-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D3vukW/yTAH+kTUOhH8Iu8XOapyb4GK5WnOB9dFiCjjgwRqQMkW/TNlbyUEStJSD tpjY2t2SrtJegtEUV5jyOQ== /in/edgar/work/0000356028-00-000028/0000356028-00-000028.txt : 20001026 0000356028-00-000028.hdr.sgml : 20001026 ACCESSION NUMBER: 0000356028-00-000028 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001025 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER ASSOCIATES INTERNATIONAL INC CENTRAL INDEX KEY: 0000356028 STANDARD INDUSTRIAL CLASSIFICATION: [7372 ] IRS NUMBER: 132857434 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09247 FILM NUMBER: 745868 BUSINESS ADDRESS: STREET 1: ONE COMPUTER ASSOCIATES PLAZA CITY: ISLANDIA STATE: NY ZIP: 11749 BUSINESS PHONE: 6313425224 8-K 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 October 24, 2000 Date of Report: (Date of earliest event reported) Computer Associates International, Inc. (Exact Name of Registrant as Specified in Charter) Delaware 1-9247 13-2857434 (State or Other Jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) One Computer Associates Plaza, Islandia, New York 11749 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (631) 342-5224 Not Applicable (Former name or former address, if changed since last report) Item 5. Other Events. On October 24, 2000, Computer Associates International, Inc. ("Computer Associates") issued press releases that reported its financial results for its second fiscal quarter and announced changes in its business model that were detailed during a simultaneous phone and internet web cast conference held on Wednesday October 25, 2000 at 8:00am EDT. Copies of the press releases are attached hereto as Exhibits 99.1 and 99.2 and the information set forth in such press releases is incorporated herein by reference. On Wednesday October 25, 2000, Computer Associates held a simultaneous phone and internet web cast conference to discuss its second quarter financial results and changes to its business model. During the conference two supplemental slide presentations pertaining to the second quarter financial results and business model changes complemented the discussion. Copies of these two slide presentations are attached hereto as Exhibits 99.3 and 99.4 and the information set forth therein is incorporated herein by reference. All the attached exhibits are also available to the general public at the Computer Associates web site (www.ca.com). Statements herein concerning Computer Associates future prospects are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. There can be no assurances that future results will be achieved, and actual results could differ materially from forecasts and estimates. Important factors that could cause actual results to differ materially include: the significant percentage of CA's quarterly sales consummated in the last few days of the quarter making financial predictions especially difficult and raising a substantial risk of variance in actual results; changes in industry accounting guidance; the risks associated with changes in the company's business model; the risks associated with changes in the way in which the company accounts for license revenue; the difficulties of compiling pro forma financial information, given acquisitions over time; instability resulting from changes to the company's business model; the emergence of new competitive initiatives resulting from rapid technological advances or changes in pricing in the market; the risks associated with new product introductions as well as the uncertainty of customer acceptance of these new or enhanced products from either CA or its competition; risks associated with the entry into new markets such as professional services; the risks associated with integrating newly acquired businesses and technologies; increasing dependency on large dollar licensing transactions; delays in product delivery; reliance on mainframe capacity growth; the ability to recruit and retain qualified personnel; business conditions in the distributed systems and mainframe software and hardware markets; uncertainty and volatility associated with Internet and eBusiness related activities; use of software patent rights to attempt to limit competition; fluctuations in foreign currency exchange rates and interest rates; the volatility of the international marketplace; and other risks described in filings with the Securities and Exchange Commission. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Not applicable (b) Not applicable. (c) Exhibits. 99.1 Press Release dated October 24, 2000. 99.2 Press Release dated October 25, 2000. 99.3 Supplemental Financial Data slide presentation. 99.4 New Business Model slide presentation. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Computer Associates International, Inc. Dated: October 25, 2000 By: /s/ Ira Zar Ira Zar Executive Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit No. Exhibit 99.1 Press Release dated October 24, 2000. 99.2 Press Release dated October 25, 2000. 99.3 Supplemental Financial Data slide presentation. 