þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) |
13-2857434 (I.R.S. Employer Identification Number) |
|
One CA Plaza Islandia, New York (Address of principal executive offices) |
11749 (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Title of Class Common Stock par value $0.10 per share |
Shares Outstanding as of October 20, 2011 493,391,769 |
Page | ||||||||
PART I. | ||||||||
1 | ||||||||
Item 1. | 2 | |||||||
2 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
Item 2. | 27 | |||||||
27 | ||||||||
29 | ||||||||
31 | ||||||||
32 | ||||||||
35 | ||||||||
46 | ||||||||
51 | ||||||||
Item 3. | 52 | |||||||
Item 4. | 52 | |||||||
PART II. | ||||||||
Item 1. | 53 | |||||||
Item 1A. | 53 | |||||||
Item 2. | 53 | |||||||
Item 3. | 54 | |||||||
Item 4. | 54 | |||||||
Item 5. | 54 | |||||||
Item 6. | 55 | |||||||
57 | ||||||||
EX-10.1 | ||||||||
EX-10.2 | ||||||||
EX-10.4 | ||||||||
EX-10.5 | ||||||||
EX-10.6 | ||||||||
EX-10.7 | ||||||||
EX-12.1 | ||||||||
EX-15 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
1
September 30, | March 31, | |||||||
2011 | 2011 | |||||||
(unaudited) | ||||||||
ASSETS |
||||||||
CURRENT ASSETS |
||||||||
Cash and cash equivalents |
$ | 2,203 | $ | 3,049 | ||||
Marketable securities current |
89 | 75 | ||||||
Trade accounts receivable, net |
601 | 849 | ||||||
Deferred income taxes current |
132 | 246 | ||||||
Other current assets |
189 | 152 | ||||||
TOTAL CURRENT ASSETS |
3,214 | 4,371 | ||||||
Marketable securities noncurrent |
90 | 104 | ||||||
Property and equipment, net of accumulated depreciation
of $671 and $632, respectively |
398 | 437 | ||||||
Goodwill |
5,885 | 5,688 | ||||||
Capitalized software and other intangible assets, net |
1,407 | 1,284 | ||||||
Deferred income taxes noncurrent |
197 | 284 | ||||||
Other noncurrent assets, net |
271 | 246 | ||||||
TOTAL ASSETS |
$ | 11,462 | $ | 12,414 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Current portion of long-term debt and loans payable |
$ | 18 | $ | 269 | ||||
Accounts payable |
95 | 100 | ||||||
Accrued salaries, wages and commissions |
272 | 293 | ||||||
Accrued expenses and other current liabilities |
377 | 395 | ||||||
Deferred revenue (billed or collected) current |
2,175 | 2,600 | ||||||
Taxes payable, other than income taxes payable current |
44 | 75 | ||||||
Federal, state and foreign income taxes payable current |
| 124 | ||||||
Deferred income taxes current |
64 | 68 | ||||||
TOTAL CURRENT LIABILITIES |
3,045 | 3,924 | ||||||
Long-term debt, net of current portion |
1,292 | 1,282 | ||||||
Federal, state and foreign income taxes payable noncurrent |
407 | 414 | ||||||
Deferred income taxes noncurrent |
63 | 64 | ||||||
Deferred revenue (billed or collected) noncurrent |
863 | 969 | ||||||
Other noncurrent liabilities |
125 | 141 | ||||||
TOTAL LIABILITIES |
5,795 | 6,794 | ||||||
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;
489,413,910 and 502,299,607 shares outstanding, respectively |
59 | 59 | ||||||
Additional paid-in capital |
3,575 | 3,615 | ||||||
Retained earnings |
4,532 | 4,106 | ||||||
Accumulated other comprehensive loss |
(133 | ) | (65 | ) | ||||
Treasury stock, at cost, 100,281,171 shares and 87,395,474 shares,
respectively |
(2,366 | ) | (2,095 | ) | ||||
TOTAL STOCKHOLDERS EQUITY |
5,667 | 5,620 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 11,462 | $ | 12,414 | ||||
2
For the Three | For the Six | |||||||||||||||
Months Ended | Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
REVENUE |
||||||||||||||||
Subscription and maintenance revenue |
$ | 1,022 | $ | 939 | $ | 2,029 | $ | 1,878 | ||||||||
Professional services |
96 | 79 | 186 | 157 | ||||||||||||
Software fees and other |
82 | 70 | 148 | 122 | ||||||||||||
TOTAL REVENUE |
1,200 | 1,088 | 2,363 | 2,157 | ||||||||||||
EXPENSES |
||||||||||||||||
Costs of licensing and maintenance |
71 | 66 | 138 | 133 | ||||||||||||
Cost of professional services |
91 | 75 | 179 | 146 | ||||||||||||
Amortization of capitalized software costs |
55 | 47 | 105 | 92 | ||||||||||||
Selling and marketing |
370 | 300 | 696 | 590 | ||||||||||||
General and administrative |
104 | 113 | 218 | 230 | ||||||||||||
Product development and enhancements |
140 | 125 | 258 | 253 | ||||||||||||
Depreciation and amortization of other intangible assets |
43 | 45 | 90 | 89 | ||||||||||||
Other (gains) expenses, net |
(7 | ) | 15 | 4 | 1 | |||||||||||
TOTAL EXPENSES BEFORE INTEREST
AND INCOME TAXES |
867 | 786 | 1,688 | 1,534 | ||||||||||||
Income from continuing operations before interest and income
taxes |
333 | 302 | 675 | 623 | ||||||||||||
Interest expense, net |
6 | 12 | 15 | 25 | ||||||||||||
Income from continuing operations before income taxes |
327 | 290 | 660 | 598 | ||||||||||||
Income tax expense |
91 | 71 | 196 | 158 | ||||||||||||
INCOME FROM CONTINUING OPERATIONS |
236 | 219 | 464 | 440 | ||||||||||||
Income (loss) from discontinued operations, net of income
taxes |
| 3 | 13 | (1 | ) | |||||||||||
NET INCOME |
$ | 236 | $ | 222 | $ | 477 | $ | 439 | ||||||||
BASIC INCOME PER SHARE |
||||||||||||||||
Income from continuing operations |
$ | 0.47 | $ | 0.43 | $ | 0.92 | $ | 0.85 | ||||||||
Income from discontinued operations |
| | .03 | | ||||||||||||
Net income |
$ | 0.47 | $ | 0.43 | $ | 0.95 | $ | 0.85 | ||||||||
Basic weighted average shares used in computation |
493 | 507 | 497 | 508 | ||||||||||||
DILUTED INCOME PER SHARE |
||||||||||||||||
Income from continuing operations |
$ | 0.47 | $ | 0.43 | $ | 0.92 | $ | 0.85 | ||||||||
Income from discontinued operations |
| | .03 | | ||||||||||||
Net income |
$ | 0.47 | $ | 0.43 | $ | 0.95 | $ | 0.85 | ||||||||
Diluted weighted average shares used in computation |
494 | 508 | 498 | 509 |
3
For the Six Months | ||||||||
Ended September 30, | ||||||||
2011 | 2010 | |||||||
OPERATING ACTIVITIES FROM CONTINUING OPERATIONS: |
||||||||
Net income |
$ | 477 | $ | 439 | ||||
(Income) loss from discontinued operations |
(13 | ) | 1 | |||||
Income from continuing operations |
464 | 440 | ||||||
Adjustments to reconcile income from continuing operations to net cash provided by
operating activities: |
||||||||
Depreciation and amortization |
195 | 181 | ||||||
Provision for deferred income taxes |
123 | 187 | ||||||
Provision for bad debts |
| 5 | ||||||
Share-based compensation expense |
41 | 40 | ||||||
Asset impairments and other non-cash items |
9 | (1 | ) | |||||
Foreign currency transaction gains |
(1 | ) | | |||||
Changes in other operating assets and liabilities, net of effect of acquisitions: |
||||||||
Decrease in trade and current installment accounts receivable, net |
255 | 273 | ||||||
Decrease in deferred revenue |
(483 | ) | (513 | ) | ||||
Decrease in taxes payable, net |
(215 | ) | (224 | ) | ||||
Increase (decrease) in accounts payable, accrued expenses and other |
10 | (2 | ) | |||||
Decrease in accrued salaries, wages and commissions |
(21 | ) | (109 | ) | ||||
Changes in other operating assets and liabilities |
(44 | ) | (26 | ) | ||||
NET CASH PROVIDED BY OPERATING ACTIVITIES CONTINUING OPERATIONS |
333 | 251 | ||||||
INVESTING ACTIVITIES FROM CONTINUING OPERATIONS: |
||||||||
Acquisitions of businesses, net of cash acquired, and purchased software |
(369 | ) | (28 | ) | ||||
Purchases of property and equipment |
(40 | ) | (47 | ) | ||||
Cash proceeds from divestiture of assets |
7 | 10 | ||||||
Capitalized software development costs |
(96 | ) | (73 | ) | ||||
Purchases of marketable securities |
(71 | ) | | |||||
Proceeds from the sale of marketable securities |
27 | | ||||||
Maturities of marketable securities |
43 | | ||||||
Other investing activities |
(1 | ) | (16 | ) | ||||
NET CASH USED IN INVESTING ACTIVITIES CONTINUING OPERATIONS |
(500 | ) | (154 | ) | ||||
FINANCING ACTIVITIES FROM CONTINUING OPERATIONS: |
||||||||
Dividends paid |
(50 | ) | (41 | ) | ||||
Purchases of common stock |
(353 | ) | (155 | ) | ||||
Debt borrowings |
164 | | ||||||
Debt repayments |
(353 | ) | (7 | ) | ||||
Exercise of common stock options and other |
11 | 4 | ||||||
NET CASH USED IN FINANCING ACTIVITIES CONTINUING OPERATIONS |
(581 | ) | (199 | ) | ||||
Effect of exchange rate changes on cash |
(85 | ) | 32 | |||||
NET CHANGE IN CASH AND CASH EQUIVALENTS CONTINUING OPERATIONS |
(833 | ) | (70 | ) | ||||
CASH USED IN OPERATING ACTIVITIES DISCONTINUED OPERATIONS |
(17 | ) | (4 | ) | ||||
CASH PROVIDED BY INVESTING ACTIVITIES DISCONTINUED OPERATIONS |
4 | 16 | ||||||
NET EFFECT OF DISCONTINUED OPERATIONS ON CASH AND CASH EQUIVALENTS |
(13 | ) | 12 | |||||
DECREASE IN CASH AND CASH EQUIVALENTS |
(846 | ) | (58 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
3,049 | 2,583 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 2,203 | $ | 2,525 | ||||
4
| 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, or quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and | |
| Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. |
5
ITKO | Estimated | |||||||||||
(dollars in millions) | Acquisition(2) | Other Acquisitions | Useful Life | |||||||||
Finite-lived intangible assets(1) |
$ | 6 | $ | 11 | 3-15 years | |||||||
Purchased software |
148 | 8 | 5-7 years | |||||||||
Goodwill |
192 | 20 | Indefinite | |||||||||
Deferred tax assets/(liabilities) |
(50 | ) | (3 | ) | | |||||||
Other assets net of other liabilities
assumed(3) |
21 | 3 | | |||||||||
Purchase Price |
$ | 317 | $ | 39 | ||||||||
(1) | Includes customer relationships and trade names. | |
(2) | Purchase price allocation is preliminary due to ongoing analysis to determine the fair value of acquired intangibles and the tax basis of acquired assets and liabilities. | |
(3) | Includes approximately $20 million of cash acquired relating to ITKO. |
6
Estimated | ||||||||
(dollars in millions) | Arcot | Useful Life | ||||||
Finite-lived intangible assets(1) |
$ | 39 | 2-5 years | |||||
Purchased software |
86 | 10 years | ||||||
Goodwill |
60 | Indefinite | ||||||
Deferred tax assets/(liabilities) |
(1 | ) | | |||||
Other assets net of other liabilities assumed |
13 | | ||||||
Purchase Price |
$ | 197 | ||||||
(1) | Includes customer relationships and trade names. |
Six Months Ended | ||||
September 30, 2011 | ||||
(in millions) | ||||
Subscription and maintenance revenue |
$ | 15 | ||
Total revenue |
$ | 15 | ||
Loss from operations of discontinued components, net of tax benefit
of $6 million |
$ | (10 | ) | |
Gain on disposal of discontinued components, net of taxes |
23 | |||
Income from discontinued operations, net of taxes |
$ | 13 | ||
7
Three Months Ended | Six Months Ended | |||||||
September 30, 2010 | September 30, 2010 | |||||||
(in millions) | ||||||||
Subscription and maintenance revenue |
$ | 22 | $ | 46 | ||||
Professional services |
| 1 | ||||||
Total revenue |
$ | 22 | $ | 47 | ||||
Income from operations of discontinued components, net of
tax expense of $2 million and $3 million, respectively |
$ | 3 | $ | 4 | ||||
Gain (loss) on disposal of discontinued components, net of
taxes |
| (5 | ) | |||||
Income (loss) from discontinued operations, net of taxes |
$ | 3 | $ | (1 | ) | |||
8
Fiscal 2012 Plan | Severance | |||
(in millions) | ||||
Accrued balance at March 31, 2011 |
$ | | ||
Activity for the period ended
September 30, 2011 |
||||
Expense |
44 | |||
Payments |
(12 | ) | ||
Accretion and other |
| |||
Accrued balance at September 30, 2011 |
$ | 32 | ||
Facilities | ||||||||
Fiscal 2010 Plan | Severance | Abandonment | ||||||
(in millions) | ||||||||
Accrued balance at March 31, 2010 |
$ | 46 | $ | 2 | ||||
Activity for the period ended
September 30, 2010 |
||||||||
Change in estimate |
(3 | ) | | |||||
Payments |
(30 | ) | | |||||
Accretion and other |
(1 | ) | | |||||
Accrued balance at September 30, 2010 |
$ | 12 | $ | 2 | ||||
Accrued balance at March 31, 2011 |
$ | 4 | $ | 1 | ||||
Activity for the period ended
September 30, 2011 |
||||||||
Change in estimate |
| | ||||||
Payments |
(2 | ) | | |||||
Accrued balance at September 30, 2011 |
$ | 2 | $ | 1 | ||||
Facilities | ||||||||
Fiscal 2007 Plan | Severance | Abandonment | ||||||
(in millions) | ||||||||
Accrued balance at March 31, 2010 |
$ | 8 | $ | 60 | ||||
Activity for the period ended
September 30, 2010 |
||||||||
Change in estimate |
1 | | ||||||
Payments |
(3 | ) | (9 | ) | ||||
Accrued balance at September 30, 2010 |
$ | 6 | $ | 51 | ||||
Accrued balance at March 31, 2011 |
$ | 4 | $ | 46 | ||||
Activity for the period ended
September 30, 2011 |
||||||||
Change in estimate |
| | ||||||
Payments |
(1 | ) | (6 | ) | ||||
Accretion and other |
| 1 | ||||||
Accrued balance at September 30, 2011 |
$ | 3 | $ | 41 | ||||
9
September 30, 2011 | ||||||||||||||||
(in millions) | ||||||||||||||||
Aggregate | Gross | Gross | ||||||||||||||
