Computer Associates Corporate Profile June 2002

Transcription

1 Computer Associates Corporate Profile June 2002 vision innovation quality value customers

2 WHY CA? With more than ninety-five percent of value Fortune 500 companies relying on Computer Associates International, Inc. (NYSE: CA) technology, CA helps manage the computing infrastructures of companies worldwide. CA is a $3 billion revenue enterprise software company, providing business-critical technology that serves as the backbone of commerce and shapes the way business is conducted throughout the world. CA s broad range of world-class software solutions address all aspects of ebusiness management through industry-leading brands. These solutions are built on a common software infrastructure, can be used in a variety of mainframe and distributed environments, are integrated and are platform-neutral. This means that regardless of the hardware or software that a business is using, CA s solutions have been specifically designed to integrate seamlessly with them. For more than 26 years, CA has driven technological and business innovation to new levels. The Company has obtained more than 200 patents worldwide, has more than 800 patent applications pending and was the first and only global enterprise software company to meet the exacting standards of ISO 9002 quality certification. CA continues to evolve its core technologies and Best Practices to meet the next generation of business challenges and help drive growth. CA s business model provides CFI with more than technology. Under the flexible new licensing terms, like the month-to-month option, we are enjoying the benefits of CA s ebusiness management solutions without the risks of the longer-term conventional licensing arrangements. In an ever-evolving business world, we welcome a technology partner that gives us choice and flexibility. Andy Crowder, CIO, CFI/WestgateResorts VALUABLE BUSINESS. customers Founded in 1976, CA continues to innovate and build a viable long-term business by making technology work for customers. CA delivers solutions that meet real business needs in ways that are valuable to the customer. The Company s broad range of solutions are used by many industries, including manufacturers, financial services providers, banks, airlines, insurance companies, educational institutions, hospitals and government agencies, to solve real-world problems, perform vital functions and simplify the way businesses operate. Through its revolutionary business model, CA is enhancing its customer relationships by helping customers reduce the risk of their information technology (IT) investments by enabling them to purchase CA solutions on a subscription or valueadded basis. For example, customers can now pay for software on a month-tomonth basis to validate their return on investment before committing to a longer-term contract. CA s unique licensing models also allow customers to pace their technology spending with the growth of their business. Towards that end, we now offer software licenses that are based on predefined metrics that are relevant to the customer. For shareholders, CA s business model generates deferred revenue, which provides a more visible and predictable future revenue stream. As of March 31, 2002, as a result of the business model, the Company s deferred revenue balance exceeded $3.2 billion. This balance will be amortized into revenue over periods ranging from 1 to 5 years. Ultimately, it is part of the Company s strategy to deliver the true value of its technology to customers in ways that build long-term relationships, which in turn drive growth and shareholder value.

3 SOLUTIONS THAT WORK. CA s solutions address all aspects of ebusiness management in six focus areas: Enterprise Management, Security, Storage, Portal and Business Intelligence, Application Life Cycle Management, and Data Management and Application Development. CA continues to drive innovation by evolving its brands to meet the next generation of computing and business challenges. These challenges include a more mobile work force, increased security needs because of ecommerce, wireless devices and Internet-driven global networks, the rise of Web Services and increasingly complex enterprise environments. The CA brands are designed to work together seamlessly. By focus area, the CA brands include: ENTERPRISE MANAGEMENT Unicenter is recognized as the industry standard for enterprise management. Companies must manage their networks for continuous availability and optimal performance. CA offers Unicenter as a modular, integrated solution and has extended this technology to new platforms, new devices and emerging infrastructure elements, such as wireless communication and mobile devices. SECURITY etrust delivers award-winning, bulletproof security that makes CA the leading supplier of comprehensive security solutions. By providing solutions in Identity Management, Security Operations and Access Management, etrust covers the entire enterprise. CA s most recent security solution, etrust 20/20, delivers a new line of defense against potential information attacks, theft, corporate espionage and policy violations through patent-pending technology. STORAGE BrightStor is CA s family of industry-leading storage management solutions. As the first of an emerging class of next-generation storage management capabilities known as Enterprise Storage Automation, BrightStor Portal provides a single point of management, integrating storage functions across a company s network. BrightStor Storage Resource Manager offers customers the unprecedented ability to centrally manage storage resources. Together, the BrightStor family of solutions can be scaled for businesses large or small and is designed to integrate with different hardware and software. PORTAL AND BUSINESS INTELLIGENCE CleverPath delivers unique portal and business intelligence capabilities that support a broad range of new and emerging standards. CleverPath solutions integrate with Web Services to allow solutions to be deployed to virtually any wireless or mobile device. They present information in a personalized environment, providing just what users need, when they need it and in a format suited to their individual preferences. Predictive analysis and rule-based technology add intelligence to help ebusinesses identify and maximize new opportunities. APPLICATION LIFE CYCLE MANAGEMENT AllFusion is CA s family of comprehensive solutions to help customers build, deploy, test and manage ebusiness applications while controlling costs. These solutions are designed to help customers increase staff productivity and shorten development cycle times while ensuring that application designs accurately fulfill business requirements. DATA MANAGEMENT AND APPLICATION DEVELOPMENT Advantage represents CA s family of industrial-strength open-standardsbased databases and the services needed to rapidly integrate applications, databases and business partner systems through powerful XML, transport and messaging services covering platforms from mainframes to wireless devices. And CA s Jasmine brand represents CA s object database and object tools solution.

