Computer Associates 1997 Annual Report Download - page 19

Liquidity and Capital Resources
In April 1996, the Company restructured a portion of its debt by
completing a $320 million private placement of debt. The private
placement offered the Company to lock in favorable interest rates
while extending the maturity of its debt.
In July 1996, the Company restructured its $2 billion
5-year reducing revolving credit facility into a $700 million 364-
day revolving credit agreement and a $1.3 billion 5-year revolving
credit agreement. Under both credit agreements, borrowings are
subject to interest primarily at the prevailing London Interbank
Rate (“LIBOR”) plus a fixed spread dependent on the achievement
of certain financial ratios. The agreements call for a facility fee
and are also dependent on the achievement of certain financial
ratios. The Company must also maintain certain financial condi-
tions under the agreements. Additionally, the Company has $24
million of unsecured and uncommitted multicurrency lines of
credit available. These multicurrency facilities were established to
meet any short-term working capital requirements for subsidiaries
principally outside the United States. Peak borrowing under these
financing arrangements were $1,850 million during fiscal 1997,
and the weighted average interest rate for these borrowings was
5.8%. Peak borrowing under credit facilities during fiscal 1996
were $1,845 million and the weighted average interest rate for
those borrowings was 6.5%. At March 31, 1997, approximately
$1,845 million was outstanding under these credit arrangements.
Cash from operations for the year ended March 31,
1997 increased by $171 million, or 28%, over the prior fiscal
year. The increase was primarily due to higher net income.
Accounts receivable balances increased during fiscal 1997, as
the Company continues to use installment payment plans as a
competitive advantage during the sales process. Clients show an
increased willingness to finance their licensing fees. The Company
has chosen to maintain its own financing plans instead of using
third parties, such as banks or financial institutions, to arrange
client financing. Cash generated from operations and the pro-
ceeds from the sale of marketable securities were used, in part,
to purchase over $300 million of treasury stock during the fiscal
year. The balance of the cash generated from operations was
used to partially repay debt drawn to fund the Company’s
November 1996 $1.2 billion purchase of Cheyenne.
The Company’s capital resource commitment as of
March 31, 1997, consisted of lease obligations for office facilities,
computer equipment, a mortgage obligation, and amounts due
from the acquisition of products and companies. In addition, the
Company is proceeding with a project to purchase land and a
building for approximately $150 million in the United Kingdom.
The Company intends to meet its existing and planned commit-
ments from its available funds and credit facilities. See Notes 6
and 7 of Notes to Consolidated Financial Statements for details
concerning commitments.
The Company believes that the foregoing sources
of liquidity, plus existing cash and marketable securities of
$199 million as of March 31, 1997, are adequate for its
foreseeable needs.
During fiscal 1997, the Company announced that it
increased the authorized amount of shares to be repurchased by
18.8 million bringing the total authorized under the Company’s
various repurchase programs to 108.8 million shares. Approx-
imately 7 million shares were repurchased during fiscal 1997,
bringing the total repurchased under the various plans to 78
million. Approximately 30 million shares remain authorized for
repurchase. All references to share amounts have been adjusted
for three-for-two stock splits effective August 21, 1995 and
June 19, 1996.
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