8-K

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

Date of Report: November 9, 2009
(Date of earliest event reported)

CA, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

1-9247	13-2857434
(Commission File Number)	(IRS Employer Identification No.)
One CA Plaza Islandia, New York	11749
(Address of principal executive offices)	(Zip Code)

(800) 225-5224

(Registrant’s telephone number, including area code)

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 (see General Instruction A.2. below):

o     Written communications pursuant to Rule 425 under the 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 8.01 Other Events	1
Item 9.01 Financial Statements and Exhibits	2
Signatures	3
Exhibit Index	4
EX-12.1
EX-23.1
EX-99.1
EX-99.2
EX-99.3
EX-99.4

Item 8.01 Other Events

CA, Inc (the Company) filed its Annual Report on Form 10-K for the year ended March 31, 2009 (the Original 2009 Form 10-K) with the Securities and Exchange Commission (the SEC) on May 15, 2009. In the Original 2009 Form 10-K, the Company disclosed the effective date for the adoption of Financial Accounting Standards Board (FASB) Staff Position (FSP) Emerging Issues Task Force (EITF) No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (FSP EITF 03-6-1), and FSP Accounting Principles Board Opinion (APB) No. 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (FSP APB No. 14-1) would be April 1, 2009.

FSP EITF 03-6-1 clarifies that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are to be included in the computation of earnings per share under the two-class method described in Statement of Financial Accounting Standards (SFAS) No. 128, “Earnings Per Share.”

FSP APB No. 14-1 requires the issuer of convertible debt instruments with cash settlement features to account separately for the liability and equity components of the instruments. The debt is recognized at the present value of its cash flows discounted using the issuer’s nonconvertible debt borrowing rate at the time of issuance with the resulting debt discount being amortized over the expected life of the debt. The equity component is recognized as the difference between the proceeds from the issuance of the convertible debt instrument and the fair value of the liability.

The adoption of these two accounting pronouncements was reflected in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009 filed with the SEC on July 24, 2009 and Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2009 filed with the SEC on October 23, 2009 (collectively, the Quarterly Reports). The adoption of FSP APB No. 14-1 and FSP EITF 03-6-1 required retrospective application to all periods presented in the Quarterly Reports. The Company is filing this Current Report on Form 8-K to reflect the required retrospective adoption of FSP APB No. 14-1 and FSP EITF 03-6-1 on the financial statement information provided in the Original 2009 Form 10-K.

Neither this Current Report on Form 8-K nor Exhibits 12.1, 99.1, 99.2, 99.3 or 99.4 hereto reflects any events occurring after March 31, 2009 or modifies or updates the disclosures in the Original 2009 Form 10-K that may have been affected by subsequent events, except as required to reflect the effects of the retrospective application of FSP APB No. 14-1 and FSP EITF 03-6-1. Accordingly, this Current Report on Form 8-K should be read in conjunction with the Original 2009 Form 10-K and the Company’s filings made with the SEC subsequent to the filing of the Original 2009 Form 10-K, including, but not limited to, the Quarterly Reports. Such subsequent filings contain important information about events and developments regarding the Company that occurred since the filing of the Original 2009 Form 10-K.

The sections of the 2009 Original Form 10-K that have been adjusted are as follows:

•	Item 6:	Selected Financial Data
•	Item 7:	Management’s Discussion and Analysis of Financial Condition and Results of Operations
•	Item 7A:	Quantitative and Qualitative Disclosures About Market Risk
•	Item 8:	Financial Statements and Supplementary Data

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Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit	Description
12.1	Statement of Ratio of Earnings to Fixed Charges (Updated)
23.1	Consent of KPMG LLP
99.1	Item 6 — Selected Financial Data (Updated)
99.2	Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations (Updated)
99.3	Item 7A — Quantitative and Qualitative Disclosures About Market Risk (Updated)
99.4	Item 8 — Financial Statements and Supplementary Data (Updated)

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Signatures

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

By:	/s/ Nancy E. Cooper
	Nancy E. Cooper
	Executive Vice President and Chief Financial Officer

Dated: November 9, 2009

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EXHIBIT INDEX

(d) Exhibits

Exhibit	Description
12.1	Statement of Ratio of Earnings to Fixed Charges (Updated)
23.1	Consent of KPMG LLP
99.1	Item 6 — Selected Financial Data (Updated)
99.2	Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations (Updated)
99.3	Item 7A — Quantitative and Qualitative Disclosures About Market Risk (Updated)
99.4	Item 8 — Financial Statements and Supplementary Data (Updated)

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EX-12.1

Exhibit 12.1

CA, Inc.

STATEMENT OF RATIOS OF EARNINGS TO FIXED CHARGES

(in millions, except ratios)

	Years Ended March 31,
	2005		2006		2007		2008		2009
Earnings available for fixed charges:
Earnings from continuing operations before income taxes, minority interest and discontinued operations	$	10	$	98	$	130	$	775	$	1,065
Add: Fixed charges		245		192		229		248		191
Less: Minority interest in pre-tax loss of subsidiaries that have not incurred fixed charges		—		1		—		—		—
Total earnings available for fixed charges	$	255	$	291	$	359	$	1,023	$	1,256
Fixed charges:
Interest expense(1)	$	177	$	122	$	153	$	169	$	130
Interest portion of rental expense		68		70		76		79		61
Total fixed charges	$	245	$	192	$	229	$	248	$	191
RATIOS OF EARNINGS TO FIXED CHARGES		1.04		1.52		1.57		4.13		6.58
Deficiency of earnings to fixed charges		n/a		n/a		n/a		n/a		n/a

(1) Includes amortization of discount related to indebtedness

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
CA, Inc.:

We consent to the incorporation by reference in registration statements (Nos. 333-151619, 333-146173, 333-120849, 333-108665, 333-100896, 333-88916, 333-32942, 333-31284, 333-83147, 333-80883, 333-79727, 333-62055, 333-19071, 333-04801, 333-127602, 333-127601, 333-126273, 33-64377, 33-53915, 33-53572, 33-34607, 33-18322, 33-20797, 2-92355, 2-87495 and 2-79751), on Form S-3 and S-8 of CA, Inc. and subsidiaries of our report dated May 15, 2009, except for Note 1(e), as to which the date is November 9, 2009 with respect to the consolidated balance sheets of CA, Inc. and subsidiaries as of March 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended March 31, 2009, and the related financial statement schedule, and the effectiveness of internal control over financial reporting as of March 31, 2009, which report appears in the Form 8-K of CA, Inc. dated November 9, 2009.

Our report refers to the adoption of the requirements of Financial Accounting Standards Board (FASB) Staff Positions Accounting Principles Board Opinion (APB) No. 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement), Emerging Issues Task Force Issue No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities, and FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes.

/s/ KPMG LLP

New York, New York
November 9, 2009

EX-99.1

Exhibit 99.1

Item 6. Selected Financial Data (Updated).

The information set forth below has been revised for the adoption of Financial Accounting Standards Board Staff Position (FSP) Accounting Principles Board Opinion (APB) No. 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (FSP APB No. 14-1), and FSP Emerging Issues Task Force (EITF) Issue No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities (FSP EITF 03-6-1) and should be read in conjunction with the “Results of Operations” section included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

	Year Ended March 31,
STATEMENT OF OPERATIONS DATA	2009		2008		2007		2006		2005
	(in millions, except per share amounts)
Revenue	$	4,271	$	4,277	$	3,943	$	3,772	$	3,583
Income from continuing operations(1)		671		479		103		143		12
Basic income from continuing operations per share		1.29		0.92		0.19		0.25		0.02
Diluted income from continuing operations per share		1.29		0.92		0.19		0.25		0.02
Dividends declared per common share		0.16		0.16		0.16		0.16		0.08

	March 31,
BALANCE SHEET AND OTHER DATA	2009		2008		2007			2006			2005
	(in millions)
Cash provided by continuing operating activities	$	1,212	$	1,103	$	1,068		$	1,380		$	1,527
Working capital surplus (deficit)		120		190		(51	)		(462	)		199
Working capital, excluding deferred revenue (2)		2,551		2,854		2,332			1,694			2,243
Total assets		11,241		11,731		11,479			11,118			11,726
Long-term debt (less current maturities)		1,287		2,155		2,472			1,683			1,653
Stockholders’ equity		4,362		3,750		3,716			4,798			5,130

(1)	In fiscal 2009, 2008 and 2007 we incurred after-tax charges of $64 million, $74 million and $124 million, respectively, for restructuring and other costs. In fiscal 2007, we also incurred after-tax charges of $6 million for write-offs of in-process research and development costs due to acquisitions.
	In fiscal 2006, we incurred after-tax charges of $54 million for restructuring and other costs and an after-tax benefit of $5 million relating to the gain on the divestiture of assets that were contributed during the formation of Ingres Corp. We also incurred an after-tax charge of $18 million for write-offs of in-process research and development costs due to acquisitions.
	In fiscal 2005, we incurred after-tax charges of $144 million related to shareholder litigation and government investigation settlements, a tax expense charge of $55 million related to the planned repatriation of $500 million in cash under the American Jobs Creation Act of 2004, and after-tax charges of $17 million for severance and other expenses in connection with a restructuring plan.
(2)	Deferred revenue includes all amounts billed or collected in advance of revenue recognition from all sources including subscription license agreements, maintenance, and professional services. It does not include unearned revenue on future installments not yet billed as of the respective balance sheet dates.

EX-99.2

Exhibit 99.2

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Updated).

Introduction

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (MD&A) is intended to provide an understanding of our financial condition, change in financial condition, cash flow, liquidity and results of operations. This MD&A should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements appearing elsewhere in this Form 8-K. The information set forth below has been revised for the adoption of FSP APB No. 14-1 and FSP EITF 03-6-1. References in this MD&A to fiscal 2009, fiscal 2008, fiscal 2007 and fiscal 2006, etc. are to our fiscal years ended on March 31, 2009, 2008, 2007 and 2006, etc., respectively.

Business Overview

We are the world’s leading independent information technology (IT) management software company, helping organizations manage IT to become lean and more productive, which can help them better compete, innovate and grow. We develop and deliver software that makes it easier for organizations to manage IT throughout complex computing environments and to help them govern, manage and secure their entire IT operation — all of the people, information, processes, systems, networks, applications and databases from Web services to the mainframe, regardless of the hardware or software they are using.

We license our products worldwide, principally to large IT service providers, financial services companies, governmental agencies, retailers, manufacturers, educational institutions, and healthcare institutions. These customers typically maintain IT infrastructures that are both complex and central to their objectives for operational excellence.

We offer our software products and solutions directly to our customers through our direct sales force and indirectly through global systems integrators, managed service providers, technology partners, Enterprise IT Management (EITM) value-added resellers and distribution and volume partners.

CA’s Business Model

We license our software products directly to customers as well as through distributors, resellers and value-added resellers. We generate revenue from the following sources: license fees — licensing our products on a right-to-use basis; maintenance fees — providing customer technical support and product enhancements; and service fees — providing professional services such as product implementation, consulting and education. The timing and amount of fees recognized as revenue during a reporting period are determined in accordance with generally accepted accounting principles in the United States of America (GAAP). Revenue is reported net of applicable sales taxes.

Under our business model, we offer customers a wide range of licensing options, including the flexibility to license software under month-to-month licenses or to fix their costs by committing to longer-term agreements. Licenses sold for most of our software products permit customers to change their software product mix as their business and technology needs change and includes the right to receive software products in the future within defined product lines for no additional fee, commonly referred to as unspecified future software products. In such instances, we do not have vendor-specific objective evidence (VSOE) for the fair value of the undelivered elements, and we are therefore required under GAAP to recognize revenue from such license agreements evenly on a monthly basis (also known as ratably) over the license term.

A relatively small percentage of our revenue is recognized on a perpetual or up-front basis once all revenue recognition criteria are met in accordance with Statement of Position 97-2 “Software Revenue Recognition,” issued by the American Institute of Certified Public Accountants, as amended by SOP 98-9 “Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions” (SOP 97-2) (see “Critical Accounting Policies and Estimates” below for details). In such cases, these products are not sold with the right to receive unspecified future software products and VSOE exists for maintenance. We expect to continue to offer these types of licensing arrangements; therefore, the amount of revenue we expect to recognize on an up-front basis may increase to the extent that such license agreements are not executed

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within a short time frame of other agreements with the same customer or in contemplation of other license agreements with the same customer where the right exists to receive unspecified future software products.

Several contracts executed prior to October 2000 (the prior business model) remain in effect and have not yet been renewed under license arrangements that contain the right to receive unspecified future software products. Under those agreements, we did not offer our customers the right to receive unspecified future software products and we record the present value of the license agreement as revenue at the time the license agreement was signed. As these customer license agreements are renewed under our current licensing model, we expect to see an increase in revenue backlog related to these licenses, from which subscription revenue will be amortized in future periods. The favorable impact on subscription revenue from the conversion of contracts from our prior business model to our current business model is decreasing over time as the transition is completed and was not material for fiscal 2009 or 2008. The remaining balance of unbilled installment receivables that were previously recognized as revenue under our prior business model was $240 million and $342 million as of March 31, 2009 and March 31, 2008, respectively.

Under our license agreements, customers generally make installment payments for the right to use our software products over the term of the associated software license agreement. While the timing of revenue recognition is affected by the offering of unspecified future software products, it generally has not changed the timing of how we bill and collect cash from customers and as a result, our cash generated from operations has generally not been affected by the offering of unspecified future software products.

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Performance Indicators

Management uses several quantitative and qualitative performance indicators to assess our financial results and condition. Each provides a measurement of the performance of our business model and how well we are executing our plan.

Our predominantly subscription-based business model is unique among our competitors in the software industry and it may be difficult to compare our results for many of our performance indicators with those of our competitors. The following is a summary of the principal quantitative and qualitative performance indicators that management uses to review performance:

	Year
	Ended March 31,							Percent
	2009		2008		Change			Change
		(dollars in millions)
Total revenue	$	4,271	$	4,277	$	(6	)		—	%
Subscription and maintenance revenue	$	3,772	$	3,762	$	10			—	%
Net income	$	671	$	479	$	192			40	%
Cash provided by operating activities	$	1,212	$	1,103	$	109			10	%
Total bookings	$	5,245	$	4,724	$	521			11	%
Subscription and maintenance bookings	$	4,783	$	4,110	$	673			16	%
Weighted average subscription and maintenance license agreement duration in years		3.61		2.98		0.63			21	%
Annualized subscription and maintenance bookings	$	1,325	$	1,379	$	(54	)		(4	)%

	As of		As of
	March 31,		March 31,					Percent
	2009		2008		Change			Change
		(dollars in millions)
Cash and cash equivalents	$	2,712	$	2,795	$	(83	)		(3	)%
Total debt	$	1,908	$	2,516	$	(608	)		(24	)%
Total expected future cash collections from committed contracts(1)	$	4,914	$	4,362	$	552			13	%
Total revenue backlog(1)	$	7,378	$	6,858	$	520			8	%

⁽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, billing backlog and revenue backlog.

Analyses of our performance indicators, including general trends, can be found in the “Results of Operations” and “Liquidity and Capital Resources” sections of this MD&A.

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

Total Bookings — Total bookings includes the incremental value of all subscription, maintenance and professional service contracts and software fees and other contracts entered into during the reporting period. Effective April 1, 2008, we changed our performance indicator for measuring our new business activity from new deferred subscription value to total bookings. In addition to what was previously included in new deferred subscription value, subscription and maintenance bookings now includes the

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value of maintenance contracts committed by customers in the current period that were separate from license subscription contracts, whereas new deferred subscription value excluded certain of these types of agreements. The bookings amounts disclosed in this MD&A include the effects of this change. The incremental value of subscription and maintenance agreements added was $252 million for the year ended March 31, 2008. Total bookings also includes the value of new professional services and software fees and other contracts that were not previously included in new deferred subscription value.

Subscription and Maintenance Bookings — Subscription and maintenance bookings is the aggregate incremental amount we expect to collect from our customers over the terms of the underlying subscription and maintenance agreements entered into during a reporting period. These amounts include the sale of products directly by us, as well as indirectly by distributors, resellers and value-added resellers to end-users, where the contracts incorporate the right for end-users to receive unspecified future software products, and other contracts without these rights entered into in close proximity or contemplation of such agreements. These amounts are expected to be recognized ratably as subscription and maintenance revenue over the applicable term of the agreement. Subscription and maintenance bookings excludes the value associated with certain perpetual based licenses, license-only indirect sales, and professional services arrangements.

The license and maintenance agreements that contribute to subscription and maintenance bookings represent binding payment commitments by customers over periods that range generally from three to five years, although in certain cases customer commitments can be for longer periods. The amount of new subscription and maintenance bookings recorded in a period is affected by the volume and value of contracts renewed during that period. Our subscription and maintenance bookings typically increase in each consecutive quarter during a fiscal year, with the first quarter being the least and the fourth quarter being the most. However, subscription and maintenance bookings may not always follow the pattern of increasing in consecutive quarters during a fiscal year, and the quarter to quarter differences in subscription and maintenance bookings may vary. Additionally, period-to-period changes in subscription and maintenance bookings do not necessarily correlate to changes in billings or cash receipts. The contribution to current period revenue from subscription and maintenance bookings from any single license or maintenance agreement is relatively small, since revenue is recognized ratably over the applicable term for these agreements.

Weighted Average Subscription and Maintenance License Agreement Duration in Years — The weighted average subscription and maintenance license agreement duration in years reflects the duration of all subscription and maintenance agreements executed during a period, weighted by the total contract value of each individual agreement. Effective April 1, 2008, our calculation of weighted average subscription and maintenance license agreement duration in years now includes all subscription and maintenance contracts from both direct and indirect channels, whereas the prior calculation reflected direct product subscription licenses only. This modification has also been reflected in the weighted average subscription and maintenance license agreement duration in years for fiscal 2008 for comparison purposes and resulted in a decrease of 0.24 years for fiscal 2008.

Annualized Subscription and Maintenance Bookings — Annualized subscription and maintenance bookings is an indicator that normalizes the bookings recorded in the current period to account for contract length. It is calculated by dividing the total value of all new subscription and maintenance license agreements entered into during a period by the weighted average subscription and license agreement duration in years of all such license and maintenance agreements recorded during the same period.

Total Revenue Backlog — Total revenue backlog represents the aggregate amount we expect to recognize as revenue in the future as either subscription and maintenance revenue, professional services revenue or software fees and other associated with contractually committed amounts billed or to be billed as of the balance sheet date. Total revenue backlog is composed of amounts recognized as liabilities in our Consolidated Balance Sheets as deferred revenue (billed or collected) as well as unearned amounts associated with balances yet to be billed under subscription and maintenance and software fees and other agreements. Amounts are classified as current or non-current depending on when they are expected to be earned and therefore recognized as revenue. The portion of the total revenue backlog that relates to subscription and maintenance agreements is recognized as revenue evenly on a monthly basis over the duration of the underlying agreements and is reported as subscription and maintenance revenue in our Consolidated Statements of Operations.

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

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Results of Operations

The following table presents revenue and expense line items reported in our Consolidated Statements of Operations for fiscal 2009, 2008 and 2007 and the period-over-period dollar and percentage changes for those line items. Certain prior year balances have been reclassified to conform to the current period’s presentation. For additional information, see Note 1, “Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements.

									Dollar			Percent			Dollar			Percent
									Change			Change			Change			Change
	Year Ended March 31,								2009/			2009/			2008/			2008/
	2009			2008		2007			2008			2008			2007			2007
	(dollars in millions)
Revenue:
Subscription and maintenance revenue	$	3,772		$	3,762	$	3,458		$	10			—	%	$	304			9	%
Professional services		358			383		351			(25	)		(7	)		32			9
Software fees and other		141			132		134			9			7			(2	)		(1	)
Total revenue	$	4,271		$	4,277	$	3,943		$	(6	)		—	%	$	334			8	%
Expenses:
Costs of licensing and maintenance	$	298		$	272	$	250		$	26			10	%	$	22			9	%
Cost of professional services		307			368		333			(61	)		(17	)		35			11
Amortization of capitalized software costs		125			117		354			8			7			(237	)		(67	)
Selling and marketing		1,214			1,327		1,340			(113	)		(9	)		(13	)		(1	)
General and administrative		464			530		549			(66	)		(12	)		(19	)		(3	)
Product development and enhancements		486			526		557			(40	)		(8	)		(31	)		(6	)
Depreciation and amortization of other intangible assets		149			156		148			(7	)		(4	)		8			5
Other (gains) expenses, net		(1	)		6		(13	)		(7	)		(117	)		19			146
Restructuring and other		102			121		201			(19	)		(16	)		(80	)		(40	)
Charge for in-process research and development costs		—			—		10			—			—			(10	)		(100	)
Total expenses before interest and income taxes		3,144			3,423		3,729			(279	)		(8	)%		(306	)		(8	)%
Income from continuing operations before interest and income taxes		1,127			854		214			273			32			640			299
Interest expense, net		62			79		90			(17	)		(22	)		(11	)		(12	)
Income from continuing operations before income taxes		1,065			775		124			290			37			651			525
Income tax expense		394			296		21			98			33			275		NM
Income from continuing operations	$	671		$	479	$	103		$	192			40	%	$	376			365	%

Note — amounts may not add to their respective totals due to rounding.

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The following table sets forth, for the fiscal years indicated, the percentage that the items in the accompanying Consolidated Statements of Operations bear to total revenue.

	Percentage of
	Total Revenue for the
	Year Ended March 31,
	2009			2008			2007
Revenue:
Subscription and maintenance revenue		88	%		88	%		88	%
Professional services		8			9			9
Software fees and other		4			3			3
Total revenue		100	%		100	%		100	%
Expenses:
Costs of licensing and maintenance		7	%		6	%		6	%
Cost of professional services		7			9			8
Amortization of capitalized software costs		3			3			9
Selling and marketing		28			31			34
General and administrative		11			12			14
Product development and enhancements		11			12			14
Depreciation and amortization of other intangible assets		3			4			4
Other (gains) expenses, net		—			—			—
Restructuring and other		2			3			5
Charge for in-process research and development costs		—			—			—
Total expenses before interest and income taxes		74			80			95
Income from continuing operations before interest and income taxes		26			20			5
Interest expense, net		1			2			2
Income from continuing operations before income taxes		25			18			3
Income tax expense		9			7			1
Income from continuing operations		16	%		11	%		3	%

Note — amounts may not add to their respective totals due to rounding.

Revenue

Total revenue was unfavorably affected by foreign exchange of $35 million for fiscal 2009 compared with fiscal 2008 and favorably affected by $165 million for fiscal 2008 compared with fiscal 2007.

Subscription and Maintenance Revenue

Subscription and maintenance revenue increased slightly for fiscal 2009 compared with fiscal 2008 primarily due to an increase in the annual value of existing customer contracts, partially offset by unfavorable foreign exchange variance of $32 million.

Subscription and maintenance revenue increased for fiscal 2008 compared with fiscal 2007 also predominantly due to an increase in the annual value of existing customer contracts, plus a $144 million favorable variance from foreign exchange.

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Subscription and Maintenance Bookings

For fiscal 2009 and 2008, we added subscription and maintenance bookings of $4,783 million and $4,110 million, respectively. Subscription and maintenance bookings for fiscal 2009 were favorably affected by an increase in U.S. renewal bookings compared with the prior year period primarily due to the size and duration of the contracts that were renewed in fiscal 2009, partially offset by an unfavorable variance due to foreign exchange. During fiscal 2009, we renewed a total of 68 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $2,471 million. During fiscal 2008, we renewed a total of 61 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1,396 million. The increase in the dollar value of the agreements in excess of $10 million was primarily attributable to the execution of several large contract extensions with terms of approximately five years in the second quarter, two of which had a combined contract value of approximately $550 million. For fiscal 2009, annualized subscription and maintenance bookings decreased $54 million from the prior year period to $1,325 million. The weighted average subscription and maintenance license agreement duration in years increased to 3.61 for fiscal 2009 compared with 2.98 for fiscal 2008 due to an increase in the number and dollar values of contracts executed with contract terms longer than historical averages. Although each contract is subject to terms negotiated by the respective parties, management does not currently expect the duration of contracts to increase materially beyond historical levels.

For fiscal 2008 and 2007, we added subscription and maintenance bookings of $4,110 million and $3,610 million, respectively. Bookings for fiscal 2008 were favorably affected by growth in sales of new products and services, continued improvement in the management of contract renewals, and an increase in the number and dollar amounts of large contracts during the fiscal year. During fiscal 2008, we renewed a total of 61 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1,396 million. During fiscal 2007, we renewed 42 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1,142 million. For fiscal 2008, annualized subscription and maintenance bookings increased $151 million from the prior year period to $1,379 million.

Professional Services

Professional services revenue primarily includes product implementation, customer training and customer education. The revenue decrease for fiscal 2009 compared with fiscal 2008 was primarily due to our concerted efforts to reduce the number of low margin service contracts in all regions, revenue decreases from customer delays in signing professional service contracts due to the difficult economic environment and revenue decreases in the APJ region, which was due to our decision to stop providing professional services in certain markets in conjunction with our change in that region from a direct to an indirect sales model.

The increase in professional services revenue for fiscal 2008 compared with fiscal 2007 was driven primarily by growth in the volume of Project and Portfolio Management, Identity and Access Management and Service Management implementation projects in fiscal 2008.

Software Fees and Other

Software fees and other revenue primarily consists of revenue that is recognized on an up-front basis as required by SOP 97-2. This includes revenue generated through transactions with distribution and original equipment manufacturer channel partners (sometimes referred to as our “indirect” or “channel” revenue) and certain revenue associated with new or acquired products sold on an up-front basis. Also included is financing fee revenue, which results from the discounting of product sales recognized on an up-front basis with extended payment terms to present value. Revenue recognized on an up-front basis results in higher revenue for the current period than if the same revenue had been recognized ratably under our subscription model.

