Computer Associates Posts Solid Second Quarter; Reports Revenue Of $1.216 Billion, EPS Of $.52.

ISLANDIA, N.Y.--(BUSINESS WIRE)--Oct. 20, 1998--Computer Associates International, Inc. (NYSE: CA) today reported financial results for its second fiscal quarter.

For the quarter ended September 30, 1998, revenue was $1,216,340,000, compared to $1,122,126,000 reported in the previous year. Adjusted for the approximate $13 million negative foreign exchange impact, revenue increased by 10% from the prior year. Net Income was $293,923,000, an increase of 8% over last year's $271,875,000. Second quarter earnings per share (diluted), were $.52, compared to $.48 a year ago, an increase of 8%.

For the six months ended September 30, 1998, revenue was $2,262,977,000 compared to the $2,012,865,000 reported in the first half of last year. Revenue for the six months increased by 14% from the prior year, adjusting for the approximate $32 million foreign exchange impact. Net income and earnings per share (diluted), were $488,079,000 and $.85, an increase of 14% and 12% respectively over the $427,648,000 and $.76 for the prior fiscal period. These income figures exclude the approximate $675 million (after-tax) one-time charge taken in the June 1998 quarter related to stock issuance under the 1995 Key Employee Stock Ownership Plan.

All per share amounts have been adjusted for the Company's three-for-two stock split effective November 5, 1997.

"While the current macro-economic trends are clearly challenging for reasons we outlined in July, CA delivered another solid quarter," said Charles B. Wang, CA's chairman and chief executive officer. "Our investment in leading client/server technology, customer service and our fundamental commitment to client satisfaction have enabled us to further our industry-leading position.

"Our Unicenter TNG product line and client/server business continued to show significant growth during the quarter," said Sanjay Kumar, CA president and chief operating officer. "We remain the partner of choice for our customers, with a distributed operations market share more than triple the size of our closest competitor. For the first time in CA history, the rapidly growing client/server products now account for 50% of total revenue."

Kumar said CA had repurchased approximately 15 million shares of its common stock during the quarter under its long-standing stock repurchase program. In a separate announcement today, the Company announced an extension to the repurchase program. "We believe our business fundamentals are strong," said Kumar. In North America - which represents more than half of the Company's revenues and where over 95 percent of the Fortune 500 use CA products - we have been able to work very closely with our clients and to anticipate and adjust for their IT plans. We're confident that the demand and need for our products and services remains strong and CA will continue to strive to show excellent growth for shareholders over the longer term."

Commenting on Asia, Kumar said that "Customers with significant exposure to Asia, as we said last quarter, are understandably cautious but continue to recognize that region's potential and are planning accordingly. Like CA, they see outstanding long term opportunities resulting from recent economic dislocations, and many are investing there in anticipation of an eventual recovery," said Kumar.

As recently announced, CA will acquire Siemens' TransView management solution, and integrate it with Unicenter TNG. Underscoring the growing market acceptance of Unicenter TNG, Siemens AG has formed a strategic alliance with CA to deliver robust and integrated management capabilities to Siemens clients worldwide. Siemens will market and support Unicenter TNG as its IT management platform of choice to customers.

Just last week, CA and Hitachi Data Systems (HDS) announced the first of several major initiatives focused on storage management integrated under the Unicenter TNG umbrella. This major software and hardware collaboration will offer customers an end-to-end storage management solution across the entire enterprise.

Unicenter TNG continues to win prestigious awards, such as VARBusiness magazine's 13th Annual Report Card, which ranked Unicenter TNG first in systems management software. The Annual Report Card is based on VARs rating vendors' products in several categories, including the associated revenue/profit potential, support before and after the sale, and ease of dealing with vendors. CA ranked number one overall, and was first in customer support.

Second-quarter highlights:

- Two International Data Corporation research reports confirmed CA as

the undisputed leader in the enterprise management market, far ahead

of its competitors.

- Merisel, a leader in the distribution of computer hardware and

software products, designated Unicenter TNG as a premier enterprise

management solution. Under its expanded agreement with CA, Merisel

has been authorized to distribute Enterprise Edition IT Products and

Harmony information management solutions to authorized resellers in

the U.S.

- Broadening the capabilities of its Global Professional Services 

(GPS) organization, CA acquired REALOGIC, Inc., a leading

international business and technology firm with wide-range expertise

in enterprise networking, application development and systems

integration. Jacques Reboul, former president of Bull France, was

named senior vice president and general manager of GPS's European

operations.

- Microsoft used Unicenter TNG to manage the multi-vendor computing

environment at its first annual Business Application Conference.

Unicenter TNG provided complete end-to-end management of the

conference's demonstration environment, delivering maximum

availability, performance and security.

- Cisco Systems and CA announced the integration of their Unicenter

TNG and CiscoWorks 2000 management solutions, enabling support

staffs to receive fast access to critical information and tools.

- Toshiba America Information Systems, Inc.'s Computer Systems

Division (Toshiba) agreed to bundle CA's Unicenter TNG Framework

with its servers, providing Toshiba customers with the industry's

most robust "out-of-the-box" management solution.

- NEC, the largest Japanese PC server vendor, integrated its ESMPRO

system management solution, with the English and Japanese versions

of the Unicenter TNG Framework.

- The Acer Group, the world's third largest personal computer

manufacturer, agreed to integrate the Unicenter TNG Framework as a

key management component for its server and desktop products.

- Silicon Graphics selected Unicenter TNG as the only optimized

management component for its highly scalable, high performance

Internet provisioning platform.