Cost | Unrealized | Unrealized | Aggregate | |||||||||||||
Basis | Gains | Losses | Fair Value | |||||||||||||
U.S. Treasury and agency
securities |
$ | 68 | $ | | $ | | $ | 68 | ||||||||
Municipal securities |
1 | | | 1 | ||||||||||||
Corporate debt securities |
110 | | | 110 | ||||||||||||
$ | 179 | $ | | $ | | $ | 179 | |||||||||
March 31, 2011 | ||||||||||||||||
(in millions) | ||||||||||||||||
Aggregate | Gross | Gross | ||||||||||||||
Cost | Unrealized | Unrealized | Aggregate | |||||||||||||
Basis | Gains | Losses | Fair Value | |||||||||||||
U.S. Treasury and agency
securities |
$ | 60 | $ | | $ | | $ | 60 | ||||||||
Municipal securities |
2 | | | 2 | ||||||||||||
Corporate debt securities |
117 | | | 117 | ||||||||||||
$ | 179 | $ | | $ | | $ | 179 | |||||||||
10
September 30, | March 31, | |||||||
2011 | 2011 | |||||||
(in millions) | ||||||||
Accounts receivable billed |
$ | 510 | $ | 758 | ||||
Accounts receivable unbilled |
84 | 86 | ||||||
Other receivables |
25 | 27 | ||||||
Less: Allowance for doubtful accounts |
(18 | ) | (22 | ) | ||||
Trade accounts receivable, net |
$ | 601 | $ | 849 | ||||
At September 30, 2011 | ||||||||||||
Gross | ||||||||||||
Amortizable | Accumulated | Net | ||||||||||
Assets | Amortization | Assets | ||||||||||
(in millions) | ||||||||||||
Purchased software products |
$ | 892 | $ | 213 | $ | 679 | ||||||
Capitalized development cost and other intangibles: |
||||||||||||
Internally developed software products |
744 | 224 | 520 | |||||||||
Other identified intangible assets subject to amortization |
399 | 191 | 208 | |||||||||
Total capitalized software and other intangible assets |
$ | 2,035 | $ | 628 | $ | 1,407 | ||||||
11
At March 31, 2011 | ||||||||||||
Gross | ||||||||||||
Amortizable | Accumulated | Net | ||||||||||
Assets | Amortization | Assets | ||||||||||
(in millions) | ||||||||||||
Purchased software products |
$ | 768 | $ | 198 | $ | 570 | ||||||
Capitalized development cost and other intangibles: |
||||||||||||
Internally developed software products |
693 | 205 | 488 | |||||||||
Other intangible assets subject to amortization |
652 | 440 | 212 | |||||||||
Other intangible assets not subject to amortization |
14 | | 14 | |||||||||
Total capitalized software costs and other intangible assets |
$ | 2,127 | $ | 843 | $ | 1,284 | ||||||
Year Ended March 31, | |||||||||||||||||||||
2012 | 2013 | 2014 | 2015 | 2016 | |||||||||||||||||
(in millions) | |||||||||||||||||||||
Capitalized software: |
|||||||||||||||||||||
Purchased |
$ | 102 | $ | 109 | $ | 101 | $ | 90 | $ | 88 | |||||||||||
Internally developed |
115 | 137 | 121 | 95 | 64 | ||||||||||||||||
Other identified intangible assets subject to amortization |
64 | 53 | 47 | 38 | 24 | ||||||||||||||||
Total |
$ | 281 | $ | 299 | $ | 269 | $ | 223 | $ | 176 | |||||||||||
Amounts | ||||
(in millions) | ||||
Balance at March 31, 2011 |
$ | 5,688 | ||
Revisions to purchase price allocation of prior year acquisitions |
(6 | ) | ||
Balance at March 31, 2011 as revised |
5,682 | |||
Amounts allocated to loss on discontinued operations |
(7 | ) | ||
Acquisitions |
212 | |||
Foreign currency translation adjustment |
(2 | ) | ||
Balance at September 30, 2011 |
$ | 5,885 | ||
12
September 30, | March 31, | |||||||
2011 | 2011 | |||||||
(in millions) | ||||||||
Current: |
||||||||
Subscription and maintenance |
$ | 2,020 | $ | 2,444 | ||||
Professional services |
142 | 145 | ||||||
Financing obligations and other |
13 | 11 | ||||||
Total deferred revenue (billed or collected) current |
2,175 | 2,600 | ||||||
Noncurrent: |
||||||||
Subscription and maintenance |
831 | 940 | ||||||
Professional services |
30 | 27 | ||||||
Financing obligations and other |
2 | 2 | ||||||
Total deferred revenue (billed or collected) noncurrent |
863 | 969 | ||||||
Total deferred revenue (billed or collected) |
$ | 3,038 | $ | 3,569 | ||||
Applicable margin on Base borrowing |
0.25 | % | ||
Applicable margin on Eurocurrency borrowing |
1.10 | % | ||
Facility commitment fee |
0.15 | % |
13
14
Amount of Net (Gain)/Loss Recognized in the | ||||||||
Condensed Consolidated Statements of Operations | ||||||||
(in millions) | ||||||||
Three Months Ended | Three Months Ended | |||||||
Location of Amounts Recognized | September 30, 2011 | September 30, 2010 | ||||||
Interest expense, net
interest rate swaps
designated as cash flow
hedges |
$ | | $ | 1 | ||||
Interest expense, net
interest rate swaps
designated as fair value
hedges |
$ | (3 | ) | $ | (3 | ) | ||
Other (gains) expenses, net
foreign currency
contracts |
$ | (6 | ) | $ | 21 |
Amount of Net (Gain)/Loss Recognized in the | ||||||||
Condensed Consolidated Statements of Operations | ||||||||
(in millions) | ||||||||
Six Months Ended | Six Months Ended | |||||||
Location of Amounts Recognized | September 30, 2011 | September 30, 2010 | ||||||
Interest expense, net
interest rate swaps
designated as cash flows
hedges |
$ | | $ | 3 | ||||
Interest expense, net
interest rate swaps
designated as fair value
hedges |
$ | (6 | ) | $ | (6 | ) | ||
Other (gains) expenses, net
foreign currency contracts
|
$ | 1 | $ | 8 |
15
At September 30, 2011 | At March 31, 2011 | |||||||||||||||||||||||
Fair Value | Estimated | Fair Value | Estimated | |||||||||||||||||||||
Measurement Using | Fair | Measurement Using | Fair | |||||||||||||||||||||
Input Types | Value | Input Types | Value | |||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Money market funds |
$ | 795 | $ | | $ | 795 | (1) | $ | 2,009 | $ | | $ | 2,009 | (2) | ||||||||||
Marketable securities(3) |
| 179 | 179 | | 179 | 179 | ||||||||||||||||||
Foreign exchange
derivatives(4) |
| 22 | 22 | | 7 | 7 | ||||||||||||||||||
Interest rate
derivatives(4) |
| 30 | 30 | | 15 | 15 | ||||||||||||||||||
Total Assets |
$ | 795 | $ | 231 | $ | 1,026 | $ | 2,009 | $ | 201 | $ | 2,210 | ||||||||||||
Liabilities: |
||||||||||||||||||||||||
Foreign exchange
derivatives(4) |
$ | | $ | 12 | $ | 12 | $ | | $ | 1 | $ | 1 | ||||||||||||
Total Liabilities |
$ | | $ | 12 | $ | 12 | $ | | $ | 1 | $ | 1 | ||||||||||||
(1) | At September 30, 2011, the Company had approximately $745 million and $50 million of investments in money market funds classified as Cash and cash equivalents and Other noncurrent assets, net for restricted cash amounts, respectively, on its Condensed Consolidated Balance Sheet. | |
(2) | At March 31, 2011, the Company had approximately $1,959 million and $50 million of investments in money market funds classified as Cash and cash equivalents and Other noncurrent assets, net for restricted cash amounts, respectively, on its Condensed Consolidated Balance Sheet. | |
(3) | See Note E, Marketable Securities for additional information. | |
(4) | See Note J, Derivatives for additional information. |
At September 30, 2011 | At March 31, 2011 | |||||||||||||||
(in millions) | (in millions) | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
Value | Fair Value | Value | Fair Value | |||||||||||||
Liabilities: |
||||||||||||||||
Total debt(1) |
$ | 1,310 | $ | 1,416 | $ | 1,551 | $ | 1,619 | ||||||||
Facilities abandonment reserve(2) |
$ | 45 | $ | 52 | $ | 52 | $ | 59 |
(1) | Estimated fair value of total debt was based on quoted prices for similar liabilities for which significant inputs are observable except for certain long-term lease obligations, for which fair value approximates carrying value. | |
(2) | Estimated fair value for the facilities abandonment reserve was determined using the Companys current incremental borrowing rate. At September 30, 2011 and March 31, 2011, the facilities abandonment reserve included approximately $12 million and $15 million, respectively, in Accrued expenses and other current liabilities and approximately $33 million and $37 million, respectively, in Other noncurrent liabilities on the Companys Condensed Consolidated Balance Sheets. |
16
17
Three Months | Six Months | |||||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in millions) | ||||||||||||||||
Net income |
$ | 236 | $ | 222 | $ | 477 | $ | 439 | ||||||||
Net unrealized gain on cash flow hedges, net of tax |
| 1 | | 2 | ||||||||||||
Foreign currency translation adjustments |
(85 | ) | 74 | (68 | ) | 40 | ||||||||||
Total comprehensive income |
$ | 151 | $ | 297 | $ | 409 | $ | 481 | ||||||||
Declaration Date | Dividend Per Share | Record Date | Total Amount | Payment Date | ||||||||||||
May 12, 2011 |
$ | 0.05 | May 23, 2011 | $ | 25 | June 16, 2011 | ||||||||||
August 3, 2011 |
$ | 0.05 | August 16, 2011 | $ | 25 | September 14, 2011 |
Declaration Date | Dividend Per Share | Record Date | Total Amount | Payment Date | ||||||||||||
May 12, 2010 |
$ | 0.04 | May 31, 2010 | $ | 21 | June 16, 2010 | ||||||||||
July 28, 2010 |
$ | 0.04 | August 9, 2010 | $ | 20 | August 19, 2010 |
18
Three | Six | |||||||||||||||
Months Ended | Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in millions, except per share amounts) | ||||||||||||||||
Basic income from continuing operations per common share: |
||||||||||||||||
Income from continuing operations |
$ | 236 | $ | 219 | $ | 464 | $ | 440 | ||||||||
Less: Income from continuing operations allocable to participating
securities |
(3 | ) | (3 | ) | (6 | ) | (5 | ) | ||||||||
Income from continuing operations allocable to common shares |
$ | 233 | $ | 216 | $ | 458 | $ | 435 | ||||||||
Weighted-average common shares outstanding |
493 | 507 | 497 | 508 | ||||||||||||
Basic income from continuing operations per common share |
$ | 0.47 | $ | 0.43 | $ | 0.92 | $ | 0.85 | ||||||||
Diluted income from continuing operations per common share: |
||||||||||||||||
Income from continuing operations |
$ | 236 | $ | 219 | $ | 464 | $ | 440 | ||||||||
Less: Income from continuing operations allocable to participating
securities |
(3 | ) | (3 | ) | (6 | ) | (5 | ) | ||||||||
Income from continuing operations allocable to common shares |
$ | 233 | $ | 216 | $ | 458 | $ | 435 | ||||||||
Weighted average shares outstanding and common share equivalents |
||||||||||||||||
Weighted average common shares outstanding |
493 | 507 | 497 | 508 | ||||||||||||
Weighted average effect of share-based payment awards |
1 | 1 | 1 | 1 | ||||||||||||
Denominator in calculation of diluted income per share |
494 | 508 | 498 | 509 | ||||||||||||
Diluted income from continuing operations per common share |
$ | 0.47 | $ | 0.43 | $ | 0.92 | $ | 0.85 |
19
Three Months | Six Months | |||||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(in millions) | ||||||||||||||||
Costs of licensing and maintenance |
$ | 1 | $ | 1 | $ | 2 | $ | 2 | ||||||||
Cost of professional services |
1 | 1 | 2 | 2 | ||||||||||||
Selling and marketing |
6 | 8 | 16 | 15 | ||||||||||||
General and administrative |
4 | 6 | 12 | 10 | ||||||||||||
Product development and enhancements |
4 | 5 | 9 | 11 | ||||||||||||
Share-based compensation expense before tax |
16 | 21 | 41 | 40 | ||||||||||||
Income tax benefit |
(6 | ) | (7 | ) | (14 | ) | (13 | ) | ||||||||
Net share-based compensation expense |
$ | 10 | $ | 14 | $ | 27 | $ | 27 | ||||||||
Weighted | ||||||||
Unrecognized | Average Period | |||||||
Compensation | Expected to be | |||||||
Costs | Recognized | |||||||
(in millions) | (in years) | |||||||
Stock option awards |
$ | 5 | 2.3 | |||||
Restricted stock units |
18 | 2.2 | ||||||
Restricted stock awards |
75 | 2.1 | ||||||
Performance share units |
31 | 2.8 | ||||||
Total unrecognized share-based compensation costs |
$ | 129 | 2.3 | |||||
20
Six Months | ||||||||
Ended September 30, | ||||||||
2011 | 2010 | |||||||
Weighted average fair value |
$ | 5.99 | $ | 5.55 | ||||
Dividend yield |
0.91 | % | 0.83 | % | ||||
Expected volatility factor(1) |
33 | % | 34 | % | ||||
Risk-free interest rate(2) |
1.7 | % | 1.8 | % | ||||
Expected life (in years)(3) |
4.5 | 4.5 |
(1) | Expected volatility is measured using historical daily price changes of the Companys stock over the respective expected term of the options and the implied volatility derived from the market prices of the Companys 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 Companys computation of expected life was determined based on the simplified method (the average of the vesting period and option term), due to changes in the vesting terms, the contractual lives and the population of employees granted options compared with the Companys historical grants. |
Three Months | Six Months | |||||||||||||||
Ended September 30, | Ended September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(shares in millions) | ||||||||||||||||
RSUs |
||||||||||||||||
Shares |
| | (1) | 0.7 | 0.5 | |||||||||||
Weighted Avg.
Grant Date
Fair Value
(2) |
| $ | 18.08 | $ | 24.08 | $ | 21.23 | |||||||||
RSAs |
||||||||||||||||
Shares |
| (1) | 0.1 | 3.6 | 4.7 | |||||||||||
Weighted Avg.