99.4 New Business Model slide presentation. EX-99.1 2 0002.txt Contacts: Yvette Gutierrez, Investor Relations Lisa Savino, Investor Relations 631-342-4078 631-342-2788 yvette.gutierrez@ca.com lisa.savino@ca.com Bob Gordon - Public Relations 631-342-2391 bobg@ca.com COMPUTER ASSOCIATES CONFIRMS SECOND QUARTER FINANCIAL RESULTS Company To Announce Changes in Business Model At Wednesday Morning Conference ISLANDIA, N.Y., October 24, 2000 - Confirming preliminary estimates, Computer Associates International, Inc. (NYSE: CA) today reported final financial results for its second fiscal quarter. For the quarter ended September 30, 2000, total contract value was $1.681 billion, an increase of 5% over the $1.605 billion reported in the previous year's second quarter. Net income for the September 30, 2000 quarter was $138 million, versus $334 million in the prior year. Second quarter earnings per share (diluted), exclusive of amortization effect, was $.54 compared to $.75 last year. Inclusive of the acquisition amortization, earnings per share (diluted) for the quarter was $.23, compared to $.60 for the prior year. For the six months ended September 30, 2000, total contract value was $2.959 billion, up 5% compared to the $2.827 billion reported in the first half of last year. EBITDA was $889 million compared to $1.295 billion for the prior year. Net income, exclusive of acquisition amortization, was $405 million versus $688 million from the prior period, after excluding a special gain of $184 million related to the 1995 Key Employee Stock Plan litigation settlement and a $31 million write-off related to the Inacom Corp Bankruptcy in the six month period ended September 30, 2000 and the $646 million R&D charge in the six month period ended September 30, 1999 related to the acquisition of Platinum technology. Operating earnings per share (diluted) excluding acquisition related amortization charges were $.68, compared to $1.24 a year ago. "Given the current business climate, we are pleased with our performance this past quarter," said CA President and CEO Sanjay Kumar. "CA software solutions-in areas including security, storage management, portals and knowledge tools-continue to deliver tremendous value to organizations around the globe. These results, highlighted by continuing revenue growth, reflect the progress we have made against our recovery plan. In addition, as part of our focused effort to unlock shareholder value, we are very excited about the progressive new business model that we will unveil on Wednesday morning. This new model promises to deliver even greater long term sustainable value for shareholders, customers and CA employees." CA has scheduled a press and analyst conference on Wednesday, October 25 at 8AM EDT at the Plaza Hotel in New York City to review financial results and the new business model. The conference will also be Webcast to all interested parties at www.ca.com/invest. Recent highlights include: o CA named Sanjay Kumar president and CEO, and announced that Charles B. Wang, CA's founder and most recently CEO, will continue as chairman. Wang will devote his energies to new ventures that will unlock tremendous value for shareholders, clients, strategic partners and employees. o As the first step in a strategy to spin off technology that would thrive and flourish on an independent basis, CA announced the formation of iCan-ASP, Inc. to service the rapidly growing Application Service Provider marketplace. iCan-ASP offers new and innovative technologies for providing applications through the Internet, wireless and broadband communications. o As part of its continuing effort to unlock shareholder value, CA announced the sale of the former Sterling Federal Systems Group to the Logicon division of Northrup Grumman. o CA announced a robust suite of eBusiness management software for IBM's new eServer zSeries 900 mainframes, underscoring the company's commitment to help clients manage new eBusiness workloads. o CA announced eTrust Internet Defense, the first integrated solution to protect mission-critical eBusiness from potentially destructive cyber attacks and security breaches. CA also released eTrust Directory, a highly scalable and secure solution designed to meet critical eBusiness infrastructure challenges, and eTrust OSCPro, which delivers real-time validation of digital certificates. o CA announced Neugentsii, a complete solution for building real-time intelligent eBusiness applications. o CA announced a comprehensive suite of eBusiness management software for Linux on S/390 as part of a collaborative effort with IBM to promote Linux on S/390 enterprise servers. o CA and Red Hat, Inc. announced an agreement to ship a live trial version of ARCServeIT with every copy of Red Hat Linux 7 Professional Edition. o CA announced a new release of the Unicenter TNG Software Delivery Option that accelerates and automates the delivery of software and other digital content to resources across the extended enterprise. o CA announced COOL: Joe1.1, which empowers Java developers to build robust eBusiness solutions, and COOL: Plex 4.5, which accelerates eBusiness application development. o CA and Softbank S.A. established a joint venture designed to accelerate eBusiness deployment in Central and Eastern Europe o CA and Hitachi Data Systems, a wholly owned subsidiary of Hitachi Ltd., announced a strategic reseller agreement under which Hitachi Data Systems will resell Unicenter TNG. o CA and Cable & Wireless HKT launched SOLAR, the first full-service ASP in Hong Kong to deliver integrated eBusiness solutions via broadband network access. o CA and Chia Heir Group of Taiwan announced eFashion, a groundbreaking B2B platform for the textile industry that is based on CA's Jasmineii. o For the third consecutive year, IndustryWeek selected CA as one of the world's 100 best-managed companies. Computer Associates International, Inc. (NYSE: CA) the world's leading business software company, delivers the end-to-end infrastructure to enable eBusiness through innovative technology, services and education. CA has 20,000 employees worldwide and had revenue in excess of $6 billion for the fiscal year ended March 31, 2000. For more information, visit www.ca.com. # # # (c) 2000 Computer Associates International, Inc. One Computer Associates Plaza, Islandia, N.Y. 11749. