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Name | Symbol | Market | Type |
---|---|---|---|
Xtrackers California Municipal Bonds ETF | NASDAQ:CA | NASDAQ | Exchange Traded Fund |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.06 | 0.24% | 24.945 | 12.46 | 37.38 | 24.94 | 24.94 | 24.94 | 2 | 22:30:00 |
Delaware
|
13-2857434
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
|
|
520 Madison Avenue,
New York, New York
|
10022
|
(Address of principal executive offices)
|
(Zip Code)
|
(Check one:)
|
|
|
|
Large accelerated filer
|
þ
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
Emerging growth company
|
¨
|
|
|
Title of Class
|
|
Shares Outstanding
|
Common Stock
|
|
as of October 19, 2017
|
par value $0.10 per share
|
|
418,543,394
|
|
|
Page
|
PART I.
|
|
|
|
|
|
|
||
|
|
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Item 1.
|
||
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Item 2.
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||
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Item 3.
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||
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Item 4.
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||
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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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||
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Item 5.
|
||
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Item 6.
|
||
|
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|
|
September 30,
2017 |
|
March 31,
2017 |
||||
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,822
|
|
|
$
|
2,771
|
|
Trade accounts receivable, net of allowance for doubtful accounts of $11 and $11, respectively
|
457
|
|
|
764
|
|
||
Other current assets
|
178
|
|
|
198
|
|
||
Total current assets
|
$
|
3,457
|
|
|
$
|
3,733
|
|
Property and equipment, net of accumulated depreciation of $846 and $841, respectively
|
230
|
|
|
237
|
|
||
Goodwill
|
6,883
|
|
|
6,857
|
|
||
Capitalized software and other intangible assets, net
|
1,247
|
|
|
1,307
|
|
||
Deferred income taxes
|
336
|
|
|
327
|
|
||
Other noncurrent assets, net
|
160
|
|
|
149
|
|
||
Total assets
|
$
|
12,313
|
|
|
$
|
12,610
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
268
|
|
|
$
|
18
|
|
Accounts payable
|
80
|
|
|
91
|
|
||
Accrued salaries, wages and commissions
|
182
|
|
|
256
|
|
||
Accrued expenses and other current liabilities
|
324
|
|
|
326
|
|
||
Deferred revenue (billed or collected)
|
1,909
|
|
|
2,222
|
|
||
Taxes payable, other than income taxes payable
|
36
|
|
|
63
|
|
||
Federal, state and foreign income taxes payable
|
—
|
|
|
30
|
|
||
Total current liabilities
|
$
|
2,799
|
|
|
$
|
3,006
|
|
Long-term debt, net of current portion
|
2,517
|
|
|
2,773
|
|
||
Federal, state and foreign income taxes payable
|
130
|
|
|
131
|
|
||
Deferred income taxes
|
132
|
|
|
119
|
|
||
Deferred revenue (billed or collected)
|
708
|
|
|
794
|
|
||
Other noncurrent liabilities
|
92
|
|
|
98
|
|
||
Total liabilities
|
$
|
6,378
|
|
|
$
|
6,921
|
|
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, no par value, 10,000,000 shares authorized; No shares issued and outstanding
|
$
|
—
|
|
|
$
|
—
|
|
Common stock, $0.10 par value, 1,100,000,000 shares authorized; 589,695,081 and 589,695,081 shares issued; 413,716,991 and 413,409,346 shares outstanding, respectively
|
59
|
|
|
59
|
|
||
Additional paid-in capital
|
3,687
|
|
|
3,702
|
|
||
Retained earnings
|
7,070
|
|
|
6,923
|
|
||
Accumulated other comprehensive loss
|
(351
|
)
|
|
(483
|
)
|
||
Treasury stock, at cost, 175,978,090 and 176,285,735 shares, respectively
|
(4,530
|
)
|
|
(4,512
|
)
|
||
Total stockholders’ equity
|
$
|
5,935
|
|
|
$
|
5,689
|
|
Total liabilities and stockholders’ equity
|
$
|
12,313
|
|
|
$
|
12,610
|
|
|
For the Three
Months Ended September 30, |
|
For the Six
Months Ended September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Subscription and maintenance
|
$
|
826
|
|
|
$
|
824
|
|
|
$
|
1,643
|
|
|
$
|
1,650
|
|
Professional services
|
75
|
|
|
75
|
|
|
150
|
|
|
152
|
|
||||
Software fees and other
|
133
|
|
|
119
|
|
|
266
|
|
|
215
|
|
||||
Total revenue
|
$
|
1,034
|
|
|
$
|
1,018
|
|
|
$
|
2,059
|
|
|
$
|
2,017
|
|
Expenses:
|
|
|
|
|
|
|
|
||||||||
Costs of licensing and maintenance
|
$
|
73
|
|
|
$
|
66
|
|
|
$
|
144
|
|
|
$
|
134
|
|
Cost of professional services
|
74
|
|
|
73
|
|
|
147
|
|
|
148
|
|
||||
Amortization of capitalized software costs
|
67
|
|
|
59
|
|
|
137
|
|
|
125
|
|
||||
Selling and marketing
|
244
|
|
|
235
|
|
|
490
|
|
|
477
|
|
||||
General and administrative
|
97
|
|
|
84
|
|
|
204
|
|
|
172
|
|
||||
Product development and enhancements
|
161
|
|
|
136
|
|
|
319
|
|
|
284
|
|
||||
Depreciation and amortization of other intangible assets
|
27
|
|
|
18
|
|
|
53
|
|
|
38
|
|
||||
Other expenses, net
|
9
|
|
|
27
|
|
|
20
|
|
|
27
|
|
||||
Total expenses before interest and income taxes
|
$
|
752
|
|
|
$
|
698
|
|
|
$
|
1,514
|
|
|
$
|
1,405
|
|
Income before interest and income taxes
|
$
|
282
|
|
|
$
|
320
|
|
|
$
|
545
|
|
|
$
|
612
|
|
Interest expense, net
|
24
|
|
|
14
|
|
|
49
|
|
|
29
|
|
||||
Income before income taxes
|
$
|
258
|
|
|
$
|
306
|
|
|
$
|
496
|
|
|
$
|
583
|
|
Income tax expense
|
74
|
|
|
94
|
|
|
134
|
|
|
173
|
|
||||
Net income
|
$
|
184
|
|
|
$
|
212
|
|
|
$
|
362
|
|
|
$
|
410
|
|
|
|
|
|
|
|
|
|
||||||||
Basic income per common share
|
$
|
0.44
|
|
|
$
|
0.50
|
|
|
$
|
0.86
|
|
|
$
|
0.98
|
|
Basic weighted average shares used in computation
|
415
|
|
|
414
|
|
|
415
|
|
|
414
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Diluted income per common share
|
$
|
0.44
|
|
|
$
|
0.50
|
|
|
$
|
0.86
|
|
|
$
|
0.98
|
|
Diluted weighted average shares used in computation
|
416
|
|
|
415
|
|
|
416
|
|
|
415
|
|
|
For the Three
Months Ended September 30, |
|
For the Six