Grant Date
Fair Value
(3) |
$ | 22.47 | $ | 18.66 | $ | 24.65 | $ | 21.39 |
(1) | Less than 0.1 million. | |
(2) | The fair value is based on the quoted market value of the Companys common stock on the grant date reduced by the present value of dividends expected to be paid on the Companys common stock prior to vesting of the RSUs, which is calculated using a risk free interest rate. | |
(3) | The fair value is based on the quoted market value of the Companys common stock on the grant date. |
21
22
Three Months Ended September 30, 2011 | Mainframe | Enterprise | ||||||||||||||
(in millions) | Solutions | Solutions | Services | Total | ||||||||||||
Revenue |
$ | 655 | $ | 449 | $ | 96 | $ | 1,200 | ||||||||
Expenses |
308 | 422 | 92 | 822 | ||||||||||||
Segment profit |
$ | 347 | $ | 27 | $ | 4 | $ | 378 | ||||||||
Segment operating margin |
53 | % | 6 | % | 4 | % | 32 | % | ||||||||
Depreciation and amortization |
$ | 25 | $ | 32 | $ | | $ | 57 |
23
Segment profit |
$ | 378 | ||
Less: |
||||
Amortization of purchased software |
26 | |||
Amortization of other intangible assets |
15 | |||
Share-based compensation expense |
16 | |||
Other unallocated operating (gains) expenses, net(1) |
(12 | ) | ||
Interest expense, net |
6 | |||
Income from continuing operations before income taxes |
$ | 327 | ||
(1) | Other unallocated operating expenses, net consists of restructuring costs associated with the Companys Fiscal 2007 Plan, hedging (gains) losses, and other miscellaneous costs. |
Six Months Ended September 30, 2011 | Mainframe | Enterprise | ||||||||||||||
(in millions) | Solutions | Solutions | Services | Total | ||||||||||||
Revenue |
$ | 1,301 | $ | 876 | $ | 186 | $ | 2,363 | ||||||||
Expenses |
584 | 804 | 180 | 1,568 | ||||||||||||
Segment profit |
$ | 717 | $ | 72 | $ | 6 | $ | 795 | ||||||||
Segment operating margin |
55 | % | 8 | % | 3 | % | 34 | % | ||||||||
Depreciation and amortization |
$ | 49 | $ | 63 | $ | | 112 |
Segment profit |
$ | 795 | ||
Less: |
||||
Amortization of purchased software |
49 | |||
Amortization of other intangible assets |
34 | |||
Share-based compensation expense |
41 | |||
Other unallocated operating (gains) expenses, net(1) |
(4 | ) | ||
Interest expense, net |
15 | |||
Income from continuing operations before income taxes |
$ | 660 | ||
(1) | Other unallocated operating expenses, net consists of restructuring costs associated with the Companys Fiscal 2007 Plan, hedging (gains) losses, and other miscellaneous costs. |
24
Three Months Ended September 30, 2010 | Mainframe | Enterprise | ||||||||||||||
(in millions) | Solutions | Solutions | Services | Total | ||||||||||||
Revenue |
$ | 615 | $ | 394 | $ | 79 | $ | 1,088 | ||||||||
Expenses |
265 | 362 | 77 | 704 | ||||||||||||
Segment profit |
$ | 350 | $ | 32 | $ | 2 | $ | 384 | ||||||||
Segment operating margin |
57 | % | 8 | % | 3 | % | 35 | % | ||||||||
Depreciation and amortization |
$ | 25 | $ | 28 | $ | | $ | 53 |
Segment profit |
$ | 384 | ||
Less: |
||||
Amortization of purchased software |
22 | |||
Amortization of other intangible assets |
17 | |||
Share-based compensation expense |
21 | |||
Other unallocated operating (gains) expenses, net(1) |
22 | |||
Interest expense, net |
12 | |||
Income from continuing operations before income taxes |
$ | 290 | ||
(1) | Other unallocated operating gains, net consists of restructuring costs associated with the Companys Fiscal 2007 Plan, hedging (gains) losses, and other miscellaneous costs. |
Six Months Ended September 30, 2010 | Mainframe | Enterprise | ||||||||||||||
(in millions) | Solutions | Solutions | Services | Total | ||||||||||||
Revenue |
$ | 1,230 | $ | 770 | $ | 157 | $ | 2,157 | ||||||||
Expenses |
545 | 713 | 151 | 1,409 | ||||||||||||
Segment profit |
$ | 685 | $ | 57 | $ | 6 | $ | 748 | ||||||||
Segment operating margin |
56 | % | 7 | % | 4 | % | 35 | % | ||||||||
Depreciation and amortization |
$ | 51 | $ | 53 | $ | | $ | 104 |
Segment profit |
$ | 748 | ||
Less: |
||||
Amortization of purchased software |
44 | |||
Amortization of other intangible assets |
33 | |||
Share-based compensation expense |
40 | |||
Other unallocated operating (gains) expense, net(1) |
8 | |||
Interest expense, net |
25 | |||
Income from continuing operations before income taxes |
$ | 598 | ||
(1) | Other unallocated operating gains, net consists of restructuring costs associated with the Companys Fiscal 2007 Plan, hedging (gains) losses, and other miscellaneous costs. |
25
Three Months Ended | Six Months Ended | Three Months Ended | Six Months Ended | |||||||||||||
(in millions) | September 30, 2011 | September 30, 2011 | September 30, 2010 | September 30, 2010 | ||||||||||||
United States |
$ | 690 | $ | 1,362 | $ | 622 | $ | 1,235 | ||||||||
International |
510 | 1,001 | 466 | 922 | ||||||||||||
Total revenue |
$ | 1,200 | $ | 2,363 | $ | 1,088 | $ | 2,157 | ||||||||
26
27
28
| Mainframe Solutions Our Mainframe Solutions segment addresses the mainframe market and is focused on making significant investments in order to be innovative in key management disciplines across our broad portfolio of products. Ongoing development is guided by customer needs, our cross-enterprise management philosophy and our Mainframe 2.0 strategy, which offers management capabilities designed to appeal to the next generation of mainframe staff while also offering productivity improvements to todays mainframe experts. Our mainframe business assists customers by addressing three major challenges: lowering costs, providing high service levels by sustaining critical workforce skills and increasing agility to help deliver on business goals. | ||
| Enterprise Solutions Our Enterprise Solutions segment includes products that operate on non-mainframe platforms, such as service assurance, security (identity and access management), project and portfolio management, service management, virtualization and service automation, SaaS, and cloud offerings. Our offerings help customers address their regulatory compliance demands, privacy needs, and internal security policies. Enterprise Solutions also focuses on delivering growth to the Company in the form of new customer acquisitions and revenue, while leveraging non-traditional routes-to-market and delivery models. | ||
| Services Our Services segment offers implementation, consulting, education and training services to customers, which is intended to promote a seamless customer experience and to increase the value that customers realize from our solutions. |
29
30
| In September 2011, we announced the appointment of Jens Alder to our Board of Directors. Mr. Alder currently serves as chairman of Sanitas Krankenversicherung, one of Switzerlands largest health insurers, and RTX Telecom A/S, a telecommunications component and handset producer based in Denmark. | ||
| In September 2011, we announced the appointment of Marco Comastri as president, Europe, Middle East and Africa. Mr. Comastri joins the Company from Poste Italiane, Italys largest communications service provider, where he was chief executive officer of the technology services division. He also held management positions at Microsoft Corporation and International Business Machines Corporation. | ||
| In August 2011, we acquired Interactive TKO, Inc., a leading provider of service simulation solutions for developing applications in composite and cloud environments. |
31
Second Quarter | ||||||||||||||||
Comparison | ||||||||||||||||
Fiscal Year 2012 versus | ||||||||||||||||
Fiscal Year 2011 | ||||||||||||||||
Percent | ||||||||||||||||
2012 | 2011(1) | Change | Change | |||||||||||||
(dollars in millions) | ||||||||||||||||
Total revenue |
$ | 1,200 | $ | 1,088 | $ | 112 | 10 | % | ||||||||
Income from continuing operations |
$ | 236 | $ | 219 | $ | 17 | 8 | % | ||||||||
Cash provided by operating activities continuing
operations |
$ | 190 | $ | 129 | $ | 61 | 47 | % | ||||||||
Total bookings |
$ | 972 | $ | 1,001 | $ | (29 | ) | (3 | )% | |||||||
Subscription and maintenance bookings |
$ | 761 | $ | 848 | $ | (87 | ) | (10 | )% | |||||||
Weighted average subscription and maintenance license
agreement duration in years |
3.59 | 3.47 | 0.12 | 3 | % |
First Half Comparison | ||||||||||||||||
Fiscal Year 2012 versus | ||||||||||||||||
Fiscal Year 2011 | ||||||||||||||||
Percent | ||||||||||||||||
2012 | 2011(1) | Change | Change | |||||||||||||
(dollars in millions) | ||||||||||||||||
Total revenue |
$ | 2,363 | $ | 2,157 | $ | 206 | 10 | % | ||||||||
Income from continuing operations |
$ | 464 | $ | 440 | $ | 24 | 5 | % | ||||||||
Cash provided by operating activities continuing
operations |
$ | 333 | $ | 251 | $ | 82 | 33 | % | ||||||||
Total bookings |
$ | 1,837 | $ | 1,733 | $ | 104 | 6 | % | ||||||||
Subscription and maintenance bookings |
$ | 1,449 | $ | 1,467 | $ | (18 | ) | (1 | )% | |||||||
Weighted average subscription and maintenance license
agreement duration in years |
3.44 | 3.24 | 0.20 | 6 | % |
Change | Change | |||||||||||||||||||
Sept. 30, | March 31, | From | Sept. 30, | From Prior | ||||||||||||||||
2011 | 2011(1) | Year End | 2010(1) | Year Quarter | ||||||||||||||||
(dollars in millions) | ||||||||||||||||||||
Cash, cash equivalents and
marketable securities(2) |
$ | 2,382 | $ | 3,228 | $ | (846 | ) | $ | 2,525 | $ | (143 | ) | ||||||||
Total debt |
$ | 1,310 | $ | 1,551 | $ | (241 | ) | $ | 1,567 | $ | (257 | ) | ||||||||
Total expected future cash collections from
committed contracts(3) |
$ | 5,630 | $ | 6,043 | $ | (413 | ) | $ | 5,396 | $ | 234 | |||||||||
Total revenue backlog(3) |
$ | 8,067 | $ | 8,763 | $ | (696 | ) | $ | 7,773 | $ | 294 | |||||||||
Total current revenue backlog(3) |
$ | 3,546 | $ | 3,727 | $ | (181 | ) | $ | 3,418 | $ | 128 |
(1) | Previously reported information has been adjusted to exclude discontinued operations. | |
(2) | At September 30, 2011, marketable securities was $179 million. At March 31, 2011, marketable securities were $179 million. At September 30, 2010, marketable securities were less than $1 million. | |
(3) | 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, billings backlog and revenue backlog. |
32
33
34
Second Quarter Comparison - Fiscal Year 2012 versus Fiscal Year 2011 | ||||||||||||||||||||||||
Percentage | ||||||||||||||||||||||||
of | Percentage of | |||||||||||||||||||||||
Dollar | Dollar | Total | ||||||||||||||||||||||
Change | Change | Revenue | ||||||||||||||||||||||
2012 | 2011(1) | 2012/2011 | 2012/2011 | 2012 | 2011 | |||||||||||||||||||
(dollars in millions) | ||||||||||||||||||||||||
Revenue |
||||||||||||||||||||||||
Subscription and maintenance revenue |
$ | 1,022 | $ | 939 | $ | 83 | 9 | % | 85 | % | 87 | % | ||||||||||||
Professional services |
96 | 79 | 17 | 22 | 8 | 7 | ||||||||||||||||||
Software fees and other |
82 | 70 | 12 | 17 | 7 | 6 | ||||||||||||||||||
Total revenue |
1,200 | 1,088 | 112 | 10 | 100 | 100 | ||||||||||||||||||
Expenses |
||||||||||||||||||||||||
Costs of licensing and maintenance |
71 | 66 | 5 | 8 | 6 | 6 | ||||||||||||||||||
Cost of professional services |
91 | 75 | 16 | 21 | 8 | 7 | ||||||||||||||||||
Amortization of capitalized software costs |
55 | 47 | 8 | 17 | 5 | 4 | ||||||||||||||||||
Selling and marketing |
370 | 300 | 70 | 23 | 31 | 28 | ||||||||||||||||||
General and administrative |
104 | 113 | (9 | ) | (8 | ) | 9 | 10 | ||||||||||||||||
Product development and enhancements |
140 | 125 | 15 | 12 | 12 | 11 | ||||||||||||||||||
Depreciation and amortization of
other intangible assets |
43 | 45 | (2 | ) | (4 | ) | 4 | 4 | ||||||||||||||||
Other (gains) expenses, net |
(7 | ) | 15 | (22 | ) | NM | (1 | ) | 1 | |||||||||||||||
Total expenses before interest and income
taxes |
867 | 786 | 81 | 10 | 72 | 72 | ||||||||||||||||||
Income before interest and income taxes |
333 | 302 | 31 | 10 | 28 | 28 | ||||||||||||||||||
Interest expense, net |
6 | 12 | (6 | ) | (50 | ) | 1 | 1 | ||||||||||||||||
Income before income taxes |
327 | 290 | 37 | 13 | 27 | 27 | ||||||||||||||||||
Income tax expense |
91 | 71 | 20 | 28 | 8 | 7 | ||||||||||||||||||
Income from continuing operations |
$ | 236 | $ | 219 | $ | 17 | 8 | % | 20 | % | 20 | % | ||||||||||||
Note | Amounts may not add to their respective totals due to rounding. |
(1) | Previously reported information has been adjusted to exclude discontinued operations. |
35
First Half Comparison - Fiscal Year 2012 versus Fiscal Year 2011 | ||||||||||||||||||||||||
Percentage | ||||||||||||||||||||||||
of | Percentage of | |||||||||||||||||||||||
Dollar | Dollar | Total | ||||||||||||||||||||||
Change | Change | Revenue | ||||||||||||||||||||||
2012 | 2011(1) | 2012/2011 | 2012/2011 | 2012 | 2011 | |||||||||||||||||||
(dollars in millions) | ||||||||||||||||||||||||
Revenue |
||||||||||||||||||||||||
Subscription and maintenance revenue |
$ | 2,029 | $ | 1,878 | $ | 151 | 8 | % | 86 | % | 87 | % | ||||||||||||
Professional services |
186 | 157 | 29 | 18 | 8 | 7 | ||||||||||||||||||
Software fees and other |
148 | 122 | 26 | 21 | 6 | 6 | ||||||||||||||||||
Total revenue |
2,363 | 2,157 | 206 | 10 | 100 | 100 | ||||||||||||||||||
Expenses |
||||||||||||||||||||||||
Costs of licensing and maintenance |
138 | 133 | 5 | 4 | 6 | 6 | ||||||||||||||||||
Cost of professional services |
179 | 146 | 33 | 23 | 8 | 7 | ||||||||||||||||||
Amortization of capitalized software costs |
105 | 92 | 13 | 14 | 4 | 4 | ||||||||||||||||||
Selling and marketing |
696 | 590 | 106 | 18 | 29 | 27 | ||||||||||||||||||
General and administrative |
218 | 230 | (12 | ) | (5 | ) | 9 | 11 | ||||||||||||||||
Product development and enhancements |
258 | 253 | 5 | 2 | 11 | 12 | ||||||||||||||||||
Depreciation and amortization of
other intangible assets |
90 | 89 | 1 | 1 | 4 | 4 | ||||||||||||||||||
Other expenses, net |
4 | 1 | 3 | NM | | | ||||||||||||||||||
Total expenses before interest and income
taxes |
1,688 | 1,534 | 154 | 10 | 71 | 71 | ||||||||||||||||||
Income before interest and income taxes |
675 | 623 | 52 | 8 | 29 | 29 | ||||||||||||||||||
Interest expense, net |
15 | 25 | (10 | ) | (40 | ) | 1 | 1 | ||||||||||||||||
Income before income taxes |
660 | 598 | 62 | 10 | 28 | 28 | ||||||||||||||||||
Income tax expense |
196 | 158 | 38 | 24 | 8 | 7 | ||||||||||||||||||
Income from continuing operations |
$ | 464 | $ | 440 | $ | 24 | 5 | % | 20 | % | 20 | % | ||||||||||||
Note | Amounts may not add to their respective totals due to rounding. |
(1) | Previously reported information has been adjusted to exclude discontinued operations. |
36
37
Second Quarter Comparison Fiscal Year 2012 | ||||||||||||||||||||||||
versus Fiscal Year 2011 | ||||||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||||||
2012 | % | 2011(1) | % | Change | Change | |||||||||||||||||||
(dollars in millions) | ||||||||||||||||||||||||
United States |
$ | 690 | 58 | % | $ | 622 | 57 | % | $ | 68 | 11 | % | ||||||||||||
International |
510 | 42 | % | 466 | 43 | % | 44 | 9 | % | |||||||||||||||
$ | 1,200 | 100 | % | $ | 1,088 | 100 | % | $ | 112 | 10 | % | |||||||||||||
(1) | Previously reported information has been adjusted to exclude discontinued operations. |
First Half Comparison Fiscal Year 2012 | ||||||||||||||||||||||||
versus Fiscal Year 2011 | ||||||||||||||||||||||||
Dollar | Percentage | |||||||||||||||||||||||
2012 | % | 2011(1) | % | Change | Change | |||||||||||||||||||
(dollars in millions) | ||||||||||||||||||||||||
United States |
$ | 1,362 | 58 | % | $ | 1,235 | 57 | % | $ | 127 | 10 | % | ||||||||||||
International |
1,001 | 42 | % | 922 | 43 | % | 79 | 9 | % | |||||||||||||||
$ | 2,363 | 100 | % | $ | 2,157 | 100 | % | $ | 206 | 10 | % | |||||||||||||
(1) | Previously reported information has been adjusted to exclude discontinued operations. |
38
39
40
41
42
Three Months Ended September 30, 2011 | Mainframe | Enterprise | ||||||||||
(in millions) | Solutions | Solutions | Services | |||||||||
Revenue |
$ | 655 | $ | 449 | $ | 96 | ||||||
Expenses |
308 | 422 | 92 | |||||||||
Segment profit |
$ | 347 | $ | 27 | $ | 4 | ||||||