4 CUSTOMER SPOTLIGHT. Finnair, the Finnish national airline, estimates that by 2006 most of the Company s sales will be generated through the Internet, and more than half of its 7.5 million annual passengers will be using Internet services for everything from making ticket reservations to checking in. More than ever, Finnair s IT investments must deliver uncompromising performance and outstanding value. To succeed, the airline turned to CA. Finnair has partnered with CA to reduce its IT risks by linking software license fees to the airline s revenue passenger kilometers, a key airline metric. Specifically, CA s flexible business model will enable the airline to tie software costs directly to their business value. For Finnair, this innovative agreement addresses both the technical and financial management issues associated with the airline s critical IT operations. For CA, it s an opportunity to be a key partner to Finnair s long-term success while delivering the true value of CA technology. CASE STUDY The month-to-month lease option offered through CA s business model fits our business needs exactly. This type of payment flexibility is critical in the Government contracting sector. Other companies that don t offer this model are not as likely to get our business. The flexible payment plans for purchases allows us to spread our costs out over time, and align our cash flows more closely with the rate of deployment and use of the tool. Mark Leaman, Vice President and Director, Process Management Group, SRA International THE CA SMART SEAL. To provide customers with truly integrated, comprehensive solutions from CA and its partners, CA developed the ca smart Seal of Excellence. This seal identifies those partner solutions that have been integrated with CA technology. To earn this distinctive brand, a software product must be integrated with CA technology, the product must be developed with CA technology or the hardware must contain CA technology. More than 200 partner solutions have earned the ca smart Seal of Excellence. It s another way CA is building strategic partner relationships and delivering valuable, comprehensive solutions to customers. MANAGEMENT STRENGTH AND CORPORATE GOVERNANCE. The CA team is led by some of the finest business and technology leaders who have long tenures with the Company and track records of success within the industry. In addition, CA has a strong board of directors, including independent directors, committed to the highest standards of corporate governance. To further its governance initiatives, CA s Board of Directors recently adopted corporate governance Best Practices, which include guiding principles such as establishing the role of a lead independent director and determining the rotation and makeup of various corporate committees of the board.

