10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________________________________

FORM 10-Q

__________________________________________

þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2012

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission File Number 1-9247

__________________________________________

CA, Inc.

(Exact name of registrant as specified in its charter)

__________________________________________

Delaware	13-2857434
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
One CA Plaza Islandia, New York	11749
(Address of principal executive offices)	(Zip Code)

1-800-225-5224

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

__________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one:)
Large accelerated filer	þ	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Title of Class	Shares Outstanding
Common Stock	as of January 17, 2013
par value $0.10 per share	455,923,672

CA, INC. AND SUBSIDIARIES

INDEX

		Page
PART I.	Financial Information
	Report of Independent Registered Public Accounting Firm	1
Item 1.	Unaudited Condensed Consolidated Financial Statements	2
	Condensed Consolidated Balance Sheets – December 31, 2012 and March 31, 2012	2
	Condensed Consolidated Statements of Operations – Three and Nine Months Ended December 31, 2012 and 2011	3
	Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended December 31, 2012 and 2011	4
	Condensed Consolidated Statements of Cash Flows – Nine Months Ended December 31, 2012 and 2011	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
	Overview	23
	Executive Summary	24
	Quarterly Update	25
	Performance Indicators	25
	Results of Operations	28
	Liquidity and Capital Resources	37
	Critical Accounting Policies and Business Practices	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43
PART II.	Other Information	43
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45
	Signatures	46

PART I. FINANCIAL INFORMATION

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

CA, Inc.:

We have reviewed the condensed consolidated balance sheet of CA, Inc. and subsidiaries as of December 31, 2012, and the related condensed consolidated statements of operations and comprehensive income for the three-month and nine-month periods ended December 31, 2012 and 2011, and the condensed consolidated statements of cash flows for the nine-month periods ended December 31, 2012 and 2011. These condensed consolidated financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of CA, Inc. and subsidiaries as of March 31, 2012, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated May 11, 2012, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of March 31, 2012, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ KPMG LLP

New York, New York

January 24, 2013

1

Item 1.

CA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts)

	December 31, 2012			March 31, 2012
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,353		$	2,679
Short-term investments	195			—
Trade accounts receivable, net	786			902
Deferred income taxes	326			231
Other current assets	143			153
TOTAL CURRENT ASSETS	$	3,803		$	3,965
Property and equipment, net of accumulated depreciation of $772 and $707, respectively	$	339		$	386
Goodwill	5,856			5,856
Capitalized software and other intangible assets, net	1,296			1,389
Deferred income taxes	21			151
Other noncurrent assets, net	243			250
TOTAL ASSETS	$	11,558		$	11,997
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current portion of long-term debt	$	19		$	14
Accounts payable	76			95
Accrued salaries, wages and commissions	281			350
Accrued expenses and other current liabilities	415			444
Deferred revenue (billed or collected)	2,234			2,658
Taxes payable, other than income taxes payable	77			80
Federal, state and foreign income taxes payable	225			96
Deferred income taxes	14			14
TOTAL CURRENT LIABILITIES	$	3,341		$	3,751
Long-term debt, net of current portion	$	1,282		$	1,287
Federal, state and foreign income taxes payable	421			430
Deferred income taxes	44			44
Deferred revenue (billed or collected)	957			972
Other noncurrent liabilities	100			116
TOTAL LIABILITIES	$	6,145		$	6,600
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; 450,765,508 and 466,183,134 shares outstanding, respectively	59			59
Additional paid-in capital	3,582			3,491
Retained earnings	5,229			4,865
Accumulated other comprehensive loss	(119		)	(108		)
Treasury stock, at cost, 138,929,573 and 123,511,947 shares, respectively	(3,338		)	(2,910		)
TOTAL STOCKHOLDERS’ EQUITY	$	5,413		$	5,397
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	11,558		$	11,997

See accompanying Notes to the Condensed Consolidated Financial Statements

2

CA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in millions, except per share amounts)

	For the Three Months Ended December 31,				For the Nine Months Ended December 31,
	2012		2011		2012			2011
REVENUE
Subscription and maintenance revenue	$	966	$	1,006	$	2,906		$	3,035
Professional services	97		103		283			289
Software fees and other	132		154		303			302
TOTAL REVENUE	$	1,195	$	1,263	$	3,492		$	3,626
EXPENSES
Costs of licensing and maintenance	$	72	$	69	$	210		$	207
Cost of professional services	92		91		266			270
Amortization of capitalized software costs	66		59		197			164
Selling and marketing	331		342		953			1,038
General and administrative	96		113		304			331
Product development and enhancements	120		126		368			384
Depreciation and amortization of other intangible assets	39		44		120			134
Other (gains) expenses, net	9		6		(14		)	10
TOTAL EXPENSES BEFORE INTEREST AND INCOME TAXES	$	825	$	850	$	2,404		$	2,538
Income from continuing operations before interest and income taxes	$	370	$	413	$	1,088		$	1,088
Interest expense, net	12		9		33			24
Income from continuing operations before income taxes	$	358	$	404	$	1,055		$	1,064
Income tax expense	107		141		342			337
INCOME FROM CONTINUING OPERATIONS	$	251	$	263	$	713		$	727
Income from discontinued operations, net of income taxes	—		—		—			13
NET INCOME	$	251	$	263	$	713		$	740
BASIC INCOME PER SHARE
Income from continuing operations	$	0.55	$	0.54	$	1.54		$	1.46
Income from discontinued operations	—		—		—			0.03
Net income	$	0.55	$	0.54	$	1.54		$	1.49
Basic weighted average shares used in computation	452		483		458			492
DILUTED INCOME PER SHARE
Income from continuing operations	$	0.55	$	0.54	$	1.53		$	1.46
Income from discontinued operations	—		—		—			0.02
Net income	$	0.55	$	0.54	$	1.53		$	1.48
Diluted weighted average shares used in computation	453		484		460			493

See accompanying Notes to the Condensed Consolidated Financial Statements

3

CA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(in millions)

	For the Three Months Ended December 31,					For the Nine Months Ended December 31,
	2012			2011		2012			2011
Net income	$	251		$	263	$	713		$	740
OTHER COMPREHENSIVE (LOSS)/INCOME
Foreign currency translation adjustments	(1		)	2		(11		)	(66		)
TOTAL OTHER COMPREHENSIVE INCOME	$	(1	)	$	2	$	(11	)	$	(66	)
COMPREHENSIVE INCOME	$	250		$	265	$	702		$	674

See accompanying Notes to the Condensed Consolidated Financial Statements

4

CA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in millions)

	For the Nine Months Ended December 31,
	2012			2011
OPERATING ACTIVITIES FROM CONTINUING OPERATIONS:
Net income	$	713		$	740
Income from discontinued operations	—			(13		)
Income from continuing operations	$	713		$	727
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization	317			298
Provision for deferred income taxes	46			78
Provision for bad debts	4			(3		)
Share-based compensation expense	62			61
Asset impairments and other non-cash items	6			15
Foreign currency transaction losses (gains)	19			(4		)
Changes in other operating assets and liabilities, net of effect of acquisitions:
Decrease in trade accounts receivable	105			12
Decrease in deferred revenue	(420		)	(389		)
Increase (decrease) in taxes payable, net	74			(33		)
Decrease in accounts payable, accrued expenses and other	(37		)	(34		)
(Decrease) increase in accrued salaries, wages and commissions	(66		)	5
Changes in other operating assets and liabilities	15			(4		)
NET CASH PROVIDED BY OPERATING ACTIVITIES – CONTINUING OPERATIONS	$	838		$	729
INVESTING ACTIVITIES FROM CONTINUING OPERATIONS:
Acquisitions of businesses, net of cash acquired, and purchased software	$	(18	)	$	(373	)
Purchases of property and equipment	(41		)	(53		)
Proceeds from divestiture of assets	—			7
Capitalized software development costs	(122		)	(137		)
Purchases of investments	(346		)	(102		)
Proceeds from sale of investments	—			27
Maturities of investments	163			72
Other investing activities	2			(1		)
NET CASH USED IN INVESTING ACTIVITIES – CONTINUING OPERATIONS	$	(362	)	$	(560	)
FINANCING ACTIVITIES FROM CONTINUING OPERATIONS:
Dividends paid	$	(349	)	$	(75	)
Purchases of common stock	(421		)	(553		)
Debt borrowings	791			240
Debt repayments	(796		)	(371		)
Exercise of common stock options and other	22			12
NET CASH USED IN FINANCING ACTIVITIES – CONTINUING OPERATIONS	$	(753	)	$	(747	)
Effect of exchange rate changes on cash	$	(49	)	$	(96	)
NET CHANGE IN CASH AND CASH EQUIVALENTS – CONTINUING OPERATIONS	$	(326	)	$	(674	)
CASH USED IN OPERATING ACTIVITIES – DISCONTINUED OPERATIONS	$	—		$	(21	)
CASH PROVIDED BY INVESTING ACTIVITIES – DISCONTINUED OPERATIONS	—			4
NET EFFECT OF DISCONTINUED OPERATIONS ON CASH AND CASH EQUIVALENTS	$	—		$	(17	)
DECREASE IN CASH AND CASH EQUIVALENTS	$	(326	)	$	(691	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	$	2,679		$	3,049
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,353		$	2,358

See accompanying Notes to the Condensed Consolidated Financial Statements

5

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A – ACCOUNTING POLICIES

Basis of Presentation: The accompanying unaudited Condensed Consolidated Financial Statements of CA, Inc. (Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP), as defined in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 270, for interim financial information and with the instructions to Rule 10-01 of Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the Company’s Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2012 (2012 Form 10-K).

In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal, recurring nature.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, these estimates may ultimately differ from actual results.

Operating results for the three and nine months ended December 31, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2013.

Divestitures: In June 2011, the Company sold its Internet Security business. The results of operations for this business and the related gain on disposal have been presented as discontinued operations in the accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2011. See Note B, “Divestitures,” for additional information.

Cash and Cash Equivalents: The Company’s cash and cash equivalents are held in numerous locations throughout the world, with approximately 64% being held by the Company’s foreign subsidiaries outside the United States at December 31, 2012.

Fair Value Measurements: Fair value is the price that would be received for an asset or the amount paid to transfer a liability in an orderly transaction between market participants. The Company is required to classify certain assets and liabilities based on the following fair value hierarchy:

• Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

• Level 2: Quoted prices for identical assets and liabilities in markets that are not active, or quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and

• Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

See Note I, “Fair Value Measurements,” for additional information.

Deferred Revenue (Billed or Collected): The Company accounts for unearned revenue on billed amounts due from customers on a gross basis. Unearned revenue on billed installments (collected or uncollected) is reported as deferred revenue in the liability section of the Company’s Condensed Consolidated Balance Sheets. Deferred revenue (billed or collected) excludes unbilled contractual commitments executed under license and maintenance agreements that will be billed in future periods. See Note G, “Deferred Revenue,” for additional information.

Statements of Cash Flows: For the nine months ended December 31, 2012 and 2011, interest payments, net for both periods were approximately $56 million and income taxes paid were approximately $190 million and $252 million, respectively. For the nine months ended December 31, 2012 and 2011, the excess tax benefits from options exercised included in financing activities from continuing operations were approximately $6 million and $3 million, respectively.

Non-cash investing activities for the nine months ended December 31, 2012 consisted of assets acquired under capital leases of $9 million and the purchase of a software license for $20 million, which will be paid during the fourth quarter of fiscal year 2013.

Non-cash financing activities for the nine months ended December 31, 2012 and 2011 consisted of treasury shares issued in connection with the following: share-based incentive awards granted under the Company’s equity compensation plans of approximately $63 million (net of approximately $34 million of taxes withheld) and $54 million (net of approximately $26 million of taxes withheld), respectively; and discretionary stock contributions to the CA, Inc. Savings Harvest Plan of approximately $29 million and $13 million, respectively.

6

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company uses a notional pooling arrangement with an international bank to help manage global liquidity requirements. Under this pooling arrangement, the Company and its participating subsidiaries may maintain either cash deposit or borrowing positions through local currency accounts with the bank, so long as the aggregate position of the global pool is a notionally calculated net cash deposit. Because the bank maintains a security interest in the cash deposits, and has the right to offset the cash deposits against the borrowings, the bank provides the Company and its participating subsidiaries favorable interest terms on both. The activity under this cash pooling arrangement for the nine months ended December 31, 2012 was as follows:

(in millions)
Total borrowing position outstanding at March 31, 2012 (1)	$	139
Borrowings	791
Repayments	(787		)
Foreign currency exchange effect	(3		)
Total borrowing position outstanding at December 31, 2012 (1)	$	140

(1) Included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.

For the nine months ended December 31, 2011, borrowings and repayments related to the notional pooling arrangement were approximately $240 million and $112 million, respectively, and are presented within the financing activities section of the Condensed Consolidated Statements of Cash Flows.

Other Matters: As part of the Company’s efforts to more fully utilize its intellectual property assets, in the first quarter of fiscal 2013, the Company closed a transaction that assigned the rights to certain of these assets to a large technology company for $35 million. The entire contract amount is included in the “Other (gains) expenses, net” line of the Company’s Condensed Consolidated Statement of Operations for the nine months ended December 31, 2012. The Company will continue to have the ability to use these intellectual property assets in current and future product offerings.

New Accounting Pronouncements Recently Adopted: In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220) — Presentation of Comprehensive Income (ASU 2011-05), requiring an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminated the option to present the components of other comprehensive income as part of the statement of equity. The Company adopted ASU 2011-05 in the first quarter of fiscal year 2013 by including the required disclosures in two separate but consecutive statements.

NOTE B – DIVESTITURES

In June 2011, the Company sold its Internet Security business for approximately $14 million and recognized a gain on disposal of approximately $23 million, including tax expense of approximately $18 million.

The income from discontinued components for the sale of the Company’s Internet Security business, which occurred during the first quarter of fiscal year 2012, consisted of the following:

	Nine Months Ended December 31, 2011
	(in millions)
Subscription and maintenance revenue	$	15
Total revenue	$	15
Loss from operations of discontinued components, net of tax benefit of $6 million	$	(10	)
Gain on disposal of discontinued components, net of taxes	23
Income from discontinued operations, net of taxes	$	13

7

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE C – SEVERANCE AND EXIT COSTS

Fiscal year 2012 workforce reduction plan: The fiscal year 2012 workforce reduction plan (Fiscal 2012 Plan) was announced in July 2011 and consisted of a workforce reduction of approximately 400 positions. This action is part of the Company’s efforts to reallocate resources and divest non-strategic parts of the business. The total amount incurred for severance under the Fiscal 2012 Plan was $39 million. Actions under the Fiscal 2012 Plan were substantially completed by the end of fiscal year 2012.

Fiscal year 2010 restructuring plan: The fiscal year 2010 restructuring plan (Fiscal 2010 Plan) was announced in March 2010 and consisted of a workforce reduction of approximately 1,000 positions and global facilities consolidations. These actions were intended to better align the Company’s cost structure with the skills and resources required to more effectively pursue opportunities in the marketplace and execute the Company’s long-term growth strategy. The total amounts incurred for severance and facilities abandonment under the Fiscal 2010 Plan were $43 million and $2 million, respectively. Actions under the Fiscal 2010 Plan were substantially completed by the end of fiscal year 2011.

Fiscal year 2007 restructuring plan: In August 2006, the Company announced the fiscal year 2007 restructuring plan (Fiscal 2007 Plan) to significantly improve the Company’s expense structure and increase its competitiveness. The Fiscal 2007 Plan consisted of a workforce reduction of approximately 3,100 employees, global facilities consolidations and other cost reductions. The total amounts incurred for severance and facilities abandonment under the Fiscal 2007 Plan were $220 million and $118 million, respectively. Actions under the Fiscal 2007 Plan were substantially completed by the end of fiscal year 2010.

Accrued severance and exit costs and changes in the accruals during the nine months ended December 31, 2012 and 2011 associated with these plans as well as other severance actions were as follows:

(in millions)	Accrued Balance at March 31, 2012		Expense		Change in Estimate			Payments			Accretion and Other			Accrued Balance at December 31, 2012
Severance	$	13	$	18	$	(3	)	$	(8	)	$	—		$	20
Facilities abandonment	40		—		—			(11		)	(4		)	25
Total accrued liabilities	$	53												$	45

(in millions)	Accrued Balance at March 31, 2011		Expense		Change in Estimate			Payments			Accretion and Other		Accrued Balance at December 31, 2011
Severance	$	8	$	49	$	(6	)	$	(30	)	$	—	$	21
Facilities abandonment	47		—		—			(8		)	1		40
Total accrued liabilities	$	55											$	61

The severance liability is included in “Accrued salaries, wages and commissions” in the Condensed Consolidated Balance Sheets. The facilities abandonment liability is included in “Accrued expenses and other current liabilities” and “Other noncurrent liabilities” in the Condensed Consolidated Balance Sheets.

Accretion and other includes accretion of the Company’s lease obligations related to facilities abandonment as well as changes in the assumptions related to future sublease income. These costs are included in “General and administrative” expense in the Condensed Consolidated Statements of Operations.

NOTE D - INVESTMENTS

At December 31, 2012, short-term investments consisted of time deposits held by foreign entities that are denominated in currencies other than the U.S. dollar.  These investments have maturities greater than three months, but less than one year.

At March 31, 2012, short-term investments were less than $1 million.

8

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE E – TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable, net represents amounts due from the Company’s customers and is presented net of allowances. These balances include revenue recognized in advance of customer billings but do not include unbilled contractual commitments executed under license agreements. The components of “Trade accounts receivable, net” were as follows:

	December 31, 2012			March 31, 2012
	(in millions)
Accounts receivable – billed	$	727		$	812
Accounts receivable – unbilled	69			80
Other receivables	13			26
Less: Allowances	(23		)	(16		)
Trade accounts receivable, net	$	786		$	902

NOTE F – GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at December 31, 2012 were as follows:

	At December 31, 2012
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	5,651	$	4,740	$	911	$	301	$	610
Internally developed software products	1,487		638		849		310		539
Other intangible assets	813		429		384		237		147
Total capitalized software and other intangible assets	$	7,951	$	5,807	$	2,144	$	848	$	1,296

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at March 31, 2012 were as follows:

	At March 31, 2012
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	5,628	$	4,733	$	895	$	228	$	667
Internally developed software products	1,366		574		792		258		534
Other intangible assets	814		412		402		214		188
Total capitalized software and other intangible assets	$	7,808	$	5,719	$	2,089	$	700	$	1,389

9

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Based on the capitalized software and other intangible assets recorded through December 31, 2012, the projected annual amortization expense for fiscal year 2013 and the next four fiscal years is expected to be as follows:

	Year Ended March 31,
	2013		2014		2015		2016		2017
	(in millions)
Purchased software products	$	107	$	101	$	90	$	89	$	87
Internally developed software products	156		159		136		105		72
Other intangible assets	54		49		40		26		9
Total	$	317	$	309	$	266	$	220	$	168

The Company evaluates the useful lives and recoverability of capitalized software and other intangible assets when events or changes in circumstances indicate that an impairment may exist. These evaluations require complex assumptions about key factors such as future customer demand, technology trends, and the impact of such factors on the technology the Company acquires and develops for its products. 

As of December 31, 2012, no impairment exists and no revisions to useful lives are necessary within our Enterprise Solutions segment.  Impairment or revisions to useful lives could result from the use of alternative assumptions that reflect reasonably possible outcomes related to future customer demand or technology trends for certain assets in the Enterprise Solutions segment whose carrying amount is approximately $75 million. 

At both December 31, 2012 and March 31, 2012, the goodwill balance was $5,856 million.

NOTE G – DEFERRED REVENUE

The current and noncurrent components of “Deferred revenue (billed or collected)” at December 31, 2012 and March 31, 2012 were as follows:

	December 31, 2012		March 31, 2012
	(in millions)
Current:
Subscription and maintenance	$	2,068	$	2,479
Professional services	149		162
Financing obligations and other	17		17
Total deferred revenue (billed or collected) – current	$	2,234	$	2,658
Noncurrent:
Subscription and maintenance	$	920	$	935
Professional services	35		35
Financing obligations and other	2		2
Total deferred revenue (billed or collected) – noncurrent	$	957	$	972
Total deferred revenue (billed or collected)	$	3,191	$	3,630

NOTE H – DERIVATIVES

The Company is exposed to financial market risks arising from changes in interest rates and foreign exchange rates. Changes in interest rates could affect the Company’s monetary assets and liabilities, and foreign exchange rate changes could affect the Company’s foreign currency denominated monetary assets and liabilities and forecasted transactions. The Company enters into derivative contracts with the intent of mitigating a portion of these risks.

Interest Rate Swaps: The Company has interest rate swaps with a total notional value of $500 million, which swap a total of $500 million of its 6.125% Senior Notes due December 2014 into floating interest rate debt through December 1, 2014. These swaps are designated as fair value hedges.

10

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2012, the fair value of these derivatives was an asset of approximately $22 million, of which approximately $12 million is included in “Other current assets” and approximately $10 million is included in “Other noncurrent assets, net” in the Company’s Condensed Consolidated Balance Sheet.

At March 31, 2012, the fair value of these derivatives was an asset of approximately $27 million, of which approximately $11 million is included in “Other current assets” and approximately $16 million is included in “Other noncurrent assets, net” in the Company’s Condensed Consolidated Balance Sheet.

Foreign Currency Contracts: The Company enters into foreign currency option and forward contracts to manage foreign currency risks. The Company has not designated its foreign exchange derivatives as hedges. Accordingly, changes in fair value from these contracts are recorded as “Other (gains) expenses, net” in the Company’s Condensed Consolidated Statements of Operations.

At December 31, 2012, foreign currency contracts outstanding consisted of purchase and sales contracts with a total notional value of approximately $740 million, which includes hedges on U.S. dollar investments held by a non-U.S. subsidiary outside of that subsidiary’s functional currency, and durations of less than three months. The net fair value of these contracts at December 31, 2012 was a net liability of less than $1 million, of which approximately $4 million is included in “Other current assets” and approximately $4 million is included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheet.

At March 31, 2012, foreign currency contracts outstanding consisted of purchase and sales contracts with a total notional value of approximately $893 million and durations of less than six months. The net fair value of these contracts at March 31, 2012 was a net liability of approximately $2 million, of which approximately $2 million is included in “Other current assets” and approximately $4 million is included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheet.

A summary of the effect of the interest rate and foreign exchange derivatives on the Company’s Condensed Consolidated Statements of Operations is as follows:

	Amount of Net (Gain)/Loss Recognized in the Condensed Consolidated  Statements of Operations (in millions)
	Three Months Ended December 31, 2012			Three Months Ended December 31, 2011
Interest expense, net – interest rate swaps designated as fair value hedges	$	(3	)	$	(3	)
Other (gains) expenses, net – foreign currency contracts	$	(7	)	$	8

	Amount of Net (Gain)/Loss Recognized in the Condensed Consolidated  Statements of Operations (in millions)
	Nine Months Ended December 31, 2012			Nine Months Ended December 31, 2011
Interest expense, net – interest rate swaps designated as fair value hedges	$	(9	)	$	(9	)
Other (gains) expenses, net – foreign currency contracts	$	2		$	9

The Company is subject to collateral security arrangements with most of its major counterparties. These arrangements require the Company or the counterparty to post collateral when the derivative fair values exceed contractually established thresholds. The aggregate fair values of all derivative instruments under these collateralized arrangements were in a net asset position at December 31, 2012 and March 31, 2012. The Company posted no collateral at December 31, 2012 or March 31, 2012. Under these agreements, if the Company’s credit ratings had been downgraded one rating level, the Company would still not have been required to post collateral.

11

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE I – FAIR VALUE MEASUREMENTS

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2012 and March 31, 2012:

	At December 31, 2012							At March 31, 2012
	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	$	1,240	$	—	$	1,240	(1)	$	1,374	$	—	$	1,374	(2)
Foreign exchange derivatives (3)	—		4		4			—		2		2
Interest rate derivatives (3)	—		22		22			—		27		27
Total Assets	$	1,240	$	26	$	1,266		$	1,374	$	29	$	1,403
Liabilities:
Foreign exchange derivatives (3)	$	—	$	4	$	4		$	—	$	4	$	4
Total Liabilities	$	—	$	4	$	4		$	—	$	4	$	4

(1) At December 31, 2012, the Company had approximately $1,190 million and $50 million of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.

(2) At March 31, 2012, the Company had approximately $1,324 million and $50 million of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.

(3) See Note H, “Derivatives” for additional information. Interest rate derivatives fair value excludes accrued interest.

At December 31, 2012 and March 31, 2012, the Company did not have any assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

The carrying values of financial instruments classified as current assets and current liabilities, such as cash and cash equivalents, short-term investments, accounts payable, accrued expenses, and short-term borrowings, approximate fair value due to the short-term maturity of the instruments.

The following table presents the carrying amounts and estimated fair values of the Company’s other financial instruments that are not measured at fair value on a recurring basis at December 31, 2012 and March 31, 2012:

	At December 31, 2012				At March 31, 2012
(in millions)	Carrying   Value		Estimated Fair Value		Carrying   Value		Estimated Fair Value
Liabilities:
Total debt (1)	$	1,301	$	1,438	$	1,301	$	1,408
Facilities abandonment reserve (2)	$	26	$	31	$	42	$	48

(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 facilities abandonment reserve is determined using the Company’s incremental borrowing rate at December 31, 2012 and March 31, 2012. At December 31, 2012 and March 31, 2012, the facilities abandonment reserve included approximately $8 million and $16 million, respectively, in “Accrued expenses and other current liabilities” and approximately $18 million and $26 million, respectively, in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3).

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CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE J– COMMITMENTS AND CONTINGENCIES

The Company, various subsidiaries, and certain current and former officers have been or, from time to time, may be named as defendants in various lawsuits and claims arising in the normal course of business. The Company also addresses contract issues and disputes with customers, including government customers. The Company believes that it has meritorious defenses in connection with these lawsuits, claims and disputes, and intends to vigorously contest each of them.

Based on the Company’s experience, management believes that the damages amounts claimed in a case are not a meaningful indicator of the potential liability. Claims, suits, investigations and proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of cases.

In the opinion of the Company’s management based upon information currently available to the Company, while the outcome of these lawsuits and claims is uncertain, the likely results of these lawsuits and claims against the Company, either individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows, although the effect could be material to the Company’s results of operations or cash flows for any interim reporting period. For some of these matters, the Company is unable to estimate a range of reasonably possible loss due to the stage of the matter and/or other particular circumstances of the matter. For others, a range of reasonably possible loss can be estimated. For those matters for which such a range can be estimated, the Company estimates that, in the aggregate, the range of reasonably possible loss is from zero to $30 million. This is in addition to amounts, if any, that have been accrued for those matters.

The Company is obligated to indemnify its officers and directors under certain circumstances to the fullest extent permitted by Delaware law. As a part of that obligation, the Company has advanced and will continue to advance certain attorneys’ fees and expenses incurred by current and former officers and directors in various lawsuits and investigations.

NOTE K – STOCKHOLDERS’ EQUITY

Stock Repurchases: In January 2012, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a bank to repurchase $500 million of its common stock. Under the agreement, the Company paid $500 million to the bank for an initial delivery of approximately 15 million shares in the fourth quarter of fiscal year 2012. The fair market value of the initially delivered shares on the date of purchase was approximately $375 million and was included in “Treasury stock” in the Company’s Condensed Consolidated Balance Sheet at March 31, 2012. The remaining $125 million was included in “Additional paid-in capital” in the Company’s Condensed Consolidated Balance Sheet at March 31, 2012.

The ASR transaction was completed in the first quarter of fiscal year 2013, with the Company receiving approximately 3.7 million additional shares, at which time the initial amount recorded as additional paid-in capital was reclassified to treasury stock. The final number of shares delivered upon settlement of the agreement was determined based on the average price of the Company’s common stock over the term of the ASR agreement.

During the nine months ended December 31, 2012, excluding the ASR transaction, the Company repurchased approximately 17 million shares of its common stock for approximately $421 million. At December 31, 2012, the Company remained authorized to purchase approximately $579 million of its common stock under its current stock repurchase program.

Accumulated Other Comprehensive Loss: Accumulated other comprehensive loss at December 31, 2012 and March 31, 2012 was approximately $119 million and $108 million, respectively, due to foreign currency translation losses.

13

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cash Dividends: The Company’s Board of Directors declared the following dividends during the nine months ended December 31, 2012 and 2011:

Nine Months Ended December 31, 2012:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share		Record Date	Total Amount		Payment Date
May 8, 2012	$	0.25	May 22, 2012	$	119	June 12, 2012
August 2, 2012	$	0.25	August 14, 2012	$	116	September 11, 2012
November 7, 2012	$	0.25	November 20, 2012	$	114	December 11, 2012

Nine Months Ended December 31, 2011:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share		Record Date	Total Amount		Payment Date
May 12, 2011	$	0.05	May 23, 2011	$	25	June 16, 2011
August 3, 2011	$	0.05	August 16, 2011	$	25	September 14, 2011
November 9, 2011	$	0.05	November 22, 2011	$	25	December 14, 2011

Rights Plan: On November 8, 2012, the Company adopted a new Stockholder Protection Rights Agreement (the Rights Agreement) to replace its prior Stockholder Protection Rights Agreement that expired on November 30, 2012. Under the Rights Agreement, each outstanding share of the Company's common stock carries a right (Right). The Rights will trade with the common stock until the Separation Time, which would occur on the next business day after: (i) the Company's announcement that a person or group (an Acquiring Person) has become the beneficial owner of 20% or more of the Company's outstanding common stock (other than Martin Haefner and Eva Maria Bucher-Haefner and their respective affiliates and associates, who are “grandfathered” under this provision so long as their aggregate ownership of common stock does not exceed the sum of 126,562,500 shares of common stock and that number of shares equal to 0.1% of the then outstanding shares of common stock); (ii) the date on which any Acquiring Person becomes the beneficial owner of more than 50% of the outstanding shares of common stock; or (iii) the 10th business day after the commencement of a tender offer or exchange offer (or such later date as the Company's Board of Directors may from time to time determine prior to the Separation Time) that would result in an Acquiring Person owning 20% or more of the Company's outstanding common stock.  Following the Separation Time, each Right may be exercised to purchase 0.001 shares of the Company's participating preferred stock at a purchase price of $100 per share.  If the Separation Time occurs pursuant to an event described in (i) or (ii) above, however, each Right, other than rights held by an Acquiring Person, will entitle the holder to receive, for an exercise price of $100, that number of shares of the Company's common stock (or, in certain circumstances, cash, property or other securities) having an aggregate Market Price (as determined under the Rights Agreement) equal to two times the exercise price.  The Rights will not be triggered by a Qualifying Offer, as defined in the Rights Agreement, if holders of at least 10% of the outstanding shares of the Company's common stock request pursuant to the terms of the Rights Agreement that a special meeting of stockholders be convened for the purpose of exempting such offer from the Rights Agreement, and thereafter the stockholders vote at that meeting to exempt that Qualifying Offer from the Rights Agreement.  The Rights, which are redeemable by the Company at $0.001 per Right, expire November 30, 2015.

