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, 2016

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)
520 Madison Avenue, New York, New York	10022
(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 18, 2017
par value $0.10 per share	417,973,964

CA, INC. AND SUBSIDIARIES

INDEX

		Page
PART I.	Financial Information
	Report of Independent Registered Public Accounting Firm	1
Item 1.	Condensed Consolidated Financial Statements	2
	Condensed Consolidated Balance Sheets – December 31, 2016 and March 31, 2016	2
	Condensed Consolidated Statements of Operations – Three and Nine Months Ended December 31, 2016 and 2015	3
	Condensed Consolidated Statements of Comprehensive Income – Three and Nine Months Ended December 31, 2016 and 2015	4
	Condensed Consolidated Statements of Cash Flows – Nine Months Ended December 31, 2016 and 2015	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
	Overview	22
	Executive Summary	24
	Quarterly Update	25
	Performance Indicators	25
	Results of Operations	29
	Liquidity and Capital Resources	38
	Critical Accounting Policies and Business Practices	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	44
PART II.	Other Information
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46
	Signatures	47

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, 2016, and the related condensed consolidated statements of operations and comprehensive income for the three-month and nine-month periods ended December 31, 2016 and 2015, and the related condensed consolidated statements of cash flows for the nine-month periods ended December 31, 2016 and 2015. These condensed consolidated financial statements are the responsibility of the Company’s management.

We conducted our reviews 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 reviews, 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, 2016, and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated May 12, 2016, 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, 2016, 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 25, 2017

1

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share amounts)

	December 31, 2016			March 31, 2016
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,828		$	2,812
Trade accounts receivable, net	555			625
Other current assets	136			124
Total current assets	$	3,519		$	3,561
Property and equipment, net of accumulated depreciation of $825 and $832, respectively	$	219		$	242
Goodwill	6,118			6,086
Capitalized software and other intangible assets, net	627			795
Deferred income taxes	426			407
Other noncurrent assets, net	113			113
Total assets	$	11,022		$	11,204
Liabilities and stockholders’ equity
Current liabilities:
Current portion of long-term debt	$	4		$	6
Accounts payable	72			77
Accrued salaries, wages and commissions	191			205
Accrued expenses and other current liabilities	353			352
Deferred revenue (billed or collected)	1,917			2,197
Taxes payable, other than income taxes payable	70			55
Federal, state and foreign income taxes payable	12			2
Total current liabilities	$	2,619		$	2,894
Long-term debt, net of current portion	$	1,946		$	1,947
Federal, state and foreign income taxes payable	132			148
Deferred income taxes	8			3
Deferred revenue (billed or collected)	651			737
Other noncurrent liabilities	90			97
Total liabilities	$	5,446		$	5,826
Stockholders’ equity:
Preferred stock, no par value, 10,000,000 shares authorized; No shares issued and outstanding	$	—		$	—
Common stock, $0.10 par value, 1,100,000,000 shares authorized; 589,695,081 and 589,695,081 shares issued; 413,268,127 and 412,596,452 shares outstanding, respectively	59			59
Additional paid-in capital	3,678			3,664
Retained earnings	6,872			6,575
Accumulated other comprehensive loss	(518		)	(416		)
Treasury stock, at cost, 176,426,954 and 177,098,629 shares, respectively	(4,515		)	(4,504		)
Total stockholders’ equity	$	5,576		$	5,378
Total liabilities and stockholders’ equity	$	11,022		$	11,204

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,
	2016			2015		2016		2015
Revenue:
Subscription and maintenance	$	817		$	828	$	2,467	$	2,496
Professional services	72			82		224		244
Software fees and other	118			124		333		276
Total revenue	$	1,007		$	1,034	$	3,024	$	3,016
Expenses:
Costs of licensing and maintenance	$	68		$	73	$	202	$	209
Cost of professional services	74			75		222		224
Amortization of capitalized software costs	57			65		182		192
Selling and marketing	270			277		747		751
General and administrative	85			90		257		279
Product development and enhancements	144			133		428		420
Depreciation and amortization of other intangible assets	18			27		56		83
Other (gains) expenses, net	(17		)	1		10		2
Total expenses before interest and income taxes	$	699		$	741	$	2,104	$	2,160
Income from continuing operations before interest and income taxes	$	308		$	293	$	920	$	856
Interest expense, net	16			15		45		36
Income from continuing operations before income taxes	$	292		$	278	$	875	$	820
Income tax expense	84			59		257		222
Income from continuing operations	$	208		$	219	$	618	$	598
Income from discontinued operations, net of income taxes	—			4		—		11
Net income	$	208		$	223	$	618	$	609
Basic income per common share:
Income from continuing operations	$	0.50		$	0.52	$	1.48	$	1.37
Income from discontinued operations	—			0.01		—		0.03
Net income	$	0.50		$	0.53	$	1.48	$	1.40
Basic weighted average shares used in computation	413			420		414		431
Diluted income per common share:
Income from continuing operations	$	0.50		$	0.52	$	1.47	$	1.37
Income from discontinued operations	—			0.01		—		0.03
Net income	$	0.50		$	0.53	$	1.47	$	1.40
Diluted weighted average shares used in computation	414			421		415		432

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,
	2016			2015			2016			2015
Net income	$	208		$	223		$	618		$	609
Other comprehensive loss:
Foreign currency translation adjustments	(83		)	(30		)	(102		)	(51		)
Total other comprehensive loss	$	(83	)	$	(30	)	$	(102	)	$	(51	)
Comprehensive income	$	125		$	193		$	516		$	558

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,
	2016			2015
Operating activities from continuing operations:
Net income	$	618		$	609
Income from discontinued operations	—			(11		)
Income from continuing operations	$	618		$	598
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization	238			275
Deferred income taxes	(20		)	(53		)
Provision for bad debts	3			—
Share-based compensation expense	80			70
Other non-cash items	4			1
Foreign currency transaction (gains) losses	(5		)	5
Changes in other operating assets and liabilities, net of effect of acquisitions:
Decrease in trade accounts receivable	57			50
Decrease in deferred revenue	(332		)	(353		)
(Decrease) increase in taxes payable, net	(25		)	53
Increase (decrease) in accounts payable, accrued expenses and other	13			(50		)
Decrease in accrued salaries, wages and commissions	(12		)	(43		)
Changes in other operating assets and liabilities	1			10
Net cash provided by operating activities - continuing operations	$	620		$	563
Investing activities from continuing operations:
Acquisitions of businesses, net of cash acquired, and purchased software	$	(48	)	$	(648	)
Purchases of property and equipment	(30		)	(34		)
Proceeds from sale of short-term investments	—			48
Other investing activities	(1		)	—
Net cash used in investing activities - continuing operations	$	(79	)	$	(634	)
Financing activities from continuing operations:
Dividends paid	$	(321	)	$	(325	)
Purchases of common stock	(100		)	(705		)
Notional pooling borrowings	1,391			3,237
Notional pooling repayments	(1,365		)	(3,230		)
Debt borrowings	—			1,100
Debt repayments	(5		)	(408		)
Debt issuance costs	—			(4		)
Exercise of common stock options	26			5
Other financing activities	—			(23		)
Net cash used in financing activities - continuing operations	$	(374	)	$	(353	)
Effect of exchange rate changes on cash	$	(151	)	$	(38	)
Net change in cash and cash equivalents - continuing operations	$	16		$	(462	)
Cash provided by operating activities - discontinued operations	$	—		$	11
Net effect of discontinued operations on cash and cash equivalents	$	—		$	11
Increase (decrease) in cash and cash equivalents	$	16		$	(451	)
Cash and cash equivalents at beginning of period	$	2,812		$	2,804
Cash and cash equivalents at end of period	$	2,828		$	2,353

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 (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 in accordance with the instructions to Form 10-Q and Article 10 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. 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, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2017.

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, 2016 (2016 Form 10-K).

Divestitures: In the fourth quarter of fiscal year 2016, the Company sold its CA ERwin Data Modeling solution assets (ERwin). The results of operations associated with this business have been presented as discontinued operations in the accompanying condensed consolidated statements of operations (Condensed Consolidated Statements of Operations) for the three and nine months ended December 31, 2015 and condensed consolidated statements of cash flows (Condensed Consolidated Statements of Cash Flows) for the nine months ended December 31, 2015.

Cash and Cash Equivalents: The Company’s cash and cash equivalents are held in numerous locations throughout the world, with approximately 79% being held by the Company’s foreign subsidiaries outside the United States at December 31, 2016.

New Accounting Pronouncements: In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, with amendments in 2015 and 2016, which creates new ASC Topic 606 (Topic 606) that will replace most existing revenue recognition guidance in GAAP when it becomes effective. Topic 606 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new standard will be effective for the Company’s first quarter of fiscal year 2019 and early application for fiscal year 2018 is permitted. Topic 606 may be applied retrospectively to each prior period presented or with the cumulative effect recognized as of the date of initial application. The Company does not currently intend to adopt the provisions of the new standard early and has not yet selected a transition method. While the Company is continuing to assess all potential effects of the new standard, it currently anticipates that this standard will have a material effect on its consolidated financial statements and believes the most significant impact relates to the timing of the recognition of its software license revenue. Specifically, under the new standard, the Company currently expects to recognize license revenue for its Mainframe Solutions and Enterprise Solutions products at the point in time the licensed software is transferred to the customer, rather than ratably over the term of the customer contract, which is required by existing GAAP for most of the Company’s software arrangements. The Company also currently believes that the point in time recognition requirement of the new standard will increase the variability of its revenue. The Company does not currently expect Topic 606 to have a significant effect on the timing of revenue recognition for its maintenance, SaaS and professional services contracts. Under Topic 606, more judgment and estimates will be required within the revenue recognition process than are required under existing GAAP, including estimating the standalone selling price for each performance obligation identified within the Company’s contracts. The Company currently expects Topic 606 to have other significant effects on its revenue recognition policies and disclosures.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842), which requires a lessee to recognize assets and liabilities on its consolidated balance sheet for leases with accounting lease terms of more than 12 months. ASU 2016-02 will replace most existing lease accounting guidance in GAAP when it becomes effective. The new standard states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations. ASU 2016-02 will be effective for the Company’s first quarter of fiscal year 2020 and requires the modified retrospective method of adoption. Early adoption is permitted. Although the Company is currently evaluating the timing of adoption and the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures, the Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption.

6

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In March 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting (Topic 718), which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax consequences and classification on the statement of cash flows. ASU 2016-09 will be effective for the Company’s first quarter of fiscal year 2018 and early adoption is permitted. The Company currently plans on adopting ASU 2016-09 in the first quarter of fiscal year 2018. The most significant aspect of this standard for the Company when adopted relates to the presentation of cash flows for employee taxes paid by withholding shares of restricted stock awards as a financing activity within the Condensed Consolidated Statements of Cash Flows, which has been historically presented as an operating activity. This update from ASU 2016-09 requires a retrospective method of adoption. All other aspects of ASU 2016-09 are not currently expected to have a material effect on the Company’s consolidated financial statements and related disclosures.

In August 2016, the FASB issued Accounting Standards Update No. 2016-15 (ASU 2016-15), Classification of Certain Cash Receipts and Cash Payments (Topic 230), which is intended to reduce diversity in practice on how certain cash receipts and cash payments are classified and presented in the statement of cash flows. In November 2016, the FASB issued Accounting Standards Update No. 2016-18 (ASU 2016-18), Restricted Cash (Topic 230), which is intended to reduce diversity in practice on how changes in restricted cash are classified and presented in the statement of cash flows. ASU 2016-18 requires amounts generally described as restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Both ASU 2016-15 and ASU 2016-18 will be effective for the Company’s first quarter of fiscal year 2019 and require a retrospective transition method of adoption. Early adoption is permitted. The Company currently anticipates adopting ASU 2016-15 and ASU 2016-18 in the first quarter of fiscal year 2018. The Company does not currently expect the adoption of these standards to have a material effect on its consolidated financial statements and related disclosures.

In October 2016, the FASB issued Accounting Standards Update No. 2016-16 (ASU 2016-16), Intra-Equity Transfers of Assets Other Than Inventory (Topic 740), which is intended to eliminate diversity in practice and provide a more accurate depiction of the tax consequences on intercompany asset transfers (excluding inventory). ASU 2016-16 requires entities to immediately recognize the tax consequences on intercompany asset transfers (excluding inventory) at the transaction date, rather than deferring the tax consequences under current GAAP. ASU 2016-16 will be effective for the Company’s first quarter of fiscal year 2019 and requires a modified retrospective method of adoption. Early adoption is permitted, but only in the first quarter of an entity’s annual fiscal year. The Company is currently evaluating the timing of adoption and the effect that ASU 2016-16 will have on its consolidated financial statements and related disclosures.

NOTE B – ACQUISITIONS

On October 11, 2016, the Company acquired BlazeMeter Ltd. (BlazeMeter), a privately-held provider of open source-based continuous application performance testing. BlazeMeter will integrate with the Company’s continuous delivery solutions to further improve testing efficiency and accelerate the deployment of applications. The acquisition of BlazeMeter was not material to the Company’s financial position or results of operations for the three and nine months ended December 31, 2016. The results of operations of BlazeMeter are reported predominately in the Company’s Enterprise Solutions segment and wereincluded in the consolidated results of operations of the Company from the date of acquisition.

On July 8, 2015, the Company completed its acquisition of Rally Software Development Corp. (Rally), a provider of Agile development software and services. The acquisition of Rally broadens the Company’s solution set and capabilities to better serve customers in the application economy. Pursuant to the terms of the acquisition agreement and related tender offer, the Company acquired 100% of the outstanding shares of Rally common stock for approximately $519 million. The purchase price allocation for Rally is provided in the table below.

The purchase price allocation for the Company’s other acquisitions during fiscal year 2016, including the second quarter acquisition of Xceedium, Inc. (Xceedium), is included within the “Other Fiscal Year 2016 Acquisitions” column below. The acquisition of Xceedium and the Company’s other acquisitions during fiscal year 2016 were immaterial, both individually and in the aggregate.

7

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions)	Rally			Other Fiscal Year 2016 Acquisitions			Estimated Useful Life
Finite-lived intangible assets (1)	$	78		$	14		1-15 years
Purchased software	178			96			5-7 years
Goodwill	257			59			Indefinite
Deferred tax liabilities, net	(45		)	(24		)	—
Other assets net of other liabilities assumed (2)	51			2			—
Purchase price	$	519		$	147

(1) Includes customer relationships and trade names.

(2) Includes approximately $13 million of cash acquired and approximately $48 million of short-term investments acquired relating to Rally.

The allocation of purchase price to acquired identifiable assets, including intangible assets, for Rally was finalized during the first quarter of fiscal year 2017. The excess purchase price over the estimated value of the net tangible and identifiable intangible assets was recorded to goodwill. The allocation of purchase price to goodwill was predominantly due to synergies the Company expects to achieve through integration of the acquired technology with the Company’s existing product portfolio and the intangible assets that are not separable, such as assembled workforce and going concern. The goodwill relating to the Company’s fiscal year 2016 acquisitions was not deductible for tax purposes and was allocated to the Enterprise Solutions segment. The pro forma effects of the Company’s fiscal year 2016 acquisitions on the Company’s revenues and results of operations during fiscal year 2016 were considered immaterial.

Transaction costs for the Company’s fiscal year 2016 acquisitions, which were primarily included in “General and administrative” in the Company’s Condensed Consolidated Statements of Operations, were less than $1 million and $20 million for the three and nine months ended December 31, 2015, respectively.

Since Rally and Xceedium were acquired during the second quarter of fiscal year 2016, the Condensed Consolidated Statements of Operations for the nine months ended December 31, 2015 included six months of activity for revenue and expenses associated with these acquisitions. During the first quarter of fiscal 2017, the Condensed Consolidated Statements of Operations included total revenue of $35 million and net loss of $5 million for the Company’s fiscal year 2016 acquisitions of Rally and Xceedium.

The Company had approximately $12 million and $3 million of accrued acquisition-related costs at December 31, 2016 and March 31, 2016, respectively, related to purchase price amounts withheld subject to indemnification protections.

NOTE C – 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, 2016			March 31, 2016
	(in millions)
Accounts receivable – billed	$	510		$	566
Accounts receivable – unbilled	49			55
Other receivables	6			13
Less: Allowances	(10		)	(9		)
Trade accounts receivable, net	$	555		$	625

8

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE D – GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at December 31, 2016 were as follows:

	At December 31, 2016
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	6,014	$	4,914	$	1,100	$	622	$	478
Internally developed software products	1,467		1,030		437		374		63
Other intangible assets	927		805		122		36		86
Total capitalized software and other intangible assets	$	8,408	$	6,749	$	1,659	$	1,032	$	627

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at March 31, 2016 were as follows:

	At March 31, 2016
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	5,990	$	4,865	$	1,125	$	552	$	573
Internally developed software products	1,467		1,009		458		333		125
Other intangible assets	927		728		199		102		97
Total capitalized software and other intangible assets	$	8,384	$	6,602	$	1,782	$	987	$	795

Based on the capitalized software and other intangible assets recorded through December 31, 2016, the projected annual amortization expense for fiscal year 2017 and the next four fiscal years is expected to be as follows:

	Year Ended March 31,
	2017		2018		2019		2020		2021
	(in millions)
Purchased software products	158		152		112		86		45
Internally developed software products	79		36		9		1		—
Other intangible assets	16		9		7		7		7
Total	$	253	$	197	$	128	$	94	$	52

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 those factors on the technology the Company acquires and develops for its products. Impairments 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 assets within the Enterprise Solutions segment.

9

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Goodwill activity by segment for the nine months ended December 31, 2016 was as follows:

(in millions)	Mainframe Solutions		Enterprise Solutions			Services		Total
Balance at March 31, 2016	$	4,178	$	1,827		$	81	$	6,086
Acquisitions	—		38			—		38
Foreign currency translation adjustment	$	—	$	(6	)	$	—	$	(6	)
Balance at December 31, 2016	$	4,178	$	1,859		$	81	$	6,118

NOTE E – DEFERRED REVENUE

The current and noncurrent components of “Deferred revenue (billed or collected)” at December 31, 2016 and March 31, 2016 were as follows:

	December 31, 2016		March 31, 2016
	(in millions)
Current:
Subscription and maintenance	$	1,711	$	1,990
Professional services	134		116
Software fees and other	72		91
Total deferred revenue (billed or collected) – current	$	1,917	$	2,197
Noncurrent:
Subscription and maintenance	$	630	$	712
Professional services	16		21
Software fees and other	5		4
Total deferred revenue (billed or collected) – noncurrent	$	651	$	737
Total deferred revenue (billed or collected)	$	2,568	$	2,934

NOTE F – 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.

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, 2016, foreign currency contracts outstanding consisted of purchase and sale contracts with a total gross notional value of approximately $745 million and durations of less than three months. The net fair value of these contracts at December 31, 2016 was a net asset of approximately $14 million, of which approximately $17 million is included in “Other current assets” and approximately $3 million is included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheet.

At March 31, 2016, foreign currency contracts outstanding consisted of purchase and sale contracts with a total gross notional value of approximately $332 million and durations of less than three months. The net fair value of these contracts at March 31, 2016 was a net liability of approximately $1 million, of which approximately $2 million is included in “Other current assets” and approximately $3 million is included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheet.

10

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of the effect of the foreign exchange derivatives on the Company’s Condensed Consolidated Statements of Operations was as follows:

	Amount of Net (Gain)/Loss Recognized in the Condensed Consolidated Statements of Operations
	Three Months Ended December 31,						Nine Months Ended December 31,
(in millions)	2016			2015			2016			2015
Other (gains) expenses, net – foreign currency contracts	$	(9	)	$	(3	)	$	(3	)	$	—

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 either in a net asset position or under the established threshold at December 31, 2016 and March 31, 2016. The Company posted no collateral at December 31, 2016 or March 31, 2016. 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.

NOTE G – FAIR VALUE MEASUREMENTS

The following table presents the Company’s assets and liabilities that were measured at fair value on a recurring basis at December 31, 2016 and March 31, 2016:

	At December 31, 2016						At March 31, 2016
	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)	$	997	$	—	$	997	$	820	$	—	$	820
Foreign exchange derivatives (2)	—		17		17		—		2		2
Total assets	$	997	$	17	$	1,014	$	820	$	2	$	822
Liabilities:
Foreign exchange derivatives (2)	$	—	$	3	$	3	$	—	$	3	$	3
Total liabilities	$	—	$	3	$	3	$	—	$	3	$	3

(1) The Company’s investments in money market funds are classified as “Cash and cash equivalents” in its Condensed Consolidated Balance Sheets.

(2) Refer to Note F, “Derivatives” for additional information.

At December 31, 2016 and March 31, 2016, 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.

11

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the carrying amounts and estimated fair values of the Company’s other financial instruments that were not measured at fair value on a recurring basis at December 31, 2016 and March 31, 2016:

	At December 31, 2016				At March 31, 2016
(in millions)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Liabilities:
Total debt (1)	$	1,950	$	2,055	$	1,953	$	2,058
Facility exit reserves (2)	$	11	$	12	$	16	$	17

(1) Estimated fair value of total debt is based on quoted prices for similar liabilities for which significant inputs are observable except for certain long-term lease obligations, for which fair value approximates carrying value (Level 2).

(2) Estimated fair value for the facility exit reserves is determined using the Company’s incremental borrowing rate at December 31, 2016 and March 31, 2016. At December 31, 2016 and March 31, 2016, the facility exit reserves included carrying values of approximately $3 million and $4 million, respectively, in “Accrued expenses and other current liabilities” and approximately $8 million and $12 million, respectively, in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3).

NOTE H – 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 may also become involved with contract issues and disputes with customers, including government customers.

On March 24, 2014, the U.S. Department of Justice (DOJ) filed under seal in the United States District Court for the District of Columbia a complaint against the Company in partial intervention under the qui tam provisions of the civil False Claims Act (FCA). The underlying complaint was filed under seal by an individual plaintiff on August 24, 2009. On May 29, 2014, the case was unsealed. Both the DOJ and the individual plaintiff filed amended complaints. The complaints related to government sales transactions under the Company’s General Services Administration (GSA) schedule contract, entered into in 2002 and extended until present through subsequent amendments. In sum and substance, the complaints alleged that the Company provided inaccurate commercial discounting information to the GSA during contract negotiations and that, as a result, the GSA’s contract discount was lower than it otherwise would have been. In addition, the complaints alleged that the Company failed to apply the full negotiated discount in some instances and to pay sufficient rebates pursuant to the contract’s price reduction clause. In addition to FCA claims, the complaints also asserted common law causes of action. The DOJ complaint sought an unspecified amount of damages, including treble damages and civil penalties. The complaint by the individual plaintiff alleged that the U.S. government suffered damages in excess of $100 million and sought an unspecified amount of damages, including treble damages and civil penalties. On October 30, 2014, the GSA Suspension and Debarment Division issued a Show Cause Letter to the Company in response to the complaints summarized above. In sum, the letter called on the Company to demonstrate why the U.S. government should continue to contract with the Company, given the litigation allegations made in the complaints. On December 19, 2014, the Company provided a detailed response to the Show Cause Letter. In July 2015, after the Company agreed to assume certain additional reporting requirements during the pendency of the litigation, the GSA Suspension and Debarment Division advised the Company that it had concluded its review and determined that the Company is a responsible contractor with which government agencies could continue to contract. On October 24, 2016, the DOJ, the Company and the individual plaintiff filed a joint motion advising the court that they had reached an agreement-in-principle to resolve the litigation and requesting an extension of the court schedule to permit the parties to draft and execute a formal settlement agreement. Also on October 24, 2016, the court granted that joint motion. The agreement-in-principle reached by the parties called for settlement of the litigation for a payment of approximately $45 million without admitting any wrongdoing and, as a result, the Company increased its reserve for this case during the second quarter of fiscal year 2017. The parties have drafted a formal settlement agreement which would resolve the case for the amount agreed upon in October 2016 and are awaiting internal DOJ approval before signing the agreement. Pursuant to the settlement agreement, the Company expects to make payment in the fourth quarter of fiscal year 2017. Upon payment, and pursuant to the settlement agreement, the parties would then move the court to dismiss the case with prejudice. The parties anticipate that the court would approve the settlement and dismiss the case. The Company and the individual plaintiff have reached an agreement-in-principal relating to the individual plaintiff’s claims for attorneys’ fees and litigation expenses and have drafted a formal settlement agreement to resolve those claims for approximately $4 million. That settlement amount is fully reserved and the parties expect the formal agreement to be signed once internal DOJ approval is granted for settlement of the larger case. Payment of the settlement relating to the individual plaintiff’s claims for attorneys’ fees and litigation expenses is expected to be made in the fourth quarter of fiscal year 2017.

