
|
2,097
|
|
|
$
|
2,059
|
|
Impact of segment policies that differ from U.S. GAAP
(1)
|
(150
|
)
|
|
—
|
|
|
(264
|
)
|
|
—
|
|
||||
Total consolidated revenue
|
$
|
895
|
|
|
$
|
1,034
|
|
|
$
|
1,833
|
|
|
$
|
2,059
|
|
(1)
|
The manner in which the Company measures and recognizes revenues for segment reporting was not revised upon adoption of Topic 606. For segment reporting purposes, the Company follows its previous Topic 605 policies, which recognizes software license revenue ratably, except for sales of perpetual licenses on a stand-alone basis, which are recognized at a point-in-time.
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Segment profit:
|
|
|
|
|
|
|
|
||||||||
Mainframe Solutions
|
$
|
354
|
|
|
$
|
351
|
|
|
$
|
724
|
|
|
$
|
700
|
|
Enterprise Solutions
|
54
|
|
|
40
|
|
|
114
|
|
|
73
|
|
||||
Services
|
4
|
|
|
1
|
|
|
4
|
|
|
2
|
|
||||
Total segment profit
|
$
|
412
|
|
|
$
|
392
|
|
|
$
|
842
|
|
|
$
|
775
|
|
Impact of segment policies that differ from U.S. GAAP
(1)
|
(150
|
)
|
|
—
|
|
|
(267
|
)
|
|
—
|
|
||||
Less unallocated amounts:
|
|
|
|
|
|
|
|
||||||||
Purchased software amortization
|
47
|
|
|
58
|
|
|
102
|
|
|
116
|
|
||||
Other intangibles amortization
|
11
|
|
|
10
|
|
|
21
|
|
|
20
|
|
||||
Internally developed software products amortization
|
2
|
|
|
9
|
|
|
7
|
|
|
21
|
|
||||
Share-based compensation expense
|
35
|
|
|
29
|
|
|
68
|
|
|
61
|
|
||||
Other expenses, net
(2)
|
—
|
|
|
4
|
|
|
108
|
|
|
12
|
|
||||
Interest expense, net
|
19
|
|
|
24
|
|
|
39
|
|
|
49
|
|
||||
Income before income taxes
|
$
|
148
|
|
|
$
|
258
|
|
|
$
|
230
|
|
|
$
|
496
|
|
(1)
|
The manner in which the Company measures and recognizes revenues and expenses, including commissions, for segment reporting was not revised upon adoption of Topic 606. For segment reporting purposes, commissions are expensed in the period earned by the employee.
|
(2)
|
Other expenses, net for the
three and six
months ended
September 30, 2018
consisted of costs associated with the Fiscal 2019 Plan of
$(1) million
and
$113 million
, respectively, certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs. Other expenses, net for the
three and six
months ended
September 30, 2017
consisted 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, |
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Depreciation:
|
|
|
|
|
|
|
|
||||||||
Mainframe Solutions
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
19
|
|
|
$
|
19
|
|
Enterprise Solutions
|
7
|
|
|
7
|
|
|
14
|
|
|
14
|
|
||||
Services
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total depreciation
|
$
|
17
|
|
|
$
|
17
|
|
|
$
|
33
|
|
|
$
|
33
|
|
•
|
Our
Enterprise Solutions
segment includes a broad range of software planning, development, and management tools. More specifically, our solutions help customers with secure application development, infrastructure management, automation, and identity-centric security solutions. These products are designed for mobile, cloud, and distributed computing environments and run on industry standard servers.
|
•
|
Our
Mainframe Solutions
segment includes solutions for the IBM z Systems
®
platform, which runs many of our largest customers’ mission critical business applications. Our Mainframe Solutions help customers improve economics by increasing throughput and lowering cost per transaction, increasing business agility through DevOps tooling and processes, increasing reliability and availability of operations through machine intelligence and automation solutions, and protecting enterprise data with security and compliance.
|
•
|
Our
Services
segment
helps customers reach their information technology (“IT”) and business goals primarily by enabling the rapid implementation and adoption of our software solutions. Our Services team consists of experienced professionals who provide a variety of services, such as consulting, implementation, application management services, education and support services, to both commercial and government customers.
|
•
|
Agile Planning
helps customers transform their development practices from traditional to modern agile methodologies. Agile development utilizes an iterative work cadence with a feedback loop that decreases time-to-market, increases product quality and, most importantly, maintains a focus on generating rapid business value. CA’s cloud-based solutions in this space help customers to collaboratively plan, prioritize and track agile software development at scale.
