Delaware | 13-2857434 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
520 Madison Avenue, New York, New York | 10022 |
(Address of principal executive offices) | (Zip Code) |
(Check one:) | |||
Large accelerated filer | þ | Accelerated filer | ¨ |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
Title of Class | Shares Outstanding | |
Common Stock | as of January 24, 2018 | |
par value $0.10 per share | 416,924,204 |
Page | ||
PART I. | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
December 31, 2017 | March 31, 2017 | ||||||
(unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,971 | $ | 2,771 | |||
Trade accounts receivable, net of allowance for doubtful accounts of $11 and $11, respectively | 719 | 764 | |||||
Other current assets | 136 | 198 | |||||
Total current assets | $ | 3,826 | $ | 3,733 | |||
Property and equipment, net of accumulated depreciation of $860 and $841, respectively | 230 | 237 | |||||
Goodwill | 6,799 | 6,857 | |||||
Capitalized software and other intangible assets, net | 1,176 | 1,307 | |||||
Deferred income taxes | 346 | 327 | |||||
Other noncurrent assets, net | 156 | 149 | |||||
Total assets | $ | 12,533 | $ | 12,610 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 269 | $ | 18 | |||
Accounts payable | 69 | 91 | |||||
Accrued salaries, wages and commissions | 219 | 256 | |||||
Accrued expenses and other current liabilities | 350 | 326 | |||||
Deferred revenue (billed or collected) | 2,095 | 2,222 | |||||
Taxes payable, other than income taxes payable | 79 | 63 | |||||
Federal, state and foreign income taxes payable | 9 | 30 | |||||
Total current liabilities | $ | 3,090 | $ | 3,006 | |||
Long-term debt, net of current portion | 2,518 | 2,773 | |||||
Federal, state and foreign income taxes payable | 335 | 131 | |||||
Deferred income taxes | 118 | 119 | |||||
Deferred revenue (billed or collected) | 655 | 794 | |||||
Other noncurrent liabilities | 94 | 98 | |||||
Total liabilities | $ | 6,810 | $ | 6,921 | |||
Stockholders’ equity: | |||||||
Preferred stock, no par value, 10,000,000 shares authorized; No shares issued and outstanding | $ | — | $ | — | |||
Common stock, $0.10 par value, 1,100,000,000 shares authorized; 589,695,081 and 589,695,081 shares issued; 412,196,271 and 413,409,346 shares outstanding, respectively | 59 | 59 | |||||
Additional paid-in capital | 3,715 | 3,702 | |||||
Retained earnings | 6,871 | 6,923 | |||||
Accumulated other comprehensive loss | (342 | ) | (483 | ) | |||
Treasury stock, at cost, 177,498,810 and 176,285,735 shares, respectively | (4,580 | ) | (4,512 | ) | |||
Total stockholders’ equity | $ | 5,723 | $ | 5,689 | |||
Total liabilities and stockholders’ equity | $ | 12,533 | $ | 12,610 |
For the Three Months Ended December 31, | For the Nine Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue: | |||||||||||||||
Subscription and maintenance | $ | 843 | $ | 817 | $ | 2,486 | $ | 2,467 | |||||||
Professional services | 80 | 72 | 230 | 224 | |||||||||||
Software fees and other | 170 | 118 | 436 | 333 | |||||||||||
Total revenue | $ | 1,093 | $ | 1,007 | $ | 3,152 | $ | 3,024 | |||||||
Expenses: | |||||||||||||||
Costs of licensing and maintenance | $ | 79 | $ | 68 | $ | 223 | $ | 202 | |||||||
Cost of professional services | 76 | 74 | 223 | 222 | |||||||||||
Amortization of capitalized software costs | 68 | 57 | 205 | 182 | |||||||||||
Selling and marketing | 288 | 270 | 778 | 747 | |||||||||||
General and administrative | 95 | 85 | 299 | 257 | |||||||||||
Product development and enhancements | 157 | 144 | 476 | 428 | |||||||||||
Depreciation and amortization of other intangible assets | 26 | 18 | 79 | 56 | |||||||||||
Other (gains) expenses, net | (3 | ) | (17 | ) | 17 | 10 | |||||||||
Total expenses before interest and income taxes | $ | 786 | $ | 699 | $ | 2,300 | $ | 2,104 | |||||||
Income before interest and income taxes | $ | 307 | $ | 308 | $ | 852 | $ | 920 | |||||||
Interest expense, net | 25 | 16 | 74 | 45 | |||||||||||
Income before income taxes | $ | 282 | $ | 292 | $ | 778 | $ | 875 | |||||||
Income tax expense | 375 | 84 | 509 | 257 | |||||||||||
Net (loss) income | $ | (93 | ) | $ | 208 | $ | 269 | $ | 618 | ||||||
Basic (loss) income per common share | $ | (0.23 | ) | $ | 0.50 | $ | 0.64 | $ | 1.48 | ||||||
Basic weighted average shares used in computation | 413 | 413 | 414 | 414 | |||||||||||
Diluted (loss) income per common share | $ | (0.23 | ) | $ | 0.50 | $ | 0.64 | $ | 1.47 | ||||||
Diluted weighted average shares used in computation | 413 | 414 | 415 | 415 |
For the Three Months Ended December 31, | For the Nine Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net (loss) income | $ | (93 | ) | $ | 208 | $ | 269 | $ | 618 | ||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustments | 9 | (83 | ) | 141 | (102 | ) | |||||||||
Total other comprehensive income (loss) | $ | 9 | $ | (83 | ) | $ | 141 | $ | (102 | ) | |||||
Comprehensive (loss) income | $ | (84 | ) | $ | 125 | $ | 410 | $ | 516 |
For the Nine Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Operating activities: | |||||||
Net income | $ | 269 | $ | 618 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 284 | 238 | |||||
Deferred income taxes | 41 | (20 | ) | ||||
Provision for bad debts | 1 | 3 | |||||
Share-based compensation expense | 89 | 80 | |||||
Other non-cash items | 3 | 4 | |||||
Foreign currency transaction losses (gains) | 3 | (5 | ) | ||||
Changes in other operating assets and liabilities, net of effect of acquisitions: | |||||||
Decrease in trade accounts receivable | 58 | 57 | |||||
Decrease in deferred revenue | (334 | ) | (332 | ) | |||
Increase (decrease) in taxes payable, net | 220 | (21 | ) | ||||
Increase in accounts payable, accrued expenses and other | 20 | 13 | |||||
Decrease in accrued salaries, wages and commissions | (44 | ) | (12 | ) | |||
Changes in other operating assets and liabilities, net | 40 | 35 | |||||
Net cash provided by operating activities | $ | 650 | $ | 658 | |||
Investing activities: | |||||||
Acquisitions of businesses, net of cash acquired, and purchased software | $ | (15 | ) | $ | (48 | ) | |
Purchases of property and equipment | (34 | ) | (30 | ) | |||
Other investing activities | (2 | ) | (1 | ) | |||
Net cash used in investing activities | $ | (51 | ) | $ | (79 | ) | |
Financing activities: | |||||||
Dividends paid | $ | (321 | ) | $ | (321 | ) | |
Purchases of common stock | (143 | ) | (100 | ) | |||
Notional pooling borrowings | 1,581 | 1,391 | |||||
Notional pooling repayments | (1,612 | ) | (1,365 | ) | |||
Debt repayments | (14 | ) | (5 | ) | |||
Debt issuance costs | (3 | ) | — | ||||
Exercise of common stock options | 5 | 22 | |||||
Payments related to tax withholding for share-based compensation | (35 | ) | (34 | ) | |||
Other financing activities | (3 | ) | — | ||||
Net cash used in financing activities | $ | (545 | ) | $ | (412 | ) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 148 | (151 | ) | ||||
Increase in cash, cash equivalents and restricted cash | $ | 202 | $ | 16 | |||
Cash, cash equivalents and restricted cash at beginning of period | 2,772 | 2,813 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 2,974 | $ | 2,829 |
(dollars in millions) | Automic | Veracode | Estimated Useful Life | ||||||
Finite-lived intangible assets (1) | $ | 174 | $ | 99 | 2-12 years | ||||
Purchased software | 273 | 240 | 1-8 years | ||||||
Goodwill | 303 | 339 | Indefinite | ||||||
Deferred tax liabilities, net | (92 | ) | (36 | ) | — | ||||
Other assets (liabilities), net (2) | 17 | (24 | ) | — | |||||
Purchase price | $ | 675 | $ | 618 |
(1) | Includes customer relationships and trade names. |
(2) | Includes approximately $34 million and $16 million of cash acquired from Automic and Veracode, respectively. |
Three Months Ended December 31, 2016 | Nine Months Ended December 31, 2016 | ||||||
(in millions, except per share amounts) | unaudited | ||||||
Total revenue | $ | 1,061 | $ | 3,178 | |||
Net income | $ | 181 | $ | 527 | |||
Basic income per common share | $ | 0.43 | $ | 1.26 | |||
Diluted income per common share | $ | 0.43 | $ | 1.25 |
At December 31, 2017 | |||||||||||||||||||
Gross Amortizable Assets | Less: Fully Amortized Assets | Remaining Amortizable Assets | Accumulated Amortization on Remaining Amortizable Assets | Net Assets | |||||||||||||||
(in millions) | |||||||||||||||||||
Purchased software products | $ | 6,565 | $ | 4,910 | $ | 1,655 | $ | 837 | $ | 818 | |||||||||
Internally developed software products | 1,467 | 1,347 | 120 | 103 | 17 | ||||||||||||||
Other intangible assets | 1,222 | 823 | 399 | 58 | 341 | ||||||||||||||
Total capitalized software and other intangible assets | $ | 9,254 | $ | 7,080 | $ | 2,174 | $ | 998 | $ | 1,176 |
At March 31, 2017 | |||||||||||||||||||
Gross Amortizable Assets | Less: Fully Amortized Assets | Remaining Amortizable Assets | Accumulated Amortization on Remaining Amortizable Assets | Net Assets | |||||||||||||||
(in millions) | |||||||||||||||||||
Purchased software products | $ | 6,496 | $ | 4,914 | $ | 1,582 | $ | 667 | $ | 915 | |||||||||
Internally developed software products | 1,467 | 1,029 | 438 | 391 | 47 | ||||||||||||||
Other intangible assets | 1,193 | 812 | 381 | 36 | 345 | ||||||||||||||
Total capitalized software and other intangible assets | $ | 9,156 | $ | 6,755 | $ | 2,401 | $ | 1,094 | $ | 1,307 |
Year Ended March 31, | |||||||||||||||||||
2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||
(in millions) | |||||||||||||||||||
Purchased software products | $ | 236 | $ | 185 | $ | 162 | $ | 118 | $ | 109 | |||||||||
Internally developed software products | 37 | 9 | 1 | — | — | ||||||||||||||
Other intangible assets | 42 | 40 | 37 | 37 | 36 | ||||||||||||||
Total | $ | 315 | $ | 234 | $ | 200 | $ | 155 | $ | 145 |
(in millions) | Mainframe Solutions | Enterprise Solutions | Services | Total | |||||||||||
Balance at March 31, 2017 | $ | 4,178 | $ | 2,598 | $ | 81 | $ | 6,857 | |||||||
Acquisitions (1) | — | (99 | ) | — | (99 | ) | |||||||||
Foreign currency translation adjustment | — | 41 | — | 41 | |||||||||||
Balance at December 31, 2017 | $ | 4,178 | $ | 2,540 | $ | 81 | $ | 6,799 |
(1) | Acquisitions amount relates to purchase price allocation adjustments that occurred during the nine months ended December 31, 2017. |
December 31, 2017 | March 31, 2017 | ||||||
(in millions) | |||||||
Current: | |||||||
Subscription and maintenance | $ | 1,773 | $ | 1,948 | |||
Professional services | 138 | 135 | |||||
Software fees and other | 184 | 139 | |||||
Total deferred revenue (billed or collected) – current | $ | 2,095 | $ | 2,222 | |||
Noncurrent: | |||||||
Subscription and maintenance | $ | 631 | $ | 769 | |||
Professional services | 17 | 19 | |||||
Software fees and other | 7 | 6 | |||||
Total deferred revenue (billed or collected) – noncurrent | $ | 655 | $ | 794 | |||
Total deferred revenue (billed or collected) | $ | 2,750 | $ | 3,016 |
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) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Other (gains) expenses, net – foreign currency contracts | $ | — | $ | (9 | ) | $ | 8 | $ | (3 | ) |
At December 31, 2017 | At March 31, 2017 | ||||||||||||||||||||||
Fair Value Measurement Using Input Types | Estimated Fair Value | Fair Value Measurement Using Input Types | Estimated Fair Value | ||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||||
Money market funds (1) | $ | 1,063 | $ | — | $ | 1,063 | $ | 1,077 | $ | — | $ | 1,077 | |||||||||||
Foreign exchange derivatives (2) | — | 8 | 8 | — | 2 | 2 | |||||||||||||||||
Total assets | $ | 1,063 | $ | 8 | $ | 1,071 | $ | 1,077 | $ | 2 | $ | 1,079 | |||||||||||
Liabilities: | |||||||||||||||||||||||
Foreign exchange derivatives (2) | $ | — | $ | 12 | $ | 12 | $ | — | $ | 1 | $ | 1 | |||||||||||
Total liabilities | $ | — | $ | 12 | $ | 12 | $ | — | $ | 1 | $ | 1 |
(1) | The Company’s investments in money market funds are classified as “Cash and cash equivalents” in its Condensed Consolidated Balance Sheets. |
(2) | Refer to Note E, “Derivatives” for additional information. |
At December 31, 2017 | At March 31, 2017 | ||||||||||||||
(in millions) | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||
Liabilities: | |||||||||||||||
Total debt (1) | $ | 2,787 | $ | 2,874 | $ | 2,791 | $ | 2,903 | |||||||
Facility exit reserves (2) | $ | 8 | $ | 9 | $ | 11 | $ | 12 |
(1) | Estimated fair value of total debt is based on quoted prices for similar liabilities for which significant inputs are observable except for certain long-term lease obligations, for which fair value approximates carrying value (Level 2). |
(2) | Estimated fair value for the facility exit reserves is determined using the Company’s incremental borrowing rate at December 31, 2017 and March 31, 2017. At December 31, 2017 and March 31, 2017, the facility exit reserves included carrying values of approximately $2 million and $3 million, respectively, in “Accrued expenses and other current liabilities” and approximately $6 million and $8 million, respectively, in “Other noncurrent liabilities” in the Company’s Condensed Consolidated Balance Sheets (Level 3). |