For fiscal 2009, software fees and other revenue increased from fiscal 2008 primarily due to an $11 million increase in our indirect business revenue and $5 million due to the license agreement we entered into with Rocket Software, Inc. (Rocket). These increases were partially offset by lower financing fees and other

8

revenues. Refer to Note 8 “Commitments and Contingencies” for additional information relating to the Rocket agreement.

For fiscal 2008, software fees and other revenue slightly decreased compared with fiscal 2007 due to lower financing fee revenue due to the decrease in the remaining number of contracts from the prior business model with extended payment terms, which was partially offset by revenue increases in our indirect business.

Total Revenue by Geography

The following table presents the amount of revenue earned from sales to unaffiliated customers in the United States and international regions and corresponding percentage changes for fiscal 2009, 2008 and 2007.

	Fiscal 2009													Fiscal 2008
	Compared with													Compared with
	Fiscal 2008													Fiscal 2007
	(dollars in millions)
			%					%								%					%
	2009		of Total			2008		of Total			% Change			2008		of Total			2007		of Total			% Change
United States	$	2,291		54	%	$	2,217		52	%		3	%	$	2,217		52	%	$	2,131		54	%		4	%
International		1,980		46	%		2,060		48	%		(4	)%		2,060		48	%		1,812		46	%		14	%
	$	4,271		100	%	$	4,277		100	%		—	%	$	4,277		100	%	$	3,943		100	%		8	%

U.S. revenue increased in fiscal 2009 compared with fiscal 2008 primarily due to growth from higher subscription revenue resulting from subscription agreements executed in prior periods. International revenue decreased in fiscal 2009 compared with fiscal 2008 partially due to the unfavorable impacts from foreign exchange of $35 million as well as a $37 million revenue decrease in the APJ region, which was mostly due to our decision to stop providing professional services in certain markets in conjunction with our change in that region from a direct to indirect sales model.

U.S. revenue increased in fiscal 2008 compared with fiscal 2007 primarily due to growth from higher subscription revenue resulting from subscription agreements executed in prior periods. International revenue increased in fiscal 2008 compared with fiscal 2007 principally due to the favorable impacts from foreign exchange of $165 million as well as higher subscription revenue associated with an increase in deferred subscription value from contracts executed in prior periods, particularly in Europe.

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

Expenses

Effective with the filing of the first quarter fiscal 2009 Quarterly Report on Form 10-Q, we refined the classification of certain costs reported on our Consolidated Statement of Operations to better reflect the allocation of various expenses and to better align our reported financial statements with our internal view of our business performance. This refinement increased the amounts reported for fiscal 2008 in the costs of licensing and maintenance, cost of professional services, selling and marketing, and product development and enhancements line items by $5 million, $18 million, $69 million and $10 million, respectively, and decreased the amount reported in general and administrative by $102 million. This refinement increased the amounts reported for fiscal 2007 in the costs of licensing and maintenance, cost of professional services, selling and marketing, and product development and enhancements line items by $6 million, $7 million, $71 million and $13 million, respectively, and decreased the amount reported in general and administrative by $97 million. Total expenses before income taxes and net income were not affected by these reclassifications.

The overall declines in operating expenses for fiscal 2009 compared with fiscal 2008 and for fiscal 2008 compared with fiscal 2007 were primarily due to improved cost management and increased operating efficiencies, including personnel and other savings realized from the fiscal 2007 cost reduction and restructuring plan (fiscal 2007 restructuring plan). In addition there was a favorable impact from foreign exchange of $35 million for fiscal 2009 compared with fiscal 2008 and an unfavorable impact from foreign exchange of $111 million for fiscal 2008 compared with fiscal 2007.

9

Costs of Licensing and Maintenance

Costs of licensing and maintenance include technical support, royalties, and other manufacturing and distribution costs. The increase in costs of licensing and maintenance for fiscal 2009 compared with fiscal 2008 was primarily due to the strategic partnership agreement that we signed with an outside third party relating to our Internet Security business during the fourth quarter of fiscal 2008, under which fees are paid based on sales volumes. Prior to this strategic partnership, the development costs relating to this business were included in product development and enhancements. These increases in costs of licensing and maintenance were partially offset by decreases in product support expenses.

The increases in costs of licensing and maintenance for fiscal 2008 compared with fiscal 2007 was primarily due to increased technical support costs for enhanced support agreements we sell to our customers.

Cost of Professional Services

Cost of professional services consists primarily of our personnel-related costs associated with providing professional services and training to customers. The decrease in cost of professional services for fiscal 2009 compared with fiscal 2008 was primarily due to a reduced use of external consultants, reduced personnel costs and our effort to reduce the number of low margin service contracts which resulted in cost reductions due to lower sales volume and margin improvements. As a result of the decreased costs of professional services, the margins on professional services revenue improved to 14% for fiscal 2009 compared with 4% for fiscal 2008.

For fiscal 2008, cost of professional services increased compared with fiscal 2007 primarily due to the growth in professional services provided. Fiscal 2008 margins on professional services revenue were 4%, which represented a slight decrease from fiscal 2007.

Amortization of Capitalized Software Costs

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

The slight increase in amortization of capitalized software costs in fiscal 2009 from fiscal 2008 was principally due to the amount of projects that have reached technological feasibility and were capitalized during fiscal 2009 and fiscal 2008.

The decline in amortization of capitalized software costs from fiscal 2007 to fiscal 2008 was principally due to the full amortization of certain capitalized software costs related to prior acquisitions.

Selling and Marketing

Selling and marketing expenses include the costs relating to our sales force, costs relating to our channel partners, corporate and business marketing costs and our customer training programs. Including a $15 million decrease due to foreign exchange, the decline in selling and marketing expenses for fiscal 2009 compared with fiscal 2008 was primarily due to decreases in personnel costs of $48 million, promotion expenses of $26 million, office and IT costs of $14 million and external consulting costs of $11 million. Including a $53 million increase due to foreign exchange, the decline in selling and marketing expenses for fiscal 2008 compared with fiscal 2007 was primarily due to reduced personnel and office costs of $11 million, mostly due to savings realized in connection with the fiscal 2007 restructuring plan partially offset by higher sales commissions that resulted from an increase in the aggregate value of contracts executed during the year. For additional information regarding the fiscal 2007 restructuring plan, refer to Note 3, “Restructuring and Other,” in the Notes to the Consolidated Financial Statements.

General and Administrative

General and administrative expenses include the costs of corporate and support functions, including our executive leadership and administration groups, finance, legal, human resources, corporate communications and other costs, such as provisions for doubtful accounts. Including a $4 million decrease due to foreign exchange, general and administrative costs decreased in fiscal 2009 compared with fiscal 2008 primarily due to lower office and IT costs of $28 million, lower personnel-related expenses of $16 million, lower external consulting costs of $18 million and a reduction in bad debt expenses of $9 million, partially offset by a $12

10

million reduction in general and administrative expenses we recorded in fiscal 2008 due to obligations from prior period acquisitions that were settled for amounts less than originally estimated that did not recur in fiscal 2009 (refer to Note 2, “Acquisitions and Divestitures,” in the Notes to the Consolidated Financial Statements for additional information).

Including a $3 million increase due to foreign exchange, general and administrative costs decreased in fiscal 2008 compared with fiscal 2007 primarily due to lower personnel-related expenses and consulting costs of $42 million. In fiscal 2008, we increased our provision for doubtful accounts by $19 million, compared with fiscal 2007. In fiscal 2008, we recorded a $12 million expense reduction due to obligations from prior period acquisitions that were settled for amounts less than originally estimated (refer to Note 2, “Acquisitions and Divestitures,” in the Notes to the Consolidated Financial Statements for additional information).

Product Development and Enhancements

For fiscal 2009, fiscal 2008 and fiscal 2007, product development and enhancements expenses represented approximately 11%, 12% and 14% of total revenue, respectively. Expenses declined during fiscal 2009 as compared with fiscal 2008 primarily due to the strategic partnership agreement signed relating to the development of products associated with our Internet Security business and increased capitalization of internally developed software, partially offset by higher personnel costs. The year-over-year decline in product development and enhancements in fiscal 2008 compared with fiscal 2007 was principally due to a continued focus on transferring development to lower cost regions and savings realized from restructuring activities.

Depreciation and Amortization of Other Intangible Assets

The decrease in depreciation and amortization of other intangible assets for fiscal 2009 compared with fiscal 2008 was primarily due to decreased amortization costs of intangible assets relating to prior period acquisitions.

The increase in depreciation and amortization of other intangible assets for fiscal 2008 as compared with fiscal 2007 was primarily due to the amortization of intangibles recognized in conjunction with prior year acquisitions and costs capitalized in connection with our continued investment in our enterprise resource planning system.

Other (Gains) Expenses, Net

Gains and losses attributable to divestitures of certain assets, certain foreign currency exchange rate fluctuations, and certain other infrequent events have been included in the “Other (gains) expenses, net” line item in the Consolidated Statements of Operations. The components of “Other (gains) expenses, net” are as follows:

	Year Ended March 31,
	2009			2008			2007
	(in millions)
(Gains) expenses attributable to divestitures of certain assets and other items	$	(5	)	$	1		$	(17	)
Fluctuations in foreign currency exchange rates		(11	)		(28	)		—
Expenses attributable to litigation claims and settlements		15			33			4
Total	$	(1	)	$	6		$	(13	)

In fiscal 2009, we recorded net foreign exchange gains of $11 million. The foreign exchange amounts recorded in fiscal 2009 included net gains of $77 million associated with derivative foreign exchange contracts, which we use to mitigate our operating risks and exposures to foreign currency exchange rates. These gains were mostly offset by foreign exchange losses from other operating activities due to the strengthening of the U.S. dollar against other currencies in which we conduct our operations. During the third quarter of fiscal 2009, we recognized a gain of $5 million associated with our repurchase of $148 million principal amount of our 4.750% Senior Notes due 2009. For additional information, refer to Note 1, “Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements.

For fiscal 2008, we incurred expenses associated with litigation claims of $33 million. Included in the expenses for litigation claims was a charge of $14 million representing the present value of the obligation to

11

pay additional amounts in connection with a settlement agreement on our Senior Notes due in 2014 (refer to the discussion of the Fiscal 2005 Senior Notes in the “Liquidity and Capital Resources” section of this MD&A for additional information).

Restructuring and Other

In August 2006, we announced the fiscal 2007 restructuring plan to significantly improve our expense structure and increase our competitiveness. The objectives of the fiscal 2007 restructuring plan included a workforce reduction, global facilities consolidations and other cost reduction initiatives. The total cost of the fiscal 2007 restructuring plan was initially expected to be $200 million.

In April 2008, the objectives of the plan were expanded to include additional workforce reductions, global facilities consolidations and other cost reduction initiatives with expected additional costs of $75 million to $100 million, bringing the total pre-tax restructuring charges for the fiscal 2007 restructuring plan to $275 million to $300 million.

On March 31, 2009, our Board of Directors approved additional cost reduction and restructuring actions relating to the fiscal 2007 restructuring plan. The objectives were expanded to now include (1) an additional workforce reduction of 300 to bring the total to 3,100 positions since the inception of the fiscal 2007 restructuring plan, (2) additional global facilities consolidations and (3) additional other cost reduction initiatives. These additional charges of $45 million bring the total expected pre-tax restructuring charges for the fiscal 2007 restructuring plan to $345 million, $340 million of which was incurred by the end of fiscal 2009. Refer to Note 3, “Restructuring and Other” in the Notes to the Consolidated Financial Statements for additional information.

For fiscal 2009 and 2008, we incurred expenses of $96 million and $97 million, respectively, primarily related to severance and lease abandonment and termination costs under the fiscal 2007 restructuring plan, of which $116 million remains unpaid as of March 31, 2009. The severance portion of the remaining liability balance is included in “Salaries, wages and commissions” line on the Consolidated Balance Sheets. The facilities abandonment portion of the remaining liability balance is included in “Accrued expenses and other current liabilities” and “Other noncurrent liabilities” lines on the Consolidated Balance Sheets. Final payment of these amounts is dependent upon settlement with the works councils in certain international locations and our ability to negotiate lease terminations.

During fiscal 2008, we incurred $12 million in legal fees in connection with matters under review by the Special Litigation Committee, composed of independent members of the Board of Directors (refer to Note 8, “Commitments and Contingencies” in the Notes to the Consolidated Financial Statements for additional information). During fiscal 2009 and fiscal 2008, we recorded impairment charges of $5 million and $6 million, respectively, for software that was capitalized for internal use but was determined to be impaired. In the first quarter of fiscal 2008, we incurred $4 million expense related to a loss on the sale of an investment in marketable securities associated with the closure of an international location.

Charge for In-Process Research and Development Costs

For fiscal 2007, the charge for in-process research and development costs of $10 million was associated with the acquisition of XOsoft, Inc.

Interest Expense, Net

The decrease in interest expense, net, for fiscal 2009 compared with fiscal 2008 was primarily due to decreased interest expenses as a result of the repayment of the $350 million 6.500% Senior Notes due April 2008 (the fiscal 1999 Senior Notes) and partial repurchase of our 4.750% Senior Notes due December 2009.

The decrease in interest expense, net, for fiscal 2008 compared with fiscal 2007 was primarily due to an increase in interest earned on higher average cash balances during the year.

Refer to the “Liquidity and Capital Resources” section of this MD&A and Note 7, “Debt,” in the Notes to the Consolidated Financial Statements, for additional information.

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Income Taxes

Our effective tax rate from continuing operations was approximately 37%, 38%, and 17%, for fiscal years 2009, 2008 and 2007, respectively. Refer to Note 9, “Income Taxes,” in the Notes to the Consolidated Financial Statements for additional information.

The income tax provision recorded for fiscal 2009 includes a net charge of $22 million, which is primarily attributable to adjustments to uncertain tax positions (including certain refinements of amounts ascribed to tax positions taken in prior periods), partially offset by the reinstatement of the U.S. Research and Development Tax Credit and the settlement of a U.S. federal income tax audit for the fiscal years 2001 through 2004. As a result of this settlement, during the first quarter of fiscal year 2009, we recognized a tax benefit of $11 million and a reduction of goodwill by $10 million.

The income tax provision recorded for fiscal 2008 included charges of $26 million associated with certain corporate income tax rate reductions enacted in various non-US tax jurisdictions (with corresponding impacts on our net deferred tax assets). As enacted income tax rates decline, the future value of the deferred tax assets declines, giving rise to a charge through the corporate income tax provision in the current period. Accordingly, deferred tax assets were adjusted to reflect the enacted rates in effect when the temporary items are expected to reverse.

The income tax provision for fiscal 2007 included benefits of $23 million, primarily arising from the resolution of certain international and U.S. federal tax liabilities.

No provision has been made for U.S. federal income taxes on the remaining balance of the unremitted earnings of our foreign subsidiaries since we plan to permanently reinvest all such earnings outside the U.S. Unremitted earnings totaled $1,349 million and $1,110 million as of March 31, 2009 and 2008, respectively. It is not practicable to determine the amount of the tax associated with such unremitted earnings.

Refer to Note 9, “Income Taxes” for additional information.

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Selected Quarterly Information (updated)

Fiscal 2009 Quarter Ended	June 30			Sept. 30			Dec. 31			Mar. 31			Total
	(in millions, except per share and percentage amounts)
Revenue	$	1,087		$	1,107		$	1,042		$	1,035		$	4,271
Percentage of annual revenue		26	%		26	%		24	%		24	%		100	%
Cost of licensing and maintenance	$	75		$	80		$	70		$	73		$	298
Cost of professional services	$	79		$	84		$	76		$	68		$	307
Amortization of capitalized software costs	$	31		$	29		$	31		$	34		$	125
Net income(1)	$	196		$	202		$	208		$	65		$	671
Basic income per share	$	0.38		$	0.39		$	0.40		$	0.13		$	1.29
Diluted income per share	$	0.37		$	0.39		$	0.39		$	0.13		$	1.29

Fiscal 2008 Quarter Ended	June 30			Sept. 30			Dec. 31			Mar. 31			Total
	(in millions, except per share and percentage amounts)
Revenue	$	1,025		$	1,067		$	1,100		$	1,085		$	4,277
Percentage of annual revenue		24	%		25	%		26	%		25	%		100	%
Cost of licensing and maintenance	$	66		$	69		$	64		$	73		$	272
Cost of professional services	$	95		$	91		$	92		$	90		$	368
Amortization of capitalized software costs	$	29		$	29		$	29		$	30		$	117
Net income(2)	$	125		$	131		$	158		$	65		$	479
Basic income per share	$	0.24		$	0.25		$	0.31		$	0.13		$	0.92
Diluted income per share	$	0.23		$	0.25		$	0.30		$	0.13		$	0.92

(1)

Includes after-tax charges of $1 million, $1 million, $0 million and $58 million for severance and other expenses in connection with a restructuring plan for the quarters ended June 30, September 30, December 31, and March 31, respectively. Refer to “Restructuring and Other” within the Results of Operations section of this MD&A for additional information. Also includes a net charge of $16 million from certain tax items and $25 million ascribed to refinements of tax positions taken in prior periods, recorded during the quarter ended March 31, 2009.

(2)

Includes after-tax charges of $4 million, $7 million, $7 million and $43 million for severance and other expenses in connection with a restructuring plan for the quarters ended June 30, September 30, December 31, and March 31, respectively. Refer to “Restructuring and Other” within the Results of Operations section of this MD&A for additional information.

Liquidity and Capital Resources

Our cash and cash equivalents balances are held in numerous locations throughout the world, with 50% residing outside the United States at March 31, 2009. Cash and cash equivalents totaled $2,712 million as of March 31, 2009, representing a decrease of $83 million from the March 31, 2008 balance of $2,795 million, primarily due to the repayment of the $350 million principal amount of our 6.500% Senior Notes due April 2008 that was due and payable during the first quarter of fiscal 2009 and the partial repurchase of $324 million principal amount of our 4.750% Senior Notes due December 2009 during the second half of fiscal 2009 (refer to Debt Arrangements below for additional information). As of March 31, 2009 compared with March 31, 2008, cash and cash equivalents decreased $252 million due to the unfavorable translation effect that foreign currency exchange rates had on cash held outside the United States in currencies other than the U.S. dollar.

On October 29, 2008, our Board of Directors approved a stock repurchase program that authorizes us to acquire up to $250 million of our common stock. During the third quarter of fiscal 2009, we paid $4 million to repurchase 0.3 million of our common shares at an average price of $15.84. As of March 31, 2009, we remain authorized to purchase an aggregate amount of up to $246 million of additional shares of common stock under our existing stock repurchase program. We will fund the program with available cash on hand and may repurchase shares on the open market from time to time based on market conditions and other factors.

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Sources and Uses of Cash

Cash generated by operating activities, which represents our primary source of liquidity, increased $109 million in fiscal 2009 to $1,212 million from $1,103 million in fiscal 2008. For fiscal 2009, accounts receivable decreased by $199 million, compared with a decline in the comparable prior year period of $111 million. For fiscal 2009, accounts payable, accrued expenses and other liabilities decreased $99 million compared with a decrease in the comparable prior year period of $95 million.

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

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

For fiscal 2009, gross receipts related to single installments for the entire contract value, or a substantial portion of the contract value, were $526 million, compared with $641 million in fiscal 2008. These amounts include transactions financed through third parties of $98 million and $257 million for fiscal 2009 and fiscal 2008, respectively.

In any fiscal year, cash provided by continuing operating activities typically increases in each consecutive quarter throughout the fiscal year in accordance with our bookings cycle, with the fourth quarter being the highest and the first quarter being the lowest. The timing of net cash provided by operating activities during the fiscal year is also affected by many other factors, including the timing of any customer financing or transfer of our interest in such contractual installments and the level and timing of expenditures.

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

Our estimate of the fair value of net installment accounts receivable recorded under the prior business model approximates carrying value. Amounts due from customers under our current business model are offset by deferred revenue related to these license agreements, leaving no or minimal net carrying value for such amounts. The fair value of such amounts may exceed, equal, or be less than this carrying value but cannot be practically assessed since there is no existing market for a pool of customer receivables with contractual

15

commitments similar to those owned by us. The actual fair value may not be known until these amounts are sold, securitized or collected. Although these customer license agreements commit the customer to payment under a fixed schedule, to the extent amounts are not yet due and payable by the customer, the agreements are considered executory in nature due to our ongoing commitment to provide maintenance and unspecified future software products as part of the agreement terms.

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

	March 31,		March 31,
	2009		2008
	(in millions)		(in millions)
Billings Backlog:
Amounts to be billed — current	$	1,719	$	1,716
Amounts to be billed — noncurrent		2,228		1,442
Total billings backlog	$	3,947	$	3,158
Revenue Backlog:
Revenue to be recognized within the next 12 months — current	$	3,295	$	3,478
Revenue to be recognized beyond the next 12 months — noncurrent		4,083		3,380
Total revenue backlog	$	7,378	$	6,858
Deferred revenue (billed or collected)	$	3,431	$	3,700
Total billings backlog		3,947		3,158
Total revenue backlog	$	7,378	$	6,858

Note:     Revenue Backlog includes deferred subscription, maintenance and professional services revenue

We can also estimate the total cash to be collected in the future from committed contracts, referred to as our “Expected future cash collections” by adding the total billings backlog to the current and noncurrent Trade and Installment Accounts Receivable from our balance sheet.

	March 31,		March 31,
	2009		2008
	(in millions)		(in millions)
Expected future cash collections:
Total billings backlog	$	3,947	$	3,158
Trade and installment accounts receivable — current, net		839		970
Installment accounts receivable — noncurrent, net		128		234
Total expected future cash collections	$	4,914	$	4,362

The increases in our revenue and billings backlogs as well as our expected future cash collections were driven by increased bookings value and the increased duration associated with those bookings. Revenue to be recognized in the next 12 months decreased 5% at March 31, 2009 as compared with March 31, 2008 mostly due to the negative effect of foreign exchange. Excluding the effect of foreign exchange, revenue to be recognized in the next 12 months increased by 3% at March 31, 2009 as compared with March 31, 2008. In any fiscal year, cash provided by operating activities has typically increased in each consecutive quarter throughout the fiscal year, with the fourth quarter being the highest and the first quarter being the lowest. The timing of cash provided by operating activities during the fiscal year is affected by many factors, including

16

the timing of new or renewed contracts and the associated billings, as well as the timing of any customer financing or transfer of our interests in contractual installments. Other factors that influence the levels of cash generated throughout the quarter can include the level and timing of expenditures.

Unbilled amounts under our business model are mostly collectible over one to five years. As of March 31, 2009, on a cumulative basis, 44%, 72%, 86%, 96%, and 100% of amounts due from customers recorded under our business model come due within fiscal 2010 through 2014, respectively.

Remaining unbilled amounts under the prior business model are collectible over one to three years. As of March 31, 2009, on a cumulative basis, 45%, 81% and 100% of amounts due from customers recorded under the prior business model come due within fiscal 2010 through 2012, respectively.

Cash Generated by Operating Activities

	Year Ended March 31,									$ Change
										2009 /			2008 /
	2009			2008			2007			2008			2007
							(in millions)
Cash collections from billings(1)	$	4,735		$	4,960		$	4,860		$	(225	)	$	100
Vendor disbursements and payroll(1)		(3,112	)		(3,324	)		(3,400	)		212			76
Income tax payments		(351	)		(374	)		(296	)		23			(78	)
Other disbursements, net(2)		(60	)		(159	)		(96	)		99			(63	)
Cash generated by operating Activities	$	1,212		$	1,103		$	1,068		$	109		$	35

(1)	Amounts include VAT and sales taxes.
(2)	Amounts include interest, restructuring and miscellaneous receipts and disbursements.

Fiscal 2009 Compared with Fiscal 2008

Operating Activities:

Cash generated by continuing operating activities for fiscal 2009 was $1,212 million, representing an increase of $109 million compared with fiscal 2008. The increase was primarily due to a reduction of $212 million in vendor disbursements and payroll due to increased operating efficiencies and $78 million received from settlements of derivative contracts primarily resulting from the strengthening of the U.S. dollar against the euro. The amounts received from the settlements of derivative contracts were mostly offset by the reduced value in dollars of net cash received due to foreign exchange movements. These increases were partially offset by a $225 million decrease in cash collections from billings, mostly due to a $115 million decrease in single installment payments.

Investing Activities:

Cash used in investing activities for fiscal 2009 was $284 million compared with $219 million for fiscal 2008. Increases in cash paid for acquisitions, net of cash acquired, and capitalized software development costs of $49 million and $17 million, respectively, were partially offset by reduced purchases of property and equipment of $34 million and a $27 million reduction due to proceeds from a sale-leaseback transaction that were realized in fiscal 2008 that did not recur in fiscal 2009.

Financing Activities:

Cash used in financing activities for fiscal 2009 was $759 million compared with $572 million in fiscal 2008. The increase in cash used in financing activities was primarily due to the partial repayment of $324 million principal amount of our 4.750% Senior Notes due 2009 during the second half of fiscal 2009. In addition, during the first quarter of fiscal 2009, we repaid the $350 million 6.500% Senior Notes that was due and payable at that time. Refer to “Debt Arrangements” below for additional information concerning our outstanding debt balances at March 31, 2009. Partially offsetting the debt repayments in fiscal 2009 was a decrease in common stock repurchases. During fiscal 2009, we repurchased $4 million of our own common stock, compared with $500 million in fiscal 2008.

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Fiscal 2008 Compared with Fiscal 2007

Operating Activities:

Cash generated by continuing operating activities for fiscal 2008 was $1,103 million, representing an increase of $35 million compared with fiscal 2007. The increase was driven primarily by higher collections of $100 million, including an increase of $64 million from single installment receipts, and lower disbursements to vendors and lower payroll related disbursements of $76 million. These amounts were partly offset by higher cash payments for income taxes and interest payments.

