UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended December 31, 1997
Or
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period ended from _____ to _____
Commission File Number 0-10180
Computer Associates International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-2857434
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Computer Associates Plaza
Islandia, New York 11788-7000
(Address of principal executive offices) (Zip Code)
(516) 342-5224
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each
of the issuer's classes of Common Stock, as of the
latest practicable date:
Title of Class Shares Outstanding
Common Stock as of January 31, 1998
par value $.10 per share 546,049,568
<PAGE>
COMPUTER ASSOCIATES INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
PART I. Financial Information: Page No.
Item 1. Consolidated Condensed Balance Sheets
December 31, 1997 and March 31, 1997 1
Consolidated Statements of Income
Three Months Ended December 31, 1997 and 1996 2
Consolidated Statements of Income
Nine Months Ended December 31, 1997 and 1996 3
Consolidated Condensed Statements of Cash Flows
Nine Months Ended December 31, 1997 and 1996 4
Notes to Consolidated Condensed Financial Statements 5
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. Other Information:
Item 6. Exhibits and Reports on Form 8-K 13
<PAGE> 1
<TABLE>
Item 1:
Part I. FINANCIAL INFORMATION
COMPUTER ASSOCIATES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
<CAPTION>
December 31 March 31,
1997 1997
----------- ---------
(Unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $175 $143
Marketable securities 60 56
Trade and installment accounts receivable 1,720 1,514
Inventories and other current assets 71 67
----- -----
TOTAL CURRENT ASSETS 2,026 1,780
===== =====
Installment accounts receivable, due after one 2,406 2,200
Property and equipment 457 438
Purchased software products 315 440
Excess of cost over net assets acquired 1,116 1,159
Investments and other noncurrent assets 109 67
----- -----
TOTAL ASSETS $6,429 $6,084
===== =====
LIABILITIES AND STOCKHOLDERS' EQUITY:
Loans payable - banks $540 $540
Other current liabilities 1,259 1,187
Long-term debt 1,258 1,663
Deferred income taxes 925 853
Deferred maintenance revenue 324 338
Stockholders' equity 2,123 1,503
----- -----
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $6,429 $6,084
===== =====
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
<PAGE> 2
<TABLE>
COMPUTER ASSOCIATES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except per share amounts)
<CAPTION>
For the Three Months
Ended December 31,
--------------------
1997 1996
---- ----
<S> <C> <C>
Product revenue and other related income $1,056 $ 869
Maintenance fees 183 184
----- -----
TOTAL REVENUE 1,239 1,053
===== =====
Costs and expenses:
Selling, marketing and administrative 432 345
Product development and enhancements 90 81
Commissions and royalties 61 51
Depreciation and amortization 83 97
Interest expense - net 29 27
Purchased research and development 0 598
----- -----
TOTAL COSTS AND EXPENSES 695 1,199
----- -----
Income (Loss) before income taxes 544 (146)
Provision for income taxes 204 167
----- -----
NET INCOME (LOSS) $340 $(313)
===== =====
BASIC EARNINGS (LOSS) PER SHARE $.62 $(.57)
===== =====
Basic weighted average shares used in
computation* 546 548
DILUTED EARNINGS (LOSS) PER SHARE $.60 $(.57)
===== =====
Diluted weighted average shares used
computation* 568 548
<FN>
*Shares and per share amounts adjusted for three-for-two stock
splits effective November 5, 1997 and June 19, 1996.
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
<PAGE> 3
<TABLE>
COMPUTER ASSOCIATES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except per share amounts)
<CAPTION>
For the Nine Months
Ended December 31,
------------------
1997 1996
---- ----
<S> <C> <C>
Product revenue and other related income $2,707 $2,272
Maintenance fees 545 563
----- -----
TOTAL REVENUE 3,252 2,835
Costs and expenses:
Selling, marketing and administrative 1,242 1,070
Product development and enhancements 269 232
Commissions and royalties 160 143
Depreciation and amortization 263 323
Interest expense - net 90 70
Purchased research and development 0 598
----- -----
TOTAL COSTS AND EXPENSES 2,024 2,436
===== =====
Income before income taxes 1,228 399
Provision for income taxes 461 369
----- -----
NET INCOME $ 767 $ 30
===== =====
BASIC EARNINGS PER SHARE $ 1.41 $ .05
===== =====
Basic weighted average shares used in
computation* 546 547
DILUTED EARNINGS PER SHARE $ 1.36 $ .05
===== =====
Diluted weighted average shares used
computation* 566 570
<FN>
*Shares and per share amounts adjusted for three-for-two stock splits
effective November 5, 1997 and June 19, 1996.