Declaration Date | Dividend Per Share | Record Date | Total Amount | Payment Date | ||||
May 9, 2017 | $0.255 | May 25, 2017 | $107 | June 13, 2017 | ||||
August 9, 2017 | $0.255 | August 24, 2017 | $108 | September 12, 2017 | ||||
November 9, 2017 | $0.255 | November 30, 2017 | $106 | December 12, 2017 |
Declaration Date | Dividend Per Share | Record Date | Total Amount | Payment Date | ||||
May 4, 2016 | $0.255 | May 26, 2016 | $107 | June 14, 2016 | ||||
August 3, 2016 | $0.255 | August 25, 2016 | $107 | September 13, 2016 | ||||
November 2, 2016 | $0.255 | November 17, 2016 | $107 | December 6, 2016 |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions, except per share amounts) | |||||||||||||||
Basic (loss) income per common share: | |||||||||||||||
Net (loss) income | $ | (93 | ) | $ | 208 | $ | 269 | $ | 618 | ||||||
Less: Net income allocable to participating securities | — | (2 | ) | (5 | ) | (7 | ) | ||||||||
Net (loss) income allocable to common shares | $ | (93 | ) | $ | 206 | $ | 264 | $ | 611 | ||||||
Weighted average common shares outstanding | 413 | 413 | 414 | 414 | |||||||||||
Basic (loss) income per common share | $ | (0.23 | ) | $ | 0.50 | $ | 0.64 | $ | 1.48 | ||||||
Diluted (loss) income per common share: | |||||||||||||||
Net (loss) income | $ | (93 | ) | $ | 208 | $ | 269 | $ | 618 | ||||||
Less: Net income allocable to participating securities | — | (2 | ) | (5 | ) | (7 | ) | ||||||||
Net (loss) income allocable to common shares | $ | (93 | ) | $ | 206 | $ | 264 | $ | 611 | ||||||
Weighted average shares outstanding and common share equivalents: | |||||||||||||||
Weighted average common shares outstanding | 413 | 413 | 414 | 414 | |||||||||||
Weighted average effect of share-based payment awards | — | 1 | 1 | 1 | |||||||||||
Denominator in calculation of diluted income per share | 413 | 414 | 415 | 415 | |||||||||||
Diluted (loss) income per common share | $ | (0.23 | ) | $ | 0.50 | $ | 0.64 | $ | 1.47 |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Costs of licensing and maintenance | $ | 1 | $ | 2 | $ | 5 | $ | 5 | |||||||
Cost of professional services | 1 | 1 | 2 | 3 | |||||||||||
Selling and marketing | 9 | 9 | 29 | 28 | |||||||||||
General and administrative | 10 | 8 | 33 | 27 | |||||||||||
Product development and enhancements | 7 | 6 | 20 | 17 | |||||||||||
Share-based compensation expense before tax | $ | 28 | $ | 26 | $ | 89 | $ | 80 | |||||||
Income tax benefit | (7 | ) | (8 | ) | (27 | ) | (26 | ) | |||||||
Net share-based compensation expense | $ | 21 | $ | 18 | $ | 62 | $ | 54 |
Unrecognized Share-Based Compensation Costs | Weighted Average Period Expected to be Recognized | ||||
(in millions) | (in years) | ||||
Stock option awards | $ | 5 | 1.9 | ||
Restricted stock units (RSUs) | 21 | 1.9 | |||
Restricted stock awards (RSAs) | 78 | 1.9 | |||
Performance share units | 37 | 2.4 | |||
Total unrecognized share-based compensation costs | $ | 141 | 2.1 |
Nine Months Ended December 31, | |||||||
2017 | 2016 | ||||||
Weighted average fair value | $ | 4.72 | $ | 4.42 | |||
Dividend yield | 3.17 | % | 3.56 | % | |||
Expected volatility factor (1) | 21 | % | 22 | % | |||
Risk-free interest rate (2) | 2.1 | % | 1.5 | % | |||
Expected life (in years) (3) | 6.0 | 6.0 |
(1) | Expected volatility is measured using historical daily price changes of the Company’s common stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options. |
(2) | The risk-free rate for periods within the contractual term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant. |
(3) | The expected life is the number of years the Company estimates that options will be outstanding prior to exercise. The Company’s computation of expected life was determined based on the simplified method (the average of the vesting period and option term). |
Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(shares in millions) | |||||||||||||||
RSAs: | |||||||||||||||
Shares | 0.1 | — | (3) | 3.0 | 2.9 | ||||||||||
Weighted average grant date fair value (1) | $ | 32.12 | $ | 31.99 | $ | 31.70 | $ | 31.56 | |||||||
RSUs: | |||||||||||||||
Shares | — | (3) | — | 1.1 | 1.0 | ||||||||||
Weighted average grant date fair value (2) | $ | 30.14 | $ | — | $ | 30.35 | $ | 30.16 |
(1) | The fair value is based on the quoted market value of the Company’s common stock on the grant date. |
(2) | The fair value is based on the quoted market value of the Company’s common stock on the grant date reduced by the present value of dividends expected to be paid on the Company’s common stock prior to vesting of the RSUs, which is calculated using a risk-free interest rate. |
(3) | Less than 0.1 million. |
Nine Months Ended December 31, | |||||||
2017 | 2016 | ||||||
(in millions) | |||||||
Total borrowings outstanding at beginning of period (1) | $ | 137 | $ | 139 | |||
Borrowings | 1,581 | 1,391 | |||||
Repayments | (1,612 | ) | (1,365 | ) | |||
Foreign exchange effect | 33 | (26 | ) | ||||
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. |
Three Months Ended December 31, 2017 | Mainframe Solutions | Enterprise Solutions | Services | Total | |||||||||||
(dollars in millions) | |||||||||||||||
Revenue | $ | 552 | $ | 461 | $ | 80 | $ | 1,093 | |||||||
Expenses | 197 | 408 | 78 | 683 | |||||||||||
Segment profit | $ | 355 | $ | 53 | $ | 2 | $ | 410 | |||||||
Segment operating margin | 64 | % | 11 | % | 3 | % | 38 | % | |||||||
Depreciation | $ | 8 | $ | 7 | $ | — | $ | 15 |
(in millions) | |||
Segment profit | $ | 410 | |
Less: | |||
Purchased software amortization | 60 | ||
Other intangibles amortization | 11 | ||
Internally developed software products amortization | 8 | ||
Share-based compensation expense | 28 | ||
Other gains, net (1) | (4 | ) | |
Interest expense, net | 25 | ||
Income before income taxes | $ | 282 |
(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, 2017 | Mainframe Solutions | Enterprise Solutions | Services | Total | |||||||||||
(dollars in millions) | |||||||||||||||
Revenue | $ | 1,627 | $ | 1,295 | $ | 230 | $ | 3,152 | |||||||
Expenses | 572 | 1,169 | 226 | 1,967 | |||||||||||
Segment profit | $ | 1,055 | $ | 126 | $ | 4 | $ | 1,185 | |||||||
Segment operating margin | 65 | % | 10 | % | 2 | % | 38 | % | |||||||
Depreciation | $ | 27 | $ | 21 | $ | — | $ | 48 |
(in millions) | |||
Segment profit | $ | 1,185 | |
Less: | |||
Purchased software amortization | 176 | ||
Other intangibles amortization | 31 | ||
Internally developed software products amortization | 29 | ||
Share-based compensation expense | 89 | ||
Other expenses, net (1) | 8 | ||
Interest expense, net | 74 | ||
Income before income taxes | $ | 778 |
(1) | Other expenses, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs. |
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 |
(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 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 |
(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 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, | Nine Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
United States | $ | 682 | $ | 642 | $ | 1,997 | $ | 1,936 | |||||||
EMEA (1) | 256 | 223 | 720 | 667 | |||||||||||
Other | 155 | 142 | 435 | 421 | |||||||||||
Total revenue | $ | 1,093 | $ | 1,007 | $ | 3,152 | $ | 3,024 |
(1) | Consists of Europe, the Middle East and Africa. |
• | Agile Management enables customers to plan, deliver and manage information technology (IT) and business services for their customers. Our solutions and Agile services enable customers to improve delivery time on projects, reduce costs and optimize resources. |
• | DevOps is adjacent to Agile Management and is comprised of a range of solutions that allow customers to efficiently deliver and manage applications and IT infrastructure. With our portfolio of solutions, customers can reduce the delivery time of new applications, increase the frequency of new releases and dramatically improve quality. Our solutions enable complete end-to-end automation, which minimizes downtime and accelerates the application delivery process. |
• | Security includes a comprehensive set of solutions that address the global imperative to minimize the risk of data breaches and alleviate the pressures faced by Chief Information Security Officers (CISOs) as a result of increasing information security regulations. Our solutions facilitate digital transformation by providing secure customer experiences, enabling a collaborative enterprise, empowering a digital workforce and securing the ‘Internet of Things.’ CA’s Security suite simplifies the complexity of managing the trusted digital relationships among people, devices, and applications both on-premise and in the cloud. Our solutions help to eliminate vulnerabilities during the development and deployment chain, which helps to lower cost and improve time-to-market. |
• | DevOps solutions help customers increase the innovation velocity for mainframe applications and teams. We support agile development processes and modern languages, as well as tools for development, testing and deployment that support collaboration across the software development lifecycle and across mobile to mainframe teams. |
• | Operations Intelligence and Automation solutions help customers adopt machine learning and bring more intelligence and automation to their mainframe operations. With machine learning, operations teams can proactively prevent problems, fix issues faster and get more done with fewer resources. We provide a unified view of the IBM z Systems performance across the infrastructure stack, including applications, middleware, networks, systems, storage and data. |
• | Security & Compliance solutions help customers address stringent data security and compliance requirements, such as EU General Data Protection Regulation (GDPR), by finding sensitive data, classifying data for compliance purposes, alerting risks in real-time, and inspecting threats to protect mission-essential data-running 100 percent on the mainframe. |
• | Drive organic innovation. Our product development strategy is built around key growth areas, where we are focused on innovating and delivering differentiated products and solutions across both distributed and mainframe platforms. |
• | Incubate technology for next generation products. We are researching and dedicating resources to the development of emerging technologies that are logical extensions of our core areas of focus. We are working on opportunities in areas such as containers, data analytics, big data and open source, some of which may enhance or extend our current product portfolio and others of which may evolve into new product categories. |
• | Pursue new business models and expanded routes to market. While our traditional on-premise software delivery remains relevant to many enterprise customers, we see cloud-based and try-and-buy models as attractive to both our existing and potential customers. These models simplify decision-making and accelerate the value customers can derive from new solution investments. |
• | Expand relationships with our global customer base and address opportunities with new and underserved customers. We are focused on maintaining and expanding the strong relationships with our established customer base, and will proactively target growth with other potential customers that we do not currently serve. |
• | Execute strategic and disciplined technology acquisitions. We intend to supplement our organic innovation efforts with key technology acquisitions that are within or adjacent to our core areas of focus. We also focus on organically developing nascent technologies from companies we have acquired to endow them with the necessary interoperability, resilience and security to operate at scale in the large, heterogeneous IT environments utilized by our customers. |
• | Total revenue increased primarily due to an increase in software fees and other revenue and, to a lesser extent, an increase in subscription and maintenance revenue. During the third quarter of fiscal 2018, total revenue included $68 million from our Automic Holding GmbH (Automic) and Veracode, Inc. (Veracode) acquisitions, which were acquired in the fourth quarter of fiscal 2017 and primarily included in software fees and other revenue. Excluding the revenue generated from our Automic and Veracode acquisitions, total revenue increased primarily due to a favorable foreign exchange effect of $19 million for the third quarter of fiscal 2018, and, to a lesser extent, an increase in revenue from our Enterprise Solutions products. |
• | Total bookings decreased primarily due to a decline in renewal bookings. Excluding our Automic and Veracode acquisitions, total bookings decreased by a percentage in the high teens. |
