Computer Associates announces restructuring plan

Computer Associates International, Inc (NYSE:CA) today announced a restructuring plan to more closely align the company`s investments with its strategic growth opportunities. The plan includes a workforce reduction of approximately 5% or 800 positions worldwide.

The plan is expected to yield about $70 million in savings on an annualised basis, once the reductions are fully implemented.

"Now is the time for CA to move forward," said CA Chief Executive Officer Kenneth Cron. "CA has great strengths in its technology, its customer base and its balance sheet. To ensure our long-term success, we need to effectively leverage these strengths and realign our investments with the company`s strategic growth opportunities. It is our goal to seize these strategic growth opportunities to ensure we deliver the highest returns to shareholders."

The plan affects nearly all departments across the company, with a focus on driving marketing efficiencies and, in the development organisation, improving productivity and simplifying the product portfolio. Impact on CA`s sales force is expected to be minimal. The majority of the workforce reductions will be completed by the end of October.

Affected employees in the US will be entitled to a severance payment pursuant to CA`s standard severance package, and will also be entitled to an enhanced COBRA (Consolidated Omnibus Budget Reconciliation Act) subsidy.

The company anticipates the total restructuring plan will cost approximately $40 million, or $0.04 per fully diluted common share, related to severance and associated benefits. The majority of this charge, approximately $25 million, is expected to be incurred in the second quarter of fiscal 2005, with the remaining amount expected to be incurred by the end of the fiscal year.

"As we discussed during our first quarter earnings announcement, we saw significant opportunities to control costs," said CA`s Chief Operating Officer Jeff Clarke. "Over the past few months, we have been evaluating the overall business, the skills necessary to meet our company goals and the expenditures required to meet our growth objectives. CA is financially strong, but we must make these changes to grow sales, increase profitability and remain competitive. The result will be a simpler, more efficient company and one positioned for growth."

Added Cron: "This restructuring will have no effect on our ability to fulfil the obligations of the deferred prosecution agreement announced last week. There is nothing more important to us, and we are committed to fulfilling every requirement."

CA will hold a Webcast to discuss the restructuring plan at 9am EDT today. On the Webcast will be Cron and Clarke. Investors and the media can access the Webcast at http://ca.com/invest.