-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TCm4khJHiHBCIqE3gTQmBvduiwc4SFg7b2Np472Wy+H/L8YGXeQM/ggi7tuI+hmP jtep50kGB7XZ3RP40hBABw== 0000950123-05-000673.txt : 20050125 0000950123-05-000673.hdr.sgml : 20050125 20050125162045 ACCESSION NUMBER: 0000950123-05-000673 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050125 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050125 DATE AS OF CHANGE: 20050125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER ASSOCIATES INTERNATIONAL INC CENTRAL INDEX KEY: 0000356028 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 132857434 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09247 FILM NUMBER: 05547411 BUSINESS ADDRESS: STREET 1: ONE COMPUTER ASSOCIATES PLAZA CITY: ISLANDIA STATE: NY ZIP: 11749 BUSINESS PHONE: 6313425224 MAIL ADDRESS: STREET 1: ONE COMPUTER ASSOCIATES PLAZA CITY: ISLANDIA STATE: NY ZIP: 11749 8-K 1 y05114e8vk.htm COMPUTER ASSOCIATES INTERNATIONAL, INC. COMPUTER ASSOCIATES INTERNATIONAL, INC.
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

January 25, 2005

Date of Report: (Date of earliest event reported)

Computer Associates International, Inc.

(Exact Name of Registrant as Specified in Charter)
         
Delaware   1-9247   13-2857434
         
(State or Other Jurisdiction
of Incorporation) 		  (Commission
File Number) 		  (IRS Employer
Identification No.)
         
One Computer Associates Plaza, Islandia, New York
   11749
     
(Address of Principal Executive Offices)
   (Zip Code)

Registrant’s telephone number, including area code: (631) 342-6000

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o      Written communications pursuant to Rule 425 under Securities Act (17 CFR 230.425)

o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

TABLE OF CONTENTS

Item 2.02 Results of Operations and Financial Condition
Item 9.01 Financial Statements and Exhibits
SIGNATURES
PRESS RELEASE

Table of Contents

Item 2.02       Results of Operations and Financial Condition.

     On January 25, 2005, Computer Associates International, Inc. issued a press release announcing its financial results for the quarter ended December 31, 2004. A copy of the press release is attached as Exhibit 99.1 hereto.

Item 9.01       Financial Statements and Exhibits

99.1       Press release dated January 25, 2005.

 

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
      Computer Associates International, Inc.
 
        
Dated: January 25, 2005
  By:   /s/ Jeff Clarke
       
      Jeff Clarke
Chief Operating Officer and Chief Financial Officer

 