12

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

With respect to litigation in general, 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. The Company believes that it has meritorious defenses in connection with its current lawsuits and material claims and disputes, and intends to vigorously contest each of them.

In the opinion of the Company’s management based upon information currently available to the Company, while the outcome of its lawsuits, claims and disputes is uncertain, the likely results of these lawsuits, claims and disputes are not expected, either individually or in the aggregate, 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. The settlement agreements detailed above, if executed, will have a negative effect on quarterly and full fiscal year cash flows. For some 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 does not exceed $20 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 may, from time to time, advance certain attorneys’ fees and expenses incurred by officers and directors in various lawsuits and investigations, as permitted under Delaware law.

NOTE I – STOCKHOLDERS’ EQUITY

Stock Repurchases: On November 13, 2015, the Board approved a stock repurchase program that authorized the Company to acquire up to $750 million of its common stock. During the nine months ended December 31, 2016, the Company repurchased approximately 3.1 million shares of its common stock for approximately $100 million. At December 31, 2016, the Company remained authorized to purchase approximately $650 million of its common stock under its current stock repurchase program.

Accumulated Other Comprehensive Loss: Foreign currency translation losses included in “Accumulated other comprehensive loss” in the Company’s Condensed Consolidated Balance Sheets at December 31, 2016 and March 31, 2016 were approximately $518 million and $416 million, respectively.

Cash Dividends: The Board declared the following dividends during the nine months ended December 31, 2016 and 2015:

Nine Months EndedDecember 31, 2016:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share	Record Date	Total Amount	Payment Date
May 4, 2016	$0.255	May 26, 2016	$107	June 14, 2016
August 3, 2016	$0.255	August 25, 2016	$107	September 13, 2016
November 2, 2016	$0.255	November 17, 2016	$107	December 6, 2016

Nine Months EndedDecember 31, 2015:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share	Record Date	Total Amount	Payment Date
May 5, 2015	$0.25	May 28, 2015	$110	June 16, 2015
August 6, 2015	$0.25	August 27, 2015	$110	September 15, 2015
November 5, 2015	$0.25	November 19, 2015	$105	December 8, 2015

13

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE J – 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, 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, 2016 and 2015:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2016			2015			2016			2015
	(in millions, except per share amounts)
Basic income from continuing operations per common share:
Income from continuing operations	$	208		$	219		$	618		$	598
Less: Income from continuing operations allocable to participating securities	(2		)	(2		)	(7		)	(6		)
Income from continuing operations allocable to common shares	$	206		$	217		$	611		$	592
Weighted average common shares outstanding	413			420			414			431
Basic income from continuing operations per common share	$	0.50		$	0.52		$	1.48		$	1.37
Diluted income from continuing operations per common share:
Income from continuing operations	$	208		$	219		$	618		$	598
Less: Income from continuing operations allocable to participating securities	(2		)	(2		)	(7		)	(6		)
Income from continuing operations allocable to common shares	$	206		$	217		$	611		$	592
Weighted average shares outstanding and common share equivalents:
Weighted average common shares outstanding	413			420			414			431
Weighted average effect of share-based payment awards	1			1			1			1
Denominator in calculation of diluted income per share	414			421			415			432
Diluted income from continuing operations per common share	$	0.50		$	0.52		$	1.47		$	1.37

For the three months ended December 31, 2016 and 2015, respectively, approximately 1 million and 2 million shares of Company common stock underlying restricted stock awards (RSAs) 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 4 million for the three months ended December 31, 2016 and 2015, respectively, were considered participating securities in the calculation of net income allocable to common stockholders.

For the nine months ended December 31, 2016 and 2015, respectively, approximately 2 million and 2 million shares of Company common stock underlying RSAs 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 4 million for the nine months ended December 31, 2016 and 2015, respectively, were considered participating securities in the calculation of net income allocable to common stockholders.

14

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE K – 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,
	2016			2015			2016			2015
	(in millions)
Costs of licensing and maintenance	$	2		$	2		$	5		$	5
Cost of professional services	1			1			3			3
Selling and marketing	9			9			28			25
General and administrative	8			9			27			25
Product development and enhancements	6			4			17			12
Share-based compensation expense before tax	$	26		$	25		$	80		$	70
Income tax benefit	(8		)	(8		)	(26		)	(22		)
Net share-based compensation expense	$	18		$	17		$	54		$	48

The following table summarizes information about unrecognized share-based compensation costs at December 31, 2016:

	Unrecognized Share-Based Compensation Costs		Weighted Average Period Expected to be Recognized
	(in millions)		(in years)
Stock option awards	$	5	2.0
Restricted stock units	20		2.0
Restricted stock awards	76		1.9
Performance share units	33		2.5
Total unrecognized share-based compensation costs	$	134	2.1

There were no capitalized share-based compensation costs for the three and nine months ended December 31, 2016 and 2015.

The value of performance share units (PSUs) is determined using the closing price of the Company’s common stock on the last trading day of the quarter until the awards 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 common stock, RSAs or restricted stock units (RSUs) 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).

15

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended December 31, 2016 and 2015, the Company issued stock options for approximately 1.1 million shares and 0.9 million shares, respectively. The weighted average fair values and assumptions used for the options granted were as follows:

	Nine Months Ended December 31,
	2016			2015
Weighted average fair value	$	4.42		$	4.68
Dividend yield	3.56		%	3.37		%
Expected volatility factor (1)	22		%	23		%
Risk-free interest rate (2)	1.5		%	1.9		%
Expected life (in years) (3)	6.0			6.0

(1) Expected volatility is measured using historical daily price changes of the Company’s common stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options.

(2) The risk-free rate for periods within the contractual term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant.

(3) The expected life is the number of years the Company estimates that options will be outstanding prior to exercise. The Company’s computation of expected life was determined based on the simplified method (the average of the vesting period and option term).

The table below summarizes the RSAs and RSUs granted under the 1-year PSUs for the Company’s fiscal year 2016 and 2015 incentive plan years. The RSAs and RSUs were granted in the first quarter of fiscal years 2017 and 2016, respectively. The RSAs and RSUs vest 34% on the date of grant and 33% on the first and second anniversaries of the grant date.

		RSAs		RSUs
Incentive Plans for Fiscal Years	Performance Period	Shares (in millions)	Weighted Average Grant Date Fair Value	Shares (in millions)	Weighted Average Grant Date Fair Value
2016	1 year	0.6	$31.53	0.1	$30.53
2015	1 year	0.5	$31.41	0.1	$30.42

The table below summarizes the shares of common stock issued under the 3-year PSUs for the Company’s fiscal year 2014 and 2013 incentive plan years in the first quarter of fiscal years 2017 and 2016, respectively.

Incentive Plans for Fiscal Years	Performance Period	Shares of Common Stock (in millions)	Weighted Average Grant Date Fair Value
2014	3 years	0.3	$31.53
2013	3 years	0.1	$31.41

The table below summarizes the RSAs and RSUs granted under the 1-year PSUs for the Company’s fiscal year 2016 and 2015 sales retention equity programs. The RSAs and RSUs were granted in the first quarter of fiscal years 2017 and 2016, respectively. The RSAs and RSUs vest on the third anniversary of the grant date.

		RSAs		RSUs
Incentive Plans for Fiscal Years	Performance Period	Shares (in millions)	Weighted Average Grant Date Fair Value	Shares (in millions)	Weighted Average Grant Date Fair Value
2016	1 year	0.3	$31.53	0.1	$28.52
2015	1 year	0.2	$30.45	0.1	$27.50

16

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The table below summarizes all of the RSAs and RSUs, including grants made pursuant to the long-term incentive plans discussed above, granted during the three and nine months ended December 31, 2016 and 2015:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2016			2015			2016		2015
	(shares in millions)
RSAs:
Shares	—		(3)	—		(3)	2.9		2.8
Weighted average grant date fair value (1)	$	31.99		$	26.53		$	31.56	$	30.63
RSUs:
Shares	—			—			1.0		0.9
Weighted average grant date fair value (2)	$	—		$	—		$	30.16	$	28.72

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

(2) The fair value is based on the quoted market value of the Company’s common stock on the grant date reduced by the present value of dividends expected to be paid on the Company’s common stock prior to vesting of the RSUs, which is calculated using a risk-free interest rate.

(3) Less than 0.1 million.

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, 2016, the Company issued approximately 0.1 million shares under the ESPP at $31.19 per share. For the six-month offer period ended December 31, 2016, the Company issued approximately 0.1 million shares under the ESPP at $30.18 per share. As of December 31, 2016, approximately 29.0 million shares are available for future issuances under the ESPP.

NOTE L – INCOME TAXES

Income tax expense for the three and nine months ended December 31, 2016 was approximately $84 million and $257 million, respectively, compared with income tax expense for the three and nine months ended December 31, 2015 of approximately $59 million and $222 million, respectively. For the three and nine months ended December 31, 2015, the Company recognized a net discrete tax benefit of approximately $19 million and $16 million, respectively, resulting primarily from the resolution of uncertain tax positions for non-U.S. jurisdictions, refinements of tax positions taken in prior periods and the retroactive reinstatement in December 2015 of the research and development tax credit in the U.S.

The Company’s estimated annual effective tax rate, which excludes the impact of discrete items, for the nine months ended December 31, 2016 and 2015 was 28.9% and 29.0%, respectively. 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 2017, 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 2017. The Company is anticipating a fiscal year 2017 effective tax rate between 28% and 29%.

NOTE M – SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

For the nine months ended December 31, 2016 and 2015, interest payments were approximately $66 million and $56 million, respectively, and income taxes paid, net from continuing operations were approximately $274 million and $199 million, respectively. For the nine months ended December 31, 2016 and 2015, the excess tax benefits from share-based incentive awards included in financing activities from continuing operations were approximately $4 million and $3 million, respectively.

Non-cash financing activities for the nine months ended December 31, 2016 and 2015 consisted of treasury common shares issued in connection with the following: share-based incentive awards issued under the Company’s equity compensation plans of approximately $44 million (net of approximately $33 million of income taxes withheld) and $42 million (net of approximately $28 million of income taxes withheld), respectively; discretionary stock contributions to the CA, Inc. Savings Harvest Plan of approximately $24 million and $24 million, respectively; and treasury common shares issued in connection with the Company’s ESPP of approximately $5 million and $5 million, respectively.

17

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. 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 it 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 notional pooling arrangement for the nine months ended December 31, 2016 and 2015 was as follows:

	Nine Months Ended December 31,
	2016			2015
	(in millions)
Total borrowings outstanding at beginning of period (1)	$	139		$	138
Borrowings	1,391			3,237
Repayments	(1,365		)	(3,230		)
Foreign exchange effect	(26		)	(6		)
Total borrowings outstanding at end of period (1)	$	139		$	139

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

NOTE N – SEGMENT INFORMATION

The Company’s Mainframe Solutions and Enterprise Solutions segments are comprised of its software business organized by the nature of the Company’s software offerings and the platforms on which the products operate. The Services segment is comprised of product implementation, consulting, customer education and customer training services, including those directly related to the Mainframe Solutions and Enterprise Solutions software that the Company sells to its customers.

Segment expenses do not include amortization of purchased software, amortization of other intangible assets, amortization of internally developed software products, share-based compensation expense, certain foreign exchange derivative hedging gains and losses, approved severance and facility actions by the Board, and other miscellaneous costs. A measure of segment assets is not currently provided to the Company’s Chief Executive Officer and has therefore not been disclosed.

The Company’s segment information for the three and nine months ended December 31, 2016 and 2015 was as follows:

Three Months Ended December 31, 2016	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	546		$	389		$	72		$	1,007
Expenses	215			333			75			623
Segment profit (loss)	$	331		$	56		$	(3	)	$	384
Segment operating margin	61		%	14		%	(4		)%	38		%
Depreciation	$	8		$	6		$	—		$	14

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2016:

(in millions)
Segment profit	$	384
Less:
Purchased software amortization	39
Other intangibles amortization	4
Internally developed software products amortization	18
Share-based compensation expense	26
Other gains, net (1)	(11		)
Interest expense, net	16
Income from continuing operations before income taxes	$	292

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.

18

CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended December 31, 2016	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,647		$	1,153		$	224		$	3,024
Expenses	634			981			223			1,838
Segment profit	$	1,013		$	172		$	1		$	1,186
Segment operating margin	62		%	15		%	—		%	39		%
Depreciation	$	25		$	18		$	—		$	43

Reconciliation of segment profit to income from continuing operations before income taxes for the nine months ended December 31, 2016:

(in millions)
Segment profit	$	1,186
Less:
Purchased software amortization	120
Other intangibles amortization	13
Internally developed software products amortization	62
Share-based compensation expense	80
Other gains, net (1)	(9		)
Interest expense, net	45
Income from continuing operations before income taxes	$	875

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.

Three Months Ended December 31, 2015	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	554		$	398		$	82		$	1,034
Expenses	218			349			77			644
Segment profit	$	336		$	49		$	5		$	390
Segment operating margin	61		%	12		%	6		%	38		%
Depreciation	$	9		$	7		$	—		$	16

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2015:

(in millions)
Segment profit	$	390
Less:
Purchased software amortization	39
Other intangibles amortization	11
Internally developed software products amortization	26
Share-based compensation expense	25
Other gains, net (1)	(4		)
Interest expense, net	15
Income from continuing operations before income taxes	$	278

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.

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CA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended December 31, 2015	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,668		$	1,104		$	244		$	3,016
Expenses	641			996			227			1,864
Segment profit	$	1,027		$	108		$	17		$	1,152
Segment operating margin	62		%	10		%	7		%	38		%
Depreciation	$	27		$	20		$	—		$	47

Reconciliation of segment profit to income from continuing operations before income taxes for the nine months ended December 31, 2015:

(in millions)
Segment profit	$	1,152
Less:
Purchased software amortization	106
Other intangibles amortization	36
Internally developed software products amortization	86
Share-based compensation expense	70
Other gains, net (1)	(2		)
Interest expense, net	36
Income from continuing operations before income taxes	$	820

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and 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:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2016		2015		2016		2015
	(in millions)
United States	$	642	$	671	$	1,936	$	1,935
EMEA (1)	223		230		667		679
Other	142		133		421		402
Total revenue	$	1,007	$	1,034	$	3,024	$	3,016

(1) Consists of Europe, the Middle East and Africa.

NOTE O – SUBSEQUENT EVENTS

On January 18, 2017, the Company completed its acquisition of Automic Holding GmbH (Automic), a provider of business automation software that automates IT and business processes. With Automic, the Company will add new cloud-enabled automation and orchestration capabilities across its portfolio and increase its ability to reach into the European market. The Company acquired 100% of the voting equity interest in Automic for approximately 600 million euros, net of cash and cash equivalents acquired (which translated to approximately $643 million at January 18, 2017). The Company funded the acquisition from its available international cash on hand. Certain data necessary to complete the preliminary purchase price allocation is not yet available, including but not limited to, the valuation of assets acquired and liabilities assumed, and review of tax returns that provide the underlying tax basis of Automic’s assets and liabilities. Accordingly, such disclosures related to this business combination could not be made at the time these Condensed Consolidated Financial Statements were issued. The results of operations of Automic will be reported predominately in the Company’s Enterprise Solutions segment and will be included in the consolidated results of operations of the Company from the date of acquisition.

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

Cautionary Statement Regarding Forward-Looking Statements

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 relating to the future are intended to identify forward-looking information. Forward-looking information includes, for example, not only the statements relating to the future made in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A), but also statements relating to the future that appear 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 by the Company is subject to the determination of the Company’s Board of Directors (the Board), in its sole discretion, after considering various factors, including the Company’s financial condition, historical and forecasted operating results, and available cash flow, as well as any applicable laws and contractual covenants and any other relevant factors. The Company’s practice regarding payment of dividends may be modified at any time and from time to time.

Repurchases under the Company’s stock repurchase program may be made from time to time, subject to market conditions and other factors, in the open market, through solicited or unsolicited privately negotiated transactions or otherwise. The program does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company’s discretion.

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A number of important factors could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the ability to achieve success in the Company’s business strategy by, among other things, ensuring that any new offerings address the needs of a rapidly changing market while not adversely affecting the demand for the Company’s traditional products or the Company’s profitability to an extent greater than anticipated, enabling the Company’s sales force to accelerate growth of sales to new customers and expand sales with existing customers, including sales outside of the Company’s renewal cycle and to a broadening set of purchasers outside of traditional information technology operations (with such growth and expansion at levels sufficient to offset any decline in revenue and/or sales in the Company’s Mainframe Solutions segment and in certain mature product lines in the Company’s Enterprise Solutions segment), effectively managing the strategic shift in the Company’s business model to develop more easily installed software, provide additional Software-as-a-Service (SaaS) offerings and refocus the Company’s professional services and education engagements on those engagements that are connected to new product sales, without affecting the Company’s financial performance to an extent greater than anticipated, and effectively managing the Company’s pricing and other go-to-market strategies, as well as improving the Company’s brand, technology and innovation awareness in the marketplace; the failure to innovate or adapt to technological changes and introduce new software products and services in a timely manner; competition in product and service offerings and pricing; the ability of the Company’s products to remain compatible with ever-changing operating environments, platforms or third party products; global economic factors or political events beyond the Company’s control and other business and legal risks associated with non-U.S. operations; the failure to expand partner programs and sales of the Company’s solutions by the Company’s partners; the ability to retain and attract qualified professionals; general economic conditions and credit constraints, or unfavorable economic conditions in a particular region, business or industry sector; the ability to successfully integrate acquired companies and products into the Company’s existing business; risks associated with sales to government customers; breaches of the Company’s data center, network, as well as the Company’s software products, and the IT environments of the Company’s vendors and customers; the ability to adequately manage, evolve and protect the Company’s information systems, infrastructure and processes; the failure to renew license transactions on a satisfactory basis; fluctuations in foreign exchange rates; discovery of errors or omissions in the Company’s software products or documentation and potential product liability claims; the failure to protect the Company’s intellectual property rights and source code; access to software licensed from third parties; risks associated with the use of software from open source code sources; third-party claims of intellectual property infringement or royalty payments; fluctuations in the number, terms and duration of the Company’s license agreements, as well as the timing of orders from customers and channel partners; events or circumstances that would require the Company to record an impairment charge relating to the Company’s goodwill or capitalized software and other intangible assets balances; potential tax liabilities; changes in market conditions or the Company’s credit ratings; changes in generally accepted accounting principles; the failure to effectively execute the Company’s workforce reductions, workforce rebalancing and facilities consolidations; successful and secure outsourcing of various functions to third parties; and other factors described more fully in 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 the forward-looking information described in this Form 10-Q as believed, planned, anticipated, expected, estimated, targeted or similarly identified. The Company does 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, the Company’s financial statements and the accompanying notes to the financial statements. References in this Form 10-Q to fiscal 2017 and fiscal 2016 are to the Company’s fiscal years ending on March 31, 2017 and 2016, respectively.

OVERVIEW

CA Technologies is a global leader in software solutions enabling customers to plan, develop, manage and secure applications and enterprise environments across distributed, cloud, mobile and mainframe platforms. Most of the Global Fortune 500, as well as many government agencies around the world, rely on CA to help manage their increasingly dynamic and complex environments.

We have a broad portfolio of software solutions that we use to execute our business strategy, including enabling our customers to gain a competitive advantage in the Application Economy. We organize our offerings into Enterprise Solutions, Mainframe Solutions and Services operating segments.

Enterprise Solutions segment includes products that are designed for distributed and cloud computing environments and run on industry standard servers. Within Enterprise Solutions, our areas of focus include:

• Agile Management enables customers to more effectively plan and manage the software development process and the business of IT service delivery. Our solutions enable customers to improve delivery time on large projects, reduce costs and optimize resources.

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• DevOps is adjacent to Agile Management and comprises a range of solutions that allow customers to efficiently deliver and manage applications and IT infrastructure. With our portfolio of solutions, customers can reduce the delivery time of new applications, increase the frequency of new releases and dramatically improve quality.

• Security includes a comprehensive set of solutions to address the growing concern across all enterprises and organizations regarding external and internal threats to their environments and the critical data they contain. Our identity-centric security portfolio allows customers to manage identities and regulate access from the device to the data center, providing a complete, end-to-end, multi-channel security solution.

Mainframe Solutions are designed for the IBM z Systems™ mainframe platform, which runs many of our largest customers' mission-critical business applications, with a focus on lowering cost per transaction, while increasing business agility, security and compliance. Within Mainframe Solutions, our areas of focus include:

• Application Development solutions help enable agile development processes, modernize applications and enable collaboration across the mobile to mainframe teams.

• Databases and Database Management solutions help customers manage the growth and increasing complexity of data and allow them to address their ever-evolving data management needs and enable web and mobile access of data.

• Security & Compliance solutions manage risk and ensure regulatory compliance across the enterprise with modern tools. Our solutions reduce risk from unauthorized access, secure mainframe assets, monitor instances that affect compliance and help discover sensitive data. Our solutions secure data at rest and in motion, across the enterprise.

• Systems and Operations Management portfolio provides customers with a unified view of their z Systems performance, including their applications, middleware, networks, systems, storage and data.

Services helps customers reach their IT and business goals primarily by enabling the rapid implementation and adoption of our Mainframe and Enterprise solutions. Our professional services team consists of experienced professionals who provide a variety of services, such as consulting, implementation, application management services, education and support services, to both commercial and government customers. In fiscal 2016, as a result of our Rally acquisition, Agile coaches, whose primary focus is training customers on the implementation of the Agile software development methodology, were incorporated into the Services segment.

Our goal is to be the world’s leading independent software provider for IT management and security solutions that help organizations and enterprises plan, develop, manage, and secure modern software environments across mainframe, distributed, cloud and mobile platforms. To accomplish this, key elements of our strategy include:

• Drive organic innovation. Our product development strategy is built around key growth areas, where we are focused on innovating and delivering differentiated products and solutions across both distributed and mainframe. A key element of our organic innovation approach is the broad adoption of the Agile methodology to govern our software development process, which we believe will improve our product development time-to-market, quality and relevance, and support our customer success initiatives.

• Incubate technology for next generation products. We are researching and dedicating resources to the development of emerging technologies that are logical extensions of our core areas of focus. We are working on opportunities in areas such as containers, data analytics, big data and open source, some of which may become enhancements or extensions of our current product portfolio and others may evolve to new product categories.

• Pursue new business models and expanded routes to market.While our traditional on-premise software delivery remains core to many enterprise customers, we see cloud-based and try-and-buy models as increasingly attractive for our customers.

• Expand relationships with our global customer base and address opportunities with new and underserved customers. We are focused on maintaining and expanding the strong relationships with our established customer base, and will proactively target growth with other potential customers that we do not currently serve. In parallel, we are seeking to broaden our customer base to new buyers in geographic regions we have underserved. The emerging roles of Chief Information Security Officers and Chief Development Officers align with the shifts we are driving across our portfolio to meet the needs of speed and agility.