Segment operating margin |
53 | % | 6 | % | 4 | % |
Six Months Ended September 30, 2011 | Mainframe | Enterprise | ||||||||||
(in millions) | Solutions | Solutions | Services | |||||||||
Revenue |
$ | 1,301 | $ | 876 | $ | 186 | ||||||
Expenses |
584 | 804 | 180 | |||||||||
Segment profit |
$ | 717 | $ | 72 | $ | 6 | ||||||
Segment operating margin |
55 | % | 8 | % | 3 | % |
Three Months Ended September 30, 2010 | Mainframe | Enterprise | ||||||||||
(in millions) | Solutions | Solutions | Services | |||||||||
Revenue |
$ | 615 | $ | 394 | $ | 79 | ||||||
Expenses |
265 | 362 | 77 | |||||||||
Segment profit |
$ | 350 | $ | 32 | $ | 2 | ||||||
Segment operating margin |
57 | % | 8 | % | 3 | % |
Six Months Ended September 30, 2010 | Mainframe | Enterprise | ||||||||||
(in millions) | Solutions | Solutions ` | Services | |||||||||
Revenue |
$ | 1,230 | $ | 770 | $ | 157 | ||||||
Expenses |
545 | 713 | 151 | |||||||||
Segment profit |
$ | 685 | $ | 57 | $ | 6 | ||||||
Segment operating margin |
56 | % | 7 | % | 4 | % |
43
44
45
46
47
Sept. 30, | March 31, | Sept. 30, | ||||||||||
(Amounts in millions) | 2011 | 2011 | 2010(1) | |||||||||
Billings backlog: |
||||||||||||
Amounts to be billed current |
$ | 2,171 | $ | 2,234 | $ | 1,963 | ||||||
Amounts to be billed noncurrent |
2,858 | 2,960 | 2,736 | |||||||||
Total billings backlog |
$ | 5,029 | $ | 5,194 | $ | 4,699 | ||||||
Revenue backlog: |
||||||||||||
Revenue to be recognized within the
next
12 months current |
$ | 3,546 | $ | 3,727 | $ | 3,418 | ||||||
Revenue to be recognized beyond the
next
12 months noncurrent |
4,521 | 5,036 | 4,355 | |||||||||
Total revenue backlog |
$ | 8,067 | $ | 8,763 | $ | 7,773 | ||||||
Deferred revenue (billed or collected) |
$ | 3,038 | $ | 3,569 | $ | 3,074 | ||||||
Unearned revenue yet to be billed |
5,029 | 5,194 | 4,699 | |||||||||
Total revenue backlog |
$ | 8,067 | $ | 8,763 | $ | 7,773 | ||||||
Note: | Revenue backlog includes deferred subscription and maintenance, professional services and software fees and other revenue. |
(1) | Previously reported information has been adjusted to exclude discontinued operations. |
Sept. 30, | March 31, | Sept. 30, | ||||||||||
(Amounts in millions) | 2011 | 2011 | 2010(1) | |||||||||
Expected future cash collections: |
||||||||||||
Total billings backlog |
$ | 5,029 | $ | 5,194 | $ | 4,699 | ||||||
Trade accounts receivable, net |
601 | 849 | 697 | |||||||||
Total expected future cash collections |
$ | 5,630 | $ | 6,043 | $ | 5,396 | ||||||
(1) | Previously reported information has been adjusted to exclude discontinued operations. |
48
Second Quarter of Fiscal | Change | |||||||||||
2012 | 2011(1) | 2012/ 2011 | ||||||||||
(in millions) | ||||||||||||
Cash collections from
billings(2) |
$ | 978 | $ | 903 | $ | 75 | ||||||
Vendor disbursements and
payroll(2) |
(768 | ) | (709 | ) | (59 | ) | ||||||
Income tax (payments) receipts,
net |
(23 | ) | (47 | ) | 24 | |||||||
Other disbursements,
net(3) |
3 | (18 | ) | 21 | ||||||||
Cash generated by continuing
operating activities |
$ | 190 | $ | 129 | $ | 61 | ||||||
(1) | Previously reported information has been adjusted to exclude discontinued operations. | |
(2) | Amounts include VAT and sales taxes. | |
(3) | Amounts include interest, severance and exit costs and miscellaneous receipts and disbursements. |
First Half of Fiscal | Change | |||||||||||
2012 | 2011(1) | 2012/ 2011 | ||||||||||
(in millions) | ||||||||||||
Cash collections from
billings(2) |
$ | 2,240 | $ | 2,015 | $ | 225 | ||||||
Vendor disbursements and
payroll(2) |
(1,655 | ) | (1,573 | ) | (82 | ) | ||||||
Income tax (payments) receipts,
net |
(221 | ) | (134 | ) | (87 | ) | ||||||
Other disbursements,
net(3) |
(31 | ) | (57 | ) | 26 | |||||||
Cash generated by continuing
operating activities |
$ | 333 | $ | 251 | $ | 82 | ||||||
(1) | Previously reported information has been adjusted to exclude discontinued operations. | |
(2) | Amounts include VAT and sales taxes. | |
(3) | Amounts include interest, severance and exit costs and miscellaneous receipts and disbursements. |
49
September 30, | March 31, | |||||||
2011 | 2011 | |||||||
(in millions) | ||||||||
Revolving credit facility due August 2012 |
$ | | $ | $250 | ||||
Revolving credit facility due August 2016 |
| | ||||||
5.375% Senior Notes due November 2019 |
750 | 750 | ||||||
6.125%
Senior Notes due December 2014, net of unamortized premium from fair value hedge of
$30 and $15 |
530 | 515 | ||||||
Other indebtedness, primarily capital leases |
36 | 42 | ||||||
Unamortized discount for Notes |
(6 | ) | (6 | ) | ||||
Total debt outstanding |
1,310 | 1,551 | ||||||
Less the current portion |
(18 | ) | (269 | ) | ||||
Total long-term debt portion |
$ | 1,292 | $ | 1,282 | ||||
50
September 30, | March 31, | |||||||
2011 | 2011 | |||||||
(in millions) | ||||||||
Borrowings |
$ | 164 | $ | $260 | ||||
Repayments |
(97 | ) | (260 | ) | ||||
Foreign currency exchange effect |
(6 | ) | | |||||
Total borrowing positions outstanding(1) |
$ | 61 | $ | | ||||
(1) | Included in the Accrued expenses and other current liabilities line item on the Companys Condensed Consolidated Balance Sheet. |
51
52
Approximate | ||||||||||||||||
Total Number | Dollar Value of | |||||||||||||||
of Shares | Shares that | |||||||||||||||
Purchased as | May Yet Be | |||||||||||||||
Total Number | Average | Part of Publicly | Purchased Under | |||||||||||||
of Shares | Price Paid | Announced Plans | the Plans | |||||||||||||
Period | Purchased | per Share | or Programs | or Programs | ||||||||||||
(amounts in thousands, except average price paid per share) | ||||||||||||||||
July 1, 2011 - July 31, 2011 |
1,808 | $ | 22.51 | 1,808 | $ | 591,100 | ||||||||||
August 1, 2011 - August 31, 2011 |
4,680 | $ | 19.91 | 4,680 | $ | 497,921 | ||||||||||
September 1, 2011 - September 30,
2011 |
3,258 | $ | 20.29 | 3,258 | $ | 431,807 | ||||||||||
Total |
9,746 | 9,746 | ||||||||||||||
53
54
Regulation S-K | ||||||
Exhibit Number | ||||||
3.1 | Amended and Restated Certificate of Incorporation.
|
Filed as Exhibit 3.3 to the Companys Current Report on Form 8-K dated March 6, 2006.* | ||||
3.2 | By-Laws of the Company, as amended.
|
Filed as Exhibit 3.1 to the Companys Current Report on Form 8-K dated February 23, 2007.* | ||||
10.1 | ** | Letter dated April 26, 2011 from the Company to
Peter Griffiths regarding terms of employment.
|
Filed herewith. | |||
10.2 | ** | Schedules A, B, and C (as amended) to CA, Inc.
Change in Control Severance Policy.
|
Filed herewith. | |||
10.3 | ** | CA, Inc. 2011 Incentive Plan.
|
Filed as Exhibit B to the Companys definitive Proxy Statement filed June 10, 2011.* | |||
10.4 | ** | Form of Award Agreement under the CA, Inc. 2011
Incentive Plan Restricted Stock Units.
|
Filed herewith. | |||
10.5 | ** | Form of Award Agreement under the CA, Inc. 2011
Incentive Plan Restricted Stock Awards.
|
Filed herewith. | |||
10.6 | ** | Form of Award Agreement under the CA, Inc. 2011
Incentive Plan Restricted Stock Awards
(special retirement vesting).
|
Filed herewith. | |||
10.7 | ** | Form of Award Agreement under the CA, Inc. 2011
Incentive Plan Nonqualified Stock Options.
|
Filed herewith. | |||
10.8 | ** | CA, Inc. 2012 Employee Stock Purchase Plan.
|
Filed as Exhibit C to the Companys definitive Proxy Statement filed June 10, 2011.* | |||
10.9 | Credit Agreement dated August 19, 2011.
|
Filed as Exhibit 10.1 to the Companys Current Report on Form 8-K dated August 19, 2011.* | ||||
12.1 | Statement of Ratios of Earnings to Fixed Charges.
|
Filed herewith. | ||||
15 | Accountants acknowledgment letter.
|
Filed herewith. | ||||
31.1 | Certification of the Principal Executive Officer
pursuant to §302 of the Sarbanes-Oxley Act of
2002.
|
Filed herewith. | ||||
31.2 | Certification of the Principal Financial Officer
pursuant to §302 of the Sarbanes-Oxley Act of
2002.
|
Filed herewith. | ||||
32 | Certification pursuant to §906 of the
Sarbanes-Oxley Act of 2002.
|
Furnished herewith. |
55
Regulation S-K | ||||||
Exhibit Number | ||||||
101 | The following financial statements from CA,
Inc.s Quarterly Report on Form 10-Q for the
quarterly period ended, September 30, 2011
formatted in XBRL (eXtensible Business Reporting
Language):
|
Filed herewith. | ||||
(i) Unaudited Condensed Consolidated Balance
Sheets September 30, 2011 and March 31, 2011. |
||||||
(ii) Unaudited Condensed Consolidated Statements
of Operations Three and Six Months Ended
September 30, 2011 and 2010. |
||||||
(iii) Unaudited Condensed Consolidated Statements
of Cash Flows Six Months Ended September 30,
2011 and 2010. |
||||||
(iv) Notes to Unaudited Condensed Consolidated
Financial Statements September 30, 2011. |
* | Incorporated herein by reference. | |
** | Management contract or compensatory plan or arrangement. |
56
CA, INC. |
||||
By: | /s/ William E. McCracken | |||
William E. McCracken | ||||
Chief Executive Officer | ||||
By: | /s/ Richard J. Beckert | |||
Richard J. Beckert | ||||
Executive Vice President and Chief Financial Officer | ||||
57
Health Care
|
Healthcare and prescription drug coverage is available effective on the first day of employment for employees and their eligible dependents. Employee only (Single) and family coverage levels are available. The Healthcare benefit supplements the Provincial Health Insurance Plan for most medical related costs. | |
Dental Plan
|
Dental coverage is available effective on the first day of employment for employees and their eligible dependents. | |
Basic Life Insurance & Accidental Death
and Dismemberment (AD&D)
|
CA provides Basic Life and Accidental Death and Dismemberment in the amounts of $50,000 each. Coverage is effective on the employees date of hire. | |
Optional Life Insurance
|
||
Employee
|
Optional life insurance is available from 1x to 5x the employees annual base salary to a maximum of $960,000. Evidence of insurability may be required in other circumstances. | |
Spouse
|
Spouse (or common law spouse subject to eligibility requirements) Optional life insurance is available in increments of $10,000 up to $250,000. Evidence of insurability may be required in other circumstances. | |
Child(ren)
|
Child(ren) Optional life insurance coverage is available in amounts of either $10,000 or $15,000 per child. Evidence of insurability may be required in other circumstances. |
Short Term Disability (STD)
|
The STD plan has an elimination period of 5 days. Once approved CA will pay the first 6 weeks at 100% of base salary followed by 10 weeks at 60% of base salary for a total of 16 weeks. | |
Long Term Disability (LTD) Mandatory benefit |
The LTD plan offers a benefit equal to 60% of the 1st $3,000 of an employees monthly base salary and 45% of the next $14,889 of an employees monthly base salary. There is an overall benefit limit under the LTD plan of $8,500 per month of which the non-evidence limit is $7,500 per month | |
Auto and Home Insurance
|
Group discounted auto and insurance policies are available to employees and their dependents through Aon Group Advantage. | |
Pet Insurance
|
Pet insurance coverage is available to employees and their dependents through Petsecure Pet Health Insurance. | |
Tuition Assistance Program
|
CA covers tuition up to 2 courses per traditional semester (Fall, Spring, Summer) if the employee achieves a B minus or better. Courses must be approved by two levels of management and HR. The maximum tuition reimbursement is $5250 per person per calendar year. | |
Adoption Assistance Program
|
After one year of employment, eligible adoption related expenses are reimbursed up to $5,000. A maximum of $10,000 will be payable to any one family within a 24-month period. | |
Employee Assistance and Work Life Balance
Program
|
Available to employees seeking confidential counseling, work life programs assisting you in finding the providers, information and resources on a wide variety of personal and professional issues. Please visit www.lifebalance.net for more information about this Program. | |
RRSP / DPSP
(Cash Plan)
|
Regular, full-time employees of CA Canada Company are eligible to participate and may enroll on the first day of the month following their date of hire. CA will begin matching employee contributions to the plan on the first of the month following the completion of 1 full year of service at the rate of 50% of the first 5% of the employees base salary that he/she contributes to the Plan. Company Contributions become fully vested after two (2) full years of service. | |
Payroll
|
Payroll dates are the 15th and last business day of each month. Direct Deposit is encouraged. | |
Vacation Days
|
You will be eligible to take five weeks of vacation per year. All vacations should be taken at times that are consistent with the business interests of the Corporation, and in accordance with CA Technologies vacation policies. |
Sick Days
|
Sick days to be used for medical related absences and earned at a rate of 8 paid sick days per year. Unused sick days may be banked up to a maximum of 30 days. A pro-rated allotment will occur based on date of hire. | |
Personal Time Off (PTO) |
Personal days to be used for paid time off for any reason with managers approval are earned at a rate of 3 days per calendar year. A pro-rated allotment will occur in the initial year of employment based on date of hire. | |
Holidays
|
Standard Canadian Statutory Holidays varies by province. See HR for more details. | |
Charitable Gift Program
|
Regular full time employees of CA, and their spouses, are eligible to participate in the Matching Gifts program. All institutions, organizations, associations, and funds must be non-profit, qualified either as 501 (C) (3) tax exempt by the Internal Revenue Service of the U.S. Treasury Department or in accordance with sections 118 and 149.1 of the Canadian Income Tax Act of Revenue Canada and or meet local statutory requirements. Contributions to non-CA sponsored private foundations are subject to review and approval by Community Relations Department in Islandia. | |
Employee Referral Program
|
Monies paid out for individuals hired by CA. Referral must be entered into system and credited to you as a person referring the candidate. Details available through employee self service portal. |
* | Denotes participants not eligible for the excise tax-gross-up pursuant to section 4(g) of the Policy. |
[Participant Name] |
||
Total Number of Restricted Stock Units Granted
|
[Number of Shares Granted] | |
Grant Date
|
[Grant Date] |
By: | ![]() |
|||
William McCracken | ||||
CEO | ||||
[Participant Name] |
||
Total Number of Restricted Stock Awards Granted
|
[Number of Shares Granted] | |
Grant Date
|
[Grant Date] |
By: | ![]() |
|||
William McCracken | ||||
CEO | ||||
[Participant Name] |
||
Total Number of Restricted Stock Awards Granted
|
[Number of Shares Granted] | |
Grant Date
|
[Grant Date] |
By: | ![]() |
|||
William McCracken | ||||
CEO |
[Participant Name] |
||
Total Number of Stock Options Granted
|
[Number of Shares Granted] | |
Grant Date
|
[Grant Date] |
Non-Qualified Stock Option granted by CA, Inc., a Delaware corporation, (the Company) to the above-named option holder (the Optionee), an employee or consultant of the Company or one of its subsidiaries, pursuant to the CA, Inc. 2011 Incentive Plan (the Plan). This Agreement incorporates by reference the terms of the Plan (including without limitation, Section 7.5 of the Plan, such that the participant may be subject to the forfeiture of the unvested portion of this Stock Option Award and must return any vested shares already delivered pursuant to this Agreement in certain circumstances described in that Section), and is subject to the provisions thereof. The terms of the Plan are incorporated herein by reference and which, in the event of any conflict, shall control over the terms contained herein. |
1. | Grant and Vesting Option |