Investing Activities:

Cash used in investing activities for fiscal 2008 was $219 million compared with $202 million for fiscal 2007. Cash paid for acquisitions, net of cash acquired, was $27 million for fiscal 2008 compared with $212 million for fiscal 2007. Proceeds from the sale of assets were $46 million for fiscal 2008, compared with $223 million in fiscal 2007, which included proceeds on the sale-leaseback of our corporate headquarters in Islandia, New York of $201 million. In fiscal 2008, we had net purchases of marketable securities of $3 million compared with proceeds from sales of marketable securities in fiscal 2007 of $44 million.

Financing Activities:

Cash used in financing activities for fiscal 2008 was $572 million compared with $515 million in fiscal 2007. During fiscal 2008, we repurchased $500 million of our own common stock, compared with $1,216 million in fiscal 2007. Partially offsetting the share repurchases in fiscal 2007 was an increase in borrowings of $750 million under our 2004 Revolving Credit Facility. In the second quarter of fiscal 2008, we repaid our 2004 Revolving Credit Facility with proceeds from our 2008 Revolving Credit Facility. During fiscal 2008, we paid dividends of $82 million, compared with $88 million in fiscal 2007.

As of March 31, 2009 and 2008, our debt arrangements consisted of the following:

	March 31, 2009				March 31, 2008
	Maximum		Outstanding		Maximum		Outstanding
	Available		Balance		Available		Balance
	(in millions)
Debt Arrangements:
2008 Revolving Credit Facility (expires August 2012)	$	1,000	$	750	$	1,000	$	750
6.500% Senior Notes due April 2008		—		—		—		350
1.625% Convertible Senior Notes due December 2009, net of debt amortization amount of $29 million and $66 million, respectively		—		431		—		394
4.750% Senior Notes due December 2009		—		176		—		500
6.125% Senior Notes due December 2014		—		500		—		500
International line of credit		25		—		25		—
Capital lease obligations and other		—		51		—		22
Total			$	1,908			$	2,516

As of March 31, 2009, we had $1,908 million in debt and $2,712 million in cash and cash equivalents. Our net cash surplus position, cash in excess of debt, was $804 million.

Additionally, we reported restricted cash balances of $56 million and $62 million as of March 31, 2009 and 2008, respectively, which were included in the “Other noncurrent assets, net” line item.

2008 Revolving Credit Facility

In August 2007, we entered into the 2008 Revolving Credit Facility. The maximum committed amount available under the 2008 Revolving Credit Facility is $1 billion, exclusive of incremental credit increases of up to an additional $500 million, which are available subject to certain conditions and the agreement of our lenders. The 2008 Revolving Credit Facility replaces the prior $1 billion 2004 Revolving Credit Facility, which was due to expire on December 2, 2008. The 2004 Revolving Credit Facility was terminated effective August 29, 2007, at which time outstanding borrowings of $750 million were repaid and simultaneously re-borrowed under the 2008 Revolving Credit Facility. The 2008 Revolving Credit

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Facility expires on August 29, 2012. As of March 31, 2009 and 2008, $750 million was drawn down under the 2008 Revolving Credit Facility.

Borrowings under the 2008 Revolving Credit Facility bear interest at a rate dependent on our credit ratings at the time of such borrowings and are calculated according to a base rate or a Eurocurrency rate, as the case may be, plus an applicable margin and utilization fee. The applicable margin for a base rate borrowing is 0% and, depending on our credit rating, the applicable margin for a Eurocurrency borrowing ranges from 0.27% to 0.875%. Also, depending on our credit rating at the time of the borrowing, the utilization fee can range from 0.1% to 0.25% for borrowings over 50% of the total commitment. At our credit ratings as of March 31, 2009, the applicable margin was 0% for a base rate borrowing and 0.425% for a Eurocurrency borrowing, and the utilization fee was 0.1%. As of March 31, 2009, the weighted average interest rate on our outstanding borrowings was 1.95%. In addition, we must pay facility commitment fees quarterly at rates dependent on our credit ratings. The facility commitment fees can range from 0.08% to 0.375% of the final allocated amount of each Lender’s full revolving credit commitment (without taking into account any outstanding borrowings under such commitments). Based on our credit ratings as of March 31, 2009, the facility commitment fee was 0.125% of the $1 billion committed amount.

The 2008 Revolving Credit Facility contains customary covenants for transactions of this type, including two financial covenants: (i) for the 12 months ending each quarter-end, the ratio of consolidated debt for borrowed money to consolidated cash flow, each as defined in the 2008 Revolving Credit Facility, must not exceed 4.00 to 1.00; and (ii) for the 12 months ending each quarter-end, the ratio of consolidated cash flow to the sum of interest payable on, and amortization of debt discount in respect of, all consolidated debt for borrowed money, as defined in the 2008 Revolving Credit Facility, must not be less than 5.00 to 1.00. In addition, as a condition precedent to each borrowing made under the 2008 Revolving Credit Facility, as of the date of such borrowing, (i) no event of default shall have occurred and be continuing and (ii) we are to reaffirm that the representations and warranties made by us in the 2008 Revolving Credit Facility (other than the representation with respect to material adverse changes, but including the representation regarding the absence of certain material litigation) are correct. As of March 31, 2009, we are in compliance with these debt covenants.

6.500% Senior Notes

In fiscal 1999, we issued $1,750 million of unsecured 6.500% Senior Notes in a transaction pursuant to Rule 144A under the Securities Act of 1933 (Rule 144A). In the first quarter of fiscal 2009, we paid the $350 million 6.500% Senior Notes that was due and payable at that time. Subsequent to this scheduled payment, there were no further amounts due under this issuance.

1.625% Convertible Senior Notes

In fiscal 2003, we issued $460 million of unsecured 1.625% Convertible Senior Notes (1.625% Notes) due December 2009, in a transaction pursuant to Rule 144A. The 1.625% Notes are senior unsecured indebtedness and rank equally with all existing senior unsecured indebtedness. See footnote 1(e) to the Consolidated Financial Statements for discussion of a change in accounting for these notes. Concurrent with the issuance of the 1.625% Notes, we entered into call spread repurchase option transactions (1.625% Notes Call Spread) to partially mitigate potential dilution from conversion of the 1.625% Notes. The option purchase price of the 1.625% Notes Call Spread was $73 million and the entire purchase price was charged to stockholders’ equity in December 2002. Under the terms of the 1.625% Notes Call Spread, we can elect to receive (i) outstanding shares equivalent to the number of shares that will be issued if all of the 1.625% Notes are converted into shares (23 million shares) upon payment of an exercise price of $20.04 per share (aggregate price of $460 million); or (ii) a net cash settlement, net share settlement or a combination, whereby we will receive cash or shares equal to the increase in the market value of the 23 million shares from the aggregate value at the $20.04 exercise price (aggregate price of $460 million), subject to the upper limit of $30.00 discussed below. The 1.625% Notes Call Spread is designed to partially mitigate the potential dilution from conversion of the 1.625% Notes, depending upon the market price of our common stock at such time. The 1.625% Notes Call Spread can be exercised in December 2009 at an exercise price of $20.04 per share. To limit the cost of the 1.625% Notes Call Spread, an upper limit of $30.00 per share has been set, such that if the price of the common stock is above that limit at the time of exercise, the number of shares eligible to be purchased will be proportionately reduced based on the amount by which the common share price exceeds $30.00 at the time of exercise. As of March 31, 2009, the estimated fair value of the 1.625% Notes Call Spread was $34 million, which was based upon valuations from independent third-party financial institutions.

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Fiscal Year 2005 Senior Notes

In November 2004, we issued an aggregate of $1 billion of unsecured Senior Notes (collectively, the 2005 Senior Notes) in a transaction pursuant to Rule 144A. We issued $500 million of 4.75%, 5-year notes due December 2009 and $500 million of 5.625%, 10-year notes due December 2014. In December 2007, the 5.625% Senior Notes due December 2014 were renamed the 6.125% Senior Notes due December 2014 (see below for additional information).

4.750% Senior Notes due December 2009: During the fourth quarter of fiscal 2009, we completed a tender offer to repay a portion of our 4.750% Senior Notes due December 1, 2009, under which we repaid $176 million of the aggregate principal amount of the notes, exclusive of accrued interest. During the third quarter of fiscal 2009, we also repaid $148 million of the aggregate principal amount of our 4.750% Senior Notes due December 2009 on the open market at a price of $143 million in cash, exclusive of accrued interest. As a result of this repayment, we recognized a gain of $5 million in the “Other (gains) expenses, net” line of the Consolidated Statements of Operations in the third quarter. At March 31, 2009, $176 million of our 4.750% Senior Notes remains outstanding.

6.125% Senior Notes due December 2014: On December 21, 2007, the Company, The Bank of New York, and the holders of a majority of the Notes reached a settlement of a lawsuit captioned The Bank of New York v. CA, Inc. et al., filed in the Supreme Court of the State of New York, New York County and executed a First Supplemental Indenture. The First Supplemental Indenture provides, among other things, that we will pay an additional 0.50% per annum interest on the $500 million principal amount of the Notes, with such additional interest beginning to accrue as of December 1, 2007. Pursuant to the Supplemental Indenture, the Notes are now referred to as our 6.125% Senior Notes due 2014. As a result of the settlement in the third quarter of fiscal 2008, we recorded a charge of $14 million, representing the present value of the additional amounts that will be paid. This charge is included in “Other (gains) expenses, net” line item in the Consolidated Statements of Operations. In connection with the settlement, we also entered into an Addendum to Registration Rights Agreement, which confirms that we no longer have any obligations under the original Registration Rights Agreement entered into with respect to the Notes. The settlement became effective upon the signature of the Stipulation of Dismissal with Prejudice by a Justice of the New York Supreme Court on January 3, 2008.

We have the option to redeem the 2005 Senior Notes at any time, at redemption prices equal to the greater of (i) 100% of the aggregate principal amount of the notes of such series being redeemed and (ii) the present value of the principal and interest payable over the life of the 2005 Senior Notes, discounted at a rate equal to 15 basis points and 20 basis points for the 5-year notes and 10-year notes, respectively, over a comparable U.S. Treasury bond yield. The maturity of the 2005 Senior Notes may be accelerated by the holders upon certain events of default, including failure to make payments when due and failure to comply with covenants in the 2005 Senior Notes. The 5-year notes were issued at a price equal to 99.861% of the principal amount and the 10-year notes at a price equal to 99.505% of the principal amount for resale under Rule 144A and Regulation S.

International Line of Credit

An unsecured and uncommitted multi-currency line of credit is available to meet short-term working capital needs for our subsidiaries operating outside the United States. The line of credit is available on an offering basis, meaning that transactions under the line of credit will be on such terms and conditions, including interest rate, maturity, representations, covenants and events of default, as mutually agreed between our subsidiaries and the local bank at the time of each specific transaction. As of March 31, 2009, the amount available under this line totaled approximately $25 million and approximately $6 million was pledged in support of bank guarantees and other local credit lines. Amounts drawn under these facilities as of March 31, 2009 were nominal.

In addition to the above facility, we and our subsidiaries use guarantees and letters of credit issued by financial institutions to guarantee performance on certain contracts. As of March 31, 2009, none of these arrangements had been drawn down by third parties.

Share Repurchases

On October 29, 2008, our Board of Directors approved a stock repurchase program that authorizes us to acquire up to $250 million of our common stock. During the third quarter of fiscal 2009, we paid $4

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million to repurchase approximately 0.3 million shares of our common stock at an average price of $15.84. As of March 31, 2009, we remained authorized to purchase an aggregate amount of up to $246 million of additional common shares under our current stock repurchase program.

Dividends

We have paid cash dividends each year since July 1990. For fiscal 2009, 2008 and 2007, we paid annual cash dividends of $0.16 per share, which have been paid out in quarterly installments of $0.04 per share as and when declared by the Board of Directors. Total cash dividends paid was $83 million, $82 million and $88 million for fiscal 2009, fiscal 2008 and fiscal 2007 respectively.

Effect of Exchange Rate Changes

There was a $252 million unfavorable impact to our cash balances in fiscal 2009 predominantly due to the strengthening of the U.S. dollar against the euro, British pound, Australian dollar, Brazilian real and Canadian dollar of 16%, 28%, 24%, 24% and 19%, respectively. In fiscal 2008, we had a favorable $208 million impact to our cash balances, predominantly due to the weakening of the U.S. dollar against the euro, Australian dollar and Canadian dollar of 18%, 13%, and 12%, respectively.

Other Matters

As of March 31, 2009, our senior unsecured notes were rated Ba1, BBB, and BB+ by Moody’s Investors Service (Moody’s), Standard and Poor’s (S&P) and Fitch Ratings (Fitch), respectively. In April 2009, Fitch upgraded our rating to BBB.

As of March 31, 2009, the outlook on these unsecured notes was stable by all three rating agencies. Peak borrowings under all debt facilities during fiscal 2009 totaled $2,582 million, with a weighted average interest rate of 4.47%.

Capital resource requirements as of March 31, 2009 and 2008 consisted of lease obligations for office space, equipment, mortgage and loan obligations, our enterprise resource planning implementation, and amounts due as a result of product and company acquisitions. Refer to “Contractual Obligations and Commitments” for additional information.

We expect that existing cash, cash equivalents, marketable securities, the availability of borrowings under existing and renewable credit lines, and cash expected to be provided from operations will be sufficient to meet our ongoing cash requirements.

We expect to use existing cash balances and future cash generated from operations to fund capital spending, including our continued investment in our enterprise resource planning implementation, future acquisitions and financing activities, such as the repayment of our debt balances either before or as they mature, the payment of dividends, and the repurchase of shares of common stock in accordance with any plans approved by our Board of Directors.

We conduct an ongoing review of our capital structure and debt obligations as part of our risk management strategy. The fair value of our current and long term portions of debt, excluding the 2008 Revolving Credit Facility and Capital lease obligations and other, was approximately $1,130 million and $1,885 million as of March 31, 2009 and 2008, respectively. The fair value of long-term debt is based on quoted market prices. See also Note 1, “Significant Accounting Policies.”

Off-Balance Sheet Arrangements

Prior to fiscal 2001, we sold individual accounts receivable to a third party subject to certain recourse provisions. The outstanding principal balance subject to recourse of these receivables approximated $38 million and $81 million as of March 31, 2009 and 2008, respectively. As of March 31, 2009, we have established a liability for the fair value of the recourse provision of $2 million associated with these receivables.

Other than the commitments and recourse provisions described above, we do not have any other off-balance sheet arrangements with unconsolidated entities or related parties and, accordingly, off-balance sheet risks to our liquidity and capital resources from unconsolidated entities are limited.

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Contractual Obligations and Commitments

We have commitments under certain contractual arrangements to make future payments for goods and services. These contractual arrangements secure the rights to various assets and services to be used in the future in the normal course of business. For example, we are contractually committed to make certain minimum lease payments for the use of property under operating lease agreements. In accordance with current accounting rules, the future rights and related obligations pertaining to such contractual arrangements are not reported as assets or liabilities on our Consolidated Balance Sheets. We expect to fund these contractual arrangements with cash generated from operations in the normal course of business.

The following table summarizes our contractual arrangements as of March 31, 2009 and the timing and effect that such commitments are expected to have on our liquidity and cash flow in future periods. In addition, the table summarizes the timing of payments on our debt obligations as reported on our Consolidated Balance Sheets as of March 31, 2009.

	Payments Due by Period
			Less Than		1-3		3-5		More than
Contractual Obligations	Total		1 Year		Years		Years		5 Years
	(in millions)
Long-term debt obligations (inclusive of interest)	$	2,173	$	708	$	112	$	823	$	530
Operating lease obligations(1)		656		119		173		119		245
Purchase obligations		76		57		19		—		—
Other obligations(2)		172		54		73		30		15
Total	$	3,077	$	938	$	377	$	972	$	790

(1)

The contractual obligations for noncurrent operating leases include sublease income totaling $42 million expected to be received in the following periods: $18 million (less than 1 year); $16 million (1-3 years); $7 million (3-5 years); and $1 million (more than 5 years).

(2)

Includes $9 million of estimated liabilities for unrecognized tax benefits under the “less than 1 year” column for amounts that are estimated to be settled within one year of the balance sheet date. In addition, $302 million of estimated liabilities for unrecognized tax benefits are excluded from the contractual obligations table because a reasonable estimate of when such amounts will become payable could not be made.

As of March 31, 2009, we have no material capital lease obligations, either individually or in the aggregate.

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Critical Accounting Policies and Estimates

We review our financial reporting and disclosure practices and accounting policies quarterly to help ensure that they provide accurate and transparent information relative to the current economic and business environment. Note 1, “Significant Accounting Policies” in the Notes to the Consolidated Financial Statements contains a summary of the significant accounting policies that we use. Many of these accounting policies involve complex situations and require a high degree of judgment, either in the application and interpretation of existing accounting literature or in the development of estimates that impact our financial statements. On an ongoing basis, we evaluate our estimates and judgments based on historical experience as well as other factors that are believed to be reasonable under the circumstances. These estimates may change in the future if underlying assumptions or factors change.

We consider the following significant accounting policies to be critical because of their complexity and the high degree of judgment involved in implementing them.

Revenue Recognition

We generate revenue from the following primary sources: (1) licensing software products; (2) providing customer technical support (referred to as maintenance); and (3) providing professional services, such as product implementation, consulting and education. Revenue is recorded net of applicable sales taxes.

We recognize revenue pursuant to the requirements of Statement of Position (SOP) 97-2 “Software Revenue Recognition”, issued by the American Institute of Certified Public Accountants, as amended by SOP 98-9 “Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions.” In accordance with SOP 97-2, we begin to recognize revenue from licensing and supporting our software products when all of the following criteria are met: (1) we have evidence of an arrangement with a customer; (2) we deliver the products; (3) license agreement terms are deemed fixed or determinable and free of contingencies or uncertainties that may alter the agreement such that it may not be complete and final; and (4) collection is probable.

Under our subscription model, implemented in October 2000, software license agreements typically combine the right to use specified software products, the right to maintenance, and the right to receive and use unspecified future software products for no additional fee during the term of the agreement. Under these subscription licenses, once all four of the above noted revenue recognition criteria are met, we are required under generally accepted accounting principles to recognize revenue ratably over the term of the license agreement.

For license agreements signed prior to October 2000, once all four of the above noted revenue recognition criteria were met, software license fees were recognized as revenue generally when the software was delivered to the customer, or “up-front” (as the contracts did not include a right to unspecified future software products), and the maintenance fees were deferred and subsequently recognized as revenue over the term of the license. Under our current business model, a relatively small percentage of our revenue from software licenses is recognized on an up-front basis, subject to meeting the same revenue recognition criteria in accordance with SOP 97-2 as described above. Software fees from such licenses are recognized up-front and are reported in the “Software fees and other” line item in the Consolidated Statements of Operations. Maintenance fees from such licenses are recognized ratably over the term of the license and are reported in the “Subscription and maintenance revenue” line item in the Consolidated Statements of Operations. License agreements under which software fees are recognized up-front do not include the right to receive unspecified future software products. However, in the event such license agreements are executed within close proximity or in contemplation of other license agreements that are signed under our subscription model with the same customer, the licenses together may be deemed a single multi-element agreement, and all such revenue is required to be recognized ratably and is recorded as “Subscription and maintenance revenue” in the Consolidated Statements of Operations.

We are unable to establish VSOE of fair value for all undelivered elements in license agreements that include software products for which maintenance pricing is based on both discounted and undiscounted license list prices and arrangements that contain rights to unspecified future software products. If VSOE of fair value of one or more undelivered elements does not exist, license revenue is deferred and recognized upon delivery of those elements or when VSOE of fair value can be established. When the license includes the right to receive unspecified future software products, license revenue is recognized

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ratably over the term on the arrangement as VSOE does not exist for the future unspecified software products.

Since we implemented our subscription model in October 2000, our practice with respect to newly acquired products with established VSOE of fair value has been to record revenue initially on the acquired company’s systems, generally under an up-front model; and, starting within the first fiscal year after the acquisition, to enter new licenses for such products under our subscription model, following which revenue is recognized ratably and recorded as “Subscription and maintenance revenue.” In some instances, we sell some newly developed and recently acquired products without the right to receive unspecified future software products. Revenue from these agreements is generally recorded on an up-front model, to the extent that we are able to establish VSOE of fair value for all undelivered elements and such license agreements are not deemed to have been linked with other contracts executed within a short time frame with the same customer or in contemplation of other license agreements with the same customer for which the right exists to receive unspecified future software products. The software license fees from these contracts are recorded on an up-front basis as “Software fees and other.” Selling such licenses under an up-front model will result in higher total revenue in a reporting period than if such licenses were based on our subscription model and the associated revenue recognized ratably.

Maintenance revenue is derived from two primary sources: (1) the maintenance portion of combined license and maintenance agreements; and (2) stand-alone maintenance agreements. Maintenance revenue is reported on the “Subscription and maintenance revenue” line item in the Consolidated Statements of Operations over the term of the renewal agreement.

Revenue from professional service arrangements is generally recognized as the services are performed. Revenue from committed professional services that are sold as part of a software transaction is deferred and recognized on a ratable basis over the life of the related software transaction. If it is not probable that a project will be completed or the payment will be received, revenue is deferred until the uncertainty is removed.

Revenue from sales to distributors, resellers, and value added resellers commences when all four of the SOP 97-2 revenue recognition criteria noted above are met and when these entities sell the software product to their customers. This is commonly referred to as the sell-through method. Revenue from the sale of products to distributors, resellers and value added resellers that incorporates the right for the end-users to receive certain unspecified future software products is recognized on a ratable basis.

We have an established business practice of offering installment payment options to customers and have a history of successfully collecting substantially all amounts due under such agreements. We assess collectability based on a number of factors, including past transaction history with the customer and the creditworthiness of the customer. If, in our judgment, collection of a fee is not probable, we will not recognize revenue until the uncertainty is removed through the receipt of cash payment.

Our standard licensing agreements include a product warranty provision for all products. Such warranties are accounted for in accordance with Statement of Financial Accounting Standards (SFAS) No. 5, “Accounting for Contingencies.” The likelihood that we will be required to make refunds to customers under such provisions is considered remote.

Under the terms of substantially all of our license agreements, we have agreed to indemnify customers for costs and damages arising from claims against such customers based on, among other things, allegations that our software products infringe the intellectual property rights of a third-party. In most cases, in the event of an infringement claim, we retain the right to (i) procure for the customer the right to continue using the software product; (ii) replace or modify the software product to eliminate the infringement while providing substantially equivalent functionality; or (iii) if neither (i) nor (ii) can be reasonably achieved, we may terminate the license agreement and refund to the customer a pro-rata portion of the fees paid. Such indemnification provisions are accounted for in accordance with SFAS No. 5. The likelihood that we will be required to make refunds to customers under such provisions is considered remote. In most cases and where legally enforceable, the indemnification is limited to the amount paid by the customer.

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Accounts Receivable

The allowance for doubtful accounts is a valuation account used to reserve for the potential impairment of accounts receivable on the balance sheet. In developing the estimate for the allowance for doubtful accounts, we rely on several factors, including:

• Historical information, such as general collection history of multi-year software agreements;

• Current customer information and events, such as extended delinquency, requests for restructuring, and filings for bankruptcy;

• Results of analyzing historical and current data; and

• The overall macroeconomic environment.

The allowance is composed of two components: (a) specifically identified receivables that are reviewed for impairment when, based on current information, we do not expect to collect the full amount due from the customer; and (b) an allowance for losses inherent in the remaining receivable portfolio-based historical activity.

Income Taxes

SFAS No. 109, “Accounting for Income Taxes,” requires us to estimate our actual current tax liability in each jurisdiction; estimate differences resulting from differing treatment of items for financial statement purposes versus tax return purposes (known as “temporary differences”), resulting in deferred tax assets and liabilities; and assess the likelihood that our deferred tax assets will be recovered from future taxable income. If we believe that recovery is not likely, we establish a valuation allowance.

Deferred tax assets result from acquisition expenses, such as duplicate facility costs, employee severance and other costs that are not deductible until paid, net operating losses (NOLs) and temporary differences between the taxable cash payments received from customers and the ratable recognition of revenue in accordance with GAAP. The NOLs will expire as follows: $457 million between 2009 and 2028 and $151 million may be carried forward indefinitely.

As of March 31, 2009, our gross deferred tax assets, net of a valuation allowance, totaled $826 million. The factors that we consider in assessing the likelihood of realization of these deferred tax assets include the forecast of future taxable income and available tax planning strategies that could be implemented to realize the deferred tax assets.

When we prepare our consolidated financial statements, we estimate our income taxes in each jurisdiction in which we operate. On April 1, 2007, we adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (FIN 48). Among other things, FIN 48 prescribes a “more-likely-than-not” threshold for the recognition and derecognition of tax positions.

Goodwill, Capitalized Software Products, and Other Intangible Assets

SFAS No. 142, “Goodwill and Other Intangible Assets” (SFAS No. 142), requires an impairment-only approach to accounting for goodwill and other intangibles with an indefinite life. Absent any prior indicators of impairment, we perform an annual impairment analysis during the fourth quarter of our fiscal year.

The SFAS No. 142 goodwill impairment model is a two-step process. The first step is used to identify potential impairment by comparing the fair value of a reporting unit with its net book value (or carrying amount), including goodwill. If the fair value exceeds the carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination; that is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible

25

assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit.

The fair value of a reporting unit under the first step of the goodwill impairment test is measured using the quoted market price method. Determining the fair value of individual assets and liabilities of a reporting unit (including unrecognized intangible assets) under the second step of the goodwill impairment test is judgmental in nature and often involves the use of significant estimates and assumptions. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and the magnitude of any such charge. These estimates are subject to review and approval by senior management. This approach uses significant assumptions, including projected future cash flow, the discount rate reflecting the risk inherent in future cash flow, and a terminal growth rate. We performed our annual assessment of goodwill during the fourth quarter of fiscal 2009 and concluded that no impairment charge was required.

