Computer Associates 2007 Annual Report Download - page 140

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Reconciliation of GAAP Results to
Non-GAAP Results
(UNAUDITED) 2007 2006
FISCALYEAR ENDED MARCH 31,
Total revenue $3,943 $3,772
Total expenses before interest and taxes 3,729 3,606
Income before interest expense and income taxes 214 166
Non-GAAP adjustments
Purchased software amortization 300 401
Intangibles amortization 58 51
Restructuring and other 201 88
Charge for in-process research and development costs 10 18
Total non-GAAP adjustments 569 558
Operating income (pre-tax) 783 724
Interest expense, net 60 41
Interest on dilutive convertible bonds 88
Non-GAAP income before income taxes 731 691
Income tax expense 232 177
Non-GAAP net income
1
$499 $514
Diluted non-GAAP EPS
1
$ 0.88 $ 0.85
Number of shares used
1
569 607
1 Non-GAAP net income and the number of shares used in the computation of diluted operating EPS for all periods presented have been adjusted to reflect the dilutive impact of the Company’s
1.625% Convertible Senior Notes and stock awards outstanding.
(UNAUDITED) 2007 2006
FISCAL YEAR ENDED MARCH 31,
Basic income per share $ 0.22 $ 0.27
Non-GAAP adjustments, net of taxes
Acquisition amortization 0.40 0.47
Restructuring and other charges 0.22 0.09
Acquisition IPR&D 0.01 0.02
Interest on convertible bonds 0.01 0.01
Non-GAAP effective tax rate adjustments
1
0.02 (0.01)
Diluted Non-GAAP EPS $ 0.88 $ 0.85
1 The Non-GAAP effective tax rate adjustment represents the impact on tax calculations caused by the changes in GAAP and Non-GAAP pretax amounts.
The tables above include financial measures for per share earnings that exclude the impact of certain items and therefore have
not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). Non-GAAP earnings per share
excludes the following items: non-cash amortization of acquired technology and other intangibles, in process research and
development charges, restructuring and other charges and the tax resulting from the repatriation of approximately
$584 million of foreign cash and interest on dilutive convertible bonds (the convertible shares, rather than the interest,
are more dilutive, thus the interest is added back and the shares increased to calculate non-GAAP earnings). Non-GAAP taxes
are provided based on the estimated effective annual non-GAAP tax rate. These non-GAAP financial measures may be
different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be
considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By
excluding these items, non-GAAP financial measures facilitate management’s internal comparisons to the Company’s
historical results, to competitors’ results, and to estimates made by securities analysts. Management uses these non-GAAP
financial measures internally to evaluate its performance and they are key variables in determining management incentive
compensation. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater
transparency of supplemental information used by management in its financial and operational decision-making. In addition,
the Company has historically reported similar non-GAAP financial measures to its investors and believes that the inclusion of
comparative numbers provides consistency in its financial reporting.
128