Months Ended September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income
|
$
|
184
|
|
|
$
|
212
|
|
|
$
|
362
|
|
|
$
|
410
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
48
|
|
|
10
|
|
|
132
|
|
|
(19
|
)
|
||||
Total other comprehensive income (loss)
|
$
|
48
|
|
|
$
|
10
|
|
|
$
|
132
|
|
|
$
|
(19
|
)
|
Comprehensive income
|
$
|
232
|
|
|
$
|
222
|
|
|
$
|
494
|
|
|
$
|
391
|
|
|
For the Six
Months Ended September 30, |
||||||
|
2017
|
|
2016
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
362
|
|
|
$
|
410
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
190
|
|
|
163
|
|
||
Deferred income taxes
|
(23
|
)
|
|
(11
|
)
|
||
Provision for bad debts
|
2
|
|
|
2
|
|
||
Share-based compensation expense
|
61
|
|
|
54
|
|
||
Other non-cash items
|
2
|
|
|
3
|
|
||
Foreign currency transaction losses (gains)
|
9
|
|
|
(1
|
)
|
||
Changes in other operating assets and liabilities, net of effect of acquisitions:
|
|
|
|
||||
Decrease in trade accounts receivable
|
317
|
|
|
176
|
|
||
Decrease in deferred revenue
|
(460
|
)
|
|
(562
|
)
|
||
Decrease in taxes payable, net
|
(58
|
)
|
|
(82
|
)
|
||
Increase in accounts payable, accrued expenses and other
|
11
|
|
|
19
|
|
||
Decrease in accrued salaries, wages and commissions
|
(81
|
)
|
|
(47
|
)
|
||
Changes in other operating assets and liabilities, net
|
3
|
|
|
17
|
|
||
Net cash provided by operating activities
|
$
|
335
|
|
|
$
|
141
|
|
Investing activities:
|
|
|
|
||||
Acquisitions of businesses, net of cash acquired, and purchased software
|
$
|
(15
|
)
|
|
$
|
(1
|
)
|
Purchases of property and equipment
|
(22
|
)
|
|
(16
|
)
|
||
Other investing activities
|
(1
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
$
|
(38
|
)
|
|
$
|
(17
|
)
|
Financing activities:
|
|
|
|
||||
Dividends paid
|
$
|
(215
|
)
|
|
$
|
(214
|
)
|
Purchases of common stock
|
(90
|
)
|
|
(100
|
)
|
||
Notional pooling borrowings
|
1,173
|
|
|
467
|
|
||
Notional pooling repayments
|
(1,204
|
)
|
|
(456
|
)
|
||
Debt repayments
|
(9
|
)
|
|
(4
|
)
|
||
Debt issuance costs
|
(3
|
)
|
|
—
|
|
||
Exercise of common stock options
|
5
|
|
|
22
|
|
||
Payments related to tax withholding for share-based compensation
|
(35
|
)
|
|
(34
|
)
|
||
Other financing activities
|
(3
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
$
|
(381
|
)
|
|
$
|
(319
|
)
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
136
|
|
|
(32
|
)
|
||
Increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
52
|
|
|
$
|
(227
|
)
|
Cash, cash equivalents and restricted cash at beginning of period
|
2,772
|
|
|
2,813
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
2,824
|
|
|
$
|
2,586
|
|
(dollars in millions)
|
Automic
|
|
Veracode
|
|
Estimated
Useful Life
|
||||
Finite-lived intangible assets
(1)
|
$
|
174
|
|
|
$
|
99
|
|
|
2-12 years
|
Purchased software
|
273
|
|
|
240
|
|
|
1-8 years
|
||
Goodwill
|
312
|
|
|
411
|
|
|
Indefinite
|
||
Deferred tax liabilities, net
|
(115
|
)
|
|
(108
|
)
|
|
—
|
||
Other assets net of other liabilities assumed
(2)
|
31
|
|
|
(24
|
)
|
|
—
|
||
Purchase price
|
$
|
675
|
|
|
$
|
618
|
|
|
|
(1)
|
Includes customer relationships and trade names.
|
(2)
|
Includes approximately
$34 million
and
$16 million
of cash acquired from Automic and Veracode, respectively.
|
|
Three Months Ended September 30, 2016
|
|
Six Months Ended September 30, 2016
|
||||
(in millions, except per share amounts)
|
unaudited
|
||||||
Total revenue
|
$
|
1,069
|
|
|
$
|
2,117
|
|
Net income
|
$
|
184
|
|
|
$
|
346
|
|
Basic income per common share
|
$
|
0.44
|
|
|
$
|
0.82
|
|
Diluted income per common share
|
$
|
0.44
|
|
|
$
|
0.82
|
|
|
At September 30, 2017
|
||||||||||||||||||
|
Gross
Amortizable
Assets
|
|
Less: Fully
Amortized
Assets
|
|
Remaining
Amortizable
Assets
|
|
Accumulated
Amortization
on Remaining
Amortizable
Assets
|
|
Net
Assets
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
6,560
|
|
|
$
|
4,909
|
|
|
$
|
1,651
|
|
|
$
|
778
|
|
|
$
|
873
|
|
Internally developed software products
|
1,467
|
|
|
1,287
|
|
|
180
|
|
|
154
|
|
|
26
|
|
|||||
Other intangible assets
|
1,219
|
|
|
824
|
|
|
395
|
|
|
47
|
|
|
348
|
|
|||||
Total capitalized software and other intangible assets
|
$
|
9,246
|
|
|
$
|
7,020
|
|
|
$
|
2,226
|
|
|
$
|
979
|
|
|
$
|
1,247
|
|
|
At March 31, 2017
|
||||||||||||||||||
|
Gross
Amortizable
Assets
|
|
Less: Fully
Amortized
Assets
|
|
Remaining
Amortizable
Assets
|
|
Accumulated
Amortization
on Remaining
Amortizable
Assets
|
|
Net
Assets
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
6,496
|
|
|
$
|
4,914
|
|
|
$
|
1,582
|
|
|
$
|
667
|
|
|
$
|
915
|
|
Internally developed software products
|
1,467
|
|
|
1,029
|
|
|
438
|
|
|
391
|
|
|
47
|
|
|||||
Other intangible assets
|
1,193
|
|
|
812
|
|
|
381
|
|
|
36
|
|
|
345
|
|
|||||
Total capitalized software and other intangible assets
|
$
|
9,156
|
|
|
$
|
6,755
|
|
|
$
|
2,401
|
|
|
$
|
1,094
|
|
|
$
|
1,307
|
|
|
Year Ended March 31,
|
||||||||||||||||||
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Purchased software products
|
$
|
236
|
|
|
$
|
185
|
|
|
$
|
161
|
|
|
$
|
117
|
|
|
$
|
109
|
|
Internally developed software products
|
37
|
|
|
9
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||
Other intangible assets
|
41
|
|
|
40
|
|
|
36
|
|
|
36
|
|
|
35
|
|
|||||
Total
|
$
|
314
|
|
|
$
|
234
|
|
|
$
|
198
|
|
|
$
|
153
|
|
|
$
|
144
|
|
(in millions)
|
Mainframe Solutions
|
|
Enterprise Solutions
|
|
Services
|
|
Total
|
||||||||
Balance at March 31, 2017
|
$
|
4,178
|
|
|
$
|
2,598
|
|
|
$
|
81
|
|
|
$
|
6,857
|
|
Acquisitions
(1)
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(10
|
)
|
||||
Foreign currency translation adjustment
|
—
|
|
|
36
|
|
|
—
|
|
|
36
|
|
||||
Balance at September 30, 2017
|
$
|
4,178
|
|
|
$
|
2,624
|
|
|
$
|
81
|
|
|
$
|
6,883
|
|
(1)
|
Acquisitions amount relates to purchase price allocation adjustments that occurred during the
six
months ended
September 30, 2017
.