• | Renewal bookings decreased by a percentage in the high teens primarily due to the decline in Mainframe Solutions renewal bookings, which was attributable to the timing of our renewal portfolio. This decline in Mainframe Solutions renewal bookings was partially offset by renewal bookings associated with our Automic and Veracode acquisitions. Excluding our Automic and Veracode acquisitions, renewal bookings decreased by a percentage in the mid-20s. |
• | Total new product sales increased by a percentage in the high single digits due to our Automic and Veracode acquisitions. Excluding our Automic and Veracode acquisitions, total new product sales decreased by a percentage in the high single digits primarily due to a lower level of renewals, which was attributable to the timing of our renewal portfolio, since renewals typically provide an increased opportunity to generate new product sales. |
• | Mainframe Solutions new product sales decreased by a percentage in the low single digits primarily due to a lower level of renewals as discussed above. |
• | Enterprise Solutions new product sales increased by a percentage in the mid-teens. Excluding our Automic and Veracode acquisitions, Enterprise Solutions new product sales decreased by a percentage in the high single digits primarily due to a decrease in our renewal portfolio, since renewals typically provide an increased opportunity to generate new product sales. |
• | We expect fiscal 2018 renewal bookings to decrease by a percentage in the high teens compared with fiscal 2017 primarily due to the large system integrator transaction that occurred in the first quarter of fiscal 2017 with an incremental contract value in excess of $475 million. |
• | Operating expenses increased primarily due to $84 million of costs from our Automic and Veracode acquisitions, which were mainly personnel-related. |
• | Income tax expense includes $318 million from preliminary estimates of the impact of changes in tax law in the United States resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017 (the “Tax Act”). |
• | Diluted (loss) income per common share decreased to $(0.23) from $0.50 primarily due to the Tax Act. |
• | Mainframe Solutions revenue increased due to a favorable foreign exchange effect. Mainframe Solutions operating margin increased primarily due to a decrease in corporate overhead costs. |
• | Enterprise Solutions revenue increased primarily due to revenue generated from our Automic and Veracode acquisitions. Enterprise Solutions operating margin decreased primarily due to costs associated with our Automic and Veracode acquisitions, which were mainly personnel-related. |
• | Services revenue increased primarily due to professional services revenue generated from our Automic and Veracode acquisitions. Operating margin for Services increased primarily due to a decrease in personnel-related costs as a result of severance actions during the third quarter of fiscal 2017 and, to a lesser extent, higher margins from services associated with our Automic and Veracode acquisitions. |
• | Net cash provided by operating activities decreased primarily due to a decrease in cash collections from billings of $153 million attributable to lower single installment collections and an increase in vendor disbursements and payroll of $41 million compared with the year-ago period. |
Third Quarter of Fiscal | ||||||||||||||
2018 | 2017 | Change | Percentage Change | |||||||||||
(dollars in millions) | ||||||||||||||
Total revenue | $ | 1,093 | $ | 1,007 | $ | 86 | 9 | % | ||||||
Net (loss) income | $ | (93 | ) | $ | 208 | $ | (301 | ) | (145 | )% | ||||
Net cash provided by operating activities | $ | 315 | $ | 517 | $ | (202 | ) | (39 | )% | |||||
Total bookings | $ | 1,128 | $ | 1,258 | $ | (130 | ) | (10 | )% | |||||
Subscription and maintenance bookings | $ | 816 | $ | 1,038 | $ | (222 | ) | (21 | )% | |||||
Weighted average subscription and maintenance license agreement duration in years | 2.94 | 3.32 | (0.38 | ) | (11 | )% |
First Nine Months of Fiscal | ||||||||||||||
2018 | 2017 | Change | Percentage Change | |||||||||||
(dollars in millions) | ||||||||||||||
Total revenue | $ | 3,152 | $ | 3,024 | $ | 128 | 4 | % | ||||||
Net income | $ | 269 | $ | 618 | $ | (349 | ) | (56 | )% | |||||
Net cash provided by operating activities (1) | $ | 650 | $ | 658 | $ | (8 | ) | (1 | )% | |||||
Total bookings | $ | 2,551 | $ | 3,340 | $ | (789 | ) | (24 | )% | |||||
Subscription and maintenance bookings | $ | 1,783 | $ | 2,742 | $ | (959 | ) | (35 | )% | |||||
Weighted average subscription and maintenance license agreement duration in years | 2.95 | 3.94 | (0.99 | ) | (25 | )% |
(1) | Net cash provided by operating activities for the first nine months of fiscal 2017 was adjusted to reflect the adoption of Accounting Standards Update No. 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting (Topic 718). Refer to Note A, “Accounting Policies” in the Notes to the Condensed Consolidated Financial Statements for further details. |
December 31, 2017 | March 31, 2017 | Change From Fiscal Year End | December 31, 2016 | Change From Prior Year Quarter | |||||||||||||||
(in millions) | |||||||||||||||||||
Cash and cash equivalents | $ | 2,971 | $ | 2,771 | $ | 200 | $ | 2,828 | $ | 143 | |||||||||
Total debt | $ | 2,787 | $ | 2,791 | $ | (4 | ) | $ | 1,950 | $ | 837 | ||||||||
Total expected future cash collections from committed contracts (1) | $ | 5,024 | $ | 5,304 | $ | (280 | ) | $ | 4,992 | $ | 32 | ||||||||
Total revenue backlog (1) | $ | 7,055 | $ | 7,556 | $ | (501 | ) | $ | 7,005 | $ | 50 | ||||||||
Total current revenue backlog (1) | $ | 3,245 | $ | 3,240 | $ | 5 | $ | 2,994 | $ | 251 |
(1) | Refer to the discussion in the “Liquidity and Capital Resources” section of this MD&A for additional information on expected future cash collections from committed contracts and revenue backlog. |
Third Quarter Comparison Fiscal 2018 Versus Fiscal 2017 | ||||||||||||||||||||
Dollar Change | Percentage Change | Percentage of Total Revenue | ||||||||||||||||||
2018 | 2017 | 2018 / 2017 | 2018 / 2017 | 2018 | 2017 | |||||||||||||||
(dollars in millions) | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
Subscription and maintenance | $ | 843 | $ | 817 | $ | 26 | 3 | % | 77 | % | 81 | % | ||||||||
Professional services | 80 | 72 | 8 | 11 | 7 | 7 | ||||||||||||||
Software fees and other | 170 | 118 | 52 | 44 | 16 | 12 | ||||||||||||||
Total revenue | $ | 1,093 | $ | 1,007 | $ | 86 | 9 | % | 100 | % | 100 | % | ||||||||
Expenses: | ||||||||||||||||||||
Costs of licensing and maintenance | $ | 79 | $ | 68 | $ | 11 | 16 | % | 7 | % | 7 | % | ||||||||
Cost of professional services | 76 | 74 | 2 | 3 | 7 | 7 | ||||||||||||||
Amortization of capitalized software costs | 68 | 57 | 11 | 19 | 6 | 6 | ||||||||||||||
Selling and marketing | 288 | 270 | 18 | 7 | 26 | 27 | ||||||||||||||
General and administrative | 95 | 85 | 10 | 12 | 9 | 8 | ||||||||||||||
Product development and enhancements | 157 | 144 | 13 | 9 | 14 | 14 | ||||||||||||||
Depreciation and amortization of other intangible assets | 26 | 18 | 8 | 44 | 2 | 2 | ||||||||||||||
Other gains, net | (3 | ) | (17 | ) | 14 | (82 | ) | — | (2 | ) | ||||||||||
Total expenses before interest and income taxes | $ | 786 | $ | 699 | $ | 87 | 12 | % | 72 | % | 69 | % | ||||||||
Income before interest and income taxes | $ | 307 | $ | 308 | $ | (1 | ) | — | % | 28 | % | 31 | % | |||||||
Interest expense, net | 25 | 16 | 9 | 56 | 2 | 2 | ||||||||||||||
Income before income taxes | $ | 282 | $ | 292 | $ | (10 | ) | (3 | )% | 26 | % | 29 | % | |||||||
Income tax expense | 375 | 84 | 291 | 346 | 34 | 8 | ||||||||||||||
Net (loss) income | $ | (93 | ) | $ | 208 | $ | (301 | ) | (145 | )% | (9 | )% | 21 | % |
First Nine Months Comparison Fiscal 2018 Versus Fiscal 2017 | ||||||||||||||||||||
Dollar Change | Percentage Change | Percentage of Total Revenue | ||||||||||||||||||
2018 | 2017 | 2018 / 2017 | 2018 / 2017 | 2018 | 2017 | |||||||||||||||
(dollars in millions) | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
Subscription and maintenance | $ | 2,486 | $ | 2,467 | $ | 19 | 1 | % | 79 | % | 82 | % | ||||||||
Professional services | 230 | 224 | 6 | 3 | 7 | 7 | ||||||||||||||
Software fees and other | 436 | 333 | 103 | 31 | 14 | 11 | ||||||||||||||
Total revenue | $ | 3,152 | $ | 3,024 | $ | 128 | 4 | % | 100 | % | 100 | % | ||||||||
Expenses: | ||||||||||||||||||||
Costs of licensing and maintenance | $ | 223 | $ | 202 | $ | 21 | 10 | % | 7 | % | 7 | % | ||||||||
Cost of professional services | 223 | 222 | 1 | — | 7 | 7 | ||||||||||||||
Amortization of capitalized software costs | 205 | 182 | 23 | 13 | 7 | 6 | ||||||||||||||
Selling and marketing | 778 | 747 | 31 | 4 | 25 | 25 | ||||||||||||||
General and administrative | 299 | 257 | 42 | 16 | 9 | 8 | ||||||||||||||
Product development and enhancements | 476 | 428 | 48 | 11 | 15 | 14 | ||||||||||||||
Depreciation and amortization of other intangible assets | 79 | 56 | 23 | 41 | 3 | 2 | ||||||||||||||
Other expenses, net | 17 | 10 | 7 | 70 | 1 | — | ||||||||||||||
Total expenses before interest and income taxes | $ | 2,300 | $ | 2,104 | $ | 196 | 9 | % | 73 | % | 70 | % | ||||||||
Income before interest and income taxes | $ | 852 | $ | 920 | $ | (68 | ) | (7 | )% | 27 | % | 30 | % | |||||||
Interest expense, net | 74 | 45 | 29 | 64 | 2 | 1 | ||||||||||||||
Income before income taxes | $ | 778 | $ | 875 | $ | (97 | ) | (11 | )% | 25 | % | 29 | % | |||||||
Income tax expense | 509 | 257 | 252 | 98 | 16 | 8 | ||||||||||||||
Net income | $ | 269 | $ | 618 | $ | (349 | ) | (56 | )% | 9 | % | 20 | % |
Third Quarter Comparison Fiscal 2018 Versus Fiscal 2017 | ||||||||||||||||||||
2018 | Percentage of Total Revenue | 2017 | Percentage of Total Revenue | Dollar Change | Percentage Change | |||||||||||||||
(dollars in millions) | ||||||||||||||||||||
United States | $ | 682 | 62 | % | $ | 642 | 64 | % | $ | 40 | 6 | % | ||||||||
International | 411 | 38 | 365 | 36 | 46 | 13 | ||||||||||||||
Total Revenue | $ | 1,093 | 100 | % | $ | 1,007 | 100 | % | $ | 86 | 9 | % |
First Nine Months Comparison Fiscal 2018 Versus Fiscal 2017 | ||||||||||||||||||||
2018 | Percentage of Total Revenue | 2017 | Percentage of Total Revenue | Dollar Change | Percentage Change | |||||||||||||||
(dollars in millions) | ||||||||||||||||||||
United States | $ | 1,997 | 63 | % | $ | 1,936 | 64 | % | $ | 61 | 3 | % | ||||||||
International | 1,155 | 37 | 1,088 | 36 | 67 | 6 | ||||||||||||||
Total Revenue | $ | 3,152 | 100 | % | $ | 3,024 | 100 | % | $ | 128 | 4 | % |
Third Quarter Fiscal 2018 | Third Quarter Fiscal 2017 | ||||||
(dollars in millions) | |||||||
Legal settlements | $ | — | $ | (4 | ) | ||
Gains from foreign exchange derivative contracts | — | (9 | ) | ||||
Gains from foreign exchange rate fluctuations | (3 | ) | (3 | ) | |||
Other miscellaneous items | — | (1 | ) | ||||
Total | $ | (3 | ) | $ | (17 | ) |
First Nine Months Fiscal 2018 | First Nine Months Fiscal 2017 | ||||||
(dollars in millions) | |||||||
Legal settlements | $ | 2 | $ | 23 | |||
Losses (gains) from foreign exchange derivative contracts | 8 | (3 | ) | ||||
Losses (gains) from foreign exchange rate fluctuations | 7 | (6 | ) | ||||
Other miscellaneous items | — | (4 | ) | ||||
Total | $ | 17 | $ | 10 |
Mainframe Solutions | Third Quarter Fiscal 2018 | Third Quarter Fiscal 2017 | |||||
(dollars in millions) | |||||||
Revenue | $ | 552 | $ | 546 | |||
Expenses | 197 | 215 | |||||
Segment profit | $ | 355 | $ | 331 | |||
Segment operating margin | 64 | % | 61 | % |
Mainframe Solutions | First Nine Months Fiscal 2018 | First Nine Months Fiscal 2017 | |||||
(dollars in millions) | |||||||
Revenue | $ | 1,627 | $ | 1,647 | |||
Expenses | 572 | 634 | |||||
Segment profit | $ | 1,055 | $ | 1,013 | |||
Segment operating margin | 65 | % | 62 | % |
Enterprise Solutions | Third Quarter Fiscal 2018 | Third Quarter Fiscal 2017 | |||||
(dollars in millions) | |||||||
Revenue | $ | 461 | $ | 389 | |||
Expenses | 408 | 333 | |||||
Segment profit | $ | 53 | $ | 56 | |||
Segment operating margin | 11 | % | 14 | % |
Enterprise Solutions | First Nine Months Fiscal 2018 | First Nine Months Fiscal 2017 | |||||
(dollars in millions) | |||||||
Revenue | $ | 1,295 | $ | 1,153 | |||
Expenses | 1,169 | 981 | |||||
Segment profit | $ | 126 | $ | 172 | |||
Segment operating margin | 10 | % | 15 | % |
Services | Third Quarter Fiscal 2018 | Third Quarter Fiscal 2017 | |||||
(dollars in millions) | |||||||
Revenue | $ | 80 | $ | 72 | |||
Expenses | 78 | 75 | |||||
Segment profit (loss) | $ | 2 | $ | (3 | ) | ||
Segment operating margin | 3 | % | (4 | )% |
Services | First Nine Months Fiscal 2018 | First Nine Months Fiscal 2017 | |||||
(dollars in millions) | |||||||
Revenue | $ | 230 | $ | 224 | |||
Expenses | 226 | 223 | |||||
Segment profit | $ | 4 | $ | 1 | |||
Segment operating margin | 2 | % | — | % |
• | Renewal Yield: Our average renewal yield for the first three quarters of fiscal 2018 was slightly above 90%, with the third quarter of fiscal 2018 renewal yield being in the mid-80% range. |
• | License Agreements over $10 million: During the third quarter of fiscal 2018, we executed a total of 13 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $367 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. |