NOTE L – INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE

Basic net income per common share excludes dilution and is calculated by dividing net income allocable to common shares by the weighted average number of common shares outstanding for the period. Diluted net income per common share is calculated by dividing net income allocable to common shares by the weighted average number of common shares at the balance sheet date, as adjusted for the potential dilutive effect of non-participating share-based awards.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents basic and diluted income from continuing operations per common share information for the three and nine months ended December 31, 2012 and 2011.

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012			2011
	(in millions, except per share amounts)
Basic income from continuing operations per common share:
Income from continuing operations	$	251		$	263		$	713		$	727
Less: Income from continuing operations allocable to participating securities	(3		)	(3		)	(8		)	(9		)
Income from continuing operations allocable to common shares	$	248		$	260		$	705		$	718
Weighted average common shares outstanding	452			483			458			492
Basic income from continuing operations per common share	$	0.55		$	0.54		$	1.54		$	1.46
Diluted income from continuing operations per common share:
Income from continuing operations	$	251		$	263		$	713		$	727
Less: Income from continuing operations allocable to participating securities	(3		)	(3		)	(8		)	(9		)
Income from continuing operations allocable to common shares	$	248		$	260		$	705		$	718
Weighted average shares outstanding and common share equivalents:
Weighted average common shares outstanding	452			483			458			492
Weighted average effect of share-based payment awards	1			1			2			1
Denominator in calculation of diluted income per share	453			484			460			493
Diluted income from continuing operations per common share	$	0.55		$	0.54		$	1.53		$	1.46

For the three months ended December 31, 2012 and 2011, respectively, approximately 4 million and 6 million shares of Company common stock underlying restricted stock awards and options to purchase common stock were excluded from the calculation because their effect on income per share was anti-dilutive during the respective periods. Weighted average restricted stock awards of approximately 5 million and 6 million for the three months ended December 31, 2012 and 2011, respectively, were considered participating securities in the calculation of net income allocable to common stockholders.

For the nine months ended December 31, 2012 and 2011, respectively, approximately 4 million and 6 million restricted stock awards and options to purchase common stock were excluded from the calculation because their effect on income per share was anti-dilutive during the respective periods. Weighted average restricted stock awards of approximately6 million and 6 million for the nine months ended December 31, 2012 and 2011, respectively, were considered participating securities in the calculation of net income allocable to common stockholders.

15

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE M – ACCOUNTING FOR SHARE-BASED COMPENSATION

The Company recognized share-based compensation in the following line items in the Condensed Consolidated Statements of Operations for the periods indicated:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012			2011
	(in millions)
Costs of licensing and maintenance	$	1		$	—		$	2		$	2
Cost of professional services	1			1			3			3
Selling and marketing	6			9			24			25
General and administrative	6			5			21			17
Product development and enhancements	4			5			12			14
Share-based compensation expense before tax	$	18		$	20		$	62		$	61
Income tax benefit	(4		)	(6		)	(20		)	(20		)
Net share-based compensation expense	$	14		$	14		$	42		$	41

The following table summarizes information about unrecognized share-based compensation costs at December 31, 2012:

	Unrecognized Compensation Costs		Weighted Average Period Expected to be Recognized
	(in millions)		(in years)
Stock option awards	$	4	2.1
Restricted stock units	16		2.0
Restricted stock awards	66		1.9
Performance share units	14		2.8
Total unrecognized share-based compensation costs	$	100	2.0

There were no capitalized share-based compensation costs for the three and nine months ended December 31, 2012 or 2011.

Under the Company’s long-term incentive plans, the value of performance share unit (PSU) awards is determined using the closing price of the Company’s common stock on the last trading day of the quarter until the PSUs are granted. Compensation costs for the PSUs are amortized over the requisite service periods based on the expected level of achievement of the performance targets. At the conclusion of the performance periods for the PSUs, the applicable number of shares of restricted stock awards (RSAs), restricted stock units (RSUs) or unrestricted shares granted may vary based upon the level of achievement of the performance targets and the approval of the Company’s Compensation and Human Resources Committee (which may reduce any award for any reason in its discretion).

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CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended December 31, 2012 and 2011, the Company issued options for 0.7 million shares and 0.6 million shares, respectively. The weighted average fair values and assumptions used for the options granted were as follows:

	Nine Months Ended December 31,
	2012		2011
Weighted average fair value	9.09		5.99
Dividend yield	3.96	%	0.91	%
Expected volatility factor (1)	59	%	33	%
Risk-free interest rate (2)	0.8	%	1.7	%
Expected life (in years) (3)	4.5		4.5

(1) Expected volatility is measured using historical daily price changes of the Company’s 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, based primarily on historical experience, 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).

The table below summarizes all of the RSUs and RSAs, including grants made pursuant to the long-term incentive plans discussed above, granted during the three and nine months ended December 31, 2012 and 2011:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012		2011
				(shares in millions)
RSUs
Shares	0.1			—		(1)	0.8		0.7
Weighted avg. grant date fair value (2)	$	20.81		$	20.19		$	24.05	$	24.04
RSAs
Shares	—		(1)	0.1			3.6		3.7
Weighted avg. grant date fair value (3)	$	23.04		$	20.40		$	26.21	$	24.49

(1) Less than 0.1 million.

(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) The fair value is based on the quoted market value of the Company’s common stock on the grant date.

Employee Stock Purchase Plan: The Company maintains the 2012 Employee Stock Purchase Plan (ESPP) for all eligible employees. The ESPP offer period is semi-annual and allows participants to purchase the Company’s common stock at 95% of the closing price of the stock on the last day of the offer period. The ESPP is non-compensatory. For the six-month offer period ended June 30, 2012, the Company issued approximately 0.1 million shares under the ESPP at an average price of $25.74 per share. For the six-month offer period ended December 31, 2012, the Company issued approximately 0.2 million shares under the ESPP at an average price of $20.88 per share. As of December 31, 2012, approximately 29.7 million shares are available for future issuances under the ESPP.

NOTE N – INCOME TAXES

Income tax expense for the three and nine months ended December 31, 2012 was $107 million and $342 million, respectively, compared with the three and nine months ended December 31, 2011 of $141 million and $337 million, respectively. For the three and nine months ended December 31, 2011, the Company recognized a net tax expense of approximately $10 million and a net tax benefit of approximately $8 million, respectively, resulting primarily from international tax rate changes and the recognition of tax benefits related to an investment in a foreign subsidiary.

17

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the three months ended December 31, 2012, the Company reclassified approximately $150 million of deferred tax assets from non-current to current due to a change in tax accounting method reflected in the Company's federal income tax return for the fiscal year ended March 31, 2012. This accounting change does not affect the income tax expense.

In April 2011, the U.S. Internal Revenue Service (IRS) completed its examination of the Company’s federal income tax returns for the tax years ended March 31, 2005, 2006 and 2007 and issued a report of its findings in connection with the examination. The Company disagrees with certain proposed adjustments in the report and is vigorously disputing these matters through the IRS appellate process. The IRS is also examining the Company’s federal income tax returns for the tax years ended March 31, 2008, 2009 and 2010.

While it is difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes that its financial statements reflect the probable outcome of uncertain tax positions. The Company may adjust these uncertain tax positions, as well as any related interest or penalties, in light of changing facts and circumstances, including the settlement of income tax audits and the expirations of statutes of limitation. To the extent a settlement differs from the amounts previously reserved, that difference generally would be recognized as a component of income tax expense in the period of resolution. Although the timing of the resolution of income tax examinations is highly uncertain, it is reasonably possible that settlements, payments and new information in the next 12 months related to certain federal, foreign and state tax issues may result in changes to the Company’s uncertain tax positions, including issues involving taxation of international operations, certain state tax issues and other matters. The Company believes that such reasonably possible changes within the next 12 months may reduce the balance of unrecognized tax benefits, net of the effects of refunds and other affirmative claims, by an amount up to $200 million.

The Company’s effective income tax rate, excluding the impact of discrete items, for the nine months ended December 31, 2012 and 2011 was 32.6% and 32.4%, respectively. Legislative changes in tax laws, the outcome of tax audits and any other changes in potential tax liabilities may result in additional tax expense or benefit in fiscal year 2013, which are not considered in the Company’s estimated annual effective tax rate. While the Company does not currently view any such items as individually material to the results of the Company’s consolidated financial position or results of operations, the impact of certain items may yield additional tax expense or benefit in the remaining quarter of fiscal year 2013 and the Company is anticipating a fiscal year 2013 effective tax rate of approximately 30% to 31%.

NOTE O – SEGMENT INFORMATION

The Company’s Mainframe Solutions and Enterprise Solutions operating segments comprise its software business organized by the nature of the Company’s software offerings and the product hierarchy in which the platform operates. The Services operating segment comprises implementation, consulting, education and training services, including those directly related to the Mainframe Solutions and Enterprise Solutions software that the Company sells to its customers. A measure of segment assets is not currently provided to the Company’s Chief Executive Officer and has therefore not been disclosed.

As part of the Company’s efforts to more fully utilize its intellectual property assets, in the first quarter of fiscal year 2013, the Company closed a transaction that assigned the rights to certain of these assets to a large technology company for $35 million. The entire contract amount is included in the Enterprise Solutions segment for the nine months ended December 31, 2012. The Company will continue to have the ability to use these intellectual property assets in current and future product offerings.

During the third quarter of fiscal year 2013, the Company incurred severance costs of which $5 million, $11 million and $2 million were assigned to the Mainframe Solutions, Enterprise Solutions and Services segments, respectively.

During the first nine months of fiscal year 2012, the Company incurred severance costs associated with the Fiscal 2012 Plan, of which $23 million, $20 million and $1 million were assigned to the Mainframe Solutions, Enterprise Solutions and Services segments, respectively.  Refer to Note C, “Severance and Exit Costs.”

18

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s segment information for the three and nine months ended December 31, 2012 and 2011 is as follows:

Three Months Ended December 31, 2012	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	622		$	476		$	97		$	1,195
Expenses	248			426			93			767
Segment profit	$	374		$	50		$	4		$	428
Segment operating margin	60		%	11		%	4		%	36		%
Depreciation and amortization	$	25		$	40		$	—		$	65

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2012:

Segment profit	$	428
Less:
Purchased software amortization	26
Other intangibles amortization	14
Share-based compensation expense	18
Other (gains) expenses, net (1)	—
Interest expense, net	12
Income from continuing operations before income taxes	$	358

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

19

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended December 31, 2012	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,869		$	1,340		$	283		$	3,492
Expenses	755			1,195			269			2,219
Segment profit	$	1,114		$	145		$	14		$	1,273
Segment operating margin	60		%	11		%	5		%	36		%
Depreciation and amortization	$	78		$	118		$	—		$	196

Reconciliation of segment profit to income from continuing operations before income taxes for the nine months ended December 31, 2012:

Segment profit	$	1,273
Less:
Purchased software amortization	80
Other intangibles amortization	41
Share-based compensation expense	62
Other (gains) expenses, net (1)	2
Interest expense, net	33
Income from continuing operations before income taxes	$	1,055

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

Three Months Ended December 31, 2011	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	682		$	478		$	103		$	1,263
Expenses	277			419			92			788
Segment profit	$	405		$	59		$	11		$	475
Segment operating margin	59		%	12		%	11		%	38		%
Depreciation and amortization	$	25		$	35		$	—		$	60

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2011:

Segment profit	$	475
Less:
Purchased software amortization	27
Other intangibles amortization	16
Share-based compensation expense	20
Other (gains) expenses, net (1)	(1		)
Interest expense, net	9
Income from continuing operations before income taxes	$	404

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

20

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended December 31, 2011	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,983		$	1,354		$	289		$	3,626
Expenses	861			1,223			272			2,356
Segment profit	$	1,122		$	131		$	17		$	1,270
Segment operating margin	57		%	10		%	6		%	35		%
Depreciation and amortization	$	74		$	98		$	—		$	172

Reconciliation of segment profit to income from continuing operations before income taxes for the nine months ended December 31, 2011:

Segment profit	$	1,270
Less:
Purchased software amortization	76
Other intangibles amortization	50
Share-based compensation expense	61
Other (gains) expenses, net (1)	(5		)
Interest expense, net	24
Income from continuing operations before income taxes	$	1,064

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

The table below summarizes the Company’s revenue from the United States and from international (i.e., non-U.S.) locations:

(in millions)	Three Months Ended December 31, 2012		Nine Months Ended December 31, 2012		Three Months Ended December 31, 2011		Nine Months Ended December 31, 2011
United States	$	701	$	2,068	$	745	$	2,107
Europe	291		830		308		908
Other	203		594		210		611
Total revenue	$	1,195	$	3,492	$	1,263	$	3,626

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Item 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statement

This Quarterly Report on Form 10-Q (Form 10-Q) contains certain forward-looking information relating to CA, Inc. (which we refer to as the “Company,” “Registrant,” “CA Technologies,” “CA,” “we,” “our” or “us”), that is based on the beliefs of, and assumptions made by, our management as well as information currently available to management. When used in this Form 10-Q, the words “believes,” “plans,” “anticipates,” “expects,” “estimates,” “targets” and similar expressions are intended to identify forward-looking information. Forward-looking information includes, for example, the statements made in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), but also appears in other parts of this Form 10-Q. This forward-looking information reflects our current views with respect to future events and is subject to certain risks, uncertainties, and assumptions.

The declaration and payment of future dividends is subject to the determination of the Company’s Board of Directors, in its sole discretion, after considering various factors, including the Company’s financial condition, historical and forecast operating results, and available cash flow, as well as any applicable laws and contractual covenants and any other relevant factors. The Company’s practice regarding payment of dividends may be modified at any time and from time to time.

Repurchases under the Company’s stock repurchase program are expected to be made with cash on hand and may be made from time to time, subject to market conditions and other factors, in the open market, through solicited or unsolicited privately negotiated transactions or otherwise. The program, which is authorized through the fiscal year ending March 31, 2014, does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company’s discretion.

A number of important factors could cause actual results or events to differ materially from those indicated by forward-looking statements, including: the ability to achieve success in the Company’s strategy by, among other things, effectively rebalancing the Company’s sales force to increase penetration in growth markets and with large enterprises that have not historically been significant customers, enabling the sales force to sell new products, improving the Company’s brand in the marketplace and ensuring the Company’s set of cloud computing, Software-as-a-Service and other new offerings address the needs of a rapidly changing market, while not adversely affecting the demand for the Company’s traditional products or its profitability; global economic factors or political events beyond the Company’s control; general economic conditions and credit constraints, or unfavorable economic conditions in a particular region, industry or business sector; the failure to adapt to technological changes and introduce new software products and services in a timely manner; competition in product and service offerings and pricing; the failure to expand partner programs; the ability to retain and attract adequate qualified personnel; the ability to integrate acquired companies and products into existing businesses; the ability to adequately manage and evolve financial reporting and managerial systems and processes; the ability of the Company’s products to remain compatible with ever-changing operating environments; breaches of the Company’s software products and the Company’s and customers’ data centers and IT environments; discovery of errors in the Company’s software and potential product liability claims; the failure to protect the Company’s intellectual property rights and source code; risks associated with sales to government customers; access to software licensed from third parties; risks associated with the use of software from open source code sources; access to third-party code and specifications for the development of code; third-party claims of intellectual property infringement or royalty payments; fluctuations in the number, terms and duration of the Company’s license agreements as well as the timing of orders from customers and channel partners; the failure to renew large license transactions on a satisfactory basis; changes in market conditions or the Company’s credit ratings; fluctuations in foreign currencies; the failure to effectively execute the Company’s workforce reductions; successful outsourcing of various functions to third parties; events or circumstances that would require us to record a goodwill impairment charge; potential tax liabilities; acquisition opportunities that may or may not arise; and other factors described more fully in this Form 10-Q and the Company’s other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties occur, or should our assumptions prove incorrect, actual results may vary materially from those described in this Form 10-Q as believed, planned, anticipated, expected, estimated, targeted or similarly expressed in a forward-looking manner. We do not intend to update these forward-looking statements, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. This MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes to the financial statements. References in this Form 10-Q to fiscal 2013 and fiscal 2012 are to our fiscal years ending on March 31, 2013 and 2012, respectively.

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OVERVIEW

We are the leading independent enterprise information technology (IT) management software and solutions company with expertise across a wide range of IT environments. We develop and deliver software and services that help organizations accelerate, transform and secure their IT infrastructures to deliver flexible IT services. This allows customers to respond faster to business demands for new services, manage the quality of services, increase efficiency and reduce risk. Our products and solutions are designed to operate in a wide range of IT environments – from mainframe and physical to virtual and cloud.

We license our products worldwide. We serve companies across most major industries around the world, including banks, insurance companies, other financial services providers, government agencies, telecommunication providers, manufacturers, technology companies, retailers, educational organizations and health care institutions. These customers typically maintain IT infrastructures across platforms, from physical to virtual and cloud, and from multiple vendors. These environments are complex and critical to our customers’ operations.

As business demands increase and new technologies evolve, demands on IT continue to increase. Organizations expect more from technology and many want to use IT to gain a competitive edge. This means companies are using IT to deliver products to market faster, reach new customers and respond to changes in the competitive environment. To achieve their desired business outcomes and gain business advantages, many organizations are improving the efficiency, mobility and availability of their IT resources and applications by adopting next-generation technologies like virtualization and cloud computing and consuming IT as Software-as-a-Service (SaaS). They are also extending their legacy physical environments to virtual and cloud environments. Virtualization lets users run multiple virtual machines on each physical machine. Cloud computing is a shared pool of computing resources that can be accessed, configured and used as needed. With SaaS, customers can obtain software on a subscription, “pay-as-you-go” model.

While these technologies can reduce operating costs tied to physical infrastructure, this evolution in computing is a transformative opportunity that is also making IT environments more complex. Data centers are evolving to include mainframes, physical servers, virtualized servers and private, public and hybrid (a combination of public and private) cloud environments.

We believe it is vital for companies to effectively accelerate, transform and secure all of their various computing environments, while being able to deliver new services quickly based on their business needs. Our core strengths in IT management and security, combined with our investments in innovative technologies, position us to serve a range of customers which we divided into three customer segments in the fourth quarter of fiscal 2012: (1) approximately 1,000 core large existing enterprise customers with annual revenue in excess of $2 billion (Large Existing Enterprises), which currently account for approximately 80% of our revenue; (2) enterprises with revenue in excess of $2 billion that have not historically been significant customers of ours (Large New Enterprises), a customer segment that we believe includes 4,500 potential new customers but where we intend to initially focus on approximately 1,000 of these customers selected based on our current geographical and vertical strengths; and (3) approximately 7,000 enterprises with revenue between $300 million and $2 billion and in fast growing geographies like Latin America and Asia (Growth Markets). During the first quarter of fiscal 2013, we made organizational changes to allow us to focus better on our customer segmentation. Key aspects of these changes include: consolidating all disciplines associated with our Growth Markets initiatives into one general manager, consolidating our business operations into our finance team, enhancing the processes for evaluating sales opportunities by region and customer segment and increasing executive oversight over key transactions. In addition, we introduced new products and solutions during the third quarter of fiscal 2013 and we expect to introduce new products and solutions during the fourth quarter of fiscal 2013 that we believe should create selling opportunities across all customer segments. All these efforts are designed to accelerate new product sales outside of our contract renewal cycle. We believe by targeting these customer segments, we are more than doubling our total addressable market. Our customer segmentation initiative has taken longer than anticipated to gain traction. As part of this initiative, we have also developed a new management process intended to improve the visibility and quality of our pipeline. We believe that these initiatives will benefit our performance in the long-term.

Our broad and deep portfolio of software solutions addresses customer needs across computing platforms. We deliver these solutions on-premises or, for certain products, using SaaS.

During fiscal 2012, we began an effort to more fully realize the value of our intellectual property by strategically licensing and/or assigning selected assets within our portfolio. This effort is intended to better position us in the marketplace and allow us the flexibility to reinvest in improving our overall business.

23

EXECUTIVE SUMMARY

The following is a summary of the analysis of our results contained in our MD&A for the third quarter of fiscal 2013.

Total revenue for the third quarter of fiscal 2013decreased5% to $1,195 million compared with $1,263 million in the year-ago period primarily due to a decrease in subscription and maintenance revenue and to a lesser extent a decrease in software fees and other revenue. For the third quarter of fiscal 2012, software fees and other revenue included $39 million in revenue under a license agreement we entered into in connection with a litigation settlement (refer to the "Software Fees and Other" section under Results of Operations for additional information), which contributed three percentage points of the decrease in total revenue. There was also an unfavorable foreign exchange effect of $12 million for the third quarter of fiscal 2013.

Total bookings in the third quarter of fiscal 2013decreased2% compared with the year-ago period to $1,261 million primarily due to a year-over-year decline in software fees and other bookings, which are recognized as software fees and other revenue. This was partially offset by an increase in professional services bookings. Total new product and mainframe capacity sales in the third quarter of fiscal 2013 declined by approximately 10% compared with the third quarter of fiscal 2012. Within these bookings, mainframe new product sales decreased primarily as a result of the aforementioned $39 million license fee received in the third quarter of fiscal 2012. Mainframe capacity sales decreased, while enterprise solutions new product sales were consistent with the prior period. We continue to expect the value of our total fiscal 2013 renewals to decline by approximately 10% compared with fiscal 2012. For the third quarter of fiscal 2013, our percentage renewal yield was in the low 90's.

Total expenses before interest and income taxes of $825 million for the third quarter of fiscal 2013decreased3% compared with $850 million in the third quarter of fiscal 2012. Total expenses for the third quarter of fiscal 2013decreased compared with the third quarter of fiscal 2012 primarily as a result of a decrease in selling and marketing, general and administrative and product development and enhancements expenses. These decreases were partially offset by an increase of $18 million in employee severance charges.

Income from continuing operations before interest and income taxes decreased$43 million, or 10%, in the third quarter of fiscal 2013 compared with the year-ago period.

Income tax expense decreased$34 million for the third quarter of fiscal 2013 compared with the year-ago period as a result of the decrease in income before income taxes and the timing of both favorable and unfavorable discrete items in the third quarter of fiscal 2013 compared with the third quarter of fiscal 2012.

Diluted income from continuing operations per share for the third quarter of fiscal 2013 was $0.55, compared with $0.54 in the year-ago period, reflecting an increase in operating income as a result of the decrease in operating expenses and our repurchases of common shares.

For the third quarter of fiscal 2013, our segment performance results were as follows:

Mainframe Solutions revenue for the third quarter of fiscal 2013decreased$60 million from the year-ago period primarily due to the aforementioned $39 million license fee received in the third quarter of fiscal 2012 and a decrease in subscription and maintenance revenue, which is attributable to a decrease in subscription and maintenance bookings due to lower new product and mainframe capacity sales in prior periods. The increase in operating margin for the third quarter of fiscal 2013 was primarily a result of a decrease in selling and marketing expenses and general and administrative expenses.

Enterprise Solutions revenue for the third quarter of fiscal 2013 decreased from the year-ago period due to an unfavorable foreign exchange effect of $4 million.  Within Enterprise Solutions, there was an increase in revenue from our security and ITKO products, which was mostly offset by a decrease in revenue from our service assurance, automation and data management products. Primarily as a result of the increase in expenses from severance costs, Enterprise Solutions operating margin for the third quarter of fiscal 2013 declined from 12% to 11% compared with the year-ago period.

Services revenue for the third quarter of fiscal 2013 decreased compared with the third quarter of fiscal 2012 due to a lower amount of billable time on engagements during the quarter. Operating margin for Services decreased to 4% in the third quarter of fiscal 2013 compared with 11% in the third quarter of fiscal 2012 as a result the decrease in revenue and an increase in severance costs.

Total revenue backlog of $7,488 million at December 31, 2012decreased7% compared with $8,084 million at December 31, 2011. The current portion of revenue backlog of $3,495 million at December 31, 2012decreased by 2% compared with the balance of $3,576 million at December 31, 2011. Revenue backlog in the quarter was unfavorably affected by the decline of total bookings in the first six months of fiscal 2013 and the increase in the percentage of bookings recognized as software fees and other revenue in the first nine months of fiscal 2013, which is not included in revenue backlog at December 31, 2012. We expect a continued decline in revenue backlog year-over-year through fiscal 2013 prior to an expected increase in our renewals in fiscal 2014. Generally, we believe that a change in the current portion of revenue backlog on a year-over-year basis is an indicator of future subscription and maintenance revenue performance due to the high percentage of our revenue that is recognized from license agreements that are already committed and being recognized ratably.

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Cash provided by continuing operating activities for the third quarter of fiscal 2013 was $566 million, representing an increase of $170 million compared with the third quarter of fiscal 2012. The increase was primarily due to an increase in cash collections of $178 million, which includes an increase in single installment payments of $150 million. Due to our performance in the first six months of fiscal 2013, the macro-economic environment in which we believe customers are elongating their sales cycles, and the expectation of delaying the closing of some transactions in our pipeline until later in fiscal 2013 and after fiscal 2013, we currently expect lower billings and collections for fiscal 2013 compared with fiscal 2012. As a result, we expect a year-over-year decrease in cash flows from operations for fiscal 2013 compared with fiscal 2012.

QUARTERLY UPDATE

• In November 2012, the Company announced that its Board of Directors unanimously adopted a Stockholder Protection Rights Agreement to replace the Company's existing Rights Agreement, which expired on November 30, 2012.

• In December 2012, the Company's Board of Directors elected Michael P. Gregoire as the Company's Chief Executive Officer and a member of its Board of Directors, effective January 7, 2013. Mr. Gregoire is succeeding William E. McCracken who retired as Chief Executive Officer and a member of the Company's Board, effective January 7, 2013. Mr. Gregoire is a 25-year veteran of the software and IT services industries, most recently as President, Chief Executive Officer and Chairman of the board of directors of Taleo Corporation prior to its acquisition by Oracle Corporation in April 2012.

PERFORMANCE INDICATORS

Management uses several quantitative performance indicators to assess our financial results and condition. Following is a summary of the principal quantitative performance indicators that management uses to review performance:

	Third Quarter Comparison Fiscal 2013 Versus Fiscal 2012
								Percent
	2013		2012		Change			Change
	(dollars in millions)
Total revenue	$	1,195	$	1,263	$	(68	)	(5	)%
Income from continuing operations	$	251	$	263	$	(12	)	(5	)%
Cash provided by operating activities – continuing operations	$	566	$	396	$	170		43	%
Total bookings	$	1,261	$	1,284	$	(23	)	(2	)%
Subscription and maintenance bookings	$	1,034	$	1,035	$	(1	)	—	%
Weighted average subscription and maintenance license agreement duration in years	2.97		3.53		(0.56		)	(16	)%

	First Nine Months Comparison Fiscal 2013 Versus Fiscal 2012
								Percent
	2013		2012		Change			Change
	(dollars in millions)
Total revenue	$	3,492	$	3,626	$	(134	)	(4	)%
Income from continuing operations	$	713	$	727	$	(14	)	(2	)%
Cash provided by operating activities – continuing operations	$	838	$	729	$	109		15	%
Total bookings	$	2,651	$	3,121	$	(470	)	(15	)%
Subscription and maintenance bookings	$	2,043	$	2,484	$	(441	)	(18	)%
Weighted average subscription and maintenance license agreement duration in years	2.98		3.48		(0.50		)	(14	)%

25

	December 31, 2012		March 31, 2012		Change From Year End			December 31, 2011		Change From Prior Year Quarter
	(in millions)
Cash, cash equivalents and investments(1)	$	2,548	$	2,679	$	(131	)	$	2,539	$	9
Total debt	$	1,301	$	1,301	$	—		$	1,309	$	(8	)
Total expected future cash collections from committed contracts(2)	$	5,083	$	5,745	$	(662	)	$	5,800	$	(717	)
Total revenue backlog(2)	$	7,488	$	8,473	$	(985	)	$	8,084	$	(596	)
Total current revenue backlog(2)	$	3,495	$	3,714	$	(219	)	$	3,576	$	(81	)

(1) At December 31, 2012 and March 31, 2012, investments were $195 million and less than $1 million, respectively. At December 31, 2011, investments were $181 million.

(2) Refer to the discussion in the “Liquidity and Capital Resources” section of this MD&A for additional information on expected future cash collections from committed contracts and revenue backlog.

Analyses of our performance indicators shown above and segment performance can be found in the “Results of Operations” and “Liquidity and Capital Resources” sections of this MD&A.

Total Revenue — Total revenue is the amount of revenue recognized during the reporting period from the sale of license, maintenance and professional services agreements. Amounts recognized as subscription and maintenance revenue are recognized ratably over the term of the agreement. Professional services revenue is generally recognized as the services are performed or recognized on a ratable basis over the term of the related software license. Software fees and other revenue generally represents license fee revenue recognized at the inception of a license agreement (up-front basis) and also includes our SaaS revenue, which is recognized as services are provided.

Total Bookings — Total bookings, or sales, includes the incremental value of all subscription, maintenance and professional services contracts and software fees and other contracts entered into during the reporting period and is generally reflective of the amount of products and services during the period that our customers have agreed to purchase from us. Revenue for bookings attributed to sales of software products for which license fee revenue is recognized on an up-front basis is reflected in “Software fees and other” in the Condensed Consolidated Statements of Operations.

As our business strategy has evolved, our management also looks within bookings at total new product and capacity sales, which we define as sales of products or mainframe capacity that are new or in addition to products or mainframe capacity previously contracted for by a customer. The amount of new product and capacity sales for a period, as currently tracked by us, requires estimation by management and has not been historically reported. Within a given period, the amount of new product and capacity sales may not be material to the change in our total bookings or revenue compared with prior periods. New product and capacity sales can be reflected as subscription and maintenance bookings in the period (for which revenue would be recognized ratably over the term of the contract) or in software fees and other bookings (which are recognized as software fees and other revenue in the current period).

Subscription and Maintenance Bookings — Subscription and maintenance bookings is the aggregate incremental amount we expect to collect from our customers over the terms of the underlying subscription and maintenance agreements entered into during a reporting period. These amounts include the sale of products directly by us and may include additional products, services or other fees for which we have not established vendor specific objective evidence (VSOE). Subscription and maintenance bookings also includes indirect sales by distributors and volume partners, value-added resellers and exclusive representatives to end-users, where the contracts incorporate the right for end-users to receive unspecified future software products, and other contracts without these rights entered into in close proximity or contemplation of such agreements. These amounts are expected to be recognized ratably as subscription and maintenance revenue over the applicable term of the agreements. Subscription and maintenance bookings exclude the value associated with certain perpetual licenses, license-only indirect sales, SaaS offerings and professional services arrangements.

The license and maintenance agreements that contribute to subscription and maintenance bookings represent binding payment commitments by customers over periods that range generally from three to five years, although in certain cases customer commitments can be for longer or shorter periods. These current period bookings are often renewals of prior contracts that also had various durations, usually from three to five years. The amount of new subscription and maintenance bookings recorded in a period is affected by the volume, duration and value of contracts renewed during that period. Subscription and maintenance bookings typically increases in each consecutive quarter during a fiscal year, with the first quarter having the least bookings and the fourth quarter having the most bookings. However, subscription and maintenance bookings may not always follow the pattern of increasing in consecutive quarters during a fiscal year, and the quarter-to-quarter differences in subscription and maintenance bookings may vary. Given the varying durations of the contracts being renewed, year-over-year comparisons of bookings are not always indicative of the overall bookings trend.

