Introduction
This "Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A) is intended to provide an understanding of our financial condition, change in financial condition, cash flow, liquidity and results of operations. This MD&A should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements appearing elsewhere in this Report. References in this MD&A to fiscal 2009, fiscal 2008, fiscal 2007 and fiscal 2006, etc. are to our fiscal years ended on March 31, 2009, 2008, 2007 and 2006, etc., respectively.

Business Overview
We are the world's leading independent information technology (IT) management software company, helping organizations manage IT to become lean and more productive, which can help them better compete, innovate and grow. We develop and deliver software that makes it easier for organizations to manage IT throughout complex computing environments and to help them govern, manage and secure their entire IT operation - all of the people, information, processes, systems, networks, applications and databases from Web services to the mainframe, regardless of the hardware or software they are using.

We license our products worldwide, principally to large IT service providers, financial services companies, governmental agencies, retailers, manufacturers, educational institutions, and healthcare institutions. These customers typically maintain IT infrastructures that are both complex and central to their objectives for operational excellence.

We offer our software products and solutions directly to our customers through our direct sales force and indirectly through global systems integrators, managed service providers, technology partners, Enterprise IT Management (EITM) value-added resellers and distribution and volume partners.

CA's Business Model
As described in greater detail in Part I, Item 1, "Business," we license our software products directly to customers as well as through distributors, resellers and value-added resellers. We generate revenue from the following sources: license fees - licensing our products on a right-to-use basis; maintenance fees - providing customer technical support and product enhancements; and service fees - providing professional services such as product implementation, consulting and education. The timing and amount of fees recognized as revenue during a reporting period are determined in accordance with generally accepted accounting principles in the United States of America (GAAP). Revenue is reported net of applicable sales taxes.

Under our business model, we offer customers a wide range of licensing options, including the flexibility to license software under month-to-month licenses or to fix their costs by committing to longer-term agreements. Licenses sold for most of our software products permit customers to change their software product mix as their business and technology needs change and includes the right to receive software products in the future within defined product lines for no additional fee, commonly referred to as unspecified future software products. In such instances, we do not have vendor-specific objective evidence (VSOE) for the fair value of the undelivered elements, and we are therefore required under GAAP to recognize revenue from such license agreements evenly on a monthly basis (also known as ratably) over the license term.

A relatively small percentage of our revenue is recognized on a perpetual or up-front basis once all revenue recognition criteria are met in accordance with Statement of Position 97-2 "Software Revenue Recognition," issued by the American Institute of Certified Public Accountants, as amended by SOP 98-9 "Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions" (SOP 97-2) (see "Critical Accounting Policies and Estimates" below for details). In such cases, these products are not sold with the right to receive unspecified future software products and VSOE exists for maintenance. We expect to continue to offer these types of licensing arrangements; therefore, the amount of revenue we expect to recognize on an up-front basis may increase to the extent that such license agreements are not executed within a short time frame of other agreements with the same customer or in contemplation of other license agreements with the same customer where the right exists to receive unspecified future software products.

Several contracts executed prior to October 2000 (the prior business model) remain in effect and have not yet been renewed under license arrangements that contain the right to receive unspecified future software products. Under those agreements, we did not offer our customers the right to receive unspecified future software products and we record the present value of the

license agreement as revenue at the time the license agreement was signed. As these customer license agreements are renewed under our current licensing model, we expect to see an increase in revenue backlog related to these licenses, from which subscription revenue will be amortized in future periods. The favorable impact on subscription revenue from the conversion of contracts from our prior business model to our current business model is decreasing over time as the transition is completed and was not material for fiscal 2009 or 2008. The remaining balance of unbilled installment receivables that were previously recognized as revenue under our prior business model was $240 million and $342 million as of March 31, 2009 and March 31, 2008, respectively.

Under our license agreements, customers generally make installment payments for the right to use our software products over the term of the associated software license agreement. While the timing of revenue recognition is affected by the offering of unspecified future software products, it generally has not changed the timing of how we bill and collect cash from customers and as a result, our cash generated from operations has generally not been affected by the offering of unspecified future software products.

Performance Indicators
Management uses several quantitative and qualitative performance indicators to assess our financial results and condition. Each provides a measurement of the performance of our business model and how well we are executing our plan.

