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CA, Inc. (CA)

F4Q09 Earnings Call

May 13, 2009 5:00 pm ET


Joseph Doncheski - Vice President of Investor Relations

John Swainson - Chief Executive Officer

Nancy Cooper - Chief Financial Officer


Sarah Friar - Goldman Sachs

Michael Turits - Raymond James

Abhey Lamba - UBS

Walter Pritchard – Cowen and Company

John DiFucci - JP Morgan

Todd Raker - Deutsche Bank

Phil Winslow - Credit Suisse

Katherine Egbert - Jefferies & Company


Welcome to today’s CA's fourth quarter and full fiscal year 2009 financial results conference call. At this time for opening remarks and introductions I would like to turn the call over to Mr. Joseph Doncheski, Vice President of Investor Relations. Please go ahead, sir.

Joseph Doncheski

Thank you and good afternoon everyone. Welcome to CA’s fourth quarter 2009 earnings call. I am Joseph Doncheski, Vice President of Investor Relations for CA. Joining me today are John Swainson, our Chief Executive Officer and Nancy Cooper, our Chief Financial Officer.

As a reminder this conference call is being broadcast on Wednesday, May 13, 2009 over the phone and the Internet to all interested parties. The information shared in this call is effective as of today’s date and will not be updated. All content is the property of CA and is protected by U.S. and International Copyright Law and may not be reproduced, transcribed or produced in any way without the expressed written consent of CA. We consider your continued participation in this call as consent to our recording.

During this call non-GAAP financial measures will be discussed. Reconciliations to the most directly comparable GAAP financial measures are included in the earnings release which was filed on Form 8-K earlier today as well as in our supplemental earnings material, all of which are available on our website at Today’s discussion will include forward-looking statements subject to risks and uncertainties and actual results could differ materially from these forward-looking statements. Please refer to our SEC filings for a detailed discussion of potential risks.

As part of our ongoing efforts to streamline our financial presentation and promote transparency, we are again providing some additional detail in our supplemental disclosures as follows. We have broken down the non-current portion of our revenue backlog into three components, giving better insight into the how these amounts flow into future revenue. We are also providing a roll forward of our revenue backlog for additional clarity. Finally, given the foreign exchange volatility in fiscal 2009, we are now providing additional constant currency detail in our supplemental information.

With that, I’ll turn the call over to John Swainson.

John Swainson

Thanks Joe and good afternoon everyone. I am very I am very satisfied with CA’s performance during the last quarter. Our results reflect the hard work we have been doing over the last four years to become a more innovative, cost-effective and customer-focused organization. They tell a compelling story.

In FY09, we increased our non-GAAP EPS by 30% over FY08, our cash flow from operations by 10%, our total bookings by 11% and we showed a five percentage point improvement in our non-GAAP operating margin. We met or exceeded our annual outlook for revenue, bookings, EPS and cash flow from operations.

Even in a good economic environment these numbers would be impressive but in the current economy they are even more so as they reflect our outstanding focus, cost management discipline and execution. We were able to grow annual revenue modestly on a constant currency basis which speaks not only to the resiliency of our ratable business model but also more importantly to the value our customers see in our products. They view our solutions as key to helping them get more value out of their IT infrastructure.

Let me give you a couple of examples. In the fourth quarter we closed a large, multi-million deal with Axiom, one of the world’s largest providers of interactive marketing services. Axiom turned to us to help them refocus their IT resources to deliver the services they needed to drive their business. In winning this contract we stressed our concept of Lean IT which calls for maximizing IT value while minimizing IT costs. Our solution enables Axiom to monitor and manage every facet of their IT environment; networks and infrastructure, application performance, mainframe, projects and security.

What was particularly gratifying about this win was that we beat an incumbent vendor, BMC. Any time a customer chooses you over an incumbent it speaks volumes about the quality and completeness of your offerings. Partnerships with customers like Axiom work well when we offer them ways of reducing their costs and at the same time increasing the value of IT to their business.

On average, 70% of IT budgets are spent on just managing operations and keeping the lights on with only 30% left for grow or transform initiatives. If we can help bring down the cost of managing IT systems by just a few points and funnel that money into driving business growth it will help our customers significantly change their value proposition.

Another impressive CA win was at Cablevision who is one of the nation’s largest cable companies serving 4.7 million households and 600,000 businesses in the New York metropolitan area. To be successful, Cablevision needs its network infrastructure operating at optimal levels 24/7. Downtime for the network infrastructure is just not an acceptable option. Neither is over-spending on IT. Cablevision found that its existing software and services solution provided by IBM was just too costly so they turned to CA and our E-health and Spectrum offerings to proactively manage and monitor their network.

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