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Xtrackers California Municipal Bonds ETF | NASDAQ:CA | NASDAQ | Exchange Traded Fund |
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CA Technologies (NASDAQ:CA) today reported financial results for its fourth quarter and full fiscal year 2016, which ended March 31, 2016.
Mike Gregoire, CA Technologies Chief Executive Officer, said:
“I am pleased to report that we achieved our guidance for full-year revenue, operating margin and EPS results, and exceeded guidance for full-year cash flow from continuing operations.
“Our efforts to reposition the product portfolio, refine our go-to-market strategy, and sharpen our focus on customer success have culminated in new sales growth for the year. This was a notable improvement relative to prior years. At the same time, there is still work to do to drive the level of sustained growth that our company is capable of delivering.
“Looking forward, we will continue to manage the business with thoughtful discipline, and remain committed to our strategic imperative of delivering long term growth and profitability.”
FINANCIAL OVERVIEW
(dollars in millions, except share data) Fourth Quarter FY16 vs. FY15 Full Year FY16 vs. FY15 FY16 FY15%Change
%ChangeCC**
FY16 FY15%Change
%ChangeCC**
Revenue $1,009 $1,023 (1)% 1% $4,025 $4,262 (6)% (1)% GAAP Income from Continuing Operations $171 $145 18% 30% $769 $810 (5)% 10% Non-GAAP Income from Continuing Operations* $252 $247 2% 15% $1,050 $1,125 (7)% 3% GAAP Diluted EPS from Continuing Operations $0.41 $0.33 24% 36% $1.78 $1.82 (2)% 13% Non-GAAP Diluted EPS from Continuing Operations* $0.60 $0.56 7% 21% $2.43 $2.53 (4)% 6% Cash Flow from Continuing Operations $471 $485 (3)% 0% $1,034 $1,030 0% 9% * Non-GAAP income and non-GAAP earnings per share are non-GAAP financial measures, as noted in the discussion of non-GAAP results below. A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release. **CC: Constant CurrencyREVENUE AND BOOKINGS
Fourth Quarter
(dollars in millions) Fourth Quarter FY16 vs. FY15 FY16% ofTotal
FY15% ofTotal
%Change
%ChangeCC**
North America Revenue $681 67% $682 67% 0% 0% International Revenue $328 33% $341 33% (4)% 3% Total Revenue $1,009 $1,023 (1)% 1% North America Bookings $636 66% $727 68% (13)% (12)% International Bookings $324 34% $342 32% (5)% (4)% Total Bookings $960 $1,069 (10)% (10)% Current Revenue Backlog $3,113 $3,141 (1)% (1)% Total Revenue Backlog $6,829 $6,530 5% 4%**CC: Constant Currency
Full Year
(dollars in millions) Full Year FY16 vs. FY15 FY16% ofTotal
FY15% ofTotal
%Change
%ChangeCC**
North America Revenue $2,712 67% $2,766 65% (2)% (1)% International Revenue $1,313 33% $1,496 35% (12)% 1% Total Revenue $4,025 $4,262 (6)% (1)% North America Bookings $2,987 70% $2,353 65% 27% 28% International Bookings $1,260 30% $1,256 35% 0% 11% Total Bookings $4,247 $3,609 18% 22%**CC: Constant Currency
EXPENSES, MARGIN AND EARNINGS PER SHARE
Fourth Quarter
(dollars in millions) Fourth Quarter FY16 vs. FY15 FY16 FY15%Change
%ChangeCC**
GAAP Operating Expenses Before Interest and Income Taxes $730 $812 (10)% (10)% Operating Income Before Interest and Income Taxes $279 $211 32% 45% GAAP Diluted EPS from Continuing Operations $0.41 $0.33 24% 36% Operating Margin 28% 21% Effective Tax Rate 35.2% 28.2% Non-GAAP* Operating Expenses Before Interest and Income Taxes $630 $693 (9)% (11)% Operating Income Before Interest and Income Taxes $379 $330 15% 29% Non-GAAP Diluted EPS from Continuing Operations $0.60 $0.56 7% 21% Operating Margin 38% 32% Effective Tax Rate 30.8% 23.1% *A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release. Year-over-year non-GAAP results exclude purchased software and other intangibles amortization, share-based compensation, amortization of internal software costs, Board approved workforce rebalancing initiatives and certain other gains and losses. The results also include gains and losses on hedges that mature within the quarter, but exclude gains and losses on hedges that do not mature within the quarter. **CC: Constant Currency