The carrying values of capitalized software products, for both purchased software and internally developed software, and other intangible assets, are reviewed on a regular basis to ensure that any excess of the carrying value over the net realizable value is written off. The facts and circumstances considered include an assessment of the net realizable value for capitalized software products and the future recoverability of cost for other intangible assets as of the balance sheet date. It is not possible for us to predict the likelihood of any possible future impairments or, if such an impairment were to occur, the magnitude thereof.

Intangible assets with finite useful lives are subject to amortization over the expected period of economic benefit to us. We evaluate the remaining useful lives of intangible assets to determine whether events or circumstances have occurred that warrant a revision to the remaining period of amortization. In cases where a revision to the remaining period of amortization is deemed appropriate, the remaining carrying amounts of the intangible assets are amortized over the revised remaining useful life.

Accounting for Business Combinations

The allocation of the purchase price for acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired, including in-process research and development, and liabilities assumed based on their respective fair values.

Product Development and Enhancements

We account for product development and enhancements in accordance with SFAS No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed” (SFAS No. 86). SFAS No. 86 specifies that costs incurred internally in researching and developing a computer software product should be charged to expense until technological feasibility has been established for the product. Once technological feasibility is established, all software costs are capitalized until the product is available for general release to customers. Judgment is required in determining when technological feasibility of a product is established and assumptions are used that reflect our best estimates. If other assumptions had been used in the current period to estimate technological feasibility, the reported product development and enhancement expense could have been affected. Annual amortization of capitalized software costs is the greater of the amount computed using the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or the straight-line method over the remaining estimated economic life of the software product, generally estimated to be five years from the date the product became available for general release to customers. We amortized capitalized software costs using the straight-line method in fiscal 2009 and fiscal 2008, as anticipated future revenue is projected to increase for several years considering that we are continuously integrating current software technology into new software products.

26

Accounting for Stock-Based Compensation

We currently maintain several stock-based compensation plans. We use the Black-Scholes option-pricing model to compute the estimated fair value of certain stock-based awards. The Black-Scholes model includes assumptions regarding dividend yields, expected volatility, expected lives, and risk-free interest rates. These assumptions reflect our best estimates, but these items involve uncertainties based on market and other conditions outside of our control. As a result, if other assumptions had been used, stock-based compensation expense could have been materially affected. Furthermore, if different assumptions are used in future periods, stock-based compensation expense could be materially affected in future years.

As described in Note 10, “Stock Plans,” in the Notes to the Consolidated Financial Statements, performance share units (PSUs) are awards under the long-term incentive programs for senior executives where the number of shares or restricted shares, as applicable, ultimately received by the employee depends on Company performance measured against specified targets and will be determined after a three-year or one-year period as applicable. The fair value of each award is estimated on the date that the performance targets are established based on the fair value of our stock and our estimate of the level of achievement of our performance targets. We are required to recalculate the fair value of issued PSUs each reporting period until the underlying shares are granted. The adjustment is based on the quoted market price of our stock on the reporting period date. Each quarter, we compare the actual performance we expect to achieve with the performance targets.

Legal Contingencies

We are currently involved in various legal proceedings and claims. Periodically, we review the status of each significant matter and assess our potential financial exposure. If the potential loss from any legal proceeding or claim is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Significant judgment is required in both the determination of the probability of a loss and the determination as to whether the amount of loss is reasonably estimable. Due to the uncertainties related to these matters, the decision to record an accrual and the amount of accruals recorded are based only on the best information available at the time. As additional information becomes available, we reassess the potential liability related to our pending litigation and claims, and may revise our estimates. Such revisions could have a material impact on our results of operations and financial condition. Refer to Note 8, “Commitments and Contingencies,” in the Notes to the Consolidated Financial Statements for a description of our material legal proceedings.

27

EX-99.3

Exhibit 99.3

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio, debt, and installment accounts receivable. We have a prescribed methodology whereby we invest our excess cash in liquid investments that are composed of money market funds and debt instruments of government agencies and high-quality corporate issuers (S&P single “A” rating and higher). To mitigate risk, all of the securities have a maturity date within one year, and holdings of any one issuer do not exceed 10% of the portfolio.

As of March 31, 2009, our outstanding debt, net of unamortized discounts, was $1,908 million, most of which was in fixed rate obligations. Each 25 basis point increase or decrease in interest rates would have a corresponding effect on our variable rate debt of less than $1 million as of March 31, 2009. If market rates were to decline, we could be required to make payments on the fixed rate debt that would exceed those based on current market rates.

During fiscal 2009, we entered into interest rate swaps with a total notional value of $250 million to hedge a portion of our variable interest rate payments. These derivatives are designated as cash flow hedges under SFAS No. 133. The effective portion of these cash flow hedges are recorded as “Accumulated other comprehensive loss” in our Consolidated Balance Sheet and reclassified into “Interest expense, net,” in our Consolidated Statements of Operations in the same period during which the hedged transaction affects earnings. Any ineffective portion of the cash flow hedges would be recorded immediately to “Interest expense, net;” however, no ineffectiveness existed at March 31, 2009. Refer to Note 4, “Derivatives and Fair Value Measurements,” for additional information regarding our derivative activities.

We offer financing arrangements with installment payment terms in connection with our software license agreements. The aggregate amounts due from customers include an imputed interest element, which can vary with the interest rate environment. Each 25 basis point increase in interest rates would currently have an associated annual opportunity cost of $10 million.

Foreign Currency Exchange Risk

We conduct business on a worldwide basis through subsidiaries in 46 countries and, as such, a portion of our revenues, earnings, and net investments in foreign affiliates is exposed to changes in foreign exchange rates. We seek to manage our foreign exchange risk in part through operational means, including managing expected local currency revenues in relation to local currency costs and local currency assets in relation to local currency liabilities. In October 2005, the Board of Directors adopted our Risk Management Policy and Procedures, which authorizes us to manage, based on management’s assessment, our risks and exposures to foreign currency exchange rates through the use of derivative financial instruments (e.g., forward contracts, options, swaps) or other means. We only use derivative financial instruments in the context of hedging and do not use them for speculative purposes.

Derivatives are accounted for in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS No. 133). During fiscal 2009 and 2008, we did not designate our foreign exchange derivatives as hedges under SFAS No. 133. Accordingly, all foreign exchange derivatives are recognized on the balance sheet at fair value and unrealized or realized changes in fair value from these contracts are recorded as “Other (gains) expenses, net” in our Consolidated Statements of Operations. Refer to Note 4, “Derivatives and Fair Value Measurements,” for additional information regarding our derivative activities.

EX-99.4

Exhibit 99.4

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (UPDATED)

Index to Financial Statements	Page
Report of Independent Registered Public Accounting Firm	1
Consolidated Statements of Operations — Years Ended March 31, 2009, 2008 and 2007	3
Consolidated Balance Sheets — March 31, 2009 and 2008	4
Consolidated Statements of Stockholders’ Equity — Years Ended March 31, 2009, 2008 and 2007	6
Consolidated Statements of Cash Flows — Years Ended March 31, 2009, 2008 and 2007	8
Notes to the Consolidated Financial Statements	10
The following Consolidated Financial Statement Schedule of CA, Inc, and subsidiaries is included in Item 15 (c):
Schedule II — Valuation of Qualifying Accounts	50

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
CA, Inc.:

We have audited the accompanying consolidated balance sheets of CA, Inc. and subsidiaries as of March 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended March 31, 2009. In connection with our audits of the consolidated financial statements, we also have audited the consolidated financial statement schedule listed in Item 15(c). We also have audited CA, Inc.’s internal control over financial reporting as of March 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). CA, Inc.’s management is responsible for these consolidated financial statements and the consolidated financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Management’s Report on Internal Control Over Financial Reporting under Item 9A(b) in CA, Inc.’s March 31, 2009 Annual Report on Form 10-K. Our responsibility is to express an opinion on these consolidated financial statements and the consolidated financial statement schedule, and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CA, Inc. and subsidiaries as of March 31, 2009 and 2008, and the results of their operations and their cash flows for each of the fiscal years in the three-year period ended March 31, 2009, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, CA, Inc. maintained, in all material respects, effective

1

internal control over financial reporting as of March 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by COSO.

As discussed in Note 1(e), the Company has adopted, through retrospective application, the requirements of Financial Accounting Standard Board (FASB) Staff Positions Accounting Principles Board Opinion (APB) No. 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) and Emerging Issues Task Force Issue No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities. As discussed in Note 1(r), the Company has adopted, as of April 1, 2007, FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes.

/s/ KPMG LLP

New York, New York
May 15, 2009, except for Note 1(e), as to which
     the date is November 9, 2009

2

CA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended March 31,
	2009			2008		2007
	(in millions, except per share amounts)
REVENUE:
Subscription and maintenance revenue	$	3,772		$	3,762	$	3,458
Professional services		358			383		351
Software fees and other		141			132		134
TOTAL REVENUE		4,271			4,277		3,943
EXPENSES:
Costs of licensing and maintenance		298			272		250
Cost of professional services		307			368		333
Amortization of capitalized software costs		125			117		354
Selling and marketing		1,214			1,327		1,340
General and administrative		464			530		549
Product development and enhancements		486			526		557
Depreciation and amortization of other intangible assets		149			156		148
Other (gains) expenses, net		(1	)		6		(13	)
Restructuring and other		102			121		201
Charge for in-process research and development costs		—			—		10
TOTAL EXPENSES BEFORE INTEREST AND INCOME TAXES		3,144			3,423		3,729
Income from continuing operations before interest and income taxes		1,127			854		214
Interest expense, net		62			79		90
Income from continuing operations before income taxes		1,065			775		124
Income tax expense		394			296		21
INCOME FROM CONTINUING OPERATIONS		671			479		103
Loss from discontinued operations, inclusive of realized losses on sale, net of income taxes		—			—		(3	)
NET INCOME	$	671		$	479	$	100
BASIC INCOME PER SHARE
Income from continuing operations	$	1.29		$	0.92	$	0.19
Loss from discontinued operations		—			—		—
Net income	$	1.29		$	0.92	$	0.19
Basic weighted average shares used in computation		513			514		544
DILUTED INCOME PER SHARE
Income from continuing operations	$	1.29		$	0.92	$	0.19
Loss from discontinued operations		—			—		—
Net income	$	1.29		$	0.92	$	0.19
Diluted weighted average shares used in computation		537			515		544

See accompanying Notes to the Consolidated Financial Statements.

3

CA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	March 31,
	2009			2008
	(dollars in millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,712		$	2,795
Trade and installment accounts receivable, net		839			970
Deferred income taxes — current		513			623
Other current assets		105			80
TOTAL CURRENT ASSETS		4,169			4,468
Installment accounts receivable, due after one year, net		128			234
PROPERTY AND EQUIPMENT
Land and buildings		199			256
Equipment, furniture and improvements		1,258			1,236
		1,457			1,492
Accumulated depreciation and amortization		(1,015	)		(996	)
TOTAL PROPERTY AND EQUIPMENT, NET		442			496
Purchased software products, net of accumulated amortization of $4,712 and $4,662, respectively		155			171
Goodwill		5,364			5,351
Deferred income taxes — noncurrent		268			268
Other noncurrent assets, net		715			743
TOTAL ASSETS	$	11,241		$	11,731

See accompanying Notes to the Consolidated Financial Statements.

4

CA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)

	March 31,
	2009			2008
	(dollars in millions)
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current portion of long-term debt and loans payable	$	621		$	361
Accounts payable		120			152
Accrued salaries, wages, and commissions		306			400
Accrued expenses and other current liabilities		362			439
Deferred revenue (billed or collected) — current		2,431			2,664
Taxes payable, other than income taxes payable		85			97
Federal, state, and foreign income taxes payable		84			59
Deferred income taxes — current		40			106
TOTAL CURRENT LIABILITIES		4,049			4,278
Long-term debt, net of current portion		1,287			2,155
Federal, state, and foreign income taxes payable		284			225
Deferred income taxes — noncurrent		136			200
Deferred revenue (billed or collected) — noncurrent		1,000			1,036
Other noncurrent liabilities		123			87
TOTAL LIABILITIES		6,879			7,981
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; 514,292,558 and 509,782,514 shares outstanding, respectively		59			59
Additional paid-in capital		3,686			3,695
Retained earnings		2,673			2,085
Accumulated other comprehensive loss		(183	)		(101	)
Treasury stock, at cost, 75,402,523 shares and 79,912,567 shares, respectively		(1,873	)		(1,988	)
TOTAL STOCKHOLDERS’ EQUITY		4,362			3,750
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	11,241		$	11,731

See accompanying Notes to the Consolidated Financial Statements.

5

CA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

										Accumulated
				Additional						Other						Total
	Common			Paid-In			Retained			Comprehensive			Treasury			Stockholders’
	Stock			Capital			Earnings			Loss			Stock			Equity
	(in millions, except per share amounts)
Balance as of March 31, 2006	$	63		$	4,536		$	1,714		$	(107	)	$	(1,488	)	$	4,718
Adoption of new accounting principle — (See Note 1)					129			(49	)								80
Adjusted balance as of March 31, 2006		63			4,665			1,665			(107	)		(1,488	)		4,798
Net income								100									100
Translation adjustment in 2007											10						10
Unrealized gain on marketable securities, net of taxes											1						1
Comprehensive income																	111
Stock-based compensation					88												88
Dividends declared ($0.16 per share)								(88	)								(88	)
Exercise of common stock options, ESPP, and other items					(95	)								113			18
Issuance of options related to acquisitions, net of amortization					5												5
Treasury stock purchased														(225	)		(225	)
Common stock purchased and retired		(4	)		(987	)											(991	)
Balance as of March 31, 2007	$	59		$	3,676		$	1,677		$	(96	)	$	(1,600	)	$	3,716
Net income								479									479
Translation adjustment in 2008											(4	)					(4	)
Unrealized loss on marketable securities, net of taxes											(1	)					(1	)
Comprehensive income																	474
Adoption of new accounting principle — FIN 48								11									11
Stock-based compensation					102												102
Dividends declared ($0.16 per share)								(82	)								(82	)
Exercise of common stock options, ESPP, and other items					(85	)								112			27
Issuance of options related to acquisitions, net of amortization					2												2
Treasury stock purchased														(500	)		(500	)
Balance as of March 31, 2008	$	59		$	3,695		$	2,085		$	(101	)		($1,988	)	$	3,750

See accompanying Notes to the Consolidated Financial Statements.

6

CA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)

									Accumulated
			Additional						Other						Total
	Common		Paid-In			Retained			Comprehensive			Treasury			Stockholders'
	Stock		Capital			Earnings			Loss			Stock			Equity
	(in millions, except per share amounts)
Balance as of March 31, 2008	$	59	$	3,695		$	2,085		$	(101	)	$	(1,988	)	$	3,750
Net income							671									671
Translation adjustment in 2009										(77	)					(77	)
Unrealized loss on derivatives, net of $3 million in taxes										(5	)					(5	)
Comprehensive income																589
Stock-based compensation				92												92
Dividends declared ($0.16 per share)							(83	)								(83	)
Exercise of common stock options, ESPP, and other items				(101	)								119			18
Treasury stock purchased													(4	)		(4	)
Balance as of March 31, 2009	$	59	$	3,686		$	2,673		$	(183	)	$	(1,873	)	$	4,362

See accompanying Notes to the Consolidated Financial Statements.

7

CA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended March 31,
	2009			2008			2007
	(in millions)
OPERATING ACTIVITIES:
Net income	$	671		$	479		$	100
Loss from discontinued operations, net of income taxes		—			—			3
Income from continuing operations		671			479			103
Adjustments to reconcile income from continuing operations to net cash provided by continuing operating activities:
Depreciation and amortization		274			273			502
Provision for deferred income taxes		(56	)		(16	)		(229	)
Provision for bad debts		15			23			4
Non-cash stock based compensation expense and defined contribution plan		116			122			116
Non-cash charge for purchased in-process research and development		—			—			10
Amortization of discount on convertible debt		37			33			30
(Gains) losses on sale and disposal of assets and repayment of debt, net		(3	)		12			(18	)
Charge for impairment of assets		5			6			16
Foreign currency transaction losses (gains) — before taxes		67			(28	)		—
Changes in other operating assets and liabilities, net of effect of acquisitions:
Decrease in trade and current installment accounts receivable, net		199			111			274
(Decrease) increase in deferred revenue (billed or collected) — current and noncurrent		(49	)		258			294
Increase (decrease) in taxes payable, net		35			(82	)		(93	)
Decrease in accounts payable, accrued expenses and other		(99	)		(95	)		(12	)
(Decrease) increase in accrued salaries, wages, and commissions		(29	)		26			(14	)
Restructuring and other, net		(13	)		12			77
Changes in other operating assets and liabilities		42			(31	)		8
NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES		1,212			1,103			1,068
INVESTING ACTIVITIES:
Acquisitions, primarily goodwill, purchased software, and other intangible assets, net of cash acquired		(76	)		(27	)		(212	)
Settlements of purchase accounting liabilities		(7	)		(7	)		(21	)
Purchases of property and equipment		(83	)		(117	)		(150	)
Proceeds from sale and divestiture of assets		6			19			22
Proceeds from sale-lease back transactions		—			27			201
Capitalized software development costs		(129	)		(112	)		(85	)
Other investing activities		5			(2	)		43
NET CASH USED IN INVESTING ACTIVITIES		(284	)		(219	)		(202	)

See accompanying Notes to the Consolidated Financial Statements.

8

CA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

	Year Ended March 31,
	2009			2008			2007
	(in millions)
FINANCING ACTIVITIES:
Dividends paid		(83	)		(82	)		(88	)
Purchases of common stock		(4	)		(500	)		(1,216	)
Debt borrowings		1			750			751
Debt repayments		(680	)		(759	)		(5	)
Debt issuance costs		—			(3	)		—
Exercise of common stock options and other		7			22			43
NET CASH USED IN FINANCING ACTIVITIES		(759	)		(572	)		(515	)
INCREASE IN CASH AND CASH EQUIVALENTS BEFORE EFFECT OF EXCHANGE RATE CHANGES ON CASH		169			312			351
Effect of exchange rate changes on cash		(252	)		208			93
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(83	)		520			444
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		2,795			2,275			1,831
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,712		$	2,795		$	2,275

See accompanying Notes to the Consolidated Financial Statements.

9

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Significant Accounting Policies

(a) Description of Business: CA, Inc. and subsidiaries (the Company) develops, markets, delivers and licenses software products and services.

(b) Principles of Consolidation: The Consolidated Financial Statements include the accounts of the Company and its majority-owned and controlled subsidiaries. Investments in affiliates owned 50% or less are accounted for by the equity method. Intercompany balances and transactions have been eliminated in consolidation. Companies acquired during each reporting period are reflected in the results of the Company effective from their respective dates of acquisition through the end of the reporting period (refer to Note 2, “Acquisitions and Divestitures” in these Notes to the Consolidated Financial Statements for additional information).

(c) Divestiture: In November 2006, the Company sold its 70% equity interest in Benit Company (Benit) to the minority interest holder. As a result, Benit has been classified as a discontinued operation and its results of operations have been reclassified in the Consolidated Statements of Operations for the fiscal year ended March 31, 2007. The cash flows for Benit were deemed immaterial for separate presentation as a discontinued operation in the Consolidated Balance Sheet and Consolidated Statements of Cash Flows. All related footnotes to the Consolidated Financial Statements have been adjusted to exclude the effect of the operating results of Benit. Refer to Note 2, “Acquisitions and Divestitures,” in these Notes to the Consolidated Financial Statements for additional information.

(d) Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (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.

(e) Retrospective adoption of new accounting principles: The financial statements included herein have been adjusted to reflect the retrospective adoption of the following accounting principles:

Effective April 1, 2009, the Company adopted Financial Accounting Standards Board (FASB) Staff Position (FSP) Emerging Issues Task Force (EITF) No. 03-6-1 (FSP EITF 03-6-1), “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities,” which requires all prior-period earnings per share data to be adjusted retrospectively. FSP EITF 03-6-1 clarifies that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are to be included in the computation of earnings per share under the two-class method described in Statement of Financial Accounting Standards (SFAS) No. 128, “Earnings Per Share.” See Item k: Net Income from Continuing Operations per Share, below for additional information regarding the Company’s earnings per share calculation and the adoption of FSP EITF 03-6-1.

Effective April 1, 2009, the Company adopted FSP Accounting Principles Board Opinion (APB) No. 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement),” which requires retrospective application to all periods presented, and does not grandfather existing instruments. FSP APB No. 14-1 requires the issuer of convertible debt instruments with cash settlement features to account separately for the liability and equity components of the instruments. The debt is recognized at the present value of its cash flows discounted using the issuer’s nonconvertible debt borrowing rate at the time of issuance, with the resulting debt discount being amortized over the expected life of the debt. The equity component is recognized as the difference between the proceeds from the issuance of the convertible debt instrument and the fair value of the liability.

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The following table reflects the Company’s previously reported amounts, along with the adjusted amounts to reflect the adoption of FSP APB No. 14-1:

	As Reported		As Adjusted
	(in millions)		(in millions)
Fiscal Year Ended March 31, 2009
Deferred income taxes — current (asset)	$	524	$	513
Current portion of long-term debt and loans payable		650		621
Additional paid-in capital		3,557		3,686
Retained earnings		2,784		2,673
Interest expense		25		62
Income from continuing operations before taxes		1,102		1,065
Income tax expense		408		394
Income from continuing operations		694		671
Net income	$	694	$	671

	As Reported		As Adjusted
	(in millions)		(in millions)
Fiscal Year Ended March 31, 2008
Deferred income taxes — noncurrent (asset)	$	293	$	268
Long-term debt, net of current portion		2,221		2,155
Additional paid-in capital		3,566		3,695
Retained earnings		2,173		2,085
Interest expense		46		79
Income from continuing operations before taxes		808		775
Income tax expense		308		296
Income from continuing operations		500		479
Net income	$	500	$	479

	As Reported		As Adjusted
	(in millions)		(in millions)
Fiscal Year Ended March 31, 2007
Deferred income taxes — noncurrent (asset)	$	402	$	364
Long-term debt, net of current portion		2,572		2,472
Additional paid-in capital		3,547		3,676
Retained earnings		1,744		1,677
Interest expense		60		90
Income from continuing operations before taxes		154		124
Income tax expense		33		21
Income from continuing operations		121		103
Net income	$	118	$	100

The carrying amount of the equity component associated with the Company’s $460 million 1.625% Convertible Senior Notes due December 2009 (the 1.625% Senior Notes) was approximately $129 million (net of deferred taxes of $80 million) at both March 31, 2009 and March 31, 2008. The unamortized discount associated with the 1.625% Senior Notes was approximately $29 million and $66 million at March 31, 2009 and March 31, 2008, respectively. Total interest expense, including amortization of discount, associated with the 1.625% Senior Notes was approximately $45 million, $41 million and $37 million for the fiscal years ended March 31, 2009, 2008 and 2007, respectively. See the Note 7, Debt, for additional information regarding the Company’s convertible debt.

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The retrospective adoption of FSP EITF 03-6-1 and FSP ABP No. 14-1 decreased basic earnings per share by approximately $0.06, $0.05 and $0.03 for the fiscal years ended March 31, 2009, 2008 and 2007, respectively. Diluted earnings per share decreased by approximately $0.01 and $0.03 for the fiscal years ended March 31, 2008 and 2007, respectively. These decreases were primarily attributable to FSP APB No. 14-1 as the impact to earnings per share of FSP EITF 03-6-1 did not have a material impact to previously reported earnings per share. Diluted earnings per share for the fiscal year ended March 31, 2009 was not affected. The Company has also updated the disclosure for Segment and Geographic Information (Note 5), Debt (Note 7) and Income Taxes (Note 9) to reflect the retrospective adoption of these accounting pronouncements.

(f)Adoption of other new accounting principles: Effective April 1, 2008, the Company adopted the provisions of SFAS No. 157, “Fair Value Measurements,” as modified by FSP Financial Accounting Standard (FAS) 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Its Related Interpretive Accounting Pronouncements That Address Leasing Transactions,” and FSP FAS 157-2, “Effective Date of FASB Statement No. 157.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. FSP FAS 157-1 removes leasing from the scope of SFAS No. 157. FSP FAS 157-2 delays the effective date of SFAS No. 157 from the Company’s fiscal year ending March 31, 2009 to the Company’s fiscal year ending March 31, 2010 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).

The provisions of SFAS No. 157 as amended by FSP FAS 157-1 were applied prospectively to fair value measurements and disclosures for financial assets and financial liabilities recognized or disclosed at fair value in the financial statements. The adoption of these Statements did not have an effect on the Company’s consolidated results of operations or financial position for the fiscal year 2009. While the Company does not expect the adoption of these Statements to have a material effect on its consolidated results of operations or financial position in subsequent reporting periods, the Company will continue to monitor any additional implementation guidance that is issued that addresses the fair value measurements for certain financial assets, and non-financial assets and non-financial liabilities not disclosed at fair value in the financial statements on at least an annual basis as required by SFAS No. 157.

In accordance with SFAS No. 157 as amended by FSP FAS 157-1, the Company modified its disclosures relating to the fair value measurements and disclosures for financial assets. Refer to Note 4, “Derivatives and Fair Value Measurements,” for additional information regarding the assets and liabilities carried at fair value on the Company’s financial statements.

Effective April 1, 2008, the Company adopted the provisions of SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to elect to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. As permitted by SFAS No. 159 implementation options, the Company chose not to elect the fair value option for its financial assets and liabilities that had not been previously measured at fair value. Therefore, material financial assets and liabilities, such as the Company’s short- and long-term debt obligations, are reported at their historical carrying amounts.