26

Generally, we believe that a change in the current portion of revenue backlog on a year-over-year basis is an indicator of future subscription and maintenance revenue performance due to the high percentage of our revenue that is recognized from license agreements that are already committed and being recognized ratably. Within bookings, we also consider the yield on our renewals. We define “renewal yield” as the percentage of the renewable value of a prior contract (i.e., the maintenance value and, in the case of non-perpetual licenses, the license value) realized in current period bookings. The renewable value of a prior contract is an estimate affected by various factors including contractual renewal terms, price increases and other conditions. We estimate the aggregated yield for a quarter based on a review of material transactions representing a substantial majority of the dollar value of renewals during the current period. There may be no correlation between year-over-year changes in bookings and year-over-year changes in renewal yield, since renewal yield is based on the renewable value of deals of various durations, most of which are longer than one year.

Additionally, period-to-period changes in subscription and maintenance bookings do not necessarily correlate to changes in cash receipts. The contribution to current period revenue from subscription and maintenance bookings from any single license or maintenance agreement is relatively small, since revenue is recognized ratably over the applicable term for these agreements.

Weighted Average Subscription and Maintenance License Agreement Duration in Years — The weighted average subscription and maintenance license agreement duration in years reflects the duration of all subscription and maintenance agreements executed during a period, weighted by the total contract value of each individual agreement. Weighted average subscription and maintenance license agreement duration in years can fluctuate from period to period depending on the mix of license agreements entered into during a period. Weighted average duration information is disclosed in order to provide additional understanding of the volume of our bookings.

Total Revenue Backlog — Total revenue backlog represents the aggregate amount we expect to recognize as revenue in the future as either subscription and maintenance revenue, professional services revenue or software fees and other revenue associated with contractually committed amounts billed or to be billed as of the balance sheet date. Total revenue backlog is composed of amounts recognized as liabilities in our Condensed Consolidated Balance Sheets as deferred revenue (billed or collected) as well as unearned amounts yet to be billed under subscription and maintenance and software fees and other agreements. Classification of amounts as current and noncurrent depends on when such amounts are expected to be earned and therefore recognized as revenue. Amounts that are expected to be earned and therefore recognized as revenue in 12 months or less are classified as current, while amounts expected to be earned in greater than 12 months are classified as noncurrent. The portion of the total revenue backlog that relates to subscription and maintenance agreements is recognized as revenue evenly on a monthly basis over the duration of the underlying agreements and is reported as subscription and maintenance revenue in our Condensed Consolidated Statements of Operations. Generally, we believe that a change in the current portion of revenue backlog on a year-over-year basis is an indicator of future subscription and maintenance revenue performance due to the high percentage of our revenue that is recognized from license agreements that are already committed and being recognized ratably.

“Deferred revenue (billed or collected)” is composed of: (i) amounts received from customers in advance of revenue recognition, (ii) amounts billed but not collected for which revenue has not yet been earned, and (iii) amounts received in advance of revenue recognition from financial institutions where we have transferred our interest in committed installments (referred to as “Financing obligations and other” in Note G, “Deferred Revenue,” in the Notes to the Condensed Consolidated Financial Statements).

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RESULTS OF OPERATIONS

The following tables present revenue and expense line items reported in our Condensed Consolidated Statements of Operations for the third quarter and first nine months of fiscal 2013 and fiscal 2012 and the period-over-period dollar and percentage changes for those line items. These comparisons of past financial results are not necessarily indicative of future results.

	Third Quarter Comparison Fiscal 2013 Versus Fiscal 2012
					Dollar Change			Percentage Change		Percentage of Total Revenue
	2013		2012		2013 / 2012			2013 / 2012		2013		2012
	(in millions)
Revenue
Subscription and maintenance revenue	$	966	$	1,006	$	(40	)	(4	)%	81	%	80	%
Professional services	97		103		(6		)	(6	)	8		8
Software fees and other	132		154		(22		)	(14	)	11		12
Total revenue	$	1,195	$	1,263	$	(68	)	(5	)%	100	%	100	%
Expenses
Costs of licensing and maintenance	$	72	$	69	$	3		4	%	6	%	5	%
Cost of professional services	92		91		1			1		8		7
Amortization of capitalized software costs	66		59		7			12		6		5
Selling and marketing	331		342		(11		)	(3	)	28		27
General and administrative	96		113		(17		)	(15	)	8		9
Product development and enhancements	120		126		(6		)	(5	)	10		10
Depreciation and amortization of other intangible assets	39		44		(5		)	(11	)	3		3
Other (gains) expenses, net	9		6		3			50	%	1		—
Total expenses before interest and income taxes	$	825	$	850	$	(25	)	(3	)%	69	%	67	%
Income from continuing operations before interest and income taxes	$	370	$	413	$	(43	)	(10	)%	31	%	33	%
Interest expense, net	12		9		3			33		1		1
Income from continuing operations before income taxes	$	358	$	404	$	(46	)	(11	)%	30	%	32	%
Income tax expense	107		141		(34		)	(24	)	9		11
Income from continuing operations	$	251	$	263	$	(12	)	(5	)%	21	%	21	%

Note:     Amounts may not add to their respective totals due to rounding.

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	First Nine Months Comparison Fiscal 2013 Versus Fiscal 2012
						Dollar Change			Percentage Change		Percentage of Total Revenue
	2013			2012		2013 / 2012			2013 / 2012		2013		2012
	(in millions)
Revenue
Subscription and maintenance revenue	$	2,906		$	3,035	$	(129	)	(4	)%	83	%	84	%
Professional services	283			289		(6		)	(2	)	8		8
Software fees and other	303			302		1			—		9		8
Total revenue	$	3,492		$	3,626	$	(134	)	(4	)%	100	%	100	%
Expenses
Costs of licensing and maintenance	$	210		$	207	$	3		1	%	6	%	6	%
Cost of professional services	266			270		(4		)	(1	)	8		7
Amortization of capitalized software costs	197			164		33			20		6		5
Selling and marketing	953			1,038		(85		)	(8	)	27		29
General and administrative	304			331		(27		)	(8	)	9		9
Product development and enhancements	368			384		(16		)	(4	)	11		11
Depreciation and amortization of other intangible assets	120			134		(14		)	(10	)	3		4
Other (gains) expenses, net	(14		)	10		(24		)	NM		—		—
Total expenses before interest and income taxes	$	2,404		$	2,538	$	(134	)	(5	)%	69	%	70	%
Income from continuing operations before interest and income taxes	$	1,088		$	1,088	$	—		—	%	31	%	30	%
Interest expense, net	33			24		9			38		1		1
Income from continuing operations before income taxes	$	1,055		$	1,064	$	(9	)	(1	)%	30	%	29	%
Income tax expense	342			337		5			1		10		9
Income from continuing operations	$	713		$	727	$	(14	)	(2	)%	20	%	20	%

Note:     Amounts may not add to their respective totals due to rounding.

Revenue

Total Revenue

As more fully described below, the decrease in total revenue in the third quarter of fiscal 2013 compared with the third quarter of fiscal 2012 was primarily attributable a decrease in subscription and maintenance revenue and to a lesser extent a decrease in software fees and other revenue. For the third quarter of fiscal 2012, software fees and other revenue included $39 million in revenue under a license agreement we entered into in connection with a litigation settlement (refer to "Software Fees and Other" section below). There was also an unfavorable foreign exchange effect of $12 million for the third quarter of fiscal 2013.

The decrease in total revenue in the first nine months of fiscal 2013 compared with the first nine months of fiscal 2012 was primarily attributable to an unfavorable foreign exchange effect of $88 million and to a lesser extent, a decrease in subscription and maintenance revenue.

Due to our performance in the first six months of fiscal 2013, the macro-economic environment in which we believe customers are elongating their sales cycles, and the expectation of delaying the closing of some transactions in our pipeline until later in fiscal 2013 and after fiscal 2013, we currently expect a year-over-year decrease in total revenue for fiscal 2013 compared with fiscal 2012.

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Subscription and Maintenance Revenue

Subscription and maintenance revenue is the amount of revenue recognized ratably during the reporting period from: (i) subscription license agreements that were in effect during the period, generally including maintenance that is bundled with and not separately identifiable from software usage fees or product sales, (ii) maintenance agreements associated with providing customer technical support and access to software fixes and upgrades that are separately identifiable from software usage fees or product sales, and (iii) license agreements bundled with additional products, maintenance or professional services for which VSOE has not been established. These amounts include the sale of products directly by us, as well as by distributors and volume partners, value-added resellers and exclusive representatives to end-users, where the contracts incorporate the right for end-users to receive unspecified future software products, and other contracts entered into in close proximity or contemplation of these agreements.

The decrease in subscription and maintenance revenue in the third quarter of fiscal 2013 compared with the third quarter of fiscal 2012 was primarily attributable to a decrease in subscription and maintenance bookings from lower renewals and new product and mainframe capacity sales in prior periods and an increase in the percentage of our total bookings recognized on an up-front basis within software fees and other revenue. There was also an unfavorable foreign exchange effect of $10 million for the third quarter of fiscal 2013.

The decrease in subscription and maintenance revenue in the first nine months of fiscal 2013 compared with the first nine months of fiscal 2012 was primarily attributable to an unfavorable foreign exchange effect of $77 million. The decrease in subscription and maintenance revenue was also attributable to a decrease in subscription and maintenance bookings from lower renewals and new product and mainframe capacity sales in prior periods and an increase in the percentage of our total bookings recognized on an up-front basis within software fees and other revenue.

We expect that an increased percentage of bookings recognized as software fees and other revenue will have an unfavorable effect on future subscription and maintenance revenue.

Professional Services

Professional services revenue primarily includes product implementation, consulting, customer training and customer education. Professional services revenue for the third quarter of fiscal 2013 decreased slightly compared with the third quarter of fiscal 2012 due to a lower amount of billable time on engagements during the quarter as a result of lower sales activity earlier in the year.

Professional services revenue for the first nine months of fiscal 2013 decreased slightly compared with the first nine months of fiscal 2012 due to an unfavorable foreign exchange effect of $7 million. Without the unfavorable effect of foreign exchange, professional services revenue for the first nine months of fiscal 2013 would have been consistent with the year-ago period.

Software Fees and Other

Software fees and other revenue primarily consists of revenue that is recognized on an up-front basis. This includes revenue associated with enterprise solutions products sold on an up-front basis directly by our sales force or through transactions with distributors and volume partners, value-added resellers and exclusive representatives (sometimes referred to as our “indirect” or “channel” revenue). It also includes our SaaS revenue, which is recognized as the services are provided rather than up-front.

During the third quarter of fiscal 2012, we recognized $39 million in revenue under a license agreement we entered into in connection with a litigation settlement with Rocket Software, Inc. (Rocket) during fiscal 2009 that resolved our claims against Rocket for copyright infringement and trade secret misappropriation. Rocket did not admit any wrongdoing in connection with this settlement. As part of this settlement, Rocket agreed to license technology from us, including source code authored several years ago and related trade secrets that were the subject of the litigation.  The amount received during the third quarter of fiscal 2012 reflects the final amount owed to us, which was not scheduled to be paid in full until fiscal 2014 (the Final License Payment).  Rocket paid this amount in advance at their discretion, unsolicited by us and without any discount or concession by us.

Software fees and other revenue decreased for the third quarter of fiscal 2013 compared with the third quarter of fiscal 2012 primarily due to the Final License Payment recognized in the third quarter of fiscal 2012. Partially offsetting this decrease was an increase of $9 million in revenue from our perpetual enterprise solutions products and $9 million in revenue from our SaaS offerings.

Software fees and other revenue was consistent for the first nine months of fiscal 2013 compared with the first nine months of fiscal 2012 primarily due to an increase of $21 million in revenue from our perpetual enterprise solutions products and $21 million in revenue from our SaaS offerings. These increases were offset by the Final License Payment recognized in the third quarter of fiscal 2012.

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Total Revenue by Geography

The following tables present the amount of revenue earned from sales to unaffiliated customers in the United States and international regions and corresponding percentage changes for the third quarter and first nine months of fiscal 2013 and the third quarter and first nine months of fiscal 2012.

	Third Quarter Comparison Fiscal 2013 Versus Fiscal 2012
	2013		%		2012		%		Dollar Change			Percentage Change
	(dollars in millions)
United States	$	701	59	%	$	745	59	%	$	(44	)	(6	)%
International	494		41	%	518		41	%	(24		)	(5	)%
Total Revenue	$	1,195	100	%	$	1,263	100	%	$	(68	)	(5	)%

	First Nine Months Comparison Fiscal 2013 Versus Fiscal 2012
	2013		%		2012		%		Dollar Change			Percentage Change
	(dollars in millions)
United States	$	2,068	59	%	$	2,107	58	%	$	(39	)	(2	)%
International	1,424		41	%	1,519		42	%	(95		)	(6	)%
Total Revenue	$	3,492	100	%	$	3,626	100	%	$	(134	)	(4	)%

Revenue in the United States decreased by $44 million, or 6%, for the third quarter of fiscal 2013 compared with the third quarter of fiscal 2012 primarily due to a decrease in subscription and maintenance revenue and a decrease in software fees and other revenue, as described above. International revenue decreased by $24 million, or 5%, for the third quarter of fiscal 2013 compared with the third quarter of fiscal 2012. The decrease was primarily due to an unfavorable foreign exchange effect of $12 million and a decrease in subscription and maintenance revenue.

Revenue in the United States decreased by $39 million, or 2%, for the first nine months of fiscal 2013 compared with the first nine months of fiscal 2012 primarily due to an a decrease in subscription and maintenance revenue, as described above. International revenue decreased by $95 million, or 6%, for the first nine months of fiscal 2013 compared with the first nine months of fiscal 2012, primarily due to an unfavorable foreign exchange effect of $88 million.

Price changes do not have a material effect on revenue in a given period as a result of our ratable subscription model.

Expenses

Operating expenses for the third quarter of fiscal 2013decreased compared with the third quarter of fiscal 2012 primarily as a result of a decrease in selling and marketing, general and administrative and product development and enhancements expenses. The decrease in operating expenses was also attributable to lower personnel costs of $5 million due in part to a change in our employee vacation benefits. These decreases were partially offset by an increase of $18 million in employee severance charges.

Operating expenses for the first nine months of fiscal 2013decreased compared with the first nine months of fiscal 2012 due to $35 million of income from the intellectual property transaction recognized in “Other (gains) expenses, net” in the first quarter of fiscal 2013. In addition, the decrease was also attributable to a decrease in selling and marketing expenses, a favorable effect of foreign exchange on operating expenses, a decrease in general and administrative expenses, a $28 million decrease in severance costs and a decrease in $10 million due to the aforementioned change to our employee vacation benefits. We currently expect an additional $10 million of cost savings in the fourth quarter of fiscal 2013 as a result of this change to our employee vacation benefits. Partially offsetting these decreases was an increase in amortization of capitalized software costs.

Costs of Licensing and Maintenance

Costs of licensing and maintenance include technical support, royalties, and other manufacturing and distribution costs.  Costs of licensing and maintenance for the third quarter and first nine months of fiscal 2013 were consistent with the third quarter and first nine months of fiscal 2012.

Cost of Professional Services

Cost of professional services consists primarily of our personnel-related costs associated with providing professional services and training to customers. Cost of professional services for the third quarter of fiscal 2013 was consistent with the third quarter of fiscal 2012. Operating margin for professional services decreased to 5% for the third quarter of fiscal 2013 compared to 12% for the third quarter of fiscal 2012. The decrease in operating margin for professional services was primarily attributable to the decrease in revenue for the third quarter of fiscal 2013 as described above and an increase in severance costs.

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Cost of professional services for the first nine months of fiscal 2013 was slightly lower compared with the first nine months of fiscal 2012. Operating margin for professional services decreased slightly to 6% for the first nine months of fiscal 2013 compared to 7% in the first nine months of fiscal 2012.

Operating margin for professional services does not include certain additional costs that are allocated to the Services segment (see “Performance of Segments” below).

Amortization of Capitalized Software Costs

Amortization of capitalized software costs consists of the amortization of both purchased software and internally generated capitalized software development costs. Internally generated capitalized software development costs relate to new products and significant enhancements to existing software products that have reached the technological feasibility stage.

The increase in amortization of capitalized software costs for the third quarter and first nine months of fiscal 2013 compared with the third quarter and first nine months of fiscal 2012 was primarily due to the increase in software development projects that have reached general availability in recent periods and amortization from assets acquired from our fiscal 2012 acquisitions.

We evaluate the useful lives and recoverability of capitalized software and other intangible assets when events or changes in circumstances indicate that an impairment may exist. These evaluations require complex assumptions about key factors such as future customer demand, technology trends, and the impact of such factors on the technology we acquire and develop for our products.  As of December 31, 2012, no impairment exists and no revisions to useful lives are necessary within our Enterprise Solutions segment.  Impairment or revisions to useful lives could result from the use of alternative assumptions which reflect reasonably possible outcomes related to future customer demand or technology trends for certain assets in the Enterprise Solutions segment whose carrying amount is approximately $75 million. 

Selling and Marketing

Selling and marketing expenses include the costs relating to our sales force, channel partners, corporate and business marketing and customer training programs. For the third quarter of fiscal 2013, the decrease in selling and marketing expenses compared with the third quarter of fiscal 2012 was primarily attributable to a decrease in personnel-related costs of $18 million and a decrease in promotion expense of $8 million. The decreases were partially offset by an increase in severance costs of $10 million.

For the first nine months of fiscal 2013, the decrease in selling and marketing expenses compared with the first nine months of fiscal 2012 was attributable to a decrease in commission expenses of $25 million due to lower sales in the first nine months of fiscal 2013, a favorable foreign exchange effect of $22 million, a decrease in personnel-related costs of $17 million, a decrease in severance costs of $17 million and a decrease in promotion expense of $13 million.

General and Administrative

General and administrative expenses include the costs of corporate and support functions, including our executive leadership and administration groups, finance, legal, human resources, corporate communications and other costs such as provisions for doubtful accounts. For the third quarter of fiscal 2013, general and administrative expenses decreased compared with the third quarter of fiscal 2012, primarily due to a decrease in costs associated with external consultants of $12 million.

For the first nine months of fiscal 2013, general and administrative expenses decreased compared with the first nine months of fiscal 2012, primarily due to a decrease in costs associated with external consultants of $17 million and a favorable foreign exchange effect of $10 million.

Product Development and Enhancements

For the third quarters of fiscal 2013 and fiscal 2012, product development and enhancements expenses represented approximately 10% of total revenue. The decrease in product development and enhancements expenses was primarily attributable to a decrease in personnel-related costs and an increase in the proportion of expenditures that were capitalized during the third quarter of fiscal 2013 compared with the third quarter of fiscal 2012. These decreases were partially offset by an increase in severance costs of $5 million.

For the first nine months of fiscal 2013 and fiscal 2012, product development and enhancements expenses represented approximately 11% of total revenue. The decrease in product development and enhancements expenses was primarily attributable to a decrease in personnel-related costs. These decreases were partially offset by a decrease in the proportion of expenditures that were capitalized during the first nine months of fiscal 2013 compared with the first nine months of fiscal 2012.

Depreciation and Amortization of Other Intangible Assets

The decrease in depreciation and amortization of other intangible assets for the third quarter and first nine months of fiscal 2013 compared with the third quarter and first nine months of fiscal 2012 was primarily due to the decrease in the amount of intangible assets acquired that are subject to amortization as a result of intangible assets becoming fully amortized.

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Other (Gains) Expenses, Net

Other (gains) expenses, net includes gains and losses attributable to divested assets, foreign currency, exchange rate changes, impairment charges and other miscellaneous items. Foreign exchange derivative contracts are used to mitigate our operating risks and exposure to foreign currency exchange rates.

Other (gains) expenses, net increased$3 million for the third quarter of fiscal 2013 compared with the third quarter of fiscal 2012.  The increase was primarily a result of an increase in expenses in connection with litigation claims. 

Other (gains) expenses, net decreased$24 million for the first nine months of fiscal 2013 compared with the first nine months of fiscal 2012.  The decrease was primarily a result of a transaction in the first quarter of fiscal 2013 to assign the rights of certain of our intellectual property assets to a technology company for $35 million as part of an effort to more fully utilize our intellectual property assets. We will continue to have the ability to use these intellectual property assets in current and future product offerings. Partially offsetting this income for the first nine months of fiscal 2013 was a $9 million loss relating to foreign exchange, of which $2 million relates to our derivative contracts hedging our forecasted cash flow exposure. 

Interest Expense, Net

Interest expense, net for the third quarter and first nine months of fiscal 2013 increased from the respective year-ago periods primarily due to a decrease in interest income due to lower interest rates and lower cash balances for the current periods compared with the respective year-ago periods.

Income Taxes

Income tax expense for the third quarter and first nine months of fiscal 2013 was $107 million and $342 million, respectively, compared with income tax expense of $141 million and $337 million for the third quarter and first nine months of fiscal 2012, respectively. For the third quarter and first nine months of fiscal 2012, we recognized a net tax expense of approximately $10 million and a net tax benefit of approximately $8 million, respectively, resulting primarily from international tax rate changes and the recognition of tax benefits related to an investment in a foreign subsidiary. Income tax expense decreased $34 million for the third quarter of fiscal 2013 compared with the year-ago period as a result of a reduction in income before income taxes for the third quarter of fiscal 2013 compared to the year-ago period, and the timing of both favorable and unfavorable discrete items in the third quarter of fiscal 2013 compared with the third quarter of fiscal 2012.

During the third quarter of fiscal 2013, we reclassified approximately $150 million of deferred tax assets from non-current to current due to a change in tax accounting method reflected in the Company's federal income tax return for fiscal 2012. This accounting change does not affect the income tax expense.

In April 2011, the U.S. Internal Revenue Service (IRS) completed its examination of our federal income tax returns for the tax years ended March 31, 2005, 2006 and 2007 and issued a report of its findings in connection with the examination. We disagree with certain proposed adjustments in the report and are vigorously disputing these matters through the IRS appellate process. The IRS is also examining our federal income tax returns for the tax years ended March 31, 2008, 2009 and 2010.

While it is difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe that our financial statements reflect the probable outcome of uncertain tax positions. We may adjust these uncertain tax positions, as well as any related interest or penalties, in light of changing facts and circumstances, including the settlement of income tax audits and the expirations of statutes of limitation. To the extent a settlement differs from the amounts previously reserved, that difference generally would be recognized as a component of income tax expense in the period of resolution. Although the timing of the resolution of income tax examinations is highly uncertain, it is reasonably possible that settlements, payments and new information in the next 12 months related to certain federal, foreign and state tax issues may result in changes to our uncertain tax positions, including issues involving taxation of international operations, certain state tax issues and other matters. We believe that such reasonably possible changes within the next 12 months may reduce the balance of unrecognized tax benefits, net of the effects of refunds and other affirmative claims, by an amount up to $200 million.

Our effective income tax rate, excluding the impact of discrete items, for the three months ended December 31, 2012 and 2011 was 32.6% and 32.4%, respectively. Legislative changes in tax laws, the outcome of tax audits and any other changes in potential tax liabilities may result in additional tax expense or benefit in fiscal 2013 which are not considered in our estimated annual effective tax rate. While we do not currently view any such items as individually material to the results of our consolidated financial position or results of operations, the impact of certain items may yield additional tax expense or benefit in the remaining quarter of fiscal 2013 and we are anticipating a fiscal 2013 effective tax rate closer to the high end of a 30% to 31% range.

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Performance of Segments

Segment financial information for the third quarter and first nine months of fiscal 2013 and fiscal 2012 is as follows:

Mainframe Solutions
	Third Quarter Fiscal 2013			Third Quarter Fiscal 2012
	(dollars in millions)
Revenue	$	622		$	682
Expenses	248			277
Segment profit	$	374		$	405
Segment operating margin	60		%	59		%
	First Nine Months Fiscal 2013			First Nine Months Fiscal 2012
	(dollars in millions)
Revenue	$	1,869		$	1,983
Expenses	755			861
Segment profit	$	1,114		$	1,122
Segment operating margin	60		%	57		%

For the third quarter of fiscal 2013, Mainframe Solutions revenue decreased from the year-ago period primarily due to the $39 million Final License Payment received in the third quarter of fiscal 2012 and a decrease in subscription and maintenance revenue, which is attributable to a decrease in subscription and maintenance bookings due to lower new product and mainframe capacity sales in prior periods. The increase in operating margin for the third quarter of fiscal 2013 was primarily a result of a decrease in selling and marketing expenses and general and administrative expenses.

For the first nine months of fiscal 2013, Mainframe Solutions revenue decreased from the year-ago period primarily due to the $39 million Final License Payment received in the third quarter of fiscal 2012, an unfavorable foreign exchange effect of $52 million and a decrease in subscription and maintenance revenue, which is attributable to a decrease in subscription and maintenance bookings due to lower new product and mainframe capacity sales in prior periods. The increase in operating margin for the first nine months of fiscal 2013 was primarily a result of the decrease in selling and marketing expenses, a favorable effect of foreign exchange on operating expenses, a decrease in general and administrative expenses and a decrease in severance costs.

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Enterprise Solutions
	Third Quarter Fiscal 2013			Third Quarter Fiscal 2012
	(dollars in millions)
Revenue	$	476		$	478
Expenses	426			419
Segment profit	$	50		$	59
Segment operating margin	11		%	12		%
	First Nine Months Fiscal 2013			First Nine Months Fiscal 2012
	(dollars in millions)
Revenue	$	1,340		$	1,354
Expenses	1,195			1,223
Segment profit	$	145		$	131
Segment operating margin	11		%	10		%

Enterprise Solutions revenue for the third quarter of fiscal 2013 decreased compared with the year-ago period due to an unfavorable foreign exchange effect of $4 million.  Within Enterprise Solutions, there was an increase in revenue from our security and ITKO products, which was mostly offset by a decrease in revenue from our service assurance, automation and data management products. Enterprise Solutions expenses for the third quarter of fiscal 2013 increased compared with the year-ago period as a result of an increase in severance costs in the third quarter of fiscal 2013. As a result of the increase in expenses, Enterprise Solutions operating margin for the third quarter of fiscal 2013 declined from 12% to 11% compared with the year-ago period.

Enterprise Solutions revenue for the first nine months of fiscal 2013 decreased compared with the year-ago period due to an unfavorable foreign exchange effect of $29 million.  Within Enterprise Solutions revenue, there was an increase in revenue attributable to our security, ITKO and Nimsoft products, partially offset by a decrease in revenue from our service assurance, automation and data management products. Operating margin for the first nine months remained consistent as a result of the income from the aforementioned $35 million intellectual property transaction in the first quarter of fiscal 2013, which contributed three percentage points to operating margin in the first nine months of fiscal 2013, as well as a decrease in severance costs for the first nine months of fiscal 2013 compared with the first nine months of fiscal 2012. These favorable items were offset by our additional investments in ITKO and Nimsoft products.

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Services
	Third Quarter Fiscal 2013			Third Quarter Fiscal 2012
	(dollars in millions)
Revenue	$	97		$	103
Expenses	93			92
Segment profit	$	4		$	11
Segment operating margin	4		%	11		%
	First Nine Months Fiscal 2013			First Nine Months Fiscal 2012
	(dollars in millions)
Revenue	$	283		$	289
Expenses	269			272
Segment profit	$	14		$	17
Segment operating margin	5		%	6		%

Services revenue for the third quarter of fiscal 2013decreased from the third quarter of fiscal 2012 due to a lower amount of billable time on engagements during the quarter as a result of lower sales activity earlier in the year. Operating margin for Services decreased to 4% in the third quarter of fiscal 2013 compared with 11% in the third quarter of fiscal 2012 as a result of the decrease in revenue and an increase in severance costs.

Services revenue for the first nine months of fiscal 2013 decreased slightly compared with the first nine months of fiscal 2012 due to an unfavorable foreign exchange effect of $7 million. Operating margin for Services decreased to 5% in the first nine months of fiscal 2013 compared with 6% in the first nine months of fiscal 2012 as a result of the slight reduction in revenue.

Refer to Note O, “Segment Information,” in the Notes to the Condensed Consolidated Financial Statements for additional information.

Bookings

Total Bookings

For the third quarter of fiscal 2013 and 2012, total bookings were $1,261 million and $1,284 million, respectively. The decrease in bookings reflected a year-over-year decline in software fees and other bookings, which are recognized as software fees and other revenue. This was partially offset by an increase in professional services bookings. For the third quarter of fiscal 2012, software fees and other bookings included the $39 million Final License Payment.

Generally, quarters with smaller renewal inventories result in a lower level of bookings both because renewal bookings will be lower and, to a lesser extent, because renewals also remain an important selling opportunity for new products and mainframe capacity. Renewal bookings for the third quarter of fiscal 2013, which generally do not include new product and capacity sales and professional services arrangements, increased compared with the prior-year period primarily due to the closing of several renewals in the third quarter of fiscal 2013 that were originally expected to close during the fourth quarter of fiscal 2013. Within renewals, an increase in enterprise solutions renewals was partially offset by a decrease in mainframe renewals.

Total bookings decreased in the United States and Latin America region. This decrease was mostly offset by an increase in bookings from the Europe, Middle East and Africa region and, to a lesser extent the Asia Pacific Japan region.

Total new product and mainframe capacity sales in the third quarter of fiscal 2013 declined by approximately 10% compared with the third quarter of fiscal 2012. Within these bookings, mainframe new product sales decreased primarily as a result of the $39 million Final License Payment received in the third quarter of fiscal 2012. Mainframe capacity sales decreased, while enterprise solutions new product sales were consistent with the prior period.

Mainframe capacity sales were negatively affected by lower mainframe renewals because renewals are an important opportunity to sell additional mainframe capacity. New product and capacity sales decreased in the United States and Latin America region. These increases were partially offset by increases in the Europe, Middle East and Africa and Asia Pacific Japan regions.

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For the first nine months of fiscal 2013 and fiscal 2012, total bookings were $2,651 million and $3,121 million, respectively. The decrease in bookings reflected a year-over-year decline in renewals and new product and mainframe capacity sales reflected in subscription and maintenance bookings. Total bookings decreased in all regions except in the Asia Pacific Japan region.

Total new product and mainframe capacity sales in the first nine months of fiscal 2013 declined by approximately 20% compared with the first nine months of fiscal 2012. Within these bookings, new product and capacity sales decreased in all regions except in the Asia Pacific Japan region.

Mainframe new product and capacity sales were down primarily due to lower renewals in the first nine months of fiscal 2013, which were down to a greater extent in the first quarter. Enterprise solutions new product sales declined primarily due to our lower-than-expected sales of new products outside of our renewal process for the first half of fiscal 2013. Bookings performance was also negatively affected by a difficult macroeconomic environment. During the first quarter of fiscal 2013, bookings performance was unexpectedly disrupted by our efforts to align our sales force to execute our customer segmented go-to-market initiative. Although our customer segmentation initiative has taken longer than anticipated to gain traction, we continue to believe that this initiative will benefit our performance in the long-term.