5 FINANCIALS. CA s current business model, introduced in October 2000, enables customers to license software on a subscription and month-tomonth basis, and allows them to vary their software mix as their business and technology needs change. Customers can determine the length and dollar value of their software licenses and receive future software within designated product lines, allowing customers to derive greater value from their software investments. The business model benefits investors by building deferred subscription revenue, which creates a more visible and predictable future revenue stream. This is expected to reduce the volatility of quarterly revenue and earnings and provides a more meaningful way to measure operating performance. In accordance with Generally Accepted Accounting Principles (GAAP), product revenue under our new form of licensing arrangements is now recognized ratably over the term of the agreement. The portion of product revenue not yet recognized into revenue is recorded on CA s balance sheet as deferred subscription revenue. This deferred subscription revenue provides a steady stream of future revenue over the life of the related contract. This difference in accounting treatment initially results in lower reported revenue and earnings; however, this trend is expected to reverse as more contracts are signed and renewed under the current business model. This past year CA had generated more than $1 billion in operating cash flow (prior to capital and financing requirements), and is one of only three independent software vendors in the world with this distinction. Fiscal 2002 represents the fifth straight year that CA has generated more than $1 billion in operating cash flow. Further positioning the Company for its ongoing operations and scheduled debt reduction, CA completed a $660 million convertible note offering in March CA ended the year with approximately $1.2 billion of cash and marketable securities on its balance sheet. The Company has shown steady sequential growth over the past several quarters, helped in large part by its business model, which seems to have stimulated a greater volume of smaller transactions and opened doors to new customers... additionally we sense a clear improvement in CA s customer relationships, which have benefited greatly from the Company s new customer support organization and focus. Drew Brosseau, SG Cowen, May 2002 Financial Data (in millions, except per share data) FY 2002 FY 2001 Revenue (1) $ 2,964 $ 4,190 Net Operating (loss)/earnings (1) $ (265) $ 96 Diluted Operating (LPS)/EPS (2) $ (0.46) $ 0.16 Shares Used in Computation Dividends per Share $ 0.08 $ 0.08 Assets $12,226 $14,436 Long-Term Debt $ 3,334 $ 3,629 Equity $ 4,617 $ 5,780 Aggregate Deferred Subscription Revenue $ 3,226 $ 1,875 Cash from Operations $ 1,251 $ 1,383 (1) Revenue and earnings results from 2001 to 2002 are not comparable due to the business model change in October 2000, as discussed in the narrative. (2) Net Operating (Loss)/Earnings and Diluted Operating (LPS)/EPS exclude acquisition amortization and special items. Special items consist of a $59 million impairment of assets sold, recorded in FY 2002, and a $184 million special gain associated with the 1995 Key Employee Stock Ownership Plan litigation and a $31 million write-off related to a bankruptcy filing, recorded in FY Market Information (as of May 10, 2002): Current Price $ Fiscal 2002 Range $ to $38.34 Indicated Dividend $ 0.08 Current Yield.46% Shares Outstanding (mil) 579 Market Cap (mil) $ 10,066 DJIA 9, NASDAQ 1, FINANCIAL ANALYSTS. Credit Suisse First Boston Deutsche Bank Securities, Inc. First Albany Corporation JP Morgan H&Q Merrill Lynch & Co., Inc. Morgan Stanley Parker/Hunter Incorporated Prudential Securities Incorporated RBC Capital Markets SG Cowen & Co. SoundView Technology Corporation qual

6 ity THE CA COMMITMENT. CA is committed to keeping customers at the center of everything it does. This dedicated focus is aimed at driving customer satisfaction and long-term relationships: In October 2000, the Company introduced a value-building business model for licensing software that accommodates customers rapidly changing business requirements and reflects their need to achieve a measurable return on their IT investments. CA initiated research and development efforts that encourage customers to be partners in developing highquality solutions. Over the past three years, the Company has invested close to $2 billion in R&D with approximately 15% of revenue devoted to R&D. CA also has developed and enhanced innovative programs that deliver extraordinary value. In 2002, CA launched CustomerConnect SM, its family of web-based services that makes it easier for customers to do business with CA. Customers can value Direct inquiries to: Investor Relations Computer Associates International, Inc. One Computer Associates Plaza Islandia, NY (631) cainvestor@ca.com Web address: ca.com/invest order and download products, update their account information and obtain support and assistance, all at their keyboards any time of day or night. The Company s Customer Relations Organization (CRO) has more than 650 non-commissioned CA employees dedicated to ensuring customer satisfaction. In addition, CA offers Education, Technical Support and Professional Services to help customers derive the most value from not only their CA technology but also their relationships with CA. To further ensure that CA s business is aligned with the interests of its customers, each of CA s solutions are managed by a brand leader. Each leader is responsible for development, product marketing, product support and quality assurance in each of CA s six focus areas. These teams are dedicated to helping customers maximize the value of their investments in CA technology. Unified sales and service organizations ensure customer continuity and help drive long-term customer satisfaction. customers Or contact CA s transfer agent: Mellon Investor Services, LLC 85 Challenger Road Ridgefield Park, NJ Hearing Impaired: We believe the Company continues to improve its customer service and product portfolio, enhancing its own competitiveness. We believe that the simplified messaging that CA is pursuing in its go-to-market strategy, designing and selling solutions around its six focus areas, will help the Company penetrate accounts and increase market share... John Rizzuto, CS First Boston, May 2002 SOCIAL RESPONSIBILITY. CA s corporate character is defined by how the Company acts not only on the job but also in the communities where CA employees live and work. CA has a long history of social responsibility specifically aimed at helping children succeed. The Company donates millions of dollars, thousands of hours and numerous technology solutions to more than 4,000 charities worldwide. CA also partners with a select group of charitable organizations that share our commitment to children. Our relationships with these organizations enable us to make a significant impact in communities where the corporation has a major presence. CA currently supports The Digital Schoolhouse Foundation, National Center for Missing & Exploited Children, Junior Achievement, The Smile Train and KaBOOM!. We also donate where our dollars will do the most good, through programs such as CA s Breakfast for Charity, and CA s 2-for-1 matching Charitable Gifts Program Computer Associates International, Inc. (CA). All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. MP