• Execute strategic and disciplined technology acquisitions. We intend to supplement our organic innovation efforts with key technology acquisitions that are within or adjacent to our core areas of focus. We conduct a thorough acquisition process, which includes build vs. buy analysis and opportunity identification, detailed business case modeling, rigorous due diligence and extensive integration, to fully realize the value of our acquisitions.

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We offer our solutions through our direct sales force and indirectly through our partners. We remain focused on strengthening relationships with our core customers and partners - approximately our top 500 accounts, which we refer to as our “Platinum” accounts - through product leadership, account management and a differentiated customer experience. We are working to accelerate the velocity of our sales transactions by dedicating sales resources and deploying additional solutions to address opportunities to sell to new enterprises and to expand our relationship with existing non-Platinum customers - which we refer to as our “Named” and “Growth/Partners” (or Partner-led) customers. Named customers are large potential customers with whom we currently do not have a strong presence and where a competitor often has an established relationship. Growth/Partners customers are mid-size potential customers with whom we currently do not have a strong presence and generally address through partners. Additionally, we have implemented broad-based business initiatives to drive continued improvement in sales execution. We are continuing to shift to a more product-driven sales approach, using real-time data and intelligence to drive on-going evolution of our go-to-market strategy towards the highest potential and highest-yielding markets.

We have sharpened our focus and processes to better reach new customers to drive higher velocity and a broadening customer mix. Our marketing and sales organizations are utilizing common systems and analytics to initiate and respond to market opportunities, optimize resources, maximize efficiency and drive awareness and consideration of the CA brand and portfolio capabilities across our broad base of customers and prospects.

EXECUTIVE SUMMARY

A summary of key results for the third quarter of fiscal 2017 compared with the third quarter of fiscal 2016 is as follows:

Revenue

• Total revenue declined$27 million due to decreases in subscription and maintenance revenue, professional services revenue and software fees and other revenue. There was an unfavorable foreign exchange effect of $5 million for the third quarter of fiscal 2017.

• We currently expect revenue for fiscal 2017 to be consistent compared with fiscal 2016. We currently expect an unfavorable foreign exchange effect of less than one percent on revenue for fiscal 2017.

Bookings

• Total bookings increased primarily due to an increase in enterprise solutions renewals, partially offset by decreases in mainframe solutions renewals and enterprise solutions new product sales.

• Renewal bookings increased by a percentage in the mid-single digits primarily due to an increase in enterprise solutions renewals, partially offset by a decrease in mainframe solutions renewals due to the timing of our renewal portfolio.

• Total new product sales decreased by a percentage in the mid-single digits primarily due to a decrease in enterprise solutions new product sales. Enterprise solutions new product sales decreased by a percentage in the high single digits primarily due to a lower level of new sales associated with our Service Management product and, to a lesser extent, a decrease in new sales of our Privileged Access Management (PAM) product. These decreases were partially offset by higher new sales of our API Management and Continuous Delivery products. Mainframe solutions new product sales were consistent compared with the year-ago period.

• We expect fiscal 2017 renewals to increase by a percentage in the high teens compared with fiscal 2016.

Expenses

• Operating expenses decreased primarily due to favorable foreign exchange and a decline in legal settlement expense included within other (gains) expenses, net. In addition, there was a decrease in amortization of other intangible assets and internally developed software products, and a decrease in commission expense as a result of the decline in total new product sales. These decreases in operating expenses were partially offset by an increase in personnel-related costs as a result of severance actions during the third quarter of fiscal 2017.

Income taxes

• We anticipate a fiscal 2017 effective tax rate between 28% and 29%.

Diluted income per common share from continuing operations

• Diluted income per common share from continuing operations decreased to $0.50 from $0.52 primarily due to an increase in income tax expense, partially offset by an increase in income from continuing operations before income taxes.

Segment results

• Mainframe Solutions revenue decreased primarily due to insufficient revenue from prior period new sales to offset the decline in revenue contribution from renewals. Mainframe Solutions operating margin was consistent compared with the year-ago period.

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• Enterprise Solutions revenue decreased primarily due to a decrease in revenue recognized on an upfront basis. Enterprise Solutions operating margin increased primarily due to an overall decrease in operating expenses.

• Services revenue decreased primarily due to a decline in professional services engagements from prior periods. This decline in professional services engagements is a result of several factors including our products being easier to install and manage, an increase in the use of partners for services engagements and the completion of non-strategic projects during previous periods. Operating margin for Services decreased primarily due to an overall decline in professional services revenue and an increase in personnel-related costs as a result of severance actions during the third quarter of fiscal 2017.

Cash flows from continuing operations

• Net cash provided by operating activities from continuing operations was $517 million, representing an increase of $185 million. The increase in net cash provided by operating activities was primarily due to an increase in cash collections from billings of $158 million mainly from higher single installment collections of $106 million, a decrease in vendor disbursements and payroll of $17 million and a decrease in other disbursements, net of $14 million.

QUARTERLY UPDATE

• In October 2016, the Company acquired BlazeMeter Ltd. (BlazeMeter), a privately-held provider of open source-based continuous application performance testing. BlazeMeter will integrate with the Company’s continuous delivery solutions to further improve testing efficiency and accelerate the deployment of applications.

• In November 2016, the Company announced that the Board appointed Kieran J. McGrath to serve as Executive Vice President and Chief Financial Officer of the Company, effective immediately. Mr. McGrath had most recently served as the Company’s Senior Vice President and interim Chief Financial Officer.

• In December 2016, the Company announced that it signed a definitive agreement to acquire Automic Holding GmbH (Automic), a provider of business automation software that automates IT and business processes. The Company completed the acquisition of Automic in January 2017.

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 of Fiscal
	2017		2016		Change			Percentage Change
	(dollars in millions)
Total revenue	$	1,007	$	1,034	$	(27	)	(3	)%
Income from continuing operations	$	208	$	219	$	(11	)	(5	)%
Net cash provided by operating activities - continuing operations	$	517	$	332	$	185		56	%
Total bookings	$	1,258	$	1,242	$	16		1	%
Subscription and maintenance bookings	$	1,038	$	1,013	$	25		2	%
Weighted average subscription and maintenance license agreement duration in years	3.32		3.76		(0.44		)	(12	)%

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	First Nine Months of Fiscal
	2017		2016		Change			Percentage Change
	(dollars in millions)
Total revenue	$	3,024	$	3,016	$	8		—	%
Income from continuing operations	$	618	$	598	$	20		3	%
Net cash provided by operating activities - continuing operations	$	620	$	563	$	57		10	%
Total bookings	$	3,340	$	3,287	$	53		2	%
Subscription and maintenance bookings	$	2,742	$	2,730	$	12		—	%
Weighted average subscription and maintenance license agreement duration in years	3.94		4.00		(0.06		)	(2	)%

	December 31, 2016		March 31, 2016		Change From Fiscal Year End			December 31, 2015		Change From Prior Year Quarter
	(in millions)
Cash and cash equivalents	$	2,828	$	2,812	$	16		$	2,353	$	475
Total debt (1)	$	1,950	$	1,953	$	(3	)	$	1,955	$	(5	)
Total expected future cash collections from committed contracts (2)	$	4,992	$	4,520	$	472		$	4,768	$	224
Total revenue backlog (2)	$	7,005	$	6,829	$	176		$	6,800	$	205
Total current revenue backlog (2)	$	2,994	$	3,113	$	(119	)	$	3,030	$	(36	)

(1) Total debt at December 31, 2015 has been adjusted to reflect the adoption of Accounting Standards Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs (Topic 835). Refer to Note 1, “Significant Accounting Policies,” of our 2016 Form 10-K for additional information.

(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 our 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, SaaS 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 arrangement. Software fees and other revenue generally represents license fee revenue recognized at the inception of a license agreement (upfront basis) and also includes our SaaS revenue, which is recognized as services are provided.

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 vendor specific objective evidence (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 such agreements. The vast majority of our subscription and maintenance revenue in any particular reporting period comes from contracts signed in prior periods, generally ranging in duration from three to five years.

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. License fees for bookings attributed to sales of software products for which revenue is recognized on an upfront basis is reflected in “Software fees and other” in our Condensed Consolidated Statements of Operations, while the maintenance portion is reflected in “Subscription and maintenance” in our Condensed Consolidated Statements of Operations. Our SaaS bookings are recognized as revenue in “Software fees and other,” generally ratably over the term of the SaaS arrangement, rather than upfront.

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Our management looks within total bookings at renewal bookings, which we define as bookings attributable to the renewable value of a prior contract (i.e., the maintenance value and, in the case of non-perpetual licenses, the license value), and at total new product sales, which we define as sales of mainframe and enterprise solutions products and mainframe solutions capacity that are new or in addition to sales of products or mainframe solutions capacity previously contracted for by a customer. Renewal bookings, as we report them, do not include new product or capacity sales or professional services arrangements and are reflected as subscription and maintenance bookings in the period (for which revenue would be recognized ratably over the term of the contract). Renewals can close before their scheduled renewal date for a number of reasons, including customer preference, customer needs for additional products or capacity, or our preference. The level of renewals closed prior to scheduled expiration dates and the reasons for such closings can vary from quarter to quarter. Generally, quarters with smaller renewal inventories result in a lower level of bookings because renewal bookings will be lower and, to a lesser extent, because renewals remain an important opportunity for new product sales.

Mainframe solutions new product sales and capacity growth can be inconsistent on both a quarterly and annual basis. We believe the period-over-period change in mainframe solutions new product sales and capacity combined is a more appropriate measure of performance and, therefore, we provide only total mainframe solutions new sales information, which includes mainframe solutions capacity. The amount of new product sales for a period, as currently tracked by us, requires estimation by management and has been historically reported by providing only growth rate comparisons. Within a given period, the amount of new product sales may not be material to the change in our total bookings or revenue compared with prior periods. New product 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 either directly by us or through distributors and volume partners, value-added resellers and exclusive representatives to end-users and may include the right for the customer to receive unspecified future software products and/or additional products, services or other fees for which we have not established VSOE for all undelivered elements. These amounts are expected to be recognized ratably as subscription and maintenance revenue over the applicable term of the agreements. Subscription and maintenance bookings excludes the value associated with perpetual licenses for which revenue is recognized on an upfront basis, SaaS offerings and professional services arrangements.

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. Price increases are not considered as part of the renewable value of the prior period contract. We estimate the aggregate renewal yield for a quarter based on a review of material transactions representing a 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 contracts of various durations, most of which are longer than one year.

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 and dollar amounts of the contracts being renewed, year-over-year comparisons of bookings are not always indicative of the overall bookings trend.

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.

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Annualized Subscription and Maintenance Bookings: 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.

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 an increase or decrease in the current portion of revenue backlog on a year-over-year basis is a favorable or unfavorable indicator of future subscription and maintenance revenue performance, respectively, due to the high percentage of our revenue that is recognized from license agreements that are already committed and being recognized ratably. The value of backlog can fluctuate based upon the timing of contract expirations.

“Deferred revenue (billed or collected)” is composed of: (i) amounts received from customers in advance of revenue recognition and (ii) amounts billed but not collected for which revenue has not yet been earned.

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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 2017 and fiscal 2016, and the period-over-period dollar and percentage changes for those line items. These comparisons of past results are not necessarily indicative of future results.

	Third Quarter Comparison Fiscal 2017 Versus Fiscal 2016
						Dollar Change			Percentage Change		Percentage of Total Revenue
	2017			2016		2017 / 2016			2017 / 2016		2017		2016
	(dollars in millions)
Revenue:
Subscription and maintenance	$	817		$	828	$	(11	)	(1	)%	81	%	80	%
Professional services	72			82		(10		)	(12	)	7		8
Software fees and other	118			124		(6		)	(5	)	12		12
Total revenue	$	1,007		$	1,034	$	(27	)	(3	)%	100	%	100	%
Expenses:
Costs of licensing and maintenance	$	68		$	73	$	(5	)	(7	)%	7	%	7	%
Cost of professional services	74			75		(1		)	(1	)	7		7
Amortization of capitalized software costs	57			65		(8		)	(12	)	6		6
Selling and marketing	270			277		(7		)	(3	)	27		27
General and administrative	85			90		(5		)	(6	)	8		9
Product development and enhancements	144			133		11			8		14		13
Depreciation and amortization of other intangible assets	18			27		(9		)	(33	)	2		3
Other (gains) expenses, net	(17		)	1		(18		)	NM		(2	)	—
Total expenses before interest and income taxes	$	699		$	741	$	(42	)	(6	)%	69	%	72	%
Income from continuing operations before interest and income taxes	$	308		$	293	$	15		5	%	31	%	28	%
Interest expense, net	16			15		1			7		2		1
Income from continuing operations before income taxes	$	292		$	278	$	14		5	%	29	%	27	%
Income tax expense	84			59		25			42		8		6
Income from continuing operations	$	208		$	219	$	(11	)	(5	)%	21	%	21	%

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

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	First Nine Months Comparison Fiscal 2017 Versus Fiscal 2016
					Dollar Change			Percentage Change		Percentage of Total Revenue
	2017		2016		2017 / 2016			2017 / 2016		2017		2016
	(dollars in millions)
Revenue:
Subscription and maintenance	$	2,467	$	2,496	$	(29	)	(1	)%	82	%	83	%
Professional services	224		244		(20		)	(8	)	7		8
Software fees and other	333		276		57			21		11		9
Total revenue	$	3,024	$	3,016	$	8		—	%	100	%	100	%
Expenses:
Costs of licensing and maintenance	$	202	$	209	$	(7	)	(3	)%	7	%	7	%
Cost of professional services	222		224		(2		)	(1	)	7		7
Amortization of capitalized software costs	182		192		(10		)	(5	)	6		6
Selling and marketing	747		751		(4		)	(1	)	25		25
General and administrative	257		279		(22		)	(8	)	8		9
Product development and enhancements	428		420		8			2		14		14
Depreciation and amortization of other intangible assets	56		83		(27		)	(33	)	2		3
Other expenses, net	10		2		8			400		—		—
Total expenses before interest and income taxes	$	2,104	$	2,160	$	(56	)	(3	)%	70	%	72	%
Income from continuing operations before interest and income taxes	$	920	$	856	$	64		7	%	30	%	28	%
Interest expense, net	45		36		9			25		1		1
Income from continuing operations before income taxes	$	875	$	820	$	55		7	%	29	%	27	%
Income tax expense	257		222		35			16		8		7
Income from continuing operations	$	618	$	598	$	20		3	%	20	%	20	%

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

Revenue

Total Revenue

Total revenue in the third quarter of fiscal 2017decreased compared with the third quarter of fiscal 2016 due to decreases in subscription and maintenance revenue, professional services revenue and software fees and other revenue as described below. There was an unfavorable foreign exchange effect of $5 million for the third quarter of fiscal 2017.

Total revenue in the first nine months of fiscal 2017increased compared with the first nine months of fiscal 2016 primarily due to an increase in software fees and other revenue, partially offset by decreases in subscription and maintenance revenue and professional services revenue as described below. There was an unfavorable foreign exchange effect of $13 million for the first nine months of fiscal 2017.

In general, we treat acquired technologies as organic in the quarter of their one year anniversary date. Rally and Xceedium were acquired during the second quarter of fiscal 2016 and, as such, were treated as organic in the second quarter of fiscal 2017. During the first quarter of fiscal 2017, total revenue included revenue of $35 million from our Rally and Xceedium acquisitions.

We currently expect revenue for fiscal 2017 to be consistent compared with fiscal 2016. We currently expect an unfavorable foreign exchange effect of less than one percent on revenue for fiscal 2017.

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Subscription and Maintenance

Subscription and maintenance revenue for the third quarter and first nine months of fiscal 2017 decreased compared with the third quarter and first nine months of fiscal 2016, respectively, primarily due to a decrease in Mainframe Solutions revenue (refer to “Performance of Segments” below) as well as Enterprise Solutions revenue recognized on a ratable basis. There was an unfavorable foreign exchange effect of $4 million and $10 million for the third quarter and first nine months of fiscal 2017, respectively.

Professional Services

Professional services revenue primarily includes revenue derived from product implementation, consulting, customer education and customer training services. Professional services revenue for the third quarter and first nine months of fiscal 2017 decreased compared with the third quarter and first nine months of fiscal 2016, respectively, primarily due to a decline in professional services engagements from prior periods. This decline in professional services engagements is a result of several factors including our products being easier to install and manage, an increase in the use of partners for services engagements and the completion of non-strategic projects during previous periods. For the long term, we expect new versions of our on-premise software to be easier to implement and a higher percentage of our business to shift to a SaaS-based model, which could potentially reduce the demand for our professional services engagements.

Software Fees and Other

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

Software fees and other revenue for the third quarter of fiscal 2017decreased compared with the third quarter of fiscal 2016 primarily due to a decrease in sales of our enterprise solutions products recognized on an upfront basis, partially offset by an increase in SaaS revenue mainly from our CA Agile Central products (acquired from Rally).

Software fees and other revenue for the first nine months of fiscal 2017increased compared with the first nine months of fiscal 2016 primarily due to an increase in SaaS revenue mainly from our CA Agile Central products (acquired from Rally), and, to a lesser extent, an increase in sales of our enterprise solutions products recognized on an upfront basis.

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 2017 compared with the third quarter and first nine months of fiscal 2016.

	Third Quarter Comparison Fiscal 2017 Versus Fiscal 2016
	2017		Percentage of Total Revenue		2016		Percentage of Total Revenue		Dollar Change			Percentage Change
	(dollars in millions)
United States	$	642	64	%	$	671	65	%	$	(29	)	(4	)%
International	365		36		363		35		2			1
Total Revenue	$	1,007	100	%	$	1,034	100	%	$	(27	)	(3	)%

	First Nine Months Comparison Fiscal 2017 Versus Fiscal 2016
	2017		Percentage of Total Revenue		2016		Percentage of Total Revenue		Dollar Change		Percentage Change
	(dollars in millions)
United States	$	1,936	64	%	$	1,935	64	%	$	1	—	%
International	1,088		36		1,081		36		7		1
Total Revenue	$	3,024	100	%	$	3,016	100	%	$	8	—	%

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Revenue in the United States for the third quarter of fiscal 2017decreased compared with the third quarter of fiscal 2016 primarily due to a decrease in sales of our enterprise solutions products recognized on an upfront basis and, to a lesser extent, a decrease in professional services revenue. International revenue for the third quarter of fiscal 2017 was generally consistent compared with the third quarter of fiscal 2016. Excluding the unfavorable foreign exchange effect of $5 million for the third quarter of fiscal 2017, international revenue increased primarily due to an increase in SaaS revenue.

Revenue in the United States for the first nine months of fiscal 2017 was generally consistent compared with the first nine months of fiscal 2016 primarily due to an increase in software fees and other revenue, mostly offset by a decrease in professional services revenue. International revenue for the first nine months of fiscal 2017 increased slightly compared with the first nine months of fiscal 2016. Excluding the unfavorable foreign exchange effect of $13 million for the first nine months of fiscal 2017, international revenue increased primarily due to an increase in software fees and other revenue in the Europe, Middle East and Africa region.

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

Expenses

Operating Expenses

Operating expenses for the third quarter of fiscal 2017decreased compared with the third quarter of fiscal 2016 primarily due to favorable foreign exchange and a decline in legal settlement expense included within other (gains) expenses, net. In addition, there was a decrease in amortization of other intangible assets and internally developed software products, and a decrease in commission expense as a result of the decline in total new product sales. These decreases in operating expenses were partially offset by an increase in personnel-related costs as a result of severance actions during the third quarter of fiscal 2017.

Operating expenses for the first nine months of fiscal 2017decreased compared with the first nine months of fiscal 2016 primarily due to a decrease in amortization expense of internally developed software products and other intangible assets, and transaction costs associated with our acquisitions of Rally and Xceedium that occurred during the second quarter of fiscal 2016, partially offset by an increase in amortization of capitalized software costs related to our Rally and Xceedium acquisitions.

In general, we treat acquired technologies as organic in the quarter of their one year anniversary date. Rally and Xceedium were acquired during the second quarter of fiscal 2016 and, as such, were treated as organic in the second quarter of fiscal 2017. During the first quarter of fiscal 2017, total operating expenses included expenses of $40 million from our Rally and Xceedium acquisitions.

Costs of Licensing and Maintenance

Costs of licensing and maintenance include technical support, royalties, SaaS, hosting, and other manufacturing and distribution costs. Costs of licensing and maintenance for the third quarter and first nine months of fiscal 2017 decreased compared with the third quarter and first nine months of fiscal 2016, respectively, primarily due to a decrease in external royalties and a decrease in personnel-related costs as a result of lower headcount, partially offset by an increase in SaaS and hosting costs.

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 and first nine months of fiscal 2017 were generally consistent compared with the third quarter and first nine months of fiscal 2016, respectively, as a result of lower costs due to a decrease in the number of professional services engagements, offset by an increase in personnel-related costs as a result of severance actions during the third quarter of fiscal 2017.

Operating margin for professional services decreased to negative 3% for the third quarter of fiscal 2017 compared with 9% for the third quarter of fiscal 2016. Operating margin for professional services decreased to 1% for the first nine months of fiscal 2017 compared with 8% for the first nine months of fiscal 2016. The decrease in operating margin for professional services was primarily attributable to an overall decline in professional services revenue and an increase in personnel-related costs as a result of severance actions during the third quarter of fiscal 2017.

Operating margin for professional services does not include certain additional direct costs that are included within the Services segment (refer to “Performance of Segments” below). Expenses for the Services segment consist of cost of professional services and other direct costs included within selling and marketing and general and administrative expenses.

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.

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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 those factors on the technology we acquire and develop for our products. Impairments 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 assets within the Enterprise Solutions segment.

Amortization of capitalized software costs for the third quarter of fiscal 2017decreased compared with the third quarter of fiscal 2016 as a result of a decrease in amortization of our internally developed software products.

Amortization of capitalized software costs for the first nine months of fiscal 2017decreased compared with the first nine months of fiscal 2016 as a result of a decrease in amortization of our internally developed software products, partially offset by an increase in amortization of capitalized software costs related to our Rally and Xceedium acquisitions.

We have continued to leverage Agile development methodologies, which are characterized by a more dynamic development process with more frequent revisions to a product release’s features and functions as the software is being developed. As a result, capitalization is commenced much later in the development life cycle. As such, we have not capitalized a significant amount of internally developed software costs since fiscal 2014, resulting in a decrease in amortization expense year-over-year.

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. Selling and marketing expenses for the third quarter of fiscal 2017decreased compared with the third quarter of fiscal 2016 primarily due to a decrease in commission expense as a result of the decline in total new product sales.

Selling and marketing expenses for the first nine months of fiscal 2017decreased compared with the first nine months of fiscal 2016 primarily due to a decrease in personnel-related costs and commission expense of $19 million, partially offset by $16 million of costs incurred in the first quarter of fiscal 2017 from our acquisitions of Rally and Xceedium, which were mainly personnel-related.

General and Administrative

General and administrative expenses include the costs of corporate functions, including our executive leadership and administration groups, finance, legal, human resources, corporate communications and other costs such as provisions for doubtful accounts. General and administrative expenses for the third quarter of fiscal 2017decreased compared with the third quarter of fiscal 2016 primarily due to a decrease in personnel-related costs.

General and administrative expenses for the first nine months of fiscal 2017decreased compared with the first nine months of fiscal 2016 primarily due to $18 million of transaction costs associated with our acquisitions of Rally and Xceedium that occurred during the second quarter of fiscal 2016.

Product Development and Enhancements

For the third quarter of fiscal 2017 and fiscal 2016, product development and enhancements expense represented 14% and 13%, respectively, of total revenue. For the third quarter of fiscal 2017, product development and enhancements expense increased compared with the third quarter of fiscal 2016 primarily due to an increase in personnel-related costs as a result of severance actions during the third quarter of fiscal 2017.