The Company hereby grants to the Optionee an option to purchase on the terms herein provided a total of the number of shares of Common Stock, $.10 par value, of the Company set forth above, at an exercise price per share equal to the Fair Market Value on the date the Options are granted. |
This option will vest with respect to 34% of the underlying shares on the first anniversary of the grant date and with respect to an additional 33% of the underlying shares on each of the second and third anniversaries of the option grant date. Except as provided in Section 8, below, this option shall expire and shall not be exercisable after seven (7) years from the Option Date (the Expiration Date). |
2. | Stock to be Delivered |
Stock to be delivered upon the exercise of this option may constitute an original issue of authorized stock or may consist of treasury stock. |
3. | Exercise of Option |
Each election to exercise this option shall be made, by delivering to the Company or its agent a properly executed exercise notice, together with irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds with respect to the portion of shares to be acquired upon exercise. Exercise of this option will not be permitted if the Company determines, in its sole and absolute discretion, that issuance of shares at that time could violate any law or regulation. |
In the event an option is exercised by the executor or administrator of a deceased Optionee, or by the person or persons to whom the option has been transferred by the Optionees will or the applicable laws of descent and distribution, the Company shall be under no obligation to deliver stock there under unless and until the Company |
is satisfied that the person or persons exercising the option is or are the duly appointed executor(s) or administrator(s) of the deceased Optionee or the person to whom the option has been transferred by the Optionees will or by the applicable laws of descent and distribution. |
4. | Payment for and Delivery of Stock |
Payment in full by cash, certified check, bank draft, wire transfer or postal or express money order shall be made for all shares for which this option is exercised at the time of such exercise, and no shares shall be delivered until such payment is made. |
Alternatively, payment may be made by (i) delivering to the Company a properly executed exercise notice, together with irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds with respect to the portion of the shares to be acquired upon exercise having a Fair Market Value on the date of exercise equal to the sum of the applicable portion of the exercise price being so paid, (ii) tendering to the Company (by physical delivery or by attestation) certificates representing shares of outstanding Common Stock, par value $.10, of the Company that have been held by the Optionee for at least six months prior to exercise, having a Fair Market Value on the day prior to the date of exercise equal to the applicable portion of the exercise price being so paid, together with stock powers duly executed and with signature guaranteed; or (iii) any combination of the foregoing. Notwithstanding the foregoing, a form of payment will not be available if the Company determines, in its sole and absolute discretion, that such form of payment could violate any law or regulation. |
The Company shall not be obligated to deliver any stock unless and until (i) satisfactory arrangements have been made with the Company for the payment of any applicable tax withholding obligations, (ii) all applicable federal and state laws and regulations have been complied with, (iii) in the event the outstanding Common Stock is at the time listed upon any stock exchange, the shares to be delivered have been listed, or authorized to be listed upon official notice of issuance upon the exchanges where it is listed, and (iv) all legal matters in connection with the issuance and delivery of the shares have been approved by counsel of the Company. The Optionee shall have no rights of a stockholder until the stock is actually delivered to him. |
5. | Recovery and Reimbursement of Option Gain |
The Company shall have the right to recover, or receive reimbursement for, any compensation or profit realized by the exercise of this option or by the disposition of any option shares to the extent that the Company has such a right of recovery or reimbursement under applicable securities laws. |
6. | Transferability of Options |
Except as provided below, this option may not be transferred by the Optionee otherwise than by will or the laws of descent and distribution and during the Optionees lifetime this option may be exercised only by the Optionee. Notwithstanding the foregoing, this option may be transferred by the Optionee to members of his or her immediate family or to one or more trusts for the benefit of such family members or to one or more partnerships in which such family members are the only partners provided that (i) the optionee does not receive any consideration for such transfer, (ii) written notice of any proposed transfer and the details thereof shall have been furnished to the Compensation and Human Resources Committee at least three (3) days in advance of such transfer, and (iii) the Compensation and Human Resources Committee consents to the transfer in writing. Options transferred pursuant to this provision will continue to be subject to the same terms and conditions that were applicable to such options immediately prior to transfer and the option may be exercised by the transferee only to the same extent that the option could have been exercised by the Optionee had no transfer been made. For this purpose, the Optionees family members shall include the Optionees spouse, children, grandchildren, parents, grandparents (whether natural, step, adopted or in-laws) siblings, nieces, nephews and grandnieces and grand nephews. |
7. | Death |
If the Optionee dies while employed by the Company, any unexercised portion of this option held by the Optionee at his date of death will become exercisable in full and will remain exercisable by the estate of the deceased Optionee or the person given authority to exercise his options by his will or by operation of law for a period of one (1) year, but not later than the expiration date of the Option, provided, however, that if the Optionees death occurs within six (6) months prior to the expiration date of the option the option shall remain exercisable up until six (6) months from the Optionees death. |
8. | Changes In Stock |
In the event of any stock split, reverse stock split, dividend or other distribution (whether in the form of cash, shares, other securities or other property), extraordinary cash dividend, recapitalization, merger, consolidation, split-up, spin-off, reorganization, combination, repurchase or exchange of shares or other securities, the issuance of warrants or other rights to purchase shares or other securities, or other similar corporate transaction or event, the number and kind of shares of stock of the Company covered by this option, the option price and other relevant provisions shall be appropriately adjusted by the Compensation and Human Resource Committee, in its discretion, to the extent necessary to prevent dilution or enlargement of the benefits or potential benefits intended to be provided by this option. |
9. | Continuance of Employment |
This option shall not be deemed to obligate the Company or any subsidiary to retain the Optionee in its employ for any period. |
CA, Inc. |
||||
By: | ![]() |
|||
William McCracken | ||||
CEO | ||||
Fiscal Year | Six Months Ended | |||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | September 30, 2011 | |||||||||||||||||||
Earnings available for fixed charges: |
||||||||||||||||||||||||
Earnings from continuing operations
before income taxes, minority
interest and discontinued operations |
$ | 95 | $ | 762 | $ | 1,049 | $ | 1,152 | $ | 1,209 | $ | 660 | ||||||||||||
Add: Fixed charges |
229 | 248 | 191 | 162 | 142 | 49 | ||||||||||||||||||
Total earnings available for fixed charges |
$ | 324 | $ | 1,010 | $ | 1,240 | $ | 1,314 | $ | 1,351 | $ | 709 | ||||||||||||
Fixed charges: |
||||||||||||||||||||||||
Interest expense(1) |
$ | 153 | $ | 169 | $ | 130 | $ | 102 | $ | 68 | $ | 32 | ||||||||||||
Interest portion of rental expense |
76 | 79 | 61 | 60 | 74 | 17 | ||||||||||||||||||
Total fixed charges |
$ | 229 | $ | 248 | $ | 191 | $ | 162 | $ | 142 | $ | 49 | ||||||||||||
RATIOS OF EARNINGS TO FIXED CHARGES |
1.41 | 4.07 | 6.49 | 8.11 | 9.51 | 14.47 | ||||||||||||||||||
Deficiency of earnings to fixed charges |
n/a | n/a | n/a | n/a | n/a | n/a |
(1) | Includes amortization of discount related to indebtedness |
1. | I have reviewed this Quarterly Report on Form 10-Q of CA, Inc. for its most recent fiscal quarter; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and | ||
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): | |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: October 27, 2011 | /s/ William E. McCracken | |||
William E. McCracken | ||||
Chief Executive Officer CA, Inc. |
1. | I have reviewed this Quarterly Report on Form 10-Q of CA, Inc. for its most recent fiscal quarter; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and | ||
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): | |
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: October 27, 2011 | /s/ Richard J. Beckert | |||
Richard J. Beckert | ||||
Executive Vice President and Chief Financial Officer CA, Inc. |
/s/ William E. McCracken | ||||
William E. McCracken | ||||
Chief Executive Officer | ||||
October 27, 2011 | ||||
/s/ Richard J. Beckert | ||||
Richard J. Beckert | ||||
Executive Vice President and Chief Financial Officer | ||||
October 27, 2011 | ||||
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Derivatives 1 (Details) (USD $) In Millions | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Cash Flow Hedging [Member] | Interest Expense [Member] | Interest Rate Swap [Member] | ||||
Effect of interest rate and foreign exchange derivatives on Consolidated Statement of Operations | ||||
Amount of Net (Gain)/Loss Recognized in the Consolidated Statement of Operations | $ 0 | $ 1 | $ 0 | $ 3 |
Fair Value Hedging [Member] | Interest Expense [Member] | Interest Rate Swap [Member] | ||||
Effect of interest rate and foreign exchange derivatives on Consolidated Statement of Operations | ||||
Amount of Net (Gain)/Loss Recognized in the Consolidated Statement of Operations | (3) | (3) | (6) | (6) |
Other (gains) expenses, net [Member] | Foreign Exchange Contract [Member] | ||||
Effect of interest rate and foreign exchange derivatives on Consolidated Statement of Operations | ||||
Amount of Net (Gain)/Loss Recognized in the Consolidated Statement of Operations | $ (6) | $ 21 | $ 1 | $ 8 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Millions, except Share data | Sep. 30, 2011 | Mar. 31, 2011 |
---|---|---|
ASSETS | ||
Accumulated depreciation | $ 671 | $ 632 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, no par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 1,100,000,000 | 1,100,000,000 |
Common stock, shares issued | 589,695,081 | 589,695,081 |
Common stock, shares outstanding | 489,413,910 | 502,299,607 |
Treasury stock, shares | 100,281,171 | 87,395,474 |
Fair Value Measurements 2 (Details) (USD $) In Millions | Sep. 30, 2011 | Mar. 31, 2011 |
---|---|---|
Carrying Value [Member] | ||
Liabilities: | ||
Total debt | $ 1,310 | $ 1,551 |
Fair value of facilities abandonment reserve | 45 | 52 |
Estimated Fair Value [Member] | ||
Liabilities: | ||
Total debt | 1,416 | 1,619 |
Fair value of facilities abandonment reserve | $ 52 | $ 59 |
Accounting Policies (Policies) | 6 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||
Accounting Policies [Abstract] | ||||||||||||
Basis of Presentation |
Basis of Presentation: The accompanying unaudited Condensed Consolidated Financial Statements of
CA, Inc. (the Company) have been prepared in accordance with U.S. generally accepted accounting
principles (GAAP), as defined in the Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) 270, for interim financial information and with the instructions to
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by GAAP for complete financial statements. For further information, refer to the Company’s
Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form
10-K for the fiscal year ended March 31, 2011 (2011 Form 10-K).
In the opinion of management, all adjustments considered necessary for a fair presentation have
been included. All such adjustments are of a normal, recurring nature.
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Although these estimates are based on management’s knowledge of current events
and actions it may undertake in the future, these estimates may ultimately differ from actual
results.
Operating results for the three and six months ended September 30, 2011 are not necessarily
indicative of the results that may be expected for the fiscal year ending March 31, 2012.
| |||||||||||
Divestitures |
Divestitures: In June 2011, the Company sold its Internet Security business and in June 2010, the
Company sold its Information Governance business. The results of operations for these businesses,
and the related gain (loss) on disposal have been presented as discontinued operations in the
accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Statements
of Cash Flows. The effects of the discontinued components were immaterial to the Company’s
Condensed Consolidated Balance Sheet at March 31, 2011. See Note C, “Divestitures,” for additional
information.
In September 2010, the Company sold an equity investment and recognized a gain of approximately $10
million, which is included in “Other (gains) expenses, net” in the Company’s Condensed Consolidated
Statements of Operations for the three and six months ended September 30, 2010.
| |||||||||||
Cash and Cash Equivalents |
Cash and Cash Equivalents: The Company’s cash and cash equivalents are held in numerous locations
throughout the world, with approximately 66% being held by the Company’s foreign subsidiaries
outside the United States at September 30, 2011.
| |||||||||||
Fair Value Measurements |
Fair Value Measurements: Fair value is the price that would be received for an asset or the amount
paid to transfer a liability in an orderly transaction between market participants. The Company is
required to classify certain assets and liabilities based on the following fair value hierarchy:
See Note K, “Fair Value Measurements,” for additional information.
| |||||||||||
Deferred Revenue (Billed or Collected) |
Deferred Revenue (Billed or Collected): The Company accounts for unearned revenue on billed amounts
due from customers on a gross basis. Unearned revenue on billed installments (collected or
uncollected) is reported as deferred revenue in the liability section of the Company’s Condensed
Consolidated Balance
Sheets. Deferred revenue (billed or collected) excludes unbilled contractual commitments executed
under license and maintenance agreements that will be billed in future periods.
| |||||||||||
Statements of Cash Flows |
Statements of Cash Flows: For the six months ended September 30, 2011 and 2010, interest
payments, net were approximately $30 million and $42 million, respectively, and income taxes paid
were approximately $221 million and $134 million, respectively.
The Company uses a notional pooling arrangement with an international bank to help manage global
liquidity requirements. Under this pooling arrangement, the Company and its participating
subsidiaries may maintain either cash deposit or borrowing positions through local currency
accounts with the bank, so long as the aggregate position of the global pool is a notionally
calculated net cash deposit. Because the bank maintains a security interest in the cash deposits,
and has the right to offset the cash deposits against the borrowings, the bank provides the Company
and its participating subsidiaries favorable interest terms on both cash deposits and borrowings.