<FN>
See Notes to Consolidated Condensed Financial Statements.
</TABLE>
<PAGE> 4
<TABLE>
COMPUTER ASSOCIATES INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
<CAPTION>
For the Nine Months
Ended December 31,
-------------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $767 $30
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 263 323
Provision for deferred income taxes 180 168
Charge for purchased research and development 598
Compensation expense related to stock and
pension plans 21 23
Increase in noncurrent installment accounts
receivable (281) (491)
Decrease in deferred maintenance revenue (6) (59)
Changes in other operating assets and
liabilities excludes effects of acquisitions
effects of acquisitions (300) (94)
----- -----
NET CASH PROVIDED BY OPERATING ACTIVITIES 644 498
INVESTING ACTIVITIES:
Acquisitions, primarily purchased software,
marketing rights and intangibles (39) (1,136)
Purchase of property and equipment (61) (22)
(Increase)decrease in current marketable
securities (4) 63
Capitalized development costs (15) (14)
----- -----
NET CASH USED IN INVESTING ACTIVITIES (119) (1,109)
FINANCING ACTIVITIES:
Repayment of borrowings - net (406) 722
Dividends paid (18) (17)
Exercise of common stock options/other 55 39
Purchases of treasury stock (116) (32)
----- -----
NET CASH USED IN FINANCING ACTIVITIES (485) 712
INCREASE IN CASH AND CASH EQUIVALENTS
BEFORE EFFECT OF EXCHANGE RATE CHANGES ON CASH 40 101
Effect of exchange rate changes on cash (8) 1
----- -----
INCREASE IN CASH AND CASH EQUIVALENTS 32 102
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 143 97
----- -----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 175 $ 199
===== =====
<FN>
See notes to Consolidated Financial Statements.
</TABLE>
<PAGE> 5
OKO
COMPUTER ASSOCIATES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial
statements have been prepared in accordance with
generally accepted accounting principles for interim
financial information and with the instructions to
Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes
required by generally accepted accounting principles
for complete financial statements. In the opinion of
management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair
presentation have been included. Operating results
for the nine months ended December 31, 1997 are
not necessarily indicative of the results that may
be expected for the fiscal year ending March 31, 1998.
For further information, refer to the consolidated
financial statements and footnotes thereto included in
Computer Associates International, Inc.s (the Registrant
or the Company) Annual Report on Form 10-K for the
fiscal year ended March 31, 1997.
Cash Dividends: In December 1997, the Companys Board
of Directors declared its regular, semi-annual
cash dividend of $.04 per share. The dividend was
paid on January 5, 1998 to stockholders of record on
December 19, 1997.
Stock Split: On October 21, 1997 the Company declared
a three-for-two stock split in the form of a
stock dividend, to be distributed November 26, 1997
to shareholders of record as of November 5, 1997.
Shares and per share amounts have been adjusted to
reflect this stock split as well as the three-for-two
split effective June 19, 1996.
Statements of Cash Flows: For the nine months ended
December 31, 1997 and 1996, interest payments
were $99 million and $55 million respectively,
and income taxes paid were $285 million and $165
million, respectively.
<PAGE> 6
COMPUTER ASSOCIATES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE A -- BASIS OF PRESENTATION (Continued)
Net Income per Share: The Company adopted the Financial
Accounting Standards Board Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings per Share, for the
period ended December 31, 1997. SFAS No. 128 requires
the Company to present basic and diluted earnings per
share (EPS) on the face of the income statement. Basic
earning per share is computed by dividing net income
by the weighted-average number of common shares outstanding
for the period. Diluted earnings per share is computed
by dividing net income by the sum of the weighted-average
number of common shares outstanding for the period end
plus the assumed exercise of all dilutive securities,
such as stock options. Diluted earnings per share for
the periods presented is not materially different for Net
Income per share reported under Accounting Principles
Board Opinion No. 15.