For the first nine months of fiscal 2017 and fiscal 2016, product development and enhancements expense represented 14% of total revenue. For the first nine months of fiscal 2017, product development and enhancements expense increased compared with the first nine months of fiscal 2016 primarily due to an increase in personnel-related costs from our acquisitions of Rally and Xceedium that occurred during the second quarter of fiscal 2016 and, to a lesser extent, severance actions during the third quarter of fiscal 2017. These increases were partially offset by a decrease in personnel-related costs as a result of lower headcount.

Depreciation and Amortization of Other Intangible Assets,

For the third quarter and first nine months of fiscal 2017, depreciation and amortization of other intangible assets expense decreased compared with the third quarter and first nine months of fiscal 2016, respectively, primarily due to a decrease in amortization expense associated with other intangible assets that became fully amortized in recent periods.

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Other (Gains) Expenses, Net

The summary of other (gains) expenses, net was as follows:

	Third Quarter Fiscal 2017			Third Quarter Fiscal 2016
	(dollars in millions)
Legal settlements	$	(4	)	$	1
Gains from foreign exchange derivative contracts	(9		)	(3		)
(Gains) losses from foreign exchange rate fluctuations	(3		)	4
Other miscellaneous items	(1		)	(1		)
Total	$	(17	)	$	1

	First Nine Months Fiscal 2017			First Nine Months Fiscal 2016
	(dollars in millions)
Legal settlements	$	23		$	(14	)
Gains from foreign exchange derivative contracts	(3		)	—
(Gains) losses from foreign exchange rate fluctuations	(6		)	16
Other miscellaneous items	(4		)	—
Total	$	10		$	2

During the first nine months of fiscal 2017, other (gains) expenses, net included a $28 million increase in legal settlements, which related to an agreement-in-principle for $45 million to settle the litigation referred to in Note H, “Commitments and Contingencies,” in the Notes to the Condensed Consolidated Financial Statements. We expect full payment for the agreement-in-principle to be made in the fourth quarter of fiscal 2017.

During the third quarter and first nine months of fiscal 2016, other (gains) expenses, net included foreign currency transaction losses of $6 million and $7 million, respectively, relating to the remeasurement of monetary assets and liabilities of our Argentinian subsidiary. These losses arose from the change in the foreign currency rate that was in effect for Argentina during the period. During the first nine months of fiscal 2016, we also recognized a gain from various favorable adjustments associated with our legal accruals and a legal settlement.

Interest Expense, Net

Interest expense, net for the third quarter of fiscal 2017 was generally consistent compared with the third quarter of fiscal 2016.

Interest expense, net for the first nine months of fiscal 2017 increased compared with the first nine months of fiscal 2016 as a result of interest associated with the issuance of our 3.600% Senior Notes due August 2020 during the second quarter of fiscal 2016 and a new term loan agreement entered into during the third quarter of fiscal 2016.

Income Taxes

Income tax expense for the third quarter and first nine months of fiscal 2017 was $84 million and $257 million, respectively, compared with income tax expense for the third quarter and first nine months of fiscal 2016 of $59 million and $222 million, respectively. For the third quarter and first nine months of fiscal 2016, we recognized a net discrete tax benefit of $19 million and $16 million, respectively, resulting primarily from the resolution of uncertain tax positions for non-U.S. jurisdictions, refinements of tax positions taken in prior periods and the retroactive reinstatement in December 2015 of the research and development tax credit in the U.S.

Our estimated annual effective tax rate, which excludes the impact of discrete items, for the first nine months of fiscal 2017 and fiscal 2016 was 28.9% and 29.0%, respectively. 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 2017, 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 2017. We are anticipating a fiscal 2017 effective tax rate between 28% and 29%.

Performance of Segments

Our Mainframe Solutions and Enterprise Solutions segments are comprised of our software business organized by the nature of our software offerings and the platforms on which the products operate. Our Services segment is comprised of product implementation, consulting, customer education and customer training services, including those directly related to the Mainframe Solutions and Enterprise Solutions software that we sell to our customers.

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Segment expenses do not include amortization of purchased software, amortization of other intangible assets, amortization of internally developed software products, share-based compensation expense, certain foreign exchange derivative hedging gains and losses, approved severance and facility actions by the Board, and other miscellaneous costs.

Segment financial information for the third quarter and first nine months of fiscal 2017 and fiscal 2016 was as follows:

Mainframe Solutions	Third Quarter Fiscal 2017			Third Quarter Fiscal 2016
	(dollars in millions)
Revenue	$	546		$	554
Expenses	215			218
Segment profit	$	331		$	336
Segment operating margin	61		%	61		%

Mainframe Solutions	First Nine Months Fiscal 2017			First Nine Months Fiscal 2016
	(dollars in millions)
Revenue	$	1,647		$	1,668
Expenses	634			641
Segment profit	$	1,013		$	1,027
Segment operating margin	62		%	62		%

Mainframe Solutions revenue for the third quarter and first nine months of fiscal 2017 decreased compared with the third quarter and first nine months of fiscal 2016, respectively, primarily due to insufficient revenue from prior period new sales to offset the decline in revenue contribution from renewals. Mainframe Solutions operating margin for the third quarter and first nine months of fiscal 2017 was consistent compared with the third quarter and first nine months of fiscal 2016, respectively.

Enterprise Solutions	Third Quarter Fiscal 2017			Third Quarter Fiscal 2016
	(dollars in millions)
Revenue	$	389		$	398
Expenses	333			349
Segment profit	$	56		$	49
Segment operating margin	14		%	12		%

Enterprise Solutions	First Nine Months Fiscal 2017			First Nine Months Fiscal 2016
	(dollars in millions)
Revenue	$	1,153		$	1,104
Expenses	981			996
Segment profit	$	172		$	108
Segment operating margin	15		%	10		%

Enterprise Solutions revenue for the third quarter of fiscal 2017decreased compared with the year-ago period primarily due to a decrease in revenue recognized on an upfront basis. Enterprise Solutions operating margin for the third quarter of fiscal 2017 increased compared with the year-ago period primarily due to an overall decrease in operating expenses.

Enterprise Solutions revenue for the first nine months of fiscal 2017increased compared with the year-ago period primarily due to an increase in software fees and other revenue. Enterprise Solutions operating margin for the first nine months of fiscal 2017 increased compared with the year-ago period primarily due to an increase in revenue and a decrease in expenses as a result of the transaction costs associated with our acquisitions of Rally and Xceedium that occurred during the second quarter of fiscal 2016.

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Services	Third Quarter Fiscal 2017			Third Quarter Fiscal 2016
	(dollars in millions)
Revenue	$	72		$	82
Expenses	75			77
Segment profit	$	(3	)	$	5
Segment operating margin	(4		)%	6		%

Services	First Nine Months Fiscal 2017			First Nine Months Fiscal 2016
	(dollars in millions)
Revenue	$	224		$	244
Expenses	223			227
Segment profit	$	1		$	17
Segment operating margin	—		%	7		%

Services revenue for the third quarter and first nine months of fiscal 2017 decreased compared with the third quarter and first nine months of fiscal 2016, respectively, primarily due to a decline in professional services engagements from prior periods. This decline in professional services engagements is a result of several factors including our products being easier to install and manage, an increase in the use of partners for services engagements and the completion of non-strategic projects during previous periods. For the long term, we expect new versions of our on-premise software to be easier to implement and a higher percentage of our business to shift to a SaaS-based model, which could potentially reduce the demand for our professional services engagements. Operating margin for Services for the third quarter and first nine months of fiscal 2017 decreased compared with the third quarter and first nine months of fiscal 2016, respectively, primarily due to an overall decline in professional services revenue and an increase in personnel-related costs as a result of severance actions during the third quarter of fiscal 2017.

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

Bookings

Third Quarter Comparison Fiscal 2017 Versus Fiscal 2016

Total Bookings: For the third quarter of fiscal 2017 and fiscal 2016, total bookings were $1,258 million and $1,242 million, respectively. The increase in total bookings was primarily due to an increase in enterprise solutions renewals, partially offset by decreases in mainframe solutions renewals and enterprise solutions new product sales.

Subscription and Maintenance Bookings: For the third quarter of fiscal 2017 and fiscal 2016, subscription and maintenance bookings were $1,038 million and $1,013 million, respectively. The increase in subscription and maintenance bookings was primarily attributable to an increase in renewals due to the timing of our renewal portfolio.

Renewal Bookings: For the third quarter of fiscal 2017, renewal bookings increased by a percentage in the mid-single digits compared with the third quarter of fiscal 2016 primarily due to an increase in enterprise solutions renewals, partially offset by a decrease in mainframe solutions renewals due to the timing of our renewal portfolio.

• Renewal Yield: For the third quarter of fiscal 2017, our percentage renewal yield was in the low 90% range.

• License Agreements over $10 million: During the third quarter of fiscal 2017, we executed a total of 21 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $577 million. During the third quarter of fiscal 2016, we executed a total of 18 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $593 million.

• Annualized Subscription and Maintenance Bookings and Weighted Average Subscription and Maintenance License Agreement Duration in Years: Annualized subscription and maintenance bookings increased from $269 million in the third quarter of fiscal 2016 to $313 million in the third quarter of fiscal 2017. The weighted average subscription and maintenance license agreement duration in years decreased from 3.76 in the third quarter of fiscal 2016 to 3.32 in the third quarter of fiscal 2017. Although each contract is subject to terms negotiated by the respective parties, we do not expect the weighted average subscription and maintenance agreement duration in years to change materially from historical levels for end-user contracts.

Total New Product Sales: Within total bookings, total new product sales decreased by a percentage in the mid-single digits for the third quarter of fiscal 2017 compared with the year-ago period primarily due to a decrease in enterprise solutions new product sales.

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• Within Total New Product Sales:

◦ Mainframe Solutions New Product Sales: For the third quarter of fiscal 2017, mainframe solutions new product sales were consistent compared with the year-ago period. Excluding the unfavorable effect of foreign exchange, Mainframe Solutions new product sales increased by a percentage in the low single digits compared with the year-ago period. Overall, we expect our Mainframe Solutions revenue to decline by a percentage in the low single digits over the medium term, which we believe is in line with the mainframe market.

◦ Enterprise Solutions New Product Sales: For the third quarter of fiscal 2017, enterprise solutions new product sales decreased by a percentage in the high single digits compared with the year-ago period primarily due to a lower level of new sales associated with our Service Management product and, to a lesser extent, a decrease in new sales of our Privileged Access Management (PAM) product. These decreases were partially offset by higher new sales of our API Management and Continuous Delivery products.

Total Bookings by Geography: Total bookings in the third quarter of fiscal 2017 increased in the United States and the Latin America region, partially offset by a decrease in total bookings in the Europe, Middle East and Africa and Asia Pacific Japan regions compared with the year-ago period. The increase in the United States and the Latin America region were primarily related to an increase in renewals due to the timing of our renewal portfolio. The decrease in total bookings in the Europe, Middle East and Africa and Asia Pacific Japan regions was primarily related to a decrease in renewals due to the timing of our renewal portfolio.

New Product Sales by Geography: Total new product sales in the third quarter of fiscal 2017 decreased in all regions except for the Europe, Middle East and Africa region compared with the year-ago period. The decrease in total new product sales was primarily due to uneven sales performance in our Named and Growth accounts within the United States and macro-economic challenges within the Latin America region.

First Nine Months Comparison Fiscal 2017 Versus Fiscal 2016

Total Bookings: For the first nine months of fiscal 2017 and fiscal 2016, total bookings were $3,340 million and $3,287 million, respectively. The increase in total bookings was primarily due to an increase in mainframe solutions renewals, partially offset by a decrease in enterprise solutions renewals.

Total bookings for the first nine months of fiscal 2017 included the replacement and extension of a large system integrator transaction that was scheduled to expire in fiscal 2018 that occurred during the first quarter of fiscal 2017. The large system integrator transaction provided an incremental contract value in excess of $475 million and extended the term of the replaced agreement for an additional five years. Total bookings for the first nine months of fiscal 2016 included a renewal with a large system integrator in excess of $500 million for a term greater than five years that occurred during the second quarter of fiscal 2016.

Subscription and Maintenance Bookings: For the first nine months of fiscal 2017 and fiscal 2016, subscription and maintenance bookings were $2,742 million and $2,730 million, respectively. The increase in subscription and maintenance bookings was primarily attributable to an increase in mainframe solutions renewals, partially offset by a decrease in enterprise solutions renewals.

Renewal Bookings: For the first nine months of fiscal 2017, renewal bookings increased by a percentage in the low single digits compared with the first nine months of fiscal 2016 primarily due to an increase in mainframe solutions renewals, partially offset by a decrease in enterprise solutions renewals. The increase in mainframe solutions renewals was primarily due to the composition of the renewal portfolio being more heavily weighted towards mainframe solutions products in the first nine months of fiscal 2017 and, to a lesser extent, the aforementioned renewal with a large system integrator in excess of $475 million that occurred during the first quarter of fiscal 2017, which included a large amount of mainframe solutions products. The decrease in enterprise solutions renewals was primarily due to the aforementioned renewal with a large system integrator in excess of $500 million that occurred during the second quarter of fiscal 2016 which included a large amount of enterprise solutions products.

• License Agreements over $10 million: During the first nine months of fiscal 2017, we executed a total of 46 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1,696 million. During the first nine months of fiscal 2016, we executed a total of 35 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1,694 million.

• Annualized Subscription and Maintenance Bookings and Weighted Average Subscription and Maintenance License Agreement Duration in Years: Annualized subscription and maintenance bookings increased from $683 million in the first nine months of fiscal 2016 to $696 million in the first nine months of fiscal 2017. The weighted average subscription and maintenance license agreement duration in years decreased from 4.00 in the first nine months of fiscal 2016 to 3.94 in the first nine months of fiscal 2017.

• Full Year Fiscal 2017 Outlook: We expect fiscal 2017 renewals to increase by a percentage in the high teens compared with fiscal 2016.

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Total New Product Sales: Within total bookings, total new product sales decreased by a percentage in the low single digits for the first nine months of fiscal 2017 compared with the year-ago period primarily due to a decrease in enterprise solutions new product sales, partially offset by an increase in mainframe solutions new product sales.

• Within Total New Product Sales:

◦ Mainframe Solutions New Product Sales: For the first nine months of fiscal 2017, mainframe solutions new product sales (which includes sales of mainframe products and mainframe capacity) increased by a percentage in the high single digits compared with the year-ago period primarily due to an increase in sales of mainframe products, partially offset by a decrease in sales of mainframe capacity.

◦ Enterprise Solutions New Product Sales: For the first nine months of fiscal 2017, enterprise solutions new product sales decreased by a percentage in the mid-single digits compared with the year-ago period, partially offset by an increase in new product sales from Rally and Xceedium in the first quarter of fiscal 2017. Enterprise Solutions new product sales performance was also negatively affected by certain products that are more mature and not growing, but which generate positive segment operating margin and cash flows from operations.

Total Bookings by Geography: Total bookings in the first nine months of fiscal 2017 increased in all international regions, partially offset by a decrease in the United States compared with the year-ago period. The increase in the international regions was primarily due to an increase in renewals. The decrease in total bookings in the United States was primarily due to a decrease in renewals.

New Product Sales by Geography: Total new product sales in the first nine months of fiscal 2017 decreased primarily in the Latin America and Asia Pacific Japan regions, partially offset by increases in the United States and Europe, Middle East and Africa region. The decrease in the Latin America region was primarily due to the continued macro-economic challenges in the region. The increase in the United States was primarily due to new sales included within the aforementioned large system integrator transaction that occurred during the first quarter of fiscal 2017. The increase in the Europe, Middle East and Africa region was primarily due to a higher level of new product sales outside the renewal portfolio and an increase in overall renewals.

LIQUIDITY AND CAPITAL RESOURCES

Our cash and cash equivalent balances are held in numerous locations throughout the world, with 79% held in our subsidiaries outside the United States at December 31, 2016. Cash and cash equivalents totaled $2,828 million at December 31, 2016, representing an increase of $16 million from the March 31, 2016 balance of $2,812 million. During the first nine months of fiscal 2017, there was a $151 millionunfavorable translation effect from foreign exchange rates on cash held outside the United States in currencies other than the U.S. dollar.

Although 79% of our cash and cash equivalents is held by foreign subsidiaries, we currently neither intend nor expect a need to repatriate these funds to the United States in the foreseeable future. We expect existing domestic cash, cash equivalents, cash flows from operations and borrowings 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.

On January 18, 2017, we completed our acquisition of Automic Holding GmbH (Automic), a provider of business automation software that automates IT and business processes. We acquired 100% of the voting equity interest in Automic for approximately 600 million euros, net of cash and cash equivalents acquired (which translated to approximately $643 million at January 18, 2017). The Company funded the acquisition from its available international cash on hand. Refer to Note O, “Subsequent Events,” in the Notes to the Condensed Consolidated Financial Statements for additional information.

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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 upfront 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 2017, gross receipts related to single installments for the entire contract value, or a substantial portion of the contract value, were $231 million compared with $125 million for the third quarter of fiscal 2016. For the first nine months of fiscal 2017, gross receipts related to single installments for the entire contract value, or a substantial portion of the contract value, were $313 million compared with $291 million for the first nine months of fiscal 2016.

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 our Condensed Consolidated Balance Sheets for those 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.

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.

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(in millions)	December 31, 2016		March 31, 2016		December 31, 2015
Billings backlog:
Amounts to be billed – current	$	1,882	$	1,818	$	1,880
Amounts to be billed – noncurrent	2,555		2,077		2,270
Total billings backlog	$	4,437	$	3,895	$	4,150
Revenue backlog:
Revenue to be recognized within the next 12 months – current	$	2,994	$	3,113	$	3,030
Revenue to be recognized beyond the next 12 months – noncurrent	4,011		3,716		3,770
Total revenue backlog	$	7,005	$	6,829	$	6,800
Deferred revenue (billed or collected)	$	2,568	$	2,934	$	2,650
Total billings backlog	4,437		3,895		4,150
Total revenue backlog	$	7,005	$	6,829	$	6,800

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, 2016		March 31, 2016		December 31, 2015
Expected future cash collections:
Total billings backlog	$	4,437	$	3,895	$	4,150
Trade accounts receivable, net	555		625		618
Total expected future cash collections	$	4,992	$	4,520	$	4,768

The increase of 14% in billings backlog at December 31, 2016 compared with March 31, 2016 was primarily due to an increase in bookings during the first nine months of fiscal 2017 largely attributable to the aforementioned large system integrator transaction that occurred during the first quarter of fiscal 2017 that was scheduled to expire in fiscal 2018. Excluding the unfavorable effect of foreign exchange, billings backlog increased 17% at December 31, 2016 compared with March 31, 2016. The increase of 7% in billings backlog at December 31, 2016 compared with December 31, 2015 was primarily a result of an increase in bookings largely attributable to the aforementioned large system integrator transaction that occurred during the first quarter of fiscal 2017. Excluding the unfavorable effect of foreign exchange, billings backlog increased 8% at December 31, 2016 compared with December 31, 2015.

The increase in expected future cash collections at December 31, 2016 compared with March 31, 2016 and December 31, 2015 was primarily driven by the increase in billings backlog, as described above.

The increase of 3% in total revenue backlog at December 31, 2016 compared with March 31, 2016 was primarily a result of the higher level of bookings for the first nine months of fiscal 2017, including the aforementioned large system integrator transaction that occurred during the first quarter of fiscal 2017. Excluding the unfavorable effect of foreign exchange, total revenue backlog increased 5% at December 31, 2016 compared with March 31, 2016. The increase in total revenue backlog of 3% at December 31, 2016 compared with December 31, 2015 was primarily a result of an increase in bookings largely attributable to the aforementioned large system integrator transaction that occurred during the first quarter of fiscal 2017. Excluding the unfavorable effect of foreign exchange, total revenue backlog increased 4% at December 31, 2016 compared with December 31, 2015.

Current revenue backlog, which is our revenue to be recognized within the next 12 months, decreased4% at December 31, 2016 compared with March 31, 2016. Excluding the unfavorable effect of foreign exchange, current revenue backlog decreased 2% at December 31, 2016 compared with March 31, 2016. Current revenue backlog decreased1% at December 31, 2016 compared with December 31, 2015. Excluding the unfavorable effect of foreign exchange, current revenue backlog was generally consistent at December 31, 2016 compared with December 31, 2015. Current revenue backlog declines as contracts move closer to their renewal dates. We expect revenue backlog will fluctuate through the year.

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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. We also believe that we would need to demonstrate multiple quarters of total new product and capacity sales growth while maintaining a renewal yield in the low 90% range before growth in the current portion of revenue backlog would be likely to occur.

Net Cash Provided by Operating Activities - Continuing Operations

	Third Quarter of Fiscal						Change
	2017			2016			2017 / 2016
	(in millions)
Cash collections from billings (1)	$	1,209		$	1,051		$	158
Vendor disbursements and payroll (1)	(611		)	(628		)	17
Income tax payments, net	(72		)	(68		)	(4		)
Other disbursements, net (2)	(9		)	(23		)	14
Net cash provided by operating activities - continuing operations	$	517		$	332		$	185

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

(2) Amount include payments associated with interest, prior period restructuring plans and miscellaneous receipts and disbursements.

	First Nine Months of Fiscal						Change
	2017			2016			2017 / 2016
	(in millions)
Cash collections from billings (1)	$	2,946		$	2,884		$	62
Vendor disbursements and payroll (1)	(2,004		)	(2,069		)	65
Income tax payments, net	(274		)	(199		)	(75		)
Other disbursements, net (2)	(48		)	(53		)	5
Net cash provided by operating activities - continuing operations	$	620		$	563		$	57

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

(2) Amount include payments associated with interest, prior period restructuring plans and miscellaneous receipts and disbursements.

Third Quarter Comparison Fiscal 2017 Versus Fiscal 2016

Operating Activities

Net cash provided by operating activities from continuing operations for the third quarter of fiscal 2017 was $517 million, representing an increase of $185 million compared with the third quarter of fiscal 2016. The increase in net cash provided by operating activities compared with the year-ago period was primarily due to an increase in cash collections from billings of $158 million mainly from higher single installment collections of $106 million, a decrease in vendor disbursements and payroll of $17 million and a decrease in other disbursements, net of $14 million.

Investing Activities

Net cash used in investing activities from continuing operations for the third quarter of fiscal 2017 was $62 million compared with $12 million for the third quarter of fiscal 2016. The increase in net cash used in investing activities was primarily due to an increase in cash paid for acquisitions and purchased software of $46 million compared with the year-ago period.

Financing Activities

Net cash used in financing activities from continuing operations for the third quarter of fiscal 2017 was $93 million compared with $392 million for the third quarter of fiscal 2016. The decrease in net cash used in financing activities was primarily due to a decrease in common shares repurchased of $590 million, which was related to our share repurchase arrangement with Careal Holding AG (Careal) during the third quarter for fiscal 2016, partially offset by a decrease in debt borrowings of $300 million from our October 2015 Term Loan.

First Nine Months Comparison Fiscal 2017 Versus Fiscal 2016

Operating Activities

Net cash provided by operating activities from continuing operations for the first nine months of fiscal 2017 was $620 million, representing an increase of $57 million compared with the first nine months of fiscal 2016. The increase in net cash provided by operating activities compared with the year-ago period was primarily due to a decrease in vendor disbursements and payroll of $65 million and an increase in cash collections from billings of $62 million in part from higher single installment collections of $22 million, partially offset by an increase in income tax payments, net of $75 million.

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Investing Activities

Net cash used in investing activities from continuing operations for the first nine months of fiscal 2017 was $79 million compared with $634 million for the first nine months of fiscal 2016. The decrease in net cash used in investing activities was primarily due to a decrease in cash paid for acquisitions and purchased software of $600 million compared with the year-ago period, partially offset by proceeds received of $48 million from the sale of short-term investments during the second quarter of fiscal 2016, which were received from our acquisition of Rally.