Subscription and Maintenance Bookings

For the third quarter of fiscal 2013 and fiscal 2012, subscription and maintenance bookings were $1,034 million and $1,035 million, respectively. Within subscription and maintenance bookings, there was a decrease in sales of mainframe new products and capacity, which was offset by an increase in renewals. An increase in enterprise solutions renewals for the third quarter of fiscal 2013 was partially offset by a decrease in mainframe solutions renewals. Renewals for the third quarter of fiscal 2013 were higher than expected due to several deals closing in the third quarter of fiscal 2013 that were original expected to close during the fourth quarter of fiscal 2013.

During the third quarter of fiscal 2013, we executed a total of 18 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $477 million. During the third quarter of fiscal 2012, we executed a total of 12 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $452 million. Given the shift of several renewals from the fourth quarter of fiscal 2013 to the third quarter of fiscal 2013, we now expect the value of our fiscal 2013 fourth quarter renewals to decrease mid-single digits compared with the year-ago period and we continue to expect the value of our fiscal 2013 renewals to decline by approximately 10% compared with fiscal 2012. For the third quarter of fiscal 2013, our percentage renewal yield was in the low 90's. We currently expect the value of our fiscal 2014 renewals to increase by a double-digit percentage compared with fiscal 2013, with the majority of the increase to occur in the second half of fiscal 2014.

For the first nine months of fiscal 2013 and fiscal 2012, subscription and maintenance bookings were $2,043 million and $2,484 million, respectively. The decrease in subscription and maintenance bookings was primarily attributable to lower renewals and lower new product and mainframe capacity sales reflected in subscription and maintenance bookings. Within renewals, the decrease in mainframe renewals was partially offset by an increase in enterprise solutions renewals.

Annualized subscription and maintenance bookings is an indicator that normalizes the bookings recorded in the current period to account for contract length. It is calculated by dividing the total value of all new subscription and maintenance license agreements entered into during a period by the weighted average subscription and license agreement duration in years for all such subscription and maintenance license agreements recorded during the same period. For the third quarter of fiscal 2013, annualized subscription and maintenance bookings increased from $293 million in the prior year period to $348 million. The weighted average subscription and maintenance license agreement duration in years decreased from 3.53 in the third quarter of fiscal 2012 to 2.97 in the third quarter of fiscal 2013. This decrease was primarily attributable to shorter durations associated with large contract renewals in the third quarter of fiscal 2013 compared with the durations of large contract renewals from the third quarter of fiscal 2012.

Although each contract is subject to terms negotiated by the respective parties, we do not currently expect the weighted average subscription and maintenance agreement duration in years to change materially from historical levels for end-user contracts.

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalent balances are held in numerous locations throughout the world, with 64% held in our subsidiaries outside the United States at December 31, 2012. Cash and cash equivalents totaled $2,353 million at December 31, 2012, representing a decrease of $326 million from the March 31, 2012 balance of $2,679 million. The decrease in cash was primarily a result of our payment of dividends, repurchases of our common stock and the purchase of short-term investments, partially offset by an increase in net cash provided by operating activities from continuing operations, during the first nine months of fiscal 2013. During the first nine months of fiscal 2013, there was a $49 million unfavorable translation effect from foreign currency exchange rates on cash held outside the United States in currencies other than the U.S. dollar.

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Although 64% of our cash and cash equivalents is held by foreign subsidiaries, we currently neither intend nor anticipate a need to repatriate these funds to the United States in the foreseeable future. We expect existing domestic cash, cash equivalents, and cash flows from operations to be sufficient to fund our domestic operating activities and our investing and financing activities, including, among other things, the payment of regular quarterly dividends, compliance with our debt repayment schedules, repurchases of our common stock and the funding for capital expenditures, for at least the next 12 months and for the foreseeable future thereafter. In addition, we expect existing foreign cash, cash equivalents and cash flows from foreign operations to be sufficient to fund our foreign operating activities and investing activities, including, among other things, the funding for capital expenditures, acquisitions and research and development, for at least the next 12 months and for the foreseeable future thereafter.

Sources and Uses of Cash

Under our subscription and maintenance agreements, customers generally make installment payments over the term of the agreement, often with at least one payment due at contract execution, for the right to use our software products and receive product support, software fixes and new products when available. The timing and actual amounts of cash received from committed customer installment payments under any specific agreement can be affected by several factors, including the time value of money and the customer’s credit rating. Often, the amount received is the result of direct negotiations with the customer when establishing pricing and payment terms. In certain instances, the customer negotiates a price for a single up-front installment payment and seeks its own internal or external financing sources. In other instances, we may assist the customer by arranging financing on the customer’s behalf through a third-party financial institution. Alternatively, we may decide to transfer our rights to the future committed installment payments due under the license agreement to a third-party financial institution in exchange for a cash payment. Once transferred, the future committed installments are payable by the customer to the third-party financial institution. Whether the future committed installments have been financed directly by the customer with our assistance or by the transfer of our rights to future committed installments to a third party, these financing agreements may contain limited recourse provisions with respect to our continued performance under the license agreements. Based on our historical experience, we believe that any liability that we may incur as a result of these limited recourse provisions will be immaterial.

Amounts billed or collected as a result of a single installment for the entire contract value, or a substantial portion of the contract value, rather than being invoiced and collected over the life of the license agreement, are reflected in the liability section of our Condensed Consolidated Balance Sheets as “Deferred revenue (billed or collected).” Amounts received from either a customer or a third-party financial institution that are attributable to later years of a license agreement have a positive impact on billings and cash provided by operating activities in the current period. Accordingly, to the extent these collections are attributable to the later years of a license agreement, billings and cash provided by operating activities during the license’s later years will be lower than if the payments were received over the license term. We are unable to predict with certainty the amount of cash to be collected from single installments for the entire contract value, or a substantial portion of the contract value, under new or renewed license agreements to be executed in future periods.

For the third quarter of fiscal 2013, gross receipts related to single installments for the entire contract value, or a substantial portion of the contract value, were $257 million compared with $107 million for the third quarter of fiscal 2012.

In any quarter, we may receive payments in advance of the contractually committed date on which the payments were otherwise due. In limited circumstances, we may offer discounts to customers to ensure payment in the current period of invoices that have been billed, but might not otherwise be paid until a subsequent period because of payment terms. Historically, any such discounts have not been material.

Amounts due from customers from our subscription licenses are offset by deferred revenue related to these license agreements, leaving no or minimal net carrying value on the balance sheets for such amounts. The fair value of these amounts may exceed or be less than this carrying value but cannot be practically assessed since there is no existing market for a pool of customer receivables with contractual commitments similar to those owned by us. The actual fair value may not be known until these amounts are sold, securitized or collected. Although these customer license agreements commit the customer to payment under a fixed schedule, to the extent amounts are not yet due and payable by the customer, the agreements are considered executory in nature due to our ongoing commitment to provide maintenance and unspecified future software products as part of the agreement terms.

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We can estimate the total amounts to be billed from committed contracts, referred to as our “billings backlog,” and the total amount to be recognized as revenue from committed contracts, referred to as our “revenue backlog.” The aggregate amounts of our billings backlog and trade receivables already reflected in our Condensed Consolidated Balance Sheets represent the amounts we expect to collect in the future from committed contracts.

(in millions)	December 31, 2012		March 31, 2012		December 31, 2011
Billings backlog:
Amounts to be billed – current	$	2,134	$	2,220	$	2,237
Amounts to be billed – noncurrent	2,163		2,623		2,723
Total billings backlog	$	4,297	$	4,843	$	4,960
Revenue backlog:
Revenue to be recognized within the next 12 months – current	$	3,495	$	3,714	$	3,576
Revenue to be recognized beyond the next 12 months – noncurrent	3,993		4,759		4,508
Total revenue backlog	$	7,488	$	8,473	$	8,084
Deferred revenue (billed or collected)	$	3,191	$	3,630	$	3,124
Unearned revenue yet to be billed	4,297		4,843		4,960
Total revenue backlog	$	7,488	$	8,473	$	8,084

Note: Revenue backlog includes deferred subscription and maintenance, professional services and software fees and other revenue.

We can also estimate the total cash to be collected in the future from committed contracts, referred to as our “Expected future cash collections,” by adding the total billings backlog to the trade accounts receivable, which represent amounts already billed but not collected, from our Condensed Consolidated Balance Sheets.

(in millions)	December 31, 2012		March 31, 2012		December 31, 2011
Expected future cash collections:
Total billings backlog	$	4,297	$	4,843	$	4,960
Trade accounts receivable, net	786		902		840
Total expected future cash collections	$	5,083	$	5,745	$	5,800

The decrease in billings backlog at December 31, 2012 compared with March 31, 2012 and December 31, 2011 was primarily driven by a decrease in total bookings in the first nine months of fiscal 2013.

The decrease in expected future cash collections at December 31, 2012 compared with March 31, 2012 and December 31, 2011 was primarily driven by a decrease in trade accounts receivable as a result of lower customer billings in the first nine months of fiscal 2013, as well as a decrease in billings backlog as described above.

The decrease in total revenue backlog at December 31, 2012 compared with March 31, 2012 and December 31, 2011 was primarily due to the decline of total bookings in the first six months of fiscal 2013 and the increase in the percentage of bookings recognized as software fees and other revenue in the first nine months of fiscal 2013, which is not included in revenue backlog at December 31, 2012.

Revenue to be recognized in the next 12 months decreased by 6% at December 31, 2012 compared with March 31, 2012. Excluding the effect of foreign exchange, revenue to be recognized in the next 12 months decreased by 5% at December 31, 2012 compared with March 31, 2012.

Revenue to be recognized in the next 12 months decreased by 2% at December 31, 2012 compared with December 31, 2011. Excluding the effect of foreign exchange, revenue to be recognized in the next 12 months decreased by 2% at December 31, 2012 compared with December 31, 2011.

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We expect a continued decline in revenue backlog year-over-year through fiscal 2013 prior to an expected increase in our renewals in fiscal 2014. Generally, we believe that a change in the current portion of revenue backlog on a year-over-year basis is an indicator of future subscription and maintenance revenue performance due to the high percentage of our revenue that is recognized from license agreements that are already committed and being recognized ratably.

Cash Generated by Operating Activities

	Third Quarter of Fiscal						Change
	2013			2012			2013 / 2012
	(in millions)
Cash collections from billings(1)	$	1,342		$	1,164		$	178
Vendor disbursements and payroll(1)	(708		)	(757		)	49
Income tax (payments) receipts, net	(40		)	(31		)	(9		)
Other disbursements, net(2)	(28		)	20			(48		)
Cash generated by continuing operating activities	$	566		$	396		$	170

(1) Amounts include value added taxes and sales taxes.

(2) Amounts include interest, restructuring and miscellaneous receipts and disbursements.

	First Nine Months of Fiscal						Change
	2013			2012			2013 / 2012
	(in millions)
Cash collections from billings(1)	$	3,357		$	3,404		$	(47	)
Vendor disbursements and payroll(1)	(2,334		)	(2,422		)	88
Income tax (payments) receipts, net	(190		)	(252		)	62
Other disbursements, net(2)	5			(1		)	6
Cash generated by continuing operating activities	$	838		$	729		$	109

(1) Amounts include value added taxes and sales taxes.

(2) Amounts include interest, restructuring, $35 million in cash proceeds received from the aforementioned intellectual property transaction and miscellaneous receipts and disbursements.

Third Quarter Comparison Fiscal 2013 Versus Fiscal 2012

Operating Activities:

Cash provided by continuing operating activities for the third quarter of fiscal 2013 was $566 million, representing an increase of $170 million compared with the third quarter of fiscal 2012. The increase was primarily due to an increase in cash collections of $178 million. This includes an increase in single installment payments of $150 million of which over $100 million was from a single customer.

Investing Activities:

Cash used in investing activities for the third quarter of fiscal 2013 was $88 million compared with $60 million for the third quarter of fiscal 2012. The increase in cash used in investing activities was primarily due to an increase in cash paid for investments of $161 million, offset by an increase in cash received from investment maturities of $134 million.

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Financing Activities:

Cash used in financing activities for the third quarter of fiscal 2013 was $222 million compared with $166 million in the third quarter of fiscal 2012. The increase in cash used in financing activities was primarily due to an increase in cash dividends paid of $89 million and an increase in net repayments mainly related to our notional pooling arrangement of $89 million, partially offset by a decrease in common shares repurchased of $123 million.

First Nine Months Comparison Fiscal 2013 Versus Fiscal 2012

Operating Activities:

Cash provided by continuing operating activities for the first nine months of fiscal 2013 was $838 million, representing an increase of $109 million compared with the first nine months of fiscal 2012. The increase was primarily due to a decrease in vendor disbursements and payroll of $88 million and a decrease in income tax payments of $62 million, partially offset by a decrease in cash collections of $47 million that was attributable to lower billings. For the first nine months of fiscal 2013 there was an increase in single installment payments of $203 million. For the first nine months of fiscal 2013, other disbursements, net includes $35 million in cash proceeds received as other income from the aforementioned intellectual property transaction that occurred in the first quarter of fiscal 2013. Due to our performance in the first six months of fiscal 2013, the macro-economic environment in which we believe customers are elongating their sales cycles, and the expectation of delaying the closing of some transactions in our pipeline until later in fiscal 2013 and after fiscal 2013, we currently expect lower billings and collections for fiscal 2013 compared with fiscal 2012. As a result, we expect a year-over-year decrease in cash flows from operations for fiscal 2013 compared with fiscal 2012.

Investing Activities:

Cash used in investing activities for the first nine months of fiscal 2013 was $362 million compared with $560 million for the first nine months of fiscal 2012. The decrease in cash used in investing activities was primarily due to the decrease in cash paid for acquisitions of $355 million, an increase in cash received from investment sales and maturities of $64 million and a decrease in capitalized software development costs of $15 million, offset by an increase in cash paid for investments of $244 million.

Financing Activities:

Cash used in financing activities for the first nine months of fiscal 2013 was $753 million compared with $747 million in the first nine months of fiscal 2012. The increase in cash used in financing activities was primarily due to an increase in cash dividends paid of $274 million, partially offset by a decrease in common shares repurchased of $132 million and a decrease in net repayments mainly related to our notional pooling arrangement of $126 million.

Debt Obligations

As of December 31, 2012 and March 31, 2012, our debt obligations consisted of the following:

	December 31, 2012			March 31, 2012
	(in millions)
Revolving credit facility due August 2016	$	—		$	—
5.375% Senior Notes due November 2019	750			750
6.125% Senior Notes due December 2014, net of unamortized premium from fair value hedge of $22 and $27	522			527
Other indebtedness, primarily capital leases	34			29
Unamortized discount for Notes	(5		)	(5		)
Total debt outstanding	1,301			1,301
Less the current portion	(19		)	(14		)
Total long-term debt portion	$	1,282		$	1,287

Other Indebtedness

We have available an unsecured and uncommitted multi-currency line of credit to meet short-term working capital needs for our subsidiaries operating outside the United States. We use guarantees and letters of credit issued by financial institutions to guarantee performance on certain contracts. At December 31, 2012 and March 31, 2012, $50 million and $55 million, respectively, was pledged in support of bank guarantees and other local credit lines and less than $1 million of these arrangements had been drawn down by third parties.

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We use a notional pooling arrangement with an international bank to help manage global liquidity requirements. Under this pooling arrangement, we and our participating subsidiaries may maintain either cash deposit or borrowing positions through local currency accounts with the bank, so long as the aggregate position of the global pool is a notionally calculated net cash deposit. Because it maintains a security interest in the cash deposits, and has the right to offset the cash deposits against the borrowings, the bank provides us and our participating subsidiaries favorable interest terms on both. For the first nine months of fiscal 2013, the activity under this cash pooling arrangement was as follows:

(in millions)
Total borrowing position outstanding at March 31, 2012 (1)	$	139
Borrowings	791
Repayments	(787		)
Foreign currency exchange effect	(3		)
Total borrowing position outstanding at December 31, 2012 (1)	$	140

(1) Included in “Accrued expenses and other current liabilities” in our Condensed Consolidated Balance Sheets.

For the first nine months of fiscal 2012, borrowings and repayments related to this notional pooling arrangement were approximately $240 million and $112 million, respectively, and are presented within the financing activities section of our Condensed Consolidated Statements of Cash Flows.

For additional information concerning our debt obligations, refer to our Consolidated Financial Statements and Notes thereto included in our 2012 Form 10-K.

Effect of Exchange Rate Changes

There was a $49 million unfavorable impact to our cash balances in the first nine months of fiscal 2013 predominantly due to the strengthening of the U.S. dollar against the euro (1%), the Brazilian real (11%) and the Japanese yen (4%).

There was a $96 million unfavorable impact to our cash balances in the first nine months of fiscal 2012 predominantly due to the strengthening of the U.S. dollar against the South African rand (19%), the Indian rupee (19%), the Brazilian real (14%), the euro (9%), and the Canadian dollar (5%).

CRITICAL ACCOUNTING POLICIES AND BUSINESS PRACTICES

The preparation of financial statements in accordance with generally accepted accounting principles requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances. Our estimates form the basis for making judgments about amounts and timing of revenue and expenses, the carrying values of assets and the recorded amounts of liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and the estimates may change if the underlying conditions or assumptions change. Information with respect to our critical accounting policies that we believe could have the most significant effect on our reported results or require subjective or complex judgments by management is contained in our 2012 Form 10-K under Management’s Discussion and Analysis of Financial Condition and Results of Operations. At December 31, 2012, there was no material change to this information.

New Accounting Pronouncements Recently Adopted

Presentation of Comprehensive Income: In June 2011, the Financial Accounting Standards Board issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220) — Presentation of Comprehensive Income (ASU 2011-05), to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of equity. We adopted ASU 2011-05 effective for the first quarter of fiscal 2013 and included the required disclosures in two separate but consecutive statements.

Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to a variety of risks, including foreign currency exchange rate fluctuations, interest rate changes and changes in the market value of our investments. In the normal course of business, we employ established policies and procedures to manage these risks including the use of derivative instruments. There have been no material changes in our financial risk management strategy or our portfolio management strategy, which is described in our 2012 Form 10-K, subsequent to March 31, 2012.

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Item 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting, as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

In the second quarter of fiscal year 2013, the Company implemented and began using its global enterprise resource planning system to process accounting transactions for the Latin America region.  The Company will continue to monitor and test this system as part of management's annual evaluation of internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Refer to Note J, “Commitments and Contingencies,” in the Notes to the Condensed Consolidated Financial Statements for information regarding certain legal proceedings, the contents of which are herein incorporated by reference.

Item 1A. RISK FACTORS

Current and potential stockholders should consider carefully the risk factors described in more detail in our 2012 Form 10-K. We believe that as of December 31, 2012, there has been no material change to this information. Any of these factors, or others, many of which are beyond our control, could materially adversely affect our business, financial condition, operating results, cash flow and stock price.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth, for the months indicated, our purchases of common stock in the third quarter of fiscal 2013:

ISSUER PURCHASES OF EQUITY SECURITIES

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or  Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
	(in thousands, except average price paid per share)
October 1, 2012 - October 31, 2012	175	$	22.59	175	$	649,662
November 1, 2012 - November 30, 2012	3,199	$	22.21	3,199	$	578,619
December 1, 2012 - December 31, 2012	—	$	—	—	$	578,619
Total	3,374			3,374

On January 23, 2012, our Board of Directors approved a capital allocation program that authorized us to acquire up to $1.5 billion of our common stock through our fiscal year ending March 31, 2014.

In January 2012, we entered into an Accelerated Share Repurchase (ASR) agreement with a bank to repurchase $500 million of our common stock. Under the agreement, we paid $500 million to the bank for an initial delivery of 15 million shares in the fourth quarter of fiscal 2012. The fair market value of the initially delivered shares on the date of purchase was $375 million. The remaining $125 million was included in “Additional paid-in capital” in our Condensed Consolidated Balance Sheet at March 31, 2012.

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The ASR transaction was completed in the first quarter of fiscal 2013, during which time we received 3.7 million additional shares. As a result, the initial amount of $125 million recorded as additional paid-in capital during the fourth quarter of fiscal 2012 was reclassified to treasury stock. The final number of shares delivered upon settlement of the agreement was determined based on the average price of our common stock over the term of the ASR agreement.

Excluding the settlement of the ASR agreement, we repurchased 17 million additional shares of our common stock for $421 million during the first nine months of fiscal 2013. At December 31, 2012, we remained authorized to purchase $579 million of our common stock under the capital allocation program.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

None.

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Item 6. EXHIBITS

Regulation S-K

Exhibit Number

3.1	Amended and Restated Certificate of Incorporation.	Filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K dated March 6, 2006.*
3.2	By-Laws of the Company, as amended.	Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated February 23, 2007.*
4.1	Stockholder Protection Rights Agreement dated November 8, 2012 between the Company and Computershare Shareowner Services LLC, as Rights Agent, including as Exhibit A the forms of Rights Certificate and of Election to Exercise and as Exhibit B the form of Certificate of Designation and Terms of the Participating Preferred Stock of the Company.	Filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated November 8, 2012.*
10.1**	Employment Agreement dated December 10, 2012 between the Company and Michael P. Gregoire.	Filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 12, 2012.*
10.2**	Consulting Agreement dated December 11, 2012 between the Company and William E. McCracken.	Filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated December 12, 2012.*
10.3**	CA, Inc. Change in Control Severance Policy (amended and restated effective January 7, 2013).	Filed herewith.
12.1	Statement of Ratio of Earnings to Fixed Charges.	Filed herewith.
15	Accountants’ acknowledgment letter.	Filed herewith.
31.1	Certification of the Principal Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
31.2	Certification of the Principal Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
32	Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002.	Furnished herewith.
101	The following financial statements from CA, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended, December 31, 2012 formatted in XBRL (eXtensible Business Reporting Language):	Filed herewith.
	(i)     Unaudited Condensed Consolidated Balance Sheets — December 31, 2012 and March 31, 2012.
	(ii)    Unaudited Condensed Consolidated Statements of Operations — Three and Nine Months Ended December 31, 2012 and 2011.
	(ii)    Unaudited Condensed Consolidated Statements of Comprehensive Income — Three and Nine Months Ended December 31, 2012 and 2011.
	(iii)  Unaudited Condensed Consolidated Statements of Cash Flows — Nine Months Ended December 31, 2012 and 2011.
	(iv)   Notes to unaudited Condensed Consolidated Financial Statements — December 31, 2012.

* Incorporated herein by reference.

** Management contract or compensatory plan or arrangement.

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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 thereunto duly authorized.

CA, INC.
By:	/s/ Michael P. Gregoire
	Michael P. Gregoire
	Chief Executive Officer
By:	/s/ Richard J. Beckert
	Richard J. Beckert
	Executive Vice President and Chief Financial Officer

Dated: January 24, 2013

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EX-10.3

Exhibit 10.3

CA, INC.CHANGE IN CONTROL SEVERANCE POLICY
(AMENDED AND RESTATED EFFECTIVE JANUARY 7, 2013)

1.Purpose. The purpose of the CA, Inc. Change in Control Severance Policy (the “Policy”) is to secure the continued services of certain senior executives of the Company and to ensure their continued dedication to their duties in the event of any threat or occurrence of a Change in Control (as defined in Section 2).

2.Definitions. As used in this Policy, the following terms shall have the respective meanings set forth below:

(a)“Annual Performance Bonus” means the annual cash bonus awarded under the Company’s incentive plan, as in effect from time to time (as of the date of adoption of this Policy the “annual performance bonus” within the meaning of Section 4.4 of the Company’s 2007 Incentive Plan, effective as of June 12, 2007 (the “Company Incentive Plan”)).

(b)“Base Salary” means the higher of (i) the Participant’s highest annual rate of base salary during the twelve-month period immediately prior to the Participant’s Date of Termination or (ii) the average of the Participant’s annual base salary earned during the past three (3) completed fiscal years of the Company immediately preceding the Participant’s Date of Termination (annualized in the event the Participant was not employed by the Company (or its affiliates) for the whole of any such fiscal year).

(c)“Board” means the Board of Directors of the Company and, after a Change in Control, the “board of directors” of the Parent Corporation or Surviving Corporation, as the case may be, as defined for purposes of Section 2(f).

(d)“Bonus Amount” means the higher of (i) the Participant’s target Annual Performance Bonus for the fiscal year in which the Participant’s Date of Termination occurs (or if the Participant’s Qualifying Termination is on account of Good Reason pursuant to a reduction in a Participant’s compensation or compensation opportunity under Section 2(k)(ii), the Participant’s target Annual Performance Bonus for the prior fiscal year if higher) or (ii) the average of the Annual Performance Bonuses earned by the Participant from the Company (or its affiliates) during the last three (3) completed fiscal years of the Company (or such shorter period of time during which the Participant was employed by the Company) immediately preceding the Participant’s Date of Termination (annualized in the event the Participant was not employed by the Company (or its affiliates) for the whole of any such fiscal year).

(e)“Cause” means (i) the willful and continued failure of the Participant to perform substantially his duties with the Company (other than any such failure resulting from the Participant’s incapacity due to physical or mental illness or any such failure subsequent to the Participant being delivered a notice of termination without Cause by the Company or delivering a notice of termination for Good Reason to the Company) after a written demand for substantial performance is delivered to the Participant by or on behalf of the Board which specifically identifies the manner in which the Board believes that the Participant has not substantially performed his duties, (ii) the willful engaging by the Participant in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company or its affiliates, (iii) the engaging by the Participant in conduct or misconduct that materially harms the reputation or financial position of the Company, (iv) the Participant (x) obstructs or impedes, (y) endeavors to influence, obstruct or impede or (z) fails to materially cooperate with, an Investigation, (v) the Participant withholds, removes, conceals, destroys, alters or by other means falsifies any material which is requested in connection with an Investigation, or attempts to do so or solicits another to do so, (vi) the commission of a felony by the Participant or (vii) the Participant is found liable in any SEC or other civil or criminal securities law action or enters into any cease and desist orders with respect to such action regardless of whether the Participant admits or denies liability. For purposes of this paragraph (d), no act or failure to act by the Participant shall be considered “willful” unless done or omitted to be done by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interests of the Company or its affiliates. Any act, or failure to act, in accordance with authority duly given by the Board, based upon the advice of counsel for the Company (including counsel employed by the Company) shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Company. Cause shall not exist unless and until the Company has delivered to the Participant a copy of a resolution duly adopted by three-quarters (3/4) of the entire Board (excluding the Participant from both the numerator and denominator if the Participant is a Board member) at a meeting of the Board called and held for such purpose (after reasonable notice to the Participant and an opportunity for the Participant, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board an event set forth in clauses (i), (ii), (iii), (iv), (v), (vi) or (vii) has occurred and specifying the particulars thereof in detail.

(f)“Change in Control” means the occurrence of any one of the following events:

(i)individuals who, on the effective date of the Policy, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the effective date of the Policy whose election or nomination for election was approved by a vote of a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy

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statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;

(ii)any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding securities eligible to vote generally in the election of directors (the “Company Voting Securities”); provided, however, that the event described in this paragraph (ii) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any Subsidiary, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph (iii)), (E) pursuant to any acquisition by the Participant or any group of persons including the Participant (or any entity controlled by the Participant or any group of persons including the Participant); or (F) a transaction (other than one described in (iii) below) in which Company Voting Securities are acquired from the Company, if a majority of the Incumbent Directors approve a resolution providing expressly that the acquisition pursuant to this clause (F) does not constitute a Change in Control under this paragraph (ii);

(iii)the consummation of a merger, consolidation, statutory share exchange, reorganization, sale of all or substantially all the Company’s assets or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination: (A) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such

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voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 35% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction” and any Business Combination which does not satisfy all of the criteria specified in (A) (B) and (C) shall be deemed a “Qualifying Transaction”); or

(iv)the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of more than 35% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company or its affiliates which reduces the number of Company Voting Securities outstanding; provided, that if after the consummation of such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur. For purposes of this Change in Control definition, “corporation” shall include any limited liability company, partnership, association, business trust and similar organization, “board of directors” shall refer to the ultimate governing body of such organization and “director” shall refer to any member of such governing body.

(g)“Company” means CA, Inc.

(h)“Date of Termination” means (i) the effective date on which the Participant’s employment by the Company terminates as specified in a prior written notice by the Company or the Participant, as the case may be, to the other, delivered pursuant to Section 9 or (ii) if the Participant’s employment by the Company terminates by reason of death, the date of death of the Participant.

(i)“Disability” shall mean long-term disability under the terms of Company’s long-term disability plan, as then in effect.

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(j)“Equity Incentive Compensation” means all equity-based compensation (including stock options and restricted stock) awarded under the Company’s incentive plan, as in effect from time to time (as of the date of adoption of this Policy the “restricted stock,” “stock options” and “other equity-based awards” within the meaning of Sections 4.6, 4.7 and 4.8, respectively, of the Company Incentive Plan).

(k)“Good Reason” means the occurrence of one or more of the following circumstances, without the Participant’s express written consent, and which circumstance(s) are not remedied by the Company within thirty (30) days of receipt of a written notice from the Participant describing in reasonable detail the Good Reason event that has occurred (which notice must be provided within ninety (90) days of the Participant’s obtaining knowledge of the event), provided that the Participant must terminate employment within the two years following the Participant’s obtaining knowledge of the event:

(i)(A) any material change in the duties, responsibilities or status (including reporting responsibilities) of the Participant that is inconsistent in any material and adverse respect with the Participant’s position(s), duties, responsibilities or authority with the Company immediately prior to such Change in Control (including any material and adverse diminution of such duties or responsibilities); provided, however, that Good Reason shall not be deemed to occur upon a change in duties, responsibilities (other than reporting responsibilities) or status that is solely and directly a result of the Company no longer being a publicly traded entity and does not involve any other event set forth in this Section 2(k) or (B) a material and adverse change in the Participant’s titles or offices (including, if applicable, membership on the Board) with the Company as in effect immediately prior to such Change in Control;

(ii)a more than 10% reduction by the Company in the Participant’s rate of annual base salary or Annual Performance Bonus, Long-Term Performance Bonus or Equity Incentive Compensation target opportunities (including any material and adverse change in the formula for such targets) as in effect immediately prior to such Change in Control, provided that any such change constitutes a reduction of 5% or more in the Participant’s total compensation paid by the Company;

(iii)the failure of the Company to continue in effect any employee benefit plan, compensation plan, welfare benefit plan or fringe benefit plan in which the Participant is participating immediately prior to such Change in Control or the taking of any action by the Company, in each case which would materially adversely affect the Participant, unless the Participant is permitted to participate in other plans providing the Participant with materially equivalent benefits in the aggregate (at materially equivalent or lower cost with respect to welfare benefit plans);

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(iv)the failure of the Company to obtain the assumption of the Company’s obligations hereunder from any successor as contemplated in Section 8(b); or

(v)a material breach by the Company of the terms of the Participant’s employment agreement.

The Participant’s right to terminate employment for Good Reason shall not be affected by the Participant’s incapacities due to mental or physical illness and the Participant’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason.

(l)“Home Country” shall mean a Participant’s country of residence immediately before the Participant commenced employment with the Company.

(m)“Investigation” means an investigation authorized by the Board, a self-regulatory organization empowered with self-regulatory responsibilities under federal or state laws or a governmental department or agency.

