Computer Associates 2006 Annual Report Download - page 70

commitments). At our credit ratings in July 2006, the facility fee is 0.225% of the aggregate amount of each lender’s
revolving credit commitment.
The 2004 Revolving Credit Facility contains customary covenants for transactions of this type, including two
financial covenants: (i) for the 12-months ending each quarter-end, the ratio of consolidated debt for borrowed
money to consolidated cash flow, each as defined in the 2004 Revolving Credit Facility, must not exceed 3.25 for the
quarter ending December 31, 2004 and 2.75 for quarters ending March 31, 2005 and thereafter; and (ii) for the
12-months ending each quarter-end, the ratio of consolidated cash flow to the sum of interest payable on, and
amortization of debt discount in respect of, all consolidated debt for borrowed money, as defined in the 2004
Revolving Credit Facility, must not be less than 5.00. In addition, as a condition precedent to each borrowing made
under the 2004 Revolving Credit Facility, as of the date of such borrowing, (i) no event of default shall have
occurred and be continuing and (ii) we are to reaffirm that the representations and warranties made in the 2004
Revolving Credit Facility (other than the representation with respect to material adverse changes, but including the
representation regarding the absence of certain material litigation) are correct. On June 29, 2006, we obtained a
waiver from all participating banks under the credit facility to file our financial statements within the 90-day
required period. The waiver extends this period through August 28, 2006. Upon the filing of this Form 10-K we
believe we are in compliance with our debt covenants.
Fiscal Year 1999 Senior Notes
In fiscal year 1999, the Company issued $1.75 billion of unsecured Senior Notes in a transaction pursuant to
Rule 144A under the Securities Act of 1933 (Rule 144A). Amounts borrowed, rates, and maturities for each issue
were $575 million at 6.25% due April 15, 2003, $825 million at 6.375% due April 15, 2005, and $350 million at
6.5% due April 15, 2008. In April 2005, the Company repaid the $825 million remaining balance of the
6.375% Senior Notes from available cash balances. As of March 31, 2006, $350 million of the 6.5% Senior
Notes remained outstanding.
Fiscal Year 2005 Senior Notes
In November 2004, the Company issued an aggregate of $1 billion of unsecured Senior Notes (2005 Senior Notes) in a
transaction pursuant to Rule 144A. The Company issued $500 million of 4.75%, 5-year notes due December 2009 and
$500 million of 5.625%, 10-year notes due December 2014. The Company has the option to redeem the 2005 Senior
Notes at any time, at redemption prices equal to the greater of (i) 100% of the aggregate principal amount of the notes of
such series being redeemed and (ii) the present value of the principal and interest payable over the life of the 2005 Senior
Notes, discounted at a rate equal to 15 basis points and 20 basis points for the 5-year notes and 10-year notes, respectively,
over a comparable U.S. Treasury bond yield. The maturity of the 2005 Senior Notes may be accelerated by the holders
upon certain events of default, including failure to make payments when due and failure to comply with covenants in the
2005 Senior Notes. The 5-year notes were issued at a price equal to 99.861% of the principal amount and the 10-year
notes at a price equal to 99.505% of the principal amount for resale under Rule 144A and Regulation S. The Company
also agreed for the benefit of the holders to register the 2005 Senior Notes under the Securities Act of 1933 pursuant to a
registered exchange offer so that the 2005 Senior Notes may be sold in the public market. Because the Company did not
meet certain deadlines for completion of the exchange offer, the interest rate on the 2005 Senior Notes increased by
25 basis points as of September 27, 2005 and increased by an additional 25 basis points as of December 26, 2005 since
the delay was not cured prior to that date. After the delay is cured, such additional interest on the 2005 Senior Notes will
no longer be payable. The Company expects to register the 2005 Senior Notes in the second quarter of fiscal year 2007.
The Company used the net proceeds from this issuance to repay debt as described above.
1.625% Convertible Senior Notes
In fiscal year 2003, the Company issued $460 million of unsecured 1.625% Convertible Senior Notes
(1.625% Notes), due December 15, 2009, in a transaction pursuant to Rule 144A. The 1.625% Notes are
senior unsecured indebtedness and rank equally with all existing senior unsecured indebtedness. Concurrent
with the issuance of the 1.625% Notes, we entered into call spread repurchase option transactions to partially
mitigate potential dilution from conversion of the 1.625% Notes. For further information, refer to Note 6, “Debt”, in
the Notes to the Consolidated Financial Statements.
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