Computer Associates 2007 Annual Report Download - page 52

Consolidated Balance Sheets. Final payment of these amounts is dependent upon settlement with the works councils in
certain international locations and our ability to negotiate lease terminations.
In July 2005, we announced a restructuring plan designed to more closely align our investments with strategic growth
opportunities, including a workforce reduction of approximately 5% or 800 positions worldwide. We incurred approximately
$85 million of expenses under the plan as of March 31, 2007, of which approximately $19 million was incurred in fiscal year
2007 and approximately $20 million was unpaid at March 31, 2007. As of March 31, 2006, we had incurred approximately
$66 million of expenses under the plan, approximately $45 million of which was unpaid at March 31, 2006. The severance
portion of the remaining liability balance is included in the “Salaries, wages and commissions” line on the Consolidated
Balance Sheets of the respective periods. The facilities portion of the remaining liability balance is included in “Accrued
expenses and other current liabilities” on the Consolidated Balance Sheets. Final payment of these amounts is dependent upon
settlement with the works councils in certain international locations and our ability to negotiate lease terminations. The
majority of the costs of this restructuring plan have been recorded.
During the fiscal years ended March 31, 2007 and March 31, 2006, we 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, we incurred approximately $15 million in legal fees in connection
with matters under review by the Special Litigation Committee, composed of independent members of our Board of Directors
(refer to Note 8, “Commitments and Contingencies”, in the Notes to the Consolidated Financial Statements for further
details). Additionally, in fiscal year 2007, we recorded an impairment charge of approximately $12 million, relating to certain
indefinite lived assets that were acquired in conjunction with a prior year acquisition. Further, we recorded a charge of
approximately $4 million for internal-use software capitalized in connection with our ERP implementation that was deemed to
have no future value, as we subsequently selected a different technology solution which we believe better satisfies the specific
needs of our business.
As part of our restructuring initiatives and associated review of the benefits of owning versus leasing certain properties, we
also 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, we also incurred approximately
$5 million due to the termination of a non-core application development professional services project, which was recorded
under “Restructuring and other” in the Consolidated Statement of Operations.
In fiscal year 2005, we incurred restructuring and other charges of approximately $28 million, primarily related to a
restructuring plan announced in the second quarter of fiscal year 2005. The restructuring plan included a workforce reduction
of approximately 5% or 750 positions worldwide, slightly lower than our original estimate of 800 positions. As of March 31,
2005, the Company had made all payments under the plan.
Shareholder Litigation and Government Investigation Settlement
In prior fiscal years, a number of stockholder class action lawsuits were initiated that alleged, among other things, that the
Company made misleading statements of material fact or omitted to state material facts necessary in order to make the
statements, in light of the circumstances under which they were made, not misleading in connection with the Company’s
financial performance. Refer to Note 8, “Commitments and Contingencies”, in the Notes to the Consolidated Financial
Statements for additional information concerning the shareholder litigation.
In August 2003, we announced the settlement of all then outstanding litigation related to these actions. Under the settlement,
we agreed to issue a total of up to 5.7 million shares of common stock to the shareholders represented in the three class action
lawsuits, including payment of attorneys’ fees. In January 2004, approximately 1.6 million settlement shares were issued
along with approximately $3.3 million to the plaintiffs’ attorneys for attorney fees and related expenses. In March 2004,
approximately 0.2 million settlement shares were issued to participants and beneficiaries of the CASH Plan. On October 8,
2004, the Federal Court signed an order approving the distribution of the remaining 3.8 million settlement shares, less
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