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies. Statements in this release concerning the Company's future prospects are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. There can be no assurances that future results will be achieved, and actual results could differ materially from forecasts and estimates. Important factors that could cause actual results to differ materially include: the significant percentage of CA's quarterly sales consummated in the last few days of the quarter making financial predictions especially difficult and raising a substantial risk of variance in actual results; changes in industry accounting guidance; the risks of potential litigation arising from the year 2000 date change for computer programs; the emergence of new competitive initiatives resulting from rapid technological advances or changes in pricing in the market; the risks associated with new product introductions as well as the uncertainty of customer acceptance of these new or enhanced products from either CA or its competition; risks associated with the entry into new markets such as professional services; the risks associated with integrating newly acquired businesses and technologies; increasing dependency on large dollar licensing transactions; delays in product delivery; reliance on mainframe capacity growth; the ability to recruit and retain qualified personnel; business conditions in the distributed systems and mainframe software and hardware markets; uncertainty and volatility associated with Internet and eBusiness related activities; use of software patent rights to attempt to limit competition; fluctuations in foreign currency exchange rates and interest rates; the volatility of the international marketplace; and other risks described in filings with the Securities and Exchange Commission. Table 1 COMPUTER ASSOCIATES INTERNATIONAL, INC. Earnings Before Amortization Charges, Including Special Items (In millions, except per share data) (unaudited)
Three Months Six Months Ended Sept. 30 Ended Sept. 30 2000 1999 2000(A) 1999(B) License $1,095 $1,127 $1,808 $1,916 Maintenance Fees 274 215 532 411 Professional Services 154 140 295 259 Financing Fees 158 123 324 241 Total Contract Value 1,681 1,605 2,959 2,827 Expanded Contract Costs (136) (140) (277) (305) Net Revenue 1,545 1,465 2,682 2,522 SG&A 781 597 1,571 1,131 Expanded Contract Costs (136) (140) (277) (305) R&D 179 141 349 262 Comm/Royalties 85 79 150 139 CA Depr/Amort 33 25 64 47 Interest Expense, net 89 97 177 147 Net Special Items 0 0 (153) 646 Total Costs 1,031 799 1,881 2,067 Income before taxes (C) 514 666 801 455 Taxes (C) 193 250 300 413 Net Income (C) 321 416 501 42 Diluted Earnings per share (C) $.54 $.75 $.84 $.08 Shares used in computation 592.420 555.487 599.387 553.717 (A) Includes special gain of $184 million related to the 1995 Key Employee Stock Plan litigation settlement and a $31 million write-off related to the bankruptcy filing of Inacom Corporation. (B) Includes a $646 million charge for in-process R&D related to the acquisition of PLATINUM technology International, inc. (C) Excludes effect of $246 million for the quarter ending September 30, 2000 and $131 million for the September 30, 1999 prior year quarter for non-cash intangible amortization charges. For the six months ended September 30, 2000 and September 30, 1999, the excluded intangible amortization was $488 million and $223 million, respectively.
Table 2 COMPUTER ASSOCIATES INTERNATIONAL, INC. Earnings Before Amortization Charges and Special Items (In millions, except per share data) (unaudited)
Three Months Six Months Ended Sept. 30 Ended Sept. 30 2000 1999 2000(A) 1999(B) License $1,095 $1,127 $1,808 $1,916 Maintenance Fees 274 215 532 411 Professional Services 154 140 295 259 Financing Fees 158 123 324 241 Total Contract Value 1,681 1,605 2,959 2,827 Expanded Contract Costs (136) (140) (277) (305) Net Revenue 1,545 1,465 2,682 2,522 SG&A 781 597 1,571 1,131 Expanded Contract Costs (136) (140) (277) (305) R&D 179 141 349 262 Comm/Royalties 85 79 150 139 CA Depr/Amort 33 25 64 47 Interest Expense, net 89 97 177 147 Total Costs 1,031 799 2,034 1,421 EBITDA 636 788 889 1,295 Income before taxes (C) 514 666 648 1,101 Taxes (C) 193 250 243 413 Net Income (C) 321 416 405 688 Diluted Earnings per share (C) $.54 $.75 $.68 $1.24 Shares used in computation 592.420 555.487 599.387 553.717 (A) Excludes special gain of $184 million related to the 1995 Key Employee Stock Plan litigation settlement and a $31 million write-off related to the bankruptcy filing of Inacom Corporation. (B) Excludes a $646 million charge for in-process R&D related to the acquisition of PLATINUM technology International, inc. (C) Excludes effect of $246 million for the quarter ending September 30, 2000 and $131 million for the September 30, 1999 prior year quarter for non-cash intangible amortization charges. For the six months ended September 30, 2000 and September 30, 1999, the excluded intangible amortization was $488 million and $223 million, respectively.