• | Annualized Subscription and Maintenance Bookings and Weighted Average Subscription and Maintenance License Agreement Duration in Years: Annualized subscription and maintenance bookings decreased from $313 million in the third quarter of fiscal 2017 to $278 million in the third quarter of fiscal 2018. The weighted average subscription and maintenance license agreement duration in years decreased from 3.32 in the third quarter of fiscal 2017 to 2.94 in the third quarter of fiscal 2018. Although each contract is subject to terms negotiated by the respective parties, we do not expect the weighted average subscription and maintenance agreement duration in years to change materially from historical levels. |
• | Within Total New Product Sales: |
◦ | Mainframe Solutions New Product Sales: For the third quarter of fiscal 2018, Mainframe Solutions new product sales decreased by a percentage in the low single digits compared with the third quarter of fiscal 2017 primarily due to a lower level of renewals as discussed above. 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 2018, Enterprise Solutions new product sales increased by a percentage in the mid-teens compared with the third quarter of fiscal 2017. Excluding our Automic and Veracode acquisitions, Enterprise Solutions new product sales decreased by a percentage in the high single digits primarily due to a decrease in our renewal portfolio, since renewals typically provide an increased opportunity to generate new product sales. |
• | License Agreements over $10 million: During the first nine months of fiscal 2018, we executed a total of 31 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $718 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. As described above, the decrease in the first nine months of fiscal 2018 compared with the first nine months of fiscal 2017 was primarily attributable to a decline in renewal bookings, which included the aforementioned large system integrator transaction. In addition, as a result of the timing of our renewal portfolio, there was an overall lower number of license agreements with incremental contract values in excess of $10 million each. |
• | Annualized Subscription and Maintenance Bookings and Weighted Average Subscription and Maintenance License Agreement Duration in Years: Annualized subscription and maintenance bookings decreased from $696 million in the first nine months of fiscal 2017 to $604 million in the first nine months of fiscal 2018. The weighted average subscription and maintenance license agreement duration in years decreased from 3.94 in the first nine months of fiscal 2017 to 2.95 in the first nine months of fiscal 2018. These decreases were primarily due to the aforementioned large system integrator transaction. |
• | Full Year Fiscal 2018 Outlook: We expect fiscal 2018 renewal bookings to decrease by a percentage in the high teens compared with fiscal 2017 primarily due to the aforementioned large system integrator transaction that occurred in the first quarter of fiscal 2017. |
• | Within Total New Product Sales: |
◦ | Mainframe Solutions New Product Sales: For the first nine months of fiscal 2018, Mainframe Solutions new product sales decreased by a percentage in the high teens compared with the first nine months of fiscal 2017 primarily due to a lower level of renewals, which included the aforementioned large system integrator transaction that occurred in the first quarter of fiscal 2017. The lower level of renewals is primarily attributable to the timing of our renewal portfolio since renewals typically provide an increased opportunity to generate new product sales. |
◦ | Enterprise Solutions New Product Sales: For the first nine months of fiscal 2018, Enterprise Solutions new product sales increased by a percentage in the mid-single digits compared with the first nine months of fiscal 2017. Excluding the aforementioned large system integrator transaction, Enterprise Solutions new product sales increased by a percentage in the low teens due to our Automic and Veracode acquisitions. Excluding the aforementioned large system integrator transaction and Enterprise Solutions new product sales from our Automic and Veracode acquisitions, Enterprise Solutions new product sales decreased by approximately 10% primarily due to a lower level of renewal bookings, which was attributable to the timing of our renewal portfolio. Typically, renewals provide an increased opportunity to generate new product sales. |
(in millions) | December 31, 2017 | March 31, 2017 | December 31, 2016 | ||||||||
Billings backlog: | |||||||||||
Amounts to be billed – current | $ | 1,936 | $ | 1,941 | $ | 1,882 | |||||
Amounts to be billed – noncurrent | 2,369 | 2,599 | 2,555 | ||||||||
Total billings backlog | $ | 4,305 | $ | 4,540 | $ | 4,437 | |||||
Revenue backlog: | |||||||||||
Revenue to be recognized within the next 12 months – current | $ | 3,245 | $ | 3,240 | $ | 2,994 | |||||
Revenue to be recognized beyond the next 12 months – noncurrent | 3,810 | 4,316 | 4,011 | ||||||||
Total revenue backlog | $ | 7,055 | $ | 7,556 | $ | 7,005 | |||||
Deferred revenue (billed or collected) | $ | 2,750 | $ | 3,016 | $ | 2,568 | |||||
Total billings backlog | 4,305 | 4,540 | 4,437 | ||||||||
Total revenue backlog | $ | 7,055 | $ | 7,556 | $ | 7,005 |
(in millions) | December 31, 2017 | March 31, 2017 | December 31, 2016 | ||||||||
Expected future cash collections: | |||||||||||
Total billings backlog | $ | 4,305 | $ | 4,540 | $ | 4,437 | |||||
Trade accounts receivable, net | 719 | 764 | 555 | ||||||||
Total expected future cash collections | $ | 5,024 | $ | 5,304 | $ | 4,992 |
Third Quarter of Fiscal | Change | ||||||||||
2018 | 2017 | 2018 / 2017 | |||||||||
(in millions) | |||||||||||
Cash collections from billings (1) | $ | 1,056 | $ | 1,209 | $ | (153 | ) | ||||
Vendor disbursements and payroll (1) | (652 | ) | (611 | ) | (41 | ) | |||||
Income tax payments, net | (75 | ) | (72 | ) | (3 | ) | |||||
Other disbursements, net (2) | (14 | ) | (9 | ) | (5 | ) | |||||
Net cash provided by operating activities | $ | 315 | $ | 517 | $ | (202 | ) |
(1) | Amounts include value added taxes and sales taxes. |
(2) | Amounts include payments associated with interest, prior period restructuring plans and miscellaneous receipts and disbursements. |
First Nine Months of Fiscal | Change | ||||||||||
2018 | 2017 | 2018 / 2017 | |||||||||
(in millions) | |||||||||||
Cash collections from billings (1) | $ | 3,070 | $ | 2,946 | $ | 124 | |||||
Vendor disbursements and payroll (1) | (2,130 | ) | (1,970 | ) | (160 | ) | |||||
Income tax payments, net | (231 | ) | (274 | ) | 43 | ||||||
Other disbursements, net (2) | (59 | ) | (44 | ) | (15 | ) | |||||
Net cash provided by operating activities (3) | $ | 650 | $ | 658 | $ | (8 | ) |
(1) | Amounts include value added taxes and sales taxes. |
(2) | Amounts include payments associated with interest, prior period restructuring plans and miscellaneous receipts and disbursements. |
(3) | Net cash provided by operating activities for the first nine months of fiscal 2017 was adjusted to reflect the adoption of ASU 2016-09. Refer to Note A, “Accounting Policies” in the Notes to the Condensed Consolidated Financial Statements for further details. |
December 31, 2017 | March 31, 2017 | ||||||
(in millions) | |||||||
Revolving credit facility | $ | — | $ | — | |||
2.875% Senior Notes due August 2018 | 250 | 250 | |||||
5.375% Senior Notes due December 2019 | 750 | 750 | |||||
3.600% Senior Notes due August 2020 | 400 | 400 | |||||
3.600% Senior Notes due August 2022 | 500 | 500 | |||||
4.500% Senior Notes due August 2023 | 250 | 250 | |||||
4.700% Senior Notes due March 2027 | 350 | 350 | |||||
Term Loan due April 2022 | 289 | 300 | |||||
Other indebtedness, primarily capital leases | 11 | 8 | |||||
Unamortized debt issuance costs | (12 | ) | (14 | ) | |||
Unamortized discount for Senior Notes | (1 | ) | (3 | ) | |||
Total debt outstanding | $ | 2,787 | $ | 2,791 | |||
Less the current portion | (269 | ) | (18 | ) | |||
Total long-term debt portion | $ | 2,518 | $ | 2,773 |
Nine Months Ended December 31, | |||||||
2017 | 2016 | ||||||
(in millions) | |||||||
Total borrowings outstanding at beginning of period (1) | $ | 137 | $ | 139 | |||
Borrowings | 1,581 | 1,391 | |||||
Repayments | (1,612 | ) | (1,365 | ) | |||
Foreign exchange effect | 33 | (26 | ) | ||||
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. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
(in thousands, except average price paid per share) | ||||||||||||||
October 1, 2017 - October 31, 2017 | 62 | $ | 32.35 | 62 | $ | 557,994 | ||||||||
November 1, 2017 - November 30, 2017 | 664 | $ | 32.35 | 664 | $ | 536,509 | ||||||||
December 1, 2017 - December 31, 2017 | 923 | $ | 32.51 | 923 | $ | 506,509 | ||||||||
Total | 1,649 | $ | 32.44 | 1,649 | $ | 506,509 |
(1) | In November 2015, the Board approved a stock repurchase program that authorized us to acquire up to $750 million of our common stock. We currently expect to repurchase shares on the open market, through solicited or unsolicited privately negotiated transactions or otherwise, from time to time based on market conditions and other factors. |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | Exhibit | Filing Date | Filed or Furnished Herewith | |||||
8-K | 3.3 | 3/9/06 | ||||||||
10-K | 3.2 | 5/8/15 | ||||||||
X | ||||||||||
X | ||||||||||
X | ||||||||||
X | ||||||||||
X | ||||||||||
101.INS | XBRL Instance Document. | X | ||||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | X | ||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | X | ||||||||
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 |
Fiscal Year | Nine Months Ended | |||||||||||||||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | December 31, 2017 | |||||||||||||||||||
Earnings available for fixed charges: | ||||||||||||||||||||||||
Earnings from continuing operations before income taxes, minority interest and discontinued operations | $ | 1,260 | $ | 1,016 | $ | 1,115 | $ | 1,084 | $ | 1,073 | $ | 778 | ||||||||||||
Add: Fixed charges | 113 | 123 | 125 | 128 | 136 | 118 | ||||||||||||||||||
Total earnings available for fixed charges | $ | 1,373 | $ | 1,139 | $ | 1,240 | $ | 1,212 | $ | 1,209 | $ | 896 | ||||||||||||
Fixed charges: | ||||||||||||||||||||||||
Interest expense (1) | $ | 64 | $ | 75 | $ | 77 | $ | 81 | $ | 90 | $ | 95 | ||||||||||||
Interest portion of rental expense | 49 | 48 | 48 | 47 | 46 | 23 | ||||||||||||||||||
Total fixed charges | $ | 113 | $ | 123 | $ | 125 | $ | 128 | $ | 136 | $ | 118 | ||||||||||||
RATIOS OF EARNINGS TO FIXED CHARGES | 12.15 | 9.26 | 9.92 | 9.47 | 8.89 | 7.59 | ||||||||||||||||||
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 |
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: |
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): |
Date: | January 31, 2018 | /s/ Michael P. Gregoire | |||||
Michael P. Gregoire | |||||||
Chief Executive Officer | |||||||
CA, Inc. |
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: |
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): |
Date: | January 31, 2018 | /s/ Kieran J. McGrath | |||||
Kieran J. McGrath | |||||||
Executive Vice President and Chief Financial Officer | |||||||
CA, Inc. |
/s/ Michael P. Gregoire |
Michael P. Gregoire |
Chief Executive Officer |
January 31, 2018 |
/s/ Kieran J. McGrath |
Kieran J. McGrath |
Executive Vice President and Chief Financial Officer |
January 31, 2018 |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Jan. 24, 2018 |
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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, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 416,924,204 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Dec. 31, 2017 |
Mar. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 11 | $ 11 |
Accumulated depreciation | $ 860 | $ 841 |
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 | 412,196,271 | 413,409,346 |
Treasury stock, Shares | 177,498,810 | 176,285,735 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (93) | $ 208 | $ 269 | $ 618 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 9 | (83) | 141 | (102) |
Total other comprehensive income (loss) | 9 | (83) | 141 | (102) |
Comprehensive (loss) income | $ (84) | $ 125 | $ 410 | $ 516 |
Accounting Policies |
9 Months Ended |
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Dec. 31, 2017 | |