EX-99.1 2 y05114exv99w1.txt PRESS RELEASE Exhibit 99.1 CA REPORTS SOLID THIRD QUARTER 2005 RESULTS - Revenue of $911 million, up 9 percent from prior year - GAAP earnings from continuing operations of $36 million, or $0.06 per share - Operating (non-GAAP) EPS of $0.19, up 19 percent from prior year - Cash flow from operations up 8 percent from prior year to $366 million - Will hold webcast at 5 p.m. EST ISLANDIA, N.Y., January 25, 2005 - Computer Associates International, Inc. (NYSE: CA) today reported financial results for its third fiscal 2005 quarter ended December 31, 2004 that exceeded previous guidance for revenue and met expectations for operating earnings. In addition, the Company updated guidance for the full fiscal year 2005. "We had another quarter of solid results based on strong execution of our business strategy," said CA's Interim Chief Executive Officer Kenneth Cron. "CA is now in a position to succeed and move forward to grow the Company; our financials are sound and we are solidifying a strong management team for the future." "We are putting the pieces in place to position CA for long-term, sustainable growth," said CA's President and CEO-elect John Swainson. "Today's enterprise IT customers are looking for a more holistic approach to tackling the challenges of IT systems management and security. By redefining our go-to-market strategy, focusing on our core competencies and aligning our product portfolio to customer needs, we will grow the business and become a true partner to our customers." FINANCIAL OVERVIEW: THIRD QUARTER FISCAL YEAR 2005 Total revenue for the third quarter of fiscal year 2005 was $911 million, a 9 percent increase over the third quarter of fiscal year 2004, and $46 million greater than the high end of the range of the Company's previous guidance. On a constant currency basis and excluding $15 million in revenue related to Netegrity products, total revenue for the third quarter would have increased approximately 3 percent compared to the similar period last year. "We are starting to see real traction from our growth initiatives," said CA Chief Operating Officer Jeff Clarke. "Our channel business performed well this quarter, up 17 percent, and security continues to be a strong segment of our business, with more than 94 percent bookings growth. CA's cost-cutting efforts are on track and the Netegrity integration is going extremely well." Revenue from CA's Technology Services unit was $64 million for the quarter, up approximately 8 percent when compared to the similar quarter last year, due to strong performance in North America and Asia, particularly related to CA's Identity and Access Management solutions. New deferred subscription revenue was $898 million for the quarter, which includes $845 million in direct bookings and $53 million in indirect bookings. Total indirect bookings for the quarter were $84 million, a 17 percent year-over-year increase. CA's total deferred subscription revenue balance as of December 31, 2004, was approximately $4.8 billion. The Company reported GAAP earnings from continuing operations for the third quarter of $36 million, or $0.06 per diluted share, compared to GAAP earnings from continuing operations of $17 million, or $0.03 per diluted share, reported in the comparable period last year. GAAP results for the current quarter include an $18 million, or $0.02 per diluted share non-cash charge related to the fiscal 2004 shareholder litigation settlement. On a fully diluted operating basis, excluding special charges, CA earned $0.19 per share in the third quarter of fiscal year 2005, compared with $0.16 per share in the third quarter of fiscal year 2004. Operating earnings per share is a non-GAAP financial measure, as noted in the discussion of non-GAAP results below. A reconciliation of GAAP income from continuing operations to non-GAAP operating income is included in the tables following this press release. CAPITAL STRUCTURE CA generated approximately $366 million in cash from continuing operations in the third quarter, compared to the $339 million reported in the similar period last year. The balance of cash and marketable securities at December 31, 2004, was approximately $3.33 billion, up from $2.25 billion on September 30, 2004. With approximately $3.30 billion in total debt outstanding, the Company has a net cash position of $28 million. This is the first time in more than nine years that the Company's cash and marketable securities balance exceeds its total debt. DEVELOPMENTS DURING THE QUARTER During the quarter, CA made a number of important advances, including: - Naming 26-year industry