Table 3 Consolidated Condensed Statement of Operations (In millions, except per share data) (unaudited)
Three Months Six Months Ended Sept., 30 Ended Sept. 30 2000 1999 2000 1999 Total Contract Value $1,681 $1,605 $2,959 $2,827 Net Revenue 1,545 1,465 2,682 2,522 Income before taxes 268 535 313 232 Taxes 130 201 152 329 Net Income (Loss) 138 334 161 (97) Basic Earnings (Loss) per Share $.24 $.62 $.27 $(.18) Shares used in computation 585.152 538.093 587.809 537.324 Diluted Earnings (Loss) per Share $.23 $.60 $.27 $(.18) Shares used in computation 592.420 555.487 599.387 537.324
Table 4 Consolidated Condensed Balance Sheets (In millions)
Sept. 30 March 31 2000 2000 (unaudited) Cash & Marketable Securities $ 454 $ 1,387 Accounts Receivable 2,059 2,175 Other Current Assets 158 430 Total Current Assets 2,671 3,992 Installment AR 3,864 3,812 Property & Equipment 822 829 Purchased Software 2,519 2,598 Goodwill 5,881 6,032 Other Assets 222 230 Total Assets $15,979 $17,493 Loans Payable & Current Portion of Long Term Debt $ 1,319 $ 919 Other Current Liabilities 1,518 2,085 Long Term Debt 3,676 4,527 Deferred Income Taxes 2,266 2,365 Deferred Maintenance 500 560 Stockholders' Equity 6,700 7,037 Total Liabilities & Equity $15,979 $17,493
EX-99.2 3 0003.txt EXHBIT 99.2 Contacts: Yvette Gutierrez, Investor Relations Lisa Savino, Investor Relations 631-342-4078 631-342-2788 yvette.gutierrez@ca.com lisa.savino@ca.com Bob Gordon, Public Relations 631-342-2391 bobg@ca.com COMPUTER ASSOCIATES INTRODUCES NEW BUSINESS MODEL TO DELIVER MAXIMUM VALUE TO SHAREHOLDERS AND CLIENTS Provides Greater Flexibility in Software Procurement And Quarter-to-Quarter Revenue Predictability ISLANDIA, N.Y., October 25, 2000 -Computer Associates International, Inc. today announced a dramatic shift in its business model, offering clients the flexibility and freedom to adapt to rapidly changing eBusiness requirements while reducing the risks and costs associated with today's traditional software licensing model. This move reflects the radical changes taking place in the relationships between corporations and large software companies. It is driven by CA's desire to build stronger relationships with its worldwide customer base, and to unlock shareholder value by improving both the visibility of CA's revenue stream and quarter-to-quarter revenue predictability. "CA's strength has always been in the diversity and excellence of our software products," said CA President and CEO Sanjay Kumar. "Our new business model empowers clients to take full advantage of that diversity and excellence while enabling shareholders to build residual value that transcends quarterly performance. It eliminates the back-end loaded nature of our business where most license agreements are concluded in the final days of a quarter. By neutralizing this hockey stick effect endemic to our industry, the new model will help unlock the true value of CA." As the first eBusiness solutions provider to move from an enterprise license model to a subscription license model, CA will enable clients to determine the length and dollar value of their software license and vary their software mix as their business and technology needs change. Clients will have the freedom to use a variety of software products of their choice during contracted periods-including month-to-month--and within fixed dollar values. "Our clients have told us they need more flexibility in how they license software, and a faster, simpler, more cost-effective way to do business with us in the new economy," said Kumar. "With this innovative business model, we can now engage our clients in even more flexible partnerships that map the growth of their technology to the growth of their business. Backed by our strong track record of innovation, the new model will ensure that clients can more readily take advantage of the latest advances in CA technology." Clients will be able to flexibly define the length and the dollar value of their contracts, with discounts determined by both parameters. The new contracts will be supported by a simpler and shorter license agreement, further reducing the cost of doing business. "This new model strengthens our competitive position against