|
|
September 30,
2017 |
|
March 31,
2017 |
||||
|
(in millions)
|
||||||
Current:
|
|
|
|
||||
Subscription and maintenance
|
$
|
1,635
|
|
|
$
|
1,948
|
|
Professional services
|
141
|
|
|
135
|
|
||
Software fees and other
|
133
|
|
|
139
|
|
||
Total deferred revenue (billed or collected) – current
|
$
|
1,909
|
|
|
$
|
2,222
|
|
Noncurrent:
|
|
|
|
||||
Subscription and maintenance
|
$
|
683
|
|
|
$
|
769
|
|
Professional services
|
19
|
|
|
19
|
|
||
Software fees and other
|
6
|
|
|
6
|
|
||
Total deferred revenue (billed or collected) – noncurrent
|
$
|
708
|
|
|
$
|
794
|
|
Total deferred revenue (billed or collected)
|
$
|
2,617
|
|
|
$
|
3,016
|
|
|
Amount of Net Loss Recognized in the Condensed Consolidated Statements of Operations
|
||||||||||||||
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
(in millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Other expenses, net – foreign currency contracts
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
8
|
|
|
$
|
6
|
|
|
At September 30, 2017
|
|
At March 31, 2017
|
||||||||||||||||||||
|
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)
|
$
|
971
|
|
|
$
|
—
|
|
|
$
|
971
|
|
|
$
|
1,077
|
|
|
$
|
—
|
|
|
$
|
1,077
|
|
Foreign exchange derivatives
(2)
|
—
|
|
|
7
|
|
|
7
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||||
Total assets
|
$
|
971
|
|
|
$
|
7
|
|
|
$
|
978
|
|
|
$
|
1,077
|
|
|
$
|
2
|
|
|
$
|
1,079
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange derivatives
(2)
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
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 E, “Derivatives” for additional information.
|
|
At September 30, 2017
|
|
At March 31, 2017
|
||||||||||||
(in millions)
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Total debt
(1)
|
$
|
2,785
|
|
|
$
|
2,889
|
|
|
$
|
2,791
|
|
|
$
|
2,903
|
|
Facility exit reserves
(2)
|
$
|
9
|
|
|
$
|
10
|
|
|
$
|
11
|
|
|
$
|
12
|
|
(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, 2017
and
March 31, 2017
. At
September 30, 2017
and
March 31, 2017
, the facility exit reserves included carrying values of approximately
$2 million
and
$3 million
, respectively, in “Accrued expenses and other current liabilities” and approximately
$7 million
and
$8 million
, respectively, in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3).
|
Declaration Date
|
|
Dividend Per Share
|
|
Record Date
|
|
Total Amount
|
|
Payment Date
|
May 9, 2017
|
|
$0.255
|
|
May 25, 2017
|
|
$107
|
|
June 13, 2017
|
August 9, 2017
|
|
$0.255
|
|
August 24, 2017
|
|
$108
|
|
September 12, 2017
|
Declaration Date
|
|
Dividend Per Share
|
|
Record Date
|
|
Total Amount
|
|
Payment Date
|
May 4, 2016
|
|
$0.255
|
|
May 26, 2016
|
|
$107
|
|
June 14, 2016
|
August 3, 2016
|
|
$0.255
|
|
August 25, 2016
|
|
$107
|
|
September 13, 2016
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions, except per share amounts)
|
||||||||||||||
Basic income per common share:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
184
|
|
|
$
|
212
|
|
|
$
|
362
|
|
|
$
|
410
|
|
Less: Net income allocable to participating securities
|
(3
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
(5
|
)
|
||||
Net income allocable to common shares
|
$
|
181
|
|
|
$
|
209
|
|
|
$
|
357
|
|
|
$
|
405
|
|
Weighted average common shares outstanding
|
415
|
|
|
414
|
|
|
415
|
|
|
414
|
|
||||
Basic income per common share
|
$
|
0.44
|
|
|
$
|
0.50
|
|
|
$
|
0.86
|
|
|
$
|
0.98
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted income per common share:
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
184
|
|
|
$
|
212
|
|
|
$
|
362
|
|
|
$
|
410
|
|
Less: Net income allocable to participating securities
|
(3
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
(5
|
)
|
||||
Net income allocable to common shares
|
$
|
181
|
|
|
$
|
209
|
|
|
$
|
357
|
|
|
$
|
405
|
|
Weighted average shares outstanding and common share equivalents:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
415
|
|
|
414
|
|
|
415
|
|
|
414
|
|
||||
Weighted average effect of share-based payment awards
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Denominator in calculation of diluted income per share
|
416
|
|
|
415
|
|
|
416
|
|
|
415
|
|
||||
Diluted income per common share
|
$
|
0.44
|
|
|
$
|
0.50
|
|
|
$
|
0.86
|
|
|
$
|
0.98
|
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions)
|
|
|
|
|
||||||||||
Costs of licensing and maintenance
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
4
|
|
|
$
|
3
|
|
Cost of professional services
|
—
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
Selling and marketing
|
10
|
|
|
9
|
|
|
20
|
|
|
19
|
|
||||
General and administrative
|
11
|
|
|
8
|
|
|
23
|
|
|
19
|
|
||||
Product development and enhancements
|
6
|
|
|
6
|
|
|
13
|
|
|
11
|
|
||||
Share-based compensation expense before tax
|
$
|
29
|
|
|
$
|
25
|
|
|
$
|
61
|
|
|
$
|
54
|
|
Income tax benefit
|
(9
|
)
|
|
(8
|
)
|
|
(20
|
)
|
|
(18
|
)
|
||||
Net share-based compensation expense
|
$
|
20
|
|
|
$
|
17
|
|
|
$
|
41
|
|
|
$
|
36
|
|
|
Unrecognized Share-Based Compensation Costs
|
|
Weighted Average Period Expected to be Recognized
|
||
|
(in millions)
|
|
(in years)
|
||
Stock option awards
|
$
|
6
|
|
|
2.1
|
Restricted stock units (RSUs)
|
25
|
|
|
2.1
|
|
Restricted stock awards (RSAs)
|
92
|
|
|
2.1
|
|
Performance share units
|
45
|
|
|
2.6
|
|
Total unrecognized share-based compensation costs
|
$
|
168
|
|
|
2.2
|
|
Six Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
Weighted average fair value
|
$
|
4.72
|
|
|
$
|
4.41
|
|
Dividend yield
|
3.17
|
%
|
|
3.57
|
%
|
||
Expected volatility factor
(1)
|
21
|
%
|
|
22
|
%
|
||
Risk-free interest rate
(2)
|
2.1
|
%
|
|
1.5
|
%
|
||
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, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(shares in millions)
|
||||||||||||||
RSAs:
|
|
|
|
|
|
|
|
||||||||
Shares
|
—
|
|
(3)
|
—
|
|
(3)
|
2.9
|
|
|
2.9
|
|
||||
Weighted average grant date fair value
(1)
|
$
|
32.98
|
|
|
$
|
34.31
|
|
|
$
|
31.70
|
|
|
$
|
31.55
|
|
RSUs:
|
|
|
|
|
|
|
|
||||||||
Shares
|
—
|
|
|
—
|
|
(3)
|
1.1
|
|
|
1.0
|
|
||||
Weighted average grant date fair value
(2)
|
$
|
—
|
|
|
$
|
31.82
|
|
|
$
|
30.35
|
|
|
$
|
30.16
|
|
(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, |
||||||
|
2017
|
|
2016
|
||||
|
(in millions)
|
||||||
Total borrowings outstanding at beginning of period
(1)
|
$
|
137
|
|
|
$
|
139
|
|
Borrowings
|
1,173
|
|
|
467
|
|
||
Repayments
|
(1,204
|
)
|
|
(456
|
)
|
||
Foreign exchange effect
|
31
|
|
|
(11
|
)
|
||
Total borrowings outstanding at end of period
(1)
|
$
|
137
|
|
|
$
|
139
|
|
(1)
|
Included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.