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. and its subsidiaries (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 and therefore should be read in conjunction with 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, 2017 (2017 Form 10-K). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, these estimates may ultimately differ from actual results. Operating results for the three and nine months ended December 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2018. Cash, Cash Equivalents and Restricted Cash: The Company’s cash and cash equivalents are held in numerous locations throughout the world, with approximately 66% being held by the Company’s foreign subsidiaries outside the United States at December 31, 2017. At December 31, 2017 and March 31, 2017, the total amount of restricted cash included in “Other noncurrent assets, net” in the Company’s Condensed Consolidated Balance Sheets was approximately $3 million and $1 million, respectively. Restricted cash was included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown in the Company’s Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2017 and 2016. New Accounting Pronouncements: New Accounting Pronouncements Recently Adopted 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 statements of cash flows. ASU 2016-09 was adopted by the Company when effective in the first quarter of fiscal year 2018. The adoption of ASU 2016-09 resulted in the presentation of cash flows for employee taxes paid by withholding shares of restricted stock as a financing activity within the Condensed Consolidated Statements of Cash Flows, which were previously presented as an operating activity. A retrospective method of adoption was required for this change, which resulted in the reclassification of cash outflows of approximately $34 million from operating activities to financing activities within the Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2016. Although not material, ASU 2016-09 also requires that excess tax benefits on share-based compensation expense be recognized in the Condensed Consolidated Statements of Operations as a component of the provision for income taxes, rather than additional paid-in capital, on a prospective basis. As permitted by ASU 2016-09, although not material, the Company elected to retrospectively reclassify cash flows related to excess tax benefits on share-based compensation expense as an operating activity within the Condensed Consolidated Statements of Cash Flows, which were previously presented as a financing activity. In addition, as permitted by ASU 2016-09, the Company elected to continue to estimate forfeitures expected to occur to determine the amount of share-based compensation expense to be recognized in each period. 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 statements 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 statements 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 statements of cash flows. The Company elected to early adopt both ASU 2016-15 and ASU 2016-18 in the first quarter of fiscal year 2018 using the retrospective transition method of adoption. The adoption of these standards did not have a material effect on the Company’s consolidated financial statements and related disclosures. New Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, with amendments in 2015, 2016 and 2017, 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 (full retrospective method) or with the cumulative effect recognized as of the date of initial application (modified retrospective method). The Company has established a cross-functional implementation team consisting of representatives across the organization and a third-party service provider to develop a project plan, including the evaluation of customer contracts across the organization, the development of policies, processes and tools to report financial results, the consideration of new performance measurements, and the implementation and evaluation of the Company’s internal controls over financial reporting that will be necessary under the new standard. The Company currently plans to adopt Topic 606 in the first quarter of fiscal year 2019 using the modified retrospective method. While the Company is continuing to determine the full effect of the new standard, it currently anticipates that this standard will have a material effect on its consolidated financial statements and related disclosures, and currently believes the most significant effect 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 as required by existing GAAP for most of the Company’s software arrangements. As a result, a significant portion of the Company’s revenue backlog (i.e., deferred revenue and future billings on committed contracts) relating to the license component of customer contracts at March 31, 2018 under existing GAAP will not be recognized as revenue in future periods but instead will be included as part of the cumulative effect adjustment within retained earnings upon adoption of Topic 606. Such cumulative effect adjustment will primarily result from (i) the significant reduction in deferred revenue relating to the license component of customer contracts as mentioned above, (ii) the establishment of a significant contract asset related to the Company’s contractual right to consideration for completed performance obligations not yet billed or collected (i.e., license revenue recognized in advance of billings), (iii) the increase in deferred tax liabilities arising from the increase in contract assets, and (iv) the increase in income taxes payable from both the increase in contract assets as a result of the Tax Cuts and Jobs Act enacted on December 22, 2017 (the “Tax Act”) and the portion of deferred revenue included in the cumulative effect adjustment that has not been previously included as taxable income on a tax return. The increase in contract assets and decrease in deferred revenue, when taken together with those provisions of the Tax Act which affect tax method revenue recognition for accrual-method U.S. taxpayers, will result in an acceleration of the timing of the Company’s income tax payments. This acceleration of the timing of income tax payments will be significant in relation to the Company’s current annual income tax payments within cash flows from operations. While the Company has not finalized its assessment of the impact arising from the Topic 606 adoption and finalization of the assessment could result in revisions to these estimates, which could be material, the Company currently estimates additional income tax payments in the range of approximately $100 million to $150 million per year over a four-year period, beginning in fiscal year 2019. The Company currently expects these additional income tax payments will be largely offset by the benefit from the reduced U.S. corporate tax rate enacted by the Tax Act. The Company believes that taken together, the incremental income tax payments resulting from the Topic 606 adoption and enactment of the Tax Act will be approximately $25 million to $50 million, on average, per year for the next four years, beginning in fiscal year 2019. Although the Company continues to evaluate the items listed above, it does not currently expect Topic 606 to have a significant effect on its customer billings and cash collections from customer billings. The Company currently believes that the point-in-time recognition requirement of the new standard will increase the variability of its revenue and overall net income period-to-period. The Company does not currently expect Topic 606 will have a significant effect on the timing of revenue recognition for its maintenance, Software-as-a-Service and professional services contracts. However, under Topic 606, more judgment and estimates will be required within the revenue recognition process than are required under existing GAAP, including estimates of the standalone selling price for each performance obligation identified within the Company’s contracts. These judgments and estimates will also impact the proportion of a contract’s value that is reported as license, maintenance and other elements, and the amounts assigned to the Company’s reportable segments. Topic 606 will also require the Company to capitalize a portion of its sales commissions and other incremental costs to acquire contracts (i.e., contract costs), which are currently expensed as incurred. Upon adoption of Topic 606, the capitalization of contract costs will be included as part of the cumulative effect adjustment within retained earnings. The Company currently anticipates it will amortize these capitalized contract costs over an expected period of benefit ranging from approximately four to seven years. The Company is currently evaluating the effect of this requirement on its consolidated financial statements and related 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 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 fiscal year. The Company does not currently expect the adoption of ASU 2016-16 to have a material effect on its consolidated financial statements and related disclosures. In January 2017, the FASB issued Accounting Standards Update No. 2017-04 (ASU 2017-04), Simplifying the Test for Goodwill Impairment (Topic 350), which is intended to simplify the subsequent measurement of goodwill. ASU 2017-04 eliminates Step 2 of the goodwill impairment test requiring the assessment of fair value of individual assets and liabilities of a reporting unit to measure goodwill impairments. Upon adoption of this new standard, goodwill impairments will be the amount by which a reporting unit's carrying value exceeds its fair value. ASU 2017-04 will be effective for the Company’s first quarter of fiscal year 2021 and requires a prospective method of adoption. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the effect that ASU 2017-04 will have on its consolidated financial statements and related disclosures. In August 2017, the FASB issued Accounting Standards Update No. 2017-12 (ASU 2017-12), Targeted Improvements to Accounting for Hedging Activities (Topic 815), which is intended to improve the financial reporting of hedging relationships to better portray the economic results of risk management activities in financial statements. ASU 2017-12 makes certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. ASU 2017-12 will be effective for the Company’s first quarter of fiscal year 2020 and requires a prospective method of adoption for the amended presentation and disclosure guidance. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the effect that ASU 2017-12 will have on its consolidated financial statements and related disclosures. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | NOTE B – ACQUISITIONS In the fourth quarter of fiscal year 2017, the Company acquired Automic Holding GmbH (Automic) and Veracode, Inc. (Veracode). The results of operations of Automic and Veracode are reported predominantly in the Company’s Enterprise Solutions segment. The purchase price allocation for Automic and Veracode is provided within the table below.
The excess purchase price over the estimated value of the net tangible and identifiable intangible assets was recorded to goodwill. The allocation of the 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 acquisitions of Automic and Veracode is not expected to be deductible for tax purposes and is allocated to the Enterprise Solutions segment. The purchase price allocation for Automic was finalized during the third quarter of fiscal year 2018. During the third quarter of fiscal year 2018, the Company recorded $72 million of additional deferred tax assets relating to Veracode based on further review of their historical tax records. The Company expects to complete its analysis of Veracode’s historical tax records and finalize the purchase price allocation for Veracode in the fourth quarter of fiscal year 2018. The Condensed Consolidated Statement of Operations for the three and nine months ended December 31, 2017 included total revenue of approximately $68 million and $182 million, respectively, and net loss of approximately $16 million and $53 million, respectively, from Automic and Veracode. The unaudited pro forma combined financial information in the table below summarizes the results of operations for the Company, Automic and Veracode as though the companies were combined as of the beginning of fiscal year 2017. The pro forma financial information presented below is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place at the beginning of fiscal year 2017, nor does it attempt to represent the results of future operations of the combined entities under the ownership and operation of the Company. The pro forma results of operations also do not include any cost savings or other synergies that may result from these acquisitions or any estimated costs that have been or will be incurred by the Company to integrate the acquired assets. The pro forma results below were based on estimates and assumptions, which the Company believes are reasonable. The pro forma financial information for all periods presented also includes the business combination accounting effects resulting from these acquisitions, including the amortization charges from acquired intangible assets and other purchase accounting adjustments, employee retention costs and the related tax effects as though the Company, Automic and Veracode were combined as of the beginning of fiscal year 2017.