veteran John Swainson president and CEO-elect; - Enhancing its capital structure with a successful private placement of $1 billion senior unsecured notes and a four-year $1 billion revolving credit facility; - Selecting SAP for its enterprise resource planning system and Accenture to assist with the implementation, which is already underway; - Outlining its EMEA growth strategy with a strong focus on small and medium businesses and expanded OEM partnerships; - Completing its acquisition of Netegrity ahead of schedule; - Offering CA Wireless Site Management 4.0 to bolster and streamline Wi-Fi security management; and - Following its successful acquisition of PestPatrol, announcing eTrust PestPatrol Anti-Spyware r5. OUTLOOK FOR THE REMAINDER OF FISCAL YEAR 2005 The following updated guidance is based on current expectations and represents "forward looking statements" (as defined below): For the fourth quarter ending March 31, 2005: - Revenue in the range of $900 million to $920 million; - GAAP earnings per share in the range of $0.07 to $0.08; and - Diluted operating (non-GAAP) earnings per share in the range of $0.19 to $0.20. For the full year, ending March 31, 2005: - Revenue in the range of $3.526 billion to $3.546 billion; - GAAP earnings per share in the range of $0.06 to $0.07; and - Diluted operating (non-GAAP) earnings per share in the range of $0.81 to $0.82. "With solid execution and upside from our recent acquisitions, we are raising the midpoint of both our revenue and earnings guidance," said Clarke. "Cash flow continues to remain on track for modest growth this year." THIRD QUARTER WEBCAST The Company will host a webcast at 5 p.m. EST today to discuss its third quarter fiscal year 2005 results. Individuals can access the webcast, as well as this press release and supplemental financial information, at http://ca.com/invest or listen to the call at 1 (706) 679-5227. NON-GAAP FINANCIAL MEASURES This press release includes financial measures for net income and related per share amounts that exclude certain charges and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). Non-GAAP "operating" net income and earnings per share exclude non-cash amortization of acquired technology and other intangibles, the government investigation and restructuring charges, the class-action and derivative litigation settlement charge and the applicable tax effects of these items. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding certain charges, these non-GAAP financial measures facilitate management's internal comparisons to the Company's historical operating results, to competitors' operating results, and to estimates made by securities analysts. Management uses these non-GAAP financial measures internally to evaluate its performance and they are key variables in determining management incentive compensation. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, the Company has historically reported similar non-GAAP financial measures to its investors and believes that the inclusion of comparative numbers provides consistency in its financial reporting. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measure as provided with the financial statements attached to this press release. ABOUT CA Computer Associates International, Inc. (NYSE:CA), delivers software and services across operations, security, storage and life cycle management to optimize the performance, reliability and efficiency of enterprise IT environments. Founded in 1976, CA is headquartered in Islandia, N.Y. and serves customers in more than 140 countries. For more information, please visit http://ca.com. ### Certain statements in this press release may constitute forward-looking statements that involve risks and uncertainties. Certain factors could cause our results to differ materially from those projected or forecast in the forward-looking statements. These include: the risks and uncertainties associated with the Company's deferred prosecution agreement with the United States Attorney's Office and Securities and Exchange Commission investigation consent judgement; litigation arising out of the matters that are the subject of the Department of Justice and Securities and Exchange Commission investigations; the software industry is subject to intense competition; risks associated with the recent loss and ongoing replacement of key personnel; risks associated with changing operating environments; risks associated with our debt including that our credit ratings have been downgraded and could be downgraded further; risks associated with integrating acquisitions; the failure to protect our intellectual