hardware vendors who bundle software and services, and gives us a leg up on independent software vendors who cling to the traditional enterprise model," said Kumar. In 1992, CA ushered in a major industry change when it moved from the traditional IBM model of CPU tier pricing to the enterprise license model, which allowed clients to license software that could run across an unlimited number of processors and locations, up to a maximum license capacity. Now, CA is taking another leadership step. With the new model, clients will have the option of subscribing to CA software, instead of licensing specific products in pre-determined quantities. Under this model, CA will account for contracted revenue over the life of the license term, thereby generating tremendous residual value at the end of each quarter. While the new business model will cause CA to change the way the company recognizes revenue, it does not necessarily change the company's overall cash generated from operations. As clients adopt this model over time and CA shifts its operations accordingly, the accumulated residual value will grow quarter-by-quarter, thereby enhancing predictability and visibility into future performance as residual value turns into revenue month-by-month over the contract term. To ensure that investors and other interested parties can easily compare past and future performance, CA will supply pro forma, pro rata financial information. This information will be the basis upon which CA will offer its guidance and estimates. CA's client relationship managers and sales executives will visit clients over the next 30 days to review the opportunities presented by this new business model. Computer Associates International, Inc. (NYSE: CA), the world's leading business software company, delivers the end-to-end infrastructure to enable eBusiness through innovative technology, services and education. CA has 20,000 employees worldwide and had revenue in excess of $6 billion for the fiscal year ended March 31, 2000. For more information, visit www.ca.com. ### (c) 2000 Computer Associates International, Inc. One Computer Associates Plaza, Islandia, N.Y. 11749. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies. Statements in this release concerning the Company's future prospects are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. There can be no assurances that future results will be achieved, and actual results could differ materially from forecasts and estimates. Important factors that could cause actual results to differ materially include: the significant percentage of CA's quarterly sales consummated in the last few days of the quarter making financial predictions especially difficult and raising a substantial risk of variance in actual results; changes in industry accounting guidance; the risks associated with changes in the company's business model; the risks associated with changes in the way in which the company accounts for license revenue; the difficulties of compiling pro forma financial information, given acquisitions over time; instability resulting from changes to the company's business model; the emergence of new competitive initiatives resulting from rapid technological advances or changes in pricing in the market; the risks associated with new product introductions as well as the uncertainty of customer acceptance of these new or enhanced products from either CA or its competition; risks associated with the entry into new markets such as professional services; the risks associated with integrating newly acquired businesses and technologies; increasing dependency on large dollar licensing transactions; delays in product delivery; reliance on mainframe capacity growth; the ability to recruit and retain qualified personnel; business conditions in the distributed systems and mainframe software and hardware markets; uncertainty and volatility associated with Internet and eBusiness related activities; use of software patent rights to attempt to limit competition; fluctuations in foreign currency exchange rates and interest rates; the volatility of the international marketplace; and other risks described in filings with the Securities and Exchange Commission. EX-99.3 4 0004.txt EXHIBIT 99.3 Computer Associates International, Inc. Securities Analyst Conference Call October 25, 2000 Supplemental Financial Data E-TRUST ARCserve2000 (PICTURE) (PICTURE) UNICERTERED CA (PICTURE) LISTED NYSE (PICTURE) CA's Home Page: http://www.ca.com/ For CA Financial Reports: http://www.cai.com/invest/reports.htm For lastest news releases: http://www.cai.com/press/releases/ IR Contacts: Lisa Savino (631) 342-2788 lisa.savino@ca.com Yvette Gutierrez (631) 342-4078 yvette.gutierrez@ca.com CA IR Fax Number: (631) 342-4854