Effective April 1, 2008, the Company elected to adopt the provisions of SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an Amendment of FASB Statement No. 133.” SFAS No. 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. The adoption of SFAS No. 161 did not have an effect on the Company’s consolidated results of operations or financial position for the fiscal year 2009.

Refer to Note 4, “Derivatives and Fair Value Measurements,” for additional information regarding the Company’s derivative activities.

(g) Translation of Foreign Currencies: Foreign currency assets and liabilities of the Company’s international subsidiaries are translated using the exchange rates in effect at the balance sheet date. Results of operations are translated using the average exchange rates prevailing throughout the year. The effects of exchange rate

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fluctuations on translating foreign currency assets and liabilities into U.S. dollars are accumulated as part of the foreign currency translation adjustment in Stockholders’ Equity. Gains and losses from foreign currency transactions are included in the “Other (gains) expenses, net” line item in the Consolidated Statements of Operations in the period in which they occur. Net income includes exchange transaction gains (losses) and the impact of derivatives, net of taxes, of approximately $7 million, $17 million and $0 million in the fiscal years ended March 31, 2009, 2008 and 2007, respectively. Refer to Note 4, “Derivatives and Fair Value Measurements,” for additional information.

(h) Revenue Recognition: The Company generates revenue from the following primary sources: (1) licensing software products; (2) providing customer technical support (referred to as “maintenance”); and (3) providing professional services, such as product implementation, consulting and education. Revenue is recorded net of applicable sales taxes.

The Company recognizes revenue pursuant to the requirements of Statement of Position (SOP) 97-2, "Software Revenue Recognition,” issued by the American Institute of Certified Public Accountants, as amended by SOP 98-9, “Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions.” In accordance with SOP 97-2, the Company begins to recognize revenue from licensing and maintenance when all of the following criteria are met: (1) the Company has evidence of an arrangement with a customer; (2) the Company delivers the products; (3) license agreement terms are fixed or determinable and free of contingencies or uncertainties that may alter the agreement such that it may not be complete and final; and (4) collection is probable.

The Company’s software licenses generally do not include acceptance provisions. An acceptance provision allows a customer to test the software for a defined period of time before committing to license the software. If a license agreement includes an acceptance provision, the Company does not recognize revenue until the earlier of the receipt of a written customer acceptance or, if not notified by the customer to cancel the license agreement, the expiration of the acceptance period.

Under the Company’s subscription model, implemented in October 2000, software license agreements typically combine the right to use specified software products, the right to maintenance, and the right to receive unspecified future software products for no additional fee during the term of the agreement. Under these subscription licenses, once all four of the above-noted revenue recognition criteria are met, the Company is required under GAAP to recognize revenue ratably over the term of the license agreement.

For license agreements signed prior to October 2000, once all four of the above-noted revenue recognition criteria were met, software license fees were recognized as revenue generally when the software was delivered to the customer, or “up-front” (as the contracts did not include a right to unspecified future software products), and the maintenance fees were deferred and subsequently recognized as revenue over the term of the license. Currently, a relatively small amount of the Company’s revenue from software licenses is recognized on an up-front basis, subject to meeting the same revenue recognition criteria in accordance with SOP 97-2 as described above. Software fees from such licenses are recognized up-front and are reported in the “Software fees and other” line item in the Consolidated Statements of Operations. Maintenance fees from such licenses are recognized ratably over the term of the license and are recorded on the “Subscription and maintenance revenue” line item in the Consolidated Statements of Operations. License agreements with software fees that are recognized up-front do not include the right to receive unspecified future software products. However, in the event such license agreements are executed within close proximity to or in contemplation of other license agreements that are signed under the Company’s subscription model with the same customer, the licenses together may be considered a single multi-element agreement, and all such revenue is required to be recognized ratably and is recorded as “Subscription and maintenance revenue” in the Consolidated Statements of Operations.

Since the Company implemented its subscription model in October 2000, the Company’s practice with respect to products of newly acquired businesses with established vendor specific objective evidence (VSOE) of fair value has been to record revenue initially on the acquired company’s systems, generally under an up-front model; and, starting within the first fiscal year after the acquisition, to enter new licenses for such products under the Company’s subscription model, following which revenue is recognized ratably and recorded as “Subscription and maintenance revenue.” In some instances, the Company sells

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newly developed and recently acquired products on an up-front model. The software license fees from these contracts are presented as “Software fees and other.” Selling such licenses under an up-front model may result in higher total revenue in a current reporting period than if such licenses were based on the Company’s subscription model and the associated revenue recognized ratably.

Revenue from professional service arrangements is generally recognized as the services are performed. Revenue from committed professional services that are sold as part of a subscription license agreement is deferred and recognized on a ratable basis over the term of the related software license. If it is not probable that a project will be completed or the payment will be received, revenue recognition is deferred until the uncertainty is removed.

Revenue from sales to distributors, resellers, and value-added resellers commences when all four of the SOP 97-2 revenue recognition criteria noted above are met and when these entities sell the software product to their customers. This is commonly referred to as the sell-through method. Revenue from the sale of products to distributors, resellers and value-added resellers that include licensing terms that provide the right for the end-users to receive certain unspecified future software products is recognized on a ratable basis.

In the second quarter of fiscal year 2008, the Company decided that certain channel or “commercial” products sold through tier two distributors will no longer be licensed with terms entitling the customer to receive unspecified future software products. As such, license revenue from these sales where the Company has established VSOE for maintenance is recognized on a perpetual or up-front basis using the residual method and is reflected as “Software fees and other,” with maintenance revenue being deferred and recognized ratably.

The Company has an established business practice of offering installment payment options to customers and has a history of successfully collecting substantially all amounts due under such agreements. The Company assesses collectibility based on a number of factors, including past transaction history with the customer and the creditworthiness of the customer. If, in the Company’s judgment, collection of a fee is not probable, revenue will not be recognized until the uncertainty is removed, which is generally through the receipt of cash payment.

The Company’s standard licensing agreements include a product warranty provision for all products. Such warranties are accounted for in accordance with Statement of Financial Accounting Standards (SFAS) No. 5, “Accounting for Contingencies.” The likelihood that the Company would be required to make refunds to customers under such provisions is considered remote.

Under the terms of substantially all of the Company’s license agreements, the Company has agreed to indemnify customers for costs and damages arising from claims against such customers based on, among other things, allegations that its software products infringe the intellectual property rights of a third party. In most cases, in the event of an infringement claim, the Company retains the right to (i) procure for the customer the right to continue using the software product; (ii) replace or modify the software product to eliminate the infringement while providing substantially equivalent functionality; or (iii) if neither (i) nor (ii) can be reasonably achieved, the Company may terminate the license agreement and refund to the customer a pro-rata portion of the fees paid. Such indemnification provisions are accounted for in accordance with SFAS No. 5. The likelihood that the Company would be required to make refunds to customers under such provisions is considered remote. In most cases and where legally enforceable, the indemnification is limited to the amount paid by the customer.

Subscription and Maintenance Revenue: Subscription and maintenance revenue is the amount of revenue recognized ratably during the reporting period from either: (i) subscription license agreements that were in effect during the period, which generally include maintenance that is bundled with and not separately identifiable from software usage fees or product sales, or (ii) maintenance agreements associated with providing customer technical support and access to software fixes and upgrades which are separately identifiable from software usage fees or product sales. Deferred revenue (billed or collected) is comprised of: (i) amounts received in advance of revenue recognition from the customer, (ii) amounts billed but not collected for which revenue has not yet been earned, and (iii) amounts received in advance of revenue recognition from financial institutions where the Company has transferred its interest in committed installments. Each of the categories is further differentiated by current or non-current classification

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depending on when the revenue is anticipated to be earned (i.e., within the next twelve months or subsequent to the next twelve months).

Software Fees and Other: Software fees and other revenue primarily consist of revenue that is recognized on an up-front basis. This includes revenue generated through transactions with distribution and original equipment manufacturer channel partners (sometimes referred to as the Company’s “indirect” or “channel” revenue) and certain revenue associated with new or acquired products sold on an up-front basis. Also included is financing fee revenue, which results from the discounting of product sales recognized on an up-front basis with extended payment terms to present value. Revenue recognized on an up-front basis results in higher revenue for the period than if the same revenue had been recognized ratably under the Company’s subscription model.

(i) Sales Commissions: Sales commissions are recognized in the period the commissions are earned by employees, which is typically upon the signing of the contract. The Company accrues for sales commissions based on, among other things, estimates of how the sales personnel will perform against specified annual sales quotas. These estimates involve assumptions regarding the Company’s projected new product sales and billings. All of these assumptions reflect the Company’s best estimates, but these items involve uncertainties, and as a result, if other assumptions had been used in the period, sales commission expense could have been affected for that period. Under the Company’s current sales compensation model, during periods of high growth and sales of new products relative to revenue in that period, the amount of sales commission expense attributable to the license agreements signed in the period would be recognized fully and could negatively impact income and net income per share in that period.

(j) Accounting for Stock-Based Compensation: Stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee requisite service period (generally the vesting period of the equity grant).

The Company currently maintains several stock-based compensation plans. The Company uses the Black-Scholes option-pricing model to compute the estimated fair value of certain stock-based awards. The Black-Scholes model includes assumptions regarding dividend yields, expected volatility, expected lives, and risk-free interest rates. These assumptions reflect the Company’s best estimates, but these items involve uncertainties based on market and other conditions outside of the Company’s control. As a result, if other assumptions had been used, stock-based compensation expense could have been materially affected. Furthermore, if different assumptions are used in future periods, stock-based compensation expense could be materially affected in future years.

As described in Note 10, “Stock Plans,” in these Notes to the Consolidated Financial Statements, performance share units (PSUs) are awards under the long-term incentive programs for senior executives where the number of shares or restricted shares, as applicable, ultimately received by the employee depends on Company performance measured against specified targets and will be determined after a three-year or one-year period as applicable. The fair value of each award is estimated on the date that the performance targets are established based on the fair value of the Company’s stock and its estimate of the level of achievement of its performance targets. The Company recalculates the fair value of issued PSUs each reporting period until the underlying shares are granted. The adjustment is based on the quoted market price of the Company’s stock on the reporting period date. Each quarter, the Company compares the actual performance it expects to achieve with the performance targets.

(k) Income from Continuing Operations per Share: Under the two-class method, net earnings are reduced by the amount of dividends declared in the period for each class of common stock and participating securities. The remaining undistributed earnings are then allocated to common stock and participating securities as if all of the net earnings for the period had been distributed. Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares as of the balance sheet date, as adjusted for the potential dilutive effect of non-participating share-based awards and convertible notes.

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The following table reconciles earnings per common share under the new methodology for the fiscal years ended March 31, 2009, 2008 and 2007, respectively.

	Year Ended March 31,
	2009			2008			2007
	(in millions, except per share amounts)
Basic earnings per common share:
Income from continuing operations	$	671		$	479		$	103
Less: Net income allocable to participating securities		(8	)		(5	)		(1	)
Net income allocable to common shares	$	663			474		$	102
Weighted average common shares outstanding		513			514			544
Basic earnings per common share		1.29			0.92			0.19
Diluted earnings per common share:
Income from continuing operations		671			479			103
Add: Interest expense associated with 1.625% Senior Notes, net of tax (1)		27			—			—
Less: Net income allocable to participating securities		(7	)		(4	)		(1	)
Net income allocable to common shares		691			475			102
Weighted average shares outstanding and common share equivalents
Weighted average common shares outstanding		513			514			544
Weighted average shares outstanding upon conversion of 1.625% Senior Notes (1)		23			—			—
Weighted average effect of share-based payment awards		1			1			—
Denominator in calculation of diluted income per share		537			515			544
Diluted income per share		1.29			0.92			0.19

(1) If the common share equivalents for the 1.625% Senior Notes (23 million shares) issued in December 2002 had been dilutive, interest expense, net of tax, related to the 1.625% Senior Notes would have been added back to income from continuing operations to calculate diluted earnings per share from continuing operations. The related interest expense, net of tax, for the fiscal years ended March 31, 2008 and 2007 totaled approximately $24 million and $23 million, respectively.

For the fiscal years ended March 31, 2009, 2008 and 2007, approximately 14 million, 13 million and 15 million restricted stock units and options to purchase common stock, respectively, were excluded from the calculation, as their effect on net income per share was anti-dilutive during the respective periods. Weighted average restricted stock awards of 5 million, 4 million and 3 million were considered participating securities in the calculation of net income available to common shareholders.

(l) Comprehensive Income: Comprehensive income includes net income, foreign currency translation adjustments and unrealized gains (losses), net of taxes, on the Company’s available-for-sale securities and derivatives. As of March 31, 2009 and 2008, accumulated other comprehensive loss included foreign currency translation losses of approximately $178 million and $101 million, respectively. Accumulated other comprehensive loss also includes an unrealized loss on derivatives, net of tax, of $5 million for the fiscal year ended March 31, 2009 and an unrealized gain on equity securities, net of tax, of less than $1 million for the fiscal year ended March 31, 2008. The components of comprehensive income, net of tax, for the fiscal years ended March 31, 2009, 2008 and 2007 are included within the Consolidated Statements of Stockholders’ Equity.

(m) Fair Value of Financial Instruments: The carrying value of financial instruments classified as current assets and current liabilities, such as cash and cash equivalents, accounts payable, accrued expenses, and short-term debt, approximate fair value due to the short-term maturity of the instruments. The fair values of derivatives and long-term debt, including current maturities, have been based on quoted market prices.

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Refer to Note 4, “Derivatives and Fair Value Measurements” and Note 7, “Debt” in these Notes to the Consolidated Financial Statements for additional information.

(n) Concentration of Credit Risk: Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash equivalents, marketable securities, derivatives and accounts receivable. The Company holds cash and cash equivalents in major financial institutions and related money market funds, some of which are protected by the U.S. Treasury’s Temporary Guarantee Program for Money Market Funds. Amounts invested in international funds are subject to different levels of protection depending upon the jurisdiction. The Company historically has not experienced any losses in its cash and cash equivalent portfolios.

Amounts included in accounts receivable expected to be collected from customers, as disclosed in Note 6, “Trade and Installment Accounts Receivable,” have limited exposure to concentration of credit risk due to the diverse customer base and geographic areas covered by operations. Unbilled amounts due under the Company’s prior business model that are expected to be collected from customers include one large IT outsourcer with a license arrangement that extends through fiscal year 2012 with a net unbilled receivable balance of approximately $232 million at March 31, 2009.

Prior to fiscal year 2001, the Company sold individual accounts receivable from certain financial institutions to a third party subject to certain recourse provisions. The outstanding principal balance subject to recourse of these receivables was approximately $38 million and $81 million as of March 31, 2009 and March 31, 2008, respectively. As of March 31, 2009, the Company has established a liability for the fair value of the recourse provisions of approximately $2 million associated with these receivables.

(o) Cash, Cash Equivalents and Marketable Securities: All financial instruments purchased with an original maturity of three months or less are considered cash equivalents. The Company has determined that all of its investment securities should be classified as available-for-sale. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported in the Stockholders’ Equity of the balance sheet under the caption “Accumulated Other Comprehensive Loss.” The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in the “Interest expense, net” line item in the Consolidated Statements of Operations. Realized gains and losses and declines in value judged to be other than temporary on available-for-sale securities are included in the “General, and administrative” line item in the Consolidated Statements of Operations. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in the “Interest expense, net” line item in the Consolidated Statements of Operations.

The Company’s cash and cash equivalents are held in numerous locations throughout the world, with approximately 50% residing outside the United States at March 31, 2009. Marketable securities were less than $1 million at March 31, 2009 and March 31, 2008.

Total interest income, which primarily related to the Company’s cash and cash equivalent balances, for the fiscal years ended March 31, 2009, 2008 and 2007 was approximately $70 million, $92 million and $66 million, respectively, and is included in the “Interest expense, net” line item in the Consolidated Statements of Operations.

(p) Restricted Cash: The Company’s insurance subsidiary requires a minimum restricted cash balance of $50 million. In addition, the Company has other restricted cash balances, including cash collateral for letters of credit. The total amount of restricted cash as of March 31, 2009 and 2008 was approximately $56 million and $62 million, respectively, and is included in the “Other noncurrent assets, net” line item on the Consolidated Balance Sheets.

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(q) Long-Lived Assets

     Property and Equipment: Land, buildings, equipment, furniture, and improvements are stated at cost. Depreciation and amortization are provided over the estimated useful lives of the assets by the straight-line method. Building and improvements are estimated to have 5- to 40-year lives, and the remaining property and equipment are estimated to have 3- to 7-year lives.

     A summary of property and equipment is as follows:

	March 31,
	2009			2008
	(dollars in millions)
Land and buildings	$	199		$	256
Equipment, furniture, and improvements		1,258			1,236
		1,457			1,492
Accumulated depreciation and amortization		( 1,015	)		(996	)
Net property and equipment	$	442		$	496

Depreciation expense for the fiscal years ended March 31, 2009, 2008 and 2007 was approximately $96 million, $91 million and $92 million, respectively.

Capitalized Software Costs and Other Identified Intangible Assets: Capitalized software costs include the fair value of rights to market software products acquired in purchase business combinations. In allocating the purchase price to the assets acquired in a purchase business combination, the Company allocates a portion of the purchase price equal to the fair value at the acquisition date of the rights to market the software products of the acquired company. The Company amortizes all purchased software costs over their remaining economic lives, estimated to be between two and ten years from the date of acquisition.

In accordance with SFAS No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed,” internally generated software development costs associated with new products and significant enhancements to existing software products are expensed as incurred until technological feasibility has been established. Internally generated software development costs of approximately $135 million, $112 million and $85 million were capitalized during fiscal years 2009, 2008 and 2007, respectively. The Company recorded amortization of approximately $68 million, $57 million and $54 million for the fiscal years ended March 31, 2009, 2008 and 2007, respectively, which was included in the “Amortization of capitalized software costs” line item in the Consolidated Statements of Operations. Unamortized, internally generated software development costs included in the “Other noncurrent assets, net” line item on the Consolidated Balance Sheets as of March 31, 2009 and 2008 were approximately $333 million and $276 million, respectively. Annual amortization of capitalized software costs is the greater of the amount computed using the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or the straight-line method over the remaining estimated economic life of the software product, generally estimated to be five years from the date the product became available for general release to customers. The Company amortized capitalized software costs using the straight-line method in fiscal years 2009, 2008 and 2007, as anticipated future revenue is projected to increase for several years considering the Company is continuously integrating current software technology into new software products.

Other identified intangible assets include both customer relationships and trademarks/trade names.

In connection with the acquisition of Cybermation, Inc., MDY Group International, Inc., and XOsoft, Inc., in fiscal year 2007, the Company recognized approximately $19 million, $3 million and $7 million, respectively, of customer relationships and trademarks/trade names.

In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” certain identified intangible assets with indefinite lives are not subject to amortization. The Company reviews its long lived assets and certain identifiable intangible assets with indefinite lives for impairment annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. During fiscal year 2009, the Company did not record impairment charges relating to certain identifiable intangible assets that were

18

acquired in conjunction with prior year acquisitions and not subject to amortization. During the first quarter of fiscal year 2008, the Company recorded impairment charges of less than $1 million relating to certain identifiable intangible assets that were acquired in conjunction with prior year acquisitions and not subject to amortization. These impairment charges were reported in the “Restructuring and other” line item in the Consolidated Statements of Operations.

The Company amortizes all other identified intangible assets over their remaining economic lives, estimated to be between three and twelve years from the date of acquisition. The Company recorded amortization of other identified intangible assets of approximately $53 million, $66 million and $57 million in fiscal 2009, 2008 and 2007, respectively. The net carrying value of other identified intangible assets as of March 31, 2009 and 2008 was approximately $237 million and $285 million, respectively, and was included in the “Other noncurrent assets, net” line item on the Consolidated Balance Sheets.

The gross carrying amounts and accumulated amortization for identified intangible assets at March 31, 2009 was approximately $6,408 million and $5,683 million, respectively. These amounts include fully amortized intangible assets of approximately $5,042 million, which is composed of purchased software of approximately $4,545 million, internally developed software of approximately $381 million and other identified intangible assets subject to amortization of approximately $116 million. The remaining gross carrying amounts and accumulated amortization for identified intangible assets that are not fully amortized are as follows:

	As of March 31, 2009
	Gross
	Amortizable		Accumulated		Net
	Assets		Amortization		Assets
			(in millions)
Capitalized software:
Purchased	$	322	$	167	$	155
Internally developed		481		148		333
Other identified intangible assets subject to amortization		549		326		223
Other identified intangible assets not subject to amortization		14		—		14
Total	$	1,366	$	641	$	725

The gross carrying amounts and accumulated amortization for identified intangible assets at March 31, 2008 was approximately $6,249 million and $5,517 million, respectively. These amounts include fully amortized intangible assets of approximately $4,943 million, which is composed of purchased software of approximately $4,488 million, internally developed software of approximately $345 million and other identified intangible assets subject to amortization of approximately $110 million. The remaining gross carrying amounts and accumulated amortization for identified intangible assets that are not fully amortized are as follows:

	As of March 31, 2008
	Gross
	Amortizable		Accumulated		Net
	Assets		Amortization		Assets
			(in millions)
Capitalized software:
Purchased	$	345	$	174	$	171
Internally developed		397		121		276
Other identified intangible assets subject to amortization		550		279		271
Other identified intangible assets not subject to amortization		14		—		14
Total	$	1,306	$	574	$	732

Based on the identified intangible assets recorded through March 31, 2009, the annual amortization expense over the next five fiscal years is expected to be as follows:

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	Year Ended March 31,
	2010		2011		2012		2013		2014
	(in millions)
Capitalized software:
Purchased	$	51	$	40	$	28	$	20	$	12
Internally developed		87		83		67		53		34
Other identified intangible assets subject to amortization		53		52		32		26		21
Total	$	191	$	175	$	127	$	99	$	67

Accounting for Long-Lived Assets: The carrying values of purchased software products, other intangible assets, and other long-lived assets, including investments, are reviewed on a regular basis for the existence of facts or circumstances, both internally and externally, that may suggest impairment. If an impairment is deemed to exist, any related impairment loss is calculated based on net realizable value for capitalized software and fair value for all other intangibles.

Goodwill: Goodwill represents the excess of the aggregate purchase price over the fair value of the net tangible and identifiable intangible assets and in-process research and development acquired by the Company in a purchase business combination. Goodwill is not amortized into results of operations but instead is reviewed for impairment. During the fourth quarter of fiscal year 2009, the Company performed its annual impairment review of goodwill and concluded that there was no impairment in fiscal year 2009. Similar impairment reviews were performed during the fourth quarter of fiscal years 2008 and 2007. The Company concluded that there was no impairment to be recorded in those fiscal years.

The carrying value of goodwill was approximately $5,364 million and $5,351 million as of March 31, 2009 and March 31, 2008, respectively. During fiscal year 2009, goodwill increased by approximately $26 million as a result of fiscal year 2009 acquisitions, which was partially offset by approximately $13 million of goodwill adjustments for prior year acquisitions.

The carrying value of goodwill was approximately $5,351 million and $5,345 million as of March 31, 2008 and March 31, 2007, respectively. During fiscal year 2008, goodwill increased by approximately $12 million as a result of fiscal year 2008 acquisitions, which was partially offset by approximately $6 million of goodwill adjustments for prior year acquisitions.

(r) Income Taxes: SFAS No. 109, “Accounting for Income Taxes,” requires the Company to estimate its actual current tax liability in each jurisdiction; estimate differences resulting from differing treatment of items for financial statement purposes versus tax return purposes (known as “temporary differences”), resulting in deferred tax assets and liabilities; and assess the likelihood that the Company’s deferred tax assets will be recovered from future taxable income. If the Company believes that recovery is not likely, it establishes a valuation allowance. The factors that the Company considers in assessing the likelihood of realization of these deferred tax assets include the forecast of future taxable income and available tax planning strategies that could be implemented to realize the deferred tax assets.

When the Company prepares its consolidated financial statements, the Company estimates its income taxes in each jurisdiction in which it operates. On April 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (FIN 48). Among other things FIN 48 prescribes a “more-likely-than-not” threshold for the recognition and derecognition of tax positions.

(s) Deferred Revenue (Billed or Collected): The Company accounts for unearned revenue on billed amounts due from customers on a “gross method” of presentation. Under the gross method, unearned revenue on billed installments (collected or uncollected) is reported as deferred revenue in the liability section of the balance sheet. The components of “Deferred revenue (billed or collected) — current” and “Deferred revenue (billed or collected) — noncurrent” as of March 31, 2009 and March 31, 2008 are as follows:

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	As of March 31,
	2009		2008
	(in millions)
Current:
Subscription and maintenance	$	2,272	$	2,455
Professional services		150		166
Financing obligations and other		9		43
Total deferred revenue (billed or collected) — current		2,431		2,664
Noncurrent:
Subscription and maintenance		987		1,001
Professional services		10		22
Financing obligations and other		3		13
Total deferred revenue (billed or collected) - noncurrent		1,000		1,036
Total deferred revenue (billed or collected)	$	3,431	$	3,700

Deferred revenue (billed or collected) excludes unrealized revenue from contractual obligations that will be billed by the Company in future periods.

(t) Stock Repurchases: During the third quarter of fiscal year 2009, the Company paid approximately $4 million to repurchase approximately 0.3 million of its common shares at an average price of $15.84. The repurchase is included in “Cash used in financing activities” in the Company’s Consolidated Statement of Cash Flows for fiscal year ended March 31, 2009. As of March 31, 2009, the Company remained authorized to purchase an aggregate amount of up to approximately $246 million of additional common shares under the current stock repurchase program that was approved on October 29, 2008 by the Company’s Board of Directors. The approved stock repurchase program authorizes the Company to acquire up to $250 million of its common stock.