Financing Activities

Net cash used in financing activities from continuing operations for the first nine months of fiscal 2017 was $374 million compared with $353 million for the first nine months of fiscal 2016. The increase in net cash used in financing activities was primarily due to lower debt borrowings of $1.1 billion, partially offset by a decrease in common shares repurchased of $605 million, which was primarily due to our share repurchase arrangement with Careal and a decrease in debt repayments of $403 million. In addition, there was a decrease in other financing activities of $23 million, which were due to payments associated with prior year acquisitions, an increase in cash received from exercises of stock options of $21 million and an increase in net borrowings from our notional pooling arrangement of $19 million compared with the year-ago period.

Debt Obligations

At December 31, 2016 and March 31, 2016, our debt obligations consisted of the following:

	December 31, 2016			March 31, 2016
	(in millions)
Revolving credit facility	$	—		$	—
5.375% Senior Notes due December 2019	750			750
3.600% Senior Notes due August 2020	400			400
2.875% Senior Notes due August 2018	250			250
4.500% Senior Notes due August 2023	250			250
Term Loan due April 2022	300			300
Other indebtedness, primarily capital leases	10			15
Unamortized debt issuance costs	(7		)	(8		)
Unamortized discount for Senior Notes	(3		)	(4		)
Total debt outstanding	$	1,950		$	1,953
Less the current portion	(4		)	(6		)
Total long-term debt portion	$	1,946		$	1,947

Other Indebtedness

We have an unsecured and uncommitted multi-currency line of credit available to meet short-term working capital needs for our subsidiaries, and use guarantees and letters of credit issued by financial institutions to guarantee performance on certain contracts and other items. At December 31, 2016 and March 31, 2016, $51 million and $55 million, respectively, of this line of credit was pledged in support of bank guarantees and other local credit lines. At December 31, 2016 and March 31, 2016, none of these arrangements were drawn down by third parties.

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We use a notional pooling arrangement with an international bank to help manage global liquidity. 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. The activity under this notional pooling arrangement for the nine months ended December 31, 2016 and 2015 was as follows:

	Nine Months Ended December 31,
	2016			2015
	(in millions)
Total borrowings outstanding at beginning of period (1)	$	139		$	138
Borrowings	1,391			3,237
Repayments	$	(1,365	)	$	(3,230	)
Foreign exchange effect	(26		)	(6		)
Total borrowings outstanding at end of period (1)	$	139		$	139

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

For additional information concerning our debt obligations, refer to our consolidated financial statements and notes thereto included in our 2016 Form 10-K.

Effect of Exchange Rate Changes

There was a $151 millionunfavorable translation effect on our cash balances in the first nine months of fiscal 2017 predominantly due to the strengthening of the U.S. dollar against the euro (8%) and the British pound sterling (14%), partially offset by the weakening of the U.S. dollar against the Brazilian real (10%).

There was a $38 millionunfavorable translation effect on our cash balances in the first nine months of fiscal 2016 predominantly due to the strengthening of the U.S. dollar against the Brazilian real (19%), the British pound sterling (1%), the Australian dollar (4%), the Norwegian krone (9%), the Indian rupee (6%), the Swiss Franc (3%) and the New Zealand dollar (9%), partially offset by the weakening of the U.S. dollar against the euro (1%) and the Israeli shekel (2%).

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 2016 Form 10-K under Management’s Discussion and Analysis of Financial Condition and Results of Operations. At December 31, 2016, there was no material change to our critical accounting policies or the methodologies or assumptions we apply under them.

New Accounting Pronouncements

For information regarding new accounting pronouncements, and the impact of these pronouncements on our consolidated financial statements, if any, refer to Note A, “Accounting Policies,” in the Notes to the Condensed Consolidated Financial Statements.

Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures about market risk, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our 2016 Form 10-K. Our exposures to market risk have not changed materially subsequent to March 31, 2016.

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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 Company’s Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were 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.

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PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Refer to Note H, “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 2016 Form 10-K. We believe that as of December 31, 2016, 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 2017:

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, 2016 - October 31, 2016	—	$	—	—	$	650,000
November 1, 2016 - November 30, 2016	—	$	—	—	$	650,000
December 1, 2016 - December 31, 2016	—	$	—	—	$	650,000
Total	—			—

On November 13, 2015, the Board approved a stock repurchase program that authorized us to acquire up to $750 million of our common stock. We expect to repurchase shares on the open market, through solicited or unsolicited privately negotiated transactions or otherwise from time to time based on market conditions and other factors.

During the first nine months of fiscal 2017, we repurchased 3.1 million shares of our common stock for $100 million. At December 31, 2016, we remained authorized to purchase $650 million of our common stock under our current stock repurchase 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

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date	Filed or Furnished Herewith
2.1	Agreement for the Sale and Purchase of all shares in Automic Holding GmbH, dated as of November 30, 2016, between Unicorn Luxembourg II S.à r.l. and CA Europe Sàrl. (Certain schedules referenced in this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the U.S. Securities and Exchange Commission upon request.)	8-K	2.1	12/1/16
3.1	Restated Certificate of Incorporation.	8-K	3.3	3/9/06
3.2	By-Laws of the Company, as amended.	10-K	3.2	5/8/15
10.1*	Employment Letter, dated as of November 4, 2016, between the Company and Kieran J. McGrath.	8-K	10.1	11/7/16
10.2*	Schedules A, B and C (amended effective November 7, 2016) to CA, Inc. Change in Control Severance Policy.	8-K	10.2	11/7/16
12	Statement of Ratios of Earnings to Fixed Charges.				X
15	Accountants’ Acknowledgment Letter.				X
31.1	Certification of the Principal Executive Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.				X
31.2	Certification of the Principal Financial Officer pursuant to §302 of the Sarbanes-Oxley Act of 2002.				X
32†	Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002.				X
101	The following financial statements from CA, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language):				X
	(i) Condensed Consolidated Balance Sheets - December 31, 2016 (Unaudited) and March 31, 2016.
	(ii) Unaudited Condensed Consolidated Statements of Operations - Three and Nine Months Ended December 31, 2016 and 2015.
	(iii) Unaudited Condensed Consolidated Statements of Comprehensive Income - Three and Nine Months Ended December 31, 2016 and 2015.
	(iv) Unaudited Condensed Consolidated Statements of Cash Flows - Nine Months Ended December 31, 2016 and 2015.
	(v) Notes to Condensed Consolidated Financial Statements - December 31, 2016.

*	Management contract or compensatory plan or arrangement.
†	Furnished herewith.

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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/ Kieran J. McGrath
	Kieran J. McGrath
	Executive Vice President and Chief Financial Officer

Dated: January 25, 2017

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EX-12

Exhibit 12

CA, Inc.

STATEMENT OF RATIOS OF EARNINGS TO FIXED CHARGES

(in millions, except ratios)

	Fiscal Year										Nine Months Ended
	2012		2013		2014		2015		2016		December 31, 2016
Earnings available for fixed charges:
Earnings from continuing operations before income taxes, minority interest and discontinued operations	$	1,291	$	1,260	$	1,016	$	1,115	$	1,084	$	875
Add: Fixed charges	115		113		123		125		128		88
Total earnings available for fixed charges	$	1,406	$	1,373	$	1,139	$	1,240	$	1,212	$	963
Fixed charges:
Interest expense (1)	$	64	$	64	$	75	$	77	$	81	$	67
Interest portion of rental expense	51		49		48		48		47		21
Total fixed charges	$	115	$	113	$	123	$	125	$	128	$	88
RATIOS OF EARNINGS TO FIXED CHARGES	12.23		12.15		9.26		9.92		9.47		10.94
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 25, 2017

CA, Inc.

520 Madison Avenue

New York, New York 10022

Re: Registration Statement No. 333-196619 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 25, 2017 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 25, 2017	/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, Kieran J. McGrath, 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 25, 2017	/s/ Kieran J. McGrath
		Kieran J. McGrath
		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, 2016 as filed with the Securities and Exchange Commission (the “Report”), each of Michael P. Gregoire, Chief Executive Officer of the Company, and Kieran J. McGrath, 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 25, 2017

/s/ Kieran J. McGrath

Kieran J. McGrath

Executive Vice President and Chief Financial Officer

January 25, 2017

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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Document and Entity Information - shares	9 Months Ended
	Dec. 31, 2016	Jan. 18, 2017
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, 2016
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--03-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		417,973,964

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Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Current assets:
Cash and cash equivalents	$ 2,828	$ 2,812
Trade accounts receivable, net	555	625
Other current assets	136	124
Total current assets	3,519	3,561
Property and equipment, net of accumulated depreciation of $825 and $832, respectively	219	242
Goodwill	6,118	6,086
Capitalized software and other intangible assets, net	627	795
Deferred income taxes	426	407
Other noncurrent assets, net	113	113
Total assets	11,022	11,204
Current liabilities:
Current portion of long-term debt	4	6
Accounts payable	72	77
Accrued salaries, wages and commissions	191	205
Accrued expenses and other current liabilities	353	352
Deferred revenue (billed or collected)	1,917	2,197
Taxes payable, other than income taxes payable	70	55
Federal, state and foreign income taxes payable	12	2
Total current liabilities	2,619	2,894
Long-term debt, net of current portion	1,946	1,947
Federal, state and foreign income taxes payable	132	148
Deferred income taxes	8	3
Deferred revenue (billed or collected)	651	737
Other noncurrent liabilities	90	97
Total liabilities	5,446	5,826
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; 413,268,127 and 412,596,452 shares outstanding, respectively	59	59
Additional paid-in capital	3,678	3,664
Retained earnings	6,872	6,575
Accumulated other comprehensive loss	(518)	(416)
Treasury stock, at cost, 176,426,954 and 177,098,629 shares, respectively	(4,515)	(4,504)
Total stockholders' equity	5,576	5,378
Total liabilities and stockholders' equity	$ 11,022	$ 11,204

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Statement of Financial Position [Abstract]
Accumulated depreciation	$ 825	$ 832
Preferred stock, No par value (in dollars per share)	$ 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 (in dollars per share)	$ 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	413,268,127	412,596,452
Treasury stock, Shares	176,426,954	177,098,629

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Revenue:
Subscription and maintenance	$ 817	$ 828	$ 2,467	$ 2,496
Professional services	72	82	224	244
Software fees and other	118	124	333	276
Total revenue	1,007	1,034	3,024	3,016
Expenses:
Costs of licensing and maintenance	68	73	202	209
Cost of professional services	74	75	222	224
Amortization of capitalized software costs	57	65	182	192
Selling and marketing	270	277	747	751
General and administrative	85	90	257	279
Product development and enhancements	144	133	428	420
Depreciation and amortization of other intangible assets	18	27	56	83
Other (gains) expenses, net	(17)	1	10	2
Total expenses before interest and income taxes	699	741	2,104	2,160
Income from continuing operations before interest and income taxes	308	293	920	856
Interest expense, net	16	15	45	36
Income from continuing operations before income taxes	292	278	875	820
Income tax expense	84	59	257	222
Income from continuing operations	208	219	618	598
Income from discontinued operations, net of income taxes	0	4	0	11
Net income	$ 208	$ 223	$ 618	$ 609
Basic income per common share:
Income from continuing operations (in dollars per share)	$ 0.50	$ 0.52	$ 1.48	$ 1.37
Income from discontinued operations (in dollars per share)	0.00	0.01	0.00	0.03
Net income (in dollars per share)	$ 0.50	$ 0.53	$ 1.48	$ 1.40
Basic weighted average shares used in computation	413	420	414	431
Diluted income per common share:
Income from continuing operations (in dollars per share)	$ 0.50	$ 0.52	$ 1.47	$ 1.37
Income from discontinued operations (in dollars per share)	0.00	0.01	0.00	0.03
Net income (in dollars per share)	$ 0.50	$ 0.53	$ 1.47	$ 1.40
Diluted weighted average shares used in computation	414	421	415	432

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Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 208	$ 223	$ 618	$ 609
Other comprehensive loss:
Foreign currency translation adjustments	(83)	(30)	(102)	(51)
Total other comprehensive loss	(83)	(30)	(102)	(51)
Comprehensive income	$ 125	$ 193	$ 516	$ 558

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Operating activities from continuing operations:
Net income	$ 618	$ 609
Income from discontinued operations	0	(11)
Income from continuing operations	618	598
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization	238	275
Deferred income taxes	(20)	(53)
Provision for bad debts	3	0
Share-based compensation expense	80	70
Other non-cash items	4	1
Foreign currency transaction (gains) losses	(5)	5
Changes in other operating assets and liabilities, net of effect of acquisitions:
Decrease in trade accounts receivable	57	50
Decrease in deferred revenue	(332)	(353)
(Decrease) increase in taxes payable, net	(25)	53
Increase (decrease) in accounts payable, accrued expenses and other	13	(50)
Decrease in accrued salaries, wages and commissions	(12)	(43)
Changes in other operating assets and liabilities	1	10
Net cash provided by operating activities - continuing operations	620	563
Investing activities from continuing operations:
Acquisitions of businesses, net of cash acquired, and purchased software	(48)	(648)
Purchases of property and equipment	(30)	(34)
Proceeds from sale of short-term investments	0	48
Other investing activities	(1)	0
Net cash used in investing activities - continuing operations	(79)	(634)
Financing activities from continuing operations:
Dividends paid	(321)	(325)
Purchases of common stock	(100)	(705)
Notional pooling borrowings	1,391	3,237
Notional pooling repayments	(1,365)	(3,230)
Debt borrowings	0	1,100
Debt repayments	(5)	(408)
Debt issuance costs	0	(4)
Exercise of common stock options	26	5
Other financing activities	0	(23)
Net cash used in financing activities - continuing operations	(374)	(353)
Effect of exchange rate changes on cash	(151)	(38)
Net change in cash and cash equivalents - continuing operations	16	(462)
Cash provided by operating activities - discontinued operations	0	11
Net effect of discontinued operations on cash and cash equivalents	0	11
Increase (decrease) in cash and cash equivalents	16	(451)
Cash and cash equivalents at beginning of period	2,812	2,804
Cash and cash equivalents at end of period	$ 2,828	$ 2,353

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Accounting Policies

9 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

ACCOUNTING POLICIES

NOTE A – ACCOUNTING POLICIES

Basis of Presentation: The accompanying unaudited condensed consolidated financial statements (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 in accordance with the instructions to Form 10-Q and Article 10 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. 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, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2017.

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, 2016 (2016 Form 10-K).

Divestitures: In the fourth quarter of fiscal year 2016, the Company sold its CA ERwin Data Modeling solution assets (ERwin). The results of operations associated with this business have been presented as discontinued operations in the accompanying condensed consolidated statements of operations (Condensed Consolidated Statements of Operations) for the three and nine months ended December 31, 2015 and condensed consolidated statements of cash flows (Condensed Consolidated Statements of Cash Flows) for the nine months ended December 31, 2015.

Cash and Cash Equivalents: The Company’s cash and cash equivalents are held in numerous locations throughout the world, with approximately 79% being held by the Company’s foreign subsidiaries outside the United States at December 31, 2016.

New Accounting Pronouncements: In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, with amendments in 2015 and 2016, which creates new ASC Topic 606 (Topic 606) that will replace most existing revenue recognition guidance in GAAP when it becomes effective. Topic 606 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new standard will be effective for the Company’s first quarter of fiscal year 2019 and early application for fiscal year 2018 is permitted. Topic 606 may be applied retrospectively to each prior period presented or with the cumulative effect recognized as of the date of initial application. The Company does not currently intend to adopt the provisions of the new standard early and has not yet selected a transition method. While the Company is continuing to assess all potential effects of the new standard, it currently anticipates that this standard will have a material effect on its consolidated financial statements and believes the most significant impact relates to the timing of the recognition of its software license revenue. Specifically, under the new standard, the Company currently expects to recognize license revenue for its Mainframe Solutions and Enterprise Solutions products at the point in time the licensed software is transferred to the customer, rather than ratably over the term of the customer contract, which is required by existing GAAP for most of the Company’s software arrangements. The Company also currently believes that the point in time recognition requirement of the new standard will increase the variability of its revenue. The Company does not currently expect Topic 606 to have a significant effect on the timing of revenue recognition for its maintenance, SaaS and professional services contracts. Under Topic 606, more judgment and estimates will be required within the revenue recognition process than are required under existing GAAP, including estimating the standalone selling price for each performance obligation identified within the Company’s contracts. The Company currently expects Topic 606 to have other significant effects on its revenue recognition policies and disclosures.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842), which requires a lessee to recognize assets and liabilities on its consolidated balance sheet for leases with accounting lease terms of more than 12 months. ASU 2016-02 will replace most existing lease accounting guidance in GAAP when it becomes effective. The new standard states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations. ASU 2016-02 will be effective for the Company’s first quarter of fiscal year 2020 and requires the modified retrospective method of adoption. Early adoption is permitted. Although the Company is currently evaluating the timing of adoption and the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures, the Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting (Topic 718), which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax consequences and classification on the statement of cash flows. ASU 2016-09 will be effective for the Company’s first quarter of fiscal year 2018 and early adoption is permitted. The Company currently plans on adopting ASU 2016-09 in the first quarter of fiscal year 2018. The most significant aspect of this standard for the Company when adopted relates to the presentation of cash flows for employee taxes paid by withholding shares of restricted stock awards as a financing activity within the Condensed Consolidated Statements of Cash Flows, which has been historically presented as an operating activity. This update from ASU 2016-09 requires a retrospective method of adoption. All other aspects of ASU 2016-09 are not currently expected to have a material effect on the Company’s consolidated financial statements and related disclosures.

In August 2016, the FASB issued Accounting Standards Update No. 2016-15 (ASU 2016-15), Classification of Certain Cash Receipts and Cash Payments (Topic 230), which is intended to reduce diversity in practice on how certain cash receipts and cash payments are classified and presented in the statement of cash flows. In November 2016, the FASB issued Accounting Standards Update No. 2016-18 (ASU 2016-18), Restricted Cash (Topic 230), which is intended to reduce diversity in practice on how changes in restricted cash are classified and presented in the statement of cash flows. ASU 2016-18 requires amounts generally described as restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Both ASU 2016-15 and ASU 2016-18 will be effective for the Company’s first quarter of fiscal year 2019 and require a retrospective transition method of adoption. Early adoption is permitted. The Company currently anticipates adopting ASU 2016-15 and ASU 2016-18 in the first quarter of fiscal year 2018. The Company does not currently expect the adoption of these standards to have a material effect on its consolidated financial statements and related disclosures.

In October 2016, the FASB issued Accounting Standards Update No. 2016-16 (ASU 2016-16), Intra-Equity Transfers of Assets Other Than Inventory (Topic 740), which is intended to eliminate diversity in practice and provide a more accurate depiction of the tax consequences on intercompany asset transfers (excluding inventory). ASU 2016-16 requires entities to immediately recognize the tax consequences on intercompany asset transfers (excluding inventory) at the transaction date, rather than deferring the tax consequences under current GAAP. ASU 2016-16 will be effective for the Company’s first quarter of fiscal year 2019 and requires a modified retrospective method of adoption. Early adoption is permitted, but only in the first quarter of an entity’s annual fiscal year. The Company is currently evaluating the timing of adoption and the effect that ASU 2016-16 will have on its consolidated financial statements and related disclosures.

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Acquisitions

9 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

ACQUISITIONS

NOTE B – ACQUISITIONS

On October 11, 2016, the Company acquired BlazeMeter Ltd. (BlazeMeter), a privately-held provider of open source-based continuous application performance testing. BlazeMeter will integrate with the Company’s continuous delivery solutions to further improve testing efficiency and accelerate the deployment of applications. The acquisition of BlazeMeter was not material to the Company’s financial position or results of operations for the three and nine months ended December 31, 2016. The results of operations of BlazeMeter are reported predominately in the Company’s Enterprise Solutions segment and wereincluded in the consolidated results of operations of the Company from the date of acquisition.

On July 8, 2015, the Company completed its acquisition of Rally Software Development Corp. (Rally), a provider of Agile development software and services. The acquisition of Rally broadens the Company’s solution set and capabilities to better serve customers in the application economy. Pursuant to the terms of the acquisition agreement and related tender offer, the Company acquired 100% of the outstanding shares of Rally common stock for approximately $519 million. The purchase price allocation for Rally is provided in the table below.

The purchase price allocation for the Company’s other acquisitions during fiscal year 2016, including the second quarter acquisition of Xceedium, Inc. (Xceedium), is included within the “Other Fiscal Year 2016 Acquisitions” column below. The acquisition of Xceedium and the Company’s other acquisitions during fiscal year 2016 were immaterial, both individually and in the aggregate.

(dollars in millions)	Rally			Other Fiscal Year 2016 Acquisitions			Estimated Useful Life
Finite-lived intangible assets (1)	$	78		$	14		1-15 years
Purchased software	178			96			5-7 years
Goodwill	257			59			Indefinite
Deferred tax liabilities, net	(45		)	(24		)	—
Other assets net of other liabilities assumed (2)	51			2			—
Purchase price	$	519		$	147

(1) Includes customer relationships and trade names.

(2) Includes approximately $13 million of cash acquired and approximately $48 million of short-term investments acquired relating to Rally.

The allocation of purchase price to acquired identifiable assets, including intangible assets, for Rally was finalized during the first quarter of fiscal year 2017. The excess purchase price over the estimated value of the net tangible and identifiable intangible assets was recorded to goodwill. The allocation of purchase price to goodwill was predominantly due to synergies the Company expects to achieve through integration of the acquired technology with the Company’s existing product portfolio and the intangible assets that are not separable, such as assembled workforce and going concern. The goodwill relating to the Company’s fiscal year 2016 acquisitions was not deductible for tax purposes and was allocated to the Enterprise Solutions segment. The pro forma effects of the Company’s fiscal year 2016 acquisitions on the Company’s revenues and results of operations during fiscal year 2016 were considered immaterial.

Transaction costs for the Company’s fiscal year 2016 acquisitions, which were primarily included in “General and administrative” in the Company’s Condensed Consolidated Statements of Operations, were less than $1 million and $20 million for the three and nine months ended December 31, 2015, respectively.

Since Rally and Xceedium were acquired during the second quarter of fiscal year 2016, the Condensed Consolidated Statements of Operations for the nine months ended December 31, 2015 included six months of activity for revenue and expenses associated with these acquisitions. During the first quarter of fiscal 2017, the Condensed Consolidated Statements of Operations included total revenue of $35 million and net loss of $5 million for the Company’s fiscal year 2016 acquisitions of Rally and Xceedium.

The Company had approximately $12 million and $3 million of accrued acquisition-related costs at December 31, 2016 and March 31, 2016, respectively, related to purchase price amounts withheld subject to indemnification protections.

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Trade Accounts Receivable

9 Months Ended

Dec. 31, 2016

Receivables [Abstract]

TRADE ACCOUNTS RECEIVABLE

NOTE C – 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, 2016			March 31, 2016
	(in millions)
Accounts receivable – billed	$	510		$	566
Accounts receivable – unbilled	49			55
Other receivables	6			13
Less: Allowances	(10		)	(9		)
Trade accounts receivable, net	$	555		$	625

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Goodwill, Capitalized Software and Other Intangible Assets

9 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS

NOTE D – GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at December 31, 2016 were as follows:

	At December 31, 2016
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	6,014	$	4,914	$	1,100	$	622	$	478
Internally developed software products	1,467		1,030		437		374		63
Other intangible assets	927		805		122		36		86
Total capitalized software and other intangible assets	$	8,408	$	6,749	$	1,659	$	1,032	$	627

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at March 31, 2016 were as follows:

	At March 31, 2016
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	5,990	$	4,865	$	1,125	$	552	$	573
Internally developed software products	1,467		1,009		458		333		125
Other intangible assets	927		728		199		102		97
Total capitalized software and other intangible assets	$	8,384	$	6,602	$	1,782	$	987	$	795

Based on the capitalized software and other intangible assets recorded through December 31, 2016, the projected annual amortization expense for fiscal year 2017 and the next four fiscal years is expected to be as follows:

	Year Ended March 31,
	2017		2018		2019		2020		2021
	(in millions)
Purchased software products	158		152		112		86		45
Internally developed software products	79		36		9		1		—
Other intangible assets	16		9		7		7		7
Total	$	253	$	197	$	128	$	94	$	52

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 those factors on the technology the Company acquires and develops for its products. Impairments 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 assets within the Enterprise Solutions segment.