property rights, which could weaken our competitive position; possible dependency upon large transactions; general economic conditions; possible claims by third parties that our products infringe their intellectual property rights; fluctuations in foreign currencies that could result in transaction losses; acts of war and terrorism, which could adversely affect our business; the volatility of the international marketplace; and other risks described in our filings with the Securities and Exchange Commission, which are available at http://www.sec.gov. CA assumes no obligation to update the information contained herein, except as otherwise required by law. (C) 2005 Computer Associates International, Inc. One Computer Associates Plaza, Islandia, N.Y. 11749. All trademarks, trade names, service marks, and logos referenced herein belong to their respective companies. Contacts: Shannon Lapierre Olivia Bellingham Public Relations Investor Relations (631) 342-3839 (631) 342-4687 shannon.lapierre@ca.com olivia.bellingham@ca.com TABLE 1 COMPUTER ASSOCIATES INTERNATIONAL, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in millions, except per share amounts) (unaudited)
Three Months Nine Months Ended Ended December 31, December 31, ------------ ------------ 2004 2003 2004 2003 ------- ------- ------- ------- Subscription revenue $ 623 $ 506 $ 1,784 $ 1,426 Software fees and other 75 84 204 226 Maintenance 126 145 376 455 Financing fees 23 43 84 146 Professional services 64 59 178 173 ------- ------- ------- ------- Total revenue 911 837 2,626 2,426 Amortization of capitalized software costs 112 116 335 349 Cost of professional services 57 54 166 161 Selling, general and administrative 345 306 989 944 Product development and enhancements 168 167 514 494 Commissions and royalties 91 75 226 182 Depreciation and amortization of other intangibles 33 33 97 100 Interest expense, net 29 29 79 89 Other losses, net 6 22 9 46 Restructuring charge -- -- 28 -- Shareholder litigation and government investigation settlements 18 8 234 158 ------- ------- ------- ------- Total expenses 859 810 2,677 2,523 Income (loss) from continuing operations before income tax 52 27 (51) (97) Income tax expense (benefit) 16 10 (46) (32) ------- ------- ------- ------- Income (loss) from continuing operations, net of taxes 36 17 (5) (65) Income from discontinued operation, net of income taxes -- 1 -- 1 Adjustment to gain on disposal of discontinued operations, net of income taxes -- -- (2) -- ------- ------- ------- ------- Net Income (Loss) $ 36 $ 18 $ (7) $ (64) ======= ======= ======= ======= BASIC EARNINGS (LOSS) PER SHARE: Income (loss) from continuing operations $ 0.06 $ 0.03 $ (0.01) $ (0.11) Discontinued operation -- -- -- -- ------- ------- ------- ------- Net Income (Loss) $ 0.06 $ 0.03 $ (0.01) $ (0.11) ======= ======= ======= ======= Basic weighted-average shares used in computation 589 580 587 579 DILUTED EARNINGS (LOSS) PER SHARE: Income (loss) from continuing operations $ 0.06 $ 0.03 $ (0.01) $ (0.11) Discontinued operation -- -- -- -- ------- ------- ------- ------- Net Income (Loss) $ 0.06 $ 0.03 $ (0.01) $ (0.11) ======= ======= ======= ======= Diluted weighted-average shares used in computation 595 589 587 579
TABLE 2 COMPUTER ASSOCIATES INTERNATIONAL, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (in millions) (unaudited)
Dec 31, March 31, 2004 2004 ------- ------- Cash and marketable securities $ 3,325 $ 1,902 Trade and installment A/R, net 702 949 Federal and state income tax receivable 245 96 Deferred income taxes 218 311 Other current assets 70 108 ------- ------- Total current assets 4,560 3,366 Installment A/R, net 681 820 Property and equipment, net 631 641 Purchased software products, net 818 1,045 Goodwill, net 4,599 4,366 Other noncurrent assets, net 636 449 ------- ------- Total assets $11,925 $10,687 ======= ======= Loans payable and current portion of long - term debt $ 826 $ 2 Deferred subscription revenue (collected)-current 1,204 1,210 Shareholder litigation and government investigation settlements 153 113 Other current liabilities 1,301 1,130 ------- ------- Total current liabilities 3,484 2,455 Long-term debt, net of current portion 2,471 2,298 Deferred income taxes 473 618 Deferred subscription revenue (collected)-noncurrent 233 276 Deferred maintenance revenue 239 293 Other noncurrent liabilities 32 29 ------- ------- Total liabilities 6,932 5,969 Stockholders' equity 4,993 4,718 ------- ------- Total liabilities and stockholders' equity $11,925 $10,687 ======= =======
TABLE 3 COMPUTER ASSOCIATES INTERNATIONAL, INC. QUARTERLY CONDENSED STATEMENTS OF CASH FLOWS (in millions) (unaudited)