|
•
|
Project & Portfolio Management
, which is highly complementary to Agile Planning, enables customers to collect, prioritize, plan and deliver products, services and customer experiences. CA’s solutions improve decision making processes and resource optimizations, and decrease project execution risk.
|
•
|
Continuous Delivery
optimizes the application development processes by automating the deployment of applications across all stages of their lifecycles. Continuous delivery is key to transforming the technical aspects of software delivery. Our solutions enable the development, testing and release teams to work concurrently and continuously to remove the excess overhead and delays that come with traditional software development.
|
•
|
Automation
solutions help customers transform business processes. They automate, orchestrate and accelerate the entire application delivery process. Our unified platform provides end-to-end automation capabilities that cover service orchestration, workload automation and release automation capabilities.
|
•
|
Agile Operations
helps customers correlate end-user, application and infrastructure data from cloud-hosted containers to mainframes. Our solutions help customers see application dependencies and provide intelligent analytics, comprehensive coverage, and an open, extensible architecture that improves end-user experience.
|
•
|
API (Application Programming Interface) Management
facilitates the creation, security and management of APIs through their lifecycle, enabling customers to connect more directly with end-users via mobile apps, cloud platforms and “Internet of Things” devices.
|
•
|
Application Security
offers a holistic and scalable way to manage security risk across an application lifecycle. Through our acquisition of Veracode, we provide a wide range of security testing and threat mitigation techniques. Our solution is hosted on a unified application security testing platform and integrates into existing development toolchains. This enables users to quickly identify and remediate security flaws earlier in the development process and supports the development of high-quality, secure code.
|
•
|
Identity & Access Management
provides enterprise-grade identity management and governance capabilities, including broad provisioning support for on-premises and cloud-based applications, extensibility and flexibility to integrate with other IT systems and consumer-grade scale.
|
•
|
Privileged Access Management
enables organizations to control and monitor the access and activity of privileged users, or users with elevated access or administrator rights. Our solutions help detect and prevent the threat of internal and external attacks leveraging both network and host-based controls for the enterprise and hybrid cloud.
|
•
|
Payment Security
is a SaaS-based payment authentication service to help banks protect against fraud and ensure a hassle-free online shopping experience for their customers.
|
•
|
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 platforms.
|
•
|
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, artificial intelligence, machine learning and open source, some of which may enhance or extend our current product portfolio and others of which may evolve into new product categories.
|
•
|
Pursue new business models and expanded routes to market.
While our traditional on-premise software delivery remains relevant to many enterprise customers, we see cloud-based and try-and-buy models as attractive to both our existing and potential customers. These models simplify decision-making and accelerate the value customers can derive from new solution investments.
|
•
|
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.
|
•
|
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 also focus on organically developing nascent technologies from companies we have acquired to provide them with the necessary interoperability, resilience and security to operate at scale in the large, heterogeneous IT environments utilized by our customers.
|
•
|
Total revenue
decreased
due to the adoption of Topic 606 in the first quarter of fiscal 2019. On a Topic 605 basis, total revenue increased $11 million primarily due to an increase in Mainframe Solutions revenue and SaaS revenue within our Enterprise Solutions segment, partially offset by an unfavorable foreign exchange effect of $10 million.
|
•
|
Under both Topic 606 and Topic 605, operating expenses decreased primarily due to a decrease in amortization of capitalized software costs.
|
•
|
Under both Topic 606 and Topic 605, income tax expense includes a net discrete tax benefit of
$16 million
resulting primarily from refinements to the provisional estimates of the impact of changes in tax law in the United States resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017 (the “Tax Act”).
|
•
|
Under Topic 606, diluted income per common share
decreased
to
$0.31
from
$0.44
. Under Topic 605, diluted income per common share would have been
$0.58
for the
second
quarter of fiscal
2019
.
|
•
|
Mainframe Solutions revenue
increased
primarily due to an increase in revenue from new sales that offset the decline in revenue contribution from renewals, partially offset by an unfavorable foreign exchange effect of $5 million. Mainframe Solutions operating margin was consistent primarily due to an increase in Mainframe Solutions revenue, partially offset by pre-merger costs related to the Merger with Broadcom.
|
•
|
Enterprise Solutions revenue
increased
primarily due to an increase in SaaS revenue, partially offset by a decrease in revenue from our Enterprise Solutions products recognized on an upfront basis and an unfavorable foreign exchange effect of $4 million. Enterprise Solutions operating margin increased primarily due to lower acquisition-related costs from prior period acquisitions, partially offset by pre-merger costs related to the Merger with Broadcom, and an increase in Enterprise Solutions revenue.