Full Year
(dollars in millions) Full Year FY16 vs. FY15 FY16 FY15%Change
%ChangeCC**
GAAP Operating Expenses Before Interest and Income Taxes $2,890 $3,100 (7)% (5)% Operating Income Before Interest and Income Taxes $1,135 $1,162 (2)% 11% GAAP Diluted EPS from Continuing Operations $1.78 $1.82 (2)% 13% Operating Margin 28% 27% Effective Tax Rate 29.1% 27.4% Non-GAAP* Operating Expenses Before Interest and Income Taxes $2,494 $2,665 (6)% (4)% Operating Income Before Interest and Income Taxes $1,531 $1,597 (4)% 5% Non-GAAP Diluted EPS from Continuing Operations $2.43 $2.53 (4)% 6% Operating Margin 38% 37% Effective Tax Rate 29.1% 27.4% *A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release. Year-over-year non-GAAP results exclude purchased software and other intangibles amortization, share-based compensation, amortization of internal software costs, Board approved workforce rebalancing initiatives and certain other gains and losses. **CC: Constant CurrencySELECTED HIGHLIGHTS
Leadership and recognition during the quarter include:
Customer traction for CA Technologies innovation during the quarter include:
SEGMENT INFORMATION
Fourth Quarter
(dollars in millions) Fourth Quarter FY16 vs. FY15 Revenue%Change
%ChangeCC**
Operating Margin FY16 FY15 FY16 FY15 Mainframe Solutions $547 $572 (4)% (2)% 61% 56% Enterprise Solutions $380 $368 3% 6% 10% 4% Services $82 $83 (1)% 0% 7% -4%**CC: Constant Currency
Full Year
(dollars in millions) Full Year FY16 vs. FY15 Revenue%Change
%ChangeCC**
Operating Margin FY16 FY15 FY16 FY15 Mainframe Solutions $2,215 $2,392 (7)% (2)% 61% 59% Enterprise Solutions $1,484 $1,519 (2)% 2% 10% 11% Services $326 $351 (7)% (3)% 7% 3%**CC: Constant Currency
CASH FLOW FROM OPERATIONS
CAPITAL STRUCTURE
OUTLOOK FOR FISCAL 2017
The following outlook for fiscal 2017 contains "forward-looking statements" (as defined below).
The Company expects the following:
This outlook assumes no material acquisitions. The Company expects a full-year GAAP operating margin of 30 percent and non-GAAP operating margin of 38 percent. The Company also expects a full-year GAAP and non-GAAP effective tax rate of between 28 percent and 29 percent.
The Company anticipates approximately 410 million shares outstanding at fiscal 2017 year-end and weighted average diluted shares outstanding of approximately 414 million for the fiscal year.
Webcast
This news release and the accompanying tables should be read in conjunction with additional content that is available on the Company’s website, including a supplemental financial package, as well as a conference call and webcast that the Company will host at 5:00 p.m. ET today to discuss its unaudited fourth quarter and full fiscal year results. The webcast will be archived on the website. Individuals can access the webcast, as well as the press release and supplemental financial information at http://ca.com/invest or can listen to the call at 1-877-561-2748. The international participant number is 1-720-545-0044.
(1) KuppingerCole Leadership Compass: Access Management and Federation, March 2016
(2) 2016 IDC MarketScape: Worldwide Enterprise IT PPM 2016 Vendor Assessment - Enabling Business Execution and Optimization, February 2016, IDC #US40473615
About CA Technologies
CA Technologies (NASDAQ:CA) creates software that fuels transformation for companies and enables them to seize the opportunities of the application economy. Software is at the heart of every business in every industry. From planning, to development, to management and security, CA is working with companies worldwide to change the way we live, transact, and communicate - across mobile, private and public cloud, distributed and mainframe environments. Learn more at www.ca.com.