During fiscal year 2008, the Company concluded its previously announced $500 million Accelerated Share Repurchase program with a third-party financial institution. In June 2007, the Company paid $500 million to repurchase shares of its common stock and received approximately 16.9 million shares at inception. Based on the terms of the agreement between the Company and the third-party financial institution, the Company received approximately 3.0 million additional shares of its common stock at the conclusion of the program in November 2007 at no additional cost. The average price paid under the Accelerated Share Repurchase program was $25.13 per share and total shares repurchased was approximately 19.9 million. The $500 million payment under the Accelerated Share Repurchase program is included in the cash flows used in financing activities section in the Company’s Consolidated Statement of Cash Flows for the fiscal year ended March 31, 2008 and is recorded as treasury stock in the Stockholders’ Equity section of the Consolidated Balance Sheet.

(u) Statements of Cash Flows: Interest payments for the fiscal years ended March 31, 2009, 2008 and 2007 were approximately $103 million, $133 million and $112 million, respectively. Income taxes paid for these fiscal years were approximately $351 million, $374 million and $296 million, respectively.

Note 2 — Acquisitions and Divestitures

Acquisitions

Acquisitions are accounted for as purchases and, accordingly, their results of operations have been included in the Company’s Consolidated Financial Statements since the dates of the acquisitions. The purchase price for the Company’s acquisitions is allocated to the assets acquired and liabilities assumed from the acquired entity. These allocations are based upon estimates which may be revised within one year of the date of acquisition as additional information becomes available. The Company’s acquisitions

21

during fiscal years 2009 and 2008 were considered immaterial, both individually and in the aggregate, compared with the results of the Company’s operations and therefore purchase accounting information and proforma disclosure are not presented.

During fiscal year 2007, the Company acquired the following companies:

• Cybermation, Inc., a privately held provider of enterprise workload automation solutions.

• MDY Group International, Inc., a privately held provider of enterprise records management software and services.

• XOsoft, Inc., a privately held provider of complete recovery management solutions.

• Cendura Corporation, a privately held provider of IT service management service delivery solutions.

The total cost of these acquisitions was approximately $173 million, net of approximately $20 million of cash and cash equivalents acquired and excluding a holdback of approximately $9 million. The Company paid the entire holdback payment amount during fiscal year 2008.

The Company recorded a charge of approximately $10 million for in-process research and development costs associated with the acquisition of XOsoft during the second quarter of fiscal year 2007. Total goodwill recognized in these transactions amounted to approximately $117 million, which included a downward adjustment recorded in fiscal year 2008 of approximately $4 million. The downward adjustment was due to the recognition of deferred tax assets associated with acquired net operating losses. The allocation of a significant portion of the purchase price to goodwill was predominantly due to the relatively short lives of the developed technology assets, whereas a substantial amount of the purchase price was based on anticipated earnings beyond the estimated lives of the intangible assets. The acquisitions completed in fiscal year 2007 were considered immaterial, both individually and in the aggregate, and therefore pro-forma information for fiscal year 2007 is not presented.

The Company had approximately $20 million and $13 million of accrued acquisition-related costs as of March 31, 2009 and 2008, respectively. Approximately $10 million of the March 31, 2009 accrued acquisition-related costs related to holdback amounts for current year acquisitions. Acquisition-related costs are comprised of employee costs, duplicate facilities and other acquisition-related costs that are incurred as a result of the Company’s current and prior period acquisitions.

The liabilities for duplicate facilities and other costs relate to operating leases, which are actively being renegotiated and expire at various times through 2013, negotiated buyouts of certain operating lease commitments, and other contractual liabilities. The liabilities for employee costs primarily relate to involuntary termination benefits. The Company recorded adjustments of approximately $12 million in fiscal year 2008. The adjustments primarily consisted of reductions to obligations from prior period acquisitions that were settled for amounts less than originally estimated. This amount was recorded as a reduction in general and administrative expenses. The remaining liability balances are included in the “Accrued expenses and other current liabilities” line item on the Consolidated Balance Sheets.

Discontinued Operations

In fiscal year 2007, the Company sold its 70% interest in Benit for approximately $3 million. The 70% interest sold represented all of the Company’s outstanding equity interest in Benit. As a result of the sale, the Company realized a loss of approximately $2 million, net of taxes, in the third quarter of fiscal year 2007. Included in the loss was the recognition of the cumulative foreign currency translation amount related to Benit of approximately $10 million which was previously included in “Accumulated other comprehensive loss.” The cash flows for Benit were deemed immaterial for separate presentation as a discontinued operation in the Consolidated Statements of Cash Flows. Benit offered a wide range of corporate solution services, such as IT outsourcing, business integration services, enterprise solutions and IT service management in Korea. The sale was part of the Company’s fiscal year 2007 cost reduction and restructuring plan (the fiscal 2007 restructuring plan). Refer to Note 3, “Restructuring and Other” in these Notes to the Consolidated Financial Statements for additional information.

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Pursuant to SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company has separately presented the results of Benit as a discontinued operation, including the loss on the sale, on the Consolidated Statement of Operations.

The operating results of Benit are summarized as follows:

	Year Ended
	March 31,
	2007
	(in millions)
Subscription and maintenance revenue	$	11
Software fees and other		3
Professional services		7
Total revenue	$	21
Loss from sale of discontinued operation, net of taxes	$	(2	)
Loss from discontinued operation, net of taxes	$	(1	)

Note 3 — Restructuring and Other

Restructuring

Fiscal 2007 restructuring plan: In August 2006, the Company announced the fiscal 2007 restructuring plan to significantly improve the Company’s expense structure and increase its competitiveness. The fiscal 2007 restructuring plan’s objectives included a workforce reduction, global facilities consolidations and other cost reduction initiatives. The total cost of the fiscal 2007 restructuring plan was initially expected to be approximately $200 million.

In April 2008, the objectives of the plan were expanded to include additional workforce reductions, global facilities consolidations and other cost reduction initiatives with expected additional cost of $75 million to $100 million, bringing the total pre-tax restructuring charges for the fiscal 2007 restructuring plan to $275 million to $300 million.

On March 31, 2009, the Company approved additional cost reduction and restructuring actions relating to the fiscal 2007 restructuring plan. The objectives were expanded to now include (1) an additional workforce reduction of approximately 300 to bring the total to approximately 3,100 positions since the inception of the fiscal 2007 restructuring plan, (2) additional global facilities consolidations and (3) additional other cost reduction initiatives. The Company expects total additional charges of approximately $45 million, bringing the total expected pre-tax restructuring charges for the fiscal 2007 restructuring plan to approximately $345 million.

Severance: The Company currently estimates a reduction in workforce of approximately 3,100 individuals under the fiscal 2007 restructuring plan. The termination benefits the Company has offered in connection with this workforce reduction are substantially the same as the benefits the Company has provided historically for non-performance-based workforce reductions, and in certain countries have been provided based upon prior experiences with the restructuring plan announced in July 2005 (the fiscal 2006 plan) as described below. These costs have been recognized in accordance with SFAS No. 112, “Employer’s Accounting for Post Employment Benefits, an Amendment of FASB Statements No. 5 and 43” (SFAS No. 112). Enhancements to termination benefits which exceed past practice will be recognized as incurred in accordance with SFAS No. 146 “Accounting for Costs Associated With Exit or Disposal Activities” (SFAS No. 146). The Company incurred approximately $28 million and $71 million of severance costs for the fiscal years ended March 31, 2009 and March 31, 2008, respectively. These charges relate to a total of approximately 600 individuals in fiscal year 2009 and approximately 1,000 individuals in fiscal year 2008. Final payment of these amounts is dependent upon settlement with the works councils in certain international locations. The plans associated with the balance of the reductions in workforce are still being finalized and the associated charges will be recorded once the actions are approved by management.

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Facilities Abandonment: The Company recorded the costs associated with lease termination or abandonment when the Company ceased to utilize the leased property. Under SFAS No. 146, the liability associated with lease termination or abandonment is measured as the present value of the total remaining lease costs and associated operating costs, less probable sublease income. The Company accretes its obligations related to facilities abandonment to the then-present value and, accordingly, recognizes accretion expense in future periods. The Company incurred approximately $68 million and $26 million of charges related to abandoned properties during the fiscal years ended March 31, 2009 and March 31, 2008, respectively.

Accrued restructuring costs and changes in the accruals for fiscal years 2008 and 2007 associated with the fiscal 2007 restructuring plan were as follows:

				Facilities
	Severance			Abandonment
	(in millions)
Accrued balance as of March 31, 2007	$	87		$	17
Additions		71			26
Payments		(65	)		(16	)
Accrued balance as of March 31, 2008		93			27
Additions		28			68
Payments		(76	)		(24	)
Accrued balance as of March 31, 2009	$	45		$	71

The liability balance for the severance portion of the remaining reserve is included in the “Salaries, wages and commissions” line on the Consolidated Balance Sheets. The liability for the facilities portion of the remaining reserve is included in the “Accrued expenses and other current liabilities” and “Other noncurrent liabilities” line items on the Consolidated Balance Sheets. The costs are included in the “Restructuring and other” line item on the Consolidated Statements of Operations for the fiscal years ended March 31, 2009 and March 31, 2008.

Fiscal 2006 Restructuring Plan: In July 2005, the Company announced the fiscal 2006 restructuring plan to increase efficiency and productivity and to more closely align its investments with strategic growth opportunities. The Company has recognized substantially all of the costs associated with the fiscal 2006 restructuring plan. The liability balance for the severance portion of the remaining reserve is included in the “Salaries, wages and commissions” line on the Consolidated Balance Sheets. The balance of accrued severance related to the fiscal 2006 plan as of March 31, 2009 and March 31, 2008 is less than $1 million and approximately $1 million, respectively. The liability for the facilities portion of the remaining reserve is included in the “Accrued expenses and other current liabilities” line item on the Consolidated Balance Sheets. The balance of accrued facilities related to the fiscal 2006 plan as of March 31, 2009 and March 31, 2008 is approximately $8 million and $10 million, respectively.

Other

During the fiscal year ended March 31, 2008, the Company incurred approximately $12 million in legal fees in connection with matters under review by the Special Litigation Committee, composed of independent members of the Board of Directors (refer to Note 8, “Commitments and Contingencies” in these Notes to the Consolidated Financial Statements for additional information). Additionally, during fiscal year 2009 and fiscal year 2008, the Company recorded impairment charges of approximately $5 million and $6 million, respectively, for software that was capitalized for internal use but was determined to be impaired. During fiscal year 2008, the Company incurred an approximate $4 million expense related to a loss on the sale of an investment in marketable securities associated with the closure of an international location.

Note 4 — Derivatives and Fair Value Measurement

The Company is exposed to certain financial market risks relating to its business operations, including changes in interest rates, which could include monetary assets and liabilities, and foreign exchange rate risk associated with the Company’s operating exposures, which could include its exposure to foreign

24

currency denominated monetary assets and liabilities and forecasted transactions. The Company enters into derivative contracts with the intent of mitigating a certain portion of these risks.

Derivatives are accounted for in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS No. 133). During fiscal years 2009 and 2008, the Company did not designate its foreign exchange derivatives as hedges under SFAS No. 133. Accordingly, all foreign exchange derivatives are recognized on the Consolidated Balance Sheets at fair value and unrealized or realized changes in fair value from these contracts are recorded as “Other (gains) expenses, net” in the Company’s Consolidated Statements of Operations.

During fiscal year 2009, the Company entered into interest rate swaps with a total notional value of $250 million to hedge a portion of its variable interest rate payments. These derivatives are designated as cash flow hedges under SFAS No. 133. The effective portion of these cash flow hedges are recorded as “Accumulated other comprehensive loss” in the Company’s Consolidated Balance Sheet and reclassified into “Interest expense, net,” in the Company’s Consolidated Statements of Operations in the same period during which the hedged transaction affects earnings. Any ineffective portion of the cash flow hedges would be recorded immediately to “Interest expense, net;” however, no ineffectiveness existed in the fiscal year ended March 31, 2009.

As described in Note 1, the Company adopted the provisions of SFAS No. 157 as amended by FSP FAS 157-1 and FSP FAS 157-2 on April 1, 2008. Pursuant to the provisions of FSP FAS 157-2, the Company will not apply the provisions of SFAS No. 157 to any nonfinancial assets and nonfinancial liabilities until April 1, 2009. The Company recorded no change to its opening balance of retained earnings as of April 1, 2008 as it did not have any financial instruments requiring retrospective application under the provisions of SFAS No. 157.

Fair Value Hierarchy

SFAS No. 157 specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect the company’s own assumptions of market participant valuation (unobservable inputs). In accordance with SFAS No. 157, these two types of inputs have created the following fair value hierarchy:

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

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

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

SFAS No. 157 requires the use of observable market data if such data is available without undue cost and effort.

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Items Measured at Fair Value on a Recurring Basis

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2009 consistent with the fair value hierarchy provisions of SFAS No. 157.

	Fair Value Measurement at Reporting Date Using
	(in millions)
					Significant
			Quoted Prices in		Other
	Estimated Fair		Active Markets for		Observable
	Value as of		Identical Assets		Inputs
Description	March 31, 2009		(Level 1)		(Level 2)
Assets:
Money market funds	$	1,617	$	1,617	$	—
Government securities		405		405		—
Total Assets	$	2,022	$	2,022	$	—
Liabilities:
Interest Rate Derivatives (1)		7		—		7
Total Liabilities	$	7	$	—	$	7

⁽¹⁾ Interest rate derivatives are designated as cash flow hedges under SFAS No. 133

As of March 31, 2009, the Company had approximately $1,567 million and $50 million of investments in money market funds classified as “Cash, cash equivalents and marketable securities” and “Other noncurrent assets, net” for restricted cash amounts, respectively, in its Consolidated Balance Sheet. The Company also had approximately $405 million in government securities, comprised of treasury bills, classified as “Cash, cash equivalents and marketable securities” in its Consolidated Balance Sheet at March 31, 2009.

As of March 31, 2009, the Company had no foreign exchange derivative contracts outstanding. At March 31, 2009, approximately $7 million of the Company’s interest rate derivatives are included in “Other current liabilities” on the Consolidated Balance Sheet.

As of March 31, 2009, the Company did not have any assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3). The Company did not have any outstanding asset or liability derivatives as of March 31, 2008.

For the Company’s interest rate derivatives, the amount of loss recorded in accumulated other comprehensive loss from the “Effective Portion” was approximately $7 million for the fiscal year ended March 31, 2009. The amount of loss reclassified from accumulated other comprehensive income into “Interest expense, net” was approximately $2 million for the fiscal year ended March 31, 2009. In the next twelve months, approximately $5 million is expected to be released from “Accumulated other comprehensive loss” to income. The Company did not enter into interest rate derivative arrangements for the fiscal year ended March 31, 2008.

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

	Amount of Net (Gain)/Loss Recognized in Income
	on Derivatives
	(in millions)
Location of Net Gain Recognized in	Year Ended			Year Ended
Income on Derivatives	March 31, 2009			March 31, 2008
Interest expenses, net (1)	$	2		$	—
Other (gains) expenses, net (2)	$	(77	)	$	14

(1)	Interest rate derivatives are designated as cash flow hedges under SFAS No. 133
(2)	Foreign exchange derivatives are not designated as hedges under SFAS No. 133

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Note 5 — Segment and Geographic Information

The Company’s chief operating decision makers review financial information presented on a consolidated basis, accompanied by disaggregated information about revenue, by geographic region, for purposes of assessing financial performance and making operating decisions. Accordingly, the Company considers itself to be operating in a single industry segment. The Company does not manage its business by solution or focus area and therefore does not maintain financial statements on such a basis.

In addition to its United States operations, the Company operates through branches and wholly-owned subsidiaries in 46 foreign countries located in North America (4), Africa (1), South America (7), Asia/Pacific (14) and Europe (20). Revenue is allocated to a geographic area based on the location of the sale. The following table presents information about the Company by geographic area for the fiscal years ended March 31, 2009, 2008 and 2007:

	United
	States		Europe		Other		Eliminations			Total
(in millions)
Year Ended March 31, 2009
Revenue
To unaffiliated customers	$	2,291	$	1, 265	$	715	$	—		$	4,271
Between geographic areas(1)		522		—		—		(522	)		—
Total revenue		2,813		1,265		715		(522	)		4,271
Property and equipment, net		254		129		59		—			442
Identifiable assets (2)		8,824		1,726		691		—			11,241
Total liabilities (2)		5,298		1,038		543		—			6,879
Year Ended March 31, 2008
Revenue
To unaffiliated customers	$	2,217	$	1,299	$	761	$	—		$	4,277
Between geographic areas(1)		562		—		—		(562	)		—
Total revenue		2,779		1,299		761		(562	)		4,277
Property and equipment, net		239		179		78		—			496
Identifiable assets (2)		8,951		2,008		772		—			11,731
Total liabilities(2)		5,979		1,281		721		—			7,981
Year Ended March 31, 2007
Revenue :
To unaffiliated customers	$	2,131	$	1,131	$	681	$	—		$	3,943
Between geographic areas(1)		510		—		—		(510	)		—
Total revenue		2,641		1,131		681		(510	)		3,943
Property and equipment, net		242		177		50		—			469
Identifiable assets(2)		8,769		1,928		782		—			11,479
Total liabilities (2)		6,082		1,057		624		—			7,763

(1)	Represents royalties from foreign subsidiaries determined as a percentage of certain amounts invoiced to customers.
(2)	Certain balances have been revised to reflect the retrospective adoption of new accounting pronouncements. Refer to Note 1(e), “Retrospective adoption of new accounting principles”, for additional information.

No single customer accounted for 10% or more of total revenue for the fiscal years ended March 31, 2009, 2008 or 2007.

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Note 6 — Trade and Installment Accounts Receivable

The Company uses installment license agreements as a standard business practice and has a history of successfully collecting substantially all amounts due under the original payment terms without making concessions on payments, software products, maintenance, or professional services. Net trade and installment accounts receivable represent financial assets derived from the committed amounts due from the Company’s customers. These accounts receivable balances are reflected net of unamortized discounts based on imputed interest for the time value of money for license agreements under the Company’s prior business model and allowances for doubtful accounts. These balances do not include unbilled contractual commitments executed under the Company’s current business model. Trade and installment accounts receivable are composed of the following components:

	March 31,			March 31,
	2009			2008
	(in millions)
Current:
Accounts receivable — billed	$	658		$	817
Accounts receivable — unbilled		71			50
Other receivables		34			57
Unbilled amounts due within the next 12 months — prior business model		108			103
Less: Allowance for doubtful accounts		(25	)		(30	)
Less: Unamortized discounts		(7	)		(27	)
Net trade and installment accounts receivable — current	$	839		$	970
Noncurrent:
Unbilled amounts due beyond the next 12 months — prior business model	$	132		$	239
Less: Allowance for doubtful accounts		—			(1	)
Less: Unamortized discounts		(4	)		(4	)
Net installment accounts receivable — noncurrent	$	128		$	234

During fiscal year 2008, the Company transferred its rights and interest in future committed installments under ratable software license agreements to third-party financial institutions with an aggregate contract value of approximately $17 million, for which the Company received cash of approximately $14 million. As of March 31, 2009 and 2008, the aggregate remaining amounts due to the third party financing institutions were approximately $10 million and $56 million, respectively. These amounts are classified as “Deferred revenue (billed or collected)” on the Consolidated Balance Sheets. The financing agreements may contain limited recourse provisions with respect to the Company’s continued performance under the license agreements. Based on the Company’s historical experience, the Company believes that any liability which may be incurred as a result of these limited recourse provisions is remote.

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Note 7 — Debt

Credit Facilities

As of March 31, 2009 and 2008, the Company’s committed bank credit facilities consisted of a $1 billion, unsecured bank revolving credit facility.

	As of March 31,
	2009				2008
	Maximum		Outstanding		Maximum		Outstanding
	Available		Balance		Available		Balance
			(in millions)
2008 Revolving Credit Facility	$	1,000	$	750	$	1,000	$	750
(expires August 2012)

2008 Revolving Credit Facility

In August 2007, the Company entered into an unsecured revolving credit facility (the 2008 Revolving Credit Facility). The maximum committed amount available under the 2008 Revolving Credit Facility is $1 billion, exclusive of incremental credit increases of up to an additional $500 million, which are available subject to certain conditions and the agreement of its lenders. The 2008 Revolving Credit Facility replaced the prior $1 billion 2004 Revolving Credit Facility (the 2004 Revolving Credit Facility), which was due to expire on December 2, 2008. The 2004 Revolving Credit Facility was terminated effective August 29, 2007, at which time outstanding borrowings of $750 million were repaid and simultaneously re-borrowed under the 2008 Revolving Credit Facility. The 2008 Revolving Credit Facility expires on August 29, 2012. As of March 31, 2009 and 2008, $750 million was drawn down under the 2008 Revolving Credit Facility. Total interest expense relating to borrowings under the 2008 Revolving Credit Facility for fiscal years 2009, 2008 and 2007 was approximately $24 million, $44 million and $25 million, respectively.

Borrowings under the 2008 Revolving Credit Facility bear interest at a rate dependent on the Company’s credit ratings at the time of such borrowings and are calculated according to a base rate or a Eurocurrency rate, as the case may be, plus an applicable margin and utilization fee. The applicable margin for a base rate borrowing is 0.0% and, depending on the Company’s credit rating, the applicable margin for a Eurocurrency borrowing ranges from 0.27% to 0.875%. Also, depending on the Company’s credit rating at the time of the borrowing, the utilization fee can range from 0.10% to 0.25% for borrowings over 50% of the total commitment. At the Company’s credit ratings as of March 31, 2009, the applicable margin was 0% for a base rate borrowing and 0.425% for a Eurocurrency borrowing, and the utilization fee was 0.1%. As of March 31, 2009, the weighted average interest rate on the Company’s outstanding borrowings was 1.95%. In addition, the Company must pay facility commitment fees quarterly at rates dependent on its credit ratings. The facility commitment fees can range from 0.08% to 0.375% of the final allocated amount of each Lender’s full revolving credit commitment (without taking into account any outstanding borrowings under such commitments). Based on the Company’s credit ratings as of March 31, 2009, the facility commitment fee was 0.125% of the $1 billion committed amount.

The 2008 Revolving Credit Facility contains customary covenants for transactions of this type, including two financial covenants: (i) for the 12 months ending each quarter-end, the ratio of consolidated debt for borrowed money to consolidated cash flow, each as defined in the 2008 Revolving Credit Facility, must not exceed 4.00 to 1.00; and (ii) for the 12 months ending each quarter-end, the ratio of consolidated cash flow to the sum of interest payable on, and amortization of debt discount in respect of, all consolidated debt for borrowed money, as defined in the 2008 Revolving Credit Facility, must not be less than 5.00 to 1.00. In addition, as a condition precedent to each borrowing made under the 2008 Revolving Credit Facility, as of the date of such borrowing, (i) no event of default shall have occurred and be continuing and (ii) the Company is to reaffirm that the representations and warranties made by the Company in the 2008 Revolving Credit Facility (other than the representation with respect to material adverse changes, but including the representation regarding the absence of certain material litigation) are correct. As of March 31, 2009, the Company is in compliance with these debt covenants.

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Senior Note Obligations

As of March 31, 2009 and 2008, the Company had the following unsecured, fixed-rate interest, senior note obligations outstanding:

	Year Ended March 31,
	2009		2008
	(in millions)
6.500% Senior Notes due April 2008	$	—	$	350
1.625% Convertible Senior Notes due December 2009, net of debt amortization amount of $29 million and $66 million, respectively		431		394
4.750% Senior Notes due December 2009		176		500
6.125% Senior Notes due December 2014		500		500

6.500% Senior Notes

In the fiscal year ended March 31, 1999, the Company issued $1.75 billion of unsecured 6.500% Senior Notes in a transaction pursuant to Rule 144A under the Securities Act of 1933 (Rule 144A). In the first quarter of fiscal year 2009, the Company paid the $350 million of the 6.500% Senior Notes that was due and payable at that time. Subsequent to this scheduled payment, there were no further amounts due under this issuance.

1.625% Convertible Senior Notes

In fiscal year 2003, the Company issued $460 million of unsecured 1.625% Convertible Senior Notes (1.625% Notes) due December 2009, in a transaction pursuant to Rule 144A. The 1.625% Notes are senior unsecured indebtedness and rank equally with all existing senior unsecured indebtedness. Concurrent with the issuance of the 1.625% Notes, the Company entered into call spread repurchase option transactions (1.625% Notes Call Spread) to partially mitigate potential dilution from conversion of the 1.625% Notes. The option purchase price of the 1.625% Notes Call Spread was approximately $73 million and the entire purchase price was charged to stockholders’ equity in December 2002. Under the terms of the 1.625% Notes Call Spread, the Company can elect to receive (i) outstanding shares equivalent to the number of shares that will be issued if all of the 1.625% Notes are converted into shares (23 million shares) upon payment of an exercise price of $20.04 per share (aggregate price of $460 million); or (ii) a net cash settlement, net share settlement or a combination, whereby the Company will receive cash or shares equal to the increase in the market value of the 23 million shares from the aggregate value at the $20.04 exercise price (aggregate price of $460 million), subject to the upper limit of $30.00 discussed below. The 1.625% Notes Call Spread is designed to partially mitigate the potential dilution from conversion of the 1.625% Notes, depending upon the market price of the Company’s common stock at such time. The 1.625% Notes Call Spread can be exercised in December 2009 at an exercise price of $20.04 per share. To limit the cost of the 1.625% Notes Call Spread, an upper limit of $30.00 per share has been set, such that if the price of the common stock is above that limit at the time of exercise, the number of shares eligible to be purchased will be proportionately reduced based on the amount by which the common share price exceeds $30.00 at the time of exercise. As of March 31, 2009, the estimated fair value of the 1.625% Notes Call Spread was approximately $34 million, which was based upon valuations from independent third-party financial institutions.