|
•
|
Services revenue
decreased
primarily due to an unfavorable foreign exchange effect. Operating margin for Services increased primarily due to lower costs resulting from severance actions associated with the Fiscal 2019 Plan.
|
•
|
Net cash used in operating activities for the
second
quarter of fiscal
2019
was
$11 million
, representing a
decrease
of
$48 million
compared with net cash provided by operating activities of
$37 million
for the
second
quarter of fiscal
2018
. The
decrease
in net cash from operating activities was primarily due to a decrease in cash collections from billings of
$39 million
mainly attributable to lower single installment collections and an increase in other disbursements, net of
$21 million
mainly from payments associated with the Fiscal 2019 Plan, partially offset by a decrease in income tax payments, net of
$9 million
compared with the year-ago period.
|
|
Second Quarter of Fiscal
|
|
Second Quarter of Fiscal 2019 vs. 2018
|
||||||||||||||||||||||
|
2019
|
|
2019
|
|
2018
|
|
Topic 606 vs. Topic 605
|
|
Topic 605 vs. Topic 605
|
||||||||||||||||
|
Topic 606
|
|
Topic 605
|
|
Topic 605
|
|
Change
|
|
Percentage Change
|
|
Change
|
|
Percentage Change
|
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||
Total revenue
|
$
|
895
|
|
|
$
|
1,045
|
|
|
$
|
1,034
|
|
|
$
|
(139
|
)
|
|
(13
|
)%
|
|
$
|
11
|
|
|
1
|
%
|
Net income
|
$
|
129
|
|
|
$
|
245
|
|
|
$
|
184
|
|
|
$
|
(55
|
)
|
|
(30
|
)%
|
|
$
|
61
|
|
|
33
|
%
|
Net cash (used in) provided by operating activities
|
$
|
(11
|
)
|
|
$
|
(11
|
)
|
|
$
|
37
|
|
|
$
|
(48
|
)
|
|
(130
|
)%
|
|
$
|
(48
|
)
|
|
(130
|
)%
|
|
First Half of Fiscal
|
|
First Half of Fiscal 2019 vs. 2018
|
||||||||||||||||||||||
|
2019
|
|
2019
|
|
2018
|
|
Topic 606 vs. Topic 605
|
|
Topic 605 vs. Topic 605
|
||||||||||||||||
|
Topic 606
|
|
Topic 605
|
|
Topic 605
|
|
Change
|
|
Percentage Change
|
|
Change
|
|
Percentage Change
|
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||
Total revenue
|
$
|
1,833
|
|
|
$
|
2,097
|
|
|
$
|
2,059
|
|
|
$
|
(226
|
)
|
|
(11
|
)%
|
|
$
|
38
|
|
|
2
|
%
|
Net income
|
$
|
295
|
|
|
$
|
506
|
|
|
$
|
362
|
|
|
$
|
(67
|
)
|
|
(19
|
)%
|
|
$
|
144
|
|
|
40
|
%
|
Net cash provided by operating activities
|
$
|
251
|
|
|
$
|
251
|
|
|
$
|
335
|
|
|
$
|
(84
|
)
|
|
(25
|
)%
|
|
$
|
(84
|
)
|
|
(25
|
)%
|
|
September 30, 2018
|
|
March 31, 2018
|
|
Change
From Fiscal
Year End
|
|
September 30, 2017
|
|
Change
From Prior
Year Quarter
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
2,931
|
|
|
$
|
3,405
|
|
|
$
|
(474
|
)
|
|
$
|
2,822
|
|
|
$
|
109
|
|
Total debt
|
$
|
2,526
|
|
|
$
|
2,783
|
|
|
$
|
(257
|
)
|
|
$
|
2,785
|
|
|
$
|
(259
|
)
|
|
Second Quarter of Fiscal
|
|
Second Quarter of Fiscal 2019 vs. 2018
|
||||||||||||||||||||||
|
2019
|
|
2019
|
|
2018
|
|
Topic 606 vs. Topic 605
|
|
Topic 605 vs. Topic 605
|
||||||||||||||||
|
Topic 606
|
|
Topic 605
|
|
Topic 605
|
|
Dollar Change
|
|
Percentage Change
|
|
Dollar Change
|
|
Percentage Change
|