At September 30, 2011 while the overall pool was positive, there was approximately $61 million of borrowing positions outstanding under this
cash pooling arrangement which is included in the “Accrued expenses and other current liabilities”
line item on the Company’s Condensed Consolidated Balance Sheet. Borrowings and repayments were
approximately $164 million and $97 million, respectively, for the six months ended September 30,
2011. At March 31, 2011, there were no borrowings outstanding under the cash pooling arrangement.
Non-cash financing activities for the six months ended September 30, 2011 and 2010 consisted of
treasury shares issued in connection with the following: share-based incentive awards granted under
the Company’s equity compensation plans of approximately $53 million (net of approximately $26
million of taxes withheld) and $63 million (net of approximately $26 million of taxes withheld),
respectively; and discretionary stock contributions to the CA, Inc. Savings Harvest Plan of
approximately $13 million and $25 million, respectively.
|
Document and Entity Information (USD $) In Billions, except Share data | 6 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | Oct. 20, 2011 | Sep. 30, 2010 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | CA, INC. | ||
Entity Central Index Key | 0000356028 | ||
Document Type | 10-Q | ||
Document Period End Date | Sep. 30, 2011 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2012 | ||
Document Fiscal Period Focus | Q2 | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 8 | ||
Entity Common Stock, Shares Outstanding | 493,391,769 |
Deferred Revenue (Details) (USD $) In Millions | Sep. 30, 2011 | Mar. 31, 2011 |
---|---|---|
Current: | ||
Total deferred revenue (billed or collected) - current | $ 2,175 | $ 2,600 |
Noncurrent: | ||
Total deferred revenue (billed or collected) - noncurrent | 863 | 969 |
Total deferred revenue (billed or collected) | 3,038 | 3,569 |
Subscription and maintenance [Member] | ||
Current: | ||
Total deferred revenue (billed or collected) - current | 2,020 | 2,444 |
Noncurrent: | ||
Total deferred revenue (billed or collected) - noncurrent | 831 | 940 |
Professional services [Member] | ||
Current: | ||
Total deferred revenue (billed or collected) - current | 142 | 145 |
Noncurrent: | ||
Total deferred revenue (billed or collected) - noncurrent | 30 | 27 |
Financing obligations and other [Member] | ||
Current: | ||
Total deferred revenue (billed or collected) - current | 13 | 11 |
Noncurrent: | ||
Total deferred revenue (billed or collected) - noncurrent | $ 2 | $ 2 |
Severance and Exit Costs (Tables) | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Severance and Exit Costs [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Severance and exit costs activity |
|
Goodwill Capitalized Software and Other Intangible Assets 4 (Details) (USD $) In Millions | Sep. 30, 2011 | Mar. 31, 2011 |
---|---|---|
Goodwill, Capitalized Software and Other Intangible Assets (Textual) [Abstract] | ||
Gross carrying amount of capitalized software and other intangible assets | $ 7,670 | $ 7,417 |
Accumulated amortization for capitalized software and other intangible assets | 6,263 | 6,133 |
Fully amortized intangible assets | 5,635 | 5,290 |
Purchased software products [Member] | ||
Goodwill, Capitalized Software and Other Intangible Assets (Textual) [Abstract] | ||
Fully amortized intangible assets | 4,693 | 4,662 |
Internally developed software products [Member] | ||
Goodwill, Capitalized Software and Other Intangible Assets (Textual) [Abstract] | ||
Fully amortized intangible assets | 539 | 508 |
Other intangible assets subject to amortization [Member] | ||
Goodwill, Capitalized Software and Other Intangible Assets (Textual) [Abstract] | ||
Fully amortized intangible assets | $ 403 | $ 120 |
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Goodwill, Capitalized Software and Other Intangible Assets | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill, Capitalized Software and Other Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS |
NOTE G — GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS
The gross carrying amounts and accumulated amortization for capitalized software and other
intangible assets at September 30, 2011 were approximately $7,670 million and $6,263 million,
respectively. These amounts include fully amortized intangible assets of approximately $5,635
million, which was composed of purchased software of approximately $4,693 million, internally
developed software of approximately $539 million and other identified intangible assets subject to
amortization of approximately $403 million. The gross carrying amounts and accumulated amortization
for identified intangible assets that were not fully amortized were as follows:
The gross carrying amounts and accumulated amortization for capitalized software and other
intangible assets at March 31, 2011 were approximately $7,417 million and $6,133 million,
respectively. These amounts included fully amortized assets of approximately $5,290 million, which
was composed of purchased software of approximately $4,662 million, internally developed software
products of approximately $508 million and other intangible assets subject to amortization of
approximately $120 million. The gross carrying amounts and accumulated amortization for identified
intangible assets that were not fully amortized were as follows:
Based on the capitalized software and other intangible assets recorded through September 30, 2011,
the annual amortization expense over the next five fiscal years is expected to be as follows:
Goodwill activity for the six months ended September 30, 2011 was as follows:
|
Marketable Securities (Tables) | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Available-for-Sale Securities |
|
Trade and Installment Accounts Receivable (Details) (USD $) In Millions | Sep. 30, 2011 | Mar. 31, 2011 |
---|---|---|
Components of trade and installment accounts receivable, net | ||
Accounts receivable - billed | $ 510 | $ 758 |
Accounts receivable - unbilled | 84 | 86 |
Other receivables | 25 | 27 |
Less: Allowance for doubtful accounts | (18) | (22) |
Trade and installment accounts receivable, net | $ 601 | $ 849 |
Accounting Policies (Details) (USD $) In Millions, unless otherwise specified | 6 Months Ended | |
---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | |
Accounting Policies [Abstract] | ||
Gain on sale of equity investment | $ 10 | |
Percentage of cash and cash equivalents held by the company's foreign subsidiaries outside the United States | 66.00% | |
Interest payments | 30 | 42 |
Income and other taxes paid, net | 221 | 134 |
Share based incentive awards | 53 | 63 |
Withholding taxes on share based incentive awards | 26 | 26 |
Discretionary stock contributions to CA, Inc. Savings Harvest Plan | 13 | 25 |
Notional Pooling Arrangement [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, amount outstanding | 61 | |
Proceeds from lines of credit | 164 | |
Repayments of lines of credit | $ 97 |
Divestitures (Tables) | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Divestitures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from discontinued components |
|
Commitments and Contingencies | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES |
NOTE L — COMMITMENTS AND CONTINGENCIES
In September 2010, a lawsuit captioned Uniloc USA, Inc. et ano. v. National Instruments Corp., et
al. was filed in the United States District Court for the Eastern District of Texas against the
Company and 10 other defendants. The complaint alleges, among other things, that Company
technology, including Internet Security Suite Plus 2010 (ISS), infringes a patent licensed to
plaintiff Uniloc USA, Inc., entitled “System for Software Registration,” U.S. Patent No. 5,490,216
(‘216 Patent). The complaint seeks monetary damages and interest in an undisclosed amount, a
temporary, preliminary and permanent injunction against alleged acts of infringement, and
attorneys’ fees and costs, based upon the plaintiffs’ patent infringement claims. In November 2010,
the Company filed an answer that, among other things, disputes the plaintiffs’ claims and seeks a
declaratory judgment that the Company does not infringe the ‘216 Patent and that the ‘216 Patent is
invalid. After pre-trial motion practice, in August 2011, the parties entered into a settlement
agreement, the terms of which are confidential and not material to the Company’s financial condition,
operating results or cash flow. As part of this settlement, the case against the Company was dismissed with prejudice in
its entirety.
Based on the Company’s experience, the Company believes that the damages amounts claimed in a case
are not a meaningful indicator of the potential liability. Claims, suits, investigations and
proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of
cases.
The Company, 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 these other lawsuits and
claims, and intends to vigorously contest each of them.
In the opinion of the Company’s management based upon information currently available to the
Company, while the outcome of these other lawsuits and claims is uncertain, the likely results of
these other lawsuits and claims against the Company, 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 effect could be material to the Company’s results of
operations or cash flows for any interim reporting period.
The Company is obligated to indemnify its officers and directors under certain circumstances to the
fullest extent permitted by Delaware law. As a part of that obligation, the Company has advanced
and will continue to advance certain attorneys’ fees and expenses incurred by current and former
officers and directors in various lawsuits and investigations.
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Divestitures | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Divestitures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DIVESTITURES |
NOTE C — DIVESTITURES
In June 2011, the Company sold its Internet Security business for approximately $14 million and
recognized a gain on disposal of approximately $23 million, including tax expense of approximately
$18 million. In June 2010, the Company sold its Information Governance business for approximately
$19
million and recognized a loss on disposal of approximately $5 million, including tax expense of
approximately $4 million.
The income (loss) from discontinued components for the sale of the Company’s Internet Security
business, which occurred during the first quarter of fiscal 2012, consists of the following:
The income (loss) from discontinued components, relating to both the Internet Security
business and the sale of the Company’s Information Governance business for the three and six months
ended September 30, 2010 consists of the following:
|
Income from Continuing Operations Per Common Share (Tables) | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Continuing Operations Per Common Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of earnings per common share |
|
Debt | 6 Months Ended | ||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||
Debt [Abstract] | |||||||||||||||||||||
DEBT |
NOTE I — DEBT
Revolving Credit Facility: In April 2011, the Company repaid the outstanding balance of $250
million on the revolving credit facility that was due August 2012. In August 2011, the Company
replaced the revolving credit facility due August 2012 with a new revolving credit facility due
August 2016.
The maximum committed amount available under the revolving credit facility due August 2016 is $1
billion. The facility also provides the Company with an option to increase the available credit by
an amount up to $500 million. This option is subject to certain conditions and the agreement of
the facility lenders.
Advances under the 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. The Company must also pay
facility commitment fees quarterly on the full revolving credit commitment and at rates dependent
on the Company’s credit ratings.
At September 30, 2011, there were no outstanding borrowings under the revolving credit facility due
August 2016 and, based on the Company’s current credit ratings, the rates applicable to the
facility at September 30, 2011 were as follows:
The interest rate that would have applied at September 30, 2011 to a borrowing under the revolving
credit facility due August 2016 would have been 3.50% for Base Rate borrowings and 1.34% for
Eurocurrency Rate borrowings. The Company capitalized the transaction fees associated with the
revolving credit facility due August 2016 of approximately $2 million. These fees are being amortized to
“Interest expense, net” in the Condensed Consolidated Statements of Operations.
The revolving credit facility due August 2016 contains customary covenants for borrowings 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 facility
Credit Agreement, must not exceed 4.00 to 1.00; and (ii) for the 12 months ending at any date, 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 facility Credit
Agreement, must not be less than 3.50 to 1.00. At September 30, 2011, the Company was in compliance
with all covenants.
In addition, future borrowings under the revolving credit facility require, at the date of such
borrowing, that (i) no event of default shall have occurred and be continuing and (ii) the Company
reaffirm the representations and warranties it made in the facility Credit Agreement.
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Income from Continuing Operations Per Common Share | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Continuing Operations Per Common Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE |
NOTE N — INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE
Basic net income per common share excludes dilution and is calculated by dividing net income allocable to
common shares by the weighted average number of common shares outstanding for the period. Diluted
net income per common share is calculated by dividing net income allocable to common shares by the
weighted average number of common shares at the balance sheet date, as adjusted for the potential
dilutive effect of non-participating share-based awards.
The following table reconciles net income per common share for the three and six months ended
September 30, 2011 and 2010.
For the three months ended September 30, 2011 and 2010, respectively, approximately 9 million and 8
million shares of Company common stock underlying restricted stock awards and options to purchase
common stock were excluded from the calculation because their effect on income per share was
anti-dilutive during the respective periods.
For the six months ended September 30, 2011 and 2010, respectively, approximately 5 million and 9
million restricted stock awards and options to purchase common stock were excluded from the
calculation because their effect on income per share was anti-dilutive during the respective
periods.
Weighted average restricted stock awards of approximately 6 million and 6 million for the three and
six months ended September 30, 2011 and 2010, respectively, were considered participating
securities in the calculation of net income available to common shareholders.
|
Derivatives | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES |
NOTE J — DERIVATIVES
The Company is exposed to financial market risks arising from changes in interest rates and foreign
exchange rates. Changes in interest rates could affect the Company’s monetary assets and
liabilities, and foreign exchange rate changes could affect the Company’s foreign currency
denominated monetary assets and liabilities and forecasted transactions. The Company enters into
derivative contracts with the intent of mitigating a portion of these risks.
Interest rate swaps: The Company has interest rate swaps with a total notional value of $500
million, that swap a total of $500 million of its 6.125% Senior Notes due December 2014 into
floating interest rate debt through December 1, 2014. These swaps are designated as fair value
hedges.
At September 30, 2011, the fair value of these derivatives was an asset of approximately $30
million, of which approximately $11 million is included in “Other current assets” and approximately
$19 million is included in “Other noncurrent assets, net” in the Company’s Condensed Consolidated
Balance Sheets.
At March 31, 2011, the fair value of these derivatives was an asset of approximately $15 million,
of which approximately $11 million is included in “Other current assets” and approximately $4
million is included in “Other noncurrent assets, net” in the Company’s Condensed Consolidated
Balance Sheets.
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 on its revolving credit
facility. The amount of loss reclassified from “Accumulated other comprehensive income” into
“Interest expense, net” in the Company’s Condensed Consolidated Statements of Operations was
approximately $1 million and $3 million for the three and six months ended September 30, 2010,
respectively. These derivatives were designated as cash flow hedges and matured in October 2010.
Foreign currency contracts: The Company enters into foreign currency option and forward contracts
to manage foreign currency risks. The Company has not designated its foreign exchange derivatives
as hedges. Accordingly, changes in fair value from these contracts are recorded as “Other (gains)
expenses,
net” in the Company’s Condensed Consolidated Statements of Operations. At September 30, 2011,
foreign currency contracts outstanding consisted of purchase and sales contracts with a total
notional value of approximately $574 million and durations of less than six months. The net fair
value of these contracts at September 30, 2011 was approximately $10 million, of which
approximately $22 million is included in “Other current assets” and approximately $12 million is
included in “Accrued expenses and other current liabilities” in the Company’s Condensed
Consolidated Balance Sheet. The net fair value of these contracts at March 31, 2011 was
approximately $6 million, of which approximately $7 million is included in “Other current assets”
and approximately $1 million is included in “Accrued expenses and other current liabilities” in the
Company’s Condensed Consolidated Balance Sheet.
A summary of the effect of the interest rate and foreign exchange derivatives on the Company’s
Condensed Consolidated Statements of Operations is as follows:
The Company is subject to collateral security arrangements with most of its major counterparties.
These arrangements require the Company to hold or post collateral when the derivative fair values
exceed contractually established thresholds. The aggregate fair values of all derivative
instruments under these collateralized arrangements were in a net asset position at September 30,
2011 and March 31, 2011. The Company posted no collateral at September 30, 2011 or March 31, 2011.
Under these agreements, if the Company’s credit ratings had been downgraded one rating level, the
Company would still not have been required to post collateral.
|
Derivatives (Tables) | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of interest rate and foreign exchange derivatives on Consolidated Statement of Operations |
|
Deferred Revenue | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEFERRED REVENUE |
NOTE H — DEFERRED REVENUE
The components of “Deferred revenue (billed or collected) — current” and “Deferred revenue (billed
or collected) — noncurrent” at September 30, 2011 and March 31, 2011 were as follows:
|
Fair Value Measurements 1 (Details) (USD $) In Millions | Sep. 30, 2011 | Mar. 31, 2011 |
---|---|---|
Assets: | ||
Interest rate derivatives | $ 30 | $ 15 |
Fair Value, Measurements, Recurring [Member] | ||
Assets: | ||
Foreign exchange derivatives | 22 | 7 |
Interest rate derivatives | 30 | 15 |
Total Assets | 1,026 | 2,210 |
Liabilities: | ||
Foreign exchange derivatives not designated as hedges | 12 | 1 |
Total Liabilities | 12 | 1 |
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Assets: | ||
Foreign exchange derivatives | 0 | 0 |
Interest rate derivatives | 0 | 0 |
Total Assets | 795 | 2,009 |
Liabilities: | ||
Foreign exchange derivatives not designated as hedges | 0 | 0 |
Total Liabilities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Money Market Funds [Member] | ||
Assets: | ||
Investments | 795 | 2,009 |
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Marketable Securities [Member] | ||
Assets: | ||
Investments | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Assets: | ||
Foreign exchange derivatives | 22 | 7 |
Interest rate derivatives | 30 | 15 |
Total Assets | 231 | 201 |
Liabilities: | ||
Foreign exchange derivatives not designated as hedges | 12 | 1 |
Total Liabilities | 12 | 1 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Money Market Funds [Member] | ||
Assets: | ||
Investments | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Marketable Securities [Member] | ||
Assets: | ||
Investments | 179 | 179 |
Fair Value, Measurements, Recurring [Member] | Money Market Funds [Member] | ||
Assets: | ||
Investments | 795 | 2,009 |
Fair Value, Measurements, Recurring [Member] | Marketable Securities [Member] | ||
Assets: | ||
Investments | $ 179 | $ 179 |
Accounting Policies | 6 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||
Accounting Policies [Abstract] | ||||||||||||
ACCOUNTING POLICIES |
NOTE A — ACCOUNTING POLICIES
Basis of Presentation: The accompanying unaudited Condensed Consolidated Financial Statements of
CA, Inc. (the Company) have been prepared in accordance with U.S. generally accepted accounting
principles (GAAP), as defined in the Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) 270, for interim financial information and with the instructions to
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by GAAP for complete financial statements. For further information, refer to the Company’s
Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form
10-K for the fiscal year ended March 31, 2011 (2011 Form 10-K).