The pro forma effects of the Company’s other fiscal year 2017 acquisitions on the Company’s revenues and results of operations during the three and nine months ended December 31, 2016 were immaterial. The Company had approximately $11 million and $12 million of accrued acquisition-related costs at December 31, 2017 and March 31, 2017, respectively, related to purchase price amounts withheld subject to indemnification protections. |
Goodwill, Capitalized Software and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill, Capitalized Software and Other Intangible Assets | NOTE C – GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at December 31, 2017 were as follows:
The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at March 31, 2017 were as follows:
Based on the capitalized software and other intangible assets recorded through December 31, 2017, the projected annual amortization expense for fiscal year 2018 and the next four fiscal years is expected to be as follows:
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, 2017 was as follows:
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Deferred Revenue |
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Deferred Revenue Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue | NOTE D – DEFERRED REVENUE The current and noncurrent components of “Deferred revenue (billed or collected)” at December 31, 2017 and March 31, 2017 were as follows:
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Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | NOTE E – 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 balance sheet and forecasted transaction foreign currency risks. The Company has not designated its foreign exchange derivatives as hedges for accounting purposes. The Company’s foreign currency derivative trading strategy is to economically hedge a majority of its material exposures due to forecasted and actual intercompany cash flows, such as royalties and development costs. The Company also economically hedges its material receivable, payable and cash balances held in non-functional currencies. The Company’s foreign currency contracts are generally short-term in duration. Principal currencies hedged include the euro, the British pound sterling, the Australian dollar, the Brazilian real, the Japanese yen, the Canadian dollar, the Israeli shekel, the Indian rupee and the Czech koruna. 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, 2017, foreign currency contracts outstanding consisted of purchase and sale contracts with a total gross notional value of approximately $825 million and durations of less than three months. The net fair value of these contracts at December 31, 2017 was a net liability of approximately $4 million, of which approximately $8 million is included in “Other current assets” and approximately $12 million is included in “Accrued expenses and other current liabilities” in the Company’s Condensed Consolidated Balance Sheet. At March 31, 2017, foreign currency contracts outstanding consisted of purchase and sale contracts with a total gross notional value of approximately $336 million and durations of less than three months. The net fair value of these contracts at March 31, 2017 was a net asset of approximately $1 million, of which approximately $2 million is included in “Other current assets” and approximately $1 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:
The Company is subject to collateral security arrangements with most of its major counterparties. The Company posted no collateral at December 31, 2017 or March 31, 2017. 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. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | NOTE F – 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, 2017 and March 31, 2017:
At December 31, 2017 and March 31, 2017, 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, 2017 and March 31, 2017:
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Commitments and Contingencies |
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Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE G – COMMITMENTS AND CONTINGENCIES The Company has been or, from time to time, may be named as a defendant in various lawsuits and claims arising in the normal course of business. The Company may also become involved in contract issues and disputes with customers, including government customers. 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 any 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. 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 any amounts that have been accrued. |
Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ Equity | NOTE H – STOCKHOLDERS’ EQUITY Stock Repurchases: On November 13, 2015, the Board of Directors (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, 2017, the Company repurchased approximately 4.4 million shares of its common stock for approximately $143 million. At December 31, 2017, the Company remained authorized to purchase approximately $507 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, 2017 and March 31, 2017 were approximately $342 million and $483 million, respectively. Cash Dividends: The Board declared the following dividends during the nine months ended December 31, 2017 and 2016: Nine Months Ended December 31, 2017: (in millions, except per share amounts)
Nine Months Ended December 31, 2016: (in millions, except per share amounts)
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Income Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Per Common Share | NOTE I – INCOME 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 per common share information for the three and nine months ended December 31, 2017 and 2016:
For the three months ended December 31, 2017 and 2016, respectively, approximately 2 million shares and 1 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 RSAs of approximately 5 million shares and 5 million shares for the three months ended December 31, 2017 and 2016, respectively, were considered participating securities in the calculation of net income allocable to common stockholders. For the nine months ended December 31, 2017 and 2016, respectively, approximately 2 million shares 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 RSAs of approximately 5 million shares and 5 million shares for the nine months ended December 31, 2017 and 2016, respectively, were considered participating securities in the calculation of net income allocable to common stockholders. |
Accounting for Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting for Share-Based Compensation | NOTE J – 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:
There were no capitalized share-based compensation costs for the three and nine months ended December 31, 2017 and 2016. The following table summarizes the unrecognized share-based compensation costs at December 31, 2017:
For the nine months ended December 31, 2017 and 2016, the Company issued stock options for approximately 1.0 million shares and 1.1 million shares, respectively. The weighted average fair values and assumptions used for the options granted were as follows:
The table below summarizes all of the RSAs and RSUs granted, including grants made pursuant to the Company’s long-term incentive plans, during the three and nine months ended December 31, 2017 and 2016:
Employee Stock Purchase Plan: For the six-month offer period ended June 30, 2017, the Company issued approximately 0.1 million shares under the Employee Stock Purchase Plan (ESPP) at $32.75 per share. For the six-month offer period ended December 31, 2017, the Company issued approximately 0.1 million shares under the Employee Stock Purchase Plan (ESPP) at $31.62 per share. As of December 31, 2017, approximately 28.8 million shares were available for future issuances under the ESPP. |
Income Taxes |
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Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE K – INCOME TAXES Income tax expense for the three and nine months ended December 31, 2017 was approximately $375 million and $509 million, respectively, compared with income tax expense for the three and nine months ended December 31, 2016 of approximately $84 million and $257 million, respectively. For the three and nine months ended December 31, 2017, the Company recorded a net discrete tax expense of approximately $310 million and $302 million, respectively. Of these amounts, approximately $318 million resulted from preliminary estimates of the impact of changes in tax law in the United States resulting from the enactment of the Tax Act. The amounts recorded for the impacts of the Tax Act are provisional amounts of approximately $220 million related to the taxation of unremitted earnings of the Company’s foreign subsidiaries, which is payable over eight years, and approximately $98 million related to the remeasurement of deferred tax assets and liabilities for the change in income tax rates. The Company will continue to refine the provisional amounts as it reviews and analyzes results from the full fiscal year 2018 operations needed for calculations under the Tax Act, as well as further review the historic unremitted earnings of the Company’s foreign subsidiaries and take into consideration any additional regulatory guidance published by the U.S. tax authorities in respect of the Tax Act. The Company expects to finalize the tax expense as soon as practical, but not later than the third quarter of fiscal year 2019. The Company does not expect other provisions of the Tax Act to have a material impact for fiscal year 2018, but is evaluating the impact on future fiscal years. Excluding the impact of discrete items for the nine months ended December 31, 2017 and 2016, the Company’s estimated annual effective tax rate was 26.6% and 28.9%, respectively. The Company’s estimated annual effective tax rate for the nine months ended December 31, 2017 includes a reduction as compared with the six months ended September 30, 2017 of 2.0% related to the statutory tax rate reduction for fiscal year 2018 resulting from the Tax Act. 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 2018, 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 2018. |
Supplemental Statement of Cash Flows Information |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Statement of Cash Flows Information | NOTE L – SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION For the nine months ended December 31, 2017 and 2016, interest payments were approximately $84 million and $66 million, respectively, and income taxes paid, net were approximately $231 million and $274 million, respectively. Non-cash financing activities for the nine months ended December 31, 2017 and 2016 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 $46 million (net of approximately $36 million of income taxes withheld) and $44 million (net of approximately $33 million of income taxes withheld), respectively; discretionary stock contributions to the CA, Inc. Savings Harvest Plan of approximately $23 million and $24 million, respectively; and 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, 2017 and 2016 was as follows:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | NOTE M – 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, severance and facility actions approved 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, 2017 and 2016 was as follows:
Reconciliation of segment profit to income before income taxes for the three months ended December 31, 2017:
Reconciliation of segment profit to income before income taxes for the nine months ended December 31, 2017:
Reconciliation of segment profit to income before income taxes for the three months ended December 31, 2016:
Reconciliation of segment profit to income before income taxes for the nine months ended December 31, 2016:
The table below summarizes the Company’s revenue from the United States and from international (i.e., non-U.S.) locations:
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Accounting Policies (Policies) |
9 Months Ended |
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Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation: The accompanying unaudited condensed consolidated financial statements (Condensed Consolidated Financial Statements) of CA, Inc. and its subsidiaries (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 and therefore should be read in conjunction with 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, 2017 (2017 Form 10-K). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal, recurring nature. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, these estimates may ultimately differ from actual results. Operating results for the three and nine months ended December 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2018. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash: The Company’s cash and cash equivalents are held in numerous locations throughout the world, with approximately 66% being held by the Company’s foreign subsidiaries outside the United States at December 31, 2017. At December 31, 2017 and March 31, 2017, the total amount of restricted cash included in “Other noncurrent assets, net” in the Company’s Condensed Consolidated Balance Sheets was approximately $3 million and $1 million, respectively. Restricted cash was included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown in the Company’s Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2017 and 2016. |
New Accounting Pronouncements | New Accounting Pronouncements: New Accounting Pronouncements Recently Adopted 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 statements of cash flows. ASU 2016-09 was adopted by the Company when effective in the first quarter of fiscal year 2018. The adoption of ASU 2016-09 resulted in the presentation of cash flows for employee taxes paid by withholding shares of restricted stock as a financing activity within the Condensed Consolidated Statements of Cash Flows, which were previously presented as an operating activity. A retrospective method of adoption was required for this change, which resulted in the reclassification of cash outflows of approximately $34 million from operating activities to financing activities within the Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2016. Although not material, ASU 2016-09 also requires that excess tax benefits on share-based compensation expense be recognized in the Condensed Consolidated Statements of Operations as a component of the provision for income taxes, rather than additional paid-in capital, on a prospective basis. As permitted by ASU 2016-09, although not material, the Company elected to retrospectively reclassify cash flows related to excess tax benefits on share-based compensation expense as an operating activity within the Condensed Consolidated Statements of Cash Flows, which were previously presented as a financing activity. In addition, as permitted by ASU 2016-09, the Company elected to continue to estimate forfeitures expected to occur to determine the amount of share-based compensation expense to be recognized in each period. 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 statements 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 statements 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 statements of cash flows. The Company elected to early adopt both ASU 2016-15 and ASU 2016-18 in the first quarter of fiscal year 2018 using the retrospective transition method of adoption. The adoption of these standards did not have a material effect on the Company’s consolidated financial statements and related disclosures. New Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, with amendments in 2015, 2016 and 2017, 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 (full retrospective method) or with the cumulative effect recognized as of the date of initial application (modified retrospective method). The Company has established a cross-functional implementation team consisting of representatives across the organization and a third-party service provider to develop a project plan, including the evaluation of customer contracts across the organization, the development of policies, processes and tools to report financial results, the consideration of new performance measurements, and the implementation and evaluation of the Company’s internal controls over financial reporting that will be necessary under the new standard. The Company currently plans to adopt Topic 606 in the first quarter of fiscal year 2019 using the modified retrospective method. While the Company is continuing to determine the full effect of the new standard, it currently anticipates that this standard will have a material effect on its consolidated financial statements and related disclosures, and currently believes the most significant effect 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 as required by existing GAAP for most of the Company’s software arrangements. As a result, a significant portion of the Company’s revenue backlog (i.e., deferred revenue and future billings on committed contracts) relating to the license component of customer contracts at March 31, 2018 under existing GAAP will not be recognized as revenue in future periods but instead will be included as part of the cumulative effect adjustment within retained earnings upon adoption of Topic 606. Such cumulative effect adjustment will primarily result from (i) the significant reduction in deferred revenue relating to the license component of customer contracts as mentioned above, (ii) the establishment of a significant contract asset related to the Company’s contractual right to consideration for completed performance obligations not yet billed or collected (i.e., license revenue recognized in advance of billings), (iii) the increase in deferred tax liabilities arising from the increase in contract assets, and (iv) the increase in income taxes payable from both the increase in contract assets as a result of the Tax Cuts and Jobs Act enacted on December 22, 2017 (the “Tax Act”) and the portion of deferred revenue included in the cumulative effect adjustment that has not been previously included as taxable income on a tax return. The increase in contract assets and decrease in deferred revenue, when taken together with those provisions of the Tax Act which affect tax method revenue recognition for accrual-method U.S. taxpayers, will result in an acceleration of the timing of the Company’s income tax payments. This acceleration of the timing of income tax payments will be significant in relation to the Company’s current annual income tax payments within cash flows from operations. While the Company has not finalized its assessment of the impact arising from the Topic 606 adoption and finalization of the assessment could result in revisions to these estimates, which could be material, the Company currently estimates additional income tax payments in the range of approximately $100 million to $150 million per year over a four-year period, beginning in fiscal year 2019. The Company currently expects these additional income tax payments will be largely offset by the benefit from the reduced U.S. corporate tax rate enacted by the Tax Act. The Company believes that taken together, the incremental income tax payments resulting from the Topic 606 adoption and enactment of the Tax Act will be approximately $25 million to $50 million, on average, per year for the next four years, beginning in fiscal year 2019. Although the Company continues to evaluate the items listed above, it does not currently expect Topic 606 to have a significant effect on its customer billings and cash collections from customer billings. The Company currently believes that the point-in-time recognition requirement of the new standard will increase the variability of its revenue and overall net income period-to-period. The Company does not currently expect Topic 606 will have a significant effect on the timing of revenue recognition for its maintenance, Software-as-a-Service and professional services contracts. However, under Topic 606, more judgment and estimates will be required within the revenue recognition process than are required under existing GAAP, including estimates of the standalone selling price for each performance obligation identified within the Company’s contracts. These judgments and estimates will also impact the proportion of a contract’s value that is reported as license, maintenance and other elements, and the amounts assigned to the Company’s reportable segments. Topic 606 will also require the Company to capitalize a portion of its sales commissions and other incremental costs to acquire contracts (i.e., contract costs), which are currently expensed as incurred. Upon adoption of Topic 606, the capitalization of contract costs will be included as part of the cumulative effect adjustment within retained earnings. The Company currently anticipates it will amortize these capitalized contract costs over an expected period of benefit ranging from approximately four to seven years. The Company is currently evaluating the effect of this requirement on its consolidated financial statements and related 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 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 fiscal year. The Company does not currently expect the adoption of ASU 2016-16 to have a material effect on its consolidated financial statements and related disclosures. In January 2017, the FASB issued Accounting Standards Update No. 2017-04 (ASU 2017-04), Simplifying the Test for Goodwill Impairment (Topic 350), which is intended to simplify the subsequent measurement of goodwill. ASU 2017-04 eliminates Step 2 of the goodwill impairment test requiring the assessment of fair value of individual assets and liabilities of a reporting unit to measure goodwill impairments. Upon adoption of this new standard, goodwill impairments will be the amount by which a reporting unit's carrying value exceeds its fair value. ASU 2017-04 will be effective for the Company’s first quarter of fiscal year 2021 and requires a prospective method of adoption. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the effect that ASU 2017-04 will have on its consolidated financial statements and related disclosures. In August 2017, the FASB issued Accounting Standards Update No. 2017-12 (ASU 2017-12), Targeted Improvements to Accounting for Hedging Activities (Topic 815), which is intended to improve the financial reporting of hedging relationships to better portray the economic results of risk management activities in financial statements. ASU 2017-12 makes certain targeted improvements to simplify the application of the hedge accounting guidance in current GAAP. ASU 2017-12 will be effective for the Company’s first quarter of fiscal year 2020 and requires a prospective method of adoption for the amended presentation and disclosure guidance. Early adoption is permitted. The Company is currently evaluating the timing of adoption and the effect that ASU 2017-12 will have on its consolidated financial statements and related disclosures. |
Acquisitions (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition purchase price allocation | The purchase price allocation for Automic and Veracode is provided within the table below.