Follow CA Technologies
Non-GAAP Financial Measures
This news release, the accompanying tables and the additional content that is available on the Company's website, including a supplemental financial package, include certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). Non-GAAP metrics for operating expenses, operating income, operating margin, income from continuing operations and diluted earnings per share exclude the following items: share-based compensation expense; non-cash amortization of purchased software and other intangible assets; charges relating to rebalancing initiatives that are large enough to require approval from the Company's Board of Directors and certain other gains and losses, which include the gains and losses since inception of hedges that mature within the quarter, but exclude gains and losses of hedges that do not mature within the quarter. The Company began expensing costs for internally developed software where development efforts commenced in the first quarter of fiscal 2014. Due to this change, the Company excludes amortization of internally developed software costs previously capitalized from these non-GAAP metrics. The effective tax rate on GAAP and non-GAAP income from operations is the Company's provision for income taxes expressed as a percentage of pre-tax GAAP and non-GAAP income from continuing operations, respectively. These tax rates are determined based on an estimated effective full year tax rate, with the effective tax rate for GAAP generally including the impact of discrete items in the period in which such items arise and the effective tax rate for non-GAAP generally allocating the impact of discrete items pro rata to the fiscal year's remaining reporting periods. Adjusted cash flow from operations excludes payments associated with the fiscal 2014 Board-approved rebalancing initiative as described above, capitalized software development costs as described above, and restructuring and other payments. Free cash flow excludes purchases of property and equipment and capitalized software development costs. The Company presents constant currency information to provide a framework for assessing how the Company's underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than U.S. dollars are converted into U.S. dollars at the exchange rate in effect on the last day of the Company's prior fiscal year (i.e., March 31, 2016, March 31, 2015, March 31, 2014 and March 31, 2013, respectively). Constant currency excludes the impacts from the Company's hedging program. The constant currency calculation for annualized subscription and maintenance bookings is calculated by dividing the subscription and maintenance bookings in constant currency by the weighted average subscription and maintenance duration in years. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, non-GAAP financial measures facilitate management's internal comparisons to the Company's historical operating results and cash flows, to competitors' operating results and cash flows, and to estimates made by securities analysts. Management uses these non-GAAP financial measures internally to evaluate its performance and they are key variables in determining management incentive compensation. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, the Company has historically reported similar non-GAAP financial measures to its investors and believes that the inclusion of comparative numbers provides consistency in its financial reporting. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures, which are attached to this news release.
Cautionary Statement Regarding Forward-Looking Statements
The declaration and payment of future dividends is subject to the determination of the Company's Board of Directors, in its sole discretion, after considering various factors, including the Company's financial condition, historical and forecast operating results, and available cash flow, as well as any applicable laws and contractual covenants and any other relevant factors. The Company's practice regarding payment of dividends may be modified at any time and from time to time.
Repurchases under the Company's stock repurchase program may be made from time to time, subject to market conditions and other factors, in the open market, through solicited or unsolicited privately negotiated transactions or otherwise. The program does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company's discretion.
Certain statements in this communication (such as statements containing the words "believes," "plans," "anticipates," "expects," "estimates," "targets" and similar expressions relating to the future) constitute "forward-looking statements" that are based upon the beliefs of, and assumptions made by, the Company's management, as well as information currently available to management. These forward-looking statements reflect the Company's current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the ability to achieve success in the Company's strategy by, among other things, enabling the Company's sales force to accelerate growth of new product sales (at levels sufficient to offset any decline in revenue in the Company's Mainframe Solutions segment), improving the Company's brand, technology and innovation awareness in the marketplace, ensuring the Company's offerings for cloud computing, application development and IT operations (DevOps), Software-as-a-Service (SaaS), and mobile device management, as well as other new offerings, address the needs of a rapidly changing market, while not adversely affecting the demand for the Company's traditional products or its profitability to an extent greater than anticipated, and effectively managing the strategic shift in the Company's business model to develop more easily installed software, provide additional SaaS offerings and refocus the Company's professional services and education engagements on those engagements that are connected to new product sales, without affecting the Company's performance to an extent greater than anticipated; the failure to innovate or adapt to technological changes and introduce new software products and services in a timely manner; competition in product and service offerings and pricing; the ability of the Company's products to remain compatible with ever-changing operating environments, platforms or third party products; global economic factors or political events beyond the Company's control and other business and legal risks associated with non-U.S. operations; the failure to expand partner programs and sales of our solutions by our partners; the ability to retain and attract qualified professionals; general economic conditions and credit constraints, or unfavorable economic conditions in a particular region, industry or business sector; the ability to successfully integrate acquired companies and products into the Company's existing business; risks associated with sales to government customers; breaches of the Company's data center, network, as well as the Company's software products, and the IT environments of the Company's vendors and customers; the ability to adequately manage, evolve and protect the Company's information systems, infrastructure and processes; the failure to renew large license transactions on a satisfactory basis; fluctuations in foreign exchange rates; discovery of errors or omissions in the Company's software products or documentation and potential product liability claims; the failure to protect the Company's intellectual property rights and source code; access to software licensed from third parties; risks associated with the use of software from open source code sources; third-party claims of intellectual property infringement or royalty payments; fluctuations in the number, terms and duration of the Company's license agreements, as well as the timing of orders from customers and channel partners; events or circumstances that would require the Company to record an impairment charge relating to the Company's goodwill or capitalized software and other intangible assets balances; potential tax liabilities; changes in market conditions or the Company's credit ratings; changes in generally accepted accounting principles; the failure to effectively execute the Company's workforce reductions, workforce rebalancing and facilities consolidations; successful and secure outsourcing of various functions to third parties; and other factors described more fully in the Company's filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties occur, or should the Company's assumptions prove incorrect, actual results may vary materially from those described herein as believed, planned, anticipated, expected, estimated, targeted or similarly expressed in a forward-looking manner. The Company assumes no obligation to update the information in this communication, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
Copyright © 2016 CA, Inc. All Rights Reserved. All other trademarks, trade names, service marks, and logos referenced herein belong to their respective companies.
