Computer Associates 2006 Annual Report Download - page 162

Note 9 — Stock Plans (Continued)
Each Phantom Share is equivalent to one share of the Company’s common stock. Vesting, at 20% of the grant
amount per annum, was contingent upon attainment of specific criteria, including an annual Target Closing Price
(Price) for the Company’s common stock and the participant’s continued employment. The Price was based on the
average closing price of the Company’s common stock on the New York Stock Exchange for the 10 days up to and
including March 31 of each fiscal year. The Price for the first tranche was met on March 31, 2000 and the Price was
not met for any subsequent tranche. Under SFAS No. 123(R), the Company is required to record a non-cash charge
over the employment period irrespective of the attainment of the Price for each tranche. However, the Company is
required to reverse expense for any shares that were forfeited as a result of a failure to fulfill the service condition.
As a result, for the fiscal years ended March 31, 2005 and 2004 the pre-tax non-cash amounts credited to expense
were approximately $5 million and $2 million, respectively. There were no such credits for the fiscal year ended
March 31, 2006. As of March 31, 2006, approximately 106,000 Phantom Shares have vested and approximately
96,000 were outstanding under the 1998 Plan. The remaining vested shares will be paid out in increments of 20%,
30% and 40% on August 25, 2006, 2007, and 2008, respectively.
Note 10 — Profit-Sharing Plan
The Company maintains a defined contribution plan, the CA, Inc. Savings Harvest Plan (CASH Plan), for the
benefit of the U.S. employees of the Company. The CASH Plan is intended to be a qualified plan under
Section 401(a) of the Internal Revenue Code of 1986 (the Code), and contains a qualified cash or deferred
arrangement as described under Section 401(k) of the Code. Pursuant to the CASH Plan, eligible participants may
elect to contribute a percentage of their base compensation. The matching contributions to the CASH Plan totaled
approximately $13 million for the fiscal year ended March 31, 2006, and, excluding the discontinued operations of
ACCPAC, totaled approximately $12 million for each of the fiscal years ended March 31, 2005 and 2004. In
addition, the Company may make discretionary contributions to the CASH Plan. The discretionary contributions to
the CASH plan totaled approximately $0 million, $15 million (excluding the discontinued operations of ACCPAC)
and $20 million in fiscal years ended March 31, 2006, 2005 and 2004, respectively.
The Company made contributions to international retirement plans of $20 million, $23 million, and $20 million in
the fiscal years ended March 31, 2006, 2005, and 2004, respectively.
Note 11 — Rights Plan
Each outstanding share of the Company’s common stock carries a stock purchase right issued under the Company’s
Rights Agreement, dated June 18, 1991, as amended May 17, 1995, May 23, 2001, and November 9, 2001 (the
Rights Agreement). Under certain circumstances, each right may be exercised to purchase one one-thousandth of a
share of Series One Junior Participating Preferred Stock, Class A, for $150. Under certain circumstances, following
(i) the acquisition of 20% or more of the Company’s outstanding common stock by an Acquiring Person (as defined
in the Rights Agreement), (ii) the commencement of a tender offer or exchange offer which would result in a person
or group owning 20% or more of the Company’s outstanding common stock, or (iii) the determination by the
Company’s Board of Directors and a majority of the Disinterested Directors (as defined in the Rights Agreement)
that a 15% stockholder is an Adverse Person (as defined in the Rights Agreement), each right (other than rights held
by an Acquiring Person or Adverse Person) may be exercised to purchase common stock of the Company or a
successor company with a market value of twice the $150 exercise price. The rights, which are redeemable by the
Company at one cent per right, expire in November 2006.
Note 12 — Restatements
(a) The Company conducted an internal review into its historical policies and procedures with respect to the
granting of stock options principally from fiscal year 1996 to the present under its stock option plans in effect during
this period. Based upon the results of its review, the Company determined that in years prior to fiscal year 2002, it
did not communicate stock option grants to individual employees in a timely manner. In fiscal years 1996 through
2001, the Company experienced delays of up to approximately two years from the date that employee stock options
were approved by the committee of the Company’s Board of Directors charged with such duties (the “Committee”),
to the date such stock option grants were communicated by management to individual employees.
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