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Software licenses and maintenance
|
$
|
824
|
|
|
$
|
971
|
|
|
$
|
959
|
|
|
$
|
(135
|
)
|
|
(14
|
)%
|
|
$
|
12
|
|
|
1
|
%
|
Professional services
|
71
|
|
|
74
|
|
|
75
|
|
|
(4
|
)
|
|
(5
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||||
Total revenue
|
$
|
895
|
|
|
$
|
1,045
|
|
|
$
|
1,034
|
|
|
$
|
(139
|
)
|
|
(13
|
)%
|
|
$
|
11
|
|
|
1
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Costs of licensing and maintenance
|
$
|
74
|
|
|
$
|
74
|
|
|
$
|
73
|
|
|
$
|
1
|
|
|
1
|
%
|
|
$
|
1
|
|
|
1
|
%
|
Cost of professional services
|
64
|
|
|
70
|
|
|
74
|
|
|
(10
|
)
|
|
(14
|
)
|
|
(4
|
)
|
|
(5
|
)
|
|||||
Amortization of capitalized software costs
|
49
|
|
|
49
|
|
|
67
|
|
|
(18
|
)
|
|
(27
|
)
|
|
(18
|
)
|
|
(27
|
)
|
|||||
Selling and marketing
|
252
|
|
|
246
|
|
|
244
|
|
|
8
|
|
|
3
|
|
|
2
|
|
|
1
|
|
|||||
General and administrative
|
99
|
|
|
99
|
|
|
97
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|||||
Product development and enhancements
|
158
|
|
|
158
|
|
|
161
|
|
|
(3
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|
(2
|
)
|
|||||
Depreciation and amortization of other intangible assets
|
28
|
|
|
28
|
|
|
27
|
|
|
1
|
|
|
4
|
|
|
1
|
|
|
4
|
|
|||||
Other expenses, net
|
4
|
|
|
4
|
|
|
9
|
|
|
(5
|
)
|
|
(56
|
)
|
|
(5
|
)
|
|
(56
|
)
|
|||||
Total expenses before interest and income taxes
|
$
|
728
|
|
|
$
|
728
|
|
|
$
|
752
|
|
|
$
|
(24
|
)
|
|
(3
|
)%
|
|
$
|
(24
|
)
|
|
(3
|
)%
|
Income before interest and income taxes
|
$
|
167
|
|
|
$
|
317
|
|
|
$
|
282
|
|
|
$
|
(115
|
)
|
|
(41
|
)%
|
|
$
|
35
|
|
|
12
|
%
|
Interest expense, net
|
19
|
|
|
19
|
|
|
24
|
|
|
(5
|
)
|
|
(21
|
)
|
|
(5
|
)
|
|
(21
|
)
|
|||||
Income before income taxes
|
$
|
148
|
|
|
$
|
298
|
|
|
$
|
258
|
|
|
$
|
(110
|
)
|
|
(43
|
)%
|
|
$
|
40
|
|
|
16
|
%
|
Income tax expense
|
19
|
|
|
53
|
|
|
74
|
|
|
(55
|
)
|
|
(74
|
)
|
|
(21
|
)
|
|
(28
|
)
|
|||||
Net income
|
$
|
129
|
|
|
$
|
245
|
|
|
$
|
184
|
|
|
$
|
(55
|
)
|
|
(30
|
)%
|
|
$
|
61
|
|
|
33
|
%
|
|
First Half of Fiscal
|
|
First Half of Fiscal 2019 vs. 2018
|
||||||||||||||||||||||
|
2019
|
|
2019
|
|
2018
|
|
Topic 606 vs. Topic 605
|
|
Topic 605 vs. Topic 605
|
||||||||||||||||
|
Topic 606
|
|
Topic 605
|
|
Topic 605
|
|
Dollar Change
|
|
Percentage Change
|
|
Dollar Change
|
|
Percentage Change
|
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Software licenses and maintenance
|
$
|
1,694
|
|
|
$
|
1,949
|
|
|
$
|
1,909
|
|
|
$
|
(215
|
)
|
|
(11
|
)%
|
|
$
|
40
|
|
|
2
|
%
|
Professional services
|
139
|
|
|
148
|
|
|
150
|
|
|
(11
|
)
|
|
(7
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||||
Total revenue
|
$
|
1,833
|
|
|
$
|
2,097
|
|
|
$
|
2,059
|
|
|
$
|
(226
|
)
|
|
(11
|
)%
|
|
$
|
38
|
|
|
2
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Costs of licensing and maintenance
|
$
|
150
|
|
|
$
|
150
|
|
|
$
|
144
|
|
|
$
|
6
|
|
|
4
|
%
|
|
$
|
6
|
|
|
4
|
%
|
Cost of professional services
|
134
|
|
|
143
|
|
|
147
|
|
|
(13