Goodwill activity by segment for the nine months ended December 31, 2016 was as follows:

(in millions)	Mainframe Solutions		Enterprise Solutions			Services		Total
Balance at March 31, 2016	$	4,178	$	1,827		$	81	$	6,086
Acquisitions	—		38			—		38
Foreign currency translation adjustment	$	—	$	(6	)	$	—	$	(6	)
Balance at December 31, 2016	$	4,178	$	1,859		$	81	$	6,118

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Deferred Revenue

9 Months Ended

Dec. 31, 2016

Deferred Revenue Disclosure [Abstract]

DEFERRED REVENUE

NOTE E – DEFERRED REVENUE

The current and noncurrent components of “Deferred revenue (billed or collected)” at December 31, 2016 and March 31, 2016 were as follows:

	December 31, 2016		March 31, 2016
	(in millions)
Current:
Subscription and maintenance	$	1,711	$	1,990
Professional services	134		116
Software fees and other	72		91
Total deferred revenue (billed or collected) – current	$	1,917	$	2,197
Noncurrent:
Subscription and maintenance	$	630	$	712
Professional services	16		21
Software fees and other	5		4
Total deferred revenue (billed or collected) – noncurrent	$	651	$	737
Total deferred revenue (billed or collected)	$	2,568	$	2,934

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Derivatives

9 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

NOTE F – 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.

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, 2016, foreign currency contracts outstanding consisted of purchase and sale contracts with a total gross notional value of approximately $745 million and durations of less than three months. The net fair value of these contracts at December 31, 2016 was a net asset of approximately $14 million, of which approximately $17 million is included in “Other current assets” and approximately $3 million is included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheet.

At March 31, 2016, foreign currency contracts outstanding consisted of purchase and sale contracts with a total gross notional value of approximately $332 million and durations of less than three months. The net fair value of these contracts at March 31, 2016 was a net liability of approximately $1 million, of which approximately $2 million is included in “Other current assets” and approximately $3 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 foreign exchange derivatives on the Company’s Condensed Consolidated Statements of Operations was as follows:

	Amount of Net (Gain)/Loss Recognized in the Condensed Consolidated Statements of Operations
	Three Months Ended December 31,						Nine Months Ended December 31,
(in millions)	2016			2015			2016			2015
Other (gains) expenses, net – foreign currency contracts	$	(9	)	$	(3	)	$	(3	)	$	—

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 either in a net asset position or under the established threshold at December 31, 2016 and March 31, 2016. The Company posted no collateral at December 31, 2016 or March 31, 2016. 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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Fair Value Measurements

9 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE G – FAIR VALUE MEASUREMENTS

The following table presents the Company’s assets and liabilities that were measured at fair value on a recurring basis at December 31, 2016 and March 31, 2016:

	At December 31, 2016						At March 31, 2016
	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)	$	997	$	—	$	997	$	820	$	—	$	820
Foreign exchange derivatives (2)	—		17		17		—		2		2
Total assets	$	997	$	17	$	1,014	$	820	$	2	$	822
Liabilities:
Foreign exchange derivatives (2)	$	—	$	3	$	3	$	—	$	3	$	3
Total liabilities	$	—	$	3	$	3	$	—	$	3	$	3

(1) The Company’s investments in money market funds are classified as “Cash and cash equivalents” in its Condensed Consolidated Balance Sheets.

(2) Refer to Note F, “Derivatives” for additional information.

At December 31, 2016 and March 31, 2016, 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 were not measured at fair value on a recurring basis at December 31, 2016 and March 31, 2016:

	At December 31, 2016				At March 31, 2016
(in millions)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Liabilities:
Total debt (1)	$	1,950	$	2,055	$	1,953	$	2,058
Facility exit reserves (2)	$	11	$	12	$	16	$	17

(1) Estimated fair value of total debt is based on quoted prices for similar liabilities for which significant inputs are observable except for certain long-term lease obligations, for which fair value approximates carrying value (Level 2).

(2) Estimated fair value for the facility exit reserves is determined using the Company’s incremental borrowing rate at December 31, 2016 and March 31, 2016. At December 31, 2016 and March 31, 2016, the facility exit reserves included carrying values of approximately $3 million and $4 million, respectively, in “Accrued expenses and other current liabilities” and approximately $8 million and $12 million, respectively, in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3).

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Commitments and Contingencies

9 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE H – 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 may also become involved with contract issues and disputes with customers, including government customers.

On March 24, 2014, the U.S. Department of Justice (DOJ) filed under seal in the United States District Court for the District of Columbia a complaint against the Company in partial intervention under the qui tam provisions of the civil False Claims Act (FCA). The underlying complaint was filed under seal by an individual plaintiff on August 24, 2009. On May 29, 2014, the case was unsealed. Both the DOJ and the individual plaintiff filed amended complaints. The complaints related to government sales transactions under the Company’s General Services Administration (GSA) schedule contract, entered into in 2002 and extended until present through subsequent amendments. In sum and substance, the complaints alleged that the Company provided inaccurate commercial discounting information to the GSA during contract negotiations and that, as a result, the GSA’s contract discount was lower than it otherwise would have been. In addition, the complaints alleged that the Company failed to apply the full negotiated discount in some instances and to pay sufficient rebates pursuant to the contract’s price reduction clause. In addition to FCA claims, the complaints also asserted common law causes of action. The DOJ complaint sought an unspecified amount of damages, including treble damages and civil penalties. The complaint by the individual plaintiff alleged that the U.S. government suffered damages in excess of $100 million and sought an unspecified amount of damages, including treble damages and civil penalties. On October 30, 2014, the GSA Suspension and Debarment Division issued a Show Cause Letter to the Company in response to the complaints summarized above. In sum, the letter called on the Company to demonstrate why the U.S. government should continue to contract with the Company, given the litigation allegations made in the complaints. On December 19, 2014, the Company provided a detailed response to the Show Cause Letter. In July 2015, after the Company agreed to assume certain additional reporting requirements during the pendency of the litigation, the GSA Suspension and Debarment Division advised the Company that it had concluded its review and determined that the Company is a responsible contractor with which government agencies could continue to contract. On October 24, 2016, the DOJ, the Company and the individual plaintiff filed a joint motion advising the court that they had reached an agreement-in-principle to resolve the litigation and requesting an extension of the court schedule to permit the parties to draft and execute a formal settlement agreement. Also on October 24, 2016, the court granted that joint motion. The agreement-in-principle reached by the parties called for settlement of the litigation for a payment of approximately $45 million without admitting any wrongdoing and, as a result, the Company increased its reserve for this case during the second quarter of fiscal year 2017. The parties have drafted a formal settlement agreement which would resolve the case for the amount agreed upon in October 2016 and are awaiting internal DOJ approval before signing the agreement. Pursuant to the settlement agreement, the Company expects to make payment in the fourth quarter of fiscal year 2017. Upon payment, and pursuant to the settlement agreement, the parties would then move the court to dismiss the case with prejudice. The parties anticipate that the court would approve the settlement and dismiss the case. The Company and the individual plaintiff have reached an agreement-in-principal relating to the individual plaintiff’s claims for attorneys’ fees and litigation expenses and have drafted a formal settlement agreement to resolve those claims for approximately $4 million. That settlement amount is fully reserved and the parties expect the formal agreement to be signed once internal DOJ approval is granted for settlement of the larger case. Payment of the settlement relating to the individual plaintiff’s claims for attorneys’ fees and litigation expenses is expected to be made in the fourth quarter of fiscal year 2017.

With respect to litigation in general, 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. The Company believes that it has meritorious defenses in connection with its current lawsuits and material claims and disputes, and intends to vigorously contest each of them.

In the opinion of the Company’s management based upon information currently available to the Company, while the outcome of its lawsuits, claims and disputes is uncertain, the likely results of these lawsuits, claims and disputes are not expected, either individually or in the aggregate, 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. The settlement agreements detailed above, if executed, will have a negative effect on quarterly and full fiscal year cash flows. For some 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 does not exceed $20 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 may, from time to time, advance certain attorneys’ fees and expenses incurred by officers and directors in various lawsuits and investigations, as permitted under Delaware law.

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Stockholders' Equity

9 Months Ended

Dec. 31, 2016

Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE I – STOCKHOLDERS’ EQUITY

Stock Repurchases: On November 13, 2015, the Board approved a stock repurchase program that authorized the Company to acquire up to $750 million of its common stock. During the nine months ended December 31, 2016, the Company repurchased approximately 3.1 million shares of its common stock for approximately $100 million. At December 31, 2016, the Company remained authorized to purchase approximately $650 million of its common stock under its current stock repurchase program.

Accumulated Other Comprehensive Loss: Foreign currency translation losses included in “Accumulated other comprehensive loss” in the Company’s Condensed Consolidated Balance Sheets at December 31, 2016 and March 31, 2016 were approximately $518 million and $416 million, respectively.

Cash Dividends: The Board declared the following dividends during the nine months ended December 31, 2016 and 2015:

Nine Months EndedDecember 31, 2016:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share	Record Date	Total Amount	Payment Date
May 4, 2016	$0.255	May 26, 2016	$107	June 14, 2016
August 3, 2016	$0.255	August 25, 2016	$107	September 13, 2016
November 2, 2016	$0.255	November 17, 2016	$107	December 6, 2016

Nine Months EndedDecember 31, 2015:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share	Record Date	Total Amount	Payment Date
May 5, 2015	$0.25	May 28, 2015	$110	June 16, 2015
August 6, 2015	$0.25	August 27, 2015	$110	September 15, 2015
November 5, 2015	$0.25	November 19, 2015	$105	December 8, 2015

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Income From Continuing Operations Per Common Share

9 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE

NOTE J – 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, 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, 2016 and 2015:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2016			2015			2016			2015
	(in millions, except per share amounts)
Basic income from continuing operations per common share:
Income from continuing operations	$	208		$	219		$	618		$	598
Less: Income from continuing operations allocable to participating securities	(2		)	(2		)	(7		)	(6		)
Income from continuing operations allocable to common shares	$	206		$	217		$	611		$	592
Weighted average common shares outstanding	413			420			414			431
Basic income from continuing operations per common share	$	0.50		$	0.52		$	1.48		$	1.37
Diluted income from continuing operations per common share:
Income from continuing operations	$	208		$	219		$	618		$	598
Less: Income from continuing operations allocable to participating securities	(2		)	(2		)	(7		)	(6		)
Income from continuing operations allocable to common shares	$	206		$	217		$	611		$	592
Weighted average shares outstanding and common share equivalents:
Weighted average common shares outstanding	413			420			414			431
Weighted average effect of share-based payment awards	1			1			1			1
Denominator in calculation of diluted income per share	414			421			415			432
Diluted income from continuing operations per common share	$	0.50		$	0.52		$	1.47		$	1.37

For the three months ended December 31, 2016 and 2015, respectively, approximately 1 million and 2 million shares of Company common stock underlying restricted stock awards (RSAs) 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 4 million for the three months ended December 31, 2016 and 2015, respectively, were considered participating securities in the calculation of net income allocable to common stockholders.

For the nine months ended December 31, 2016 and 2015, respectively, approximately 2 million and 2 million shares of Company common stock underlying RSAs 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 4 million for the nine months ended December 31, 2016 and 2015, respectively, were considered participating securities in the calculation of net income allocable to common stockholders.

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Accounting for Share-Based Compensation

9 Months Ended

Dec. 31, 2016

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

ACCOUNTING FOR SHARE-BASED COMPENSATION

NOTE K – 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,
	2016			2015			2016			2015
	(in millions)
Costs of licensing and maintenance	$	2		$	2		$	5		$	5
Cost of professional services	1			1			3			3
Selling and marketing	9			9			28			25
General and administrative	8			9			27			25
Product development and enhancements	6			4			17			12
Share-based compensation expense before tax	$	26		$	25		$	80		$	70
Income tax benefit	(8		)	(8		)	(26		)	(22		)
Net share-based compensation expense	$	18		$	17		$	54		$	48

The following table summarizes information about unrecognized share-based compensation costs at December 31, 2016:

	Unrecognized Share-Based Compensation Costs		Weighted Average Period Expected to be Recognized
	(in millions)		(in years)
Stock option awards	$	5	2.0
Restricted stock units	20		2.0
Restricted stock awards	76		1.9
Performance share units	33		2.5
Total unrecognized share-based compensation costs	$	134	2.1

There were no capitalized share-based compensation costs for the three and nine months ended December 31, 2016 and 2015.

The value of performance share units (PSUs) is determined using the closing price of the Company’s common stock on the last trading day of the quarter until the awards 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 common stock, RSAs or restricted stock units (RSUs) 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, 2016 and 2015, the Company issued stock options for approximately 1.1 million shares and 0.9 million shares, respectively. The weighted average fair values and assumptions used for the options granted were as follows:

	Nine Months Ended December 31,
	2016			2015
Weighted average fair value	$	4.42		$	4.68
Dividend yield	3.56		%	3.37		%
Expected volatility factor (1)	22		%	23		%
Risk-free interest rate (2)	1.5		%	1.9		%
Expected life (in years) (3)	6.0			6.0

(1) Expected volatility is measured using historical daily price changes of the Company’s common stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options.

(2) The risk-free rate for periods within the contractual term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant.

(3) The expected life is the number of years the Company estimates that options will be outstanding prior to exercise. The Company’s computation of expected life was determined based on the simplified method (the average of the vesting period and option term).

The table below summarizes the RSAs and RSUs granted under the 1-year PSUs for the Company’s fiscal year 2016 and 2015 incentive plan years. The RSAs and RSUs were granted in the first quarter of fiscal years 2017 and 2016, respectively. The RSAs and RSUs vest 34% on the date of grant and 33% on the first and second anniversaries of the grant date.

		RSAs		RSUs
Incentive Plans for Fiscal Years	Performance Period	Shares (in millions)	Weighted Average Grant Date Fair Value	Shares (in millions)	Weighted Average Grant Date Fair Value
2016	1 year	0.6	$31.53	0.1	$30.53
2015	1 year	0.5	$31.41	0.1	$30.42

The table below summarizes the shares of common stock issued under the 3-year PSUs for the Company’s fiscal year 2014 and 2013 incentive plan years in the first quarter of fiscal years 2017 and 2016, respectively.

Incentive Plans for Fiscal Years	Performance Period	Shares of Common Stock (in millions)	Weighted Average Grant Date Fair Value
2014	3 years	0.3	$31.53
2013	3 years	0.1	$31.41

The table below summarizes the RSAs and RSUs granted under the 1-year PSUs for the Company’s fiscal year 2016 and 2015 sales retention equity programs. The RSAs and RSUs were granted in the first quarter of fiscal years 2017 and 2016, respectively. The RSAs and RSUs vest on the third anniversary of the grant date.

		RSAs		RSUs
Incentive Plans for Fiscal Years	Performance Period	Shares (in millions)	Weighted Average Grant Date Fair Value	Shares (in millions)	Weighted Average Grant Date Fair Value
2016	1 year	0.3	$31.53	0.1	$28.52
2015	1 year	0.2	$30.45	0.1	$27.50

The table below summarizes all of the RSAs and RSUs, including grants made pursuant to the long-term incentive plans discussed above, granted during the three and nine months ended December 31, 2016 and 2015:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2016			2015			2016		2015
	(shares in millions)
RSAs:
Shares	—		(3)	—		(3)	2.9		2.8
Weighted average grant date fair value (1)	$	31.99		$	26.53		$	31.56	$	30.63
RSUs:
Shares	—			—			1.0		0.9
Weighted average grant date fair value (2)	$	—		$	—		$	30.16	$	28.72

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

(2) The fair value is based on the quoted market value of the Company’s common stock on the grant date reduced by the present value of dividends expected to be paid on the Company’s common stock prior to vesting of the RSUs, which is calculated using a risk-free interest rate.

(3) Less than 0.1 million.

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, 2016, the Company issued approximately 0.1 million shares under the ESPP at $31.19 per share. For the six-month offer period ended December 31, 2016, the Company issued approximately 0.1 million shares under the ESPP at $30.18 per share. As of December 31, 2016, approximately 29.0 million shares are available for future issuances under the ESPP.

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Income Taxes

9 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE L – INCOME TAXES

Income tax expense for the three and nine months ended December 31, 2016 was approximately $84 million and $257 million, respectively, compared with income tax expense for the three and nine months ended December 31, 2015 of approximately $59 million and $222 million, respectively. For the three and nine months ended December 31, 2015, the Company recognized a net discrete tax benefit of approximately $19 million and $16 million, respectively, resulting primarily from the resolution of uncertain tax positions for non-U.S. jurisdictions, refinements of tax positions taken in prior periods and the retroactive reinstatement in December 2015 of the research and development tax credit in the U.S.

The Company’s estimated annual effective tax rate, which excludes the impact of discrete items, for the nine months ended December 31, 2016 and 2015 was 28.9% and 29.0%, respectively. 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 2017, 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 2017. The Company is anticipating a fiscal year 2017 effective tax rate between 28% and 29%.

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Supplemental Statement of Cash Flows Information

9 Months Ended

Dec. 31, 2016

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

NOTE M – SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

For the nine months ended December 31, 2016 and 2015, interest payments were approximately $66 million and $56 million, respectively, and income taxes paid, net from continuing operations were approximately $274 million and $199 million, respectively. For the nine months ended December 31, 2016 and 2015, the excess tax benefits from share-based incentive awards included in financing activities from continuing operations were approximately $4 million and $3 million, respectively.

Non-cash financing activities for the nine months ended December 31, 2016 and 2015 consisted of treasury common shares issued in connection with the following: share-based incentive awards issued under the Company’s equity compensation plans of approximately $44 million (net of approximately $33 million of income taxes withheld) and $42 million (net of approximately $28 million of income taxes withheld), respectively; discretionary stock contributions to the CA, Inc. Savings Harvest Plan of approximately $24 million and $24 million, respectively; and treasury common shares issued in connection with the Company’s ESPP of approximately $5 million and $5 million, respectively.

The Company uses a notional pooling arrangement with an international bank to help manage global liquidity. 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 it 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 notional pooling arrangement for the nine months ended December 31, 2016 and 2015 was as follows:

	Nine Months Ended December 31,
	2016			2015
	(in millions)
Total borrowings outstanding at beginning of period (1)	$	139		$	138
Borrowings	1,391			3,237
Repayments	(1,365		)	(3,230		)
Foreign exchange effect	(26		)	(6		)
Total borrowings outstanding at end of period (1)	$	139		$	139

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

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Segment Information

9 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE N – SEGMENT INFORMATION

The Company’s Mainframe Solutions and Enterprise Solutions segments are comprised of its software business organized by the nature of the Company’s software offerings and the platforms on which the products operate. The Services segment is comprised of product implementation, consulting, customer education and customer training services, including those directly related to the Mainframe Solutions and Enterprise Solutions software that the Company sells to its customers.

Segment expenses do not include amortization of purchased software, amortization of other intangible assets, amortization of internally developed software products, share-based compensation expense, certain foreign exchange derivative hedging gains and losses, approved severance and facility actions by the Board, and other miscellaneous costs. A measure of segment assets is not currently provided to the Company’s Chief Executive Officer and has therefore not been disclosed.

The Company’s segment information for the three and nine months ended December 31, 2016 and 2015 was as follows:

Three Months Ended December 31, 2016	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	546		$	389		$	72		$	1,007
Expenses	215			333			75			623
Segment profit (loss)	$	331		$	56		$	(3	)	$	384
Segment operating margin	61		%	14		%	(4		)%	38		%
Depreciation	$	8		$	6		$	—		$	14

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2016:

(in millions)
Segment profit	$	384
Less:
Purchased software amortization	39
Other intangibles amortization	4
Internally developed software products amortization	18
Share-based compensation expense	26
Other gains, net (1)	(11		)
Interest expense, net	16
Income from continuing operations before income taxes	$	292

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.

Nine Months Ended December 31, 2016	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,647		$	1,153		$	224		$	3,024
Expenses	634			981			223			1,838
Segment profit	$	1,013		$	172		$	1		$	1,186
Segment operating margin	62		%	15		%	—		%	39		%
Depreciation	$	25		$	18		$	—		$	43

Reconciliation of segment profit to income from continuing operations before income taxes for the nine months ended December 31, 2016:

(in millions)
Segment profit	$	1,186
Less:
Purchased software amortization	120
Other intangibles amortization	13
Internally developed software products amortization	62
Share-based compensation expense	80
Other gains, net (1)	(9		)
Interest expense, net	45
Income from continuing operations before income taxes	$	875

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.

Three Months Ended December 31, 2015	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	554		$	398		$	82		$	1,034
Expenses	218			349			77			644
Segment profit	$	336		$	49		$	5		$	390
Segment operating margin	61		%	12		%	6		%	38		%
Depreciation	$	9		$	7		$	—		$	16

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2015:

(in millions)
Segment profit	$	390
Less:
Purchased software amortization	39
Other intangibles amortization	11
Internally developed software products amortization	26
Share-based compensation expense	25
Other gains, net (1)	(4		)
Interest expense, net	15
Income from continuing operations before income taxes	$	278

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.

Nine Months Ended December 31, 2015	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,668		$	1,104		$	244		$	3,016
Expenses	641			996			227			1,864
Segment profit	$	1,027		$	108		$	17		$	1,152
Segment operating margin	62		%	10		%	7		%	38		%
Depreciation	$	27		$	20		$	—		$	47

Reconciliation of segment profit to income from continuing operations before income taxes for the nine months ended December 31, 2015:

(in millions)
Segment profit	$	1,152
Less:
Purchased software amortization	106
Other intangibles amortization	36
Internally developed software products amortization	86
Share-based compensation expense	70
Other gains, net (1)	(2		)
Interest expense, net	36
Income from continuing operations before income taxes	$	820

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and 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:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2016		2015		2016		2015
	(in millions)
United States	$	642	$	671	$	1,936	$	1,935
EMEA (1)	223		230		667		679
Other	142		133		421		402
Total revenue	$	1,007	$	1,034	$	3,024	$	3,016

(1) Consists of Europe, the Middle East and Africa.

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Subsequent Events

9 Months Ended

Dec. 31, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE O – SUBSEQUENT EVENTS

On January 18, 2017, the Company completed its acquisition of Automic Holding GmbH (Automic), a provider of business automation software that automates IT and business processes. With Automic, the Company will add new cloud-enabled automation and orchestration capabilities across its portfolio and increase its ability to reach into the European market. The Company acquired 100% of the voting equity interest in Automic for approximately 600 million euros, net of cash and cash equivalents acquired (which translated to approximately $643 million at January 18, 2017). The Company funded the acquisition from its available international cash on hand. Certain data necessary to complete the preliminary purchase price allocation is not yet available, including but not limited to, the valuation of assets acquired and liabilities assumed, and review of tax returns that provide the underlying tax basis of Automic’s assets and liabilities. Accordingly, such disclosures related to this business combination could not be made at the time these Condensed Consolidated Financial Statements were issued. The results of operations of Automic will be reported predominately in the Company’s Enterprise Solutions segment and will be included in the consolidated results of operations of the Company from the date of acquisition.