(n)“Long-Term Performance Bonus” means the long-term bonus awarded under the Company’s incentive plan, as in effect from time to time (as of the date of adoption of this Policy the “long-term performance bonus” within the meaning of Section 4.5 of the Company Incentive Plan).

(o)“Participant” means each of the senior executives of the Company who are selected by the Board for coverage by this Policy and identified on Schedules A, B and C from time to time.

(p)“Potential Change in Control” means the execution or entering into of any agreement by the Company the consummation of which can be expected to be a Qualifying Transaction.

(q)“Qualifying Termination” means a termination of the Participant’s employment with the Company (i) by the Company other than for Cause or (ii) by the Participant for Good Reason. Termination of the Participant’s employment on account of death, Disability or Retirement shall not be treated as a Qualifying Termination. Notwithstanding the preceding sentence, the death of the Participant after notice of termination for Good Reason or without Cause has been validly provided shall be deemed to be a Qualifying Termination.

(r)“Retirement” means the Participant’s mandatory retirement (not including any mandatory early retirement) in accordance with the Company’s retirement policy generally applicable to its salaried employees, as in effect immediately prior to the Change in Control, or in accordance with any retirement arrangement established with respect to the Participant with the Participant’s written consent.

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(s)“Subsidiary” means any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors (or members of any similar governing body) or in which the Company has the right to receive 50% or more of the distribution of profits or 50% of the assets or liquidation or dissolution.

(t)“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the final Treasury Regulations issued thereunder.

(u)“Termination Period” means the period of time beginning with a Change in Control and ending two (2) years following such Change in Control. Notwithstanding anything in this Policy to the contrary, if (i) the Participant’s employment is terminated prior to a Change in Control (or, if applicable, a Potential Change of Control) for reasons that would have constituted a Qualifying Termination if they had occurred following a Change in Control; (ii) the Participant reasonably demonstrates that such termination (or Good Reason event) was at the request of a third party who had indicated an intention or taken steps reasonably calculated to effect a Change in Control; and (iii) a Change in Control (or a Potential Change in Control) involving such third party (or a party competing with such third party to effectuate a Change in Control) does occur within six (6) months from the date of such termination (or, in the case of a Potential Change in Control, such Potential Change in Control occurs within three (3) months of such termination), then for purposes of this Policy, the date immediately prior to the date of such termination of employment or event constituting Good Reason shall be treated as a Change in Control. For purposes of determining the timing of payments and benefits to the Participant under Section 4, the date of the actual Change in Control (or, if applicable, the Potential Change of Control) shall be treated as the Participant’s Date of Termination under Section 2(h), and for purposes of determining the amount of payments and benefits owed to the Participant under Section 4, the date the Participant’s employment is actually terminated shall be treated as the Participant’s Date of Termination under Section 2(h).

3.Eligibility. The Board shall determine in its sole discretion which senior executives of the Company shall be Participants and whether a Participant shall be listed on Schedule A, B or C, and the Board may remove the name of any senior executive from Schedule A, B or C and participation in this Policy at any time in its sole discretion; provided, however, that a Participant may not be removed from Schedule A, B or C without his or her prior written consent within the two-year period after a Change in Control or within the period of time beginning on a date three (3) months prior to a Potential Change in Control and ending on the termination of the agreement that constituted the Potential Change in Control. The Board may delegate its authority to identify the Participants on Schedule A, B or C and to remove a Participant from Schedule A, B or C to the Compensation and Human Resources Committee (or any successor committee) of the Board.

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4.Payments Upon Termination of Employment. If during the Termination Period the employment of the Participant is terminated pursuant to a Qualifying Termination, then, subject to the Participant’s execution of a Separation Agreement and Release in the form attached to this Policy as Exhibit A or such other form as shall be approved by the Compensation and Human Resources Committee (or any successor committee) of the Board in an employment agreement between the Company and the Participant(the “Separation Agreement and Release”), which shall be provided to the Participant no later than two (2) days after the Date of Termination and must be executed by the Participant, become effective and not be revoked by the Participant by the fifty-fifth (55^th) day following the Date of Termination, the Company shall provide to the Participant:

(a)a lump sum cash payment equal to the result of multiplying (i) the sum of (A) the Participant’s Base Salary, plus (B) the Participant’s Bonus Amount by (ii) either 2.99 for a Participant identified on Schedule A, or 2.00 for a Participant identified on Schedule B or 1.00 for a Participant identified on Schedule C; and

(b)a cash payment equal to the Participant’s target Annual Performance Bonus for the fiscal year in which the Participant’s Date of Termination occurs, multiplied by a fraction the numerator of which shall be the number of days the Participant was employed by the Company during the fiscal year in which the Date of Termination occurred and the denominator of which is 365; and

(c)a cash payment equal to the Participant’s target Long-Term Performance Bonus for any incomplete performance cycle(s) as of the Participant’s Date of Termination, multiplied by a fraction the numerator of which shall be the number of days the Participant was employed by the Company during the applicable performance cycle and the denominator of which shall be the total number of days in the performance cycle; and

(d)a cash payment equal to the Company’s monthly premium cost of health care for Participant and/or the Participant’s family at the Date of Termination, multiplied by eighteen (18); and

(e)for a period of one (1) year following the Participant’s Date of Termination, the Company shall make outplacement services available to the Participant in accordance with its outplacement policy in effect immediately before the Change in Control (or if no such policy is in effect, the Participant may choose a provider of outplacement services, provided that the total cost of such outplacement services for the Participant shall not exceed $10,000 USD); and

(f)if on the Date of Termination the Participant is working in a country other than the Participant’s Home Country and the Participant wishes to relocate to such Participant’s Home Country within one (1) year following the Date of

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Termination, the Company shall provide relocation benefits to the Participant and his or her dependants in accordance with the Company’s relocation program as in effect immediately before the Change in Control (or if no such program is in effect, the Company shall reimburse the Participant for reasonable relocation benefits incurred by the Participant and his or her dependants in returning to the Participant’s Home Country to the extent that such costs do not exceed $75,000 USD); and

(g)to the extent provided in Appendix A, if the Participant is subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Excise Tax”), a gross-up payment in accordance with the provisions of Appendix A.

The cash payments specified in paragraphs (a), (b), (c) and (d) of this Section 4 shall be paid no later than the sixtieth (60^th) day (or the next following business day if the sixtieth day is not a business day) following the Date of Termination.

Except as otherwise expressly provided pursuant to this Policy, this Policy shall be construed and administered in a manner which avoids duplication of compensation and benefits which may be provided under any other plan, program, policy, or other arrangement or individual contract. In the event a Participant is covered by any other plan, program, policy, individually negotiated agreement or other arrangement, in effect as of his or her Date of Termination, that may duplicate the payments and benefits provided for in this Section 4, the Board is specifically empowered to reduce or eliminate the duplicative benefits provided for under the Policy.

5.Withholding Taxes. The Company may withhold from all payments due to the Participant (or his beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.

6.Reimbursement of Expenses. Except as provided in Section 16(a) of a Participant’s Employment and Confidentiality Agreement, if any contest or dispute shall arise under this Policy involving termination of a Participant’s employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall reimburse the Participant on a current basis for all reasonable legal fees and related expenses, if any, incurred by the Participant in connection with such contest or dispute (regardless of the result thereof), together with interest in an amount equal to the prime rate as reported in The Wall Street Journal, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue thirty (30) days from the date the Company receives the Participant’s statement for such fees and expenses through the date of payment thereof, regardless of whether or not the Participant’s claim is upheld by a court of competent jurisdiction or an arbitration panel; provided, however, that the Participant shall be required to repay immediately any such amounts to the Company to the extent that a

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court or an arbitration panel issues a final and non-appealable order setting forth the determination that the position taken by the Participant was frivolous or advanced by the Participant in bad faith.

7.Scope of Policy. Nothing in this Policy shall be deemed to entitle the Participant to continued employment with the Company or its Subsidiaries, and if a Participant’s employment with the Company shall terminate prior to a Change in Control, the Participant shall have no further rights under this Policy (except as otherwise provided hereunder); provided, however, that any termination of a Participant’s employment during the Termination Period shall be subject to all of the provisions of this Policy.

8.Successors; Binding Agreement.

(a)This Policy shall not be terminated by any Business Combination. In the event of any Business Combination, the provisions of this Policy shall be binding upon the Surviving Corporation, and such Surviving Corporation shall be treated as the Company hereunder.

(b)The Company agrees that in connection with any Business Combination, it will cause any successor entity to the Company unconditionally to assume all of the obligations of the Company hereunder. Failure of the Company to obtain such assumption prior to the effectiveness of any such Business Combination that constitutes a Change in Control, shall be a breach of this Policy and shall constitute Good Reason hereunder and shall entitle the Participant to compensation and other benefits from the Company in the same amount and on the same terms as the Participant would be entitled hereunder if the Participant’s employment were terminated following a Change in Control by reason of a Qualifying Termination. For purposes of implementing the foregoing, the date on which any such Business Combination becomes effective shall be deemed the date Good Reason occurs, and shall be the Date of Termination if requested by a Participant.

(c)The benefits provided under this Policy shall inure to the benefit of and be enforceable by the Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Participant shall die while any amounts would be payable to the Participant hereunder had the Participant continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Policy to such person or persons appointed in writing by the Participant to receive such amounts or, if no person is so appointed, to the Participant’s estate.

9.Notice. (a) For purposes of this Policy, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed

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to have been duly given when delivered or five (5) days after deposit in the United States mail, certified and return receipt requested, postage prepaid, addressed as follows:

If to the Participant: the address listed as the Participant’s address in the Company’s personnel files.

If to the Company:        CA, Inc.        Attention: Corporate Secretary        One CA Plaza        Islandia, NY 11749

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

(b)A written notice of the Participant’s Date of Termination by the Company or the Participant, as the case may be, to the other, shall (i) indicate the specific termination provision in this Policy relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated and (iii) specify the termination date (which date shall be not less than fifteen (15) nor more than sixty (60) days after the giving of such notice). The failure by the Participant or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Participant or the Company hereunder or preclude the Participant or the Company from asserting such fact or circumstance in enforcing the Participant’s or the Company’s rights hereunder.

10.Full Settlement; Resolution of Disputes and Costs.

(a)    The Company’s obligation to make any payments provided for in this Policy and otherwise to perform its obligations hereunder shall be in lieu and in full settlement of all other severance payments to the Participant under any other severance or employment agreement between the Participant and the Company, and any severance plan of the Company. In no event shall the Participant be obligated to seek other employment or take other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Policy and, except as provided in the Separation Agreement and Release, such amounts shall not be reduced whether or not the Participant obtains other employment.

(b)    Any dispute or controversy arising under or in connection with this Policy shall be settled exclusively by arbitration in New York by three arbitrators in

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accordance with the commercial arbitration rules of the American Arbitration Association (“AAA”) then in effect. One arbitrator shall be selected by the Company, the other by the Participant and the third jointly by these arbitrators (or if they are unable to agree within thirty (30) days of the commencement of arbitration the third arbitrator will be appointed by the AAA). Judgment may be entered on the arbitrators’ award in any court having jurisdiction. In the event of any such dispute or controversy arising during a Termination Period, the Company shall bear all costs and expenses arising in connection with any arbitration proceeding on the same terms as set forth in Section 6 of this Policy. Notwithstanding anything in this Policy to the contrary, any court, tribunal or arbitration panel that adjudicates any dispute, controversy or claim arising between a Participant and the Company, or any of their delegates or successors, in respect of a Participant’s Qualifying Termination, will apply a denovo standard of review to any determinations made by such person. Such denovo standard shall apply notwithstanding the grant of full discretion hereunder to any such person or characterization of any such decision by such person as final, binding or conclusive on any party.

11.Employment with Subsidiaries. Employment with the Company for purposes of this Policy shall include employment with any Subsidiary.

12.Survival. The respective obligations and benefits afforded to the Company and the Participant as provided in Sections 4 (to the extent that payments or benefits are owed as a result of a termination of employment that occurs during the term of this Policy) 5, 6, 8(c) and 10 shall survive the termination of this Policy.

13.GOVERNING LAW; VALIDITY. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS POLICY SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLE OF CONFLICTS OF LAWS, AND APPLICABLE FEDERAL LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS POLICY SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS POLICY, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.

14.Amendment and Termination. The Board may amend or terminate the Policy at any time; provided, however, that during the period commencing on a Change in Control and ending on the second anniversary of the Change in Control, the Policy may not be amended or terminated by the Board in any manner which is materially adverse to the interests of any Participant then listed on Schedule A, B or C without the prior written consent of such Participant; provided, further, that any termination or amendments to the Policy that are adverse to the interests of any Participant then listed on Schedule A, B or C, and that occur during the period of time beginning on a date three (3) months prior to a Potential Change in Control and ending on

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the termination of the agreement that constituted the Potential Change in Control, shall be void.

15.Interpretation and Administration. The Policy shall be administered by the Board. The Board may delegate any of its powers under the Policy to the Compensation and Human Resources Committee of the Board (or any successor committee). The Board or the Compensation and Human Resources Committee (or any successor committee) shall have the authority (i) to exercise all of the powers granted to it under the Policy, (ii) to construe, interpret and implement the Policy, (iii) to prescribe, amend and rescind rules and regulations relating to the Policy, (iv) to make all determinations necessary or advisable in administration of the Policy and (v) to correct any defect, supply any omission and reconcile any inconsistency in the Policy. Actions of the Board or the Compensation and Human Resources Committee (or any successor committee) shall be taken by a majority vote of its members.

16.Claims and Appeals. Participants may submit claims for benefits by giving notice to the Company pursuant to Section 9 of this Policy. If a Participant believes that he or she has not received coverage or benefits to which he or she is entitled under the Policy, the Participant may notify the Board in writing of a claim for coverage or benefits. If the claim for coverage or benefits is denied in whole or in part, the Board shall notify the applicant in writing of such denial within thirty (30) days (which may be extended to sixty (60) days under special circumstances), with such notice setting forth: (i) the specific reasons for the denial; (ii) the Policy provisions upon which the denial is based; (iii) any additional material or information necessary for the applicant to perfect his or her claim; and (iv) the procedures for requesting a review of the denial. Upon a denial of a claim by the Board, the Participant may: (i) request a review of the denial by the Board or, where review authority has been so delegated, by such other person or entity as may be designated by the Board for this purpose; (ii) review any Policy documents relevant to his or her claim; and (iii) submit issues and comments to the Board or its delegate that are relevant to the review. Any request for review must be made in writing and received by the Board or its delegate within sixty (60) days of the date the applicant received notice of the initial denial, unless special circumstances require an extension of time for processing. The Board or its delegate will make a written ruling on the applicant’s request for review setting forth the reasons for the decision and the Policy provisions upon which the denial, if appropriate, is based. This written ruling shall be made within thirty (30) days of the date the Board or its delegate receives the applicant’s request for review unless special circumstances require an extension of time for processing, in which case a decision will be rendered as soon as possible, but not later than sixty (60) days after receipt of the request for review. All extensions of time permitted by this Section 16 will be permitted at the sole discretion of the Board or its delegate. If the Board does not provide the Participant with written notice of the denial of his or her appeal, the Participant’s claim shall be deemed denied.

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17.Type of Policy. This Policy is intended to be, and shall be interpreted as an unfunded employee welfare plan under Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and Section 2520.104-24 of the Department of Labor Regulations, maintained primarily for the purpose of providing employee welfare benefits, to the extent that it provides welfare benefits, and under Sections 201, 301 and 401 of ERISA, as a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation, to the extent that it provides such compensation, in each case for a select group of management or highly compensated employees.

18.Nonassignability. Benefits under the Policy may not be assigned by the Participant. The terms and conditions of the Policy shall be binding on the successors and assigns of the Company.

19.Section 409A. To the extent a Participant would otherwise be entitled to any payment that under this Policy, or any plan or arrangement of the Company or its affiliates, constitutes “deferred compensation” subject to Section 409A and that if paid during the six months beginning on the date of termination of a Participant’s employment would be subject to the Section 409A additional tax because the Participant is a “specified employee” (within the meaning of Section 409A and as determined by the Company) the payment will be paid to the Participant on the earlier of the six-month anniversary of the Participant’s date of termination or the Participant’s death or disability (within the meaning of Section 409A). Similarly, to the extent the Participant would otherwise be entitled to any benefit (other than a payment) during the six months beginning on termination of the Participant’s employment that would be subject to the Section 409A additional tax, the benefit will be delayed and will begin being provided on the earlier of the six-month anniversary of the Participant’s date of termination or death. In addition, any payment or benefit due upon a termination of the Participant’s employment that represents a “deferral of compensation” within the meaning of Section 409A shall be paid or provided to the Participant only upon a “separation from service” as defined in Treasury Regulation § 1.409A-1(h). Each severance payment made under this Policy shall be deemed to be separate payments, amounts payable under Section 4 of this Policy shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treasury Regulation Sections 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treasury Regulation Section 1.409A-1 through A-6.

Notwithstanding anything to the contrary in this Policy or elsewhere, any payment or benefit under this Policy or otherwise that is exempt from Section 409A pursuant to final Treasury Regulation 1.409A-1(b)(9)(v)(A) or (C) shall be paid or provided to the Participant only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the Participant’s second taxable year following the Participant’s taxable year in which the “separation from service” occurs; and provided

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further that such expenses are reimbursed no later than the last day of the Participant’s third taxable year following the taxable year in which the Participant’s “separation from service” occurs.  Except as otherwise expressly provided herein, to the extent any expense reimbursement or the provision of any in-kind benefit under this Policy is determined to be subject to Section 409A of the Code, the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the expenses eligible for reimbursement in any other taxable year (except for any life-time or other aggregate limitation applicable to medical expenses), in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which the Participant incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

20.Effective Date. The Policy shall be effective as of October 18, 2004.

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Schedule A
(2.99 Multiple)

Chief Executive Officer (Michael P. Gregoire)*

Executive Advisor (William E. McCracken)**

Executive Vice President and Chief Financial Officer (Richard J. Beckert)*

Executive Vice President and Group Executive, Worldwide Sales and Services (George J. Fischer)

Executive Vice President and Group Executive, Enterprise Solutions and Technology Group (Peter JL Griffiths)*

[Employees may be added or eliminated from time to time]

*Denotes participants not eligible for the excise tax-gross-up pursuant to section 4(g) of the Policy.

**Effective until March 31, 2013 or earlier termination of employment with the Company.

Schedule B
(2.00 Multiple)

Executive Vice President, Risk, and Chief Administrative Officer (Phillip J. Harrington, Jr.)

Executive Vice President and General Counsel (Amy Fliegelman Olli)

Executive Vice President and Group Executive, Mainframe and Customer Success Group (Adam Elster)*

[Employees may be added or eliminated from time to time]

*Denotes participants not eligible for the excise tax-gross-up pursuant to section 4(g) of the Policy.

Schedule C
(1.00 Multiple)

Executive Vice President, Strategy and Corporate Development (Jacob Lamm)

[Employees may be added or eliminated from time to time]

Appendix A

Additional Reimbursement Payments by the Company

(a)    Anything in this Policy to the contrary notwithstanding, in the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity which effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of the Participant (whether pursuant to the terms of this Policy or otherwise, but determined without regard to any additional payments required under this Appendix A) (the “Payments”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by the Participant with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay to the Participant an additional payment (a “Reimbursement Payment”) in an amount such that after payment by the Participant of all taxes (including any Excise Tax) imposed upon the Reimbursement Payment, the Participant retains an amount of the Reimbursement Payment equal to the Excise Tax imposed upon the Payments. For purposes of determining the amount of the Reimbursement Payment, the Participant shall be deemed to (i) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Reimbursement Payment is to be made and (ii) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Reimbursement Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

Notwithstanding the foregoing provisions of this Appendix A, if it shall be determined that the Participant is entitled to a Reimbursement Payment, but that the Payments would not be subject to the Excise Tax if the Payments were reduced by an amount that is no more than 10% of the portion of the Payments that would be treated as “parachute payments” under Section 280G of the Code, then the amounts payable to the Participant under this Policy shall be reduced (but not below zero) to the maximum amount that could be paid to the Participant without giving rise to the Excise Tax (the “Safe Harbor Cap”), and no Reimbursement Payment shall be made to the Participant. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Section 4(a), unless an alternative method of reduction is elected by the Participant. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Policy (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable under this Policy shall be reduced pursuant to this provision.

(b)    Subject to the provisions of Paragraph (a), all determinations required to be made under this Appendix A, including whether and when a Reimbursement Payment is required, the amount of such Reimbursement Payment, the amount of any Option Redetermination (as defined below), the reduction of the Payments to the Safe Harbor Cap and the assumptions to be utilized in arriving at such determinations, shall be made by a public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Participant within fifteen (15) business days of the receipt of notice from the Company or the Participant that there has been a Payment, or such earlier time as is requested by the Company (collectively, the “Determination”). For the avoidance of doubt, the Accounting Firm may use the Option Redetermination amount in determining the reduction of the Payments to the Safe Harbor Cap. Notwithstanding the foregoing, in the event (i) the Board shall determine prior to the Change in Control that the Accounting Firm is precluded from performing such services under applicable auditor independence rules or (ii) the Audit Committee of the Board determines that it does not want the Accounting Firm to perform such services because of auditor independence concerns or (iii) the Accounting Firm is serving as accountant or auditor for the person(s) effecting the Change in Control, the Board shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company, and the Company shall enter into any agreement reasonably requested by the Accounting Firm in connection with the performance of the services hereunder. The Reimbursement Payment under this Appendix A with respect to any Payments shall be made no later than thirty (30) days following such Payment. If the Accounting Firm determines that no Excise Tax is payable by a Participant, it shall furnish the Participant with a written opinion to such effect, and to the effect that failure to report the Excise Tax, if any, on the Participant’s applicable federal income tax return will not result in the imposition of a negligence or similar penalty. In the event the Accounting Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it shall furnish the Participant with a written opinion to such effect. The Determination by the Accounting Firm shall be binding upon the Company and the Participant.

As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Reimbursement Payments which will not have been made by the Company should have been made (“Underpayment”) or Reimbursement Payments are made by the Company which should not have been made (“Overpayment”), consistent with the calculations required to be made hereunder. In the event the amount of the Reimbursement Payment is less than the amount necessary to reimburse the Participant for theExcise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly

A-2

paid by the Company to or for the benefit of the Participant (but in any event no later than by the end of the Participant’s taxable year next following the Participant’s taxable year in which the Underpayment of Excise Tax is remitted). In the event the amount of the Reimbursement Payment exceeds the amount necessary to reimburse the Participant for theExcise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by the Participant (to the extent the Participant has received a refund if the applicable Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. The Participant shall cooperate, to the extent his or herexpenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax. In the event that the Company makes a Reimbursement Payment to the Participant and subsequently the Company determines that the value of any accelerated vesting of stock options held by the Participant shall be redetermined within the context of Treasury Regulation §1.280G-1 Q/A 33 (the “Option Redetermination”), the Participant shall (i) file with the Internal Revenue Service an amended federal income tax return that claims a refund of the overpayment of the Excise Tax attributable to such Option Redetermination and (ii) promptly pay the refundedExcise Tax to the Company; provided that the Company shall pay on a current basis all reasonable professional fees incurred in the preparation of the Participant’s amended federal income tax return. If the Option Redetermination occurs in the same year that the Reimbursement Payment is included in the Participant’s taxable income, then in addition to returning the refund to the Company, the Participant will also promptly return to the Company any tax benefit realized by the return of such refund and the return of the additional tax benefit payment (all determinations pursuant to this sentence shall be made by the Accounting Firm).In the event that amounts payable to the Participant under this Policy were reduced pursuant to the second paragraph of Paragraph (a) and subsequently the Participant determines there has been an Option Redetermination that reduces the value of the Payments attributable to such options, the Company shall pay to the Participant (on the first business day of the calendar year following the year the Option Redetermination is made) any amounts payable under this Policy that were not previously paid solely as a result of the second paragraph of Paragraph (a) up to the Safe Harbor Cap plus interest, from the date the Participant files the amended return as provided above, at the 3 month Treasury Bill rate.

A-3

Exhibit A

FORM OF CIC SEPARATION AGREEMENT AND RELEASE (HEREIN “AGREEMENT”)

CA, Inc. (the “Company”) and _______________ (“Executive”) agree as follows:

1.Executive’s employment with the Company will terminate effective [Date].

2.Executive agrees to make himself reasonably available to the Company to respond to requests by the Company for information concerning litigation, regulatory inquiry or investigation, involving facts or events relating to the Company that may be within his knowledge. Executive will cooperate fully with the Company in connection with any and all future litigation or regulatory proceedings brought by or against the Company to the extent the Company reasonably deems Executive’s cooperation necessary. Executive will be entitled to reimbursement of reasonable out-of-pocket expenses (not including counsel fees) incurred in connection with fulfilling his obligations under this Section 2.

3.In consideration of Executive’s undertakings herein, the Company will pay an amount equal to $____________ in accordance with Section 4 of the Company’s Change in Control Severance Policy (the “CIC Severance Policy”), less required deductions (including, but not limited to, federal, state and local tax withholdings) as separation/severance pay (the “Severance Payment”). The Severance Payment will be paid in accordance with the CIC Severance Policy. Payment of the Severance Payment is contingent upon the execution of this Agreement by Executive and Executive’s compliance with all terms and conditions of this Agreement and the CIC Severance Policy. Executive agrees that if this Agreement does not become effective, the Company shall not be required to make any further payments to Executive pursuant to this Agreement or the CIC Severance Policy and shall be entitled to recover all payments already made by it (including interest thereon).

4.Executive understands and agrees that any amounts that Executive owes the Company, including any salary or other overpayments related to Executive’s employment with the Company, will be offset and deducted from Executive’s final paycheck from the Company. Executive specifically authorizes the Company to offset and deduct any such amounts from his final paycheck. Executive agrees and acknowledges that, to the extent the amount of Executive’s final paycheck is not sufficient to repay the full amount that Executive owes to the Company, if any, the full remaining amount owed to the Company, if any, will be offset and deducted from the amount of the Severance Payment. Executive specifically authorizes the Company to offset and deduct any such amounts from his Severance Payment.

5.Executive agrees that, after payment of Executive’s final paycheck on [Date] and the Severance Payment, Executive will have received all compensation and benefits

that are due and owing to Executive by the Company, including but not limited to salary, vacation pay, bonus, commissions and incentive/override compensation but excluding any benefits or services provided pursuant to Sections 4(e) and 4(f) of the CIC Severance Policy.

6.    Executive represents that he has returned to the Company all property or information, including, without limitation, all reports, files, memos, plans, lists, or other records (whether electronically stored or not) belonging to the Company or its affiliates, including copies, extracts or other documents derived from such property or information. Executive will immediately forfeit all rights and benefits under this Agreement and the CIC Severance Policy, including, without limitation, the right to receive any Severance Payment if Executive, directly or indirectly, at any time (i) discloses to any third party or entity any trade secrets or other proprietary or confidential information pertaining to the Company or any of its affiliates or uses such secrets or information without the prior written consent of the General Counsel of the Company or (ii) takes any actions or makes or publishes any statements, written or oral, or instigates, assists or participates in the making or publication of any such statements which libel, slander or disparage the Company or any of its past or present directors, officers or employees. Nothing in this Agreement shall prevent or prohibit Executive or the Company from responding to an order, subpoena, other legal process or regulatory inquiry directed to them or from providing information to or making a filing with a governmental or regulatory body. Executive agrees that upon learning of any order, subpoena or other legal process seeking information that would otherwise be prohibited from disclosure under this Agreement, he will promptly notify the Company, in writing, directed to the Company’s General Counsel. In the event disclosure is so required, Executive agrees not to oppose any action by the Company to seek or obtain a protective order or other appropriate remedy.

7.Executive agrees that Executive’s Employment and Confidentiality Agreement (the “Employment and Confidentiality Agreement”) shall continue to be in full force and effect, including but not limited to all non-competition and non-solicitation provisions contained therein.

8.Executive hereby represents that he has not filed any action, complaint, charge, grievance or arbitration against the Company or any of its affiliates in connection with any matters relating, directly or indirectly, to his employment, and covenants and agrees not to file any such action, complaint or arbitration or commence any other judicial or arbitral proceedings against the Company or any of its affiliates with respect to events occurring prior to the termination of his employment with the Company or any affiliates thereof.

9.Effective on [Date], the Company will cease all health benefit coverage and other benefit coverage for Executive.

10.GENERAL RELEASE – Effective as of the Effective Date, and in return for the consideration set forth above, Executive agrees not to sue or file any action, claim, or lawsuit against the Company, agrees not to pursue, seek to recover or recover any alleged

Ex-2

damages, seek to obtain or obtain any other form of relief or remedy with respect to, and cause the dismissal or withdrawal of, any lawsuit, action, claim, or charge against the Company, and Executive agrees to waive all claims and release and forever discharge the Company, its officers, directors, subsidiaries, affiliates, parents, attorneys, shareholders and employees from any claims, demands, actions, causes of action or liabilities for compensatory damages or any other relief or remedy, and obligations of any kind or nature whatsoever, based on any matter, cause or thing, relating in any way, directly or indirectly, to his employment, from the beginning of time through the Effective Date of this Agreement, whether known or unknown, fixed or contingent, liquidated or unliquidated, and whether arising from tort, statute, or contract, including, but not limited to, any claims arising under or pursuant to the California Fair Employment and Housing Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1871, the Civil Rights Act of 1991, the Americans with Disabilities Act, the Rehabilitation Act, the Family and Medical Leave Act of 1993, the Occupational Safety & Health Act, the Employee Retirement Income Security Act of 1974, the Older Workers Benefit Protection Act of 1990, the Worker Adjustment and Retraining Notification Act, the Fair Labor Standards Act, the Age Discrimination in Employment Act of 1967 (“ADEA”), New York State Labor Law, New York State Human Rights Law, New York Human Rights Law, and any other state, federal, city, county or local statute, rule, regulation, ordinance or order, or the national or local law of any foreign country, any claim for future consideration for employment with the Company, any claims for attorneys’ fees and costs and any employment rights or entitlement law, and any claims for wrongful discharge, intentional infliction of emotional distress, defamation, libel or slander, payment of wages, outrageous behavior, breach of contract or any duty allegedly owed to Executive, discrimination based upon race, color, ethnicity, sex, age, national origin, religion, disability, sexual orientation, or another unlawful criterion or circumstance, and any other theory of recovery. It is the intention of the parties to make this release as broad and as general as the law permits.

[Executive acknowledges that he is aware of, has read, has had explained to him by his attorneys, understands and expressly waives any and all rights he has or may have under Section 1542 of the California Civil Code, which provides as follows:

“A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”]^* 

11.Executive acknowledges that he may later discover facts different from or in addition to those which he knows or believes to be true now, and he agrees that, in such event, this Agreement shall nevertheless remain effective in all respects, notwithstanding such different or additional facts or the discovery of those facts.

* Include bracketed language for California employees.

Ex-3

12.This Agreement may not be introduced in any legal or administrative proceeding, or other similar forum, except one concerning a breach of this Agreement or the CIC Severance Policy.

13.Executive acknowledges that Executive has made an independent investigation of the facts, and does not rely on any statement or representation of the Company in entering into this Agreement, other than those set forth herein.