|
Three Months Ended September 30, 2017
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
|||||||||||||||
Revenue
|
$
|
539
|
|
|
$
|
420
|
|
|
$
|
75
|
|
|
$
|
1,034
|
|
Expenses
|
188
|
|
|
380
|
|
|
74
|
|
|
642
|
|
||||
Segment profit
|
$
|
351
|
|
|
$
|
40
|
|
|
$
|
1
|
|
|
$
|
392
|
|
Segment operating margin
|
65
|
%
|
|
10
|
%
|
|
1
|
%
|
|
38
|
%
|
||||
Depreciation
|
$
|
10
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
17
|
|
(1)
|
Other expenses, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
Six Months Ended September 30, 2017
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
|||||||||||||||
Revenue
|
$
|
1,075
|
|
|
$
|
834
|
|
|
$
|
150
|
|
|
$
|
2,059
|
|
Expenses
|
375
|
|
|
761
|
|
|
148
|
|
|
1,284
|
|
||||
Segment profit
|
$
|
700
|
|
|
$
|
73
|
|
|
$
|
2
|
|
|
$
|
775
|
|
Segment operating margin
|
65
|
%
|
|
9
|
%
|
|
1
|
%
|
|
38
|
%
|
||||
Depreciation
|
$
|
19
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
33
|
|
(1)
|
Other expenses, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
Three Months Ended September 30, 2016
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
|||||||||||||||
Revenue
|
$
|
550
|
|
|
$
|
393
|
|
|
$
|
75
|
|
|
$
|
1,018
|
|
Expenses
|
211
|
|
|
324
|
|
|
73
|
|
|
608
|
|
||||
Segment profit
|
$
|
339
|
|
|
$
|
69
|
|
|
$
|
2
|
|
|
$
|
410
|
|
Segment operating margin
|
62
|
%
|
|
18
|
%
|
|
3
|
%
|
|
40
|
%
|
||||
Depreciation
|
$
|
8
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
14
|
|
(1)
|
Other expenses, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
Six Months Ended September 30, 2016
|
Mainframe
Solutions
|
|
Enterprise
Solutions
|
|
Services
|
|
Total
|
||||||||
(dollars in millions)
|
|||||||||||||||
Revenue
|
$
|
1,101
|
|
|
$
|
764
|
|
|
$
|
152
|
|
|
$
|
2,017
|
|
Expenses
|
419
|
|
|
648
|
|
|
148
|
|
|
1,215
|
|
||||
Segment profit
|
$
|
682
|
|
|
$
|
116
|
|
|
$
|
4
|
|
|
$
|
802
|
|
Segment operating margin
|
62
|
%
|
|
15
|
%
|
|
3
|
%
|
|
40
|
%
|
||||
Depreciation
|
$
|
17
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
29
|
|
(1)
|
Other expenses, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.
|
|
Three Months Ended
September 30, |
|
Six Months Ended
September 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in millions)
|
||||||||||||||
United States
|
$
|
658
|
|
|
$
|
657
|
|
|
$
|
1,315
|
|
|
$
|
1,294
|
|
EMEA
(1)
|
235
|
|
|
219
|
|
|
464
|
|
|
444
|
|
||||
Other
|
141
|
|
|
142
|
|
|
280
|
|
|
279
|
|
||||
Total revenue
|
$
|
1,034
|
|
|
$
|
1,018
|
|
|
$
|
2,059
|
|
|
$
|
2,017
|
|
(1)
|
Consists of Europe, the Middle East and Africa.
|
•
|
Agile Management
enables customers to plan, deliver and manage information technology (IT) and business services for their customers. Our solutions and Agile services enable customers to improve delivery time on projects, reduce costs and optimize resources.
|
•
|
DevOps
is adjacent to Agile Management and is comprised of a range of solutions that allow customers to efficiently deliver and manage applications and IT infrastructure. With our portfolio of solutions, customers can reduce the delivery time of new applications, increase the frequency of new releases and dramatically improve quality. Our solutions enable complete end-to-end automation, which minimizes downtime and accelerates the application delivery process.
|
•
|
Security
includes a comprehensive set of solutions that address the global imperative to minimize the risk of data breaches and alleviate the pressures faced by Chief Information Security Officers (CISOs) as a result of increasing information security regulations. Our solutions facilitate digital transformation by providing secure customer experiences, enabling a collaborative enterprise, empowering a digital workforce and securing the ‘Internet of Things.’ CA’s Security suite simplifies the complexity of managing the trusted digital relationships among people, devices, and applications both on-premise and in the cloud. Our solutions help to eliminate vulnerabilities during the development and deployment chain, which helps to lower cost and improve time-to-market.
|
•
|
DevOps
solutions help customers increase the innovation velocity for mainframe applications and teams. We support agile development processes and modern languages, as well as tools for development, testing and deployment that support collaboration across the software development lifecycle and across mobile to mainframe teams.
|
•
|
Operations Intelligence and Automation
solutions help customers adopt machine learning and bring more intelligence and automation to their mainframe operations. With machine learning, operations teams can proactively prevent problems, fix issues faster and get more done with fewer resources. We provide a unified view of the IBM z Systems performance across the infrastructure stack, including applications, middleware, networks, systems, storage and data.
|
•
|
Security & Compliance
solutions help customers address stringent data security and compliance requirements, such as EU General Data Protection Regulation (GDPR), by finding sensitive data, classifying data for compliance purposes, alerting risks in real-time, and inspecting threats to protect mission-essential data-running 100 percent on the mainframe.
|
•
|
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 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 endow them with the necessary interoperability, resilience and security to operate at scale in the large, heterogeneous IT environments utilized by our customers.
|
•
|
Total revenue
increased
primarily due to an increase in software fees and other revenue. During the
second
quarter of fiscal
2018
, total revenue included
$55 million
from our Automic Holding GmbH (Automic) and Veracode, Inc. (Veracode) acquisitions, which were acquired in the fourth quarter of fiscal 2017. Excluding the revenue generated from our Automic and Veracode acquisitions, total revenue decreased primarily due to a decline in revenue from our Enterprise Solutions products recognized on an upfront basis as well as a decline in Mainframe Solutions revenue. There was a favorable foreign exchange effect of $8 million for the
second
quarter of fiscal
2018
.
|
•
|
Total bookings
decreased
primarily due to a decline in renewal bookings. Excluding our Automic and Veracode acquisitions, total bookings decreased by a percentage in the low teens.
|
•
|
Renewal bookings decreased by a percentage in the mid-single digits primarily due to the decline in Mainframe Solutions renewal bookings, which was attributable to the timing of our renewal portfolio. This decline in Mainframe Solutions renewal bookings was partially offset by renewal bookings associated with our Automic and Veracode acquisitions. Excluding our Automic and Veracode acquisitions, renewal bookings decreased by a percentage in the mid-teens.
|
•
|
Total new product sales increased by a percentage in the mid-single digits due to our Automic and Veracode acquisitions. Excluding our Automic and Veracode acquisitions, total new product sales decreased by approximately 10%.