Our predominantly subscription-based business model is unique among our competitors in the software industry and it may be difficult to compare our results for many of our performance indicators with those of our competitors. The following is a summary of the principal quantitative and qualitative performance indicators that management uses to review performance:

YEAR ENDED MARCH 31,                                                                                  PERCENT
(DOLLARS IN MILLIONS)                                           2009         2008       CHANGE         CHANGE

Total revenue                                                $ 4,271      $ 4,277      $    (6 )            - %
Subscription and maintenance revenue                         $ 3,772      $ 3,762      $    10              - %
Net income                                                   $   694      $   500      $   194             39 %
Cash provided by operating activities                        $ 1,212      $ 1,103      $   109             10 %
Total bookings                                               $ 5,245      $ 4,724      $   521             11 %
Subscription and maintenance bookings                        $ 4,783      $ 4,110      $   673             16 %
Weighted average subscription and maintenance license
agreement duration in years                                     3.61         2.98         0.63             21 %
Annualized subscription and maintenance bookings             $ 1,325      $ 1,379      $   (54 )           (4 )%




                                                                 AS OF            AS OF
                                                             MARCH 31,        MARCH 31,                      PERCENT
(DOLLARS IN MILLIONS)                                             2009             2008        CHANGE         CHANGE

Cash, cash equivalents and marketable securities1          $     2,713      $     2,796       $   (83 )          (3) %
Total debt                                                 $     1,937      $     2,582       $  (645 )         (25) %
Total expected future cash collections from committed
contracts2                                                 $     4,914      $     4,362       $   552             13 %
Total revenue backlog2                                     $     7,378      $     6,858       $   520              8 %

1 At March 31, 2009 and March 31, 2008, marketable securities were less than $1 million.

2 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, billing backlog and revenue backlog.

Analyses of our performance indicators, including general trends, can be found in the "Results of Operations" and "Liquidity and Capital Resources" sections of this MD&A.

Subscription and Maintenance Revenue - Subscription and maintenance revenue is the amount of revenue recognized ratably during the reporting period from both:
(i) subscription license agreements that were in effect during the period, generally including maintenance that is bundled with and not separately identifiable from software usage fees or product sales, and (ii) maintenance agreements associated with providing customer technical support and access to software fixes and upgrades that are separately identifiable from software usage fees or product sales. These amounts include the sale of products directly by us, as well as by distributors, resellers and value-added resellers to end-users, where the contracts incorporate the right for end-users to receive unspecified future software products and other contracts entered into in close proximity or contemplation of such agreements.

Total Bookings - Total bookings includes the incremental value of all subscription, maintenance and professional service contracts and software fees and other contracts entered into during the reporting period. Effective April 1, 2008, we changed our performance indicator for measuring our new business activity from new deferred subscription value to total bookings. In addition to what was previously included in new deferred subscription value, subscription and maintenance bookings now includes the value of maintenance contracts committed by customers in the current period that were separate from license subscription contracts, whereas new deferred subscription value excluded certain of these types of agreements. The bookings amounts disclosed in this MD&A include the effects of this change. The incremental value of subscription and maintenance agreements added was $252 million for the year ended March 31, 2008. Total bookings also includes the value of new professional services and software fees and other contracts that were not previously included in new deferred subscription value.

Subscription and Maintenance Bookings - Subscription and maintenance bookings is the aggregate incremental amount we expect to collect from our customers over the terms of the underlying subscription and maintenance agreements entered into during a reporting period. These amounts include the sale of products directly by us, as well as indirectly by distributors, resellers and value-added resellers to end-users, where the contracts incorporate the right for end-users to receive unspecified future software products, and other contracts without these rights entered into in close proximity or contemplation of such agreements. These amounts are expected to be recognized ratably as subscription and maintenance revenue over the applicable term of the agreement. Subscription and maintenance bookings excludes the value associated with certain perpetual based licenses, license-only indirect sales, and professional services arrangements.

The license and maintenance agreements that contribute to subscription and maintenance bookings represent binding payment commitments by customers over periods that range generally from three to five years, although in certain cases customer commitments can be for longer periods. The amount of new subscription and maintenance bookings recorded in a period is affected by the volume and value of contracts renewed during that period. Our subscription and maintenance bookings typically increase in each consecutive quarter during a fiscal year, with the first quarter being the least and the fourth quarter being the most. However, subscription and maintenance bookings may not always follow the pattern of increasing in consecutive quarters during a fiscal year, and the quarter to quarter differences in subscription and maintenance bookings may vary. Additionally, period-to-period changes in subscription and maintenance bookings do not necessarily correlate to changes in billings or cash receipts. The contribution to current period revenue from subscription and maintenance bookings from any single license or maintenance agreement is relatively small, since revenue is recognized ratably over the applicable term for these agreements.