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Unaudited pro forma combined financial information | The pro forma results below were based on estimates and assumptions, which the Company believes are reasonable. The pro forma financial information for all periods presented also includes the business combination accounting effects resulting from these acquisitions, including the amortization charges from acquired intangible assets and other purchase accounting adjustments, employee retention costs and the related tax effects as though the Company, Automic and Veracode were combined as of the beginning of fiscal year 2017.
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Goodwill, Capitalized Software and Other Intangible Assets (Tables) |
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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, 2017 were as follows:
The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at March 31, 2017 were as follows:
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Projected annual amortization expense | Based on the capitalized software and other intangible assets recorded through December 31, 2017, the projected annual amortization expense for fiscal year 2018 and the next four fiscal years is expected to be as follows:
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Goodwill activity by segment | Goodwill activity by segment for the nine months ended December 31, 2017 was as follows:
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Deferred Revenue (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2017 and March 31, 2017 were as follows:
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Derivatives (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
|
Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2017 and March 31, 2017:
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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, 2017 and March 31, 2017:
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Stockholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends | Cash Dividends: The Board declared the following dividends during the nine months ended December 31, 2017 and 2016: Nine Months Ended December 31, 2017: (in millions, except per share amounts)
Nine Months Ended December 31, 2016: (in millions, except per share amounts)
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Income Per Common Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of basic and diluted income per common share | The following table presents basic and diluted income per common share information for the three and nine months ended December 31, 2017 and 2016:
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Accounting for Share-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Unrecognized share-based compensation costs | The following table summarizes the unrecognized share-based compensation costs at December 31, 2017:
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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:
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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 granted, including grants made pursuant to the Company’s long-term incentive plans, during the three and nine months ended December 31, 2017 and 2016:
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Supplemental Statement of Cash Flows Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional pooling arrangement | The activity under this notional pooling arrangement for the nine months ended December 31, 2017 and 2016 was as follows:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment information |
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Reconciliation of segment profit to income before income taxes | Reconciliation of segment profit to income before income taxes for the nine months ended December 31, 2016:
Reconciliation of segment profit to income before income taxes for the nine months ended December 31, 2017:
Reconciliation of segment profit to income before income taxes for the three months ended December 31, 2016:
Reconciliation of segment profit to income before income taxes for the three months ended December 31, 2017:
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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:
|
Acquisitions 2 (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2016 |
|
Unaudited pro forma combined financial information for the Company, Automic and Veracode as though combined as of beginning of fiscal year 2017 | ||
Total revenue | $ 1,061 | $ 3,178 |
Net income | $ 181 | $ 527 |
Basic income per common share (in dollars per share) | $ 0.43 | $ 1.26 |
Diluted income per common share (in dollars per share) | $ 0.43 | $ 1.25 |
Acquisitions 3 (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Mar. 31, 2017 |
|||
Business Combinations [Abstract] | |||||||
Accrued acquisition-related costs related to purchase price amounts withheld subject to indemnification protections | $ 11 | $ 11 | $ 12 | ||||
Business Acquisition | |||||||
Purchase accounting adjustments for additional deferred tax assets | [1] | (99) | |||||
Total revenue | 1,093 | $ 1,007 | 3,152 | $ 3,024 | |||
Net (loss) income | (93) | $ 208 | 269 | $ 618 | |||
Veracode | |||||||
Business Acquisition | |||||||
Purchase accounting adjustments for additional deferred tax assets | (72) | ||||||
Automic and Veracode | |||||||
Business Acquisition | |||||||
Total revenue | 68 | 182 | |||||
Net (loss) income | $ (16) | $ (53) | |||||
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Goodwill, Capitalized Software and Other Intangible Assets 1 (Details) - USD ($) $ in Millions |
Dec. 31, 2017 |
Mar. 31, 2017 |
---|---|---|
Capitalized software and other intangible assets | ||
Gross amortizable assets | $ 9,254 | $ 9,156 |
Less: Fully amortized assets | 7,080 | 6,755 |
Remaining amortizable assets | 2,174 | 2,401 |
Accumulated amortization on remaining amortizable assets | 998 | 1,094 |
Net assets | 1,176 | 1,307 |
Purchased Software Products | ||
Capitalized software and other intangible assets | ||
Gross amortizable assets | 6,565 | 6,496 |
Less: Fully amortized assets | 4,910 | 4,914 |
Remaining amortizable assets | 1,655 | 1,582 |
Accumulated amortization on remaining amortizable assets | 837 | 667 |
Net assets | 818 | 915 |
Internally Developed Software Products | ||
Capitalized software and other intangible assets | ||
Gross amortizable assets | 1,467 | 1,467 |
Less: Fully amortized assets | 1,347 | 1,029 |
Remaining amortizable assets | 120 | 438 |
Accumulated amortization on remaining amortizable assets | 103 | 391 |
Net assets | 17 | 47 |
Other Intangible Assets | ||
Capitalized software and other intangible assets | ||
Gross amortizable assets | 1,222 | 1,193 |
Less: Fully amortized assets | 823 | 812 |
Remaining amortizable assets | 399 | 381 |
Accumulated amortization on remaining amortizable assets | 58 | 36 |
Net assets | $ 341 | $ 345 |
Goodwill, Capitalized Software and Other Intangible Assets 2 (Details) $ in Millions |
Dec. 31, 2017
USD ($)
|
---|---|
Projected annual amortization expense | |
2018 | $ 315 |
2019 | 234 |
2020 | 200 |
2021 | 155 |
2022 | 145 |
Purchased Software Products | |
Projected annual amortization expense | |
2018 | 236 |
2019 | 185 |
2020 | 162 |
2021 | 118 |
2022 | 109 |
Internally Developed Software Products | |
Projected annual amortization expense | |
2018 | 37 |
2019 | 9 |
2020 | 1 |
2021 | 0 |
2022 | 0 |
Other Intangible Assets | |
Projected annual amortization expense | |
2018 | 42 |
2019 | 40 |
2020 | 37 |
2021 | 37 |
2022 | $ 36 |
Goodwill, Capitalized Software and Other Intangible Assets 3 (Details) $ in Millions |
9 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2017
USD ($)
| ||||
Goodwill activity by segment | ||||
Balance at March 31, 2017 | $ 6,857 | |||
Acquisitions | (99) | [1] | ||
Foreign currency translation adjustment | 41 | |||
Balance at December 31, 2017 | 6,799 | |||
Mainframe Solutions | ||||
Goodwill activity by segment | ||||
Balance at March 31, 2017 | 4,178 | |||
Acquisitions | 0 | |||
Foreign currency translation adjustment | 0 | |||
Balance at December 31, 2017 | 4,178 | |||
Enterprise Solutions | ||||
Goodwill activity by segment | ||||
Balance at March 31, 2017 | 2,598 | |||
Acquisitions | (99) | [1] | ||
Foreign currency translation adjustment | 41 | |||
Balance at December 31, 2017 | 2,540 | |||
Services | ||||
Goodwill activity by segment | ||||
Balance at March 31, 2017 | 81 | |||
Acquisitions | 0 | |||
Foreign currency translation adjustment | 0 | |||
Balance at December 31, 2017 | $ 81 | |||
|
Goodwill, Capitalized Software and Other Intangible Assets 4 (Details) |
9 Months Ended |
---|---|
Dec. 31, 2017 | |
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. |
Deferred Revenue (Details) - USD ($) $ in Millions |
Dec. 31, 2017 |
Mar. 31, 2017 |
---|---|---|
Current: | ||
Total deferred revenue (billed or collected) - current | $ 2,095 | $ 2,222 |
Noncurrent: | ||
Total deferred revenue (billed or collected) - noncurrent | 655 | 794 |
Total deferred revenue (billed or collected) | 2,750 | 3,016 |
Subscription and Maintenance | ||
Current: | ||
Total deferred revenue (billed or collected) - current | 1,773 | 1,948 |
Noncurrent: | ||
Total deferred revenue (billed or collected) - noncurrent | 631 | 769 |
Professional Services | ||
Current: | ||
Total deferred revenue (billed or collected) - current | 138 | 135 |
Noncurrent: | ||
Total deferred revenue (billed or collected) - noncurrent | 17 | 19 |
Software Fees and Other | ||
Current: | ||
Total deferred revenue (billed or collected) - current | 184 | 139 |
Noncurrent: | ||
Total deferred revenue (billed or collected) - noncurrent | $ 7 | $ 6 |
Derivatives 1 (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
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 | $ 0 | $ (9) | $ 8 | $ (3) |
Derivatives 2 (Details) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Dec. 31, 2017 |
Mar. 31, 2017 |
|
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 | $ 825 | $ 336 |
Tenure of foreign currency contracts outstanding | less than three months | less than three months |
Net fair value of foreign currency contracts | $ (4) | $ 1 |
Foreign Currency Contracts | Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair value of foreign currency contracts included in "Other current assets" | 8 | 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" | $ 12 | $ 1 |
Fair Value Measurements 1 (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions |
Dec. 31, 2017 |
Mar. 31, 2017 |
|||||
---|---|---|---|---|---|---|---|
Assets: | |||||||
Foreign exchange derivatives | [1] | $ 8 | $ 2 | ||||
Total assets | 1,071 | 1,079 | |||||
Liabilities: | |||||||
Foreign exchange derivatives | [1] | 12 | 1 | ||||
Total liabilities | 12 | 1 | |||||
Money Market Funds | Cash and Cash Equivalents | |||||||
Assets: | |||||||
Money market funds | [2] | 1,063 | 1,077 | ||||
Fair Value, Inputs, Level 1 | |||||||
Assets: | |||||||
Foreign exchange derivatives | 0 | 0 | |||||
Total assets | 1,063 | 1,077 | |||||
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] | 1,063 | 1,077 | ||||
Fair Value, Inputs, Level 2 | |||||||
Assets: | |||||||
Foreign exchange derivatives | [1] | 8 | 2 | ||||
Total assets | 8 | 2 | |||||
Liabilities: | |||||||
Foreign exchange derivatives | [1] | 12 | 1 | ||||
Total liabilities | 12 | 1 | |||||
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 | |||||
|
Fair Value Measurements 2 (Details) - USD ($) $ in Millions |
Dec. 31, 2017 |
Mar. 31, 2017 |
|||||
---|---|---|---|---|---|---|---|
Carrying Value | |||||||
Liabilities: | |||||||
Total debt | $ 2,787 | $ 2,791 | |||||
Carrying Value | Facility Exit | |||||||
Liabilities: | |||||||
Facility exit reserves | [1] | 8 | 11 | ||||
Estimated Fair Value | |||||||
Liabilities: | |||||||
Total debt | [2] | 2,874 | 2,903 | ||||
Estimated Fair Value | Facility Exit | |||||||
Liabilities: | |||||||
Facility exit reserves | [1] | $ 9 | $ 12 | ||||
|
Fair Value Measurements 3 (Details) - Facility Exit - USD ($) $ in Millions |
Dec. 31, 2017 |
Mar. 31, 2017 |
---|---|---|
Accrued Expenses and Other Current Liabilities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Facility exit reserves | $ 2 | $ 3 |
Other Noncurrent Liabilities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Facility exit reserves | $ 6 | $ 8 |