Table 1 CA Technologies Consolidated Statements of Operations (unaudited) (in millions, except per share amounts) Three Months Ended Fiscal Year EndedMarch 31,
March 31,
Revenue:2016
2015
2016
2015
Subscription and maintenance $ 821 $ 851 $ 3,317 $ 3,560 Professional services 82 83 326 351 Software fees and other 106 89 382 351 Total revenue $ 1,009 $ 1,023 $ 4,025 $ 4,262 Expenses: Costs of licensing and maintenance $ 74 $ 80 $ 283 $ 297 Cost of professional services 76 85 300 338 Amortization of capitalized software costs 64 69 256 273 Selling and marketing 255 278 1,006 1,060 General and administrative 88 108 367 377 Product development and enhancements 140 160 560 603 Depreciation and amortization of other intangible assets 23 30 106 129 Other expenses, net 10 2 12 23 Total expenses before interest and income taxes $ 730 $ 812 $ 2,890 $ 3,100 Income from continuing operations before interest and income taxes $ 279 $ 211 $ 1,135 $ 1,162 Interest expense, net 15 9 51 47 Income from continuing operations before income taxes $ 264 $ 202 $ 1,084 $ 1,115 Income tax expense 93 57 315 305 Income from continuing operations $ 171 $ 145 $ 769 $ 810 Income from discontinued operations, net of income taxes $ 3 $ 6 $ 14 $ 36 Net income $ 174 $ 151 $ 783 $ 846 Basic income per common share: Income from continuing operations $ 0.41 $ 0.33 $ 1.79 $ 1.83 Income from discontinued operations 0.01 0.01 0.03 0.08 Net income $ 0.42 $ 0.34 $ 1.82 $ 1.91 Basic weighted average shares used in computation 413 437 426 439 Diluted income per common share: Income from continuing operations $ 0.41 $ 0.33 $ 1.78 $ 1.82 Income from discontinued operations 0.01 0.01 0.03 0.08 Net income $ 0.42 $ 0.34 $ 1.81 $ 1.90 Diluted weighted average shares used in computation 414 439 427 441 Results reflect the discontinued operations associated with the CA ERwin Data Modeling and CA arcserve data protection businesses.Table 2 CA Technologies Condensed Consolidated Balance Sheets (in millions) March 31, March 31, 2016 2015 (unaudited) Cash and cash equivalents $ 2,812 $ 2,804 Trade accounts receivable, net 625 652 Deferred income taxes - 318 Other current assets 124 212 Total current assets $ 3,561 $ 3,986 Property and equipment, net $ 242 $ 252 Goodwill 6,086 5,806 Capitalized software and other intangible assets, net 795 731 Deferred income taxes 407 92 Other noncurrent assets, net 113 106 Total assets $ 11,204 $ 10,973 Current portion of long-term debt $ 6 $ 10 Deferred revenue (billed or collected) 2,197 2,114 Deferred income taxes - 7 Other current liabilities 691 807 Total current liabilities $ 2,894 $ 2,938 Long-term debt, net of current portion $ 1,947 $ 1,247 Deferred income taxes 3 45 Deferred revenue (billed or collected) 737 863 Other noncurrent liabilities 245 255 Total liabilities $ 5,826 $ 5,348 Common stock $ 59 $ 59 Additional paid-in capital 3,664 3,631 Retained earnings 6,575 6,221 Accumulated other comprehensive loss (416 ) (418 ) Treasury stock (4,504 ) (3,868 ) Total stockholders’ equity $ 5,378 $ 5,625 Total liabilities and stockholders’ equity $ 11,204 $ 10,973
Table 3 CA Technologies Condensed Consolidated Statements of Cash Flows (unaudited) (in millions) Three Months Ended
March 31,
2016
2015
Operating activities from continuing operations: Net income $ 174 $ 151 Income from discontinued operations (3 ) (6 ) Income from continuing operations $ 171 $ 145Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization 87 99 Deferred income taxes (62 ) (10 ) Provision for bad debts - 2 Share-based compensation expense 27 22 Other non-cash items (1 ) 4 Foreign currency transaction gains (1 ) (3 ) Changes in other operating assets and liabilities, net of effect of acquisitions: Decrease (increase) in trade accounts receivable 4 (12 ) Increase in deferred revenue 248 307 Decrease in taxes payable, net (25 ) (132 ) (Decrease) increase in accounts payable, accrued expenses and other (12 ) 29 Increase in accrued salaries, wages and commissions 25 22 Changes in other operating assets and liabilities 10 12 Net cash provided by operating activities - continuing operations $ 471 $ 485 Investing activities from continuing operations: Acquisitions of businesses, net of cash acquired, and purchased software $ - $ (6 ) Purchases of property and equipment (14 ) (7 ) Decrease in restricted cash 4 - Other investing activities (1 ) - Net cash used in investing activities - continuing operations $ (11 ) $ (13 ) Financing activities from continuing operations: