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CA Technologies Reports First Quarter Fiscal Year 2019 Results

August 6, 2018

NEW YORK--(BUSINESS WIRE)--Aug 6, 2018--CA Technologies (NASDAQ:CA) today reported financial results for its first quarter fiscal 2019, which ended June 30, 2018.

As of April 1, 2018, CA Technologies adopted Accounting Standard Codification 606 (ASC 606) using the modified retrospective method. First quarter fiscal 2019 financial results are presented under ASC 606 and under ASC 605 for comparison to prior periods.

On July 11, 2018, CA Technologies entered into a definitive agreement to be acquired by Broadcom, Inc. Due to the pending acquisition, CA Technologies will not host a conference call to discuss its first quarter results.

FINANCIAL OVERVIEW

* Non-GAAP income, Non-GAAP earnings per share and CC or Constant Currency are non-GAAP financial measures, as noted in “Non-GAAP Financial Measures” below. A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release.

REVENUE AND BOOKINGS

*CC or Constant Currency is a non-GAAP financial measure, as noted in “Non-GAAP Financial Measures” below. A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release.

Total bookings for the first quarter of fiscal 2019 were $778 million.

EXPENSES, MARGIN AND EARNINGS PER SHARE

*Refer to the discussion of Non-GAAP financial measures included in this news release and the reconciliation of non-GAAP financial measures to their comparable GAAP financial measures included in the tables following this news release.

**CC or Constant Currency is a non-GAAP financial measure, as noted in “Non-GAAP Financial Measures” below. A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release.

GAAP income tax benefit included a net $98 million tax benefit relating to changes in the provisional amounts for the US Tax Cuts and Jobs Act, enacted on December 22, 2017 (“US Tax Reform”). GAAP EPS was positively impacted by $0.23 from this US Tax Reform adjustment. Non-GAAP income tax expense excluded the aforementioned tax benefit relating to US Tax Reform.

SELECTED HIGHLIGHTS FROM THE QUARTER

CA Technologies was named a Leader in the Gartner Magic Quadrant for Project Portfolio Management for the second consecutive year.  (1)(5) CA Technologies was named a Leader in the Gartner Magic Quadrant for Full Life Cycle API Management for the sixth consecutive time. (2)(3)(5) CA Technologies was named a Leader in the Gartner Magic Quadrant for Enterprise Agile Planning Tools. (4)(5)

SEGMENT INFORMATION

*The manner in which the Company measures and recognizes revenues for segment reporting was not revised upon adoption of ASC 606. For segment reporting purposes, the Company follows its previous ASC 605 policies, which recognizes software license revenue ratably, except for sales of perpetual licenses on a stand-alone basis, which are recognized at a point-in-time.

**CC or Constant Currency is a non-GAAP financial measure, as noted in “Non-GAAP Financial Measures” below. A reconciliation of non-GAAP financial measures to their comparable GAAP financial measures is included in the tables following this news release.

CAPITAL STRUCTURE

Cash and cash equivalents at June 30, 2018 were $3.328 billion. With $2.780 billion in total debt outstanding and $139 million in notional pooling, the Company’s net cash position was $409 million. Approximately 48% of the Company’s cash and cash equivalents were held by foreign subsidiaries outside the United States at June 30, 2018. In the first quarter of fiscal 2019, the Company repurchased 2.3 million shares of its common stock for $80 million. As of June 30, 2018, the Company was authorized to purchase $407 million of its common stock under its current stock repurchase program. Pursuant to the terms of the merger agreement with Broadcom, Inc, the Company may not continue to repurchase shares without Broadcom Inc.’s consent. The Company distributed $107 million in dividends to stockholders during the first quarter of fiscal 2019. The Company’s outstanding share count at June 30, 2018 was approximately 413 million.

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

About CA Technologies

CA Technologies (NASDAQ: CA) creates software that fuels transformation for companies and enables them to seize the opportunities of the Application Economy. Software is at the heart of every business in every industry. From planning, to development, to management and security, CA is working with companies worldwide to change the way we live, transact, and communicate - across mobile, private and public cloud, distributed and mainframe environments. Learn more at www.ca.com.

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Non-GAAP Financial Measures

This news release, the accompanying tables and the additional content that is available on the Company’s website include certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). Non-GAAP metrics for operating expenses, operating income, operating margin, net income, and diluted earnings per share exclude the following items: non-cash amortization of purchased software, internally developed software and other intangible assets; share-based compensation expense; charges relating to restructuring and rebalancing initiatives that are large enough to require approval from the Company’s Board of Directors and certain other gains and losses, which include the gains and losses since inception of hedges that mature within the quarter, but exclude gains and losses of hedges that do not mature within the quarter. The effective tax rate on GAAP and non-GAAP income from operations is the Company’s provision for income taxes expressed as a percentage of pre-tax GAAP and non-GAAP income from operations, respectively. These tax rates are determined based on an estimated effective full year tax rate, with the effective tax rate for GAAP including the impact of discrete items in the period in which such items arise and the effective tax rate for non-GAAP generally allocating the impact of discrete items pro rata to the fiscal year’s remaining reporting periods. The non-GAAP effective tax rate is typically equal to the full year GAAP effective tax rate, therefore no adjustment is required on an annual basis. However, to minimize certain distortions that otherwise would have resulted from applying this methodology to the significant non-recurring impact on the Company’s tax expense from enactment of the US Tax Reform in the third quarter of fiscal 2018, such impact was recorded as a discrete item in second half of fiscal 2018 and the first quarter of fiscal 2019 only for purposes of the GAAP effective tax rate, but excluded from the non-GAAP effective tax rate, which also yields different full-year effective tax rates for the Company’s GAAP and non-GAAP results in fiscal 2018 and fiscal 2019. Non-GAAP diluted earnings per share also excludes the impact of the US Tax Reform. Non-GAAP adjusted cash flow from operations excludes payments associated with the Board-approved rebalancing initiative, restructuring and other payments. Non-GAAP free cash flow excludes purchases of property and equipment. The Company presents constant currency information to provide a framework for assessing how the Company’s underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than U.S. dollars are converted into U.S. dollars at the exchange rate in effect on the last day of the Company’s prior fiscal year (i.e., March 31, 2018). Constant currency excludes the impacts from the Company’s hedging program. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, non-GAAP financial measures facilitate management’s internal comparisons to the Company’s historical operating results and cash flows, to competitors’ operating results and cash flows, and to estimates made by securities analysts. Management uses these non-GAAP financial measures internally to evaluate its performance and they are key variables in determining management incentive compensation. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, the Company has historically reported similar non-GAAP financial measures to its investors and believes that the inclusion of comparative numbers provides consistency in its financial reporting. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures, which are attached to this news release.

Cautionary Statement Regarding Forward-Looking Statements

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