<TABLE>
(In millions, except per share amounts)
<CAPTION> For the Three Months For the Nine Months
Ended December 31, Ended December 31,
-------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Earnings (Loss) 340 (313) 767 30
===== ===== ===== =====
Diluted Earnings Per Share
Weighted average shares
outstanding and common
share equivalents 568 548 566 570
Diluted Earnings Per Share $ 0.60 $(0.57) $ 1.36 $ 0.05
===== ===== ===== =====
Diluted Share Computation:
Average common shares
outstanding 546 548 * 546 547
Average options
outstanding - net 21 - 19 23
1995 Key Employee Stock
Ownership Plan
average shares
outstanding 1 - 1 -
----- ----- ----- -----
Weighted average shares
Outstanding and common
share equivalents 568 548 * 566 570
===== ===== ===== =====
<FN>
* For the three months ended December 31, 1996 the
Company reported a net loss. Common share
equivalents are anti dilutive and are, therefore,
not reported.
</TABLE>
<PAGE> 7
COMPUTER ASSOCIATES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE B -- ACQUISITIONS
On November 11, 1996, the Company acquired 98% of the
issued and outstanding shares of common stock of
Cheyenne Software, Inc. (Cheyenne), and on
December 2, 1996 merged into Cheyenne one of
its wholly owned subsidiaries. The aggregate
purchase price of approximately $1.2 billion was
funded from drawings under the Companys $2 billion
credit agreements. Cheyenne was engaged in the design,
development, marketing, and support of storage,
management, security and communications software
for desktops and distributed enterprise networks.
The acquisition was accounted for as a purchase. The
results of Cheyennes operations have been combined
with those of the Company since the date of
acquisition.
The Company recorded a $598 million after-tax charge
against earnings for the write-off of purchased
Cheyenne research and development technology that
had not reached the working model stage and had
no alternative future use. The research and
development charges recorded are generally based
upon a discounted cash flow analysis.
The following table reflects pro forma combined
results of operations(unaudited) of the Company and
Cheyenne on the basis that the acquisition had taken
place and the related after-tax charge, noted above,
was recorded at the beginning of fiscal year 1997:
<TABLE>
(In millions, except per share amounts)
<CAPTION> For the Nine Months For the Three Months
Ended December 31, Ended December 31,
------------------- --------------------
<S> <C> <C>
Revenue $2,950 $1,066
Net (loss) income (26) 270
Basic earnings per common share $ (.05) $ .49
Shares used in computation 547 548
Diluted earnings per common share $ (.05) $ .47
Shared used in computation 547 572
</TABLE>
In managements opinion, the pro forma combined
results of operations are not indicative of the
actual results that would have occurred had the
acquisitions been consummated at the beginning
of fiscal year 1997 or of future operations of
the combined companies under the ownership and
operation of the Company.
<PAGE> 7
COMPUTER ASSOCIATES INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE C -- THE 1995 KEY EMPLOYEE STOCK OWNERSHIP PLAN
Under the 1995 Key Employee Stock Ownership Plan
(the 1995 Plan) a total of 20.25 million restricted
shares were available for grant to three key executives.
In January 1996, 1.35 million shares of the initial
grant of 6.75 million shares vested, subject to the
continued employment of the key executives through
March 31, 2000. Accordingly, the Company began accruing
the compensation expense associated with these 1.35 million
shares over the employment period. Additional grants
of 13.5 million shares are available under the 1995 Plan
and have been reserved pending the achievement of certain
price targets in the fiscal year ending March 31, 2000.
The additional grants and the unvested portion of the
initial grant are subject to risk of forfeiture through
March 31, 2000. However, if the closing price of the
Companys common stock on the NYSE exceeds $53.33 for
60 trading days within any twelve month period, all
20.25 million shares vest immediately and will no longer
be subject to forfeiture. In such event, the Company
will be required to record a one time, non-cash charge of
approximately one billion dollars. Furthermore, the
addition of up to the 20.25 million shares to the
companys weighted-average number of common shares
outstanding would have a negative impact on future basic
and diluted earnings per share. At the election of
the executives, the total number of shares
vested may be reduced to pay any applicable taxes.
The shares granted will continue to be subject to significant
limitations on transfer during the seven years following vesting.
All references to the number of shares available and
reserved for grant, as well as share prices have been
adjusted to reflect three-for-two stock splits effective
November 1997, June 1996 and August 1995.
<PAGE> 8
Item 2:
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Statements in this Form 10-Q concerning the companys
future prospects are forward looking statements under
the federal securities laws. There can be no assurances that
future results will be achieved and actual results could
differ materially from forecasts and estimates. Important
factors that could cause actual results to differ materially
are discussed below in the section Results of Operations.