In the opinion of management, all adjustments considered necessary for a fair presentation have
been included. All such adjustments are of a normal, recurring nature.
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Although these estimates are based on management’s knowledge of current events
and actions it may undertake in the future, these estimates may ultimately differ from actual
results.
Operating results for the three and six months ended September 30, 2011 are not necessarily
indicative of the results that may be expected for the fiscal year ending March 31, 2012.
Divestitures: In June 2011, the Company sold its Internet Security business and in June 2010, the
Company sold its Information Governance business. The results of operations for these businesses,
and the related gain (loss) on disposal have been presented as discontinued operations in the
accompanying Condensed Consolidated Statements of Operations and Condensed Consolidated Statements
of Cash Flows. The effects of the discontinued components were immaterial to the Company’s
Condensed Consolidated Balance Sheet at March 31, 2011. See Note C, “Divestitures,” for additional
information.
In September 2010, the Company sold an equity investment and recognized a gain of approximately $10
million, which is included in “Other (gains) expenses, net” in the Company’s Condensed Consolidated
Statements of Operations for the three and six months ended September 30, 2010.
Cash and Cash Equivalents: The Company’s cash and cash equivalents are held in numerous locations
throughout the world, with approximately 66% being held by the Company’s foreign subsidiaries
outside the United States at September 30, 2011.
Fair Value Measurements: Fair value is the price that would be received for an asset or the amount
paid to transfer a liability in an orderly transaction between market participants. The Company is
required to classify certain assets and liabilities based on the following fair value hierarchy:
See Note K, “Fair Value Measurements,” for additional information.
Deferred Revenue (Billed or Collected): The Company accounts for unearned revenue on billed amounts
due from customers on a gross basis. Unearned revenue on billed installments (collected or
uncollected) is reported as deferred revenue in the liability section of the Company’s Condensed
Consolidated Balance
Sheets. Deferred revenue (billed or collected) excludes unbilled contractual commitments executed
under license and maintenance agreements that will be billed in future periods.
Statements of Cash Flows: For the six months ended September 30, 2011 and 2010, interest
payments, net were approximately $30 million and $42 million, respectively, and income taxes paid
were approximately $221 million and $134 million, respectively.
The Company uses a notional pooling arrangement with an international bank to help manage global
liquidity requirements. Under this pooling arrangement, the Company and its participating
subsidiaries may maintain either cash deposit or borrowing positions through local currency
accounts with the bank, so long as the aggregate position of the global pool is a notionally
calculated net cash deposit. Because the bank maintains a security interest in the cash deposits,
and has the right to offset the cash deposits against the borrowings, the bank provides the Company
and its participating subsidiaries favorable interest terms on both cash deposits and borrowings.
At September 30, 2011 while the overall pool was positive, there was approximately $61 million of borrowing positions outstanding under this
cash pooling arrangement which is included in the “Accrued expenses and other current liabilities”
line item on the Company’s Condensed Consolidated Balance Sheet. Borrowings and repayments were
approximately $164 million and $97 million, respectively, for the six months ended September 30,
2011. At March 31, 2011, there were no borrowings outstanding under the cash pooling arrangement.
Non-cash financing activities for the six months ended September 30, 2011 and 2010 consisted of
treasury shares issued in connection with the following: share-based incentive awards granted under
the Company’s equity compensation plans of approximately $53 million (net of approximately $26
million of taxes withheld) and $63 million (net of approximately $26 million of taxes withheld),
respectively; and discretionary stock contributions to the CA, Inc. Savings Harvest Plan of
approximately $13 million and $25 million, respectively.
|
Severance and Exit Costs | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Severance and Exit Costs [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEVERANCE AND EXIT COSTS |
NOTE D — SEVERANCE AND EXIT COSTS
Fiscal 2012 workforce reduction: The Fiscal 2012 workforce reduction plan (Fiscal 2012 Plan) was
announced in July 2011 and consisted of a workforce reduction of approximately 400 positions.
This action is part of our efforts to reallocate resources and divest nonstrategic parts of the
business. The total amounts incurred with respect to severance under the Fiscal 2012 Plan were $44
million, of which approximately $27 million is included in “Selling and marketing,” $9 million is
included in “Product development and enhancements,” $5 million is included in “General and
administrative,” $2 million is included in “Costs of licensing and maintenance” and $1 million is
included in “Cost of professional services” on the Condensed Consolidated Statements of Operations.
Actions under the Fiscal 2012 Plan are expected to be substantially completed by the end of fiscal
year 2012.
Fiscal 2010 restructuring plan: The Fiscal 2010 restructuring plan (Fiscal 2010 Plan) was announced
in March 2010 and is composed of a workforce reduction of approximately 1,000 positions and global
facilities consolidations. These actions were intended to better align the Company’s cost structure
with the skills and resources required to more effectively pursue opportunities in the marketplace
and execute the Company’s long-term growth strategy. The total amounts incurred with respect to
severance and facilities abandonment under the Fiscal 2010 Plan were $44 million and $2 million,
respectively. Actions under the Fiscal 2010 Plan were substantially completed by the end of fiscal
year 2011.
Fiscal 2007 restructuring plan: In August 2006, the Company announced the Fiscal 2007 restructuring
plan (Fiscal 2007 Plan) to significantly improve the Company’s expense structure and increase its
competitiveness. The Fiscal 2007 Plan’s objectives included a workforce reduction of approximately
3,100 employees, global facilities consolidations and other cost reductions. The total amounts
incurred with respect to severance and facilities abandonment under the Fiscal 2007 Plan were $220
million and $119 million, respectively. Actions under the Fiscal 2007 Plan were substantially
completed by the end of fiscal year 2010.
Accrued severance and exit costs at September 30, 2011 and changes in the accruals during the six
months ended September 30, 2011 and 2010 associated with the Fiscal 2012, Fiscal 2010 and Fiscal
2007 Plans were as follows:
The severance liability is included in the “Accrued salaries, wages and commissions” line item
on the Condensed Consolidated Balance Sheet. The facilities abandonment liability is included in
the “Accrued expenses and other current liabilities” and “Other noncurrent liabilities” line items
on the Condensed Consolidated Balance Sheet. The Fiscal 2010 Plan and Fiscal 2007 Plan costs are
included in the “Other (gains) expenses, net” line item on the Condensed Consolidated Statements of
Operations.
Accretion and other includes accretion of the Company’s lease obligations related to facilities
abandonment as well as changes in the assumptions related to future sublease income. These costs
are included in the “General and administrative” expense line item on the Condensed Consolidated
Statements of Operations.
|
Divestitures (Details) (USD $) In Millions | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | ||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2010
Segment, Discontinued Operations [Member] | Sep. 30, 2011
Segment, Discontinued Operations [Member] | Sep. 30, 2010
Segment, Discontinued Operations [Member] | Jun. 30, 2010
Information Governance Business [Member] | Jun. 30, 2011
Internet Security Business [Member] | |
REVENUE | |||||||||
Subscription and maintenance revenue | $ 1,022 | $ 939 | $ 2,029 | $ 1,878 | $ 22 | $ 15 | $ 46 | ||
Professional services | 96 | 79 | 186 | 157 | 1 | ||||
TOTAL REVENUE | 1,200 | 1,088 | 2,363 | 2,157 | 22 | 15 | 47 | ||
Discontinued Operations (Textual) [Abstract] | |||||||||
Selling price | 19 | 14 | |||||||
Gain (loss) upon disposal | 23 | (5) | (5) | 23 | |||||
Tax expenses related to loss on disposal | 4 | 18 | |||||||
Income tax expense (benefit) | 91 | 71 | 196 | 158 | 2 | (6) | 3 | ||
Income (loss) from discontinued components | |||||||||
(Loss) income from operations of discontinued components, net of tax expense (benefit) | 3 | (10) | 4 | ||||||
Gain (loss) on disposal of discontinued components, net of taxes | 23 | (5) | (5) | 23 | |||||
Income (loss) from discontinued operations, net of taxes | $ 0 | $ 3 | $ 13 | $ (1) |
Debt (Tables) | 6 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||
Debt [Abstract] | |||||||||||||||||||||
Interest rates applicable to revolving credit facility |
|
Income Taxes (Details) (USD $) In Millions, unless otherwise specified | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Income Taxes (Textual) [Abstract] | ||||
Income tax expense | $ 91 | $ 71 | $ 196 | $ 158 |
Net tax benefits from investment in foreign subsidiary | 15 | 18 | ||
Unrecognized tax benefits, increases resulting from settlements with taxing authorities | $ 23 | $ 36 | ||
Effective Income Tax Rate Excluding Discrete Items | 32.40% | 32.50% | ||
Maximum [Member] | ||||
Effective income tax rate continuing operations tax rate reconciliation [Line Items] | ||||
Expected fiscal year 2012 effective tax rate | 32.00% | |||
Minimum [Member] | ||||
Effective income tax rate continuing operations tax rate reconciliation [Line Items] | ||||
Expected fiscal year 2012 effective tax rate | 31.00% |
Marketable Securities | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MARKETABLE SECURITIES |
NOTE E — MARKETABLE SECURITIES
At September 30, 2011, available-for-sale securities consisted of the following:
At September 30, 2011, the Company did not have any debt securities that were in a continuous
unrealized loss position for greater than 12 months. Proceeds from the sale of marketable
securities and realized gains and realized losses were approximately $27 million and less than $1
million, respectively. At September 30, 2011, $89 million of marketable securities had scheduled
maturities of less than one year, and approximately $90 million had maturities of greater than one
year but not exceeding three years.
At March 31, 2011, available-for-sale securities consisted of the following:
At March 31, 2011, the Company did not have any debt securities that were in a continuous
unrealized loss position for greater than 12 months. At March 31, 2011, $75 million of marketable
securities had scheduled maturities of less than one year, and approximately $104 million had
scheduled maturities of greater than one year but not exceeding three years.
|
Trade and Installment Accounts Receivable (Tables) | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade and Installment Accounts Receivable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of trade and installment accounts receivable, net |
|
Segment and Geographic Information 2 (Details) (USD $) In Millions | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Company's revenue from the United States and from international locations | ||||
United States | $ 690 | $ 622 | $ 1,362 | $ 1,235 |
International | 510 | 466 | 1,001 | 922 |
TOTAL REVENUE | $ 1,200 | $ 1,088 | $ 2,363 | $ 2,157 |
Fair Value Measurements (Tables) | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities measured at fair value on a recurring basis |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying amounts and estimated fair values of the Company's instruments that are not measured at fair value on a recurring basis |
|
Severance and Exit Costs (Details) (USD $) In Millions, unless otherwise specified | 1 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | 6 Months Ended | 19 Months Ended | 6 Months Ended | 19 Months Ended | 1 Months Ended | 6 Months Ended | 62 Months Ended | 6 Months Ended | 62 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2011
Restructuring Activity Fiscal Plan 2012 [Member]
Employee | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2012 [Member]
Severance [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2012 [Member]
Severance [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2012 [Member]
Severance [Member]
Selling and marketing [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2012 [Member]
Severance [Member]
Product development and enhancements [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2012 [Member]
Severance [Member]
General and administrative [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2012 [Member]
Severance [Member]
Costs of licensing and maintenance [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2012 [Member]
Severance [Member]
Costs of professional services [Member] | Mar. 31, 2010
Restructuring Activity Fiscal Plan 2010 [Member]
Employee | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2010 [Member]
Severance [Member] | Sep. 30, 2010
Restructuring Activity Fiscal Plan 2010 [Member]
Severance [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2010 [Member]
Severance [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2010 [Member]
Facility Abandonment [Member] | Sep. 30, 2010
Restructuring Activity Fiscal Plan 2010 [Member]
Facility Abandonment [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2010 [Member]
Facility Abandonment [Member] | Aug. 31, 2006
Restructuring Activity Fiscal Plan 2007 [Member]
Employee | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2007 [Member]
Severance [Member] | Sep. 30, 2010
Restructuring Activity Fiscal Plan 2007 [Member]
Severance [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2007 [Member]
Severance [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2007 [Member]
Facility Abandonment [Member] | Sep. 30, 2010
Restructuring Activity Fiscal Plan 2007 [Member]
Facility Abandonment [Member] | Sep. 30, 2011
Restructuring Activity Fiscal Plan 2007 [Member]
Facility Abandonment [Member] | |
Severance and Exit Costs Activity | ||||||||||||||||||||||
Accrued beginning balance | $ 0 | $ 4 | $ 46 | $ 1 | $ 2 | $ 4 | $ 8 | $ 46 | $ 60 | |||||||||||||
Expense | 44 | 27 | 9 | 5 | 2 | 1 | ||||||||||||||||
Change in estimate | 0 | (3) | 0 | 0 | 0 | 1 | 0 | 0 | ||||||||||||||
Payments | (12) | (2) | (30) | 0 | 0 | (1) | (3) | (6) | (9) | |||||||||||||
Accretion and other | 0 | (1) | 0 | 0 | 1 | |||||||||||||||||
Accrued ending balance | 32 | 32 | 2 | 12 | 2 | 1 | 2 | 1 | 3 | 6 | 3 | 41 | 51 | 41 | ||||||||
Severance and Exit Costs (Textual) [Abstract] | ||||||||||||||||||||||
Workforce reduction | 400 | 1,000 | 3,100 | |||||||||||||||||||
Cumulative amount recognized | $ 44 | $ 44 | $ 2 | $ 220 | $ 119 |
Deferred Revenue (Tables) | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Deferred revenue (billed or collected) |
|
Stockholders' Equity | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY |
NOTE M — STOCKHOLDERS’ EQUITY
Stock Repurchases: On May 12, 2011, the Company’s Board of Directors approved a stock repurchase
program that authorized the Company to acquire up to an additional $500 million of its common
stock. At September 30, 2011, the Company remained authorized to purchase up to approximately $432
million of additional shares of common stock under its stock repurchase programs. During the six
months ended September 30, 2011, the Company repurchased approximately 16.1 million shares of its
common stock for approximately $350 million.
Comprehensive Income: Comprehensive income includes net income, unrealized gains on cash flow
hedges, unrealized gains and losses on marketable securities and foreign currency translation
adjustments. The components of comprehensive income for the three and six months ended September
30, 2011 and 2010 are as follows:
Cash Dividends: The Company’s Board of Directors declared the following dividends during the six
months ended September 30, 2011 and 2010:
Six Months Ended September 30, 2011:
(in millions, except per share amounts)
Six Months Ended September 30, 2010:
(in millions, except per share amounts)
|
Stockholders' Equity 2 (Details) (USD $) In Millions | 6 Months Ended | 1 Months Ended | |
---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | May 31, 2011
May 12, 2011 plan [Member] | |
Stockholders' Equity (Textual) [Abstract] | |||
Stock repurchase program, authorized amount | $ 500 | ||
Additional Stockholders' Equity (Textual) [Abstract] | |||
Remaining authorized amount of common stock under common stock repurchase program | 432 | ||
Common Stock Share | 16.1 | ||
Common Stock Value | 350 | ||
Cash payment for repurchased common stock | $ 353 | $ 155 |
Trade and Installment Accounts Receivable | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade and Installment Accounts Receivable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
TRADE AND INSTALLMENT ACCOUNTS RECEIVABLE |
NOTE F — TRADE ACCOUNTS RECEIVABLE
Trade accounts receivable, net represents amounts due from the Company’s customers and is presented
net of allowance for doubtful accounts. These balances include revenue recognized in advance of
customer billings but do not include unbilled contractual commitments executed under license
agreements. The components of “Trade accounts receivable, net” were as follows:
|
Income Taxes | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
Income Tax [Abstract] | |
INCOME TAXES |
NOTE P — INCOME TAXES
Income tax expense for the three and six months ended September 30, 2011 was $91 million and $196
million, respectively, compared with the three and six months ended September 30, 2010 of $71
million and $158 million, respectively.