Computer Associates International, Inc. 2nd Qtr - FY 2001 Platform Breakout ($ in Millions) Q2 FY 01 % of Total FY 00 % of Total % Chg - ----------- ------- ---------- ------ ---------- ----- OS/390 590 35% 638 39% -8% Distrib. 926 55% 816 51% 13% Prof Srvcs 154 9% 140 9% 10% Other 11 1% 11 1% 0% Total 1,681 100% 1,605 100% 5% YTD FY 01 % of Total FY 00 % of Total % Chg - ----------- ------- ---------- ------ ---------- ----- OS/390 1,032 35% 1,136 40% -9% Distrib. 1,610 54% 1,412 50% 14% Prof Srvcs 295 10% 259 9% 14% Other 22 1% 20 1% 10% Total 2,959 100% 2,827 100% 5%
(PIE CHART) (PIE CHART) 2Q01 2Q00 SRVC 9% SRVC 9% 0S/390 35% OS/390 39% DISTR 55% DISTR 51% (BAR CHART - LAST 12 MONTHS) THROUGH 9/99 THROUGH 9/00 SRVC 429 SRVC 536 OS/390 2,506 OS/390 2,736 DISTR 2,835 DISTR 3,583
Computer Associates International, Inc. 2nd Qtr - FY 2001 Geographic Breakout ($ in millions) Q2 FY 01 FY 00 % Change - ------------- ----- ----- -------- North America 1,201 1,101 9% International 480 504 -5% ----- ----- --- Total 1,681 1,605 5% YTD North America 2,117 1,950 9% International 842 877 -4% ----- ----- --- Total 2,959 2,827 5%
(BAR CHART - TITLED: NORTH AMERICA/INTERNATIONAL) 2Q98 2Q99 2Q00 2Q01 NORTH AMERICA 373 443 504 480 INTERNATIONAL 749 773 1,101 1,201 (BAR CHART - TITLED: LAST 12 MONTHS INT'L ADJ FOR F/X) ADJ. INT'L N.A. NORTH AMERICA 1,996 2,164 INTERNATIONAL 3,870 4,860 Int'l F/X impact approximately $37 million for 2Q01; $57 million YTD Europe YOY down 7% including F/X impact Computer Associates International, Inc. 2nd Qtr - FY 2001 Product Detail ($ in Millions)
2Q01 Total - ------------ ----- Storage 252 Security 177 Network 228 Other EM/IM 791 Applications 68 Services 154 Other 11 Total 1,681
2Q01 OS/390 Distrib. Total - --------- ------ -------- ----- Storage 120 132 252 Security 48 129 177 Network 48 180 228 (Based on CA approximations, allocations and estimates where not readily measurable)
Computer Associates International, Inc. YTD FY2001 (Six Months Ending Sept. 30, 2000) Income Statement Detail ($ in Millions Except Per Share Amounts)
Pro-Forma: FY 01 FY 00 % Chg - --------------------------- ------- ------- ------- License 1,808 1,916 (6%) Maintenance 532 411 29% Professional Services 295 259 14% Financing Fees 324 241 34% Total Contract Value 2,959 2,827 5% Expanded Contract Costs (277) (305) (9%) Net Revenue 2,682 2,522 6% SG&A 1,571 1,131 39% Expanded Contract Costs (277) (305) (9%) R&D 349 262 33% Comm/Royalties 150 139 8% Total 1,793 1,227 46% EBITDA 889 1,295 (31%) Depreciation 64 47 36% Interest Expense, net 177 147 20% Special Items* (153) 646 NM Other Costs 88 840 NM Profit Before Tax 801 455 NM Taxes 300 413 NM Net Income (ex amort.) 501 42 NM Dilulted Earnings Per Share $.84 $.08 NM # of Shares 599.387 553.717 8% Before Charges: FY 01 FY 00 % Chg - ------------------------- ------- ------- ----- Profit Before Tax 648 1,101 (41%) Pre-tax Margin 22% 39% Operating Margin 28% 44% Taxes 243 413 (41%) Net Income (ex amort.) 405 688 (41%) Dilulted Earnings Per Share $.68 $1.24 # of Shares 599.387 553.717 8% As Reported: FY 01 FY 00 % Chg - ------------------------- ------- ------- ----- Profit Before Tax and Amort. 801 455 NM Acquis. Amortization 488 223 NM Adj. Pre Tax Profit 313 232 NM Taxes 152 329 NM Net Income (Loss) 161 (97) NM Dilulted Earnings Per Share $.27 $(.18) NM # of Shares 599.387 537.324 NM Average Headcount 20,500 16,800 22% *FY01 Special items consist of approx. $184 million credit related to Stock Plan litigation and an approx. $31 million charge related to the Inacom bankruptcy. FY00 Special charge of $646 million relates to in-process R&D from the Platinum acquisition.