|
)
|
|
(9
|
)
|
|
(4
|
)
|
|
(3
|
)
|
|||||
Amortization of capitalized software costs
|
109
|
|
|
109
|
|
|
137
|
|
|
(28
|
)
|
|
(20
|
)
|
|
(28
|
)
|
|
(20
|
)
|
|||||
Selling and marketing
|
487
|
|
|
471
|
|
|
490
|
|
|
(3
|
)
|
|
(1
|
)
|
|
(19
|
)
|
|
(4
|
)
|
|||||
General and administrative
|
203
|
|
|
202
|
|
|
204
|
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
|||||
Product development and enhancements
|
320
|
|
|
320
|
|
|
319
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|||||
Depreciation and amortization of other intangible assets
|
54
|
|
|
54
|
|
|
53
|
|
|
1
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|||||
Other expenses, net
|
107
|
|
|
112
|
|
|
20
|
|
|
87
|
|
|
435
|
|
|
92
|
|
|
460
|
|
|||||
Total expenses before interest and income taxes
|
$
|
1,564
|
|
|
$
|
1,561
|
|
|
$
|
1,514
|
|
|
$
|
50
|
|
|
3
|
%
|
|
$
|
47
|
|
|
3
|
%
|
Income before interest and income taxes
|
$
|
269
|
|
|
$
|
536
|
|
|
$
|
545
|
|
|
$
|
(276
|
)
|
|
(51
|
)%
|
|
$
|
(9
|
)
|
|
(2
|
)%
|
Interest expense, net
|
39
|
|
|
39
|
|
|
49
|
|
|
(10
|
)
|
|
(20
|
)
|
|
(10
|
)
|
|
(20
|
)
|
|||||
Income before income taxes
|
$
|
230
|
|
|
$
|
497
|
|
|
$
|
496
|
|
|
$
|
(266
|
)
|
|
(54
|
)%
|
|
$
|
1
|
|
|
—
|
%
|
Income tax (benefit) expense
|
(65
|
)
|
|
(9
|
)
|
|
134
|
|
|
(199
|
)
|
|
(149
|
)
|
|
(143
|
)
|
|
(107
|
)
|
|||||
Net income
|
$
|
295
|
|
|
$
|
506
|
|
|
$
|
362
|
|
|
$
|
(67
|
)
|
|
(19
|
)%
|
|
$
|
144
|
|
|
40
|
%
|
|
Second Quarter of Fiscal
|
|
First Half of Fiscal
|
||||||||||||||
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2019
|
|
2018
|
||||||
|
Topic 606
|
|
Topic 605
|
|
Topic 605
|
|
Topic 606
|
|
Topic 605
|
|
Topic 605
|
||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Software licenses and maintenance
|
92
|
%
|
|
93
|
%
|
|
93
|
%
|
|
92
|
%
|
|
93
|
%
|
|
93
|
%
|
Professional services
|
8
|
|
|
7
|
|
|
7
|
|
|
8
|
|
|
7
|
|
|
7
|
|
Total revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Costs of licensing and maintenance
|
8
|
%
|
|
7
|
%
|
|
7
|
%
|
|
8
|
%
|
|
7
|
%
|
|
7
|
%
|
Cost of professional services
|
7
|
|
|
7
|
|
|
7
|
|
|
7
|
|
|
7
|
|
|
7
|
|
Amortization of capitalized software costs
|
5
|
|
|
5
|
|
|
6
|
|
|
6
|
|
|
5
|
|
|
7
|
|
Selling and marketing
|
28
|
|
|
24
|
|
|
24
|
|
|
27
|
|
|
22
|
|
|
24
|
|
General and administrative
|
11
|
|
|
9
|
|
|
9
|
|
|
11
|
|
|
10
|
|
|
10
|
|
Product development and enhancements
|
18
|
|
|
15
|
|
|
16
|
|
|
17
|
|
|
15
|
|
|
15
|
|
Depreciation and amortization of other intangible assets
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
Other expenses, net
|
—
|
|
|
—
|
|
|
1
|
|
|
6
|
|
|
5
|
|
|
1
|
|
Total expenses before interest and income taxes
|
81
|
%
|
|
70
|
%
|
|
73
|
%
|
|
85
|
%
|
|
74
|
%
|
|
74
|
%
|
Income before interest and income taxes
|
19
|
%
|
|
30
|
%
|
|
27
|
%
|
|
15
|
%
|
|
26
|
%
|
|
26
|
%
|
Interest expense, net
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
Income before income taxes
|
17
|
%
|
|
29
|
%
|
|
