Computer Associates 2009 Annual Report Download

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Delivering on our Commitments
CA Annual Report 2009
Empowering Customers to Manage IT Complexity
CA Annual Report 2009

Table of contents

  • Page 1
    Delivering on our Commitments Empowering Customers to Manage IT Complexity CA Annual Report 2009

  • Page 2

  • Page 3
    ... their IT systems to drive innovation and growth. IT helps run many parts of a company, from payroll to logistics to resource management to online sales. IT can help win customers, drive revenue and deliver dollars straight to the bottom line. Not surprisingly, organizations want their existing IT...

  • Page 4
    ... its online ticketing service runs smoothly 24 hours a day, seven days a week; a global employment services provider serve its local customers better; and a retailer deliver competitive prices and better customer service: • Qantas uses CA's Wily Application Performance Management software to help...

  • Page 5
    ...analyst, CA also is the market leader in Identity and Access Management security software. We enhanced our security management solutions, which cover data loss prevention, identity, role, access and log management, by both internal development and our recent acquisitions of two companies, Orchestria...

  • Page 6
    ... Service Management. WE'RE READY One of CA's greatest assets continues to be our team of global, well-trained professionals who are committed to customers, shareholders, their communities and CA. In fact, CA was named one of the top 100 places to work in IT by Computer World magazine. In 2009, we...

  • Page 7
    ...Employer Identification Number) One CA Plaza, Islandia, New York (Address of Principal Executive Offices) 11749 (Zip Code) 1-800-225-5224 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: (Title of Each Class) Common stock, par value...

  • Page 8
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  • Page 9
    ... ...Part III Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Certain Relationships and Related Transactions, and Director Independence ...Principal Accountant Fees and Services...

  • Page 10
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  • Page 11
    ... data center automation and virtualization. The Company was incorporated in Delaware in 1974, began operations in 1976 and completed an initial public offering of common stock in December 1981. Prior to April 28, 2008, our common stock was traded on the New York Stock Exchange under the symbol "CA...

  • Page 12
    ...-malware product portfolio. The program for Internet Security will help value-added resellers, retailers and technology partners market and sell solutions to service small, medium and large organizations, as well as the home and home office market. • In June 2008, we released eight new and updated...

  • Page 13
    ... governance is addressed by our CA GRC Manager and Information Governance products. Manage We make it easier to manage technology so that high-quality IT services can be delivered within our customers' businesses at a competitive cost. We focus on service management, data center automation and...

  • Page 14
    ... globally to help drive sales. Our sales organization operates on a worldwide basis. We operate through branches, subsidiaries and partners around the world. Approximately 46% of our revenue in fiscal 2009 was from operations outside of the United States. As of March 31, 2009 and March 31, 2008...

  • Page 15
    ...most major industries worldwide, including banks, insurance companies, other financial services providers, governmental agencies, manufacturers, technology companies, retailers, educational institutions and health care institutions. When customers enter into software license agreements with us, they...

  • Page 16
    ...Ewing, New Jersey; Islandia, New York; Pittsburgh, Pennsylvania; Plano, Texas; and Herndon, Virginia. Patents and Trademarks Certain aspects of our products and technology are proprietary. We rely on U.S. and foreign intellectual property laws, including patent, copyright, trademark and trade secret...

  • Page 17
    ..., 2009: LOCATION EMPLOYEES AS OF MARCH 31, 2009 FUNCTIONAL AREA EMPLOYEES AS OF MARCH 31, 2009 Corporate headquarters Other U.S. offices International offices Total 1,900 5,200 6,100 13,200 Professional services Support services Selling and marketing General and administrative Product development...

  • Page 18
    ... Compensation and Human Resources Committee, the Corporate Governance Committee, and the Compliance and Risk Committee; and our CA Code of Conduct: Information and Resource Guide (applicable to all of our employees, including our Chief Executive Officer, Chief Financial Officer, Principal Accounting...

  • Page 19
    ... localizing software products for a significant number of international markets; • More restrictive employment regulation; • Trade restrictions such as tariffs, duties, taxes or other controls; • International intellectual property laws, which may be more restrictive or may offer lower...