Weighted Average Subscription and Maintenance License Agreement Duration in Years - The weighted average subscription and maintenance license agreement duration in years reflects the duration of all subscription and maintenance agreements executed during a period, weighted by the total contract value of each individual agreement. Effective April 1, 2008, our calculation of weighted average subscription and maintenance license agreement duration in years now includes all subscription and maintenance contracts from both direct and indirect channels, whereas the prior calculation reflected direct product subscription licenses only. This modification has also been reflected in the weighted average subscription and maintenance license agreement duration in years for fiscal 2008 for comparison purposes and resulted in a decrease of 0.24 years for fiscal 2008.

Annualized Subscription and Maintenance Bookings - Annualized subscription and maintenance bookings is an indicator that normalizes the bookings recorded in the current period to account for contract length. It is calculated by dividing the total value of all new subscription and maintenance license agreements entered into during a period by the weighted average subscription and license agreement duration in years of all such license and maintenance agreements recorded during the same period.

Total Revenue Backlog - Total revenue backlog represents the aggregate amount we expect to recognize as revenue in the future as either subscription and maintenance revenue, professional services revenue or software fees and other associated with contractually committed amounts billed or to be billed as of the balance sheet date. Total revenue backlog is composed of amounts recognized as liabilities in our Consolidated Balance Sheets as deferred revenue (billed or collected) as well as unearned amounts associated with balances yet to be billed under subscription and maintenance and software fees and other agreements. Amounts are classified as current or non-current depending on when they are expected to be earned and therefore recognized as revenue. The portion of the total revenue backlog that relates to subscription and maintenance

agreements is recognized as revenue evenly on a monthly basis over the duration of the underlying agreements and is reported as subscription and maintenance revenue in our Consolidated Statements of Operations.

"Deferred revenue (billed or collected)" is comprised of: (i) amounts received from the customer in advance of revenue recognition, (ii) amounts billed but not collected for which revenue has not yet been earned, and (iii) amounts received in advance of revenue recognition from financial institutions where we have transferred our interest in committed installments (referred to as "Financing obligations" in the Notes to the Consolidated Financial Statements).

Results of Operations
The following table presents revenue and expense line items reported in our Consolidated Statements of Operations for fiscal 2009, 2008 and 2007 and the period-over-period dollar and percentage changes for those line items. Certain prior year balances have been reclassified to conform to the current period's presentation. For additional information, see Note 1, "Significant Accounting Policies," in the Notes to the Consolidated Financial Statements.

                                                                                         DOLLAR         PERCENT          DOLLAR         PERCENT
                                                     YEAR ENDED MARCH 31                 CHANGE          CHANGE          CHANGE          CHANGE
(DOLLARS IN MILLIONS)                            2009         2008         2007       2009/2008       2009/2008       2008/2007       2008/2007

Revenue:
Subscription and maintenance revenue          $ 3,772      $ 3,762      $ 3,458      $       10               - %    $      304               9 %
Professional services                             358          383          351             (25 )            (7 )            32               9
Software fees and other                           141          132          134               9               7              (2 )            (1 )

Total revenue                                 $ 4,271      $ 4,277      $ 3,943      $       (6 )             - %    $      334               8 %

Expenses:
Costs of licensing and maintenance            $   298      $   272      $   250      $       26              10 %    $       22               9 %
Cost of professional services                     307          368          333             (61 )           (17 )            35              11
Amortization of capitalized software costs        125          117          354               8               7            (237 )           (67 )
Selling and marketing                           1,214        1,327        1,340            (113 )            (9 )           (13 )            (1 )
General and administrative                        464          530          549             (66 )           (12 )           (19 )            (3 )
Product development and enhancements              486          526          557             (40 )            (8 )           (31 )            (6 )
Depreciation and amortization of other
intangible assets                                 149          156          148              (7 )            (4 )             8               5
Other (gains) expenses, net                        (1 )          6          (13 )            (7 )          (117 )            19             146
Restructuring and other                           102          121          201             (19 )           (16 )           (80 )           (40 )
Charge for in-process research and
development costs                                   -            -           10               -               -             (10 )          (100 )

Total expenses before interest and income
taxes                                           3,144        3,423        3,729            (279 )            (8 )          (306 )            (8 )

Income from continuing operations before
interest and income taxes                       1,127          854          214             273              32             640             299
Interest expense, net                              25           46           60             (21 )           (46 )           (14 )           (23 )

Income from continuing operations before
income taxes                                    1,102          808          154             294              36             654             425
Income tax expense                                408          308           33             100              32             275             833

Income from continuing operations             $   694      $   500      $   121      $      194              39 %    $      379             313 %

Note - amounts may not add to their respective totals due to rounding.