Dividends paid $ (104 ) $ (111 ) Purchases of common stock (2 ) (90 ) Notional pooling borrowings, net 15 83 Debt repayments (1 ) (1 ) Exercise of common stock options 3 1 Other financing activities (1 ) - Net cash used in financing activities - continuing operations $ (90 ) $ (118 ) Effect of exchange rate changes on cash $ 62 $ (222 ) Net change in cash and cash equivalents - continuing operations $ 432 $ 132 Cash used in operating activities - discontinued operations $ (23 ) $ (11 ) Cash provided by investing activities - discontinued operations 50 - Net effect of discontinued operations on cash and cash equivalents $ 27 $ (11 ) Increase in cash and cash equivalents $ 459 $ 121 Cash and cash equivalents at beginning of period $ 2,353 $ 2,683 Cash and cash equivalents at end of period $ 2,812 $ 2,804 Results reflect the discontinued operations associated with the CA ERwin Data Modeling business.Table 4 CA Technologies Operating Segments (unaudited) (dollars in millions) Three Months Ended March 31, 2016 Fiscal Year Ended March 31, 2016
Mainframe
Enterprise
Mainframe
Enterprise
Solutions (1)
Solutions (1)
Services (1) TotalSolutions (1)
Solutions (1)
Services (1) Total Revenue (2) $ 547 $ 380 $ 82 $ 1,009 $ 2,215 $ 1,484 $ 326 $ 4,025 Expenses (3) 213 341 76 630 854 1,337 303 2,494 Segment profit $ 334 $ 39 $ 6 $ 379 $ 1,361 $ 147 $ 23 $ 1,531 Segment operating margin 61 % 10 % 7 % 38 % 61 % 10 % 7 % 38 % Segment profit $ 379 $ 1,531 Less: Purchased software amortization 40 146 Other intangibles amortization 8 44 Internally developed software products amortization 24 110 Share-based compensation expense 27 97 Other expenses (gains), net (4) 1 (1 ) Interest expense, net 15 51 Income from continuing operations before income taxes $ 264 $ 1,084 Three Months Ended March 31, 2015 Fiscal Year Ended March 31, 2015Mainframe
Enterprise
Mainframe
Enterprise
Solutions (1)
Solutions (1)
Services (1) TotalSolutions (1)
Solutions (1)
Services (1) Total Revenue (2) $ 572 $ 368 $ 83 $ 1,023 $ 2,392 $ 1,519 $ 351 $ 4,262 Expenses (3) 253 354 86 693 970 1,353 342 2,665 Segment profit $ 319 $ 14 $ (3 ) $ 330 $ 1,422 $ 166 $ 9 $ 1,597 Segment operating margin 56 % 4 % -4 % 32 % 59 % 11 % 3 % 37 % Segment profit $ 330 $ 1,597 Less: Purchased software amortization 37 124 Other intangibles amortization 13 58 Internally developed software products amortization 32 149 Share-based compensation expense 22 87 Other expenses, net (4) 15 17 Interest expense, net 9 47 Income from continuing operations before income taxes $ 202 $ 1,115 (1) The Company’s Mainframe Solutions and Enterprise Solutions segments comprise its software business organized by the nature of the Company’s software offerings and the platform on which the products operate. The Services segment comprises product implementation, consulting, customer education and customer training, including those directly related to the Mainframe Solutions and Enterprise Solutions software that the Company sells to its customers. (2) The Company regularly enters into a single arrangement with a customer that includes mainframe solutions, enterprise solutions and services. The amount of contract revenue assigned to operating segments is generally based on the manner in which the proposal is made to the customer. The software product revenue is assigned to the Mainframe Solutions and Enterprise Solutions segments based on either: (1) a list price allocation method (which allocates a discount in the total contract price to the individual products in proportion to the list price of the product); (2) allocations included within internal contract approval documents; or (3) the value for individual software products as stated in the customer contract. The price for the implementation, consulting, education and training services is separately stated in the contract and these amounts of contract revenue are assigned to the Services segment. The contract value assigned to each operating segment is then recognized in a manner consistent with the revenue recognition policies the Company applies to the customer contract for purposes of preparing the Consolidated Financial Statements. (3) Segment expenses include costs that are controllable by segment managers (i.e., direct costs) and, in the case of the Mainframe Solutions and Enterprise Solutions segments, an allocation of shared and indirect costs (i.e., allocated costs). Segment-specific direct costs include a portion of selling and marketing costs, licensing