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Clifford H.R. DuPree Senior Vice President, Corporate Governance, and Corporate Secretary |
One CA Plaza Islandia, NY 11749 tel: +1 631 342 2150 fax: +1 631 342 4866 Clifford.DuPree@ca.com |
Re: | CA, Inc. Form 8-K Filed January 25, 2011 File No. 001-09247 |
1. | Tell us what consideration you gave to the Staffs interpretive guidance that it is not appropriate to present a full non-GAAP income statement. Refer to Question 102.10 of Compliance and Disclosure Interpretations: Non-GAAP Financial Measures. Consider removing in future filings and earnings releases. |
| the Company is responsible for the adequacy and accuracy of the disclosure in the filing; | ||
| staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and | ||
| the Company may not assert staff comments as a defense in any proceedings initiated by the Commission or any person under federal securities laws of the United States. |
Very truly yours, CA, Inc. |
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/s/ C.H.R. DuPree | ||||
C.H.R. DuPree | ||||
Senior Vice President, Corporate Governance, and Corporate Secretary |
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31, 2010 | December 31, 2009 | December 31, 2010 | December 31, 2009 | |||||||||||||
GAAP Income from continuing operations before interest and income
taxes (1) |
$ | 338 | $ | 350 | $ | 969 | $ | 1,014 | ||||||||
GAAP Operating Margin (% of revenue) (2) |
29 | % | 31 | % | 29 | % | 31 | % | ||||||||
Non-GAAP Adjustments to Expenses |
||||||||||||||||
Costs of licensing and maintenance(3) |
1 | | 3 | 2 | ||||||||||||
Cost of professional services(3) |
1 | 1 | 3 | 2 | ||||||||||||
Amortization of capitalized software costs(4) |
23 | 13 | 67 | 39 | ||||||||||||
Selling and marketing(3) |
8 | 8 | 23 | 25 | ||||||||||||
General and administrative(3) |
7 | 7 | 17 | 29 | ||||||||||||
Product development and enhancements(3) |
4 | 6 | 15 | 17 | ||||||||||||
Depreciation and amortization of other intangible assets(5) |
18 | 13 | 51 | 39 | ||||||||||||
Other expenses (gains), net (6) |
| (6 | ) | 7 | 3 | |||||||||||
Restructuring and other (7) |
(9 | ) | 2 | (8 | ) | 4 | ||||||||||
Total Non-GAAP adjustment to operating expenses |
53 | 44 | 178 | 160 | ||||||||||||
Non-GAAP Income from continuing operations before interest and income
taxes |
391 | 394 | 1,147 | 1,174 | ||||||||||||
Non-GAAP Operating Margin (% of revenue) (8) |
34 | % | 35 | % | 34 | % | 36 | % | ||||||||
GAAP Interest expense, net |
10 | 23 | 35 | 62 | ||||||||||||
Non-GAAP adjustment to Interest expense (9) |
| (11 | ) | | (35 | ) | ||||||||||
Non-GAAP Interest Expense |
10 | 12 | 35 | 27 | ||||||||||||
GAAP Income tax expense |
128 | 71 | 289 | 283 | ||||||||||||
Non-GAAP Adjustment to Income Tax Expense(10)(11) |
(7 | ) | 65 | 77 | 124 | |||||||||||
Non-GAAP Income Tax Expense |
121 | 136 | 366 | 407 | ||||||||||||
Non-GAAP INCOME FROM CONTINUING OPERATIONS |
$ | 260 | $ | 246 | $ | 746 | $ | 740 | ||||||||
(1) | See the Condensed Consolidated Statements of Operations on Table 1 for a bridge from GAAP income from continuing operations before interest and income taxes to GAAP income from continuing operations | |
(2) | GAAP Operating Margin is calculated by dividing GAAP Income from continuing operations before interest and income taxes by total revenue (refer to Table 1 for total revenue) | |
(3) | Non-GAAP adjustment consists of Share-based Compensation | |
(4) | Non-GAAP adjustment consists of Purchased Software Amortization | |
(5) | Non-GAAP adjustment consists of Intangibles Amortization | |
(6) | Consists of gains and losses since inception of hedges that mature within the quarter, but exclude gains and losses of hedges that do not mature within the quarter. | |
(7) | Non-GAAP adjustment excludes $3 million of benefit related to the Fiscal 2010 restructuring plan for the nine months ended December 31, 2010 and includes $9M net gain from one-time stockholder derivative litigation settlements during the three months ended December 31, 2010. | |
(8) | Non-GAAP Operating Margin is calculated by dividing Non-GAAP Income from continuing operations before interest and income taxes by total revenue (refer Table 1 for total revenue amount) | |
(9) | Non-GAAP income from continuing operations has been adjusted to reflect the impact of the Companys 1.625% Convertible Senior Notes and stock awards outstanding for the three and nine months ended December 31, 2009. | |
(10) | The effective tax rate on non-GAAP income from continuing operations is the Companys provision for income taxes expressed as a percentage of non-GAAP income from continuing operations before income taxes. Such tax rates are determined based on an estimated effective full year tax rate after the adjustments for the impacts of certain discrete items (such as changes in tax rates, reconciliations of tax returns to tax provisions and resolutions of tax contingencies). | |
(11) | Includes an income tax benefit related to share based compensation of $7M and $20M for the three and nine months ended December 31, 2010, respectively, and $8M and $26M for the three and nine months ended December 31, 2009, respectively. | |
Refer to the discussion of non-GAAP financial measures included in the accompanying press release for additional information. | ||
Certain balances have been revised to reflect the discontinued operations associated with the sale of the Information Governance business. | ||
Certain non-material differences may arise versus actual from impact of rounding. |