The following table sets forth, for the fiscal years indicated, the percentage that the items in the accompanying Consolidated Statements of Operations bear to total revenue.

                                                                            PERCENTAGE OF TOTAL
                                                                              REVENUE FOR THE
                                                                           YEAR ENDED MARCH 31,
                                                                          2009        2008       2007

Revenue:
Subscription and maintenance revenue                                        88 %        88 %       88 %
Professional services                                                        8           9          9
Software fees and other                                                      4           3          3

Total revenue                                                              100 %       100 %      100 %
Expenses:
Costs of licensing and maintenance                                           7 %         6 %        6 %
Cost of professional services                                                7           9          8
Amortization of capitalized software costs                                   3           3          9
Selling and marketing                                                       28          31         34
General and administrative                                                  11          12         14
Product development and enhancements                                        11          12         14
Depreciation and amortization of other intangible assets                     3           4          4
Other (gains) expenses, net                                                  -           -          -
Restructuring and other                                                      2           3          5
Charge for in-process research and development costs                         -           -          -

Total expenses before interest and taxes                                    74          80         95

Income from continuing operations before interest and income taxes          26          20          5
Interest expense, net                                                        1           1          2

Income from continuing operations before income taxes                       26          19          4
Income tax expense                                                          10           7          1

Income from continuing operations                                           16 %        12 %        3 %

Note - amounts may not add to their respective totals due to rounding.

Revenue
Total revenue was unfavorably affected by foreign exchange of $35 million for fiscal 2009 compared with fiscal 2008 and favorably affected by $165 million for fiscal 2008 compared with fiscal 2007.

Subscription and Maintenance Revenue
Subscription and maintenance revenue increased slightly for fiscal 2009 compared with fiscal 2008 primarily due to an increase in the annual value of existing customer contracts, partially offset by unfavorable foreign exchange variance of $32 million.

Subscription and maintenance revenue increased for fiscal 2008 compared with fiscal 2007 also predominantly due to an increase in the annual value of existing customer contracts, plus a $144 million favorable variance from foreign exchange.

Subscription and Maintenance Bookings
For fiscal 2009 and 2008, we added subscription and maintenance bookings of $4,783 million and $4,110 million, respectively. Subscription and maintenance bookings for fiscal 2009 were favorably affected by an increase in U.S. renewal bookings compared with the prior year period primarily due to the size and duration of the contracts that were renewed in fiscal 2009, partially offset by an unfavorable variance due to foreign exchange. During fiscal 2009, we renewed a total of 68 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $2,471 million. During fiscal 2008, we renewed a total of 61 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1,396 million. The increase in the dollar value of the agreements in excess of $10 million was primarily attributable to the execution of several large contract extensions with terms

of approximately five years in the second quarter, two of which had a combined contract value of approximately $550 million. For fiscal 2009, annualized subscription and maintenance bookings decreased $54 million from the prior year period to $1,325 million. The weighted average subscription and maintenance license agreement duration in years increased to 3.61 for fiscal 2009 compared with 2.98 for fiscal 2008 due to an increase in the number and dollar values of contracts executed with contract terms longer than historical averages. Although each contract is subject to terms negotiated by the respective parties, management does not currently expect the duration of contracts to increase materially beyond historical levels.

For fiscal 2008 and 2007, we added subscription and maintenance bookings of $4,110 million and $3,610 million, respectively. Bookings for fiscal 2008 were favorably affected by growth in sales of new products and services, continued improvement in the management of contract renewals, and an increase in the number and dollar amounts of large contracts during the fiscal year. During fiscal 2008, we renewed a total of 61 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1,396 million. During fiscal 2007, we renewed 42 license agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $1,142 million. For fiscal 2008, annualized subscription and maintenance bookings increased $151 million from the prior year period to $1,379 million.

Professional Services
Professional services revenue primarily includes product implementation, customer training and customer education. The revenue decrease for fiscal 2009 compared with fiscal 2008 was primarily due to our concerted efforts to reduce the number of low margin service contracts in all regions, revenue decreases from customer delays in signing professional service contracts due to the difficult economic environment and revenue decreases in the APJ region, which was due to our decision to stop providing professional services in certain markets in conjunction with our change in that region from a direct to an indirect sales model.

The increase in professional services revenue for fiscal 2008 compared with fiscal 2007 was driven primarily by growth in the volume of Project and Portfolio Management, Identity and Access Management and Service Management implementation projects in fiscal 2008.

Software Fees and Other
Software fees and other revenue primarily consists of revenue that is recognized on an up-front basis as required by SOP 97-2. This includes revenue generated through transactions with distribution and original equipment manufacturer . . .