14.Executive agrees that, without limiting the Company’s remedies, should he commence, continue, join in, or in any other manner attempt to assert any claim released in connection herewith, or otherwise violate in a material fashion any of the terms of this Agreement, the Company shall not be required to make any further payments to the Executive pursuant to this Agreement or the CIC Severance Policy and shall be entitled to recover all payments already made by it (including interest thereon), in addition to all damages, attorneys’ fees and costs the Company incurs in connection with Executive’s breach of this Agreement. Executive further agrees that the Company shall be entitled to the repayments and recovery of damages described above without waiver of or prejudice to the release granted by him in connection with this Agreement, and that his violation or breach of any provision of this Agreement shall forever release and discharge the Company from the performance of its obligations arising from the Agreement.

15.Executive has been advised and acknowledges that he has been given forty-five (45) days to sign this Agreement, he has seven (7) days following his signing of this Agreement to revoke and cancel the terms and conditions contained herein, and the terms and conditions of this Agreement shall not become effective or enforceable. until the revocation period has expired (the “Effective Date”).

16.Executive acknowledges that Executive has been advised hereby to consult with, and has consulted with, an attorney of his choice prior to signing this Agreement.

17.Executive acknowledges that Executive has fully read this Agreement, understands the contents of this Agreement, and agrees to its terms and conditions of his own free will, knowingly and voluntarily, and without any duress or coercion.

18.Executive understands that this Agreement includes a final general release, and that Executive can make no further claims against the Company or the persons listed in Section 10 of this Agreement relating in any way, directly or indirectly, to his employment. Executive also understands that this Agreement precludes Executive from recovering any damages or other relief as a result of any lawsuit, grievance, charge or claim brought on Executive’s behalf against the Company or the persons listed in Section 10 of this Agreement.

19.Executive acknowledges that Executive is receiving adequate consideration (that is in addition to what Executive is otherwise entitled to) for signing this Agreement.

Ex-4

20.This Agreement and the CIC Severance Policy constitute the complete understanding between Executive and the Company regarding the subject matter hereof and thereof. No other promises or agreements regarding the subject matter hereof and thereof will be binding unless signed by Executive and the Company.

21.Executive and the Company agree that all notices or other communications required or permitted to be given under the terms of this Agreement shall be given in accordance with Section 9 of the CIC Severance Policy.

22.Executive and the Company agree that any disputes relating to any matters covered under the terms of this Agreement shall be resolved in accordance with Section 10 of the CIC Severance Policy.

23.By entering into this Agreement, the Company does not admit and specifically denies any liability, wrongdoing or violation of any law, statute, regulation or policy, and it is expressly understood and agreed that this Agreement is being entered into solely for the purpose of amicably resolving all matters of any kind whatsoever between Executive and the Company.

24.In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions or portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

25.The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.

26.Unless expressly specified elsewhere in this Agreement, this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York without reference to the principles of conflict of law.

27.This Agreement may be executed in one or more counterparts.

Company By:	Executive
Date:	Date:

Ex-5

EX-12.1

Exhibit 12.1

CA, Inc.

STATEMENT OF RATIOS OF EARNINGS TO FIXED CHARGES

(in millions, except ratios)

	Fiscal Year										Nine Months Ended
	2008		2009		2010		2011		2012		December 31, 2012
Earnings available for fixed charges:
Earnings from continuing operations before income taxes, minority interest and discontinued operations	$	762	$	1,049	$	1,152	$	1,209	$	1,354	$	1,055
Add: Fixed charges	248		191		156		121		123		74
Total earnings available for fixed charges	$	1,010	$	1,240	$	1,308	$	1,330	$	1,477	$	1,129
Fixed charges:
Interest expense(1)	$	169	$	130	$	102	$	68	$	64	$	48
Interest portion of rental expense	79		61		54		53		59		26
Total fixed charges	$	248	$	191	$	156	$	121	$	123	$	74
RATIOS OF EARNINGS TO FIXED CHARGES	4.07		6.49		8.38		10.99		12.01		15.26
Deficiency of earnings to fixed charges	n/a		n/a		n/a		n/a		n/a		n/a

(1) Includes amortization of discount related to indebtedness

EX-15

Exhibit 15

January 24, 2013

CA, Inc.
One CA Plaza
Islandia, New York 11749

Re: Registration Statement No. 333-174849 on Form S-3 and Registration Statement Nos. 333-183731,333-177558, 333-176166, 333-146173, 333-120849, 333-108665, 333-100896, 333-88916, 333-32942, 333-31284, 333-83147, 333-80883, 333-79727, 333-62055, 333-19071, 333-04801, 333-127602, 333-127601, 333-126273, 33-64377, 33-53915, 33-53572, 33-34607, 33-18322, 33-20797, 2-92355, 2-87495 and 2-79751 on Form S-8.

With respect to the subject registration statements, we acknowledge our awareness of the use therein of our report dated January 24, 2013 related to our review of interim financial information.

Pursuant to Rule 436 under the Securities Act of 1933 (the Act), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.

/s/ KPMG LLP

New York, New York

EX-31.1

Exhibit 31.1

CEO CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael P. Gregoire, certify that:

1. I have reviewed the Quarterly Report on Form 10-Q of CA, Inc. for its most recent fiscal quarter;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	January 24, 2013	/s/ Michael P. Gregoire
		Michael P. Gregoire
		Chief Executive Officer
		CA, Inc.

EX-31.2

Exhibit 31.2

CFO CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard J. Beckert, certify that:

1. I have reviewed the Quarterly Report on Form 10-Q of CA, Inc. for its most recent fiscal quarter;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	January 24, 2013	/s/ Richard J. Beckert
		Richard J. Beckert
		Executive Vice President and Chief Financial Officer
		CA, Inc.

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report on Form 10-Q of CA, Inc., a Delaware corporation (the “Company”), for the fiscal quarter ended December 31, 2012 as filed with the Securities and Exchange Commission (the “Report”), each of Michael P. Gregoire, Chief Executive Officer of the Company, and Richard J. Beckert, Executive Vice President and Chief Financial Officer of the Company, hereby certifies, pursuant to §906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350), that to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Michael P. Gregoire

Michael P. Gregoire

Chief Executive Officer

January 24, 2013

/s/ Richard J. Beckert

Richard J. Beckert

Executive Vice President and Chief Financial Officer

January 24, 2013

The foregoing certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that Section. The foregoing certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates it by reference.

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Severance and Exit Costs 1 (Details) (USD $) In Millions, unless otherwise specified					9 Months Ended
	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011	Mar. 31, 2011	Dec. 31, 2012 Severance [Member]	Dec. 31, 2011 Severance [Member]	Dec. 31, 2012 Facility Abandonment [Member]	Dec. 31, 2011 Facility Abandonment [Member]
Restructuring Reserve [Roll Forward]
Accrued beginning balance	$ 45	$ 53	$ 61	$ 55	$ 13	$ 8	$ 40	$ 47
Expense					18	49	0	0
Change in estimate					(3)	(6)	0	0
Payments					(8)	(30)	(11)	(8)
Accretion and other					0	0	(4)	1
Accrued ending balance	$ 45	$ 53	$ 61	$ 55	$ 20	$ 21	$ 25	$ 40

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Stockholders' Equity 1 (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011
Cash Dividends
Declaration date	Nov. 07, 2012	Aug. 02, 2012	May 08, 2012	Nov. 09, 2011	Aug. 03, 2011	May 12, 2011
Dividend per share	$ 0.25	$ 0.25	$ 0.25	$ 0.05	$ 0.05	$ 0.05
Record date	Nov. 20, 2012	Aug. 14, 2012	May 22, 2012	Nov. 22, 2011	Aug. 16, 2011	May 23, 2011
Total amount	$ 114	$ 116	$ 119	$ 25	$ 25	$ 25
Payment date	Dec. 11, 2012	Sep. 11, 2012	Jun. 12, 2012	Dec. 14, 2011	Sep. 14, 2011	Jun. 16, 2011

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Derivatives 1 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Interest Rate Swaps [Member] | Fair Value Hedging [Member] | Interest Expense, Net [Member]
Effect of interest rate and foreign exchange derivatives on Consolidated Statements of Operations
Amount of net (gain)/loss recognized in the Condensed Consolidated Statement of Operations	$ (3)	$ (3)	$ (9)	$ (9)
Foreign Exchange Contracts [Member] | Other (Gains) Expenses, Net [Member]
Effect of interest rate and foreign exchange derivatives on Consolidated Statements of Operations
Amount of net (gain)/loss recognized in the Condensed Consolidated Statement of Operations	$ (7)	$ 8	$ 2	$ 9

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Stockholders' Equity 2 (Details) (USD $)	2 Months Ended	3 Months Ended		9 Months Ended
	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2012
Stock Repurchase Program [Line Items]
Accelerated share repurchase, value			$ 500,000,000
Stockholders' Equity (Textual) [Abstract]
Number of initial shares received under accelerated share repurchase agreement			15,000,000
Number of additional shares received under accelerated share repurchase agreement		3,700,000
Total shares of common stock repurchased excluding ASR				17,000,000
Value of common stock repurchased excluding ASR				421,000,000
Remaining authorized amount of common stock under common stock repurchase program				579,000,000
Accumulated other comprehensive loss	119,000,000		108,000,000	119,000,000
Rights plan, beneficial ownership with exclusion	20% or more
Rights plan, grandfathered maximum shares	126,562,500
Rights plan, grandfathered affiliates percentage of shares outstanding	0.10%
Rights plan, beneficial ownership	more than 50%
Rights plan, effect of tender offer	20% or more
Rights plan, shares	0.001 shares
Rights plan, purchase price	100
Rights plan, exercise price	100
Rights plan, qualifying offer	10.00%
Rights plan, redemption price and term	$0.001 per Right, expire November 30, 2015
Treasury Stock [Member]
Stock Repurchase Program [Line Items]
Accelerated share repurchase, value			375,000,000
Additional Paid-in Capital [Member]
Stock Repurchase Program [Line Items]
Accelerated share repurchase, value			125,000,000
Accelerated Share Repurchase Agreement [Member]
Stock Repurchase Program [Line Items]
Stock repurchase program, authorized amount			$ 500,000,000

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Goodwill, Capitalized Software and Other Intangible Assets 4 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Mar. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Capitalized software and other intangible assets, net	$ 1,296	$ 1,389
Uncertainty, continued marketability of goods and services	The Company evaluates the useful lives and recoverability of capitalized software and other intangible assets when events or changes in circumstances indicate that an impairment may exist. These evaluations require complex assumptions about key factors such as future customer demand, technology trends, and the impact of such factors on the technology the Company acquires and develops for its products.  As of December 31, 2012, no impairment exists and no revisions to useful lives are necessary within our Enterprise Solutions segment.  Impairment or revisions to useful lives could result from the use of alternative assumptions that reflect reasonably possible outcomes related to future customer demand or technology trends for certain assets in the Enterprise Solutions segment whose carrying amount is approximately $75 million.
Assets At Risk Of Impairment [Member] | Enterprise Solutions [Member]
Finite-Lived Intangible Assets [Line Items]
Capitalized software and other intangible assets, net	$ 75

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Accounting for Share-Based Compensation (Tables)

9 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Recognized share-based compensation

The Company recognized share-based compensation in the following line items in the Condensed Consolidated Statements of Operations for the periods indicated:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012			2011
	(in millions)
Costs of licensing and maintenance	$	1		$	—		$	2		$	2
Cost of professional services	1			1			3			3
Selling and marketing	6			9			24			25
General and administrative	6			5			21			17
Product development and enhancements	4			5			12			14
Share-based compensation expense before tax	$	18		$	20		$	62		$	61
Income tax benefit	(4		)	(6		)	(20		)	(20		)
Net share-based compensation expense	$	14		$	14		$	42		$	41

Unrecognized share-based compensation costs

The following table summarizes information about unrecognized share-based compensation costs at December 31, 2012:

	Unrecognized Compensation Costs		Weighted Average Period Expected to be Recognized
	(in millions)		(in years)
Stock option awards	$	4	2.1
Restricted stock units	16		2.0
Restricted stock awards	66		1.9
Performance share units	14		2.8
Total unrecognized share-based compensation costs	$	100	2.0

Weighted average fair values and assumptions used for options granted

The weighted average fair values and assumptions used for the options granted were as follows:

	Nine Months Ended December 31,
	2012		2011
Weighted average fair value	9.09		5.99
Dividend yield	3.96	%	0.91	%
Expected volatility factor (1)	59	%	33	%
Risk-free interest rate (2)	0.8	%	1.7	%
Expected life (in years) (3)	4.5		4.5

(1) Expected volatility is measured using historical daily price changes of the Company’s 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, based primarily on historical experience, 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).

Summary of RSUs and RSAs granted

The table below summarizes all of the RSUs and RSAs, including grants made pursuant to the long-term incentive plans discussed above, granted during the three and nine months ended December 31, 2012 and 2011:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012		2011
				(shares in millions)
RSUs
Shares	0.1			—		(1)	0.8		0.7
Weighted avg. grant date fair value (2)	$	20.81		$	20.19		$	24.05	$	24.04
RSAs
Shares	—		(1)	0.1			3.6		3.7
Weighted avg. grant date fair value (3)	$	23.04		$	20.40		$	26.21	$	24.49

(1) Less than 0.1 million.

(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) The fair value is based on the quoted market value of the Company’s common stock on the grant date.

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Accounting for Share-Based Compensation 1 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Recognized share-based compensation
Share-based compensation expense before tax	$ 18	$ 20	$ 62	$ 61
Income tax benefit	(4)	(6)	(20)	(20)
Net share-based compensation expense	14	14	42	41
Costs of Licensing and Maintenance [Member]
Recognized share-based compensation
Share-based compensation expense before tax	1	0	2	2
Cost of Professional Services [Member]
Recognized share-based compensation
Share-based compensation expense before tax	1	1	3	3
Selling and Marketing [Member]
Recognized share-based compensation
Share-based compensation expense before tax	6	9	24	25
General and Administrative [Member]
Recognized share-based compensation
Share-based compensation expense before tax	6	5	21	17
Product Development and Enhancements [Member]
Recognized share-based compensation
Share-based compensation expense before tax	$ 4	$ 5	$ 12	$ 14

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Severance and Exit Costs (Tables)

9 Months Ended

Dec. 31, 2012

Restructuring and Related Activities [Abstract]

Severance and exit costs activity

Accrued severance and exit costs and changes in the accruals during the nine months ended December 31, 2012 and 2011 associated with these plans as well as other severance actions were as follows:

(in millions)	Accrued Balance at March 31, 2012		Expense		Change in Estimate			Payments			Accretion and Other			Accrued Balance at December 31, 2012
Severance	$	13	$	18	$	(3	)	$	(8	)	$	—		$	20
Facilities abandonment	40		—		—			(11		)	(4		)	25
Total accrued liabilities	$	53												$	45

(in millions)	Accrued Balance at March 31, 2011		Expense		Change in Estimate			Payments			Accretion and Other		Accrued Balance at December 31, 2011
Severance	$	8	$	49	$	(6	)	$	(30	)	$	—	$	21
Facilities abandonment	47		—		—			(8		)	1		40
Total accrued liabilities	$	55											$	61

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Fair Value Measurements 1 (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012		Mar. 31, 2012
Assets:
Interest rate derivatives	$ 22		$ 27
Fair Value, Measurements, Recurring [Member]
Assets:
Foreign exchange derivatives	4	[1]	2	[1]
Interest rate derivatives	22	[1]	27	[1]
Total Assets	1,266		1,403
Liabilities:
Foreign exchange derivatives	4	[1]	4	[1]
Total Liabilities	4		4
Fair Value, Measurements, Recurring [Member] | Money Market Funds [Member]
Assets:
Money market funds	1,240	[2]	1,374	[3]
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets:
Total Assets	1,240		1,374
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Money Market Funds [Member]
Assets:
Money market funds	1,240		1,374
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets:
Foreign exchange derivatives	4	[1]	2	[1]
Interest rate derivatives	22	[1]	27	[1]
Total Assets	26		29
Liabilities:
Foreign exchange derivatives	4	[1]	4	[1]
Total Liabilities	$ 4		$ 4

[1] See Note H, “Derivatives” for additional information. Interest rate derivatives fair value excludes accrued interest.

[2] At December 31, 2012, the Company had approximately $1,190 million and $50 million of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.

[3] At March 31, 2012, the Company had approximately $1,324 million and $50 million of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.

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Trade Accounts Receivable (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Mar. 31, 2012
Components of trade accounts receivable, net
Accounts receivable - billed	$ 727	$ 812
Accounts receivable - unbilled	69	80
Other receivables	13	26
Less: Allowances	(23)	(16)
Trade accounts receivable, net	$ 786	$ 902

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Divestitures 1 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Income (loss) from the discontinued components
Income from discontinued operations, net of taxes	$ 0	$ 0	$ 0	$ 13
Internet Security Business [Member]
Income (loss) from the discontinued components
Subscription and maintenance revenue				15
Total revenue				15
Loss from operations of discontinued components, net of tax benefit of $6 million				(10)
Gain on disposal of discontinued components, net of taxes				23
Income from discontinued operations, net of taxes				$ 13

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Fair Value Measurements 3 (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Mar. 31, 2012
Cash and Cash Equivalents [Member] | Money Market Funds [Member]
Fair Value Measurements (Details Textual) [Abstract]
Cash and cash equivalents	$ 1,190	$ 1,324
Other Noncurrent Assets, Net [Member] | Money Market Funds [Member]
Fair Value Measurements (Details Textual) [Abstract]
Other noncurrent assets, net	50	50
Accrued Expenses and Other Current Liabilities [Member] | Facilities Abandonment Reserve [Member]
Fair Value Measurements (Details Textual) [Abstract]
Accrued expenses and other current liabilities	8	16
Other Noncurrent Liabilities [Member] | Facilities Abandonment Reserve [Member]
Fair Value Measurements (Details Textual) [Abstract]
Other noncurrent liabilities	$ 18	$ 26

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Accounting for Share-Based Compensation 5 (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	9 Months Ended		6 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Employee Stock Purchase Plan [Member]	Jun. 30, 2012 Employee Stock Purchase Plan [Member]
Accounting for Share-Based Compensation (Textual) [Abstract]
Stock options issued	0.7	0.6
Share-based compensation arrangement by share-based payment award, fair value assumptions, expected term, simplified method	The Company’s computation of expected life was determined based on the simplified method (the average of the vesting period and option term).
Percentage of closing price of stock on last day of offer period			95.00%
Number of shares issued under Employee Stock Purchase Plan			0.2	0.1
Average price of shares issued under Employee Stock Purchase Plan			$ 20.88	$ 25.74
Number of shares available for future issuances under Employee Stock Purchase Plan			29.7

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Deferred Revenue (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Mar. 31, 2012
Current:
Total deferred revenue (billed or collected) - current	$ 2,234	$ 2,658
Noncurrent:
Total deferred revenue (billed or collected) - noncurrent	957	972
Total deferred revenue (billed or collected)	3,191	3,630
Subscription and Maintenance [Member]
Current:
Total deferred revenue (billed or collected) - current	2,068	2,479
Noncurrent:
Total deferred revenue (billed or collected) - noncurrent	920	935
Professional Services [Member]
Current:
Total deferred revenue (billed or collected) - current	149	162
Noncurrent:
Total deferred revenue (billed or collected) - noncurrent	35	35
Financing Obligations and Other [Member]
Current:
Total deferred revenue (billed or collected) - current	17	17
Noncurrent:
Total deferred revenue (billed or collected) - noncurrent	$ 2	$ 2

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Severance and Exit Costs

9 Months Ended

Dec. 31, 2012

Restructuring and Related Activities [Abstract]

SEVERANCE AND EXIT COSTS

NOTE C – SEVERANCE AND EXIT COSTS

Fiscal year 2012 workforce reduction plan: The fiscal year 2012 workforce reduction plan (Fiscal 2012 Plan) was announced in July 2011 and consisted of a workforce reduction of approximately 400 positions. This action is part of the Company’s efforts to reallocate resources and divest non-strategic parts of the business. The total amount incurred for severance under the Fiscal 2012 Plan was $39 million. Actions under the Fiscal 2012 Plan were substantially completed by the end of fiscal year 2012.

Fiscal year 2010 restructuring plan: The fiscal year 2010 restructuring plan (Fiscal 2010 Plan) was announced in March 2010 and consisted of a workforce reduction of approximately 1,000 positions and global facilities consolidations. These actions were intended to better align the Company’s cost structure with the skills and resources required to more effectively pursue opportunities in the marketplace and execute the Company’s long-term growth strategy. The total amounts incurred for severance and facilities abandonment under the Fiscal 2010 Plan were $43 million and $2 million, respectively. Actions under the Fiscal 2010 Plan were substantially completed by the end of fiscal year 2011.

Fiscal year 2007 restructuring plan: In August 2006, the Company announced the fiscal year 2007 restructuring plan (Fiscal 2007 Plan) to significantly improve the Company’s expense structure and increase its competitiveness. The Fiscal 2007 Plan consisted of a workforce reduction of approximately 3,100 employees, global facilities consolidations and other cost reductions. The total amounts incurred for severance and facilities abandonment under the Fiscal 2007 Plan were $220 million and $118 million, respectively. Actions under the Fiscal 2007 Plan were substantially completed by the end of fiscal year 2010.

Accrued severance and exit costs and changes in the accruals during the nine months ended December 31, 2012 and 2011 associated with these plans as well as other severance actions were as follows:

(in millions)	Accrued Balance at March 31, 2012		Expense		Change in Estimate			Payments			Accretion and Other			Accrued Balance at December 31, 2012
Severance	$	13	$	18	$	(3	)	$	(8	)	$	—		$	20
Facilities abandonment	40		—		—			(11		)	(4		)	25
Total accrued liabilities	$	53												$	45

(in millions)	Accrued Balance at March 31, 2011		Expense		Change in Estimate			Payments			Accretion and Other		Accrued Balance at December 31, 2011
Severance	$	8	$	49	$	(6	)	$	(30	)	$	—	$	21
Facilities abandonment	47		—		—			(8		)	1		40
Total accrued liabilities	$	55											$	61

The severance liability is included in “Accrued salaries, wages and commissions” in the Condensed Consolidated Balance Sheets. The facilities abandonment liability is included in “Accrued expenses and other current liabilities” and “Other noncurrent liabilities” in the Condensed Consolidated Balance Sheets.

Accretion and other includes accretion of the Company’s lease obligations related to facilities abandonment as well as changes in the assumptions related to future sublease income. These costs are included in “General and administrative” expense in the Condensed Consolidated Statements of Operations.

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Income Taxes (Additional Textual) [Abstract]
Income tax expense	$ 107	$ 141	$ 342	$ 337
Net tax benefit (expense) from international tax rate changes and investment in foreign subsidiary		(10)		8
Deferred tax assets reclassified from non-current to current	150		150
Timing of resolution of income tax examinations			12 months
Period of unrecognized tax benefit			12 months
Significant change in existing unrecognized tax benefits within the next 12 months	$ 200		$ 200
Effective income tax rate excluding impact of discrete items			32.60%	32.40%
Minimum [Member]
Income Taxes (Textual) [Abstract]
Expected fiscal year 2013 effective tax rate			30.00%
Maximum [Member]
Income Taxes (Textual) [Abstract]
Expected fiscal year 2013 effective tax rate			31.00%

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Goodwill, Capitalized Software and Other Intangible Assets 1 (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Mar. 31, 2012
Capitalized software and other intangible assets
Gross amortizable assets	$ 7,951	$ 7,808
Less: Fully amortized assets	5,807	5,719
Remaining amortizable assets	2,144	2,089
Accumulated amortization on remaining amortizable assets	848	700
Net assets	1,296	1,389
Purchased Software Products [Member]
Capitalized software and other intangible assets
Gross amortizable assets	5,651	5,628
Less: Fully amortized assets	4,740	4,733
Remaining amortizable assets	911	895
Accumulated amortization on remaining amortizable assets	301	228
Net assets	610	667
Internally Developed Software Products [Member]
Capitalized software and other intangible assets
Gross amortizable assets	1,487	1,366
Less: Fully amortized assets	638	574
Remaining amortizable assets	849	792
Accumulated amortization on remaining amortizable assets	310	258
Net assets	539	534
Other Intangible Assets [Member]
Capitalized software and other intangible assets
Gross amortizable assets	813	814
Less: Fully amortized assets	429	412
Remaining amortizable assets	384	402
Accumulated amortization on remaining amortizable assets	237	214
Net assets	$ 147	$ 188

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Derivatives (Tables)

9 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Effect of interest rate and foreign exchange derivatives on Condensed Consolidated Statements of Operations

A summary of the effect of the interest rate and foreign exchange derivatives on the Company’s Condensed Consolidated Statements of Operations is as follows:

	Amount of Net (Gain)/Loss Recognized in the Condensed Consolidated  Statements of Operations (in millions)
	Three Months Ended December 31, 2012			Three Months Ended December 31, 2011
Interest expense, net – interest rate swaps designated as fair value hedges	$	(3	)	$	(3	)
Other (gains) expenses, net – foreign currency contracts	$	(7	)	$	8

	Amount of Net (Gain)/Loss Recognized in the Condensed Consolidated  Statements of Operations (in millions)
	Nine Months Ended December 31, 2012			Nine Months Ended December 31, 2011
Interest expense, net – interest rate swaps designated as fair value hedges	$	(9	)	$	(9	)
Other (gains) expenses, net – foreign currency contracts	$	2		$	9

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Deferred Revenue (Tables)

9 Months Ended

Dec. 31, 2012

Deferred Revenue Disclosure [Abstract]

Components of deferred revenue (billed or collected)

The current and noncurrent components of “Deferred revenue (billed or collected)” at December 31, 2012 and March 31, 2012 were as follows:

	December 31, 2012		March 31, 2012
	(in millions)
Current:
Subscription and maintenance	$	2,068	$	2,479
Professional services	149		162
Financing obligations and other	17		17
Total deferred revenue (billed or collected) – current	$	2,234	$	2,658
Noncurrent:
Subscription and maintenance	$	920	$	935
Professional services	35		35
Financing obligations and other	2		2
Total deferred revenue (billed or collected) – noncurrent	$	957	$	972
Total deferred revenue (billed or collected)	$	3,191	$	3,630

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Income from Continuing Operations Per Common Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Basic income from continuing operations per common share:
Income from continuing operations	$ 251	$ 263	$ 713	$ 727
Less: Income from continuing operations allocable to participating securities	(3)	(3)	(8)	(9)
Income from continuing operations allocable to common shares	248	260	705	718
Weighted average common shares outstanding	452	483	458	492
Basic income from continuing operations per common share	$ 0.55	$ 0.54	$ 1.54	$ 1.46
Diluted income from continuing operations per common share:
Income from continuing operations	251	263	713	727
Less: Income from continuing operations allocable to participating securities	(3)	(3)	(8)	(9)
Income from continuing operations allocable to common shares	$ 248	$ 260	$ 705	$ 718
Weighted average shares outstanding and common share equivalents:
Weighted average common shares outstanding	452	483	458	492
Weighted average effect of share-based payment awards	1	1	2	1
Denominator in calculation of diluted income per share	453	484	460	493
Diluted income from continuing operations per common share	$ 0.55	$ 0.54	$ 1.53	$ 1.46
Income Per Common Share (Textual) [Abstract]
Number of anti-dilutive restricted stock awards and options excluded from the calculation	4	6	4	6
Weighted average restricted stock awards considered participating securities	5	6	6	6

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Goodwill, Capitalized Software and Other Intangible Assets 2 (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012
Projected annual amortization expense for current fiscal year and next four fiscal years
2013	$ 317
2014	309
2015	266
2016	220
2017	168
Purchased Software Products [Member]
Projected annual amortization expense for current fiscal year and next four fiscal years
2013	107
2014	101
2015	90
2016	89
2017	87
Internally Developed Software Products [Member]
Projected annual amortization expense for current fiscal year and next four fiscal years
2013	156
2014	159
2015	136
2016	105
2017	72
Other Intangible Assets [Member]
Projected annual amortization expense for current fiscal year and next four fiscal years
2013	54
2014	49
2015	40
2016	26
2017	$ 9

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Fair Value Measurements (Tables)

9 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Assets and liabilities measured at fair value on a recurring basis

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2012 and March 31, 2012:

	At December 31, 2012							At March 31, 2012
	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	$	1,240	$	—	$	1,240	(1)	$	1,374	$	—	$	1,374	(2)
Foreign exchange derivatives (3)	—		4		4			—		2		2
Interest rate derivatives (3)	—		22		22			—		27		27
Total Assets	$	1,240	$	26	$	1,266		$	1,374	$	29	$	1,403
Liabilities:
Foreign exchange derivatives (3)	$	—	$	4	$	4		$	—	$	4	$	4
Total Liabilities	$	—	$	4	$	4		$	—	$	4	$	4

(1) At December 31, 2012, the Company had approximately $1,190 million and $50 million of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.

(2) At March 31, 2012, the Company had approximately $1,324 million and $50 million of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.

(3) See Note H, “Derivatives” for additional information. Interest rate derivatives fair value excludes accrued interest.

Carrying amounts and estimated fair values of the Company's instruments that are not measured at fair value on a recurring basis

The following table presents the carrying amounts and estimated fair values of the Company’s other financial instruments that are not measured at fair value on a recurring basis at December 31, 2012 and March 31, 2012:

	At December 31, 2012				At March 31, 2012
(in millions)	Carrying   Value		Estimated Fair Value		Carrying   Value		Estimated Fair Value
Liabilities:
Total debt (1)	$	1,301	$	1,438	$	1,301	$	1,408
Facilities abandonment reserve (2)	$	26	$	31	$	42	$	48

(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 facilities abandonment reserve is determined using the Company’s incremental borrowing rate at December 31, 2012 and March 31, 2012. At December 31, 2012 and March 31, 2012, the facilities abandonment reserve included approximately $8 million and $16 million, respectively, in “Accrued expenses and other current liabilities” and approximately $18 million and $26 million, respectively, in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3).

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Stockholders' Equity (Tables)

9 Months Ended

Dec. 31, 2012

Equity [Abstract]

Cash dividends

Cash Dividends: The Company’s Board of Directors declared the following dividends during the nine months ended December 31, 2012 and 2011:

Nine Months Ended December 31, 2012:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share		Record Date	Total Amount		Payment Date
May 8, 2012	$	0.25	May 22, 2012	$	119	June 12, 2012
August 2, 2012	$	0.25	August 14, 2012	$	116	September 11, 2012
November 7, 2012	$	0.25	November 20, 2012	$	114	December 11, 2012

Nine Months Ended December 31, 2011:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share		Record Date	Total Amount		Payment Date
May 12, 2011	$	0.05	May 23, 2011	$	25	June 16, 2011
August 3, 2011	$	0.05	August 16, 2011	$	25	September 14, 2011
November 9, 2011	$	0.05	November 22, 2011	$	25	December 14, 2011

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Divestitures

9 Months Ended

Dec. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

DIVESTITURES

NOTE B – DIVESTITURES

In June 2011, the Company sold its Internet Security business for approximately $14 million and recognized a gain on disposal of approximately $23 million, including tax expense of approximately $18 million.

