"I am pleased that the first quarter of fiscal 2009 was a good one for CA, our seventh consecutive quarter of solid performance," said John Swainson, CA's chief executive officer. "We built on the momentum we established and sustained in fiscal year 2008 and recorded strong bookings and profit growth with cash flow from operations and revenue meeting our expectations.
"Our results indicate that CA has innovative products that are operationally critical to our customers' success; a sound, reliable financial model; and strong relationships with customers, which we are able to nurture and grow quarter after quarter, year after year," he continued.
"These advantages are the bedrock of CA's continuing success. That's why I am confident about CA's position in the marketplace and why we are reaffirming our outlook for fiscal year 2009," Swainson concluded.
Total revenue for the first quarter was $1.087 billion, up 6 percent, or flat in constant currency, from the $1.025 billion reported in the similar period last fiscal year.
Total North American revenue was up 3 percent in the first quarter while revenue from international operations was up 10 percent, or down 2 percent on a constant currency basis, compared with the same period last year.
Total bookings* in the first quarter were $1.030 billion, up 15 percent compared with $895 million in the prior year comparable period. During the quarter, the Company signed 13 license agreements with incremental values greater than $10 million, for a total of about $371 million, compared with 10 license agreements totaling about $202 million in the first quarter of fiscal year 2008. Weighted average life of subscription and maintenance bookings* in the first quarter was 3.37 years, compared with 2.95 years in the prior fiscal year period. When annualized, the year-over-year increase in annualized subscription and maintenance bookings for the quarter was 5 percent.
Total expenses, before interest and income taxes, for the first quarter were $779 million, a decrease of 4 percent, compared with $814 million in the prior year period. In the first quarter, GAAP operating income, before interest and income taxes, was $308 million, representing an operating margin of 28 percent, a 7 percentage point improvement from the prior year period.
On a non-GAAP basis, which excludes purchased software and intangibles amortization, restructuring and other costs and gains and losses on hedges of operating income relating to future periods, the Company reported first quarter operating expenses of $745 million, down 3 percent from the $769 million reported in the prior year period. Excluding the negative impact of currency, first quarter non-GAAP operating expenses were down 7 percent year-over-year. For the first quarter, non-GAAP operating income, before interest and incomes taxes, was $342 million, up 34 percent from the prior year period and representing a non-GAAP operating margin of 31 percent, a 6 percentage point improvement from the first quarter of fiscal year 2008.
The Company reported first-quarter GAAP income of $200 million or $0.37 per diluted common share, compared with income of $129 million or $0.24 per diluted common share a year earlier, representing a 54 percent increase in earnings per share.
CA recorded non-GAAP income of $214 million for the first quarter, or $0.40 per diluted common share, compared with $159 million, or $0.29 per diluted common share, reported a year earlier, representing a 38 percent increase in earnings per share.
The Company reported cash flow from operations of $54 million in the first quarter, up from a negative $13 million recorded in the first quarter of fiscal year 2008. Cash flow was affected positively by a duplicate payment of $23 million received from a customer that was returned in the second quarter.
Capital Structure
The balance of cash, cash equivalents and marketable securities at June 30, 2008, was $2.411 billion. With $2.230 billion in total debt outstanding, the Company has a net cash position of $181 million.
Outlook for Fiscal Year 2009
The Company reaffirmed its fiscal year 2009 annual outlook based on current expectations. The following represents "forward-looking statements" (as defined below).
- Total bookings growth in the mid-to-high single digits;
- Total revenue growth of 2 to 4 percent in constant currency, or $4.5 billion to $4.6 billion when translated at current foreign currency exchange rates, representing reported growth of 5 to 7 percent;
- GAAP earnings per common diluted share of $1.28 to $1.35. The outlook includes about $30 million in charges related to previously disclosed restructuring plans;
- Non-GAAP operating earnings per share of $1.45 to $1.52 per diluted common share, an increase of 22 percent to 28 percent; and
- Full-year cash flow from operations of $1.150 billion to $1.180 billion, an increase of 4 percent to 7 percent. The outlook includes about $120 million in payments related to previously disclosed restructuring plans and relatively flat cash taxes year-over-year.
Except as otherwise noted, guidance reflects current foreign currency exchange rates, assumes no acquisitions and a partial currency hedge of operating income.
The Company anticipates approximately 517 million shares outstanding at fiscal 2009 year-end and a weighted average diluted share count of approximately 541 million for the fiscal year. The Company also expects a full-year tax rate on non-GAAP income of approximately 37 percent.
A reconciliation of each non-GAAP measure referenced in this press release to its most directly comparable GAAP financial measure is included in the tables provided as part of this news release.
This news release and the accompanying tables should be read in conjunction with additional content that is available on the Company's website, including a supplemental financial package as well as a webcast that the Company will host at 5 p.m. ET today to discuss its first quarter fiscal year 2009 results. The webcast will be archived on the website. Individuals can access the webcast, as well as this press release and supplemental financial information, at http://ca.com/invest or listen to the call at 1-877-809-1564. International participants can listen to the call at 1-706-634-8757.
* The Company has modified the way in which it reports bookings and weighted average life duration in an effort to align these metrics with amounts it expects to recognize as revenue.
Total bookings now includes the value of new maintenance contracts executed by customers in the current period that were separate from license subscription contracts, certain of which had previously been excluded. This modification is reflected in the bookings reported in the first quarter of fiscal year 2008 for comparison purposes and resulted in an increase of $61 million for the first quarter of fiscal year 2008.
Weighted average life duration now includes all license and maintenance contracts for both direct and indirect channels whereas the previous calculation reflected direct product licenses only. This modification is reflected in the weighted average life duration from the first quarter of fiscal year 2008 for comparison purposes and resulted in a decrease of 0.40 years for the first quarter of fiscal year 2008.