As discussed in Note 1(e), the Company adopted FSP APB No. 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).” FSP APB No. 14-1 requires the issuer of convertible debt instruments with cash settlement features to account separately for the liability and equity components of the instruments. The debt is recognized at the present value of its cash flows discounted using the issuer’s nonconvertible debt borrowing rate at the time of issuance with the resulting debt discount being amortized over the expected life of the debt. The equity component is recognized as the difference between the proceeds from the issuance of the convertible debt instrument and the fair value of the liability. FSP APB No. 14-1 requires retrospective application to all periods presented and does not grandfather existing instruments.

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The Company estimated a borrowing rate of 11% for a similar non-convertible instrument at the time the debt was issued. The carrying value of the liability component of the 1.625% Notes assuming an interest rate of 11% was $251 million at issuance, reflecting a discount of $209 million. This discount is being amortized to interest expense over a seven-year period ending December 2009, the date on which holders of the 1.625% Notes may first require the Company to repurchase all or a portion of their 1.625% Notes at a price of $20.04 per share. At March 31, 2009, the Company’s share price was $2.43 below the conversion price.

Fiscal Year 2005 Senior Notes

In November 2004, the Company issued an aggregate of $1 billion of unsecured Senior Notes (2005 Senior Notes) in a transaction pursuant to Rule 144A. The Company issued $500 million of 4.75%, 5-year notes due December 2009 and $500 million of 5.625%, 10-year notes due December 2014. In December 2007, the 5.625% Senior Notes due December 2014 were renamed the 6.125% Senior Notes due December 2014 (see below for additional information).

4.750% Senior Notes due December 2009: During the fourth quarter of fiscal 2009, the Company completed a tender offer to repay a portion of the Company’s 4.750% Senior Notes due December 2009, under which the Company repaid approximately $176 million of the aggregate principal amount of the notes, exclusive of accrued interest. During the third quarter of fiscal year 2009, the Company repaid approximately $148 million principal amount of the Company’s 4.750% Senior Notes due December 2009 on the open market at a price of $143 million, exclusive of accrued interest. As a result of this repayment, the Company recognized a gain of $5 million in the “Other (gains) expenses, net” line of the Consolidated Statements of Operations in the third quarter. At March 31, 2009, $176 million of the 4.750% Senior Notes remains outstanding.

6.125% Senior Notes due December 2014: On December 21, 2007, the Company, The Bank of New York, and the holders of a majority of the Notes reached a settlement of a lawsuit captioned The Bank of New York v. CA, Inc. et al., filed in the Supreme Court of the State of New York, New York County and executed a First Supplemental Indenture. The First Supplemental Indenture provides, among other things, that the Company will pay an additional 0.50% per annum interest on the $500 million principal amount of the Notes, with such additional interest beginning to accrue as of December 1, 2007. Pursuant to the Supplemental Indenture, the Notes are now referred to as the Company’s 6.125% Senior Notes due 2014. As a result of the settlement in the third quarter of fiscal year 2008, the Company recorded a charge of approximately $14 million, representing the present value of the additional amounts that will be paid. This charge is included in “Other (gains) expenses, net” line item in the Consolidated Statements of Operations. In connection with the settlement, the Company also entered into an Addendum to Registration Rights Agreement, which confirms that the Company no longer has any obligations under the original Registration Rights Agreement entered into with respect to the Notes. The settlement became effective upon the signature of the Stipulation of Dismissal with Prejudice by a Justice of the New York Supreme Court on January 3, 2008.

The Company has the option to redeem the 2005 Senior Notes at any time, at redemption prices equal to the greater of (i) 100% of the aggregate principal amount of the notes of such series being redeemed and (ii) the present value of the principal and interest payable over the life of the 2005 Senior Notes, discounted at a rate equal to 15 basis points and 20 basis points for the 5-year notes and 10-year notes, respectively, over a comparable U.S. Treasury bond yield. The maturity of the 2005 Senior Notes may be accelerated by the holders upon certain events of default, including failure to make payments when due and failure to comply with covenants in the 2005 Senior Notes. The 5-year notes were issued at a price equal to 99.861% of the principal amount and the 10-year notes at a price equal to 99.505% of the principal amount for resale under Rule 144A and Regulation S.

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Other Indebtedness

			Year Ended March 31,
	2009				2008
	Maximum		Outstanding		Maximum		Outstanding
	Available		Balance		Available		Balance
			(in millions)
International line of credit	$	25	$	—	$	25	$	—
Capital lease obligations and other		—		51		—		22

International Line of Credit

An unsecured and uncommitted multi-currency line of credit is available to meet short-term working capital needs for the Company’s subsidiaries operating outside the United States. The line of credit is available on an offering basis, meaning that transactions under the line of credit will be on such terms and conditions, including interest rate, maturity, representations, covenants and events of default, as mutually agreed between the Company’s subsidiaries and the local bank at the time of each specific transaction. As of March 31, 2009, the amount available under this line totaled approximately $25 million and approximately $6 million was pledged in support of bank guarantees and other local credit lines. Amounts drawn under these facilities as of March 31, 2009 were nominal.

In addition to the above facility, the Company and its subsidiaries use guarantees and letters of credit issued by financial institutions to guarantee performance on certain contracts. As of March 31, 2009, none of these arrangements had been drawn down by third parties.

Other

As of March 31, 2009 and 2008, the Company had various other debt obligations outstanding, which approximated $51 million and $22 million, respectively.

As of March 31, 2009, the Company’s senior unsecured notes were rated Ba1, BBB, and BB+ by Moody’s Investors Service (Moody’s), Standard and Poor’s (S&P) and Fitch Ratings (Fitch), respectively. In April 2009, Fitch upgraded the Company’s credit rating to BBB.

As of March 31, 2009 the outlook on these unsecured notes is rated stable by all three rating agencies.

The Company conducts an ongoing review of its capital structure and debt obligations as part of its risk management strategy. The fair value of the Company’s current and long term portions of debt, excluding the 2008 Revolving Credit Facility and Capital lease obligations and other, was approximately $1,130 million and $1,885 million as of March 31, 2009 and 2008, respectively. The fair value of long-term debt is based on quoted market prices. See also Note 1, “Significant Accounting Policies.”

Interest expense for the fiscal years ended March 31, 2009, 2008 and 2007 was $130 million, $169 million and $152 million, respectively.

The maturities of outstanding debt are as follows:

					Year Ended March 31,
	2010(1)		2011		2012		2013		2014		Thereafter
					(in millions)
Amount due	$	621	$	13	$	12	$	757	$	6	$	499

(1) Net of unamortized debt discount of $29 million associated with the Company’s 1.625% Senior Notes

Note 8 — Commitments and Contingencies

The Company leases real estate and certain data processing and other equipment with lease terms expiring through 2023. The leases are operating leases and provide for renewal options and additional rentals based on escalations in operating expenses and real estate taxes. The Company has no material capital leases.

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Rental expense under operating leases for facilities and equipment was approximately $161 million, $203 million and $196 million for the fiscal years ended March 31, 2009, 2008 and 2007, respectively. Rental expense for the fiscal years ended March 31, 2009, 2008 and 2007 included sublease income of approximately $22 million, $35 million and $31 million, respectively.

Future minimum lease payments under non-cancelable operating leases as of March 31, 2009, were as follows:

	(in millions)
2010	$	119
2011		95
2012		77
2013		65
2014		55
Thereafter		245
Total		656
Less income from sublease		(42	)
Net minimum operating lease payments	$	614

Prior to fiscal year 2001, the Company sold individual accounts receivable under the prior business model to a third party subject to certain recourse provisions. The outstanding principal balance of these receivables subject to recourse approximated $38 million and $81 million as of March 31, 2009 and 2008, respectively.

Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004 — Background

The Company, its former Chairman and CEO Charles B. Wang, its former Chairman and CEO Sanjay Kumar, its former Chief Financial Officer Ira Zar, and its Vice Chairman and Founder Russell M. Artzt were defendants in one or more stockholder class action lawsuits filed in July 1998, February 2002, and March 2002 in the United States District Court for the Eastern District of New York (the Federal Court), alleging, among other things, that a class consisting of all persons who purchased the Company’s Common Stock during the period from January 20, 1998 until July 22, 1998 were harmed by misleading statements, misrepresentations, and omissions regarding the Company’s future financial performance.

In addition, in May 2003, a class action lawsuit captioned John A. Ambler v. Computer Associates International, Inc., et al. was filed in the Federal Court. The complaint in this matter, a purported class action on behalf of the CA Savings Harvest Plan (the CASH Plan) and the participants in, and beneficiaries of, the CASH Plan for a class period from March 30, 1998 through May 30, 2003, asserted claims of breach of fiduciary duty under the federal Employee Retirement Income Security Act (ERISA). The named defendants were the Company, the Company’s Board of Directors, the CASH Plan, the Administrative Committee of the CASH Plan, and the following current or former employees and/or former directors of the Company: Messrs. Wang, Kumar, Zar, Artzt, Peter A. Schwartz (the Company’s former Chief Financial Officer), and Charles P. McWade (the Company’s former head of Financial Reporting and business development); and various unidentified alleged fiduciaries of the CASH Plan. The complaint alleged that the defendants breached their fiduciary duties by causing the CASH Plan to invest in Company securities and sought damages in an unspecified amount.

A stockholder derivative lawsuit was filed by Charles Federman against certain current and former directors of the Company, based on essentially the same allegations as those contained in the February and March 2002 stockholder lawsuits discussed above. This action was commenced in April 2002 in the Delaware Chancery Court, and an amended complaint was filed in November 2002. The defendants named in the amended complaint were current Company director The Honorable Alfonse M. D’Amato and former Company directors Shirley Strum Kenny and Messrs. Wang, Kumar, Artzt, Willem de Vogel, Richard Grasso, Roel Pieper, and Lewis S. Ranieri. The Company was named as a nominal defendant. The derivative suit alleged breach of fiduciary duties on the part of all the individual defendants and, as against the former management director defendants, insider trading on the basis of allegedly misappropriated confidential, material information. The amended complaint sought an accounting and recovery on behalf of the Company of an unspecified amount of damages, including recovery of the profits allegedly realized from the sale of Common Stock.

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On August 25, 2003, the Company announced the settlement of the above-described class action lawsuits against the Company and certain of its present and former officers and directors, alleging misleading statements, misrepresentations, and omissions regarding the Company’s financial performance, as well as breaches of fiduciary duty. At the same time, the Company also announced the settlement of a derivative lawsuit, in which the Company was named as a nominal defendant, filed against certain present and former officers and directors of the Company, alleging breaches of fiduciary duty and, against certain management directors, insider trading, as well as the settlement of an additional derivative action filed by Charles Federman that had been pending in the Federal Court. As part of the class action settlement, which was approved by the Federal Court in December 2003, the Company agreed to issue a total of up to 5.7 million shares of Common Stock to the stockholders represented in the three class action lawsuits, including payment of attorneys’ fees. The Company has completed the issuance of the settlement shares as well as payment of $3.3 million to the plaintiffs’ attorneys in legal fees and related expenses. In settling the derivative suits, which settlement was approved by the Federal Court in December 2003, the Company committed to maintain certain corporate governance practices. Under the settlement, the Company, the individual defendants and all other current and former officers and directors of the Company were released from any potential claim by stockholders arising from accounting-related or other public statements made by the Company or its agents from January 1998 through February 2002 (and from March 11, 1998 through May 2003 in the case of the employee ERISA action). The individual defendants were released from any potential claim by or on behalf of the Company relating to the same matters.

On October 5, 2004 and December 9, 2004, four purported Company stockholders served motions to vacate the Order of Final Judgment and Dismissal entered by the Federal Court in December 2003 in connection with the settlement of the derivative action. These motions primarily sought to void the releases that were granted to the individual defendants under the settlement. On December 7, 2004, a motion to vacate the Order of Final Judgment and Dismissal entered by the Federal Court in December 2003 in connection with the settlement of the 1998 and 2002 stockholder lawsuits discussed above (together with the October 5, 2004 and December 9, 2004 motions, the 60(b) Motions) was filed by Sam Wyly and certain related parties (the Wyly Litigants). The motion sought to reopen the settlement to permit the moving stockholders to pursue individual claims against certain present and former officers of the Company. The motion stated that the moving stockholders did not seek to file claims against the Company.

Derivative Actions Filed in 2004

In June and July 2004, three purported derivative actions were filed in the Federal Court by Ranger Governance, Ltd. (Ranger), Bert Vladimir and Irving Rosenzweig against certain current or former employees and/or directors of the Company (the Derivative Actions). In November 2004, the Federal Court issued an order consolidating the Derivative Actions. The plaintiffs filed a consolidated amended complaint (the Consolidated Complaint) on January 7, 2005. The Consolidated Complaint names as defendants Messrs. Wang, Kumar, Zar, McWade, Schwartz, de Vogel, Grasso, Pieper, Artzt, D’Amato, and Ranieri, Stephen Richards, Steven Woghin, David Kaplan, David Rivard, Lloyd Silverstein, Michael A. McElroy, Gary Fernandes, Robert E. La Blanc, Jay W. Lorsch, Kenneth Cron, Walter P. Schuetze, KPMG LLP, and Ernst & Young LLP. The Company is named as a nominal defendant. The Consolidated Complaint seeks from one or more of the defendants (1) contribution towards the consideration the Company had previously agreed to provide current and former stockholders in settlement of certain class action litigation commenced against the Company and certain officers and directors in 1998 and 2002 (see “Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004 — Background”), (2) compensatory and consequential damages in an amount not less than $500 million in connection with the investigations giving rise to the Deferred Prosecution Agreement (DPA) entered into between the Company and the United States Attorney’s Office (USAO) in 2004 and a consent to enter into a final judgment (Consent Judgment) in a parallel proceeding brought by the Securities and Exchange Commission (SEC) regarding certain of the Company’s past accounting practices, including its revenue recognition policies and procedures during certain periods prior to the adoption of the Company’s new business model in October 2000. (In May 2007, based upon the Company’s compliance with the terms of

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the DPA, the Federal Court ordered dismissal of the charges that had been filed against the Company in connection with the DPA, and the DPA expired. The injunctive provisions of the Consent Judgment permanently enjoining the Company from violating certain provisions of the federal securities laws remain in effect.), (3) unspecified relief for violations of Section 14(a) of the Exchange Act for alleged false and material misstatements made in the Company’s proxy statements issued in 2002 and 2003, (4) relief for alleged breach of fiduciary duty, (5) unspecified compensatory, consequential and punitive damages based upon allegations of corporate waste and fraud, (6) unspecified damages for breach of duty of reasonable care, (7) restitution and rescission of the compensation earned under the Company’s executive compensation plan and (8) pursuant to Section 304 of the Sarbanes-Oxley Act, reimbursement of bonus or other incentive-based equity compensation and alleged profits realized from sales of securities issued by the Company. Although no relief is sought from the Company, the Consolidated Complaint seeks monetary damages, both compensatory and consequential, from the other defendants, including current or former employees and/or directors of the Company, Ernst & Young LLP and KPMG LLP in an amount totaling not less than $500 million.

On February 1, 2005, the Company established a Special Litigation Committee of independent members of its Board of Directors to, among other things, control and determine the Company’s response to the Derivative Actions and the 60(b) Motions. On April 13, 2007, the Special Litigation Committee issued its reports, which announced the Special Litigation Committee’s conclusions, determinations, recommendations and actions with respect to the claims asserted in the Derivative Actions and the 60(b) Motions. The Special Litigation Committee also served a motion which seeks to dismiss and realign the claims and parties in accordance with the Special Litigation Committee’s recommendations. As summarized below, the Special Litigation Committee concluded as follows:

• The Special Litigation Committee has concluded that it would be in the best interests of the Company to pursue certain of the claims against Messrs. Wang and Schwartz.

• The Special Litigation Committee has concluded that it would be in the best interests of the Company to pursue certain of the claims against the former Company executives who have pled guilty to various charges of securities fraud and/or obstruction of justice — including Messrs. Kaplan, Richards, Rivard, Silverstein, Woghin and Zar. The Special Litigation Committee has determined and directed that these claims be pursued by the Company using counsel retained by the Company, unless the Special Litigation Committee is able to successfully conclude its ongoing settlement negotiations with these individuals.

• The Special Litigation Committee has reached a settlement (subject to court approval) with Messrs. Kumar, McWade and Artzt.

• The Special Litigation Committee believes that the claims (the Director Claims) against current and former Company directors Messrs. Cron, D’Amato, de Vogel, Fernandes, Grasso, La Blanc, Lorsch, Pieper, Ranieri and Schuetze, Ms. Kenny, and Alex Vieux should be dismissed. The Special Litigation Committee has concluded that these directors did not breach their fiduciary duties and the claims against them lack merit.

• The Special Litigation Committee has concluded that it would be in the best interests of the Company to seek dismissal of the claims against Ernst & Young LLP, KPMG LLP and Mr. McElroy.

The Special Litigation Committee has served a motion which seeks dismissal of the Director Claims, the claims against Ernst & Young LLP, KPMG LLP and Mr. McElroy, and certain other claims. In addition, the Special Litigation Committee has asked for the Federal Court’s approval for the Company to be realigned as the plaintiff with respect to claims against certain other parties, including Messrs. Wang and Schwartz.

Current Procedural Status of Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004 and Derivative Actions Filed in 2004

By letter dated July 19, 2007, counsel for the Special Litigation Committee advised the Federal Court that the Special Litigation Committee had reached a settlement of the Derivative Actions with two of the three derivative plaintiffs — Bert Vladimir and Irving Rosenzweig. In connection with the settlement, both of these plaintiffs have agreed to support the Special Litigation Committee’s motion to dismiss and to

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realign. The Company has agreed to pay the attorney’s fees of Messrs. Vladimir and Rosenzweig in an amount up to $525,000 each. If finalized, this settlement would require approval of the Federal Court. On July 23, 2007, Ranger filed a letter with the Federal Court objecting to the proposed settlement. On October 29, 2007, the Federal Court denied the Special Litigation Committee’s motion to dismiss and realign, without prejudice to renewing the motion after a decision by the appellate court regarding the Federal Court’s decisions concerning the 60(b) Motions.

In a memorandum and order dated August 2, 2007, the Federal Court denied all of the 60(b) Motions and reaffirmed the 2003 settlements (the August 2 decision). On August 24, 2007, Ranger and the Wyly Litigants filed notices of appeal of the August 2 decision. On August 16, 2007, the Special Litigation Committee filed a motion to amend or clarify the August 2 decision, and the Company joined that motion. On September 12, 2007 and October 4, 2007, the Federal Court issued opinions denying the motions to amend or clarify. On September 18, 2007, the Wyly Litigants and Ranger filed notices of appeal of the September 12 decision. The Company filed notices of cross-appeal of the September 12 and October 4 decisions on November 2, 2007. Oral argument on the appeals and cross-appeals occurred on March 11, 2009, and decisions are pending.

Texas Litigation

On August 9, 2004, a petition was filed by Sam Wyly and Ranger against the Company in the District Court of Dallas County, Texas, seeking to obtain a declaratory judgment that plaintiffs did not breach two separation agreements they entered into with the Company in 2002 (the 2002 Agreements). On February 18, 2005, Mr. Wyly filed a separate lawsuit in the United States District Court for the Northern District of Texas (the Texas Federal Court) alleging that he is entitled to attorneys’ fees in connection with the original litigation filed in the District Court of Dallas County, Texas. The two actions have been consolidated. On March 31, 2005, the plaintiffs amended their complaint to allege a claim that they were defrauded into entering the 2002 Agreements and to seek rescission of those agreements and damages. On September 1, 2005, the Texas Federal Court granted the Company’s motion to transfer the action to the Federal Court. On November 9, 2007, plaintiffs served a motion to reopen discovery for 90 days to permit unspecified additional document requests and depositions. The Federal Court denied plaintiffs’ discovery motion on August 29, 2008 and certified that discovery was complete on September 3, 2008. On September 15, 2008, the Company moved for summary judgment dismissing all of plaintiffs’ claims, and plaintiffs moved for reconsideration of the Federal Court’s August 29, 2008 order denying plaintiffs’ discovery motion. These motions are fully briefed and pending determination by the Federal Court.

Other Civil Actions

     In 2004, the Company entered a voluntary disclosure agreement (VDA) with the State of Delaware, by which the Company agreed to disclose information about its failure to comply with certain abandoned property (“escheatment”) procedures and, in return, the State agreed, among other things, not to impose interest or conduct an audit. The Company engaged an independent consultant to review its records and provide an estimate of its liability to the State. The State refused to accept that estimate. In October 2008, the Company commenced an action entitled CA, Inc. v. Cordrey, et al, Civil Action No. 4111-CC in the Delaware Chancery Court (the Delaware Court) seeking, among other things, to compel the State to abide by its obligations under the VDA. In November 2008, the State filed a suit in the Delaware Court entitled Cordrey, et al v. CA, Inc. et al, Civil Action No. 4195-CC, that seeks to enforce a request for payment of abandoned property liability, compel an audit and impose interest. By an amended complaint, dated March 2, 2009, the State alleged, among other things, that the Company made material misrepresentations in and unreasonably delayed the VDA process and the state added causes of action for fraud and/or negligent misrepresentation. Although the ultimate outcome cannot be determined, the Company believes that the State’s claims are unfounded and that the Company has meritorious defenses. In the opinion of management, the resolution of this lawsuit is not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

On April 9, 2007, the Company filed a complaint in the United States District Court for the Eastern District of New York (the Federal Court) against Rocket Software, Inc. (Rocket). On August 1, 2007, the

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Company filed an amended complaint alleging that Rocket misappropriated intellectual property associated with a number of the Company’s database management software products. The amended complaint included causes of action for copyright infringement, misappropriation of trade secrets, unfair competition, and unjust enrichment. In the amended complaint, the Company sought damages of at least $200 million for Rocket’s alleged theft and misappropriation of the Company’s intellectual property, as well as an injunction preventing Rocket from continuing to distribute the database management software products at issue. On February 10, 2009, the Company announced that it had reached a settlement with Rocket resolving the Company’s claims of copyright infringement and trade secret misappropriation. As part of the settlement, Rocket agreed to license technology from the Company, including source code authored several years ago and related trade secrets that were the subject of the litigation for $50 million to be received and recognized as software fees and other with the consolidated statement of operations in increments through fiscal 2014. Rocket did not admit any wrongdoing in connection with this settlement.

In December 2008, a lawsuit captioned Information Protection and Authentication of Texas LLC v. Symantec Corp., et al. was filed in the United States District Court for the Eastern District of Texas. The complaint seeks monetary damages in an undisclosed amount against twenty-two separate defendants including the Company based upon claims for direct and contributory infringement of two separate patents. The complaint does not disclose which of the Company’s products allegedly infringe the claimed patents. In March 2009, the Company both answered the complaint and filed a cross-complaint seeking a declaratory judgment that the Company does not infringe the claimed patents and that such patents are invalid. Although the ultimate outcome cannot be determined, the Company believes that the claims are unfounded and that the Company has meritorious defenses. In the opinion of management, the resolution of this lawsuit is not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

The Company, various subsidiaries, and certain current and former officers have been named as defendants in various other lawsuits and claims arising in the normal course of business. The Company believes that it has meritorious defenses in connection with such lawsuits and claims, and intends to vigorously contest each of them. In the opinion of the Company’s management, the results of these other lawsuits and claims, either individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows, although the impact could be material to any individual reporting period.

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Note 9 — Income Taxes

The amounts of income (loss) from continuing operations before taxes attributable to domestic and foreign operations are as follows:

	Year Ended March 31,
	2009		2008		2007
	(in millions)
Domestic	$	648	$	558	$	81
Foreign		417		217		43
	$	1,065	$	775	$	124

Income tax expense (benefit) consists of the following:

	Year Ended March 31,
	2009			2008			2007
	(in millions)
Current:
Federal	$	317		$	203		$	179
State		14			2			6
Foreign		119			107			65
		450			312			250
Deferred:
Federal		(89	)		8			(30	)
State		(11	)		(7	)		(26	)
Foreign		44			(17	)		(173	)
		(56	)		(16	)		(229	)
Total:
Federal		228			211			149
State		3			(5	)		(20	)
Foreign		163			90			(108	)
	$	394		$	296		$	21

Note: Balances have been revised to reflect the retrospective adoption of new accounting pronouncements. Refer to Note 1(e), “Retrospective adoption of new accounting principles”, for additional information.

The income tax provision recorded for the fiscal year ended March 31, 2009 includes a net charge of approximately $22 million, which is primarily attributable to adjustments to uncertain tax positions (including certain refinements of amounts ascribed to tax positions taken in prior periods), partially offset by the reinstatement of the U.S. Research and Development Tax Credit and settlement of a U.S. federal income tax audit for the fiscal years 2001 through 2004. As a result of this settlement, during the first quarter of fiscal year 2009, the Company recognized a tax benefit of $11 million and a reduction of goodwill by $10 million.

The income tax provision recorded for the fiscal year ended March 31, 2008 included charges of approximately $26 million associated with certain corporate income tax rate reductions enacted in various non-US tax jurisdictions (with corresponding impacts on the Company’s net deferred tax assets).

The income tax provision for the fiscal year ended March 31, 2007 included benefits of approximately $23 million primarily arising from the resolution of certain international and U.S. federal tax liabilities.