The income from discontinued components for the sale of the Company’s Internet Security business, which occurred during the first quarter of fiscal year 2012, consisted of the following:

	Nine Months Ended December 31, 2011
	(in millions)
Subscription and maintenance revenue	$	15
Total revenue	$	15
Loss from operations of discontinued components, net of tax benefit of $6 million	$	(10	)
Gain on disposal of discontinued components, net of taxes	23
Income from discontinued operations, net of taxes	$	13

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Income from Continuing Operations Per Common Share (Tables)

9 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Reconciliation of earnings per common share

The following table presents basic and diluted income from continuing operations per common share information for the three and nine months ended December 31, 2012 and 2011.

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012			2011
	(in millions, except per share amounts)
Basic income from continuing operations per common share:
Income from continuing operations	$	251		$	263		$	713		$	727
Less: Income from continuing operations allocable to participating securities	(3		)	(3		)	(8		)	(9		)
Income from continuing operations allocable to common shares	$	248		$	260		$	705		$	718
Weighted average common shares outstanding	452			483			458			492
Basic income from continuing operations per common share	$	0.55		$	0.54		$	1.54		$	1.46
Diluted income from continuing operations per common share:
Income from continuing operations	$	251		$	263		$	713		$	727
Less: Income from continuing operations allocable to participating securities	(3		)	(3		)	(8		)	(9		)
Income from continuing operations allocable to common shares	$	248		$	260		$	705		$	718
Weighted average shares outstanding and common share equivalents:
Weighted average common shares outstanding	452			483			458			492
Weighted average effect of share-based payment awards	1			1			2			1
Denominator in calculation of diluted income per share	453			484			460			493
Diluted income from continuing operations per common share	$	0.55		$	0.54		$	1.53		$	1.46

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Severance and Exit Costs 2 (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	18 Months Ended	1 Months Ended	34 Months Ended		1 Months Ended	77 Months Ended
	Jul. 31, 2011 Restructuring Activity Fiscal Plan 2012 [Member] Employee	Dec. 31, 2012 Restructuring Activity Fiscal Plan 2012 [Member] Severance [Member]	Mar. 31, 2010 Restructuring Activity Fiscal Plan 2010 [Member] Employee	Dec. 31, 2012 Restructuring Activity Fiscal Plan 2010 [Member] Severance [Member]	Dec. 31, 2012 Restructuring Activity Fiscal Plan 2010 [Member] Facility Abandonment [Member]	Aug. 31, 2006 Restructuring Activity Fiscal Plan 2007 [Member] Employee	Dec. 31, 2012 Restructuring Activity Fiscal Plan 2007 [Member] Severance [Member]	Dec. 31, 2012 Restructuring Activity Fiscal Plan 2007 [Member] Facility Abandonment [Member]
Severance and Exit Costs (Textual) [Abstract]
Workforce reduction	400		1,000			3,100
Cumulative amount recognized		$ 39		$ 43	$ 2		$ 220	$ 118

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Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012
Commitments and Contingencies (Textual) [Abstract]
Loss contingency, range of possible loss, minimum	$ 0
Loss contingency, range of possible loss, maximum	$ 30

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Condensed Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Mar. 31, 2012
CURRENT ASSETS
Cash and cash equivalents	$ 2,353	$ 2,679
Short-term investments	195	0
Trade accounts receivable, net	786	902
Deferred income taxes	326	231
Other current assets	143	153
TOTAL CURRENT ASSETS	3,803	3,965
Property and equipment, net of accumulated depreciation of $772 and $707, respectively	339	386
Goodwill	5,856	5,856
Capitalized software and other intangible assets, net	1,296	1,389
Deferred income taxes	21	151
Other noncurrent assets, net	243	250
TOTAL ASSETS	11,558	11,997
CURRENT LIABILITIES
Current portion of long-term debt	19	14
Accounts payable	76	95
Accrued salaries, wages and commissions	281	350
Accrued expenses and other current liabilities	415	444
Deferred revenue (billed or collected)	2,234	2,658
Taxes payable, other than income taxes payable	77	80
Federal, state and foreign income taxes payable	225	96
Deferred income taxes	14	14
TOTAL CURRENT LIABILITIES	3,341	3,751
Long-term debt, net of current portion	1,282	1,287
Federal, state and foreign income taxes payable	421	430
Deferred income taxes	44	44
Deferred revenue (billed or collected)	957	972
Other noncurrent liabilities	100	116
TOTAL LIABILITIES	6,145	6,600
STOCKHOLDERS' EQUITY
Preferred stock, no par value, 10,000,000 shares authorized; No shares issued and outstanding	0	0
Common stock, $0.10 par value, 1,100,000,000 shares authorized; 589,695,081 and 589,695,081 shares issued; 450,765,508 and 466,183,134 shares outstanding, respectively	59	59
Additional paid-in capital	3,582	3,491
Retained earnings	5,229	4,865
Accumulated other comprehensive loss	(119)	(108)
Treasury stock, at cost, 138,929,573 and 123,511,947 shares, respectively	(3,338)	(2,910)
TOTAL STOCKHOLDERS' EQUITY	5,413	5,397
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 11,558	$ 11,997

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Goodwill, Capitalized Software and Other Intangible Assets 3 (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Mar. 31, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 5,856	$ 5,856

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
OPERATING ACTIVITIES FROM CONTINUING OPERATIONS:
Net income	$ 713	$ 740
Income from discontinued operations	0	(13)
Income from continuing operations	713	727
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization	317	298
Provision for deferred income taxes	46	78
Provision for bad debts	4	(3)
Share-based compensation expense	62	61
Asset impairments and other non-cash items	6	15
Foreign currency transaction losses (gains)	19	(4)
Changes in other operating assets and liabilities, net of effect of acquisitions:
Decrease in trade accounts receivable	105	12
Decrease in deferred revenue	(420)	(389)
Increase (decrease) in taxes payable, net	74	(33)
Decrease in accounts payable, accrued expenses and other	(37)	(34)
(Decrease) increase in accrued salaries, wages and commissions	(66)	5
Changes in other operating assets and liabilities	15	(4)
NET CASH PROVIDED BY OPERATING ACTIVITIES - CONTINUING OPERATIONS	838	729
INVESTING ACTIVITIES FROM CONTINUING OPERATIONS:
Acquisitions of businesses, net of cash acquired, and purchased software	(18)	(373)
Purchases of property and equipment	(41)	(53)
Proceeds from divestiture of assets	0	7
Capitalized software development costs	(122)	(137)
Purchases of investments	(346)	(102)
Proceeds from sale of investments	0	27
Maturities of investments	163	72
Other investing activities	2	(1)
NET CASH USED IN INVESTING ACTIVITIES - CONTINUING OPERATIONS	(362)	(560)
FINANCING ACTIVITIES FROM CONTINUING OPERATIONS:
Dividends paid	(349)	(75)
Purchases of common stock	(421)	(553)
Debt borrowings	791	240
Debt repayments	(796)	(371)
Exercise of common stock options and other	22	12
NET CASH USED IN FINANCING ACTIVITIES - CONTINUING OPERATIONS	(753)	(747)
Effect of exchange rate changes on cash	(49)	(96)
NET CHANGE IN CASH AND CASH EQUIVALENTS - CONTINUING OPERATIONS	(326)	(674)
CASH USED IN OPERATING ACTIVITIES - DISCONTINUED OPERATIONS	0	(21)
CASH PROVIDED BY INVESTING ACTIVITIES - DISCONTINUED OPERATIONS	0	4
NET EFFECT OF DISCONTINUED OPERATIONS ON CASH AND CASH EQUIVALENTS	0	(17)
DECREASE IN CASH AND CASH EQUIVALENTS	(326)	(691)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	2,679	3,049
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 2,353	$ 2,358

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Accounting for Share-Based Compensation 3 (Details) (USD $)	9 Months Ended
	Dec. 31, 2012		Dec. 31, 2011
Stock Purchase Plan, Fair Value Assumptions
Weighted average fair value	$ 9.09		$ 5.99
Dividend yield	3.96%		0.91%
Expected volatility factor	59.00%	[1]	33.00%	[1]
Risk-free interest rate	0.80%	[2]	1.70%	[2]
Expected life (in years)	4 years 6 months	[3]	4 years 6 months	[3]

[1] Expected volatility is measured using historical daily price changes of the Company’s 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, based primarily on historical experience, 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).

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Accounting Policies 1 (Details) (Notional Pooling Arrangement [Member], USD $) In Millions, unless otherwise specified	9 Months Ended
	Dec. 31, 2012		Dec. 31, 2011
Notional Pooling Arrangement [Member]
Activity under cash pooling arrangement
Total borrowing position outstanding at March 31, 2012	$ 139	[1]
Borrowings	791		240
Repayments	(787)		(112)
Foreign currency exchange effect	(3)
Total borrowing position outstanding at December 31, 2012	$ 140	[1]

[1] Included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.

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Segment Information 3 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended	3 Months Ended	9 Months Ended
	Dec. 31, 2012 Mainframe Solutions [Member]	Dec. 31, 2012 Enterprise Solutions [Member]	Dec. 31, 2012 Enterprise Solutions [Member]	Dec. 31, 2012 Services [Member]	Dec. 31, 2011 Restructuring Activity Fiscal Plan 2012 [Member] Mainframe Solutions [Member]	Dec. 31, 2011 Restructuring Activity Fiscal Plan 2012 [Member] Enterprise Solutions [Member]	Dec. 31, 2011 Restructuring Activity Fiscal Plan 2012 [Member] Services [Member]
Segment Reporting [Line Items]
Intellectual property assets transaction value			$ 35
Severance costs	$ 5	$ 11		$ 2	$ 23	$ 20	$ 1

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Accounting Policies (Policies)

9 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation: The accompanying unaudited Condensed Consolidated Financial Statements of CA, Inc. (Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP), as defined in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 270, for interim financial information and with the instructions to Rule 10-01 of Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the Company’s Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2012 (2012 Form 10-K).

In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal, recurring nature.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, these estimates may ultimately differ from actual results.

Operating results for the three and nine months ended December 31, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2013.

Divestitures

Divestitures: In June 2011, the Company sold its Internet Security business. The results of operations for this business and the related gain on disposal have been presented as discontinued operations in the accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2011. See Note B, “Divestitures,” for additional information.

Cash and Cash Equivalents

Cash and Cash Equivalents: The Company’s cash and cash equivalents are held in numerous locations throughout the world, with approximately 64% being held by the Company’s foreign subsidiaries outside the United States at December 31, 2012.

Fair Value Measurements

Fair Value Measurements: Fair value is the price that would be received for an asset or the amount paid to transfer a liability in an orderly transaction between market participants. The Company is required to classify certain assets and liabilities based on the following fair value hierarchy:

• Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

• Level 2: Quoted prices for identical assets and liabilities in markets that are not active, or quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and

• Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

See Note I, “Fair Value Measurements,” for additional information.

Deferred Revenue (Billed or Collected)

Deferred Revenue (Billed or Collected): The Company accounts for unearned revenue on billed amounts due from customers on a gross basis. Unearned revenue on billed installments (collected or uncollected) is reported as deferred revenue in the liability section of the Company’s Condensed Consolidated Balance Sheets. Deferred revenue (billed or collected) excludes unbilled contractual commitments executed under license and maintenance agreements that will be billed in future periods. See Note G, “Deferred Revenue,” for additional information.

Statements of Cash Flows

Statements of Cash Flows: For the nine months ended December 31, 2012 and 2011, interest payments, net for both periods were approximately $56 million and income taxes paid were approximately $190 million and $252 million, respectively. For the nine months ended December 31, 2012 and 2011, the excess tax benefits from options exercised included in financing activities from continuing operations were approximately $6 million and $3 million, respectively.

Non-cash investing activities for the nine months ended December 31, 2012 consisted of assets acquired under capital leases of $9 million and the purchase of a software license for $20 million, which will be paid during the fourth quarter of fiscal year 2013.

Non-cash financing activities for the nine months ended December 31, 2012 and 2011 consisted of treasury shares issued in connection with the following: share-based incentive awards granted under the Company’s equity compensation plans of approximately $63 million (net of approximately $34 million of taxes withheld) and $54 million (net of approximately $26 million of taxes withheld), respectively; and discretionary stock contributions to the CA, Inc. Savings Harvest Plan of approximately $29 million and $13 million, respectively.

The Company uses a notional pooling arrangement with an international bank to help manage global liquidity requirements. Under this pooling arrangement, the Company and its participating subsidiaries may maintain either cash deposit or borrowing positions through local currency accounts with the bank, so long as the aggregate position of the global pool is a notionally calculated net cash deposit. Because the bank maintains a security interest in the cash deposits, and has the right to offset the cash deposits against the borrowings, the bank provides the Company and its participating subsidiaries favorable interest terms on both. The activity under this cash pooling arrangement for the nine months ended December 31, 2012 was as follows:

(in millions)
Total borrowing position outstanding at March 31, 2012 (1)	$	139
Borrowings	791
Repayments	(787		)
Foreign currency exchange effect	(3		)
Total borrowing position outstanding at December 31, 2012 (1)	$	140

(1) Included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.

For the nine months ended December 31, 2011, borrowings and repayments related to the notional pooling arrangement were approximately $240 million and $112 million, respectively, and are presented within the financing activities section of the Condensed Consolidated Statements of Cash Flows.

Other Matters

Other Matters: As part of the Company’s efforts to more fully utilize its intellectual property assets, in the first quarter of fiscal 2013, the Company closed a transaction that assigned the rights to certain of these assets to a large technology company for $35 million. The entire contract amount is included in the “Other (gains) expenses, net” line of the Company’s Condensed Consolidated Statement of Operations for the nine months ended December 31, 2012. The Company will continue to have the ability to use these intellectual property assets in current and future product offerings.

New Accounting Pronouncements Recently Adopted

New Accounting Pronouncements Recently Adopted: In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220) — Presentation of Comprehensive Income (ASU 2011-05), requiring an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminated the option to present the components of other comprehensive income as part of the statement of equity. The Company adopted ASU 2011-05 in the first quarter of fiscal year 2013 by including the required disclosures in two separate but consecutive statements.

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Accounting Policies 2 (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Accounting Policies (Textual) [Abstract]
Percentage of cash and cash equivalents held by the Company's foreign subsidiaries outside the United States	64.00%
Interest payments, net	$ 56	$ 56
Income and other taxes paid, net	190	252
Excess tax benefits from options exercised included in financing activities from continuing operations	6	3
Assets acquired under capital leases	9
Purchase of software license	20
Share-based incentive awards	63	54
Withholding taxes on share-based incentive awards	34	26
Discretionary stock contributions to CA, Inc. Savings Harvest Plan	29	13
Other (Gains) Expenses, Net [Member]
Accounting Policies [Line Items]
Intellectual property assets transaction value	$ 35

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Divestitures (Tables)

9 Months Ended

Dec. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Income from discontinued components

The income from discontinued components for the sale of the Company’s Internet Security business, which occurred during the first quarter of fiscal year 2012, consisted of the following:

	Nine Months Ended December 31, 2011
	(in millions)
Subscription and maintenance revenue	$	15
Total revenue	$	15
Loss from operations of discontinued components, net of tax benefit of $6 million	$	(10	)
Gain on disposal of discontinued components, net of taxes	23
Income from discontinued operations, net of taxes	$	13

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Accounting Policies

9 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ACCOUNTING POLICIES

NOTE A – ACCOUNTING POLICIES

Basis of Presentation: The accompanying unaudited Condensed Consolidated Financial Statements of CA, Inc. (Company) have been prepared in accordance with U.S. generally accepted accounting principles (GAAP), as defined in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 270, for interim financial information and with the instructions to Rule 10-01 of Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the Company’s Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2012 (2012 Form 10-K).

In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal, recurring nature.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, these estimates may ultimately differ from actual results.

Operating results for the three and nine months ended December 31, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2013.

Divestitures: In June 2011, the Company sold its Internet Security business. The results of operations for this business and the related gain on disposal have been presented as discontinued operations in the accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2011. See Note B, “Divestitures,” for additional information.

Cash and Cash Equivalents: The Company’s cash and cash equivalents are held in numerous locations throughout the world, with approximately 64% being held by the Company’s foreign subsidiaries outside the United States at December 31, 2012.

Fair Value Measurements: Fair value is the price that would be received for an asset or the amount paid to transfer a liability in an orderly transaction between market participants. The Company is required to classify certain assets and liabilities based on the following fair value hierarchy:

• Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

• Level 2: Quoted prices for identical assets and liabilities in markets that are not active, or quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and

• Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

See Note I, “Fair Value Measurements,” for additional information.

Deferred Revenue (Billed or Collected): The Company accounts for unearned revenue on billed amounts due from customers on a gross basis. Unearned revenue on billed installments (collected or uncollected) is reported as deferred revenue in the liability section of the Company’s Condensed Consolidated Balance Sheets. Deferred revenue (billed or collected) excludes unbilled contractual commitments executed under license and maintenance agreements that will be billed in future periods. See Note G, “Deferred Revenue,” for additional information.

Statements of Cash Flows: For the nine months ended December 31, 2012 and 2011, interest payments, net for both periods were approximately $56 million and income taxes paid were approximately $190 million and $252 million, respectively. For the nine months ended December 31, 2012 and 2011, the excess tax benefits from options exercised included in financing activities from continuing operations were approximately $6 million and $3 million, respectively.

Non-cash investing activities for the nine months ended December 31, 2012 consisted of assets acquired under capital leases of $9 million and the purchase of a software license for $20 million, which will be paid during the fourth quarter of fiscal year 2013.

Non-cash financing activities for the nine months ended December 31, 2012 and 2011 consisted of treasury shares issued in connection with the following: share-based incentive awards granted under the Company’s equity compensation plans of approximately $63 million (net of approximately $34 million of taxes withheld) and $54 million (net of approximately $26 million of taxes withheld), respectively; and discretionary stock contributions to the CA, Inc. Savings Harvest Plan of approximately $29 million and $13 million, respectively.

The Company uses a notional pooling arrangement with an international bank to help manage global liquidity requirements. Under this pooling arrangement, the Company and its participating subsidiaries may maintain either cash deposit or borrowing positions through local currency accounts with the bank, so long as the aggregate position of the global pool is a notionally calculated net cash deposit. Because the bank maintains a security interest in the cash deposits, and has the right to offset the cash deposits against the borrowings, the bank provides the Company and its participating subsidiaries favorable interest terms on both. The activity under this cash pooling arrangement for the nine months ended December 31, 2012 was as follows:

(in millions)
Total borrowing position outstanding at March 31, 2012 (1)	$	139
Borrowings	791
Repayments	(787		)
Foreign currency exchange effect	(3		)
Total borrowing position outstanding at December 31, 2012 (1)	$	140

(1) Included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.

For the nine months ended December 31, 2011, borrowings and repayments related to the notional pooling arrangement were approximately $240 million and $112 million, respectively, and are presented within the financing activities section of the Condensed Consolidated Statements of Cash Flows.

Other Matters: As part of the Company’s efforts to more fully utilize its intellectual property assets, in the first quarter of fiscal 2013, the Company closed a transaction that assigned the rights to certain of these assets to a large technology company for $35 million. The entire contract amount is included in the “Other (gains) expenses, net” line of the Company’s Condensed Consolidated Statement of Operations for the nine months ended December 31, 2012. The Company will continue to have the ability to use these intellectual property assets in current and future product offerings.

New Accounting Pronouncements Recently Adopted: In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220) — Presentation of Comprehensive Income (ASU 2011-05), requiring an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminated the option to present the components of other comprehensive income as part of the statement of equity. The Company adopted ASU 2011-05 in the first quarter of fiscal year 2013 by including the required disclosures in two separate but consecutive statements.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Dec. 31, 2012	Mar. 31, 2012
Statement of Financial Position [Abstract]
Accumulated depreciation	$ 772	$ 707
Preferred stock, par value	$ 0	$ 0
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	1,100,000,000	1,100,000,000
Common stock, shares issued	589,695,081	589,695,081
Common stock, shares outstanding	450,765,508	466,183,134
Treasury stock, shares	138,929,573	123,511,947

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Stockholders' Equity

9 Months Ended

Dec. 31, 2012

Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE K – STOCKHOLDERS’ EQUITY

Stock Repurchases: In January 2012, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a bank to repurchase $500 million of its common stock. Under the agreement, the Company paid $500 million to the bank for an initial delivery of approximately 15 million shares in the fourth quarter of fiscal year 2012. The fair market value of the initially delivered shares on the date of purchase was approximately $375 million and was included in “Treasury stock” in the Company’s Condensed Consolidated Balance Sheet at March 31, 2012. The remaining $125 million was included in “Additional paid-in capital” in the Company’s Condensed Consolidated Balance Sheet at March 31, 2012.

The ASR transaction was completed in the first quarter of fiscal year 2013, with the Company receiving approximately 3.7 million additional shares, at which time the initial amount recorded as additional paid-in capital was reclassified to treasury stock. The final number of shares delivered upon settlement of the agreement was determined based on the average price of the Company’s common stock over the term of the ASR agreement.

During the nine months ended December 31, 2012, excluding the ASR transaction, the Company repurchased approximately 17 million shares of its common stock for approximately $421 million. At December 31, 2012, the Company remained authorized to purchase approximately $579 million of its common stock under its current stock repurchase program.

Accumulated Other Comprehensive Loss: Accumulated other comprehensive loss at December 31, 2012 and March 31, 2012 was approximately $119 million and $108 million, respectively, due to foreign currency translation losses.

Cash Dividends: The Company’s Board of Directors declared the following dividends during the nine months ended December 31, 2012 and 2011:

Nine Months Ended December 31, 2012:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share		Record Date	Total Amount		Payment Date
May 8, 2012	$	0.25	May 22, 2012	$	119	June 12, 2012
August 2, 2012	$	0.25	August 14, 2012	$	116	September 11, 2012
November 7, 2012	$	0.25	November 20, 2012	$	114	December 11, 2012

Nine Months Ended December 31, 2011:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share		Record Date	Total Amount		Payment Date
May 12, 2011	$	0.05	May 23, 2011	$	25	June 16, 2011
August 3, 2011	$	0.05	August 16, 2011	$	25	September 14, 2011
November 9, 2011	$	0.05	November 22, 2011	$	25	December 14, 2011

Rights Plan: On November 8, 2012, the Company adopted a new Stockholder Protection Rights Agreement (the Rights Agreement) to replace its prior Stockholder Protection Rights Agreement that expired on November 30, 2012. Under the Rights Agreement, each outstanding share of the Company's common stock carries a right (Right). The Rights will trade with the common stock until the Separation Time, which would occur on the next business day after: (i) the Company's announcement that a person or group (an Acquiring Person) has become the beneficial owner of 20% or more of the Company's outstanding common stock (other than Martin Haefner and Eva Maria Bucher-Haefner and their respective affiliates and associates, who are “grandfathered” under this provision so long as their aggregate ownership of common stock does not exceed the sum of 126,562,500 shares of common stock and that number of shares equal to 0.1% of the then outstanding shares of common stock); (ii) the date on which any Acquiring Person becomes the beneficial owner of more than 50% of the outstanding shares of common stock; or (iii) the 10th business day after the commencement of a tender offer or exchange offer (or such later date as the Company's Board of Directors may from time to time determine prior to the Separation Time) that would result in an Acquiring Person owning 20% or more of the Company's outstanding common stock.  Following the Separation Time, each Right may be exercised to purchase 0.001 shares of the Company's participating preferred stock at a purchase price of $100 per share.  If the Separation Time occurs pursuant to an event described in (i) or (ii) above, however, each Right, other than rights held by an Acquiring Person, will entitle the holder to receive, for an exercise price of $100, that number of shares of the Company's common stock (or, in certain circumstances, cash, property or other securities) having an aggregate Market Price (as determined under the Rights Agreement) equal to two times the exercise price.  The Rights will not be triggered by a Qualifying Offer, as defined in the Rights Agreement, if holders of at least 10% of the outstanding shares of the Company's common stock request pursuant to the terms of the Rights Agreement that a special meeting of stockholders be convened for the purpose of exempting such offer from the Rights Agreement, and thereafter the stockholders vote at that meeting to exempt that Qualifying Offer from the Rights Agreement.  The Rights, which are redeemable by the Company at $0.001 per Right, expire November 30, 2015.

XML

Document and Entity Information	9 Months Ended
	Dec. 31, 2012	Jan. 17, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	CA, INC.
Entity Central Index Key	0000356028
Document Type	10-Q
Document Period End Date	Dec. 31, 2012
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--03-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		455,923,672

XML

Income from Continuing Operations Per Common Share

9 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE

NOTE L – INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE

Basic net income per common share excludes dilution and is calculated by dividing net income allocable to common shares by the weighted average number of common shares outstanding for the period. Diluted net income per common share is calculated by dividing net income allocable to common shares by the weighted average number of common shares at the balance sheet date, as adjusted for the potential dilutive effect of non-participating share-based awards.

The following table presents basic and diluted income from continuing operations per common share information for the three and nine months ended December 31, 2012 and 2011.

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012			2011
	(in millions, except per share amounts)
Basic income from continuing operations per common share:
Income from continuing operations	$	251		$	263		$	713		$	727
Less: Income from continuing operations allocable to participating securities	(3		)	(3		)	(8		)	(9		)
Income from continuing operations allocable to common shares	$	248		$	260		$	705		$	718
Weighted average common shares outstanding	452			483			458			492
Basic income from continuing operations per common share	$	0.55		$	0.54		$	1.54		$	1.46
Diluted income from continuing operations per common share:
Income from continuing operations	$	251		$	263		$	713		$	727
Less: Income from continuing operations allocable to participating securities	(3		)	(3		)	(8		)	(9		)
Income from continuing operations allocable to common shares	$	248		$	260		$	705		$	718
Weighted average shares outstanding and common share equivalents:
Weighted average common shares outstanding	452			483			458			492
Weighted average effect of share-based payment awards	1			1			2			1
Denominator in calculation of diluted income per share	453			484			460			493
Diluted income from continuing operations per common share	$	0.55		$	0.54		$	1.53		$	1.46

For the three months ended December 31, 2012 and 2011, respectively, approximately 4 million and 6 million shares of Company common stock underlying restricted stock awards and options to purchase common stock were excluded from the calculation because their effect on income per share was anti-dilutive during the respective periods. Weighted average restricted stock awards of approximately 5 million and 6 million for the three months ended December 31, 2012 and 2011, respectively, were considered participating securities in the calculation of net income allocable to common stockholders.

For the nine months ended December 31, 2012 and 2011, respectively, approximately 4 million and 6 million restricted stock awards and options to purchase common stock were excluded from the calculation because their effect on income per share was anti-dilutive during the respective periods. Weighted average restricted stock awards of approximately6 million and 6 million for the nine months ended December 31, 2012 and 2011, respectively, were considered participating securities in the calculation of net income allocable to common stockholders.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
REVENUE
Subscription and maintenance revenue	$ 966	$ 1,006	$ 2,906	$ 3,035
Professional services	97	103	283	289
Software fees and other	132	154	303	302
TOTAL REVENUE	1,195	1,263	3,492	3,626
EXPENSES
Costs of licensing and maintenance	72	69	210	207
Cost of professional services	92	91	266	270
Amortization of capitalized software costs	66	59	197	164
Selling and marketing	331	342	953	1,038
General and administrative	96	113	304	331
Product development and enhancements	120	126	368	384
Depreciation and amortization of other intangible assets	39	44	120	134
Other (gains) expenses, net	9	6	(14)	10
TOTAL EXPENSES BEFORE INTEREST AND INCOME TAXES	825	850	2,404	2,538
Income from continuing operations before interest and income taxes	370	413	1,088	1,088
Interest expense, net	12	9	33	24
Income from continuing operations before income taxes	358	404	1,055	1,064
Income tax expense	107	141	342	337
INCOME FROM CONTINUING OPERATIONS	251	263	713	727
Income from discontinued operations, net of income taxes	0	0	0	13
NET INCOME	$ 251	$ 263	$ 713	$ 740
BASIC INCOME PER SHARE
Income from continuing operations	$ 0.55	$ 0.54	$ 1.54	$ 1.46
Income from discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ 0.03
Net income	$ 0.55	$ 0.54	$ 1.54	$ 1.49
Basic weighted average shares used in computation	452	483	458	492
DILUTED INCOME PER SHARE
Income from continuing operations	$ 0.55	$ 0.54	$ 1.53	$ 1.46
Income from discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ 0.02
Net income	$ 0.55	$ 0.54	$ 1.53	$ 1.48
Diluted weighted average shares used in computation	453	484	460	493

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Goodwill, Capitalized Software and Other Intangible Assets

9 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS

NOTE F – GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at December 31, 2012 were as follows:

	At December 31, 2012
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	5,651	$	4,740	$	911	$	301	$	610
Internally developed software products	1,487		638		849		310		539
Other intangible assets	813		429		384		237		147
Total capitalized software and other intangible assets	$	7,951	$	5,807	$	2,144	$	848	$	1,296

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at March 31, 2012 were as follows:

	At March 31, 2012
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	5,628	$	4,733	$	895	$	228	$	667
Internally developed software products	1,366		574		792		258		534
Other intangible assets	814		412		402		214		188
Total capitalized software and other intangible assets	$	7,808	$	5,719	$	2,089	$	700	$	1,389

Based on the capitalized software and other intangible assets recorded through December 31, 2012, the projected annual amortization expense for fiscal year 2013 and the next four fiscal years is expected to be as follows:

	Year Ended March 31,
	2013		2014		2015		2016		2017
	(in millions)
Purchased software products	$	107	$	101	$	90	$	89	$	87
Internally developed software products	156		159		136		105		72
Other intangible assets	54		49		40		26		9
Total	$	317	$	309	$	266	$	220	$	168

The Company evaluates the useful lives and recoverability of capitalized software and other intangible assets when events or changes in circumstances indicate that an impairment may exist. These evaluations require complex assumptions about key factors such as future customer demand, technology trends, and the impact of such factors on the technology the Company acquires and develops for its products. 

As of December 31, 2012, no impairment exists and no revisions to useful lives are necessary within our Enterprise Solutions segment.  Impairment or revisions to useful lives could result from the use of alternative assumptions that reflect reasonably possible outcomes related to future customer demand or technology trends for certain assets in the Enterprise Solutions segment whose carrying amount is approximately $75 million. 

At both December 31, 2012 and March 31, 2012, the goodwill balance was $5,856 million.

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Trade Accounts Receivable

9 Months Ended

Dec. 31, 2012

Receivables [Abstract]

TRADE ACCOUNTS RECEIVABLE

NOTE E – TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable, net represents amounts due from the Company’s customers and is presented net of allowances. These balances include revenue recognized in advance of customer billings but do not include unbilled contractual commitments executed under license agreements. The components of “Trade accounts receivable, net” were as follows:

	December 31, 2012			March 31, 2012
	(in millions)
Accounts receivable – billed	$	727		$	812
Accounts receivable – unbilled	69			80
Other receivables	13			26
Less: Allowances	(23		)	(16		)
Trade accounts receivable, net	$	786		$	902

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Accounting Policies (Tables)

9 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Activity under cash pooling arrangement

The activity under this cash pooling arrangement for the nine months ended December 31, 2012 was as follows:

(in millions)
Total borrowing position outstanding at March 31, 2012 (1)	$	139
Borrowings	791
Repayments	(787		)
Foreign currency exchange effect	(3		)
Total borrowing position outstanding at December 31, 2012 (1)	$	140

(1) Included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheets.