|
•
|
Mainframe Solutions new product sales increased by a percentage in the low-20s.
|
•
|
Enterprise Solutions new product sales decreased by a percentage in the low single digits. Excluding our Automic and Veracode acquisitions, Enterprise Solutions new product sales decreased by approximately 20% primarily due to a lower level of new product sales not attached to renewal bookings. Enterprise Solutions new product sales performance was negatively affected by certain products that are more mature and not growing, but which generate positive segment operating margin and cash flows from operations.
|
•
|
We expect fiscal 2018 renewal bookings to decrease by a percentage in the high teens compared with fiscal 2017 primarily due to the large system integrator transaction that occurred in the first quarter of fiscal 2017 with an incremental contract value in excess of $475 million.
|
•
|
Operating expenses
increased
primarily due to
$73 million
of costs from our Automic and Veracode acquisitions, which were mainly personnel-related, partially offset by decreases in non-acquisition-related costs, which included legal settlements, and personnel-related, commission and promotion costs.
|
•
|
We anticipate a fiscal
2018
effective tax rate between
28%
and
29%
.
|
•
|
Diluted income per common share
decreased
to
$0.44
from
$0.50
primarily due to an increase in operating costs associated with our Automic and Veracode acquisitions as well as an increase in interest expense associated with our Senior Notes issued during the fourth quarter of fiscal 2017.
|
•
|
Mainframe Solutions revenue
decreased
primarily due to insufficient revenue from prior period new sales to offset the decline in revenue contribution from renewals. Mainframe Solutions operating margin
increased
primarily due to lower expenses as a result of the Mainframe Solutions portion of the litigation settlement costs incurred in the second quarter of fiscal 2017.
|
•
|
Enterprise Solutions revenue
increased
due to revenue generated from our Automic and Veracode acquisitions. Enterprise Solutions operating margin
decreased
primarily due to costs associated with our Automic and Veracode acquisitions, which were mainly personnel-related.
|
•
|
Services revenue was consistent primarily due to professional services revenue generated from our Automic and Veracode acquisitions, offset by a decline in non-acquisition-related professional services engagements. Operating margin for Services was generally consistent compared with the year-ago period.
|
•
|
Net cash provided by operating activities for the
second
quarter of fiscal
2018
was
$37 million
, representing an
increase
of
$90 million
compared with net cash used in operating activities of
$53 million
for the
second
quarter of fiscal
2017
. This
increase
was primarily due to an increase in cash collections from billings of
$68 million
, of which $21 million was from higher single installment collections, and lower cash tax payments of
$31 million
compared with the year-ago period.
|
|
Second Quarter of Fiscal
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|
Percentage Change
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
Total revenue
|
$
|
1,034
|
|
|
$
|
1,018
|
|
|
$
|
16
|
|
|
2
|
%
|
Net income
|
$
|
184
|
|
|
$
|
212
|
|
|
$
|
(28
|
)
|
|
(13
|
)%
|
Net cash provided by (used in) operating activities
(1)
|
$
|
37
|
|
|
$
|
(53
|
)
|
|
$
|
90
|
|
|
170
|
%
|
Total bookings
|
$
|
720
|
|
|
$
|
729
|
|
|
$
|
(9
|
)
|
|
(1
|
)%
|
Subscription and maintenance bookings
|
$
|
492
|
|
|
$
|
531
|
|
|
$
|
(39
|
)
|
|
(7
|
)%
|
Weighted average subscription and maintenance license
agreement duration in years
|
2.79
|
|
|
2.99
|
|
|
(0.20
|
)
|
|
(7
|
)%
|
(1)
|
Net cash used in operating activities for the
second
quarter of fiscal 2017 was adjusted to reflect the adoption of Accounting Standards Update No. 2016-09 (ASU 2016-09),
Improvements to Employee Share-Based Payment Accounting
(Topic 718). Refer to Note A, “Accounting Policies” in the Notes to the Condensed Consolidated Financial Statements for further details.
|
|
First Half of Fiscal
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Change
|
|
Percentage Change
|
|||||||
|
(dollars in millions)
|
|
|
|||||||||||
Total revenue
|
$
|
2,059
|
|
|
$
|
2,017
|
|
|
$
|
42
|
|
|
2
|
%
|
Net income
|
$
|
362
|
|
|
$
|
410
|
|
|
$
|
(48
|
)
|
|
(12
|
)%
|
Net cash provided by operating activities
(1)
|
$
|
335
|
|
|
$
|
141
|
|
|
$
|
194
|
|
|
138
|
%
|
Total bookings
|
$
|
1,423
|
|
|
$
|
2,082
|
|
|
$
|
(659
|
)
|
|
(32
|
)%
|
Subscription and maintenance bookings
|
$
|
967
|
|
|
$
|
1,704
|
|
|
$
|
(737
|
)
|
|
(43
|
)%
|
Weighted average subscription and maintenance license
agreement duration in years
|
2.84
|
|
|
4.18
|
|
|
(1.34
|
)
|
|
(32
|
)%
|
(1)
|
Net cash provided by operating activities for the
first half
quarter of fiscal 2017 was adjusted to reflect the adoption of Accounting Standards Update No. 2016-09 (ASU 2016-09),
Improvements to Employee Share-Based Payment Accounting
(Topic 718). Refer to Note A, “Accounting Policies” in the Notes to the Condensed Consolidated Financial Statements for further details.
|
|
September 30, 2017
|
|
March 31, 2017
|
|
Change
From Fiscal
Year End
|
|
September 30, 2016
|
|
Change
From Prior
Year Quarter
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
2,822
|
|
|
$
|
2,771
|
|
|
$
|
51
|
|
|
$
|
2,585
|
|
|
$
|
237
|
|
Total debt
|
$
|
2,785
|
|
|
$
|
2,791
|
|
|
$
|
(6
|
)
|
|
$
|
1,950
|
|
|
$
|
835
|
|
Total expected future cash collections
from committed contracts
(1)
|
$
|
4,853
|
|
|
$
|
5,304
|
|
|
$
|
(451
|
)
|
|
$
|
4,933
|
|
|
$
|
(80
|
)
|
Total revenue backlog
(1)
|
$
|
7,013
|
|
|
$
|
7,556
|
|
|
$
|
(543
|
)
|
|
$
|
6,858
|
|
|
$
|
155
|
|
Total current revenue backlog
(1)
|
$
|
3,163
|
|
|
$
|
3,240
|
|
|
$
|
(77
|
)
|
|
$
|
2,945
|
|
|
$
|
218
|
|
(1)
|
Refer to the discussion in the “Liquidity and Capital Resources” section of this MD&A for additional information on expected future cash collections from committed contracts and revenue backlog.