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Accounting Policies (Policies)

9 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation: The accompanying unaudited condensed consolidated financial statements (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 in accordance with the instructions to Form 10-Q and Article 10 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. 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, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2017.

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, 2016 (2016 Form 10-K).

Divestitures

Divestitures: In the fourth quarter of fiscal year 2016, the Company sold its CA ERwin Data Modeling solution assets (ERwin). The results of operations associated with this business have been presented as discontinued operations in the accompanying condensed consolidated statements of operations (Condensed Consolidated Statements of Operations) for the three and nine months ended December 31, 2015 and condensed consolidated statements of cash flows (Condensed Consolidated Statements of Cash Flows) for the nine months ended December 31, 2015.

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 79% being held by the Company’s foreign subsidiaries outside the United States at December 31, 2016.

New Accounting Pronouncements

New Accounting Pronouncements: In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, with amendments in 2015 and 2016, which creates new ASC Topic 606 (Topic 606) that will replace most existing revenue recognition guidance in GAAP when it becomes effective. Topic 606 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new standard will be effective for the Company’s first quarter of fiscal year 2019 and early application for fiscal year 2018 is permitted. Topic 606 may be applied retrospectively to each prior period presented or with the cumulative effect recognized as of the date of initial application. The Company does not currently intend to adopt the provisions of the new standard early and has not yet selected a transition method. While the Company is continuing to assess all potential effects of the new standard, it currently anticipates that this standard will have a material effect on its consolidated financial statements and believes the most significant impact relates to the timing of the recognition of its software license revenue. Specifically, under the new standard, the Company currently expects to recognize license revenue for its Mainframe Solutions and Enterprise Solutions products at the point in time the licensed software is transferred to the customer, rather than ratably over the term of the customer contract, which is required by existing GAAP for most of the Company’s software arrangements. The Company also currently believes that the point in time recognition requirement of the new standard will increase the variability of its revenue. The Company does not currently expect Topic 606 to have a significant effect on the timing of revenue recognition for its maintenance, SaaS and professional services contracts. Under Topic 606, more judgment and estimates will be required within the revenue recognition process than are required under existing GAAP, including estimating the standalone selling price for each performance obligation identified within the Company’s contracts. The Company currently expects Topic 606 to have other significant effects on its revenue recognition policies and disclosures.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842), which requires a lessee to recognize assets and liabilities on its consolidated balance sheet for leases with accounting lease terms of more than 12 months. ASU 2016-02 will replace most existing lease accounting guidance in GAAP when it becomes effective. The new standard states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations. ASU 2016-02 will be effective for the Company’s first quarter of fiscal year 2020 and requires the modified retrospective method of adoption. Early adoption is permitted. Although the Company is currently evaluating the timing of adoption and the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures, the Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption.

In March 2016, the FASB issued Accounting Standards Update No. 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting (Topic 718), which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax consequences and classification on the statement of cash flows. ASU 2016-09 will be effective for the Company’s first quarter of fiscal year 2018 and early adoption is permitted. The Company currently plans on adopting ASU 2016-09 in the first quarter of fiscal year 2018. The most significant aspect of this standard for the Company when adopted relates to the presentation of cash flows for employee taxes paid by withholding shares of restricted stock awards as a financing activity within the Condensed Consolidated Statements of Cash Flows, which has been historically presented as an operating activity. This update from ASU 2016-09 requires a retrospective method of adoption. All other aspects of ASU 2016-09 are not currently expected to have a material effect on the Company’s consolidated financial statements and related disclosures.

In August 2016, the FASB issued Accounting Standards Update No. 2016-15 (ASU 2016-15), Classification of Certain Cash Receipts and Cash Payments (Topic 230), which is intended to reduce diversity in practice on how certain cash receipts and cash payments are classified and presented in the statement of cash flows. In November 2016, the FASB issued Accounting Standards Update No. 2016-18 (ASU 2016-18), Restricted Cash (Topic 230), which is intended to reduce diversity in practice on how changes in restricted cash are classified and presented in the statement of cash flows. ASU 2016-18 requires amounts generally described as restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Both ASU 2016-15 and ASU 2016-18 will be effective for the Company’s first quarter of fiscal year 2019 and require a retrospective transition method of adoption. Early adoption is permitted. The Company currently anticipates adopting ASU 2016-15 and ASU 2016-18 in the first quarter of fiscal year 2018. The Company does not currently expect the adoption of these standards to have a material effect on its consolidated financial statements and related disclosures.

In October 2016, the FASB issued Accounting Standards Update No. 2016-16 (ASU 2016-16), Intra-Equity Transfers of Assets Other Than Inventory (Topic 740), which is intended to eliminate diversity in practice and provide a more accurate depiction of the tax consequences on intercompany asset transfers (excluding inventory). ASU 2016-16 requires entities to immediately recognize the tax consequences on intercompany asset transfers (excluding inventory) at the transaction date, rather than deferring the tax consequences under current GAAP. ASU 2016-16 will be effective for the Company’s first quarter of fiscal year 2019 and requires a modified retrospective method of adoption. Early adoption is permitted, but only in the first quarter of an entity’s annual fiscal year. The Company is currently evaluating the timing of adoption and the effect that ASU 2016-16 will have on its consolidated financial statements and related disclosures.

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Acquisitions (Tables)

9 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Acquisition purchase price allocation

(dollars in millions)	Rally			Other Fiscal Year 2016 Acquisitions			Estimated Useful Life
Finite-lived intangible assets (1)	$	78		$	14		1-15 years
Purchased software	178			96			5-7 years
Goodwill	257			59			Indefinite
Deferred tax liabilities, net	(45		)	(24		)	—
Other assets net of other liabilities assumed (2)	51			2			—
Purchase price	$	519		$	147

(1) Includes customer relationships and trade names.

(2) Includes approximately $13 million of cash acquired and approximately $48 million of short-term investments acquired relating to Rally.

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Trade Accounts Receivable (Tables)

9 Months Ended

Dec. 31, 2016

Receivables [Abstract]

Components of trade accounts receivable, net

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

	December 31, 2016			March 31, 2016
	(in millions)
Accounts receivable – billed	$	510		$	566
Accounts receivable – unbilled	49			55
Other receivables	6			13
Less: Allowances	(10		)	(9		)
Trade accounts receivable, net	$	555		$	625

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Goodwill, Capitalized Software and Other Intangible Assets (Tables)

9 Months Ended

Dec. 31, 2016

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, 2016 were as follows:

	At December 31, 2016
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	6,014	$	4,914	$	1,100	$	622	$	478
Internally developed software products	1,467		1,030		437		374		63
Other intangible assets	927		805		122		36		86
Total capitalized software and other intangible assets	$	8,408	$	6,749	$	1,659	$	1,032	$	627

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at March 31, 2016 were as follows:

	At March 31, 2016
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	5,990	$	4,865	$	1,125	$	552	$	573
Internally developed software products	1,467		1,009		458		333		125
Other intangible assets	927		728		199		102		97
Total capitalized software and other intangible assets	$	8,384	$	6,602	$	1,782	$	987	$	795

Projected annual amortization expense

Based on the capitalized software and other intangible assets recorded through December 31, 2016, the projected annual amortization expense for fiscal year 2017 and the next four fiscal years is expected to be as follows:

	Year Ended March 31,
	2017		2018		2019		2020		2021
	(in millions)
Purchased software products	158		152		112		86		45
Internally developed software products	79		36		9		1		—
Other intangible assets	16		9		7		7		7
Total	$	253	$	197	$	128	$	94	$	52

Goodwill activity by segment

Goodwill activity by segment for the nine months ended December 31, 2016 was as follows:

(in millions)	Mainframe Solutions		Enterprise Solutions			Services		Total
Balance at March 31, 2016	$	4,178	$	1,827		$	81	$	6,086
Acquisitions	—		38			—		38
Foreign currency translation adjustment	$	—	$	(6	)	$	—	$	(6	)
Balance at December 31, 2016	$	4,178	$	1,859		$	81	$	6,118

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Deferred Revenue (Tables)

9 Months Ended

Dec. 31, 2016

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, 2016 and March 31, 2016 were as follows:

	December 31, 2016		March 31, 2016
	(in millions)
Current:
Subscription and maintenance	$	1,711	$	1,990
Professional services	134		116
Software fees and other	72		91
Total deferred revenue (billed or collected) – current	$	1,917	$	2,197
Noncurrent:
Subscription and maintenance	$	630	$	712
Professional services	16		21
Software fees and other	5		4
Total deferred revenue (billed or collected) – noncurrent	$	651	$	737
Total deferred revenue (billed or collected)	$	2,568	$	2,934

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Derivatives (Tables)

9 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Effect of foreign exchange derivatives

A summary of the effect of the foreign exchange derivatives on the Company’s Condensed Consolidated Statements of Operations was as follows:

	Amount of Net (Gain)/Loss Recognized in the Condensed Consolidated Statements of Operations
	Three Months Ended December 31,						Nine Months Ended December 31,
(in millions)	2016			2015			2016			2015
Other (gains) expenses, net – foreign currency contracts	$	(9	)	$	(3	)	$	(3	)	$	—

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Fair Value Measurements (Tables)

9 Months Ended

Dec. 31, 2016

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 were measured at fair value on a recurring basis at December 31, 2016 and March 31, 2016:

	At December 31, 2016						At March 31, 2016
	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)	$	997	$	—	$	997	$	820	$	—	$	820
Foreign exchange derivatives (2)	—		17		17		—		2		2
Total assets	$	997	$	17	$	1,014	$	820	$	2	$	822
Liabilities:
Foreign exchange derivatives (2)	$	—	$	3	$	3	$	—	$	3	$	3
Total liabilities	$	—	$	3	$	3	$	—	$	3	$	3

(1) The Company’s investments in money market funds are classified as “Cash and cash equivalents” in its Condensed Consolidated Balance Sheets.

(2) Refer to Note F, “Derivatives” for additional information.

Carrying amounts and estimated fair values of other financial instruments 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 were not measured at fair value on a recurring basis at December 31, 2016 and March 31, 2016:

	At December 31, 2016				At March 31, 2016
(in millions)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Liabilities:
Total debt (1)	$	1,950	$	2,055	$	1,953	$	2,058
Facility exit reserves (2)	$	11	$	12	$	16	$	17

(1) Estimated fair value of total debt is based on quoted prices for similar liabilities for which significant inputs are observable except for certain long-term lease obligations, for which fair value approximates carrying value (Level 2).

(2) Estimated fair value for the facility exit reserves is determined using the Company’s incremental borrowing rate at December 31, 2016 and March 31, 2016. At December 31, 2016 and March 31, 2016, the facility exit reserves included carrying values of approximately $3 million and $4 million, respectively, in “Accrued expenses and other current liabilities” and approximately $8 million and $12 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, 2016

Equity [Abstract]

Cash dividends

Cash Dividends: The Board declared the following dividends during the nine months ended December 31, 2016 and 2015:

Nine Months EndedDecember 31, 2016:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share	Record Date	Total Amount	Payment Date
May 4, 2016	$0.255	May 26, 2016	$107	June 14, 2016
August 3, 2016	$0.255	August 25, 2016	$107	September 13, 2016
November 2, 2016	$0.255	November 17, 2016	$107	December 6, 2016

Nine Months EndedDecember 31, 2015:

(in millions, except per share amounts)

Declaration Date	Dividend Per Share	Record Date	Total Amount	Payment Date
May 5, 2015	$0.25	May 28, 2015	$110	June 16, 2015
August 6, 2015	$0.25	August 27, 2015	$110	September 15, 2015
November 5, 2015	$0.25	November 19, 2015	$105	December 8, 2015

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Income From Continuing Operations Per Common Share (Tables)

9 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Reconciliation of basic and diluted income from continuing operations 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, 2016 and 2015:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2016			2015			2016			2015
	(in millions, except per share amounts)
Basic income from continuing operations per common share:
Income from continuing operations	$	208		$	219		$	618		$	598
Less: Income from continuing operations allocable to participating securities	(2		)	(2		)	(7		)	(6		)
Income from continuing operations allocable to common shares	$	206		$	217		$	611		$	592
Weighted average common shares outstanding	413			420			414			431
Basic income from continuing operations per common share	$	0.50		$	0.52		$	1.48		$	1.37
Diluted income from continuing operations per common share:
Income from continuing operations	$	208		$	219		$	618		$	598
Less: Income from continuing operations allocable to participating securities	(2		)	(2		)	(7		)	(6		)
Income from continuing operations allocable to common shares	$	206		$	217		$	611		$	592
Weighted average shares outstanding and common share equivalents:
Weighted average common shares outstanding	413			420			414			431
Weighted average effect of share-based payment awards	1			1			1			1
Denominator in calculation of diluted income per share	414			421			415			432
Diluted income from continuing operations per common share	$	0.50		$	0.52		$	1.47		$	1.37

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Accounting for Share-Based Compensation (Tables)

9 Months Ended

Dec. 31, 2016

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,
	2016			2015			2016			2015
	(in millions)
Costs of licensing and maintenance	$	2		$	2		$	5		$	5
Cost of professional services	1			1			3			3
Selling and marketing	9			9			28			25
General and administrative	8			9			27			25
Product development and enhancements	6			4			17			12
Share-based compensation expense before tax	$	26		$	25		$	80		$	70
Income tax benefit	(8		)	(8		)	(26		)	(22		)
Net share-based compensation expense	$	18		$	17		$	54		$	48

Unrecognized share-based compensation costs

The following table summarizes information about unrecognized share-based compensation costs at December 31, 2016:

	Unrecognized Share-Based Compensation Costs		Weighted Average Period Expected to be Recognized
	(in millions)		(in years)
Stock option awards	$	5	2.0
Restricted stock units	20		2.0
Restricted stock awards	76		1.9
Performance share units	33		2.5
Total unrecognized share-based compensation costs	$	134	2.1

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,
	2016			2015
Weighted average fair value	$	4.42		$	4.68
Dividend yield	3.56		%	3.37		%
Expected volatility factor (1)	22		%	23		%
Risk-free interest rate (2)	1.5		%	1.9		%
Expected life (in years) (3)	6.0			6.0

(1) Expected volatility is measured using historical daily price changes of the Company’s common stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options.

(2) The risk-free rate for periods within the contractual term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant.

(3) The expected life is the number of years the Company estimates that options will be outstanding prior to exercise. The Company’s computation of expected life was determined based on the simplified method (the average of the vesting period and option term).

Summary of RSAs and RSUs granted under 1-year PSUs for Incentive Plans

		RSAs		RSUs
Incentive Plans for Fiscal Years	Performance Period	Shares (in millions)	Weighted Average Grant Date Fair Value	Shares (in millions)	Weighted Average Grant Date Fair Value
2016	1 year	0.6	$31.53	0.1	$30.53
2015	1 year	0.5	$31.41	0.1	$30.42

Summary of shares of common stock issued under 3-year PSUs for Incentive Plans

Incentive Plans for Fiscal Years	Performance Period	Shares of Common Stock (in millions)	Weighted Average Grant Date Fair Value
2014	3 years	0.3	$31.53
2013	3 years	0.1	$31.41

Summary of RSAs and RSUs granted under 1-year PSUs for Sales Retention Equity Programs

		RSAs		RSUs
Incentive Plans for Fiscal Years	Performance Period	Shares (in millions)	Weighted Average Grant Date Fair Value	Shares (in millions)	Weighted Average Grant Date Fair Value
2016	1 year	0.3	$31.53	0.1	$28.52
2015	1 year	0.2	$30.45	0.1	$27.50

Summary of all RSAs and RSUs granted, including grants made pursuant to long-term incentive plans

The table below summarizes all of the RSAs and RSUs, including grants made pursuant to the long-term incentive plans discussed above, granted during the three and nine months ended December 31, 2016 and 2015:

	Three Months Ended December 31,						Nine Months Ended December 31,
	2016			2015			2016		2015
	(shares in millions)
RSAs:
Shares	—		(3)	—		(3)	2.9		2.8
Weighted average grant date fair value (1)	$	31.99		$	26.53		$	31.56	$	30.63
RSUs:
Shares	—			—			1.0		0.9
Weighted average grant date fair value (2)	$	—		$	—		$	30.16	$	28.72

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

(2) The fair value is based on the quoted market value of the Company’s common stock on the grant date reduced by the present value of dividends expected to be paid on the Company’s common stock prior to vesting of the RSUs, which is calculated using a risk-free interest rate.

(3) Less than 0.1 million.

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Supplemental Statement of Cash Flows Information (Tables)

9 Months Ended

Dec. 31, 2016

Supplemental Cash Flow Elements [Abstract]

Notional pooling arrangement

The activity under this notional pooling arrangement for the nine months ended December 31, 2016 and 2015 was as follows:

	Nine Months Ended December 31,
	2016			2015
	(in millions)
Total borrowings outstanding at beginning of period (1)	$	139		$	138
Borrowings	1,391			3,237
Repayments	(1,365		)	(3,230		)
Foreign exchange effect	(26		)	(6		)
Total borrowings outstanding at end of period (1)	$	139		$	139

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

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Segment Information (Tables)

9 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment information

Nine Months Ended December 31, 2016	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,647		$	1,153		$	224		$	3,024
Expenses	634			981			223			1,838
Segment profit	$	1,013		$	172		$	1		$	1,186
Segment operating margin	62		%	15		%	—		%	39		%
Depreciation	$	25		$	18		$	—		$	43

Nine Months Ended December 31, 2015	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	1,668		$	1,104		$	244		$	3,016
Expenses	641			996			227			1,864
Segment profit	$	1,027		$	108		$	17		$	1,152
Segment operating margin	62		%	10		%	7		%	38		%
Depreciation	$	27		$	20		$	—		$	47

Three Months Ended December 31, 2016	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	546		$	389		$	72		$	1,007
Expenses	215			333			75			623
Segment profit (loss)	$	331		$	56		$	(3	)	$	384
Segment operating margin	61		%	14		%	(4		)%	38		%
Depreciation	$	8		$	6		$	—		$	14

Three Months Ended December 31, 2015	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	554		$	398		$	82		$	1,034
Expenses	218			349			77			644
Segment profit	$	336		$	49		$	5		$	390
Segment operating margin	61		%	12		%	6		%	38		%
Depreciation	$	9		$	7		$	—		$	16

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, 2016:

(in millions)
Segment profit	$	1,186
Less:
Purchased software amortization	120
Other intangibles amortization	13
Internally developed software products amortization	62
Share-based compensation expense	80
Other gains, net (1)	(9		)
Interest expense, net	45
Income from continuing operations before income taxes	$	875

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.

Reconciliation of segment profit to income from continuing operations before income taxes for the nine months ended December 31, 2015:

(in millions)
Segment profit	$	1,152
Less:
Purchased software amortization	106
Other intangibles amortization	36
Internally developed software products amortization	86
Share-based compensation expense	70
Other gains, net (1)	(2		)
Interest expense, net	36
Income from continuing operations before income taxes	$	820

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2015:

(in millions)
Segment profit	$	390
Less:
Purchased software amortization	39
Other intangibles amortization	11
Internally developed software products amortization	26
Share-based compensation expense	25
Other gains, net (1)	(4		)
Interest expense, net	15
Income from continuing operations before income taxes	$	278

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended December 31, 2016:

(in millions)
Segment profit	$	384
Less:
Purchased software amortization	39
Other intangibles amortization	4
Internally developed software products amortization	18
Share-based compensation expense	26
Other gains, net (1)	(11		)
Interest expense, net	16
Income from continuing operations before income taxes	$	292

(1) Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and 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:

	Three Months Ended December 31,				Nine Months Ended December 31,
	2016		2015		2016		2015
	(in millions)
United States	$	642	$	671	$	1,936	$	1,935
EMEA (1)	223		230		667		679
Other	142		133		421		402
Total revenue	$	1,007	$	1,034	$	3,024	$	3,016

(1) Consists of Europe, the Middle East and Africa.

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Accounting Policies (Details)	Dec. 31, 2016
Accounting Policies [Abstract]
Percentage of cash and cash equivalents held by the Company's foreign subsidiaries outside the United States	79.00%

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Acquisitions 1 (Details) - USD ($) $ in Millions			15 Months Ended
		Jul. 08, 2015	Jun. 30, 2016	Dec. 31, 2016	Mar. 31, 2016
Acquisition purchase price allocation
Goodwill				$ 6,118	$ 6,086
Rally
Business Acquisition
Cash acquired from acquisition		$ 13
Short-term investments acquired from acquisition		48
Acquisition purchase price allocation
Finite-lived intangible assets	[1]		$ 78
Goodwill			257
Deferred tax liabilities, net			(45)
Other assets net of other liabilities assumed	[2]		51
Purchase price		$ 519	519
Rally | Purchased Software
Acquisition purchase price allocation
Finite-lived intangible assets			178
Other Fiscal Year 2016 Acquisitions
Acquisition purchase price allocation
Finite-lived intangible assets	[1]		14
Goodwill			59
Deferred tax liabilities, net			(24)
Other assets net of other liabilities assumed			2
Purchase price			147
Other Fiscal Year 2016 Acquisitions | Purchased Software
Acquisition purchase price allocation
Finite-lived intangible assets			$ 96
Fiscal Year 2016 Acquisitions
Estimated useful life
Goodwill, Estimated useful life			Indefinite
Fiscal Year 2016 Acquisitions | Minimum
Estimated useful life
Finite-lived intangible assets, Estimated useful life (in years)	[1]		1 year
Fiscal Year 2016 Acquisitions | Maximum
Estimated useful life
Finite-lived intangible assets, Estimated useful life (in years)	[1]		15 years
Fiscal Year 2016 Acquisitions | Purchased Software | Minimum
Estimated useful life
Finite-lived intangible assets, Estimated useful life (in years)			5 years
Fiscal Year 2016 Acquisitions | Purchased Software | Maximum
Estimated useful life
Finite-lived intangible assets, Estimated useful life (in years)			7 years

[1] Includes customer relationships and trade names.

[2] Includes approximately $13 million of cash acquired and approximately $48 million of short-term investments acquired relating to Rally.