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Accounting for Share-Based Compensation

9 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

ACCOUNTING FOR SHARE-BASED COMPENSATION

NOTE M – ACCOUNTING FOR SHARE-BASED COMPENSATION

The Company recognized share-based compensation in the following line items in the Condensed Consolidated Statements of Operations for the periods indicated:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012			2011
	(in millions)
Costs of licensing and maintenance	$	1		$	—		$	2		$	2
Cost of professional services	1			1			3			3
Selling and marketing	6			9			24			25
General and administrative	6			5			21			17
Product development and enhancements	4			5			12			14
Share-based compensation expense before tax	$	18		$	20		$	62		$	61
Income tax benefit	(4		)	(6		)	(20		)	(20		)
Net share-based compensation expense	$	14		$	14		$	42		$	41

The following table summarizes information about unrecognized share-based compensation costs at December 31, 2012:

	Unrecognized Compensation Costs		Weighted Average Period Expected to be Recognized
	(in millions)		(in years)
Stock option awards	$	4	2.1
Restricted stock units	16		2.0
Restricted stock awards	66		1.9
Performance share units	14		2.8
Total unrecognized share-based compensation costs	$	100	2.0

There were no capitalized share-based compensation costs for the three and nine months ended December 31, 2012 or 2011.

Under the Company’s long-term incentive plans, the value of performance share unit (PSU) awards is determined using the closing price of the Company’s common stock on the last trading day of the quarter until the PSUs are granted. Compensation costs for the PSUs are amortized over the requisite service periods based on the expected level of achievement of the performance targets. At the conclusion of the performance periods for the PSUs, the applicable number of shares of restricted stock awards (RSAs), restricted stock units (RSUs) or unrestricted shares granted may vary based upon the level of achievement of the performance targets and the approval of the Company’s Compensation and Human Resources Committee (which may reduce any award for any reason in its discretion).

For the nine months ended December 31, 2012 and 2011, the Company issued options for 0.7 million shares and 0.6 million shares, respectively. The weighted average fair values and assumptions used for the options granted were as follows:

	Nine Months Ended December 31,
	2012		2011
Weighted average fair value	9.09		5.99
Dividend yield	3.96	%	0.91	%
Expected volatility factor (1)	59	%	33	%
Risk-free interest rate (2)	0.8	%	1.7	%
Expected life (in years) (3)	4.5		4.5

(1) Expected volatility is measured using historical daily price changes of the Company’s 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, based primarily on historical experience, 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).

The table below summarizes all of the RSUs and RSAs, including grants made pursuant to the long-term incentive plans discussed above, granted during the three and nine months ended December 31, 2012 and 2011:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012		2011
				(shares in millions)
RSUs
Shares	0.1			—		(1)	0.8		0.7
Weighted avg. grant date fair value (2)	$	20.81		$	20.19		$	24.05	$	24.04
RSAs
Shares	—		(1)	0.1			3.6		3.7
Weighted avg. grant date fair value (3)	$	23.04		$	20.40		$	26.21	$	24.49

(1) Less than 0.1 million.

(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) The fair value is based on the quoted market value of the Company’s common stock on the grant date.

Employee Stock Purchase Plan: The Company maintains the 2012 Employee Stock Purchase Plan (ESPP) for all eligible employees. The ESPP offer period is semi-annual and allows participants to purchase the Company’s common stock at 95% of the closing price of the stock on the last day of the offer period. The ESPP is non-compensatory. For the six-month offer period ended June 30, 2012, the Company issued approximately 0.1 million shares under the ESPP at an average price of $25.74 per share. For the six-month offer period ended December 31, 2012, the Company issued approximately 0.2 million shares under the ESPP at an average price of $20.88 per share. As of December 31, 2012, approximately 29.7 million shares are available for future issuances under the ESPP.

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Fair Value Measurements

9 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE I – FAIR VALUE MEASUREMENTS

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2012 and March 31, 2012:

	At December 31, 2012							At March 31, 2012
	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	$	1,240	$	—	$	1,240	(1)	$	1,374	$	—	$	1,374	(2)
Foreign exchange derivatives (3)	—		4		4			—		2		2
Interest rate derivatives (3)	—		22		22			—		27		27
Total Assets	$	1,240	$	26	$	1,266		$	1,374	$	29	$	1,403
Liabilities:
Foreign exchange derivatives (3)	$	—	$	4	$	4		$	—	$	4	$	4
Total Liabilities	$	—	$	4	$	4		$	—	$	4	$	4

(1) At December 31, 2012, the Company had approximately $1,190 million and $50 million of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.

(2) At March 31, 2012, the Company had approximately $1,324 million and $50 million of investments in money market funds classified as “Cash and cash equivalents” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Condensed Consolidated Balance Sheet.

(3) See Note H, “Derivatives” for additional information. Interest rate derivatives fair value excludes accrued interest.

At December 31, 2012 and March 31, 2012, the Company did not have any assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

The carrying values of financial instruments classified as current assets and current liabilities, such as cash and cash equivalents, short-term investments, accounts payable, accrued expenses, and short-term borrowings, approximate fair value due to the short-term maturity of the instruments.

The following table presents the carrying amounts and estimated fair values of the Company’s other financial instruments that are not measured at fair value on a recurring basis at December 31, 2012 and March 31, 2012:

	At December 31, 2012				At March 31, 2012
(in millions)	Carrying   Value		Estimated Fair Value		Carrying   Value		Estimated Fair Value
Liabilities:
Total debt (1)	$	1,301	$	1,438	$	1,301	$	1,408
Facilities abandonment reserve (2)	$	26	$	31	$	42	$	48

(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 facilities abandonment reserve is determined using the Company’s incremental borrowing rate at December 31, 2012 and March 31, 2012. At December 31, 2012 and March 31, 2012, the facilities abandonment reserve included approximately $8 million and $16 million, respectively, in “Accrued expenses and other current liabilities” and approximately $18 million and $26 million, respectively, in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3).

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Accounting for Share-Based Compensation 4 (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2012		Dec. 31, 2011
Restricted Stock Units [Member]
Summary of RSAs and RSUs granted under these PSUs
Shares	0.1		0	[1]	0.8		0.7
Weighted average grant date fair value	$ 20.81	[2]	$ 20.19	[2]	$ 24.05	[2]	$ 24.04	[2]
Restricted Stock Awards [Member]
Summary of RSAs and RSUs granted under these PSUs
Shares	0	[1]	0.1		3.6		3.7
Weighted average grant date fair value	$ 23.04	[3]	$ 20.40	[3]	$ 26.21	[3]	$ 24.49	[3]

[1] Less than 0.1 million.

[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] The fair value is based on the quoted market value of the Company’s common stock on the grant date.

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Deferred Revenue

9 Months Ended

Dec. 31, 2012

Deferred Revenue Disclosure [Abstract]

DEFERRED REVENUE

NOTE G – DEFERRED REVENUE

The current and noncurrent components of “Deferred revenue (billed or collected)” at December 31, 2012 and March 31, 2012 were as follows:

	December 31, 2012		March 31, 2012
	(in millions)
Current:
Subscription and maintenance	$	2,068	$	2,479
Professional services	149		162
Financing obligations and other	17		17
Total deferred revenue (billed or collected) – current	$	2,234	$	2,658
Noncurrent:
Subscription and maintenance	$	920	$	935
Professional services	35		35
Financing obligations and other	2		2
Total deferred revenue (billed or collected) – noncurrent	$	957	$	972
Total deferred revenue (billed or collected)	$	3,191	$	3,630

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Derivatives

9 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

NOTE H – DERIVATIVES

The Company is exposed to financial market risks arising from changes in interest rates and foreign exchange rates. Changes in interest rates could affect the Company’s monetary assets and liabilities, and foreign exchange rate changes could affect the Company’s foreign currency denominated monetary assets and liabilities and forecasted transactions. The Company enters into derivative contracts with the intent of mitigating a portion of these risks.

Interest Rate Swaps: The Company has interest rate swaps with a total notional value of $500 million, which swap a total of $500 million of its 6.125% Senior Notes due December 2014 into floating interest rate debt through December 1, 2014. These swaps are designated as fair value hedges.

At December 31, 2012, the fair value of these derivatives was an asset of approximately $22 million, of which approximately $12 million is included in “Other current assets” and approximately $10 million is included in “Other noncurrent assets, net” in the Company’s Condensed Consolidated Balance Sheet.

At March 31, 2012, the fair value of these derivatives was an asset of approximately $27 million, of which approximately $11 million is included in “Other current assets” and approximately $16 million is included in “Other noncurrent assets, net” in the Company’s Condensed Consolidated Balance Sheet.

Foreign Currency Contracts: The Company enters into foreign currency option and forward contracts to manage foreign currency risks. The Company has not designated its foreign exchange derivatives as hedges. Accordingly, changes in fair value from these contracts are recorded as “Other (gains) expenses, net” in the Company’s Condensed Consolidated Statements of Operations.

At December 31, 2012, foreign currency contracts outstanding consisted of purchase and sales contracts with a total notional value of approximately $740 million, which includes hedges on U.S. dollar investments held by a non-U.S. subsidiary outside of that subsidiary’s functional currency, and durations of less than three months. The net fair value of these contracts at December 31, 2012 was a net liability of less than $1 million, of which approximately $4 million is included in “Other current assets” and approximately $4 million is included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheet.

At March 31, 2012, foreign currency contracts outstanding consisted of purchase and sales contracts with a total notional value of approximately $893 million and durations of less than six months. The net fair value of these contracts at March 31, 2012 was a net liability of approximately $2 million, of which approximately $2 million is included in “Other current assets” and approximately $4 million is included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheet.

A summary of the effect of the interest rate and foreign exchange derivatives on the Company’s Condensed Consolidated Statements of Operations is as follows:

	Amount of Net (Gain)/Loss Recognized in the Condensed Consolidated  Statements of Operations (in millions)
	Three Months Ended December 31, 2012			Three Months Ended December 31, 2011
Interest expense, net – interest rate swaps designated as fair value hedges	$	(3	)	$	(3	)
Other (gains) expenses, net – foreign currency contracts	$	(7	)	$	8

	Amount of Net (Gain)/Loss Recognized in the Condensed Consolidated  Statements of Operations (in millions)
	Nine Months Ended December 31, 2012			Nine Months Ended December 31, 2011
Interest expense, net – interest rate swaps designated as fair value hedges	$	(9	)	$	(9	)
Other (gains) expenses, net – foreign currency contracts	$	2		$	9

The Company is subject to collateral security arrangements with most of its major counterparties. These arrangements require the Company or the counterparty to post collateral when the derivative fair values exceed contractually established thresholds. The aggregate fair values of all derivative instruments under these collateralized arrangements were in a net asset position at December 31, 2012 and March 31, 2012. The Company posted no collateral at December 31, 2012 or March 31, 2012. Under these agreements, if the Company’s credit ratings had been downgraded one rating level, the Company would still not have been required to post collateral.

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Commitments and Contingencies

9 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE J– COMMITMENTS AND CONTINGENCIES

The Company, various subsidiaries, and certain current and former officers have been or, from time to time, may be named as defendants in various lawsuits and claims arising in the normal course of business. The Company also addresses contract issues and disputes with customers, including government customers. The Company believes that it has meritorious defenses in connection with these lawsuits, claims and disputes, and intends to vigorously contest each of them.

Based on the Company’s experience, management believes that the damages amounts claimed in a case are not a meaningful indicator of the potential liability. Claims, suits, investigations and proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of cases.

In the opinion of the Company’s management based upon information currently available to the Company, while the outcome of these lawsuits and claims is uncertain, the likely results of these lawsuits and claims against the Company, either individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows, although the effect could be material to the Company’s results of operations or cash flows for any interim reporting period. For some of these matters, the Company is unable to estimate a range of reasonably possible loss due to the stage of the matter and/or other particular circumstances of the matter. For others, a range of reasonably possible loss can be estimated. For those matters for which such a range can be estimated, the Company estimates that, in the aggregate, the range of reasonably possible loss is from zero to $30 million. This is in addition to amounts, if any, that have been accrued for those matters.

The Company is obligated to indemnify its officers and directors under certain circumstances to the fullest extent permitted by Delaware law. As a part of that obligation, the Company has advanced and will continue to advance certain attorneys’ fees and expenses incurred by current and former officers and directors in various lawsuits and investigations.

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Segment Information 2 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Revenue from the United States and international locations
Total revenue	$ 1,195	$ 1,263	$ 3,492	$ 3,626
United States [Member]
Revenue from the United States and international locations
Total revenue	701	745	2,068	2,107
Europe [Member]
Revenue from the United States and international locations
Total revenue	291	308	830	908
Other [Member]
Revenue from the United States and international locations
Total revenue	$ 203	$ 210	$ 594	$ 611

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Segment Information 1 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended				9 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2012		Dec. 31, 2011
Company's segment information
Revenue	$ 1,195		$ 1,263		$ 3,492		$ 3,626
Expenses	767		788		2,219		2,356
Segment profit	370		413		1,088		1,088
Segment operating margin	36.00%		38.00%		36.00%		35.00%
Depreciation and amortization					317		298
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	370		413		1,088		1,088
Depreciation and amortization					317		298
Share-based compensation expense	18		20		62		61
Other (gains) expenses, net	0	[1]	(1)	[1]	2	[1]	(5)	[1]
Interest expense, net	12		9		33		24
Income from continuing operations before income taxes	358		404		1,055		1,064
Mainframe Solutions [Member]
Company's segment information
Revenue	622		682		1,869		1,983
Expenses	248		277		755		861
Segment profit	374		405		1,114		1,122
Segment operating margin	60.00%		59.00%		60.00%		57.00%
Depreciation and amortization	25		25		78		74
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	374		405		1,114		1,122
Depreciation and amortization	25		25		78		74
Enterprise Solutions [Member]
Company's segment information
Revenue	476		478		1,340		1,354
Expenses	426		419		1,195		1,223
Segment profit	50		59		145		131
Segment operating margin	11.00%		12.00%		11.00%		10.00%
Depreciation and amortization	40		35		118		98
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	50		59		145		131
Depreciation and amortization	40		35		118		98
Services [Member]
Company's segment information
Revenue	97		103		283		289
Expenses	93		92		269		272
Segment profit	4		11		14		17
Segment operating margin	4.00%		11.00%		5.00%		6.00%
Depreciation and amortization	0		0		0		0
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	4		11		14		17
Depreciation and amortization	0		0		0		0
Reportable Segments Only [Member]
Company's segment information
Segment profit	428		475		1,273		1,270
Depreciation and amortization	65		60		196		172
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit	428		475		1,273		1,270
Depreciation and amortization	65		60		196		172
Depreciation and Amortization of Developed Software [Member] | Purchased Software Products [Member]
Company's segment information
Depreciation and amortization	26		27		80		76
Reconciliation of segment profit to income from continuing operations before income taxes
Depreciation and amortization	26		27		80		76
Depreciation and Amortization of Developed Software [Member] | Other Intangible Assets [Member]
Company's segment information
Depreciation and amortization	14		16		41		50
Reconciliation of segment profit to income from continuing operations before income taxes
Depreciation and amortization	$ 14		$ 16		$ 41		$ 50

[1] Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

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Segment Information (Tables)

9 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Segment information

Three Months Ended December 31, 2011	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	682		$	478		$	103		$	1,263
Expenses	277			419			92			788
Segment profit	$	405		$	59		$	11		$	475
Segment operating margin	59		%	12		%	11		%	38		%
Depreciation and amortization	$	25		$	35		$	—		$	60

Nine Months Ended December 31, 2011	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,983		$	1,354		$	289		$	3,626
Expenses	861			1,223			272			2,356
Segment profit	$	1,122		$	131		$	17		$	1,270
Segment operating margin	57		%	10		%	6		%	35		%
Depreciation and amortization	$	74		$	98		$	—		$	172

Nine Months Ended December 31, 2012	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,869		$	1,340		$	283		$	3,492
Expenses	755			1,195			269			2,219
Segment profit	$	1,114		$	145		$	14		$	1,273
Segment operating margin	60		%	11		%	5		%	36		%
Depreciation and amortization	$	78		$	118		$	—		$	196

Three Months Ended December 31, 2012	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	622		$	476		$	97		$	1,195
Expenses	248			426			93			767
Segment profit	$	374		$	50		$	4		$	428
Segment operating margin	60		%	11		%	4		%	36		%
Depreciation and amortization	$	25		$	40		$	—		$	65

Reconciliation of segment profit to income from continuing operations before income taxes

Reconciliation of segment profit to income from continuing operations before income taxes for the nine months ended December 31, 2011:

Segment profit	$	1,270
Less:
Purchased software amortization	76
Other intangibles amortization	50
Share-based compensation expense	61
Other (gains) expenses, net (1)	(5		)
Interest expense, net	24
Income from continuing operations before income taxes	$	1,064

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

Reconciliation of segment profit to income from continuing operations before income taxes for the nine months ended December 31, 2012:

Segment profit	$	1,273
Less:
Purchased software amortization	80
Other intangibles amortization	41
Share-based compensation expense	62
Other (gains) expenses, net (1)	2
Interest expense, net	33
Income from continuing operations before income taxes	$	1,055

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2012:

Segment profit	$	428
Less:
Purchased software amortization	26
Other intangibles amortization	14
Share-based compensation expense	18
Other (gains) expenses, net (1)	—
Interest expense, net	12
Income from continuing operations before income taxes	$	358

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2011:

Segment profit	$	475
Less:
Purchased software amortization	27
Other intangibles amortization	16
Share-based compensation expense	20
Other (gains) expenses, net (1)	(1		)
Interest expense, net	9
Income from continuing operations before income taxes	$	404

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

Revenue from the United States and international locations

The table below summarizes the Company’s revenue from the United States and from international (i.e., non-U.S.) locations:

(in millions)	Three Months Ended December 31, 2012		Nine Months Ended December 31, 2012		Three Months Ended December 31, 2011		Nine Months Ended December 31, 2011
United States	$	701	$	2,068	$	745	$	2,107
Europe	291		830		308		908
Other	203		594		210		611
Total revenue	$	1,195	$	3,492	$	1,263	$	3,626

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Fair Value Measurements 2 (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012		Mar. 31, 2012
Carrying Value [Member]
Liabilities:
Total debt	$ 1,301	[1]	$ 1,301	[1]
Facilities abandonment reserve	26	[2]	42	[2]
Estimated Fair Value [Member]
Liabilities:
Total debt	1,438	[1]	1,408	[1]
Facilities abandonment reserve	$ 31	[2]	$ 48	[2]

[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 facilities abandonment reserve is determined using the Company’s incremental borrowing rate at December 31, 2012 and March 31, 2012. At December 31, 2012 and March 31, 2012, the facilities abandonment reserve included approximately $8 million and $16 million, respectively, in “Accrued expenses and other current liabilities” and approximately $18 million and $26 million, respectively, in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3).

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Segment Information

9 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE O – SEGMENT INFORMATION

The Company’s Mainframe Solutions and Enterprise Solutions operating segments comprise its software business organized by the nature of the Company’s software offerings and the product hierarchy in which the platform operates. The Services operating segment comprises implementation, consulting, education and training services, including those directly related to the Mainframe Solutions and Enterprise Solutions software that the Company sells to its customers. A measure of segment assets is not currently provided to the Company’s Chief Executive Officer and has therefore not been disclosed.

As part of the Company’s efforts to more fully utilize its intellectual property assets, in the first quarter of fiscal year 2013, the Company closed a transaction that assigned the rights to certain of these assets to a large technology company for $35 million. The entire contract amount is included in the Enterprise Solutions segment for the nine months ended December 31, 2012. The Company will continue to have the ability to use these intellectual property assets in current and future product offerings.

During the third quarter of fiscal year 2013, the Company incurred severance costs of which $5 million, $11 million and $2 million were assigned to the Mainframe Solutions, Enterprise Solutions and Services segments, respectively.

During the first nine months of fiscal year 2012, the Company incurred severance costs associated with the Fiscal 2012 Plan, of which $23 million, $20 million and $1 million were assigned to the Mainframe Solutions, Enterprise Solutions and Services segments, respectively.  Refer to Note C, “Severance and Exit Costs.”

The Company’s segment information for the three and nine months ended December 31, 2012 and 2011 is as follows:

Three Months Ended December 31, 2012	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	622		$	476		$	97		$	1,195
Expenses	248			426			93			767
Segment profit	$	374		$	50		$	4		$	428
Segment operating margin	60		%	11		%	4		%	36		%
Depreciation and amortization	$	25		$	40		$	—		$	65

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2012:

Segment profit	$	428
Less:
Purchased software amortization	26
Other intangibles amortization	14
Share-based compensation expense	18
Other (gains) expenses, net (1)	—
Interest expense, net	12
Income from continuing operations before income taxes	$	358

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

Nine Months Ended December 31, 2012	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,869		$	1,340		$	283		$	3,492
Expenses	755			1,195			269			2,219
Segment profit	$	1,114		$	145		$	14		$	1,273
Segment operating margin	60		%	11		%	5		%	36		%
Depreciation and amortization	$	78		$	118		$	—		$	196

Reconciliation of segment profit to income from continuing operations before income taxes for the nine months ended December 31, 2012:

Segment profit	$	1,273
Less:
Purchased software amortization	80
Other intangibles amortization	41
Share-based compensation expense	62
Other (gains) expenses, net (1)	2
Interest expense, net	33
Income from continuing operations before income taxes	$	1,055

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

Three Months Ended December 31, 2011	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	682		$	478		$	103		$	1,263
Expenses	277			419			92			788
Segment profit	$	405		$	59		$	11		$	475
Segment operating margin	59		%	12		%	11		%	38		%
Depreciation and amortization	$	25		$	35		$	—		$	60

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2011:

Segment profit	$	475
Less:
Purchased software amortization	27
Other intangibles amortization	16
Share-based compensation expense	20
Other (gains) expenses, net (1)	(1		)
Interest expense, net	9
Income from continuing operations before income taxes	$	404

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

Nine Months Ended December 31, 2011	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,983		$	1,354		$	289		$	3,626
Expenses	861			1,223			272			2,356
Segment profit	$	1,122		$	131		$	17		$	1,270
Segment operating margin	57		%	10		%	6		%	35		%
Depreciation and amortization	$	74		$	98		$	—		$	172

Reconciliation of segment profit to income from continuing operations before income taxes for the nine months ended December 31, 2011:

Segment profit	$	1,270
Less:
Purchased software amortization	76
Other intangibles amortization	50
Share-based compensation expense	61
Other (gains) expenses, net (1)	(5		)
Interest expense, net	24
Income from continuing operations before income taxes	$	1,064

(1) Other (gains) expenses, net consists of other unallocated costs including foreign exchange derivative (gains) losses, and other miscellaneous costs.

The table below summarizes the Company’s revenue from the United States and from international (i.e., non-U.S.) locations:

(in millions)	Three Months Ended December 31, 2012		Nine Months Ended December 31, 2012		Three Months Ended December 31, 2011		Nine Months Ended December 31, 2011
United States	$	701	$	2,068	$	745	$	2,107
Europe	291		830		308		908
Other	203		594		210		611
Total revenue	$	1,195	$	3,492	$	1,263	$	3,626

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Trade Accounts Receivable (Tables)

9 Months Ended

Dec. 31, 2012

Receivables [Abstract]

Components of trade accounts receivable, net

The components of “Trade accounts receivable, net” were as follows:

	December 31, 2012			March 31, 2012
	(in millions)
Accounts receivable – billed	$	727		$	812
Accounts receivable – unbilled	69			80
Other receivables	13			26
Less: Allowances	(23		)	(16		)
Trade accounts receivable, net	$	786		$	902

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Derivatives 2 (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Dec. 31, 2012	Mar. 31, 2012
Derivatives, Fair Value [Line Items]
Total value of Senior Notes subject to fair value interest rate swaps	$ 500
Fair value of interest rate derivative assets	22	27
Notional value of purchase and sales contracts for foreign currency contracts outstanding	740	893
Tenure of foreign currency contracts outstanding	less than three months	less than six months
Net liability position of foreign currency contracts	less than $1 million
Net fair value of foreign currency contracts		(2)
6.125% Notes due December 2014 [Member]
Derivatives, Fair Value [Line Items]
Long-term debt, interest rate	6.125%
Interest Rate Swaps [Member]
Derivatives, Fair Value [Line Items]
Notional amount of fair value hedge instruments	500
Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Fair value of interest rate derivative assets	12	11
Fair value of foreign currency contracts included in "Other current assets"	4	2
Other Noncurrent Assets, Net [Member]
Derivatives, Fair Value [Line Items]
Fair value of interest rate derivative assets	10	16
Accrued Expenses and Other Current Liabilities [Member]
Derivatives, Fair Value [Line Items]
Fair value of foreign currency contracts included in "Accrued expenses and other current liabilities"	$ 4	$ 4

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Investments (Details)	3 Months Ended
	Mar. 31, 2012
Short-term Investments [Abstract]
Marketable securities balance	less than $1 million

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012	Dec. 31, 2011
Statement of Other Comprehensive Income [Abstract]
Net income	$ 251	$ 263	$ 713	$ 740
OTHER COMPREHENSIVE (LOSS)/INCOME
Foreign currency translation adjustments	(1)	2	(11)	(66)
TOTAL OTHER COMPREHENSIVE INCOME	(1)	2	(11)	(66)
COMPREHENSIVE INCOME	$ 250	$ 265	$ 702	$ 674

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Investments

9 Months Ended

Dec. 31, 2012

Short-term Investments [Abstract]

INVESTMENTS

NOTE D - INVESTMENTS

At December 31, 2012, short-term investments consisted of time deposits held by foreign entities that are denominated in currencies other than the U.S. dollar.  These investments have maturities greater than three months, but less than one year.

At March 31, 2012, short-term investments were less than $1 million.

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Accounting for Share-Based Compensation 2 (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Dec. 31, 2012
Unrecognized share-based compensation costs
Unrecognized share-based compensation costs	$ 100
Weighted average period expected to be recognized	2 years 0 months 0 days
Stock Option Awards [Member]
Unrecognized share-based compensation costs
Unrecognized share-based compensation costs	4
Weighted average period expected to be recognized	2 years 1 month 6 days
Restricted Stock Units [Member]
Unrecognized share-based compensation costs
Unrecognized share-based compensation costs	16
Weighted average period expected to be recognized	2 years 0 months 0 days
Restricted Stock Awards [Member]
Unrecognized share-based compensation costs
Unrecognized share-based compensation costs	66
Weighted average period expected to be recognized	1 year 10 months 24 days
Performance Share Units [Member]
Unrecognized share-based compensation costs
Unrecognized share-based compensation costs	$ 14
Weighted average period expected to be recognized	2 years 9 months 18 days

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Goodwill, Capitalized Software and Other Intangible Assets (Tables)

9 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Capitalized software and other intangible assets

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at December 31, 2012 were as follows:

	At December 31, 2012
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	5,651	$	4,740	$	911	$	301	$	610
Internally developed software products	1,487		638		849		310		539
Other intangible assets	813		429		384		237		147
Total capitalized software and other intangible assets	$	7,951	$	5,807	$	2,144	$	848	$	1,296

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at March 31, 2012 were as follows:

	At March 31, 2012
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	5,628	$	4,733	$	895	$	228	$	667
Internally developed software products	1,366		574		792		258		534
Other intangible assets	814		412		402		214		188
Total capitalized software and other intangible assets	$	7,808	$	5,719	$	2,089	$	700	$	1,389

Projected annual amortization expense for current fiscal year and next four fiscal years

Based on the capitalized software and other intangible assets recorded through December 31, 2012, the projected annual amortization expense for fiscal year 2013 and the next four fiscal years is expected to be as follows:

	Year Ended March 31,
	2013		2014		2015		2016		2017
	(in millions)
Purchased software products	$	107	$	101	$	90	$	89	$	87
Internally developed software products	156		159		136		105		72
Other intangible assets	54		49		40		26		9
Total	$	317	$	309	$	266	$	220	$	168

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Divestitures 2 (Details) (Internet Security Business [Member], USD $) In Millions, unless otherwise specified	9 Months Ended
	Dec. 31, 2011
Internet Security Business [Member]
Divestitures (Textual) [Abstract]
Selling price of discontinued components	$ 14
Gain on disposal of discontinued components, net of taxes	23
Tax expense related to gain on disposal of discontinued components	18
Tax benefit on loss from operations of discontinued components	$ 6

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Income Taxes

9 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE N – INCOME TAXES

Income tax expense for the three and nine months ended December 31, 2012 was $107 million and $342 million, respectively, compared with the three and nine months ended December 31, 2011 of $141 million and $337 million, respectively. For the three and nine months ended December 31, 2011, the Company recognized a net tax expense of approximately $10 million and a net tax benefit of approximately $8 million, respectively, resulting primarily from international tax rate changes and the recognition of tax benefits related to an investment in a foreign subsidiary.

During the three months ended December 31, 2012, the Company reclassified approximately $150 million of deferred tax assets from non-current to current due to a change in tax accounting method reflected in the Company's federal income tax return for the fiscal year ended March 31, 2012. This accounting change does not affect the income tax expense.

In April 2011, the U.S. Internal Revenue Service (IRS) completed its examination of the Company’s federal income tax returns for the tax years ended March 31, 2005, 2006 and 2007 and issued a report of its findings in connection with the examination. The Company disagrees with certain proposed adjustments in the report and is vigorously disputing these matters through the IRS appellate process. The IRS is also examining the Company’s federal income tax returns for the tax years ended March 31, 2008, 2009 and 2010.

While it is difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes that its financial statements reflect the probable outcome of uncertain tax positions. The Company may adjust these uncertain tax positions, as well as any related interest or penalties, in light of changing facts and circumstances, including the settlement of income tax audits and the expirations of statutes of limitation. To the extent a settlement differs from the amounts previously reserved, that difference generally would be recognized as a component of income tax expense in the period of resolution. Although the timing of the resolution of income tax examinations is highly uncertain, it is reasonably possible that settlements, payments and new information in the next 12 months related to certain federal, foreign and state tax issues may result in changes to the Company’s uncertain tax positions, including issues involving taxation of international operations, certain state tax issues and other matters. The Company believes that such reasonably possible changes within the next 12 months may reduce the balance of unrecognized tax benefits, net of the effects of refunds and other affirmative claims, by an amount up to $200 million.

The Company’s effective income tax rate, excluding the impact of discrete items, for the nine months ended December 31, 2012 and 2011 was 32.6% and 32.4%, respectively. Legislative changes in tax laws, the outcome of tax audits and any other changes in potential tax liabilities may result in additional tax expense or benefit in fiscal year 2013, which are not considered in the Company’s estimated annual effective tax rate. While the Company does not currently view any such items as individually material to the results of the Company’s consolidated financial position or results of operations, the impact of certain items may yield additional tax expense or benefit in the remaining quarter of fiscal year 2013 and the Company is anticipating a fiscal year 2013 effective tax rate of approximately 30% to 31%.