and maintenance costs, product development costs and general and administrative costs. Allocated segment costs primarily include indirect and non-segment specific direct selling and marketing costs and general and administrative costs that are not directly attributable to a specific segment. The basis for allocating shared and indirect costs between the Mainframe Solutions and Enterprise Solutions segments is dependent on the nature of the cost being allocated and is either in proportion to segment revenues or in proportion to the related direct cost category. Expenses for the Services segment consist of cost of professional services and other direct costs included within selling and marketing and general and administrative expenses. There are no allocated or indirect costs for the Services segment. (4) Other expenses (gains), net consists of costs associated with the FY2014 Board approved rebalancing initiative (the Fiscal 2014 Plan), certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs. Results reflect the discontinued operations associated with the CA ERwin Data Modeling and CA arcserve data protection businesses.Table 5 CA Technologies Constant Currency Summary (unaudited) (dollars in millions) Three Months Ended March 31, Fiscal Year Ended March 31,
% Increase
% Increase
% Increase
(Decrease)
% Increase
(Decrease)
(Decrease)
in Constant
(Decrease)
in Constant
2016
2015
in $ US
Currency (1)
2016
2015
in $ US
Currency (1)
Bookings $ 960 $ 1,069 (10 )% (10 )% $ 4,247 $ 3,609 18 % 22 % Revenue: North America $ 681 $ 682 0 % 0 % $ 2,712 $ 2,766 (2 )% (1 )% International 328 341 (4 )% 3 % 1,313 1,496 (12 )% 1 % Total revenue $ 1,009 $ 1,023 (1 )% 1 % $ 4,025 $ 4,262 (6 )% (1 )% Revenue: Subscription and maintenance $ 821 $ 851 (4 )% (1 )% $ 3,317 $ 3,560 (7 )% (2 )% Professional services 82 83 (1 )% 0 % 326 351 (7 )% (3 )% Software fees and other 106 89 19 % 23 % 382 351 9 % 13 % Total revenue $ 1,009 $ 1,023 (1 )% 1 % $ 4,025 $ 4,262 (6 )% (1 )% Segment Revenue: Mainframe solutions $ 547 $ 572 (4 )% (2 )% $ 2,215 $ 2,392 (7 )% (2 )% Enterprise solutions $ 380 368 3 % 6 % 1,484 1,519 (2 )% 2 % Services 82 83 (1 )% 0 % 326 351 (7 )% (3 )% Total expenses before interest and income taxes: Total non-GAAP (2) $ 630 $ 693 (9 )% (11 )% $ 2,494 $ 2,665 (6 )% (4 )% Total GAAP 730 812 (10 )% (10 )% 2,890 3,100 (7 )% (5 )% (1) Constant currency information is presented to provide a framework for assessing how the Company's underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than U.S. dollars are converted into U.S. dollars at the exchange rate in effect on March 31, 2015, which was the last day of the prior fiscal year. Constant currency excludes the impacts from the Company's hedging program. (2) Refer to Table 7 for a reconciliation of total expenses before interest and income taxes to total non-GAAP operating expenses. Results reflect the discontinued operations associated with the CA ERwin Data Modeling and CA arcserve data protection businesses. Certain non-material differences may arise versus actual from impact of rounding.Table 6 CA Technologies Reconciliation of Select GAAP Measures to Non-GAAP Measures (unaudited) (dollars in millions) Three Months Ended Fiscal Year Ended
March 31,
March 31,
2016
2015
2016
2015
GAAP net income $ 174 $ 151 $ 783 $ 846 GAAP income from discontinued operations, net of income taxes (3 ) (6 ) (14 ) (36 ) GAAP income from continuing operations $ 171 $ 145 $ 769 $ 810 GAAP income tax expense 93 57 315 305 Interest expense, net 15 9 51 47 GAAP income from continuing operations before interest and income taxes $ 279 $ 211 $ 1,135 $ 1,162 GAAP operating margin (% of revenue) (1) 28 % 21 % 28 % 27 % Non-GAAP adjustments to expenses: Costs of licensing and maintenance (2) $ 2 $ 1 $ 7 $ 5 Cost of professional services (2) 1 1 4 4 Amortization of capitalized software costs (3) 64 69 256 273 Selling and marketing (2) 9 7 34 30 General and administrative (2) 10 8 35 29 Product development and enhancements (2) 5 5 17 19 Depreciation and amortization of other intangible assets (4) 8 13 44 58 Other expenses (gains), net (5) 1 15 (1 ) 17 Total Non-GAAP adjustment to operating expenses $ 100 $ 119 $ 396 $ 435 Non-GAAP income from continuing operations before interest and income taxes $ 379 $ 330 $ 1,531 $ 1,597 Non-GAAP operating margin (% of revenue) (6) 38 % 32 % 38 % 37 % Interest expense, net 15 9 51 47 GAAP income tax expense 93 57 315 305 Non-GAAP adjustment to income tax expense (7) 19 17 