25
|
%
|
|
13
|
%
|
|
24
|
%
|
|
24
|
%
|
Income tax expense (benefit)
|
2
|
|
|
5
|
|
|
7
|
|
|
(4
|
)
|
|
—
|
|
|
7
|
|
Net income
|
14
|
%
|
|
23
|
%
|
|
18
|
%
|
|
16
|
%
|
|
24
|
%
|
|
18
|
%
|
|
Second Quarter Fiscal 2019
Topic 606
|
|
Percentage of Total Revenue
|
|
Second Quarter Fiscal 2018
Topic 605 |
|
Percentage of Total Revenue
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
United States
|
$
|
592
|
|
|
66
|
%
|
|
$
|
658
|
|
|
64
|
%
|
|
$
|
(66
|
)
|
|
(10
|
)%
|
International
|
303
|
|
|
34
|
|
|
376
|
|
|
36
|
|
|
(73
|
)
|
|
(19
|
)
|
|||
Total revenue
|
$
|
895
|
|
|
100
|
%
|
|
$
|
1,034
|
|
|
100
|
%
|
|
$
|
(139
|
)
|
|
(13
|
)%
|
|
Second Quarter Fiscal 2019
Topic 605
|
|
Percentage of Total Revenue
|
|
Second Quarter Fiscal 2018
Topic 605
|
|
Percentage of Total Revenue
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
United States
|
$
|
668
|
|
|
64
|
%
|
|
$
|
658
|
|
|
64
|
%
|
|
$
|
10
|
|
|
2
|
%
|
International
|
377
|
|
|
36
|
|
|
376
|
|
|
36
|
|
|
1
|
|
|
—
|
|
|||
Total revenue
|
$
|
1,045
|
|
|
100
|
%
|
|
$
|
1,034
|
|
|
100
|
%
|
|
$
|
11
|
|
|
1
|
%
|
|
First Half Fiscal 2019
Topic 606
|
|
Percentage of Total Revenue
|
|
First Half Fiscal 2018
Topic 605
|
|
Percentage of Total Revenue
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
United States
|
$
|
1,164
|
|
|
64
|
%
|
|
$
|
1,315
|
|
|
64
|
%
|
|
$
|
(151
|
)
|
|
(11
|
)%
|
International
|
669
|
|
|
36
|
|
|
744
|
|
|
36
|
|
|
(75
|
)
|
|
(10
|
)
|
|||
Total revenue
|
$
|
1,833
|
|
|
100
|
%
|
|
$
|
2,059
|
|
|
100
|
%
|
|
$
|
(226
|
)
|
|
(11
|
)%
|
|
First Half Fiscal 2019
Topic 605
|
|
Percentage of Total Revenue
|
|
First Half Fiscal 2018
Topic 605
|
|
Percentage of Total Revenue
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
United States
|
$
|
1,331
|
|
|
63
|
%
|
|
$
|
1,315
|
|
|
64
|
%
|
|
$
|
16
|
|
|
1
|
%
|
International
|
766
|
|
|
37
|
|
|
744
|
|
|
36
|
|
|
22
|
|
|
3
|
|
|||
Total revenue
|
$
|
2,097
|
|
|
100
|
%
|
|
$
|
2,059
|
|
|
100
|
%
|
|
$
|
38
|
|
|
2
|
%
|
|
Second Quarter
Fiscal 2019 |
|
Second Quarter
Fiscal 2019 |
|
Second Quarter
Fiscal 2018 |
||||||
|
Topic 606
|
|
Topic 605
|
|
Topic 605
|
||||||
|
(dollars in millions)
|
||||||||||
Fiscal 2019 Plan
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
Legal settlements
|
1
|
|
|
1
|
|
|
—
|
|
|||
Losses from foreign exchange derivative contracts
|
—
|
|
|
—
|
|
|
4
|
|
|||
Losses from foreign exchange rate fluctuations
|
2
|
|
|
2
|
|
|
5
|
|
|||
Other miscellaneous items
|
2
|
|
|
2
|
|
|
—
|
|
|||
Total
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
9
|
|
|
First Half
Fiscal 2019 |
|
First Half
Fiscal 2019 |
|
First Half
Fiscal 2018 |
||||||
|
Topic 606
|
|
Topic 605
|
|
Topic 605
|
||||||
|
(dollars in millions)
|
||||||||||
Fiscal 2019 Plan
|
$
|
113
|
|
|
$
|
113
|
|
|
$
|
—
|
|
Legal settlements
|
1
|
|
|
1
|
|
|
2
|
|
|||
(Gains) losses from foreign exchange derivative contracts
|
(10
|
)
|
|
(10
|
)
|
|
8
|
|
|||
Losses from foreign exchange rate fluctuations
|
1
|
|
|
6