Computer Associates International, Inc. 2Q FY2001 (Quarter Ending Sept. 30, 2000) Income Statement Detail ($ in Millions Except Per Share Amounts)
Pro-Forma: FY 01 FY 00 % Chg - ------------------- ------- -------- ------ License 1,095 1,127 (3%) Maintenance 274 215 27% Professional Services 154 140 10% Financing Fees 158 123 28% Total Contract Value 1,681 1,605 5% Expanded Contract Costs (136) (140) (3%) Net Revenue 1,545 1,465 5% SG&A 781 597 31% Expanded Contract Costs (136) (140) (3%) R&D 179 141 27% Comm/Royalties 85 79 8% Total 909 677 34% EBITDA 636 788 (19%) Depreciation 33 25 32% Interest Expense, net 89 97 (8%) Other Costs 122 122 0% Pretax Margin 31% 41% Operating Margin 36% 48% Profit Before Tax 514 666 (23%) Taxes 193 250 (23%) Net Income (ex amort.) 321 416 (23%) Dilulted Earnings Per Share $.54 $.75 (28%) # of Shares 592.420 555.487 7% As Reported: FY 01 FY 00 % Chg - --------------------------- ------- -------- ------ Profit Before Tax and Amort. 514 666 (23%) Acquis. Amortization 246 131 88% Adj. Pre Tax Profit 268 535 (50%) Taxes 130 201 (35%) Net Income 138 334 (59%) Diluted Earnings Per Share $.23 $.60 62% # of Shares 592.420 555.487 7% Average Headcount 21,000 17,700 19%
Computer Associates International, Inc. 2nd Qtr - FY 2001 Capitalized R&D ($ in millions)
Q2 Q2 FY01 FY00 ----- ----- Total R&D Expense 191 150 Percent of Revenue 11% 9% Capitalized R&D 12 9 Percent Capitalized 6% 6% Net R&D Expense 179 141 Percent of Revenue 11% 9% Amortized R&D 6 5
Computer Associates International, Inc. 2nd Qtr - FY 2001 Balance Sheet ($ in Millions)
9/30/00 6/30/00 % Change ------- ------- -------- Cash & Marketable Securities 454 691 (34%) Accounts Receivable 2,059 1,712 20% Other Current Assets 158 175 (10%) ------ ------ ------ Total Current Assets 2,671 2,578 4% Installment A/R 3,864 3,822 1% Property & Equipment 822 832 (1%) Purchased Software 2,519 2,584 (3%) Goodwill 5,881 6,022 (2%) Other Assets 222 226 (2%) ------ ------ ------ Total Assets 15,979 16,064 (1%) Loans Payable & Current Portion of LT Debt 1,319 1,218 8% Other Current Liabilities 1,518 1,467 3% Long Term Debt 3,676 3,781 (3%) Deferred Income Taxes 2,266 2,242 1% Deferred Maintenance 500 504 (1%) Stockholders' Equity 6,700 6,852 (2%) ------ ------ ------ Total Liab. & Equity 15,979 16,064 (1%)
Computer Associates International, Inc. 2nd Qtr - FY 2001 Accounts Receivable ($ in Millions)
FY01 9/30/00 6/30/00 %Chg - -------------------------- ------- ------- ----- Trade 1,471 1,105 33% Current Installment 588 607 (3%) ----- ----- ---- Total Current 2,059 1,712 20% Non-Current Installment 3,864 3,822 1% ----- ----- ---- Total AR 5,923 5,534 7% Trailing 12 months Total Contract Value 6,898 6,822 1%
FY00 9/30/99 6/30/99 %Chg - -------------------------- ------- ------- ----- Trade 1,083 857 26% Current Installment 835 854 (2%) ----- ----- ---- Total Current 1,918 1,711 12% Non-Current Installment 3,260 2,945 11% ----- ----- ---- Total AR 5,178 4,656 11% Trailing 12 months Total Contract Value 5,817 5,428 7%
Computer Associates International, Inc. 2nd Qtr - FY 2001 Cash Usage ($ in Millions)
Q2 Q2 9/30/00 9/30/99 ------- ------- From Operations 125 345 Dividends (24) (22) Stock Repurchase (233) 0 Acquisitions/Other (105) (636) Total Outlays (362) (658) Net Financing: 0 250 Net Change (237) (63) Last 12 months cash from operations: 1,166
EX-99.4 5 0005.txt EXHIBIT 99.4 COMPUTER ASSOCIATES Forward-Looking Statements Contained Herein Statements in this release concerning the Company's future prospects are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. There can be no assurances that future results will be achieved, and actual results could differ materially from forecasts and estimates. Important factors that could cause actual results to differ materially include: the significant percentage of CA's quarterly sales consummated in the last few days of the quarter making financial predictions especially difficult and raising a substantial risk of variance in actual results; changes in industry accounting guidance; the risks associated with changes in the company's business model; the risks associated with changes in the way in which the company accounts for license revenue; the difficulties of compiling pro forma financial information, given acquisitions over time; instability resulting from changes to the company's business model; the emergence of new competitive initiatives resulting from rapid technological advances or changes in pricing in the market; the risks associated with new product introductions as well as the uncertainty of customer acceptance of these new or enhanced products from either CA or its competition; risks associated with the entry into new markets such as professional services; the risks associated with integrating newly acquired businesses and technologies; increasing dependency on large dollar licensing transactions; delays in product delivery; reliance on mainframe capacity growth; the ability to recruit and retain qualified personnel; business conditions in the distributed systems and mainframe software and hardware markets; uncertainty and volatility associated with Internet and eBusiness related activities; use of software patent rights to attempt to limit competition; fluctuations in foreign currency exchange rates and interest rates; the volatility of the international