  • Page 20
    ... CA solutions through systems integrators and value-added resellers in channel partner programs that require training and expertise to sell these solutions, and global penetration to grow these aspects of our business. The failure to expand these channel partner programs and penetrate these markets...

  • Page 21
    ... our sales, revenue and market presence. The markets for our products are intensely competitive, and we expect product and service offerings and pricing competition to increase. Some of our competitors have longer operating histories, greater name recognition, a larger installed base of customers in...

  • Page 22
    ... the incorporated products rather than purchase our products. In addition, the software industry is currently undergoing consolidation as software companies seek to offer more extensive suites and broader arrays of software products and services, as well as integrated software and hardware solutions...

  • Page 23
    ... affect our revenue and earnings and subject us to product liability claims, which may be costly and time consuming. The software products we offer are inherently complex. Despite testing and quality control, we cannot be certain that errors will not be found in current versions, new versions or...

  • Page 24
    ... our proprietary technology, including our software and our source code for that software. Failure to protect such technology could lead to our loss of valuable assets and competitive advantage. We protect our proprietary information through the use of patents, copyrights, trademarks, trade secret...

  • Page 25
    ... and penalties. Approximately 10% of our total revenue backlog as of March 31, 2009 is associated with multi-year contracts signed with the U.S. federal government and other U.S. state and local governmental agencies. These contracts are generally subject to annual fiscal funding approval, may be...

  • Page 26
    ... failure by us to execute our restructuring plans and related sales model changes successfully could result in total costs that are greater than expected or revenues that are less than anticipated. We have announced restructuring plans, which include workforce reductions as well as global facility...

  • Page 27
    ... for the Eastern District of New York (the Federal Court) against Rocket Software, Inc. (Rocket). On August 1, 2007, the Company filed an amended complaint alleging that Rocket misappropriated intellectual property associated with a number of the Company's database management software products. The...

  • Page 28
    ... President and General Manager of the Management Business Unit and Security Business Unit from May 2007 to January 2008 and as Executive Vice President, EITM Group from January 2008 to February 2009. Dr. Gopal was with Symantec Corporation, a provider of infrastructure software, from September 2004...

  • Page 29
    ... 2006 to February 2007, she served as Executive Vice President and Co-General Counsel of the Company. Before September 2006, Ms. Olli spent nearly 20 years in various senior-level legal positions with divisions of IBM, most recently as General Counsel - Americas and Global Coordinator for Sales and...

  • Page 30
    ..., RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. During fiscal 2008 and through April 27, 2008, our common stock was traded on the New York Stock Exchange under the symbol "CA." On April 28, 2008, our common stock commenced trading on The NASDAQ Global Select Market tier...

  • Page 31
    ... Act of 2004, and after-tax charges of $17 million for severance and other expenses in connection with a restructuring plan. 2 Deferred revenue includes all amounts billed or collected in advance of revenue recognition from all sources including subscription license agreements, maintenance, and...

  • Page 32
    ... in accordance with generally accepted accounting principles in the United States of America (GAAP). Revenue is reported net of applicable sales taxes. Under our business model, we offer customers a wide range of licensing options, including the flexibility to license software under month-to...

  • Page 33
    ...million as of March 31, 2009 and March 31, 2008, respectively. Under our license agreements, customers generally make installment payments for the right to use our software products over the term of the associated software license agreement. While the timing of revenue recognition is affected by the...

  • Page 34
    ...by distributors, resellers and value-added resellers to end-users, where the contracts incorporate the right for end-users to receive unspecified future software products and other contracts entered into in close proximity or contemplation of such agreements. Total Bookings - Total bookings includes...

  • Page 35
    ... YEAR ENDED MARCH 31 (DOLLARS IN MILLIONS) 2009 2008 2007 CHANGE 2009/2008 PERCENT CHANGE 2009/2008 DOLLAR CHANGE 2008/2007 PERCENT CHANGE 2008/2007 Revenue: Subscription and maintenance revenue Professional services Software fees and other Total revenue Expenses: Costs of licensing and maintenance...