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The provision (benefit) for income taxes is allocated as follows:

	Year Ended March 31,
	2009		2008		2007
	(in millions)
Continuing operations	$	394	$	296	$	21
Discontinued operations		—		—		(1	)
	$	394	$	296	$	20

The tax expense from continuing operations is reconciled to the tax expense from continuing operations computed at the federal statutory tax rate as follows:

	Year Ended March 31,
	2009			2008			2007
	(in millions)
Tax expense at U.S. federal statutory tax rate	$	373		$	272		$	43
Increase in tax expense resulting from:
U.S. share-based compensation		4			4			8
Effect of international operations		(11	)		(24	)		(47	)
Corporate tax rate changes		8			26			—
State taxes, net of federal tax benefit		1			2			(18	)
Valuation allowance		7			(11	)		8
Other, net		12			27			27
Tax expense from continuing operations	$	394		$	296		$	21

Note: Balances have been revised to reflect the retrospective adoption of new accounting pronouncements. Refer to Note 1(e), “Retrospective adoption of new accounting principles,” for additional information.

40

Deferred income taxes reflect the impact of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. The tax effects of the temporary differences are as follows:

	March 31,
	2009			2008
	(in millions)
Deferred tax assets:
Modified accrual basis accounting	$	445		$	428
Acquisition accruals		—			6
Share-based compensation		84			102
Accrued expenses		73			48
Net operating losses		179			206
Purchased intangibles amortizable for tax purposes		24			28
Depreciation		20			26
Deductible state tax and interest benefits		31			42
Purchased software		13			18
Other		33			17
Total deferred tax assets		902			921
Valuation allowances		(76	)		(118	)
Total deferred tax assets, net of valuation allowances		826			803
Deferred tax liabilities:
Other intangible assets		86			105
Capitalized development costs		135			113
Total deferred tax liabilities		221			218
Net deferred tax asset	$	605		$	585

In management’s judgment, it is more likely than not that the total deferred tax assets, net of valuation allowance, of approximately $826 million will be realized as reductions to future taxable income or by utilizing available tax planning strategies. Worldwide net operating loss carryforwards (NOLs) totaled approximately $608 million and $697 million as of March 31, 2009 and 2008, respectively. The NOLs will expire as follows: $457 million between 2009 and 2028 and $151 million may be carried forward indefinitely.

The valuation allowance decreased approximately $42 million and $13 million at March 31, 2009 and 2008, respectively. The decrease in the valuation allowance at March 31, 2009 primarily relates to the utilization of NOLs. The decrease in valuation allowance at March 31, 2008 primarily related to the amount of NOLs in foreign jurisdictions which, in management’s judgment, were “more likely than not” to be realized.

No provision has been made for U.S. federal income taxes on the balance of unremitted earnings of the Company’s foreign subsidiaries since the Company plans to permanently reinvest all such earnings outside the U.S. Unremitted earnings totaled approximately $1,349 million and $1,110 million as of March 31, 2009 and 2008, respectively. It is not practicable to determine the amount of tax associated with such unremitted earnings.

In 2006, the FASB issued FIN 48, which clarifies the accounting for uncertainty in tax positions. FIN 48 requires that the Company recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The Company adopted the provisions of FIN 48 as of the beginning of fiscal year 2008.

A number of years may elapse before a particular uncertain tax position for which the Company has not recorded a financial statement benefit is audited and finally resolved. The number of years with open tax

41

audits varies depending on the tax jurisdiction. The Company’s major taxing jurisdictions and the related open tax audits are as follows:

• United States — federal audits have been completed for all taxable years through 2004;

• Germany— audits have been completed for all taxable years through 2003;

• Italy — audits have been completed for all taxable years through 1999;

• Japan— audits have been completed for all taxable years through 2003; and

• United Kingdom — audits have been completed for all taxable years prior to 1999.

While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, the Company believes that its financial statements reflect the probable outcome of known uncertain tax positions. The Company adjusts these reserves, as well as any related interest or penalties, in light of changing facts and circumstances. To the extent a settlement differs from the amounts previously reserved, such difference would be generally recognized as a component of the Company’s annual tax rate in the year of resolution.

As of March 31, 2009, the liability for income taxes associated with uncertain tax positions is approximately $311 million (of which approximately $9 million is classified as current). In addition, the Company has recorded approximately $31 million of deferred tax assets for future deductions of interest and state income taxes related to these uncertain tax positions.

As of March 31, 2009, the total gross amount of reserves for income taxes, reported in other liabilities, is $247 million. Any prospective adjustments to these reserves will be recorded as an increase or decrease to the Company’s provision for income taxes and would impact its effective tax rate. In addition, the Company accrues in its income tax provision interest and any associated penalties related to reserves for income taxes. The gross amount of interest and penalties accrued, reported in total liabilities, is $64 million as of March 31, 2009, of which a reduction of $5 million is recognized in fiscal year 2009. The gross amount accrued in such regard was $69 million as of March 31, 2008, of which $4 million was recognized in fiscal year 2008.

A roll-forward of the Company’s reserves for all federal, state and foreign tax jurisdictions is as follows:

	March 31
	2009			2008
	(in millions)
Balance, beginning of year	$	211		$	238
FIN 48 adoption adjustment to retained earnings		—			(10	)
Adjusted balance, beginning of year		211			228
Additions for tax positions related to the current year		26			19
Additions for tax positions from prior years		82			27
Reductions for tax positions from prior years		(4	)		(32	)
Settlement payments		(54	)		(27	)
Statute of limitations expiration		(4	)		(4	)
Translation and other		(10	)		—
Balance, end of year	$	247		$	211

Note 10 — Stock Plans

Share-based incentive awards are provided to employees under the terms of the Company’s equity compensation plans (the Plans). The Plans are administered by the Compensation and Human Resources Committee of the Board of Directors (the Committee). Awards under the Plans may include at-the-money

42

stock options, premium-priced stock options, restricted stock (RSAs), restricted stock units (RSUs), performance share units (PSUs) or any combination thereof. The non-employee members of the Company’s Board of Directors receive deferred stock units under separate director compensation plans. The Company typically settles awards under employee and non-employee director compensation plans with stock held in treasury.

All Plans, with the exception of acquired companies’ stock plans, have been approved by the Company’s shareholders. Descriptions of the Plans are as follows:

The Company’s 1991 Stock Incentive Plan (the 1991 Plan) provided that stock appreciation rights and/or options, both qualified and non-statutory, to purchase up to 67.5 million shares of common stock of the Company could be granted to employees (including officers of the Company). As of March 31, 2009, options covering approximately 70.9 million shares have been granted, including option shares issued that were previously terminated due to employee forfeitures. As of March 31, 2009, all of the options outstanding under the 1991 Plan, which cover approximately 3.5 million shares, were exercisable with exercise prices ranging from $27.00 — $74.69 per share.

The 1993 Stock Option Plan for Non-Employee Directors (the 1993 Plan) provided for non-statutory options to purchase up to a total of 337,500 shares of common stock of the Company to be available for grant to each member of the Board of Directors who is not an employee of the Company. Pursuant to the 1993 Plan, the exercise price was the fair market value of the Company’s stock on the date of grant. All options expire 10 years from the date of grant unless otherwise terminated. As of March 31, 2009, options covering 222,750 shares have been granted under this plan. As of March 31, 2009, all of the options outstanding under the 1993 Plan, which cover 13,500 shares, were exercisable with exercise prices ranging from $32.38 — $51.44 per share.

The 1996 Deferred Stock Plan for Non-Employee Directors (the 1996 Plan) provided for each director to receive annual director fees in the form of deferred shares. As of March 31, 2009, approximately 7,600 deferred shares were outstanding under the 1996 Plan.

The 2001 Stock Option Plan (the 2001 Plan) provided that non-statutory and incentive stock options to purchase up to 7.5 million shares of common stock of the Company could be granted to select employees and consultants. As of March 31, 2009, options covering approximately 6.5 million shares have been granted. As of March 31, 2009, all of the options outstanding under the 2001 Plan, which cover approximately 1.6 million shares, were exercisable with an exercise price of $21.89 per share.

The 2002 Incentive Plan (the 2002 Plan) as amended and restated effective April 27, 2007 provides that annual performance bonuses, long-term performance bonuses, both qualified and non-statutory stock options, RSAs, RSUs and other equity-based awards to purchase up to 45 million shares of common stock of the Company may be granted to select employees and consultants. In addition, any shares of common stock that were subject to issuance but not awarded under the 2001 Plan are available for issuance under the 2002 Plan. As of March 31, 2009, approximately 3.0 million of such shares were available under the 2002 Plan. As of March 31, 2009, options covering 19.8 million shares have been granted under the 2002 Plan. As of March 31, 2009, options covering 8.5 million shares were outstanding, of which options covering approximately 7.9 million shares are exercisable. The outstanding options have exercise prices ranging from $12.89 — $32.80 per share. As of March 31, 2009, approximately 9.2 million RSAs and approximately 2.6 million RSUs have been awarded to employees, of which approximately 2.9 million and 0.3 million shares, respectively, were unreleased.

The 2002 Compensation Plan for Non-Employee Directors (the 2002 Director Plan) provided for each eligible director to receive annual fees in the form of deferred shares and automatic option grants to purchase 6,750 shares of common stock of the Company, up to a total of 650,000 shares. Pursuant to the 2002 Director Plan, the exercise price of the options granted was the fair market value of the Company’s stock price on the date of grant. All options expire 10 years from the date of grant unless otherwise terminated. As of March 31, 2009, all of the options outstanding under the 2002 Director Plan, which cover approximately 28,000 shares, were exercisable, with exercise prices ranging from $11.04 — $23.37 per share. As of March 31, 2009, approximately 8,800 deferred shares were outstanding in connection with annual director fees.

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The 2003 Compensation Plan for Non-Employee Directors (the 2003 Director Plan) as amended September 10, 2008 provides for each director to receive director fees in the form of deferred shares. In addition, certain directors receive an additional annual fee for their service as a committee chair, and the chairman of the board receives an additional fee for his service as the lead director. Directors may elect to receive up to 50% of fees under the 2003 Director Plan in cash. As of March 31, 2009, approximately 207,000 deferred shares were outstanding under the 2003 Director Plan.

The 2007 Incentive Plan (the 2007 Plan) effective June 22, 2007 provides that annual performance bonuses, long-term performance bonuses, both qualified and non-statutory stock options, RSAs, RSUs and other equity-based awards up to approximately 30 million shares of common stock of the Company may be granted to select employees and consultants. No more than 10 million incentive stock options may be granted. As of March 31, 2009, approximately 1.8 million RSAs have been awarded to employees, of which approximately 1.7 million were unreleased. As of March 31, 2009, approximately 0.3 million RSUs were awarded and unreleased. As of March 31, 2009, approximately 25.5 million shares were available for future issuance.

Share-Based Compensation

Share-based awards exchanged for employee services are accounted for under the fair value method. Accordingly, share-based compensation cost is measured at the grant date, based on the fair value of the award. The Company uses the straight-line attribution method to recognize share-based compensation costs related to awards with only service conditions. The expense for awards expected to vest is recognized over the employee’s requisite service period (generally the vesting period of the award). Awards expected to vest are estimated based upon a combination of historical experience and future expectations.

Upon adoption of SFAS No. 123(R), the Company elected to treat awards with only service conditions and with graded vesting as one award. Consequently, the total compensation expense is recognized ratably over the entire vesting period, so long as compensation cost recognized at any date at least equals the portion of the grant date fair value of the award that is vested at that date.

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

	Year Ended March 31,
	2009			2008			2007
	(in millions)
Cost of professional services	$	4		$	4		$	3
Cost of licensing and maintenance		3			3			2
Selling and marketing		30			30			27
General and administrative		30			40			36
Product development and enhancements		25			27			25
Share-based compensation expense before tax		92			104			93
Income tax benefit		(30	)		(34	)		(27	)
Net compensation expense	$	62		$	70		$	66

The following table summarizes information about unrecognized share-based compensation costs as of March 31, 2009:

			Weighted
	Unrecognized		Average Period
	Compensation		Expected to be
	Costs		Recognized
	(in millions)		(in years)
Stock option awards	$	2		1.0
Restricted stock units		7		1.5
Restricted stock		48		1.4
Performance share units		22		1.7
Stock purchase plan		2		0.3
Total unrecognized share-based compensation costs	$	81		1.5

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There were no capitalized share-based compensation costs as of March 31, 2009, 2008 or 2007.

Stock Option Awards

Stock options are awards issued to employees that entitle the holder to purchase shares of the Company’s stock at a fixed price. Stock options are generally granted at an exercise price equal to or greater than the Company’s stock price on the date of grant and with a contractual term of ten years. Stock option awards granted after fiscal year 2000 generally vest one-third per year and become fully vested three years from the grant date.

As of March 31, 2009, options outstanding that have vested and are expected to vest are as follows:

			Weighted		Weighted Average		Aggregate
	Number of		Average		Remaining		Intrinsic
	Shares		Exercise Price		Contractual Life		Value(1)
	(in millions)				(In Years)		(in millions)
Vested		13.5	$	27.46		3.7	$	5.7
Expected to vest(2)		0.6		22.01		7.3		—	(3)
Total		14.1	$	27.22		3.9	$	5.7

(1)	These amounts represent the difference between the exercise price and $17.61, the closing price of the Company’s common stock on March 31, 2009, the last trading day of the Company’s fiscal year as reported on the NASDAQ Stock Market for all in the money options.
(2)	Outstanding options expected to vest are net of estimated future forfeitures.
(3)	Less than $0.1 million.

Additional information with respect to stock option plan activity is as follows:

	Number			Weighted Average
	of Shares			Exercise Price
(shares in millions)
Outstanding as of March 31, 2006		30.8		$	28.96
Granted		3.4			23.28
Exercised		(2.4	)		17.96
Expired or terminated		(10.5	)		30.04
Outstanding as of March 31, 2007		21.3		$	28.72
Granted		—	(1)		25.79
Exercised		(1.0	)		19.17
Expired or terminated		(3.5	)		36.32
Outstanding as of March 31, 2008		16.8		$	27.70
Exercised		(0.4	)		18.85
Expired or terminated		(2.3	)		32.09
Outstanding as of March 31, 2009		14.1		$	27.21

⁽¹⁾ Less than 0.1 million shares.

	Number		Weighted Average
	of Shares		Exercise Price
(shares in millions)
Options exercisable at:
March 31, 2007		16.9		29.78
March 31, 2008		14.9		28.22
March 31, 2009		13.5		27.46

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The following table summarizes stock option information as of March 31, 2009:

	Options Outstanding				Options Exercisable
			Weighted				Weighted
			Average	Weighted			Average	Weighted
Range of		Aggregate	Remaining	Average		Aggregate	Remaining	Average
Exercise		Intrinsic	Contractual	Exercise		Intrinsic	Contractual	Exercise
Prices	Shares	Value	Life	Price	Shares	Value	Life	Price
		(shares and aggregate intrinsic value in millions; weighted average remaining contractual life in years)
$1.37-$20.00	1.4	$5.7	4.0	$13.61	1.4	$5.7	4.0	$13.61
$20.01-$30.00	10.5	—	4.2	25.52	9.9	—	4.0	25.75
$30.01-$40.00	0.8	—	5.4	31.05	0.8	—	5.4	31.05
$40.01-$50.00	— (1)	—	2.4	47.31	— (1)	—	2.4	47.31
$50.01-$74.69	1.4	—	0.3	51.98	1.4	—	0.3	51.98
	14.1	$5.7	3.9	$27.21	13.5	$5.7	3.7	$27.46

⁽¹⁾ Less than 0.1 million shares.

The fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company’s stock options granted. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards.

No options were granted in fiscal year 2009. The weighted average estimated values of employee stock option grants, as well as the weighted average assumptions that were used in calculating such values during fiscal years 2008 and 2007 were based on estimates at the date of grant as follows:

	Year Ended March 31
	2008			2007
Weighted average fair value	$	7.84		$	8.40
Dividend yield		.62	%		.73	%
Expected volatility factor(1)		.28			.41
Risk-free interest rate(2)		5.1	%		4.9	%
Expected life (in years)(3)		4.5			4.5

(1)	Expected volatility is measured using historical daily price changes of the Company’s stock over the respective expected term of the options and the implied volatility derived from the market prices of the Company’s traded options.
(2)	The risk-free rate for periods within the contractual term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant.
(3)	The expected life is the number of years that the Company estimates, based primarily on historical experience, that options will be outstanding prior to exercise.

The following table summarizes information on shares exercised for the periods indicated:

	Year Ended March 31,
	2009			2008		2007
	(in millions)
Cash received from options exercised	$	7		$	19	$	39
Intrinsic value of options exercised		2			7		17
Tax benefit from options exercised		—	(1)		2		5

(1) Less than $1 million.

Restricted Stock and Restricted Stock Unit Awards

RSAs are stock awards issued to employees that are subject to specified restrictions and a risk of forfeiture. The restrictions typically lapse over a two or three year period. The fair value of the awards is determined and fixed based on the quoted market value of the Company’s stock on the grant date.

RSUs are stock awards issued to employees that entitle the holder to receive shares of common stock as the awards vest, typically over a two or three year period based on continued service. RSUs are not entitled to dividend equivalents. The fair value of the awards is determined and fixed based on the quoted market value

46

of the Company’s stock on the grant date reduced by the present value of dividends expected to be paid on the Company’s stock prior to vesting of the RSUs which is calculated using a risk free interest rate.

The following table summarizes the activity of RSAs under the Plans:

				Weighted Average
	Number			Grant Date
	of Shares			Fair Value
(shares in millions)
Outstanding as of March 31, 2006		0.7		$	26.51
Restricted stock granted		3.0			22.05
Restricted stock released		(0.4	)		25.18
Restricted stock cancelled		(0.5	)		23.47
Outstanding as of March 31, 2007		2.8		$	22.48
Restricted stock granted		2.6			25.88
Restricted stock released		(1.4	)		23.55
Restricted stock cancelled		(0.3	)		23.57
Outstanding as of March 31, 2008		3.7		$	24.38
Restricted stock granted		3.9			25.16
Restricted stock released		(2.6	)		24.82
Restricted stock cancelled		(0.4	)		24.97
Outstanding as of March 31, 2009		4.6		$	24.73

The following table summarizes the activity of the RSUs under the Plans:

				Weighted Average
	Number			Grant Date
	of Shares			Fair Value
(shares in millions)
Outstanding as of March 31, 2006		1.8		$	28.53
Restricted units granted		0.3			21.97
Restricted units released		(0.5	)		27.48
Restricted units cancelled		(0.2	)		26.38
Outstanding as of March 31, 2007		1.4		$	26.86
Restricted units granted		0.2			25.23
Restricted units released		(0.6	)		27.70
Restricted units cancelled		(0.1	)		25.06
Outstanding as of March 31, 2008		0.9		$	27.20
Restricted units granted		0.4			24.02
Restricted units released		(0.6	)		27.91
Restricted units cancelled		(0.1	)		24.11
Outstanding as of March 31, 2009		0.6		$	24.99

The total intrinsic value of RSAs and RSUs released during the fiscal years 2009, 2008 and 2007 was approximately $78 million, $50 million and $25 million, respectively.

Performance Awards

PSUs are target awards issued under the Company’s long-term incentive plan to senior executives where the number of shares ultimately issued to the employees depends on Company performance measured against specified targets. The Committee determines the number of shares to grant after either a one-year or three-year performance cycle as applicable to the 1-year and 3-year PSUs, respectively. The fair value of each award is estimated on the date that the performance targets are established based on the quoted market value of the Company’s stock adjusted for dividends as described above for RSUs, and the Company’s estimate of

47

the level of achievement of the performance targets. The Company recalculates the fair value of issued PSUs each reporting period until they are granted. The adjustment is based on the quoted market value of the Company’s stock on the reporting period date, adjusted for dividends as described above for RSUs, and the Company’s comparison of the performance it expects to achieve with the performance targets. Compensation costs will continue to be amortized over the requisite service period of the awards.

Under the Company’s long-term incentive program for fiscal years 2009, 2008 and 2007 senior executives were issued PSUs, under which the senior executives are eligible to receive RSAs or RSUs and unrestricted shares at the end of the performance cycle if certain performance targets are achieved. Additionally, senior executives were granted RSAs or RSUs for fiscal years 2009 and 2008 and stock options for fiscal year 2007. At the conclusion of the performance cycle for each PSU, the applicable number of shares of RSAs, RSUs or unrestricted stock granted may vary based upon the level of achievement of the performance targets and the approval of the Committee (which has discretion to reduce any award for any reason). The related compensation cost recognized will be based on the number of shares granted.

RSAs and RSUs relating to 1-year PSUs were granted as follows:

	Year Ended March 31, 2009 for					Year Ended March 31, 2008 for					Year Ended March 31, 2007 for
	the Performance Cycle of					the Performance Cycle of					the Performance Cycle of
	Fiscal 2008					Fiscal 2007					Fiscal 2006
				Weighted Average					Weighted Average				Weighted Average
				Grant Date					Grant Date				Grant Date
(Shares in millions)	Shares			Fair Value		Shares			Fair Value		Shares		Fair Value
RSAs		1.8		$	26.04		0.9		$	26.45		0.3	$	21.88
RSUs		—	(1)	$	25.96		—	(1)	$	26.38		—		—

(1) Shares granted amount to less than 0.1 million shares.

During the year ended March 31, 2009, approximately 0.4 million unrestricted shares with a weighted average grant date fair value of $25.80 were granted relating to 3-year PSUs.

The Committee approved also the FY09 Sales Retention Equity Program (the Program) to reward and retain top sales performers. Awards granted under the Program may not exceed 0.8 million shares or $20 million of grant date value. Eligible participants may receive RSAs or RSUs at the end of the performance cycle if certain performance targets are achieved, subject to the approval of the Committee (which has discretion to reduce any award for any reason). The related compensation cost recognized will be based on the number of shares granted.

Stock Purchase Plan

The Company maintains the Year 2000 Employee Stock Purchase Plan (the Purchase Plan) for all eligible employees. The Purchase Plan is considered compensatory. Under the terms of the Purchase Plan, employees may elect to withhold between 1% and 25% of their base pay through regular payroll deductions, subject to Internal Revenue Code limitations. Shares of the Company’s common stock may be purchased at six-month intervals at 85% of the lower of the fair market value of the Company’s common stock on the first or last day of each six-month period. During fiscal years 2009, 2008, and 2007, employees purchased approximately 1.5 million, 1.3 million and 1.5 million shares, respectively, at average prices of $17.56, $20.19 and $17.47 per share, respectively. As of March 31, 2009, approximately 19.8 million shares were reserved for future issuance under the Purchase Plan.

48

The fair value is estimated on the first date of the offering period using the Black-Scholes option pricing model. The fair values and the weighted average assumptions for the Purchase Plan offer periods commencing in the respective fiscal years are as follows:

				Year Ended March 31,
	2009			2008			2007
Weighted average fair value	$	5.89		$	5.57		$	4.73
Dividend yield		.78	%		.63	%		.74	%
Expected volatility factor(1)		.50			.23			.22
Risk-free interest rate(2)		1.1	%		4.2	%		5.2	%
Expected life (in years)(3)		0.5			0.5			0.5

(1)	Expected volatility is measured using historical daily price changes of the Company’s stock over the respective term of the offer period and the implied volatility is derived from the market prices of the Company’s traded options.
(2)	The risk-free rate for periods within the contractual term of the offer period is based on the U.S. Treasury yield curve in effect at the beginning of the offer period.
(3)	The expected life is the six-month offer period.

Note 11 — Profit-Sharing Plan

The Company maintains a defined contribution plan, the CA, Inc. Savings Harvest Plan (CASH Plan), for the benefit of the U.S. employees of the Company. The CASH Plan is intended to be a qualified plan under Section 401(a) of the Internal Revenue Code of 1986 (the Code), and contains a qualified cash or deferred arrangement as described under Section 401(k) of the Code. Pursuant to the CASH Plan, eligible participants may elect to contribute a percentage of their base compensation. The Company may make matching contributions under the CASH plan. The matching contributions to the CASH Plan totaled approximately $14 million, $14 million and $13 million for the fiscal years ended March 31, 2009, 2008 and 2007, respectively. In addition, the Company may make discretionary contributions of Company common stock to the CASH Plan. Charges for the discretionary contributions to the CASH plan totaled approximately $24 million, $18 million and $24 million for the fiscal years ended March 31, 2009, 2008 and 2007, respectively.

Note 12 — Rights Plan

Each outstanding share of the Company’s common stock carries a Stock Purchase Right issued under the Company’s Stockholder Protection Rights Agreement, dated October 16, 2006 (the Rights Agreement). Under certain circumstances, each right may be exercised to purchase one one-thousandth of a share of Participating Preferred Stock, Class A, for $100. Following (i) the acquisition of 20% or more of the Company’s outstanding common stock by an Acquiring Person as defined in the Rights Agreement (Walter Haefner and his affiliates and associates are “grandfathered” under this provision so long as their aggregate ownership of Common Stock does not exceed approximately 126,562,500 shares), or (ii) the commencement of a tender offer or exchange offer that would result in a person or group owning 20% or more of the Company’s outstanding common stock, under certain circumstances each right, other than rights held by an Acquiring Person, may be exercised to purchase common stock of the Company or a successor company with a market value of twice the $100 exercise price. However, the rights will not be triggered by a Qualifying Offer, as defined in the Rights Agreement, if holders of at least 10 percent of the outstanding shares of the Company’s common stock request that a special meeting of stockholders be convened for the purpose of exempting such offer from the Rights Agreement, and thereafter the stockholders vote at such meeting to exempt such Qualifying Offer from the Rights Agreement. The rights, which are redeemable by the Company at one cent per right, expire November 30, 2009.

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SCHEDULE II

CA, INC.
AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS

			Additions/
			(Deductions)
			Charged/
	Balance at		(Credited) to					Balance
	Beginning		Costs and					at End
Description	of Period		Expenses		Deductions(1)			of Period
(in millions)
Allowance for doubtful accounts
Year ended March 31, 2009	$	31	$	9	$	(15	)	$	25
Year ended March 31, 2008	$	37	$	22	$	(28	)	$	31
Year ended March 31, 2007	$	45	$	11	$	(19	)	$	37

(1) Write-offs and recoveries of amounts against allowance provided.

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