Computer Associates 2007 Annual Report Download - page 110

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Facilities Abandonment: The Company recorded the costs associated with lease termination or abandonment when the
Company ceased to utilize the leased property. Under SFAS No. 146, the liability associated with lease termination and/or
abandonment is measured as the present value of the total remaining lease costs and associated operating costs, less
probable sublease income. The Company accretes its obligations related to the facilities abandonment to the then-present
value and, accordingly, recognizes accretion expense as a restructuring expense in future periods. The Company reduced the
accrual for facilities abandonment related costs by approximately $3 million for the fiscal year ended March 31, 2007 due to
revised estimates for sublease income on certain properties, and incurred approximately $30 million in costs for the fiscal year
ended March 31, 2006. The Company has recognized substantially all of the facilities abandonment costs associated with the
fiscal 2006 plan.
Accrued restructuring costs and changes in the accruals for fiscal years 2007 and 2006 associated with the fiscal 2006 plan
were as follows:
(IN MILLIONS) SEVERANCE
FACILITIES
ABANDONMENT
Balance at March 31, 2005 $— $—
Additions 36 30
Payments (19) (3)
Adjustments 1—
Balance at March 31, 2006 18 27
Additions (reductions) 22 (3)
Payments (34) (10)
Balance at March 31, 2007 $6 $14
The liability balance for the severance portion of the remaining reserve is included in the “Salaries, wages and commissions”
line on the Consolidated Balance Sheets of the respective periods.The liability for the facilities portion of the remaining reserve
is included in the “Accrued expenses and other current liabilities” line item on the Consolidated Balance Sheets.
Other
During the fiscal years ended March 31, 2007 and March 31, 2006, the Company incurred approximately $4 million and
$10 million, respectively, in connection with the Company’s Deferred Prosecution Agreement entered into with the United
States Attorney’s Office for the Eastern District of New York (see also Note 8, “Commitments and Contingencies”, in the
Notes to the Consolidated Financial Statements). During fiscal year 2007, the Company incurred approximately $15 million in
legal fees in connection with matters under review by the Special Litigation Committee, composed of independent members
of the Board of Directors (refer to Note 8, “Commitments and Contingencies”, in the Notes to the Consolidated Financial
Statements for further details). Additionally, in the fourth quarter of fiscal year 2007, the Company recorded an impairment
charge of approximately $12 million, relating to certain separately identifiable intangible assets acquired in conjunction with a
prior year acquisition that were not subject to amortization, and a charge of approximately $4 million for software that was
capitalized for internal use but was determined to be impaired for future periods.
As part of the Company’s restructuring initiatives and associated review of the benefits of owning versus leasing certain
properties, the Company entered into three sale/leaseback transactions during fiscal year 2006. Two of these transactions
resulted in a loss totaling approximately $7 million which was recorded under “Restructuring and other” in the Consolidated
Statements of Operations. The third sale/leaseback transaction resulted in a gain of approximately $5 million which is being
recognized ratably as a reduction to rent expense over the life of the lease term. During fiscal year 2006, the Company also
incurred approximately $5 million due to the termination of a non-core application development professional services project.
98