|
|
|
10
|
|
|||
Other miscellaneous items
|
2
|
|
|
2
|
|
|
—
|
|
|||
Total
|
$
|
107
|
|
|
$
|
112
|
|
|
$
|
20
|
|
Mainframe Solutions
|
Second Quarter
Fiscal 2019 |
|
Second Quarter
Fiscal 2018 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
548
|
|
|
$
|
539
|
|
Segment profit
|
$
|
354
|
|
|
$
|
351
|
|
Segment operating margin
|
65
|
%
|
|
65
|
%
|
Mainframe Solutions
|
First Half
Fiscal 2019 |
|
First Half
Fiscal 2018 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
1,101
|
|
|
$
|
1,075
|
|
Segment profit
|
$
|
724
|
|
|
$
|
700
|
|
Segment operating margin
|
66
|
%
|
|
65
|
%
|
Enterprise Solutions
|
Second Quarter
Fiscal 2019 |
|
Second Quarter
Fiscal 2018 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
423
|
|
|
$
|
420
|
|
Segment profit
|
$
|
54
|
|
|
$
|
40
|
|
Segment operating margin
|
13
|
%
|
|
10
|
%
|
Enterprise Solutions
|
First Half
Fiscal 2019 |
|
First Half
Fiscal 2018 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
848
|
|
|
$
|
834
|
|
Segment profit
|
$
|
114
|
|
|
$
|
73
|
|
Segment operating margin
|
13
|
%
|
|
9
|
%
|
Services
|
Second Quarter
Fiscal 2019 |
|
Second Quarter
Fiscal 2018 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
74
|
|
|
$
|
75
|
|
Segment profit
|
$
|
4
|
|
|
$
|
1
|
|
Segment operating margin
|
5
|
%
|
|
1
|
%
|
Services
|
First Half
Fiscal 2019 |
|
First Half
Fiscal 2018 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
148
|
|
|
$
|
150
|
|
Segment profit
|
$
|
4
|
|
|
$
|
2
|
|
Segment operating margin
|
3
|
%
|
|
1
|
%
|
|
Second Quarter of Fiscal
|
|
Change
|
||||||||
|
2019
|
|
2018
|
|
2019 / 2018
|
||||||
|
(in millions)
|
||||||||||
Cash collections from billings
(1)
|
$
|
764
|
|
|
$
|
803
|
|
|
$
|
(39
|
)
|
Vendor disbursements and payroll
(1)
|
(628
|
)
|
|
(631
|
)
|
|
3
|
|
|||
Income tax payments, net
|
(100
|
)
|
|
(109
|
)
|
|
9
|
|
|||
Other disbursements, net
(2)
|
(47
|
)
|
|
(26
|
)
|
|
(21
|
)
|
|||
Net cash (used in) provided by operating activities
|
$
|
(11
|
)
|
|
$
|
37
|
|
|
$
|
(48
|
)
|
(1)
|
Amounts include value added taxes and sales taxes.
|
(2)
|
For the
second
quarter of fiscal
2019
, amount includes $28 million of payments associated with the Fiscal 2019 Plan, interest, prior period restructuring plans and miscellaneous receipts and disbursements. For the
second
quarter of fiscal
2018
, amount includes payments associated with interest, prior period restructuring plans and miscellaneous receipts and disbursements.
|
|
First Half of Fiscal
|
|
Change
|
||||||||
|
2019
|
|
2018
|
|
2019 / 2018
|
||||||
|
(in millions)
|
||||||||||
Cash collections from billings
(1)
|
$
|
1,862
|
|
|
$
|
2,014
|
|
|
$
|
(152
|
)
|
Vendor disbursements and payroll
(1)
|
(1,394
|
)
|
|
(1,478
|
)
|
|
84
|
|
|||
Income tax payments, net
|
(130
|
)
|
|
(156
|
)
|
|
26
|
|
|||
Other disbursements, net
(2)
|
(87
|
)
|
|
(45
|
)
|
|
(42
|
)
|
|||
Net cash provided by operating activities
|
$
|
251
|
|
|
$
|
335
|
|
|
$
|
(84
|
)
|
(1)
|
Amounts include value added taxes and sales taxes.