For the three and six months ended September 30, 2011, the Company recognized a net tax benefit of
$15 million and $18 million, respectively, resulting primarily from the recognition of tax benefits
related to an investment in a foreign subsidiary. For the three and six months ended September 30,
2010, the Company recognized a net tax benefit of $23 million and $36 million, respectively,
resulting primarily from refinements of tax positions taken in prior periods, assertion of
affirmative claims in the context of tax audits and the resolutions and accruals of uncertain tax
positions relating to non-U.S. jurisdictions.
In April 2011, the U.S. Internal Revenue Service (IRS) completed its examination of the Company’s
federal income tax returns for the tax years ended March 31, 2005, March 31, 2006 and March 31,
2007 and issued a report of its findings in connection with the examination. The Company disagrees
with certain proposed adjustments in the report and intends to vigorously dispute these matters
through applicable IRS and judicial procedures, as appropriate. While the Company believes that it
has recorded reserves sufficient to cover exposures related to these issues, such that the ultimate
disposition of this matter will not have a material adverse effect on the Company’s consolidated
financial position or results of operations, the resolution of such matters involves
uncertainties and there are no assurances that the ultimate resolution will not exceed the amounts
recorded. The Company does not believe it is reasonably possible that the amount of unrecognized
tax benefits will significantly increase or decrease within the next 12 months.
The Company’s effective income tax rate, excluding the impact of discrete items, for the six months
ended September 30, 2011 and September 30, 2010 was 32.4% and 32.5%, respectively. Changes in the
anticipated results of the Company’s international operations, the outcome of tax audits and any
other changes in potential tax liabilities may result in additional tax expense or benefit in
future periods, which are not considered in the Company’s estimated annual effective tax rate.
While the Company does not currently view any such items as individually material to the results of
the Company’s consolidated financial position or results of operations, the impact of such items may yield additional tax
expense or benefit in the remaining quarters of fiscal year 2012 and future periods and the Company
is anticipating a fiscal year 2012 effective tax rate of approximately 31% to 32%.
|
Segment and Geographic Information 3 (Details) (Restructuring Activity Fiscal Plan 2012 [Member], Severance [Member], USD $) In Millions | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011
Mainframe Solutions [Member] | Sep. 30, 2011
Enterprise Solutions [Member] | Sep. 30, 2011
Services [Member] | Sep. 30, 2011 | |
Segment Reporting Information [Line Items] | ||||
Severance costs | $ 23 | $ 20 | $ 1 | $ 44 |
Acquisitions (Details) (USD $) In Millions, unless otherwise specified | 3 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | Mar. 31, 2011 | Sep. 30, 2011
ITKO [Member] | Sep. 30, 2011
ITKO [Member] | Aug. 31, 2011
ITKO [Member] | Sep. 30, 2011
ITKO [Member]
Minimum [Member]
Year | Sep. 30, 2011
ITKO [Member]
Minimum [Member]
Purchased software products [Member]
Year | Sep. 30, 2011
ITKO [Member]
Maximum [Member]
Year | Sep. 30, 2011
ITKO [Member]
Maximum [Member]
Purchased software products [Member]
Year | Sep. 30, 2011
Fiscal 2012 Acquisitions [Member] | Sep. 30, 2011
Fiscal 2012 Acquisitions [Member]
Minimum [Member]
Year | Sep. 30, 2011
Fiscal 2012 Acquisitions [Member]
Minimum [Member]
Purchased software products [Member]
Year | Sep. 30, 2011
Fiscal 2012 Acquisitions [Member]
Maximum [Member]
Year | Sep. 30, 2011
Fiscal 2012 Acquisitions [Member]
Maximum [Member]
Purchased software products [Member]
Year | Sep. 30, 2011
Arcot [Member] | Dec. 31, 2010
Arcot [Member] | Sep. 30, 2011
Arcot [Member]
Minimum [Member]
Year | Sep. 30, 2011
Arcot [Member]
Maximum [Member]
Year | Sep. 30, 2011
Arcot [Member]
Purchased software products [Member]
Year | |
Allocation of purchase price and estimated useful lives | |||||||||||||||||||
Business acquisition, percentage of voting interests acquired | 100.00% | 100.00% | |||||||||||||||||
Finite-lived intangible assets | $ 6 | $ 6 | $ 11 | $ 39 | |||||||||||||||
Purchase software | 148 | 148 | 8 | 86 | |||||||||||||||
Goodwill | 192 | 192 | 20 | 60 | |||||||||||||||
Deferred tax assets/(liabilities) | (50) | (50) | (3) | (1) | |||||||||||||||
Other assets net of other liabilities assumed | 21 | 21 | 3 | 13 | |||||||||||||||
Purchase Price | 317 | 317 | 39 | 197 | |||||||||||||||
Cash acquired from acquisition | 20 | ||||||||||||||||||
Estimated Useful Life | |||||||||||||||||||
Finite-lived intangible assets, estimated useful life | 3 | 5 | 15 | 7 | 3 | 5 | 15 | 7 | 2 | 5 | 10 | ||||||||
Goodwill, estimated useful life | Indefinite | Indefinite | Indefinite | ||||||||||||||||
Acquisitions (Textual) [Abstract] | |||||||||||||||||||
Accrued acquisition-related costs relative to amounts withheld subject to indemnification protections | $ 44 | $ 77 |
Goodwill Capitalized Software and Other Intangible Assets (Tables) | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill, Capitalized Software and Other Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized software and other intangible assets |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization expense over next five fiscal years |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill activity |
|
Segment Information | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION |
NOTE Q — SEGMENT INFORMATION
In the first quarter of fiscal year 2012, the Company completed its implementation of changing the
internal reporting used by its Chief Executive Officer for evaluating segment performance and
allocating resources. The new reporting disaggregates the Company’s operations into Mainframe
Solutions, Enterprise Solutions and Services segments, and represented a change in the Company’s
operating segments under ASC 280, “Segment Reporting.” Prior to fiscal year 2012, the Company
reported and managed its business based on a single operating segment under ASC 280.
The Company’s Mainframe Solutions and Enterprise Solutions operating segments comprise its software
business organized by the nature of the Company’s software offerings and the product hierarchy in
which the platform operates on. The Services operating segment comprises implementation,
consulting, education and training services, including those directly related to the mainframe and
distributed software that the Company sells to its customers.
The Company regularly enters into a single arrangement with a customer that includes Mainframe
Solutions segment software products, Enterprise Solutions segment software products and Services.
The amount of contract revenue assigned to segments is generally based on the manner in which the
proposal is made to the customer. The software product revenue is assigned to the Mainframe
Solutions and Enterprise Solutions segments based on either: (1) a list price allocation method
(which allocates a discount in the total contract price to the individual products in proportion to
the list price of the products); (2) allocations included within internal contract approval documents; or
(3) the
value for individual software products as stated in the customer contract. The price for the
implementation, consulting, education and training services is separately stated in the contract
and these amounts of contract revenue are assigned to the Services segment. The contract value
assigned to each segment is then recognized in a manner consistent with the revenue recognition
policies the Company applies to the customer contract for purposes of preparing the Condensed
Consolidated Financial Statements.
Segment expenses include costs that are controllable by segment managers (i.e., direct costs) and,
in the case of the Mainframe Solutions and Enterprise Solutions segments, an allocation of shared
and indirect costs (i.e., allocated costs). Segment-specific direct costs include a portion of
selling and marketing costs, licensing and maintenance costs, product development costs, general
and administrative costs and amortization of the cost of internally developed software. Allocated
segment costs primarily include indirect selling and marketing costs and general and administrative
costs that are not directly attributable to a specific segment. The basis for allocating shared
and indirect costs between the Mainframe Solutions and Enterprise Solutions segments is dependent
on the nature of the cost being allocated and is either in proportion to segment revenues or in
proportion to the related direct cost category. Expenses for the Services segment consist only of
direct costs and there are no allocated or indirect costs for the Services segment.
During the second quarter of fiscal 2012, the Company incurred severance costs associated with the
Fiscal 2012 Plan, of which $23 million, $20 million and $1 million were assigned to the Mainframe
Solutions, Enterprise Solutions and Services segments, respectively. Refer to Note D, “Severance
and Exit Costs,” in the Notes to the Condensed Consolidated Financial Statements for additional
information.
Unallocated segment expenses include the following: share-based compensation expense; amortization
of purchased software; amortization of other intangible assets; derivative hedging gains and
losses; and severance, exit costs and related charges associated with the Company’s Fiscal 2007
Plan.
A measure of segment assets is not currently provided to the Company’s Chief Executive Officer and
has therefore not been disclosed. Also, goodwill by segment has not been disclosed because the
Company has not yet completed its allocation of goodwill among the segments.
The Company’s segment information for the three and six months ended September 30, 2011 and 2010 is
as follows:
Reconciliation of segment profit to income from continuing operations before income taxes for the three
months ended September 30, 2011:
Reconciliation of segment profit to income from continuing operations before income taxes for the six months ended September 30, 2011:
Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended September 30, 2010:
Reconciliation of segment profit to income from continuing operations before income taxes for the six months ended September 30, 2010:
The table below summarizes the Company’s revenue from the United States and from international
(i.e., non-U.S.) locations:
|
Acquisitions (Tables) | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of purchase price and estimated useful lives |
The pro forma effects of the Company’s fiscal year 2012 acquisitions to the Company’s revenues and
results of operations during fiscal year 2011 and 2012 were considered immaterial. The purchase
price allocation of the Company’s fiscal year 2012 acquisitions is as follows:
During the third quarter of fiscal year 2011, the Company acquired 100% of the voting equity
interests of Arcot Systems, Inc. (Arcot), a privately held provider of authentication and fraud
prevention solutions through on-premises software or cloud services. The purchase price allocation
was finalized in the second quarter of fiscal 2012 and no material adjustments were made to amounts
previously reported. The following represents the allocation of the purchase price and estimated
useful lives to the acquired net assets of Arcot:
|
Acquisitions | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS |
NOTE B — ACQUISITIONS
Acquisitions of businesses are accounted for as purchases and, accordingly, their results of
operations have been included in the Company’s Condensed Consolidated Financial Statements since
the respective dates of the acquisitions. The purchase price for each of the Company’s
acquisitions is allocated to the assets acquired and liabilities assumed from the acquired entity.
In August 2011, the Company acquired 100% of the voting equity interest of Interactive TKO, Inc.
(ITKO), a privately held provider of service simulation solutions for developing applications in
composite and cloud environments. The acquisition expands solutions the Company offers enterprises
and service providers for using and providing cloud computing to deliver business services. The
total purchase price of the acquisition was approximately $317 million.
The pro forma effects of the Company’s fiscal year 2012 acquisitions to the Company’s revenues and
results of operations during fiscal year 2011 and 2012 were considered immaterial. The purchase
price allocation of the Company’s fiscal year 2012 acquisitions is as follows:
Transaction costs for acquisitions were immaterial. The excess purchase price over the
estimated value of the net tangible and identifiable intangible assets was recorded to goodwill.
The preliminary allocation of a significant portion of the purchase price to goodwill was
predominantly due to the intangible assets that are not separable, such as assembled workforce and
going concern. The goodwill relating to the ITKO acquisition is not expected to be deductible for
tax purposes. Goodwill relating to the other fiscal year 2012 acquisitions is expected to be
deductible for tax purposes.
The Company’s acquisitions during the first half of fiscal year 2011 were considered immaterial,
both individually and in the aggregate, compared with the results of the Company’s operations.
Therefore, purchase accounting information and pro forma disclosure are not presented.
During the third quarter of fiscal year 2011, the Company acquired 100% of the voting equity
interests of Arcot Systems, Inc. (Arcot), a privately held provider of authentication and fraud
prevention solutions through on-premises software or cloud services. The purchase price allocation
was finalized in the second quarter of fiscal 2012 and no material adjustments were made to amounts
previously reported. The following represents the allocation of the purchase price and estimated
useful lives to the acquired net assets of Arcot:
The Company had approximately $44 million and $77 million of accrued acquisition-related costs
at September 30, 2011 and March 31, 2011, respectively, all of which related to purchase price
amounts withheld subject to indemnification protections.
|
Fair Value Measurements | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS |
NOTE K — FAIR VALUE MEASUREMENTS
The following table presents the Company’s assets and liabilities that are measured at fair value
on a recurring basis at September 30, 2011 and March 31, 2011:
At September 30, 2011 and March 31, 2011, the Company did not have any assets or liabilities
measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
The following table presents the carrying amounts and estimated fair values of the Company’s
financial instruments that are not measured at fair value on a recurring basis at September 30,
2011 and March 31, 2011:
The carrying values 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
total debt, including current maturities, have been based on quoted market prices.
|
Stockholders' Equity 1 (Details) (USD $) In Millions, except Per Share data | 3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2011 | Jun. 30, 2011 | Sep. 30, 2010 | Jun. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Components of comprehensive income | ||||||
Net income | $ 236 | $ 222 | $ 477 | $ 439 | ||
Net unrealized gain on cash flow hedges, net of tax | 0 | 1 | 0 | 2 | ||
Foreign currency translation adjustments | (85) | 74 | (68) | 40 | ||
Total comprehensive income | 151 | 297 | 409 | 481 | ||
Cash Dividends | ||||||
Declaration Date | Aug. 03, 2011 | May 12, 2011 | Jul. 28, 2010 | May 12, 2010 | ||
Dividend Per Share | $ 0.05 | $ 0.05 | $ 0.04 | $ 0.04 | ||
Record Date | Aug. 16, 2011 | May 23, 2011 | Aug. 09, 2010 | May 31, 2010 | ||
Total Amount | $ 25 | $ 25 | $ 20 | $ 21 | ||
Payment Date | Sep. 14, 2011 | Jun. 16, 2011 | Aug. 19, 2010 | Jun. 16, 2010 |
Stockholders' Equity (Tables) | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of comprehensive income |
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Cash Dividends |
Six Months Ended September 30, 2011:
(in millions, except per share amounts)
Six Months Ended September 30, 2010:
(in millions, except per share amounts)
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Accounting For Share-Based Compensation | 6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting For Share-Based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTING FOR SHARE-BASED COMPENSATION |
NOTE O — ACCOUNTING FOR SHARE-BASED COMPENSATION
The Company recognized share-based compensation in the following line items on the Condensed
Consolidated Statements of Operations for the periods indicated:
The following table summarizes information about unrecognized share-based compensation costs at
September 30, 2011:
There were no capitalized share-based compensation costs for the three and six months ended
September 30, 2011 or 2010.
Under the Company’s long-term incentive plans, the value of performance share unit (PSU) awards is
determined using the closing price of the Company’s common stock on the last trading day of the
quarter until the PSUs are granted. Compensation costs for the PSUs are amortized over the
requisite service periods based on the expected level of achievement of the performance targets. At
the conclusion of the performance periods for the PSUs, the applicable number of shares of
restricted stock awards (RSAs), restricted stock units (RSUs) or unrestricted shares granted may
vary based upon the level of achievement of the performance targets and the approval of the
Company’s Compensation and Human Resources Committee (which may reduce any award for any reason in
its discretion).
For the six months ended September 30, 2011 and 2010, the Company issued options for
approximately 0.6 million shares and 1.2 million shares, respectively. The weighted average fair
values and assumptions used for the options granted were as follows:
The table below summarizes all of the RSUs and RSAs, including grants made pursuant to the
long-term incentive plans discussed above, granted during the three and six months ended September
30, 2011 and 2010:
Employee Stock Purchase Plan
At the Company’s August 3, 2011 Annual Meeting of Stockholders, the Company’s 2012 Employee Stock
Purchase Plan (the ESPP) was approved. The ESPP offer period is semi-annual and allows
participants to purchase the Company’s common stock at 95% of the closing price of the stock on the
last day of the plan period. A total of 30,000,000 shares may be issued under the ESPP. Shares will
not be issued until the end of the first offer period, which occurs at the end of the first quarter
of fiscal year 2013.
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Accounting For Share-Based Compensation (Tables) | 6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting For Share-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recognized share-based compensation |
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Unrecognized share based compensation cost |
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Weighted average estimated values of employee stock option grants |
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Summarizes the activity of RSAs and RSUs under the Plans |
|
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