|
|
Second Quarter Comparison Fiscal 2018 Versus Fiscal 2017
|
|||||||||||||||||||
|
|
|
|
|
Dollar Change
|
|
Percentage Change
|
|
Percentage of
Total Revenue
|
|||||||||||
|
2018
|
|
2017
|
|
2018 / 2017
|
|
2018 / 2017
|
|
2018
|
|
2017
|
|||||||||
|
(dollars in millions)
|
|
|
|
|
|
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Subscription and maintenance
|
$
|
826
|
|
|
$
|
824
|
|
|
$
|
2
|
|
|
—
|
%
|
|
80
|
%
|
|
81
|
%
|
Professional services
|
75
|
|
|
75
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|||
Software fees and other
|
133
|
|
|
119
|
|
|
14
|
|
|
12
|
|
|
13
|
|
|
12
|
|
|||
Total revenue
|
$
|
1,034
|
|
|
$
|
1,018
|
|
|
$
|
16
|
|
|
2
|
%
|
|
100
|
%
|
|
100
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Costs of licensing and maintenance
|
$
|
73
|
|
|
$
|
66
|
|
|
$
|
7
|
|
|
11
|
%
|
|
7
|
%
|
|
6
|
%
|
Cost of professional services
|
74
|
|
|
73
|
|
|
1
|
|
|
1
|
|
|
7
|
|
|
7
|
|
|||
Amortization of capitalized software costs
|
67
|
|
|
59
|
|
|
8
|
|
|
14
|
|
|
6
|
|
|
6
|
|
|||
Selling and marketing
|
244
|
|
|
235
|
|
|
9
|
|
|
4
|
|
|
24
|
|
|
23
|
|
|||
General and administrative
|
97
|
|
|
84
|
|
|
13
|
|
|
15
|
|
|
9
|
|
|
8
|
|
|||
Product development and enhancements
|
161
|
|
|
136
|
|
|
25
|
|
|
18
|
|
|
16
|
|
|
13
|
|
|||
Depreciation and amortization of other intangible assets
|
27
|
|
|
18
|
|
|
9
|
|
|
50
|
|
|
3
|
|
|
2
|
|
|||
Other expenses, net
|
9
|
|
|
27
|
|
|
(18
|
)
|
|
(67
|
)
|
|
1
|
|
|
3
|
|
|||
Total expenses before interest and income taxes
|
$
|
752
|
|
|
$
|
698
|
|
|
$
|
54
|
|
|
8
|
%
|
|
73
|
%
|
|
69
|
%
|
Income before interest and income taxes
|
$
|
282
|
|
|
$
|
320
|
|
|
$
|
(38
|
)
|
|
(12
|
)%
|
|
27
|
%
|
|
31
|
%
|
Interest expense, net
|
24
|
|
|
14
|
|
|
10
|
|
|
71
|
|
|
2
|
|
|
1
|
|
|||
Income before income taxes
|
$
|
258
|
|
|
$
|
306
|
|
|
$
|
(48
|
)
|
|
(16
|
)%
|
|
25
|
%
|
|
30
|
%
|
Income tax expense
|
74
|
|
|
94
|
|
|
(20
|
)
|
|
(21
|
)
|
|
7
|
|
|
9
|
|
|||
Net income
|
$
|
184
|
|
|
$
|
212
|
|
|
$
|
(28
|
)
|
|
(13
|
)%
|
|
18
|
%
|
|
21
|
%
|
|
First Half Comparison Fiscal 2018 Versus Fiscal 2017
|
|||||||||||||||||||
|
|
|
|
|
Dollar Change
|
|
Percentage Change
|
|
Percentage of
Total Revenue
|
|||||||||||
|
2018
|
|
2017
|
|
2018 / 2017
|
|
2018 / 2017
|
|
2018
|
|
2017
|
|||||||||
|
(dollars in millions)
|
|
|
|
|
|
|
|||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Subscription and maintenance
|
$
|
1,643
|
|
|
$
|
1,650
|
|
|
$
|
(7
|
)
|
|
—
|
%
|
|
80
|
%
|
|
82
|
%
|
Professional services
|
150
|
|
|
152
|
|
|
(2
|
)
|
|
(1
|
)
|
|
7
|
|
|
7
|
|
|||
Software fees and other
|
266
|
|
|
215
|
|
|
51
|
|
|
24
|
|
|
13
|
|
|
11
|
|
|||
Total revenue
|
$
|
2,059
|
|
|
$
|
2,017
|
|
|
$
|
42
|
|
|
2
|
%
|
|
100
|
%
|
|
100
|
%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Costs of licensing and maintenance
|
$
|
144
|
|
|
$
|
134
|
|
|
$
|
10
|
|
|
7
|
%
|
|
7
|
%
|
|
7
|
%
|
Cost of professional services
|
147
|
|
|
148
|
|
|
(1
|
)
|
|
(1
|
)
|
|
7
|
|
|
7
|
|
|||
Amortization of capitalized software costs
|
137
|
|
|
125
|
|
|
12
|
|
|
10
|
|
|
7
|
|
|
6
|
|
|||
Selling and marketing
|
490
|
|
|
477
|
|
|
13
|
|
|
3
|
|
|
24
|
|
|
24
|
|
|||
General and administrative
|
204
|
|
|
172
|
|
|
32
|
|
|
19
|
|
|
10
|
|
|
9
|
|
|||
Product development and enhancements
|
319
|
|
|
284
|
|
|
35
|
|
|
12
|
|
|
15
|
|
|
14
|
|
|||
Depreciation and amortization of other intangible assets
|
53
|
|
|
38
|
|
|
15
|
|
|
39
|
|
|
3
|
|
|
2
|
|
|||
Other expenses, net
|
20
|
|
|
27
|
|
|
(7
|
)
|
|
(26
|
)
|
|
1
|
|
|
1
|
|
|||
Total expenses before interest and income taxes
|
$
|
1,514
|
|
|
$
|
1,405
|
|
|
$
|
109
|
|
|
8
|
%
|
|
74
|
%
|
|
70
|
%
|
Income before interest and income taxes
|
$
|
545
|
|
|
$
|
612
|
|
|
$
|
(67
|
)
|
|
(11
|
)%
|
|
26
|
%
|
|
30
|
%
|
Interest expense, net
|
49
|
|
|
29
|
|
|
20
|
|
|
69
|
|
|
2
|
|
|
1
|
|
|||
Income before income taxes
|
$
|
496
|
|
|
$
|
583
|
|
|
$
|
(87
|
)
|
|
(15
|
)%
|
|
24
|
%
|
|
29
|
%
|
Income tax expense
|
134
|
|
|
173
|
|
|
(39
|
)
|
|
(23
|
)
|
|
7
|
|
|
9
|
|
|||
Net income
|
$
|
362
|
|
|
$
|
410
|
|
|
$
|
(48
|
)
|
|
(12
|
)%
|
|
18
|
%
|
|
20
|
%
|
|
Second Quarter Comparison Fiscal 2018 Versus Fiscal 2017
|
|||||||||||||||||||
|
2018
|
|
Percentage of Total Revenue
|
|
2017
|
|
Percentage of Total Revenue
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
United States
|
$
|
658
|
|
|
64
|
%
|
|
$
|
657
|
|
|
65
|
%
|
|
$
|
1
|
|
|
—
|
%
|
International
|
376
|
|
|
36
|
|
|
361
|
|
|
35
|
|
|
15
|
|
|
4
|
|
|||
Total Revenue
|
$
|
1,034
|
|
|
100
|
%
|
|
$
|
1,018
|
|
|
100
|
%
|
|
$
|
16
|
|
|
2
|
%
|
|
First Half Comparison Fiscal 2018 Versus Fiscal 2017
|
|||||||||||||||||||
|
2018
|
|
Percentage of Total Revenue
|
|
2017
|
|
Percentage of Total Revenue
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
(dollars in millions)
|
|||||||||||||||||||
United States
|
$
|
1,315
|
|
|
64
|
%
|
|
$
|
1,294
|
|
|
64
|
%
|
|
$
|
21
|
|
|
2
|
%
|
International
|
744
|
|
|
36
|
|
|
723
|
|
|
36
|
|
|
21
|
|
|
3
|
|
|||
Total Revenue
|
$
|
2,059
|
|
|
100
|
%
|
|
$
|
2,017
|
|
|
100
|
%
|
|
$
|
42
|
|
|
2
|
%
|
|
Second Quarter
Fiscal 2018 |
|
Second Quarter
Fiscal 2017 |
||||
|
(dollars in millions)
|
||||||
Legal settlements
|
$
|
—
|
|
|
$
|
27
|
|
Losses from foreign exchange derivative contracts
|
4
|
|
|
3
|
|
||
Losses from foreign exchange rate fluctuations
|
5
|
|
|
—
|
|
||
Other miscellaneous items
|
—
|
|
|
(3
|
)
|
||
Total
|
$
|
9
|
|
|
$
|
27
|
|
|
First Half
Fiscal 2018 |
|
First Half
Fiscal 2017 |
||||
|
(dollars in millions)
|
||||||
Legal settlements
|
$
|
2
|
|
|
$
|
27
|
|
Losses from foreign exchange derivative contracts
|
8
|
|
|
6
|
|
||
Losses (gains) from foreign exchange rate fluctuations
|
10
|
|
|
(3
|
)
|
||
Other miscellaneous items
|
—
|
|
|
(3
|
)
|
||