|
(2)
|
For the
first half
of fiscal
2019
, amount includes $50 million of payments associated with the Fiscal 2019 Plan, interest, prior period restructuring plans and miscellaneous receipts and disbursements. For the
first half
of fiscal
2018
, amount includes payments associated with interest, prior period restructuring plans and miscellaneous receipts and disbursements.
|
|
September 30, 2018
|
|
March 31, 2018
|
||||
|
(in millions)
|
||||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
—
|
|
2.875% Senior Notes due August 2018
|
—
|
|
|
250
|
|
||
5.375% Senior Notes due December 2019
|
750
|
|
|
750
|
|
||
3.600% Senior Notes due August 2020
|
400
|
|
|
400
|
|
||
3.600% Senior Notes due August 2022
|
500
|
|
|
500
|
|
||
4.500% Senior Notes due August 2023
|
250
|
|
|
250
|
|
||
4.700% Senior Notes due March 2027
|
350
|
|
|
350
|
|
||
Term Loan due April 2023
|
278
|
|
|
285
|
|
||
Other indebtedness, primarily capital leases
|
8
|
|
|
10
|
|
||
Unamortized debt issuance costs
|
(9
|
)
|
|
(11
|
)
|
||
Unamortized discount for Senior Notes
|
(1
|
)
|
|
(1
|
)
|
||
Total debt outstanding
|
$
|
2,526
|
|
|
$
|
2,783
|
|
Less the current portion
|
(20
|
)
|
|
(269
|
)
|
||
Total long-term debt portion
|
$
|
2,506
|
|
|
$
|
2,514
|
|
|
Six Months Ended
September 30, |
||||||
|
2018
|
|
2017
|
||||
|
(in millions)
|
||||||
Total borrowings outstanding at beginning of period
(1)
|
$
|
137
|
|
|
$
|
137
|
|
Borrowings
|
1,076
|
|
|
1,173
|
|
||
Repayments
|
(1,053
|
)
|
|
(1,204
|
)
|
||
Foreign exchange effect
|
(24
|
)
|
|
31
|
|
||
Total borrowings outstanding at end of period
(1)
|
$
|
136
|
|
|
$
|
137
|
|
(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
(1)
|
|
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, 2018 - July 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
406,509
|
|
August 1, 2018 - August 31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
406,509
|
|
||
September 1, 2018 - September 30, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
406,509
|
|
||
Total
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
406,509
|
|
(1)
|
In November 2015, our Board of Directors approved a stock repurchase program that authorized us to acquire up to
$750 million
of our common stock.
|
|
|
|
|
Incorporated by Reference
|
|
|
||||
Exhibit Number
|
|
Exhibit Description
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
Filed or Furnished Herewith
|
|
|
8-K
|
|
2.1
|
|
7/12/18
|
|
|
||
|
|
8-K
|
|
3.3
|
|
3/9/06
|
|
|
||
|
|
10-K
|
|
3.2
|
|
5/8/15
|
|
|
||
|
|
8-K
|
|
4.1
|
|
7/12/18
|
|
|
||
|
|
8-K
|
|
10.1
|
|
8/10/18
|
|
|
||
|
|
8-K
|
|
10.2
|
|
8/10/18
|
|
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
X
|
||
101.INS
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
CA, INC.
|
|
|
|
By:
|
/s/ Michael P. Gregoire
|
|
Michael P. Gregoire
|
|
Chief Executive Officer
|
|
|
By:
|
/s/ Kieran J. McGrath
|
|
Kieran J. McGrath
|
|
Executive Vice President and Chief Financial Officer
|
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:
|
November 7, 2018
|
|
|
|
|
|
/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:
|
November 7, 2018
|
|
|
|
|
|
/s/ Kieran J. McGrath
|
|
|
|
|
|
|
|
Kieran J. McGrath
|
|
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
CA, Inc.
|
|
/s/ Michael P. Gregoire
|
Michael P. Gregoire
|
Chief Executive Officer
|
November 7, 2018
|
|
/s/ Kieran J. McGrath
|
Kieran J. McGrath
|
Executive Vice President and Chief Financial Officer
|
November 7, 2018
|