RESULTS OF OPERATIONS
Revenue:
Total revenue for the quarter ended December 31, 1997
increased by 18% or $186 million dollars over
the prior years comparable quarter. The increase
reflects continued acceptance of the Companys
enterprise pricing options, particularly on mainframe
platforms. The client/server business showed strong
growth, increasing 28% over the December 1996 quarter.
In the quarter,Unicenter TNG (The Next Generation),
a family of integrated business solutions for monitoring and
administering across multi-platform environments,
accounted for approximately 22% of the Companys overall
revenue. Total North American revenue grew 30% over the
prior years comparable quarter. The North American
sales represented 67% of the revenue in the December
1997 quarter compared to 61% of revenue in the
December 1996 quarter. The strengthening of the US
dollar against most currencies decreased International
revenue by $41 million. In constant dollar terms,
International revenue would have increased by approximately
$34 million or 8% over the prior years comparable quarter.
Maintenance revenues remained unchanged from last years comparable quarter.
Price changes did not have a material impact in either quarter.
Costs and Expenses:
Selling, marketing and administrative expenses as a
percentage of total revenue for the December 1997
quarter increased to 35% from 33% for the December
1996 quarter. The increase represents the additional
salary and benefit expense for an increased number of
employees, as well as, major promotional events including
the Jasmine, a pure object database solution, product launch
and the Unicenter TNG framework release. Net research and
development expenditures increased $9 million, or 11%, over the
December 1996 quarter. Continued emphasis on adapting and
enhancing products for the client/server environment, in
particular Unicenter TNG and Jasmine, the addition of
Cheyenne product development personnel and broadening of
the Companys Internet/Intranet product offerings were largely
responsible for the increase. Commissions and royalties
as a percentage of revenue was 5% for both the December
1997 and 1996 quarters. Depreciation and amortization expense
decreased $14 million in the December 1997 quarter from
the December 1996 quarter. The decrease was primarily
due to completion of the amortization associated with the
On-Line Software International, Inc. and Pansophic Systems,
Inc. acquisitions, as well as the scheduled reduction in
the amortization associated with The ASK Group, Inc.
and Legent Corporation acquisitions. This decrease was
only partially offset by the additional accelerated
purchased software amortization related to the Cheyenne
Software, Inc. acquisition. In the December
<PAGE> 9
Item 2: (Continued)
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
1997 quarter, net interest expense increased by $2
million over the December 1996 quarter as a result of
higher debt levels associated with the Cheyenne
acquisition.
Operating Margins:
The pretax income of $544 million for the December
1997 quarter is an increase of $690 million, over the
December 1996 quarter pretax loss of $146 million.
The pretax loss for the December 1996 quarter
was entirely attributable to a charge for development
technology that had not reached the working model
stage and had no alternative future use. Net income
in the December 1996 quarter excluding the after tax
charge would have been $285 million, compared to after
tax income of $340 million in the December 1997 quarter,
an increase of $55 million or 19%. The Companys
consolidated effective tax rate was 37.5% for the
December 1997 compared with 37% for the prior years
Comparable quarter.
Operations:
The Companys products are designed to improve the
productivity and efficiency of its clients
information processing resources. Accordingly,
in a recessionary environment, the Companys products
are often a reasonable economic alternative to customers
faced with the prospect of incurring expenditures to
increase their existing information processing resources.
However, a general or regional slowdown in the world
economy could adversely affect the Companys operations.
The Company has traditionally reported lower profit
margins in the first two quarters of each fiscal year
than those experienced in the third and fourth quarters.
As part of the annual budget process, management
establishes higher discretionary expense levels in
relation to projected revenue for the first half of the year.
Historically, the Companys combined third and fourth
quarter revenues have been greater than the first
half of the year, as these two quarters coincide with
clients calendar year budget periods and culmination
of the Companys annual sales plan. These historically
higher second half revenues have resulted in significantly
higher profit margins since total expenses have not
increased in proportion to revenue. However, past
financial performance should not be considered to
be a reliable indicator of future performance.
The Companys future operating results may be
affected by a number of other factors, including,
but not limited to: uncertainties relative to
global economic conditions; the adequacy of the
Companys internal administrative systems to
efficiently process transactions, store and retrieve
data subsequent to the year 2000; the Companys
increasing reliance on a single family of products
for a material portion of its sales; market
acceptance of competing technologies; the availability
and cost of new solutions; delays in delivery of
new products or features; the Companys ability to
update its business application products to conform
with the new, common European currency known as the
Euro; the Companys ability to successfully maintain
or increase market share in its core business while
expanding its product base into other markets; the
strength of its distribution channels; the ability either
internally or through third party service providers
to support client implementation of the Companys
products; the Companys
<PAGE> 10
Item 2: (Continued)
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ability to manage fixed and variable expense growth
relative to revenue growth; and the Companys
ability to effectively integrate acquired products
and operations.
