Computer Associates 2006 Annual Report Download - page 135

Note$ 2 — Acquisitions, Divestitures and Restructuring (Continued)
obligations are settled at amounts less than those originally estimated. The remaining liability balances are included
in the “Accrued expenses and other liabilities” line item on the Consolidated Balance Sheets.
Divestitures: In December 2005, the Company sold its wholly-owned subsidiary MultiGen-Paradigm, Inc.
(MultiGen) to Parallax Capital Partners. MultiGen was a provider of real-time, end-to-end 3D solutions for
visualizations, simulations and training applications used for both civilian and government purposes. The sale price
was approximately $6 million, which included reimbursements for certain employee-related costs. The sale price
was received in the form of an interest bearing note receivable that is scheduled to be paid by June 2007. MultiGen
had revenues of $9 million and $11 million for the nine month periods ending December 31, 2005 and December 31,
2004, respectively. As a result of the sale in the third quarter, the Company recorded a $3 million gain, net of a tax
benefit of approximately $10 million. The Company has separately presented the gain on the disposal of MultiGen
as a discontinued operation for the current period presented. The impact of MultiGen’s results on prior periods was
considered immaterial.
In March 2004, the Company sold its approximate 90% interest in ACCPAC International, Inc. (ACCPAC) to The
Sage Group, plc. (Sage). The Company’s net proceeds totaled approximately $104 million for all of the Company’s
outstanding equity interests of ACCPAC, including options and change of control payments for certain ACCPAC
officers and managers. The Company received approximately $90 million of the net proceeds in fiscal year 2004
and the remainder in fiscal year 2005. ACCPAC provided accounting, customer relationship management, human
resources, warehouse management, manufacturing, electronic data interchange, and point-of-sale software for
small and medium-sized businesses. As a result of the sale in the fourth quarter of fiscal year 2004, the Company
realized a gain of approximately $60 million, net of taxes of approximately $36 million, in fiscal year 2004. In the
second quarter of fiscal year 2005, the Company recorded an adjustment to the gain of approximately $2 million, net
of tax of approximately $1 million, that reduced the net gain to approximately $58 million. Approximately 600
employees were transferred to Sage. The sale completed the Company’s multi-year effort to exit the business
applications market. Pursuant to SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets,” the historical results of operations of ACCPAC, including the gain on the sale in fiscal year 2004, and the
adjustment to the gain in fiscal year 2005, have been recorded as discontinued operations for all periods presented.
The operating results of ACCPAC are summarized as follows:
Year Ended
March 31,
2004
(1)
(in millions)
Software fees and other ................................................. $38
Maintenance ......................................................... 40
Total revenue ........................................................ $78
Pre-tax income from discontinued operation .................................. $ 1
Income from discontinued operation, net of taxes .............................. $ 1
(1) Fiscal year 2004 includes operating results through December 2003, the measurement date for the ACCPAC sale.
Other:
In December 2005, the Company acquired certain assets and liabilities of Control F-1 Corporation (Control F-1) for
a total purchase price of approximately $14 million which was paid in January 2006. Control F-1 was a privately
held provider of support automation solutions that automatically prevent, detect, and repair end-user computer
problems before they disrupt critical IT services.
In November 2005, the Company announced an agreement with Garnett & Helfrich Capital, a private equity firm, to
create an independent corporate entity, Ingres Corporation (Ingres). As part of the agreement, the Company
contributed intellectual property, support contracts, the services of certain employees and other assets used
exclusively in the business of the intellectual property contributed. The contributions from the Company and
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