marketplace; and other risks described in filings with the Securities and Exchange Commission. INTRODUCING A NEW BUSINESS MODEL Innovative Approach to Doing Business * CA's strength is in the diversity and excellence of our software products * Our new business model empowers clients to take advantage of that diversity * Enables CA and its shareholders to build residual value that transcends quarterly performance * Eliminates the back-end loaded nature of our business * Unlocks the true value of CA How does it work? * Customers vary their software mix as their business needs change * Freedom to use a variety of software products during contracted periods * Flexible customer licensing including payments up-front, month-to-month, and over a term * Discounts for longer terms and volume Real Client Benefits * Provides more flexibility in how clients license their software * Faster, simpler, more cost-effective way to do business with CA * Map the growth of their technology to the growth of their business * Take advantage of the latest advances in CA technology * More predictable costs What does it mean for CA? * The new licensing model helps build better visibility into the company's revenue stream and residual value. * CA will recognize income on a monthly basis, rather than on a one-time basis thereby reducing the uncertainty of quarterly revenues. * While the new license model changes the way CA recognizes income, it does not change the company's overall cash flow. Reported Revenue - Timing
Year 1 Year 2 Year 3 Total Payments 100 100 100 300 Revenue Old 300 Residual Value 0 0 0 Revenue New 100 100 100 300 Residual Value 200 100 0 * Excludes impact of maintenance and interest
Financial Information All of the financial information set forth is subject to the risks, uncertainties, and assumptions referred to in the "Forward Looking Statement" proviso. Current Year Impact
FY01 FY01 FY01 FY01 FY01 Q1 Q2 Q3 (A) Q4 (A) Total (A) ----- ----- ------- ------ --------- Reported Product Revenue 1,137 1,527 528 591 3,783 Services Revenue 141 154 135 125 555 Total Revenue 1,278 1,681 663 716 4,338 Contract Value 1,278 1,681 Operating-EPS $0.14 $0.54 Pro-forma Product Revenue 1,183 1,243 1,280 1,341 5,047 Services Revenue 141 154 135 125 555 Total Revenue 1,324 1,397 1,415 1,466 5,602 Operating-EPS $0.33 $0.39 $0.40 $0.43 $1.55 (A) Projected Assumptions used to project future results are based on historical data, trends, and other financial information.
And Impact On Next Two Years
FY00 FY01 (A) FY02 (A) -------- --------- --------- Reported: Product Revenue 6,266 3,783 2,755 Services Revenue 500 555 510 ----- ----- ----- Total Revenue 6,766 4,338 3,265 Contract Value 6,766 Operating-EPS $3.28 Backlog 3,028 8,222 Pro-Forma: Product Revenue 4,492 5,049 5,636 12% 12% Services Revenue 764 554 510 Total Revenue 5,256 5,603 6,146 Operating - EPS $1.31 $1.55 $2.01 18% 30% Assumptions used to project future results are based on historical data, trends, and other financial information.
A win-win situation * Clients with greater satisfaction * Sales force with greater focus on selling technology and armed with a true value proposition * Investors who can focus on technology benefits instead of unpredictability of revenue streams Forward-Looking Statements Contained Herein Statements in this release concerning the Company's future prospects are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. There can be no assurances that future results will be achieved, and actual results could differ materially from forecasts and estimates. Important factors that could cause actual results to differ materially include: the significant percentage of CA's quarterly sales consummated in the last few days of the quarter making financial predictions especially difficult and raising a substantial risk of variance in actual results; changes in industry accounting guidance; the risks associated with changes in the company's business model; the risks associated with changes in the way in which the company accounts for license revenue; the difficulties of compiling pro forma financial information, given acquisitions over time; instability resulting from changes to the company's business model; the emergence of new competitive initiatives resulting from rapid technological advances or changes in pricing in the market; the risks associated with new product introductions as well as the uncertainty of customer acceptance of these new or enhanced products from either CA or its competition; risks associated with the entry into new markets such as professional services; the risks associated with integrating newly acquired businesses and technologies; increasing dependency on large dollar licensing transactions; delays in product delivery; reliance on mainframe capacity growth; the ability to recruit and retain qualified personnel; business conditions in the distributed systems and mainframe software and hardware markets; uncertainty and volatility associated with Internet and eBusiness related activities; use of software patent rights to attempt to limit competition; fluctuations in foreign currency exchange rates and interest rates; the volatility of the international marketplace; and other risks described in filings with the Securities and Exchange Commission. COMPUTER ASSOCIATES -----END PRIVACY-ENHANCED MESSAGE-----