115 120 Non-GAAP income tax expense $ 112 $ 74 $ 430 $ 425 Non-GAAP income from continuing operations $ 252 $ 247 $ 1,050 $ 1,125 (1) GAAP operating margin is calculated by dividing GAAP income from continuing operations before interest and income taxes by total revenue (refer to Table 1 for total revenue). (2) Non-GAAP adjustment consists of share-based compensation. (3) For the three month periods ending March 31, 2016 and 2015, non-GAAP adjustment consists of $40 million and $37 million of purchased software amortization and $24 million and $32 million of internally developed software products amortization, respectively. For the twelve month periods ending March 31, 2016 and 2015, non-GAAP adjustment consists of $146 million and $124 million of purchased software amortization and $110 million and $149 million of internally developed software products amortization, respectively. (4) Non-GAAP adjustment consists of other intangibles amortization. (5) Non-GAAP adjustment consists of charges relating to the FY2014 Board approved rebalancing initiative (the Fiscal 2014 Plan) and certain other gains and losses, including gains and losses since inception of hedges that mature within the quarter, but excludes gains and losses of hedges that do not mature within the quarter. (6) Non-GAAP operating margin is calculated by dividing non-GAAP income from continuing operations before interest and income taxes by total revenue (refer to Table 1 for total revenue). (7) The full year non-GAAP income tax expense is different from GAAP income tax expense because of the difference in non-GAAP income from continuing operations before income taxes. On an interim basis, this difference would also include a difference in the impact of discrete and permanent items where for GAAP purposes the effect is recorded in the period such items arise, but for non-GAAP such items are recorded pro rata to the fiscal year's remaining reporting periods. Refer to the discussion of non-GAAP financial measures included in the accompanying press release for additional information. Results reflect the discontinued operations associated with the CA ERwin Data Modeling and CA arcserve data protection businesses. Certain non-material differences may arise versus actual from impact of rounding.Table 7 CA Technologies Reconciliation of GAAP to Non-GAAP Operating Expenses and Diluted Earnings per Share (unaudited) (in millions, except per share amounts) Three Months Ended Fiscal Year Ended
March 31,
March 31,
Operating Expenses
2016
2015
2016
2015
Total expenses before interest and income taxes $ 730 $ 812 $ 2,890 $ 3,100 Non-GAAP operating adjustments: Purchased software amortization 40 37 146 124 Other intangibles amortization 8 13 44 58 Internally developed software products amortization 24 32 110 149 Share-based compensation 27 22 97 87 Other expenses (gains), net (1) 1 15 (1 ) 17 Total non-GAAP operating adjustment $ 100 $ 119 $ 396 $ 435 Total non-GAAP operating expenses $ 630 $ 693 $ 2,494 $ 2,665 Three Months Ended Fiscal Year EndedMarch 31,
March 31,
Diluted EPS from Continuing Operations
2016
2015
2016
2015
GAAP diluted EPS from continuing operations $ 0.41 $ 0.33 $ 1.78 $ 1.82 Non-GAAP adjustments, net of taxes: Purchased software amortization 0.06 0.06 0.24 0.20 Other intangibles amortization 0.01 0.02 0.07 0.10 Internally developed software products amortization 0.04 0.05 0.18 0.24 Share-based compensation 0.04 0.04 0.16 0.14 Other expenses, net (1) - 0.02 - 0.03 Non-GAAP effective tax rate adjustments (2) 0.04 0.04 - - Total non-GAAP adjustment $ 0.19 $ 0.23 $ 0.65 $ 0.71 Non-GAAP diluted EPS from continuing operations $ 0.60 $ 0.56 $ 2.43 $ 2.53 (1) Other expenses (gains), net consists of costs associated with the FY2014 Board approved rebalancing initiative (the Fiscal 2014 Plan), certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs. (2) The non-GAAP effective tax rate is equal to the full year GAAP effective tax rate, therefore no adjustment is required on an annual basis. On an interim basis, the difference in non-GAAP income tax expense and GAAP income tax expense relates to the difference in non-GAAP income from continuing operations before income taxes, and includes a difference in the impact of discrete and permanent items where for GAAP purposes the effect is recorded in the period such items arise but for non-GAAP purposes such items are recorded pro rata to the fiscal year's remaining reporting periods. Refer to the discussion of non-GAAP financial measures included in the accompanying press release for additional information. Results reflect the discontinued operations associated with the CA ERwin Data Modeling and CA arcserve data protection businesses. Certain non-material differences may arise versus actual from impact of rounding.Table 8 CA Technologies Effective Tax Rate Reconciliation GAAP and Non-GAAP (unaudited) (dollars in millions) Three Months Ended Fiscal Year Ended