Commitments and Contingencies (Details) $ in Millions |
Dec. 31, 2017
USD ($)
|
---|---|
Maximum | |
Loss Contingencies [Line Items] | |
Loss contingency, Estimate of possible loss | $ 20 |
Stockholders' Equity 1 (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
|
Cash dividends | ||||||
Declaration date | Nov. 09, 2017 | Aug. 09, 2017 | May 09, 2017 | Nov. 02, 2016 | Aug. 03, 2016 | May 04, 2016 |
Dividend per share (in dollars per share) | $ 0.255 | $ 0.255 | $ 0.255 | $ 0.255 | $ 0.255 | $ 0.255 |
Record date | Nov. 30, 2017 | Aug. 24, 2017 | May 25, 2017 | Nov. 17, 2016 | Aug. 25, 2016 | May 26, 2016 |
Total amount | $ 106 | $ 108 | $ 107 | $ 107 | $ 107 | $ 107 |
Payment date | Dec. 12, 2017 | Sep. 12, 2017 | Jun. 13, 2017 | Dec. 06, 2016 | Sep. 13, 2016 | Jun. 14, 2016 |
Stockholders' Equity 2 (Details) - Current Stock Repurchase Program - USD ($) shares in Millions, $ in Millions |
9 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Nov. 13, 2015 |
|
Stock Repurchase Program [Line Items] | ||
Stock repurchase program, Authorized amount | $ 750 | |
Shares of common stock repurchased | 4.4 | |
Value of common stock repurchased | $ 143 | |
Stock repurchase program, Remaining authorized common stock repurchase amount | $ 507 |
Stockholders' Equity 3 (Details) - USD ($) $ in Millions |
Dec. 31, 2017 |
Mar. 31, 2017 |
---|---|---|
Accumulated Other Comprehensive Loss | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Foreign currency translation losses | $ (342) | $ (483) |
Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Basic (loss) income per common share: | ||||
Net (loss) income | $ (93) | $ 208 | $ 269 | $ 618 |
Less: Net income allocable to participating securities | 0 | (2) | (5) | (7) |
Net (loss) income allocable to common shares | $ (93) | $ 206 | $ 264 | $ 611 |
Weighted average common shares outstanding | 413 | 413 | 414 | 414 |
Basic (loss) income per common share (in dollars per share) | $ (0.23) | $ 0.50 | $ 0.64 | $ 1.48 |
Diluted (loss) income per common share: | ||||
Net (loss) income | $ (93) | $ 208 | $ 269 | $ 618 |
Less: Net income allocable to participating securities | 0 | (2) | (5) | (7) |
Net (loss) income allocable to common shares | $ (93) | $ 206 | $ 264 | $ 611 |
Weighted average shares outstanding and common share equivalents: | ||||
Weighted average common shares outstanding | 413 | 413 | 414 | 414 |
Weighted average effect of share-based payment awards | 0 | 1 | 1 | 1 |
Denominator in calculation of diluted income per share | 413 | 414 | 415 | 415 |
Diluted (loss) income per common share (in dollars per share) | $ (0.23) | $ 0.50 | $ 0.64 | $ 1.47 |
Income per common share, Other disclosures [Abstract] | ||||
Number of anti-dilutive restricted stock awards and options excluded from the calculation | 2 | 1 | 2 | 2 |
Weighted average restricted stock awards considered participating securities | 5 | 5 | 5 | 5 |
Accounting for Share-Based Compensation 1 (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Recognized share-based compensation | ||||
Share-based compensation expense before tax | $ 28 | $ 26 | $ 89 | $ 80 |
Income tax benefit | (7) | (8) | (27) | (26) |
Net share-based compensation expense | 21 | 18 | 62 | 54 |
Costs of Licensing and Maintenance | ||||
Recognized share-based compensation | ||||
Share-based compensation expense before tax | 1 | 2 | 5 | 5 |
Cost of Professional Services | ||||
Recognized share-based compensation | ||||
Share-based compensation expense before tax | 1 | 1 | 2 | 3 |
Selling and Marketing | ||||
Recognized share-based compensation | ||||
Share-based compensation expense before tax | 9 | 9 | 29 | 28 |
General and Administrative | ||||
Recognized share-based compensation | ||||
Share-based compensation expense before tax | 10 | 8 | 33 | 27 |
Product Development and Enhancements | ||||
Recognized share-based compensation | ||||
Share-based compensation expense before tax | $ 7 | $ 6 | $ 20 | $ 17 |
Accounting for Share-Based Compensation 2 (Details) $ in Millions |
9 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
Unrecognized share-based compensation costs | |
Unrecognized share-based compensation costs | $ 141 |
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) | 1 year 10 months 24 days |
Restricted Stock Units (RSUs) | |
Unrecognized share-based compensation costs | |
Unrecognized share-based compensation costs | $ 21 |
Weighted average period expected to be recognized (in years) | 1 year 10 months 24 days |
Restricted Stock Awards (RSAs) | |
Unrecognized share-based compensation costs | |
Unrecognized share-based compensation costs | $ 78 |
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 | $ 37 |
Weighted average period expected to be recognized (in years) | 2 years 4 months 24 days |
Accounting for Share-Based Compensation 3 (Details) - $ / shares |
9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
||||||||
Weighted average fair values and assumptions used for options granted | |||||||||
Weighted average fair value (in dollars per share) | $ 4.72 | $ 4.42 | |||||||
Dividend yield | 3.17% | 3.56% | |||||||
Expected volatility factor | [1] | 21.00% | 22.00% | ||||||
Risk-free interest rate | [2] | 2.10% | 1.50% | ||||||
Expected life (in years) | [3] | 6 years | 6 years | ||||||
|
Accounting for Share-Based Compensation 4 (Details) - $ / shares shares in Millions |
3 Months Ended | 9 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
||||||||||
Restricted Stock Awards (RSAs) | |||||||||||||
Summary of all RSAs and RSUs granted, including grants made pursuant to long-term incentive plans | |||||||||||||
Shares | 0.1 | 0.0 | [1] | 3.0 | 2.9 | ||||||||
Weighted average grant date fair value (in dollars per share) | [2] | $ 32.12 | $ 31.99 | $ 31.70 | $ 31.56 | ||||||||
Restricted Stock Units (RSUs) | |||||||||||||
Summary of all RSAs and RSUs granted, including grants made pursuant to long-term incentive plans | |||||||||||||
Shares | 0.0 | [1] | 0.0 | 1.1 | 1.0 | ||||||||
Weighted average grant date fair value (in dollars per share) | [3] | $ 30.14 | $ 0.00 | $ 30.35 | $ 30.16 | ||||||||
|
Accounting for Share-Based Compensation 5 (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Jun. 30, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||
Capitalized share-based compensation costs | $ 0 | $ 0 | $ 0 | $ 0 | ||
Stock options issued | 1.0 | 1.1 | ||||
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 (ESPP) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares issued under ESPP | 0.1 | 0.1 | ||||
Share price issued under ESPP (in dollars per share) | $ 31.62 | $ 32.75 | ||||
Number of shares available for future issuances under ESPP | 28.8 | 28.8 | 28.8 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 375 | $ 84 | $ 509 | $ 257 |
Tax Cuts and Jobs Act [Line Items] | ||||
Net discrete tax expense | 310 | $ 302 | ||
Estimated annual effective tax rate excluding impact of discrete items | 26.60% | 28.90% | ||
Tax Cuts and Jobs Act (Tax Act) | ||||
Tax Cuts and Jobs Act [Line Items] | ||||
Net discrete tax expense | 318 | |||
Tax Cuts and Jobs Act (Tax Act) | Taxation of Unremitted Foreign Earnings | ||||
Tax Cuts and Jobs Act [Line Items] | ||||
Net discrete tax expense | 220 | |||
Tax Cuts and Jobs Act (Tax Act) | Remeasurement of Deferred Tax Assets and Liabilities | ||||
Tax Cuts and Jobs Act [Line Items] | ||||
Net discrete tax expense | $ 98 | |||
Tax Cuts and Jobs Act (Tax Act) | Statutory Tax Rate Reduction | ||||
Tax Cuts and Jobs Act [Line Items] | ||||
Estimated annual effective tax rate excluding impact of discrete items | (2.00%) |
Supplemental Statement of Cash Flows Information 1 (Details) - Notional Pooling Arrangement - USD ($) $ in Millions |
9 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
||||
Notional pooling arrangement | |||||
Borrowings | $ 1,581 | $ 1,391 | |||
Repayments | (1,612) | (1,365) | |||
Foreign exchange effect | 33 | (26) | |||
Accrued Expenses and Other Current Liabilities | |||||
Notional pooling arrangement | |||||
Total borrowings outstanding at beginning of period | [1] | 137 | 139 | ||
Total borrowings outstanding at end of period | [1] | $ 139 | $ 139 | ||
|
Supplemental Statement of Cash Flows Information 2 (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Supplemental Cash Flow Information [Abstract] | ||
Interest payments | $ 84 | $ 66 |
Income taxes paid, net | 231 | 274 |
Treasury common shares issued in connection with share-based incentive awards under equity compensation plans, Non-cash financing activities | 46 | 44 |
Withholding taxes on share-based incentive awards, Non-cash financing activities | 36 | 33 |
Treasury common shares issued in connection with discretionary stock contributions to CA, Inc. Savings Harvest Plan, Non-cash financing activities | 23 | 24 |
Treasury common shares issued in connection with Employee Stock Purchase Plan, Non-cash financing activities | $ 5 | $ 5 |
Segment Information 1 (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|||||||||
Segment information | ||||||||||||
Revenue | $ 1,093 | $ 1,007 | $ 3,152 | $ 3,024 | ||||||||
Expenses | 683 | 623 | 1,967 | 1,838 | ||||||||
Segment profit (loss) | $ 410 | $ 384 | $ 1,185 | $ 1,186 | ||||||||
Segment operating margin | 38.00% | 38.00% | 38.00% | 39.00% | ||||||||
Depreciation | $ 15 | $ 14 | $ 48 | $ 43 | ||||||||
Reconciliation of segment profit to income before income taxes | ||||||||||||
Segment profit | 410 | 384 | 1,185 | 1,186 | ||||||||
Share-based compensation expense | 28 | 26 | 89 | 80 | ||||||||
Other (gains) expenses, net | (4) | [1] | (11) | [1] | 8 | [2] | (9) | [1] | ||||
Interest expense, net | 25 | 16 | 74 | 45 | ||||||||
Income before income taxes | 282 | 292 | 778 | 875 | ||||||||
Purchased Software Products | ||||||||||||
Reconciliation of segment profit to income before income taxes | ||||||||||||
Amortization of intangible assets | 60 | 39 | 176 | 120 | ||||||||
Other Intangible Assets | ||||||||||||
Reconciliation of segment profit to income before income taxes | ||||||||||||
Amortization of intangible assets | 11 | 4 | 31 | 13 | ||||||||
Internally Developed Software Products | ||||||||||||
Reconciliation of segment profit to income before income taxes | ||||||||||||
Amortization of intangible assets | 8 | 18 | 29 | 62 | ||||||||
Mainframe Solutions | ||||||||||||
Segment information | ||||||||||||
Revenue | 552 | 546 | 1,627 | 1,647 | ||||||||
Expenses | 197 | 215 | 572 | 634 | ||||||||
Segment profit (loss) | $ 355 | $ 331 | $ 1,055 | $ 1,013 | ||||||||
Segment operating margin | 64.00% | 61.00% | 65.00% | 62.00% | ||||||||
Depreciation | $ 8 | $ 8 | $ 27 | $ 25 | ||||||||
Reconciliation of segment profit to income before income taxes | ||||||||||||
Segment profit | 355 | 331 | 1,055 | 1,013 | ||||||||
Enterprise Solutions | ||||||||||||
Segment information | ||||||||||||
Revenue | 461 | 389 | 1,295 | 1,153 | ||||||||
Expenses | 408 | 333 | 1,169 | 981 | ||||||||
Segment profit (loss) | $ 53 | $ 56 | $ 126 | $ 172 | ||||||||
Segment operating margin | 11.00% | 14.00% | 10.00% | 15.00% | ||||||||
Depreciation | $ 7 | $ 6 | $ 21 | $ 18 | ||||||||
Reconciliation of segment profit to income before income taxes | ||||||||||||
Segment profit | 53 | 56 | 126 | 172 | ||||||||
Services | ||||||||||||
Segment information | ||||||||||||
Revenue | 80 | 72 | 230 | 224 | ||||||||
Expenses | 78 | 75 | 226 | 223 | ||||||||
Segment profit (loss) | $ 2 | $ (3) | $ 4 | $ 1 | ||||||||
Segment operating margin | 3.00% | (4.00%) | 2.00% | 0.00% | ||||||||
Depreciation | $ 0 | $ 0 | $ 0 | $ 0 | ||||||||
Reconciliation of segment profit to income before income taxes | ||||||||||||
Segment profit | $ 2 | $ (3) | $ 4 | $ 1 | ||||||||
|
Segment Information 2 (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|||
Revenue from the United States and international locations | ||||||
Total revenue | $ 1,093 | $ 1,007 | $ 3,152 | $ 3,024 | ||
United States | ||||||
Revenue from the United States and international locations | ||||||
Total revenue | 682 | 642 | 1,997 | 1,936 | ||
EMEA | ||||||
Revenue from the United States and international locations | ||||||
Total revenue | [1] | 256 | 223 | 720 | 667 | |
Other | ||||||
Revenue from the United States and international locations | ||||||
Total revenue | $ 155 | $ 142 | $ 435 | $ 421 | ||
|
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