Total
|
$
|
20
|
|
|
$
|
27
|
|
Mainframe Solutions
|
Second Quarter
Fiscal 2018 |
|
Second Quarter
Fiscal 2017 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
539
|
|
|
$
|
550
|
|
Expenses
|
188
|
|
|
211
|
|
||
Segment profit
|
$
|
351
|
|
|
$
|
339
|
|
Segment operating margin
|
65
|
%
|
|
62
|
%
|
Mainframe Solutions
|
First Half
Fiscal 2018 |
|
First Half
Fiscal 2017 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
1,075
|
|
|
$
|
1,101
|
|
Expenses
|
375
|
|
|
419
|
|
||
Segment profit
|
$
|
700
|
|
|
$
|
682
|
|
Segment operating margin
|
65
|
%
|
|
62
|
%
|
Enterprise Solutions
|
Second Quarter
Fiscal 2018 |
|
Second Quarter
Fiscal 2017 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
420
|
|
|
$
|
393
|
|
Expenses
|
380
|
|
|
324
|
|
||
Segment profit
|
$
|
40
|
|
|
$
|
69
|
|
Segment operating margin
|
10
|
%
|
|
18
|
%
|
Enterprise Solutions
|
First Half
Fiscal 2018 |
|
First Half
Fiscal 2017 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
834
|
|
|
$
|
764
|
|
Expenses
|
761
|
|
|
648
|
|
||
Segment profit
|
$
|
73
|
|
|
$
|
116
|
|
Segment operating margin
|
9
|
%
|
|
15
|
%
|
Services
|
Second Quarter
Fiscal 2018 |
|
Second Quarter
Fiscal 2017 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
75
|
|
|
$
|
75
|
|
Expenses
|
74
|
|
|
73
|
|
||
Segment profit
|
$
|
1
|
|
|
$
|
2
|
|
Segment operating margin
|
1
|
%
|
|
3
|
%
|
Services
|
First Half
Fiscal 2018 |
|
First Half
Fiscal 2017 |
||||
|
(dollars in millions)
|
||||||
Revenue
|
$
|
150
|
|
|
$
|
152
|
|
Expenses
|
148
|
|
|
148
|
|
||
Segment profit
|
$
|
2
|
|
|
$
|
4
|
|
Segment operating margin
|
1
|
%
|
|
3
|
%
|
•
|
Renewal Yield:
For the
second
quarter of fiscal
2018
, our percentage renewal yield was over 90%.
|
•
|
License Agreements over $10 million:
During the
second
quarter of fiscal
2018
, we executed a total of
9
license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of
$175 million
. During the
second
quarter of fiscal
2017
, we executed a total of
11
license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of
$209 million
.
|
•
|
Annualized Subscription and Maintenance Bookings and Weighted Average Subscription and Maintenance License Agreement Duration in Years:
Annualized subscription and maintenance bookings
decreased
from
$178 million
in the
second
quarter of fiscal
2017
to
$176 million
in the
second
quarter of fiscal
2018
. The weighted average subscription and maintenance license agreement duration in years
decreased
from
2.99
in the
second
quarter of fiscal
2017
to
2.79
in the
second
quarter of fiscal
2018
. Although each contract is subject to terms negotiated by the respective parties, we do not expect the weighted average subscription and maintenance agreement duration in years to change materially from historical levels.
|
•
|
Within Total New Product Sales:
|
◦
|
Mainframe Solutions New Product Sales:
For the
second
quarter of fiscal
2018
, Mainframe Solutions new product sales increased by a percentage in the low-20s compared with the
second
quarter of fiscal
2017
. Overall, we expect our Mainframe Solutions revenue to decline by a percentage in the low single digits over the medium term, which we believe is in line with the mainframe market.
|
◦
|
Enterprise Solutions New Product Sales:
For the
second
quarter of fiscal
2018
, Enterprise Solutions new product sales decreased by a percentage in the low single digits compared with the
second
quarter of fiscal
2017
. Excluding our Automic and Veracode acquisitions, Enterprise Solutions new product sales decreased by approximately 20% primarily due to a lower level of new product sales not attached to renewal bookings. Enterprise Solutions new product sales performance was negatively affected by certain products that are more mature and not growing, but which generate positive segment operating margin and cash flows from operations.
|
•
|
License Agreements over $10 million:
During the
first half
of fiscal
2018
, we executed a total of
18
license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of
$351 million
. During the
first half
of fiscal
2017
, we executed a total of
25
license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of
$1,119 million
. As described above, the decrease in the
first half
of fiscal 2018 compared with the
first half
of fiscal 2017 was primarily attributable to a decline in renewal bookings, which included the aforementioned large system integrator transaction.
|
•
|
Annualized Subscription and Maintenance Bookings and Weighted Average Subscription and Maintenance License Agreement Duration in Years:
Annualized subscription and maintenance bookings
decreased
from
$408 million
in the
first half
of fiscal
2017
to
$340 million
in the
first half
of fiscal
2018
. The weighted average subscription and maintenance license agreement duration in years
decreased
from
4.18
in the
first half
of fiscal
2017
to
2.84
in the
first half
of fiscal
2018
. These decreases were primarily due to the aforementioned large system integrator transaction.
|
•
|
Full Year Fiscal 2018 Outlook:
We expect fiscal
2018
renewal bookings to decrease by a percentage in the high teens compared with fiscal
2017
primarily due to the aforementioned large system integrator transaction that occurred in the first quarter of fiscal 2017.
|
•
|
Within Total New Product Sales:
|
◦
|
Mainframe Solutions New Product Sales:
For the
first half
of fiscal
2018
, Mainframe Solutions new product sales decreased by approximately 30% compared with the
first half
of fiscal
2017
primarily due to a lower level of renewals, which included the aforementioned large system integrator transaction that occurred in the first quarter of fiscal 2017. The lower level of renewals is primarily attributable to the timing of our renewal portfolio since renewals typically provide an increased opportunity to generate new product sales.