The Company may experience future uncertainties regarding
year 2000 compliance of its products. The Company has
designed and tested the vast majority of its recent product
offerings to be year 2000 compliant. However, there are
currently a small minority of the product offerings that
have not been updated to meet the year 2000 compliance
specifications. The Company is making its best efforts
to address this issue and will continue to update and
test its product offerings for year 2000 compliance.
The Company has publicly identified any products that
will not be updated to be year 2000 compliant and
has been encouraging clients using these products to
migrate to compliant versions. There can be no
assurance that all the Companys products except
those previously identified will be year 2000 compliant
prior to the January 1, 2000 nor can there be assurances
that the Companys currently compliant products do not
contain undetected problems associated with year 2000
compliance. Such problems may result in increased
expenses negatively affecting future operating results.
The Company recognizes the significance of the year
2000 problem as it relates to our internal systems.
It has an overall plan and a systematic process in
place to make its internal financial and administrative
systems year 2000 ready within the next twelve to
eighteen months. The cost of this exercise is not
viewed to have a material effect on the Companys
results of operations or liquidity. Contingency plans
have also been developed such that any failure to convert
will not adversely affect overall performance.
<PAGE> 11
Item 2: (Continued)
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources:
At December 31, 1997, the Companys cash, cash
equivalents and marketable securities balance of
$235 million increased by approximately $50 million
from the September 30, 1997 balance. Cash generated
from operations totaled $223 million for the quarter
ended December 31, 1997. Beyond increasing the
absolute level of cash and cash equivalents, this
cash was primarily used for treasury stock
purchases of $74 million and bank debt repayments
of $50 million.
At December 31, 1997, $1,440 million of debt was
outstanding under the Companys revolving credit
facilities, and $320 million remains outstanding
under the Companys 6.77% Senior Notes. Borrowing
costs and facility fees are based upon the achievement
of certain financial ratios.
The cumulative total of common stock purchased
under the Companys various open market repurchase
programs as of December 31, 1997, was approximately
120 million shares, including 1.5 million shares in
the most recently ended quarter. The shares authorized
for future repurchase at December 31, 1997 are
approximately 43 million. These amounts reflect
the November 5, 1997 three-for-two stock split.
In the quarter ended December 31, 1997, the Companys
commenced the building of its European Headquarters,
located in the United Kingdom. In addition to this commitment of
approximately $150 million, capital resource
requirements as of December 31, 1997 consisted of
lease obligations for office space, computer equipment,
mortgage/loan obligations and amounts due as a result
of product and company acquisitions. It is expected
that existing cash, cash equivalents, short-term
marketable securities, the availability of
borrowings under committed and uncommitted
credit lines, as well as cash provided from
operations, will be sufficient to meet these
and other ongoing cash requirements.
<PAGE> 12
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
COMPUTER ASSOCIATES INTERNATIONAL, INC.
Dated: February 5, 1998 By:/s/ Sanjay Kumar
-------------------------
Sanjay Kumar, President
and Chief Operating Officer
Dated: February 5, 1998 By:/s/ Peter Schwartz
-------------------------
Peter Schwartz
Sr. Vice President - Finance
(Chief Financial and
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 175
<SECURITIES> 60
<RECEIVABLES> 1720
<ALLOWANCES> 0
<INVENTORY> 71
<CURRENT-ASSETS> 2026
<PP&E> 457
<DEPRECIATION> 0
<TOTAL-ASSETS> 6429
<CURRENT-LIABILITIES> 1799
<BONDS> 1258
0
0
<COMMON> 0
<OTHER-SE> 2123
<TOTAL-LIABILITY-AND-EQUITY> 6429
<SALES> 2707
<TOTAL-REVENUES> 3252
<CGS> 0
<TOTAL-COSTS> 2024
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90
<INCOME-PRETAX> 1228
<INCOME-TAX> 461
<INCOME-CONTINUING> 761
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 761
<EPS-PRIMARY> 1.41
<EPS-DILUTED> 1.36
</TABLE>