March 31, 2016
March 31, 2016
GAAP
Non-GAAP
GAAP
Non-GAAP
Income from continuing operations before interest and income taxes (1) $ 279 $ 379 $ 1,135 $ 1,531 Interest expense, net 15 15 51 51 Income from continuing operations before income taxes $ 264 $ 364 $ 1,084 $ 1,480 Statutory tax rate 35 % 35 % 35 % 35 % Tax at statutory rate $ 92 $ 127 $ 379 $ 518 Adjustments for discrete and permanent items (2) 1 (15 ) (64 ) (88 ) Total tax expense $ 93 $ 112 $ 315 $ 430 Effective tax rate (3) 35.2 % 30.8 % 29.1 % 29.1 % Three Months Ended Fiscal Year EndedMarch 31, 2015
March 31, 2015
GAAP
Non-GAAP
GAAP
Non-GAAP
Income from continuing operations before interest and income taxes (1) $ 211 $ 330 $ 1,162 $ 1,597 Interest expense, net 9 9 47 47 Income from continuing operations before income taxes $ 202 $ 321 $ 1,115 $ 1,550 Statutory tax rate 35 % 35 % 35 % 35 % Tax at statutory rate $ 71 $ 112 $ 390 $ 543 Adjustments for discrete and permanent items (2) (14 ) (38 ) (85 ) (118 ) Total tax expense $ 57 $ 74 $ 305 $ 425 Effective tax rate (3) 28.2 % 23.1 % 27.4 % 27.4 % (1) Refer to Table 6 for a reconciliation of income from continuing operations before interest and income taxes on a GAAP basis to income from continuing operations before interest and income taxes on a non-GAAP basis. (2) The effective tax rate for GAAP generally includes the impact of discrete and permanent items in the period such items arise, whereas the effective tax rate for non-GAAP generally allocates the impact of such items pro rata to the fiscal year's remaining reporting periods. (3) The effective tax rate on GAAP and non-GAAP income from continuing operations is the Company's provision for income taxes expressed as a percentage of GAAP and non-GAAP income from continuing operations before income taxes, respectively. The non-GAAP effective tax rate is equal to the full year GAAP effective tax rate. On an interim basis, the effective tax rates are determined based on an estimated effective full year tax rate after the adjustments for the impacts of certain discrete items (such as changes in tax rates, reconciliations of tax returns to tax provisions and resolutions of tax contingencies). Refer to the discussion of non-GAAP financial measures included in the accompanying press release for additional information. Results reflect the discontinued operations associated with the CA ERwin Data Modeling and CA arcserve data protection businesses. Certain non-material differences may arise versus actual from impact of rounding.Table 9 CA Technologies Reconciliation of Projected GAAP Metrics to Projected Non-GAAP Metrics (unaudited) Fiscal Year Ending
Projected Diluted EPS from Continuing Operations
March 31, 2017
Projected GAAP diluted EPS from continuing operations range$
1.92
to
$
1.97
Non-GAAP adjustments, net of taxes: Purchased software amortization 0.25 0.25 Other intangibles amortization 0.03 0.03 Internally developed software products amortization 0.14 0.14 Share-based compensation 0.17 0.17 Total non-GAAP adjustment $ 0.59 $ 0.59 Projected non-GAAP diluted EPS from continuing operations range $ 2.51 to $ 2.56 Fiscal Year Ending
Projected Operating Margin
March 31, 2017
Projected GAAP operating margin 30 % Non-GAAP operating adjustments: Purchased software amortization 4 % Other intangibles amortization 0 % Internally developed software products amortization 2 % Share-based compensation 2 % Total non-GAAP operating adjustment 8 % Projected non-GAAP operating margin 38 %Refer to the discussion of non-GAAP financial measures included in the accompanying press release for additional information.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160511006513/en/
CA TechnologiesSaswato Das, 646-710-6690Corporate CommunicationsSaswato.das@ca.comorJennifer DiClerico, 917-968-9680Corporate CommunicationsJennifer.diclerico@ca.comorTraci Tsuchiguchi, 650-534-9814Investor Relationstraci.tsuchiguchi@ca.comorRobert Lung, 212-415-6908Investor Relationsrobert.lung@ca.com
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