Three Months Ended December 31, 2004 2003 ------- ------- OPERATING ACTIVITIES: Net Income $ 36 $ 18 Impact from discontinued operations, net of taxes -- 1 ------- ------- Income from continuing operations 36 17 Adjustments to reconcile income from continuing operations to net cash provided by continuing operating activities: Depreciation and amortization 145 149 Provision for deferred income taxes 24 (141) Non-cash stock-based compensation expense 13 7 Non-cash settlement charge 18 8 Decrease in noncurrent installment A/R, net 2 84 Government investigation settlement (75) -- Increase in deferred subscription revenue (collected) - noncurrent 5 33 (Decrease) Increase in deferred maintenance revenue (13) 4 Decrease (Increase) in trade and current installment A/R, net 76 (101) Increase in deferred subscription revenue (collected) - current 88 97 Other 47 182 ------- ------- NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES 366 339 INVESTING ACTIVITIES: Acquisition of Netegrity, net of cash acquired (418) -- Acquisitions of purchased software -- (1) Settlements of purchase accounting liabilities (9) (4) Purchases of property and equipment, net (21) (4) Sales (purchases) of marketable securities, net 19 (8) Increase in capitalized software development costs and other (19) (11) ------- ------- NET CASH USED IN INVESTING ACTIVITIES (448) (28) FINANCING ACTIVITIES: Debt borrowings, net 997 -- Exercises of common stock options and other 31 15 Debt issuance costs (12) -- Purchases of treasury stock -- (1) ------- ------- NET CASH PROVIDED BY FINANCING ACTIVITIES 1,016 14 INCREASE IN CASH AND CASH EQUIVALENTS BEFORE EFFECT OF EXCHANGE RATE CHANGES ON CASH 934 325 Effect of exchange rates on cash 78 43 ------- ------- INCREASE IN CASH AND CASH EQUIVALENTS 1,012 368 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,142 880 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,154 $ 1,248 ======= =======
TABLE 4 COMPUTER ASSOCIATES INTERNATIONAL, INC. RECONCILIATION OF GAAP RESULTS TO OPERATING RESULTS FROM CONTINUING OPERATIONS (in millions, except per share data) (unaudited)
Three Months Ended Nine Months Ended December 31, December 31, ------------ ------------ 2004 2003 2004 2003 ------- ------- ------- ------- Total Revenue (See Table 1) $ 911 $ 837 $ 2,626 $ 2,426 Total Expenses (See Table 1) 859 810 2,677 2,523 ------- ------- ------- ------- Income (Loss) From Continuing Operations, Before Taxes (See Table 1) 52 27 (51) (97) Non-GAAP Adjustments: Purchased Software Amortization 102 105 305 318 Intangibles Amortization 10 10 30 30 Restructuring Charge -- -- 28 -- Government Investigation Charge -- -- 218 -- Shareholder Litigation 18 8 16 158 ------- ------- ------- ------- Total Non-GAAP Adjustments 130 123 597 506 Operating Income Before Interest Adj. & Taxes 182 150 546 409 Interest on Dilutive Convertible Bonds 11 2 31 6 ------- ------- ------- ------- Operating Income Before Taxes 193 152 577 415 Income Tax Provision(1) 69 57 180 155 ------- ------- ------- ------- Net Operating Income From Continuing Operations(1)(2) $ 124 $ 95 $ 397 $ 260 ======= ======= ======= ======= Diluted Operating EPS(1)(2) $ 0.19 $ 0.16 $ 0.62 $ 0.43 ======= ======= ======= ======= # of Shares Used(2) 645 612 643 609
(1) The nine months ended December 31, 2004 includes a $26.4 million or $.04 per share one-time tax benefit. (2) Net operating income and the number of shares used in the computation of diluted operating EPS for the three and nine months ended December 31, 2004 and 2003 have been adjusted to reflect the dilutive impact of the Company's 1.625 percent Convertible Senior Notes. The number of shares for the three and nine months ended December 31, 2004 also includes the dilutive impact of the Company's 5 percent Convertible Senior Notes. TABLE 5 COMPUTER ASSOCIATES INTERNATIONAL, INC. RECONCILIATION OF PROJECTED GAAP RESULTS FROM CONTINUING OPERATIONS TO OPERATING RESULTS (in millions, except per share data) (unaudited)
Three Months Ending Fiscal Year Ending March 31, 2005 March 31, 2005 --------------------- ---------------------- Projected revenue range $ 900 to $ 920 $3,526 to $3,546 ===== ===== ====== ====== Projected GAAP EPS range $0.07 to $0.08 $ 0.06 to $ 0.07 Non GAAP adjustments, net of taxes Acquisition amortization 0.11 0.11 0.45 0.45 Government Investigation Settlement -- -- 0.22 0.22 Restructuring Charge -- -- 0.04 0.04 Interest on Dilutive Convertible Bonds 0.01 0.01 0.04 0.04 ----- ----- ------ ------ Projected diluted operating EPS range $0.19 to $0.20 $ 0.81 to $ 0.82 ===== ===== ====== ======
-----END PRIVACY-ENHANCED MESSAGE-----