|
◦
|
Enterprise Solutions New Product Sales:
For the
first half
of fiscal
2018
, Enterprise Solutions new product sales decreased by a percentage in the low single digits compared with the
first half
of fiscal
2017
. Excluding the aforementioned large system integrator transaction, Enterprise Solutions new product sales increased by a percentage in the low teens primarily due to our Automic and Veracode acquisitions. Excluding the aforementioned large system integrator transaction and Enterprise Solutions new product sales from our Automic and Veracode acquisitions, Enterprise Solutions new product sales decreased by a percentage in the low teens primarily due to a lower level of renewal bookings, which was attributable to the timing of our renewal portfolio. Typically, renewals provide an increased opportunity to generate new product sales. Enterprise Solutions new product sales performance was negatively affected by certain products that are more mature and not growing, but which generate positive segment operating margin and cash flows from operations.
|
(in millions)
|
September 30,
2017 |
|
March 31,
2017 |
|
September 30,
2016 |
||||||
Billings backlog:
|
|
|
|
|
|
||||||
Amounts to be billed – current
|
$
|
1,893
|
|
|
$
|
1,941
|
|
|
$
|
1,821
|
|
Amounts to be billed – noncurrent
|
2,503
|
|
|
2,599
|
|
|
2,667
|
|
|||
Total billings backlog
|
$
|
4,396
|
|
|
$
|
4,540
|
|
|
$
|
4,488
|
|
|
|
|
|
|
|
||||||
Revenue backlog:
|
|
|
|
|
|
||||||
Revenue to be recognized within the next 12 months – current
|
$
|
3,163
|
|
|
$
|
3,240
|
|
|
$
|
2,945
|
|
Revenue to be recognized beyond the next 12 months – noncurrent
|
3,850
|
|
|
4,316
|
|
|
3,913
|
|
|||
Total revenue backlog
|
$
|
7,013
|
|
|
$
|
7,556
|
|
|
$
|
6,858
|
|
|
|
|
|
|
|
||||||
Deferred revenue (billed or collected)
|
$
|
2,617
|
|
|
$
|
3,016
|
|
|
$
|
2,370
|
|
Total billings backlog
|
4,396
|
|
|
4,540
|
|
|
4,488
|
|
|||
Total revenue backlog
|
$
|
7,013
|
|
|
$
|
7,556
|
|
|
$
|
6,858
|
|
(in millions)
|
September 30,
2017 |
|
March 31,
2017 |
|
September 30,
2016 |
||||||
Expected future cash collections:
|
|
|
|
|
|
||||||
Total billings backlog
|
$
|
4,396
|
|
|
$
|
4,540
|
|
|
$
|
4,488
|
|
Trade accounts receivable, net
|
457
|
|
|
764
|
|
|
445
|
|
|||
Total expected future cash collections
|
$
|
4,853
|
|
|
$
|
5,304
|
|
|
$
|
4,933
|
|
|
Second Quarter of Fiscal
|
|
Change
|
||||||||
|
2018
|
|
2017
|
|
2018 / 2017
|
||||||
|
(in millions)
|
||||||||||
Cash collections from billings
(1)
|
$
|
803
|
|
|
$
|
735
|
|
|
$
|
68
|
|
Vendor disbursements and payroll
(1)
|
(631
|
)
|
|
(631
|
)
|
|
—
|
|
|||
Income tax payments, net
|
(109
|
)
|
|
(140
|
)
|
|
31
|
|
|||
Other disbursements, net
(2)
|
(26
|
)
|
|
(17
|
)
|
|
(9
|
)
|
|||
Net cash provided by (used in) operating activities
(3)
|
$
|
37
|
|
|
$
|
(53
|
)
|
|
$
|
90
|
|
(1)
|
Amounts include value added taxes and sales taxes.
|
(2)
|
Amounts include payments associated with interest, prior period restructuring plans and miscellaneous receipts and disbursements.
|
(3)
|
Net cash used in operating activities for the
second
quarter of fiscal 2017 was adjusted to reflect the adoption of ASU 2016-09. Refer to Note A, “Accounting Policies” in the Notes to the Condensed Consolidated Financial Statements for further details.
|
|
First Half of Fiscal
|
|
Change
|
||||||||
|
2018
|
|
2017
|
|
2018 / 2017
|
||||||
|
(in millions)
|
||||||||||
Cash collections from billings
(1)
|
$
|
2,014
|
|
|
$
|
1,737
|
|
|
$
|
277
|
|
Vendor disbursements and payroll
(1)
|
(1,478
|
)
|
|
(1,359
|
)
|
|
(119
|
)
|
|||
Income tax payments, net
|
(156
|
)
|
|
(202
|
)
|
|
46
|
|
|||
Other disbursements, net
(2)
|
(45
|
)
|
|
(35
|
)
|
|
(10
|
)
|
|||
Net cash provided by operating activities
(3)
|
$
|
335
|
|
|
$
|
141
|
|
|
$
|
194
|
|
(1)
|
Amounts include value added taxes and sales taxes.
|
(2)
|
Amounts include payments associated with interest, prior period restructuring plans and miscellaneous receipts and disbursements.
|
(3)
|
Net cash provided by operating activities for the
first half
of fiscal 2017 was adjusted to reflect the adoption of ASU 2016-09. Refer to Note A, “Accounting Policies” in the Notes to the Condensed Consolidated Financial Statements for further details.
|
|
September 30, 2017
|
|
March 31, 2017
|
||||
|
(in millions)
|
||||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
—
|
|
2.875% Senior Notes due August 2018
|
250
|
|
|
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 2022
|
293
|
|
|
300
|
|
||
Other indebtedness, primarily capital leases
|
7
|
|
|
8
|
|
||
Unamortized debt issuance costs
|
(12
|
)
|
|
(14
|
)
|
||
Unamortized discount for Senior Notes
|
(3
|
)
|
|
(3
|
)
|
||
Total debt outstanding
|
$
|
2,785
|
|
|
$
|
2,791
|
|
Less the current portion
|
(268
|
)
|
|
(18
|
)
|
||
Total long-term debt portion
|
$
|
2,517
|
|
|
$
|
2,773
|
|
|
Six Months Ended
September 30, |
||||||
|
2017
|
|
2016
|
||||
|
(in millions)
|
||||||
Total borrowings outstanding at beginning of period
(1)
|
$
|
137
|
|
|
$
|
139
|
|
Borrowings
|
1,173
|
|
|
467
|
|
||
Repayments
|
(1,204
|
)
|
|
(456
|
)
|
||
Foreign exchange effect
|
31
|
|
|
(11
|
)
|
||
Total borrowings outstanding at end of period
(1)
|
$
|
137
|
|
|
$
|
139
|
|
(1)
|
Included in “Accrued expenses and other current liabilities” in our Condensed Consolidated Balance Sheets.
|
Period
|
|
Total Number
of Shares
Purchased
|
|
Average
Price Paid
per Share
|
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs
(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, 2017 - July 31, 2017
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
650,000
|
|
August 1, 2017 - August 31, 2017
|
|
2,604
|
|
|
$
|
32.48
|
|
|
2,604
|
|
|
$
|
565,429
|
|
September 1, 2017 - September 30, 2017
|
|
164
|
|
|
$
|
33.15
|
|
|
164
|
|
|
$
|
560,000
|
|
Total
|
|
2,768
|
|
|
$
|
32.52
|
|
|
2,768
|
|
|
$
|
560,000
|
|
(1)
|
In November 2015, the Board approved a stock repurchase program that authorized us to acquire up to
$750 million
of our common stock. We currently expect to repurchase shares on the open market, through solicited or unsolicited privately negotiated transactions or otherwise, from time to time based on market conditions and other factors.
|
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 Year Xtrackers California Mun... Chart |
1 Month Xtrackers California Mun... Chart |
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