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Acquisitions 2 (Details) - USD ($) $ in Millions	3 Months Ended			9 Months Ended
	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Mar. 31, 2016	Jul. 08, 2015
Business Combinations [Abstract]
Accrued acquisition-related costs related to purchase price amounts withheld to support indemnification obligations	$ 12			$ 12		$ 3
Business Acquisition
Total revenue	1,007		$ 1,034	3,024	$ 3,016
Net income (loss)	$ 208		$ 223	$ 618	609
Rally
Business Acquisition
Percentage of outstanding shares of common stock acquired							100.00%
Purchase price		$ 519					$ 519
Fiscal Year 2016 Acquisitions | General and Administrative
Business Acquisition
Transaction costs			less than $1 million
Transaction costs					$ 20
Rally and Xceedium
Business Acquisition
Total revenue		35
Net income (loss)		$ (5)

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Trade Accounts Receivable (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Components of trade accounts receivable, net
Accounts receivable - billed	$ 510	$ 566
Accounts receivable - unbilled	49	55
Other receivables	6	13
Less: Allowances	(10)	(9)
Trade accounts receivable, net	$ 555	$ 625

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Goodwill, Capitalized Software and Other Intangible Assets 1 (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Capitalized software and other intangible assets
Gross amortizable assets	$ 8,408	$ 8,384
Less: Fully amortized assets	6,749	6,602
Remaining amortizable assets	1,659	1,782
Accumulated amortization on remaining amortizable assets	1,032	987
Net assets	627	795
Purchased Software Products
Capitalized software and other intangible assets
Gross amortizable assets	6,014	5,990
Less: Fully amortized assets	4,914	4,865
Remaining amortizable assets	1,100	1,125
Accumulated amortization on remaining amortizable assets	622	552
Net assets	478	573
Internally Developed Software Products
Capitalized software and other intangible assets
Gross amortizable assets	1,467	1,467
Less: Fully amortized assets	1,030	1,009
Remaining amortizable assets	437	458
Accumulated amortization on remaining amortizable assets	374	333
Net assets	63	125
Other Intangible Assets
Capitalized software and other intangible assets
Gross amortizable assets	927	927
Less: Fully amortized assets	805	728
Remaining amortizable assets	122	199
Accumulated amortization on remaining amortizable assets	36	102
Net assets	$ 86	$ 97

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Goodwill, Capitalized Software and Other Intangible Assets 2 (Details) $ in Millions	Dec. 31, 2016 USD ($)
Projected annual amortization expense
2017	$ 253
2018	197
2019	128
2020	94
2021	52
Purchased Software Products
Projected annual amortization expense
2017	158
2018	152
2019	112
2020	86
2021	45
Internally Developed Software Products
Projected annual amortization expense
2017	79
2018	36
2019	9
2020	1
2021	0
Other Intangible Assets
Projected annual amortization expense
2017	16
2018	9
2019	7
2020	7
2021	$ 7

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Goodwill, Capitalized Software and Other Intangible Assets 3 (Details) $ in Millions	9 Months Ended
	Dec. 31, 2016 USD ($)
Goodwill activity by segment
Balance at March 31, 2016	$ 6,086
Acquisitions	38
Foreign currency translation adjustment	(6)
Balance at December 31, 2016	6,118
Mainframe Solutions
Goodwill activity by segment
Balance at March 31, 2016	4,178
Acquisitions	0
Foreign currency translation adjustment	0
Balance at December 31, 2016	4,178
Enterprise Solutions
Goodwill activity by segment
Balance at March 31, 2016	1,827
Acquisitions	38
Foreign currency translation adjustment	(6)
Balance at December 31, 2016	1,859
Services
Goodwill activity by segment
Balance at March 31, 2016	81
Acquisitions	0
Foreign currency translation adjustment	0
Balance at December 31, 2016	$ 81

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Goodwill, Capitalized Software and Other Intangible Assets 4 (Details)	9 Months Ended
	Dec. 31, 2016
Enterprise Solutions
Finite-Lived Intangible Assets
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 those factors on the technology the Company acquires and develops for its products. Impairments 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 assets within the Enterprise Solutions segment.

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Deferred Revenue (Details) - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Current:
Total deferred revenue (billed or collected) - current	$ 1,917	$ 2,197
Noncurrent:
Total deferred revenue (billed or collected) - noncurrent	651	737
Total deferred revenue (billed or collected)	2,568	2,934
Subscription and Maintenance
Current:
Total deferred revenue (billed or collected) - current	1,711	1,990
Noncurrent:
Total deferred revenue (billed or collected) - noncurrent	630	712
Professional Services
Current:
Total deferred revenue (billed or collected) - current	134	116
Noncurrent:
Total deferred revenue (billed or collected) - noncurrent	16	21
Software Fees and Other
Current:
Total deferred revenue (billed or collected) - current	72	91
Noncurrent:
Total deferred revenue (billed or collected) - noncurrent	$ 5	$ 4

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Derivatives 1 (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Foreign Currency Contracts | Other (Gains) Expenses, Net
Effect of foreign exchange derivatives
Amount of net (gain)/loss from derivative instruments recognized in the Condensed Consolidated Statements of Operations	$ (9)	$ (3)	$ (3)	$ 0

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Derivatives 2 (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Dec. 31, 2016	Mar. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Collateral posted under collateralized security arrangements	$ 0	$ 0
Foreign Currency Contracts
Derivatives, Fair Value [Line Items]
Gross notional value of foreign currency contracts outstanding consisting of purchase and sale contracts	$ 745	$ 332
Tenure of foreign currency contracts outstanding	less than three months	less than three months
Net fair value of foreign currency contracts	$ 14	$ (1)
Foreign Currency Contracts | Other Current Assets
Derivatives, Fair Value [Line Items]
Fair value of foreign currency contracts included in "Other current assets"	17	2
Foreign Currency Contracts | Accrued Expenses and Other Current Liabilities
Derivatives, Fair Value [Line Items]
Fair value of foreign currency contracts included in "Accrued expenses and other current liabilities"	$ 3	$ 3

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Fair Value Measurements 1 (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions		Dec. 31, 2016	Mar. 31, 2016
Assets:
Foreign exchange derivatives	[1]	$ 17	$ 2
Total assets		1,014	822
Liabilities:
Foreign exchange derivatives	[1]	3	3
Total liabilities		3	3
Money Market Funds | Cash and Cash Equivalents
Assets:
Money market funds	[2]	997	820
Fair Value, Inputs, Level 1
Assets:
Foreign exchange derivatives		0	0
Total assets		997	820
Liabilities:
Foreign exchange derivatives		0	0
Total liabilities		0	0
Fair Value, Inputs, Level 1 | Money Market Funds | Cash and Cash Equivalents
Assets:
Money market funds	[2]	997	820
Fair Value, Inputs, Level 2
Assets:
Foreign exchange derivatives	[1]	17	2
Total assets		17	2
Liabilities:
Foreign exchange derivatives	[1]	3	3
Total liabilities		3	3
Fair Value, Inputs, Level 2 | Money Market Funds | Cash and Cash Equivalents
Assets:
Money market funds		0	0
Fair Value, Inputs, Level 3
Assets:
Total assets		0	0
Liabilities:
Total liabilities		$ 0	$ 0

[1] Refer to Note F, “Derivatives” for additional information.

[2] The Company’s investments in money market funds are classified as “Cash and cash equivalents” in its Condensed Consolidated Balance Sheets.

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Fair Value Measurements 2 (Details) - USD ($) $ in Millions		Dec. 31, 2016	Mar. 31, 2016
Carrying Value
Liabilities:
Total debt		$ 1,950	$ 1,953
Carrying Value | Facility Exit
Liabilities:
Facility exit reserves	[1]	11	16
Estimated Fair Value
Liabilities:
Total debt	[2]	2,055	2,058
Estimated Fair Value | Facility Exit
Liabilities:
Facility exit reserves	[1]	$ 12	$ 17

[1] Estimated fair value for the facility exit reserves is determined using the Company’s incremental borrowing rate at December 31, 2016 and March 31, 2016. At December 31, 2016 and March 31, 2016, the facility exit reserves included carrying values of approximately $3 million and $4 million, respectively, in “Accrued expenses and other current liabilities” and approximately $8 million and $12 million, respectively, in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3).

[2] 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).

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Fair Value Measurements 3 (Details) - Facility Exit - USD ($) $ in Millions	Dec. 31, 2016	Mar. 31, 2016
Accrued Expenses and Other Current Liabilities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Facility exit reserves	$ 3	$ 4
Other Noncurrent Liabilities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Facility exit reserves	$ 8	$ 12

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Commitments and Contingencies (Details) - USD ($) $ in Millions			3 Months Ended
	Oct. 24, 2016	May 29, 2014	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Alleged damages suffered		excess of $100 million
Litigation settlement, Amount	$ (45)
Litigation settlement, Attorneys’ fees and litigation expenses			$ 4
Maximum
Loss Contingencies [Line Items]
Loss contingency, Estimate of possible loss			$ 20

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Stockholders' Equity 1 (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015
Cash dividends
Declaration date	Nov. 02, 2016	Aug. 03, 2016	May 04, 2016	Nov. 05, 2015	Aug. 06, 2015	May 05, 2015
Dividend per share (in dollars per share)	$ 0.255	$ 0.255	$ 0.255	$ 0.25	$ 0.25	$ 0.25
Record date	Nov. 17, 2016	Aug. 25, 2016	May 26, 2016	Nov. 19, 2015	Aug. 27, 2015	May 28, 2015
Total amount	$ 107	$ 107	$ 107	$ 105	$ 110	$ 110
Payment date	Dec. 06, 2016	Sep. 13, 2016	Jun. 14, 2016	Dec. 08, 2015	Sep. 15, 2015	Jun. 16, 2015

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Stockholders' Equity 2 (Details) - USD ($) shares in Millions, $ in Millions	9 Months Ended
	Dec. 31, 2016	Mar. 31, 2016	Nov. 13, 2015
Equity [Abstract]
Accumulated other comprehensive loss	$ (518)	$ (416)
Current Stock Repurchase Program
Stock Repurchase Program [Line Items]
Stock repurchase program, Authorized amount			$ 750
Shares of common stock repurchased	3.1
Value of common stock repurchased	$ 100
Stock repurchase program, Remaining authorized common stock repurchase amount	$ 650

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Income From Continuing Operations Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Basic income from continuing operations per common share:
Income from continuing operations	$ 208	$ 219	$ 618	$ 598
Less: Income from continuing operations allocable to participating securities	(2)	(2)	(7)	(6)
Income from continuing operations allocable to common shares	$ 206	$ 217	$ 611	$ 592
Weighted average common shares outstanding	413	420	414	431
Basic income from continuing operations per common share (in dollars per share)	$ 0.50	$ 0.52	$ 1.48	$ 1.37
Diluted income from continuing operations per common share:
Income from continuing operations	$ 208	$ 219	$ 618	$ 598
Less: Income from continuing operations allocable to participating securities	(2)	(2)	(7)	(6)
Income from continuing operations allocable to common shares	$ 206	$ 217	$ 611	$ 592
Weighted average shares outstanding and common share equivalents:
Weighted average common shares outstanding	413	420	414	431
Weighted average effect of share-based payment awards	1	1	1	1
Denominator in calculation of diluted income per share	414	421	415	432
Diluted income from continuing operations per common share (in dollars per share)	$ 0.50	$ 0.52	$ 1.47	$ 1.37
Income from continuing operations per common share, Other disclosures [Abstract]
Number of anti-dilutive restricted stock awards and options excluded from the calculation	1	2	2	2
Weighted average restricted stock awards considered participating securities	5	4	5	4

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Accounting for Share-Based Compensation 1 (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Recognized share-based compensation
Share-based compensation expense before tax	$ 26	$ 25	$ 80	$ 70
Income tax benefit	(8)	(8)	(26)	(22)
Net share-based compensation expense	18	17	54	48
Costs of Licensing and Maintenance
Recognized share-based compensation
Share-based compensation expense before tax	2	2	5	5
Cost of Professional Services
Recognized share-based compensation
Share-based compensation expense before tax	1	1	3	3
Selling and Marketing
Recognized share-based compensation
Share-based compensation expense before tax	9	9	28	25
General and Administrative
Recognized share-based compensation
Share-based compensation expense before tax	8	9	27	25
Product Development and Enhancements
Recognized share-based compensation
Share-based compensation expense before tax	$ 6	$ 4	$ 17	$ 12

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Accounting for Share-Based Compensation 2 (Details) $ in Millions	9 Months Ended
	Dec. 31, 2016 USD ($)
Unrecognized share-based compensation costs
Unrecognized share-based compensation costs	$ 134
Weighted average period expected to be recognized (in years)	2 years 1 month 6 days
Stock Option Awards
Unrecognized share-based compensation costs
Unrecognized share-based compensation costs	$ 5
Weighted average period expected to be recognized (in years)	2 years
Restricted Stock Units
Unrecognized share-based compensation costs
Unrecognized share-based compensation costs	$ 20
Weighted average period expected to be recognized (in years)	2 years
Restricted Stock Awards
Unrecognized share-based compensation costs
Unrecognized share-based compensation costs	$ 76
Weighted average period expected to be recognized (in years)	1 year 10 months 24 days
Performance Share Units
Unrecognized share-based compensation costs
Unrecognized share-based compensation costs	$ 33
Weighted average period expected to be recognized (in years)	2 years 6 months

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Accounting for Share-Based Compensation 3 (Details) - $ / shares		9 Months Ended
		Dec. 31, 2016	Dec. 31, 2015
Weighted average fair values and assumptions used for options granted
Weighted average fair value (in dollars per share)		$ 4.42	$ 4.68
Dividend yield		3.56%	3.37%
Expected volatility factor	[1]	22.00%	23.00%
Risk-free interest rate	[2]	1.50%	1.90%
Expected life (in years)	[3]	6 years	6 years

[1] Expected volatility is measured using historical daily price changes of the Company’s common stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options.

[2] The risk-free rate for periods within the contractual term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant.

[3] The expected life is the number of years the Company estimates that options will be outstanding prior to exercise. The Company’s computation of expected life was determined based on the simplified method (the average of the vesting period and option term).

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Accounting for Share-Based Compensation 4 (Details) - $ / shares shares in Millions		3 Months Ended						9 Months Ended
		Dec. 31, 2016		Jun. 30, 2016	Dec. 31, 2015		Jun. 30, 2015	Dec. 31, 2016	Dec. 31, 2015
Restricted Stock Awards (RSAs)
Summary of PSUs granted under long-term incentive plans
Shares		0.0	[1]		0.0	[1]		2.9	2.8
Weighted average grant date fair value (in dollars per share)	[2]	$ 31.99			$ 26.53			$ 31.56	$ 30.63
Restricted Stock Units (RSUs)
Summary of PSUs granted under long-term incentive plans
Shares		0.0			0.0			1.0	0.9
Weighted average grant date fair value (in dollars per share)	[3]	$ 0.00			$ 0.00			$ 30.16	$ 28.72
Fiscal Year 2016 Incentive Plans | 1-year PSUs under Incentive Plans
Summary of PSUs granted under long-term incentive plans
Performance period (in years)				1 year
Fiscal Year 2016 Incentive Plans | 1-year PSUs under Incentive Plans | Restricted Stock Awards (RSAs)
Summary of PSUs granted under long-term incentive plans
Shares				0.6
Weighted average grant date fair value (in dollars per share)				$ 31.53
Fiscal Year 2016 Incentive Plans | 1-year PSUs under Incentive Plans | Restricted Stock Units (RSUs)
Summary of PSUs granted under long-term incentive plans
Shares				0.1
Weighted average grant date fair value (in dollars per share)				$ 30.53
Fiscal Year 2016 Incentive Plans | 1-year PSUs under Sales Retention Equity Programs
Summary of PSUs granted under long-term incentive plans
Performance period (in years)				1 year
Fiscal Year 2016 Incentive Plans | 1-year PSUs under Sales Retention Equity Programs | Restricted Stock Awards (RSAs)
Summary of PSUs granted under long-term incentive plans
Shares				0.3
Weighted average grant date fair value (in dollars per share)				$ 31.53
Fiscal Year 2016 Incentive Plans | 1-year PSUs under Sales Retention Equity Programs | Restricted Stock Units (RSUs)
Summary of PSUs granted under long-term incentive plans
Shares				0.1
Weighted average grant date fair value (in dollars per share)				$ 28.52
Fiscal Year 2015 Incentive Plans | 1-year PSUs under Incentive Plans
Summary of PSUs granted under long-term incentive plans
Performance period (in years)							1 year
Fiscal Year 2015 Incentive Plans | 1-year PSUs under Incentive Plans | Restricted Stock Awards (RSAs)
Summary of PSUs granted under long-term incentive plans
Shares							0.5
Weighted average grant date fair value (in dollars per share)							$ 31.41
Fiscal Year 2015 Incentive Plans | 1-year PSUs under Incentive Plans | Restricted Stock Units (RSUs)
Summary of PSUs granted under long-term incentive plans
Shares							0.1
Weighted average grant date fair value (in dollars per share)							$ 30.42
Fiscal Year 2015 Incentive Plans | 1-year PSUs under Sales Retention Equity Programs
Summary of PSUs granted under long-term incentive plans
Performance period (in years)							1 year
Fiscal Year 2015 Incentive Plans | 1-year PSUs under Sales Retention Equity Programs | Restricted Stock Awards (RSAs)
Summary of PSUs granted under long-term incentive plans
Shares							0.2
Weighted average grant date fair value (in dollars per share)							$ 30.45
Fiscal Year 2015 Incentive Plans | 1-year PSUs under Sales Retention Equity Programs | Restricted Stock Units (RSUs)
Summary of PSUs granted under long-term incentive plans
Shares							0.1
Weighted average grant date fair value (in dollars per share)							$ 27.50
Fiscal Year 2014 Incentive Plans | 3-year PSUs under Incentive Plans
Summary of PSUs granted under long-term incentive plans
Performance period (in years)				3 years
Shares				0.3
Weighted average grant date fair value (in dollars per share)				$ 31.53
Fiscal Year 2013 Incentive Plans | 3-year PSUs under Incentive Plans
Summary of PSUs granted under long-term incentive plans
Performance period (in years)							3 years
Shares							0.1
Weighted average grant date fair value (in dollars per share)							$ 31.41

[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.

[3] 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.

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Accounting for Share-Based Compensation 5 (Details) - $ / shares shares in Millions		3 Months Ended				9 Months Ended
		Dec. 31, 2016		Dec. 31, 2015		Dec. 31, 2016	Dec. 31, 2015
Restricted Stock Awards (RSAs)
Summary of all RSAs and RSUs granted, including grants made pursuant to long-term incentive plans
Shares		0.0	[1]	0.0	[1]	2.9	2.8
Weighted average grant date fair value (in dollars per share)	[2]	$ 31.99		$ 26.53		$ 31.56	$ 30.63
Restricted Stock Units (RSUs)
Summary of all RSAs and RSUs granted, including grants made pursuant to long-term incentive plans
Shares		0.0		0.0		1.0	0.9
Weighted average grant date fair value (in dollars per share)	[3]	$ 0.00		$ 0.00		$ 30.16	$ 28.72

[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.

[3] 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.

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Accounting for Share-Based Compensation 6 (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Capitalized share-based compensation costs	$ 0	$ 0			$ 0	$ 0
Stock options issued					1.1	0.9
Computation of expected life, 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).
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of stock closing price on last day of offer period that ESPP participants can purchase Company stock			95.00%	95.00%
Number of shares issued under ESPP			0.1	0.1
Share price issued under ESPP (in dollars per share)			$ 30.18	$ 31.19
Number of shares available for future issuances under ESPP	29.0		29.0		29.0
Restricted Stock Awards (RSAs) | 1-year PSUs under Incentive Plans | Grant Date
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting percentage					34.00%
Restricted Stock Awards (RSAs) | 1-year PSUs under Incentive Plans | First Anniversary
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting percentage					33.00%
Restricted Stock Awards (RSAs) | 1-year PSUs under Incentive Plans | Second Anniversary
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting percentage					33.00%
Restricted Stock Awards (RSAs) | 1-year PSUs under Sales Retention Equity Programs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period from grant date (in years)					3 years
Restricted Stock Units (RSUs) | 1-year PSUs under Incentive Plans | Grant Date
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting percentage					34.00%
Restricted Stock Units (RSUs) | 1-year PSUs under Incentive Plans | First Anniversary
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting percentage					33.00%
Restricted Stock Units (RSUs) | 1-year PSUs under Incentive Plans | Second Anniversary
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting percentage					33.00%
Restricted Stock Units (RSUs) | 1-year PSUs under Sales Retention Equity Programs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period from grant date (in years)					3 years

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Income tax expense	$ 84	$ 59	$ 257	$ 222
Net discrete tax benefit recognized		$ 19		$ 16
Estimated annual effective tax rate, which excludes impact of discrete items			28.90%	29.00%
Minimum
Expected Effective Tax Rate [Line Items]
Expected fiscal year 2017 effective tax rate			28.00%
Maximum
Expected Effective Tax Rate [Line Items]
Expected fiscal year 2017 effective tax rate			29.00%

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Supplemental Statement of Cash Flows Information 1 (Details) - Notional Pooling Arrangement - USD ($) $ in Millions		9 Months Ended
		Dec. 31, 2016	Dec. 31, 2015
Notional pooling arrangement
Total borrowings outstanding at beginning of period	[1]	$ 139	$ 138
Borrowings		1,391	3,237
Repayments		(1,365)	(3,230)
Foreign exchange effect		(26)	(6)
Total borrowings outstanding at end of period	[1]	$ 139	$ 139

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

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Supplemental Statement of Cash Flows Information 2 (Details) - USD ($) $ in Millions	9 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Supplemental Cash Flow Information [Abstract]
Interest payments	$ 66	$ 56
Income taxes paid, net from continuing operations	274	199
Excess tax benefits from share-based incentive awards included in financing activities from continuing operations	4	3
Share-based incentive awards issued under equity compensation plans, Non-cash financing activities	44	42
Withholding taxes on share-based incentive awards, Non-cash financing activities	33	28
Discretionary stock contributions to CA, Inc. Savings Harvest Plan, Non-cash financing activities	24	24
Treasury common shares issued in connection with Employee Stock Purchase Plan, Non-cash financing activities	$ 5	$ 5

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Segment Information 1 (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Segment information
Revenue		$ 1,007	$ 1,034	$ 3,024	$ 3,016
Income from continuing operations before interest and income taxes		308	293	920	856
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit		308	293	920	856
Share-based compensation expense		26	25	80	70
Other gains, net	[1]	(11)	(4)	(9)	(2)
Interest expense, net		16	15	45	36
Income from continuing operations before income taxes		292	278	875	820
Purchased Software Products
Reconciliation of segment profit to income from continuing operations before income taxes
Amortization of intangible assets		39	39	120	106
Other Intangible Assets
Reconciliation of segment profit to income from continuing operations before income taxes
Amortization of intangible assets		4	11	13	36
Internally Developed Software Products
Reconciliation of segment profit to income from continuing operations before income taxes
Amortization of intangible assets		18	26	62	86
Mainframe Solutions
Segment information
Revenue		546	554	1,647	1,668
Expenses		215	218	634	641
Income from continuing operations before interest and income taxes		$ 331	$ 336	$ 1,013	$ 1,027
Segment operating margin		61.00%	61.00%	62.00%	62.00%
Depreciation		$ 8	$ 9	$ 25	$ 27
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit		331	336	1,013	1,027
Enterprise Solutions
Segment information
Revenue		389	398	1,153	1,104
Expenses		333	349	981	996
Income from continuing operations before interest and income taxes		$ 56	$ 49	$ 172	$ 108
Segment operating margin		14.00%	12.00%	15.00%	10.00%
Depreciation		$ 6	$ 7	$ 18	$ 20
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit		56	49	172	108
Services
Segment information
Revenue		72	82	224	244
Expenses		75	77	223	227
Income from continuing operations before interest and income taxes		$ (3)	$ 5	$ 1	$ 17
Segment operating margin		(4.00%)	6.00%	0.00%	7.00%
Depreciation		$ 0	$ 0	$ 0	$ 0
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit		(3)	5	1	17
Total Reportable Segments
Segment information
Revenue		1,007	1,034	3,024	3,016
Expenses		623	644	1,838	1,864
Income from continuing operations before interest and income taxes		$ 384	$ 390	$ 1,186	$ 1,152
Segment operating margin		38.00%	38.00%	39.00%	38.00%
Depreciation		$ 14	$ 16	$ 43	$ 47
Reconciliation of segment profit to income from continuing operations before income taxes
Segment profit		$ 384	$ 390	$ 1,186	$ 1,152

[1] Other gains, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.

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Segment Information 2 (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Revenue from the United States and international locations
Revenue		$ 1,007	$ 1,034	$ 3,024	$ 3,016
United States
Revenue from the United States and international locations
Revenue		642	671	1,936	1,935
EMEA
Revenue from the United States and international locations
Revenue	[1]	223	230	667	679
Other
Revenue from the United States and international locations
Revenue		$ 142	$ 133	$ 421	$ 402

[1] Consists of Europe, the Middle East and Africa.

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Subsequent Events (Details) € in Millions, $ in Millions			9 Months Ended
	Jan. 18, 2017 USD ($)	Jan. 18, 2017 EUR (€)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Subsequent Event [Line Items]
Payment to acquire business, net of cash and cash equivalents acquired			$ 48	$ 648
Subsequent Event | Automic
Subsequent Event [Line Items]
Percentage of voting equity interest acquired	100.00%	100.00%
Payment to acquire business, net of cash and cash equivalents acquired	$ 643	€ 600