- CA announced a new release of the Unicenter TNG SAP R/3 Option,

simultaneous with SAP's certification of Unicenter TNG scheduling

facilities. The new release consolidates application management

across SAP and non-SAP environments.

- In line with its plan to propagate its enterprise management

technology to new market segments, CA began shipping AimIT

(asset and inventory management), ARCserveIT (storage management),

ControlIT (remote control), InoculateIT (virus protection), MasterIT

(Web server management), NetworkIT Pro (network management), ShipIT

(software delivery), and ServiceIT (help desk).

- Increasing its commitment to the Lotus Notes/Domino market, CA

announced the acquisition of privately-held QXCOM, Inc., which

provides consulting and software products to many of the world's

largest and most sophisticated Notes and Domino installations in the

U.S., Europe and Asia. The QXCOM software will also augment the

Unicenter TNG Notes/Domino Option.

- Digital Concepts Inc. standardized on Jasmine as the underlying

object database technology for its evolving DataCast Learning

Network.

- CA and Fujitsu Limited announced the general availability of the

traditional Chinese Version of Jasmine, the only solution of its

kind to employ double-byte coding.

- After an extensive competition that included more than 60

contestants in 8 categories, GPS won "Best of Class" award in

GroupWare and Enterprise Support at the 1998 Internet Open for

building a Lotus Notes Domino application for a unit of Key

Corporation.

- CA and the SOS Crianca, an agency of the Secretary of Social

Assistance and Development of the Sao Paulo State Government,

launched a Web site in Brazil to aid in the recovery of missing

children. The announcement was made during a week-long visit by

Charles B. Wang with government and business leaders in Latin

America.

- IndustryWeek Magazine selected CA as one of the World's 100 best

managed companies.

- Companies which selected Unicenter TNG to manage their computer

environments during the quarter included Aspen Medical Group,

Horizon Blue Cross Blue Shield of New Jersey, Health Insurance Plan

of New York, Construction Services, Inc., Sovereign Ltd., Australia

Post, Fujitsu Australia, Eastern Washington University, Radioshack

Canada, Austin Radiological, NCI Information Systems, Inc.,

Bridgestone Co., Ltd., GVA Hospital, BMC West, and Edmonds School

District.

Computer Associates International, Inc. (NYSE: CA), with headquarters in Islandia, N.Y., is the world leader in mission-critical business software. The company develops, licenses and supports more than 500 integrated products that include enterprise computing and information management, application development, manufacturing and financial applications. CA has over 12,000 people in 160 offices in 43 countries and had revenue of $4.7 billion in fiscal year 1998. CA can be reached by visiting www.cai.com, emailing [e-mail] or calling 1-516-342-5224.

All referenced product names are trademarks of their respective companies.

Statements in this release concerning the Company's future prospects are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. 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 include: the significant percentage of CA's quarterly sales recorded in the last few days of the quarter, making financial predictions especially difficult and raising a substantial risk of variance in actual results; the emergence of new competitive initiatives resulting from rapid technological advances or changes in pricing in the market; the risks associated with new product introductions as well as the uncertainty of customer acceptance of these new or enhanced products from either CA or its competition; risks associated with the entry into new markets such as professional services; delays in product delivery; the ability to recruit and retain qualified personnel; negative implications from the "Year 2000" or "Euro" implementation technology problem, including customer indecision, purchasing delays or budget re-allocations; business conditions in the client/server and mainframe software and hardware markets; use of software patent rights to attempt to limit competition; assimilation of business or technology acquisitions; fluctuations in foreign currency exchange rates; the volatility of the international marketplace, including the recent Asian and Latin American turmoil; and other risks described in filings with the Securities and Exchange Commission. -0-

                        COMPUTER ASSOCIATES INTERNATIONAL, INC.
                          Earnings Before Q1 Stock Plan Charge
                          (in thousands, except per share data)
                                        (Unaudited)

                         Three Months                Six Months
                       Ended September 30,       Ended September 30,

                      1998        1997           1998 (A)        1997

Revenue           $1,216,340  $1,122,126     $2,262,977    $2,012,865
Income before
 taxes               470,276     435,000        780,925       684,237
Net Income           293,923     271,875        488,079       427,648

Basic Earnings
  per Share             $.53        $.50           $.88          $.78
Shares used in
 Computation         553,796     546,326        553,045       545,251

Diluted Earnings
 per Share              $.52        $.48           $.85          $.76
Shares used in
 Computation         569,003     567,866        570,996       564,918

(A) Excludes the non-cash $1,071,413,000 pre-tax ($674,992,000
    after-tax) charge associated with the vesting of 20,250,000 shares
    under the 1995 Key Employee Stock Ownership Plan (the "1995
    Plan"), as previously disclosed.  The shares are subject to seven
    year transfer restrictions in accordance with the 1995 Plan.

-0-

                        Condensed Consolidated Income Statement
                         (in thousands, except per share data)
                                        (Unaudited)

                         Three Months              Six Months
                     Ended September 30,        Ended September 30,
                      1998        1997           1998          1997

Revenue         $1,216,340    $1,122,126     $2,262,977    $2,012,865
Income (Loss)
  before taxes     470,276       435,000       (290,488)      684,237
Net Income (Loss)  293,923       271,875       (186,914)      427,648
Basic Earnings
 (Loss) per Share     $.53          $.50          $(.34)         $.78
Shares used in
 Computation       553,796       546,326         553,045      545,251
Diluted Earnings
 (Loss) per Share     $.52          $.48           $(.34)        $.76
Shares used in
 Computation       569,003       567,866          553,045     564,918