  • Page 36
    ... THE YEAR ENDED MARCH 31, 2009 2008 2007 Revenue: Subscription and maintenance revenue Professional services Software fees and other Total revenue Expenses: Costs of licensing and maintenance Cost of professional services Amortization of capitalized software costs Selling and marketing General and...

  • Page 37
    ... growth in sales of new products and services, continued improvement in the management of contract renewals, and an increase in the number and dollar amounts of large contracts during the fiscal year. During fiscal 2008, we renewed a total of 61 license agreements with incremental contract values in...

  • Page 38
    ... of revenue earned from sales to unaffiliated customers in the United States and international regions and corresponding percentage changes for fiscal 2009, 2008 and 2007. FISCAL 2009 COMPARED WITH FISCAL 2008 (DOLLARS IN MILLIONS) 2009 % of Total 2008 % of Total % Change 2008 FISCAL 2008 COMPARED...

  • Page 39
    ... of certain capitalized software costs related to prior acquisitions. Selling and Marketing Selling and marketing expenses include the costs relating to our sales force, costs relating to our channel partners, corporate and business marketing costs and our customer training programs. Including a $15...

  • Page 40
    ... 2008 primarily due to the strategic partnership agreement signed relating to the development of products associated with our Internet Security business and increased capitalization of internally developed software, partially offset by higher personnel costs. The year-over-year decline in product...

  • Page 41
    ... a loss on the sale of an investment in marketable securities associated with the closure of an international location. Charge for In-Process Research and Development Costs For fiscal 2007, the charge for in-process research and development costs of $10 million was associated with the acquisition of...

  • Page 42
    ...and receive product support, software fixes and new products when available. The timing and actual amounts of cash received from committed customer installment payments under any specific agreement can be affected by several factors, including the time value of money and the customer's credit rating...

  • Page 43
    ... contract value, under new or renewed license agreements to be executed in future periods. For fiscal 2009, gross receipts related to single installments for the entire contract value, or a substantial portion of the contract value, were $526 million, compared with $641 million in fiscal 2008. These...

  • Page 44
    ... 2008 Expected future cash collections: Total billings backlog Trade and installment accounts receivable - current, net Installment accounts receivable - noncurrent, net Total expected future cash collections $ 3,947 839 128 $ 4,914 $ 3,158 970 234 $ 4,362 The increases in our revenue and billings...

  • Page 45
    ... cash acquired, was $27 million for fiscal 2008 compared with $212 million for fiscal 2007. Proceeds from the sale of assets were $46 million for fiscal 2008, compared with $223 million in fiscal 2007, which included proceeds on the sale-leaseback of our corporate headquarters in Islandia, New York...

  • Page 46
    ... (expires August 2012) 6.500% Senior Notes due April 2008 1.625% Convertible Senior Notes due December 2009 4.750% Senior Notes due December 2009 6.125% Senior Notes due December 2014 International line of credit Capital lease obligations and other Total $ 1,000 - - - - 25 - $ 750 - 460 176 500 - 51...

  • Page 47
    ... if the price of the common stock is above that limit at the time of exercise, the number of shares eligible to be purchased will be proportionately reduced based on the amount by which the common share price exceeds $30.00 at the time of exercise. As of March 31, 2009, the estimated fair value of...

  • Page 48
    ... stock repurchase program. Dividends We have paid cash dividends each year since July 1990. For fiscal 2009, 2008 and 2007, we paid annual cash dividends of $0.16 per share, which have been paid out in quarterly installments of $0.04 per share as and when declared by the Board of Directors. Total...

  • Page 49
    ... interest rate of 4.47%. Capital resource requirements as of March 31, 2009 and 2008 consisted of lease obligations for office space, equipment, mortgage and loan obligations, our enterprise resource planning implementation, and amounts due as a result of product and company acquisitions. Refer...

  • Page 50
    ... them. Revenue Recognition We generate revenue from the following primary sources: (1) licensing software products; (2) providing customer technical support (referred to as maintenance); and (3) providing professional services, such as product implementation, consulting and education. Revenue is...

  • Page 51
    ...recognition criteria noted above are met and when these entities sell the software product to their customers. This is commonly referred to as the sell-through method. Revenue from the sale of products to distributors, resellers and value added resellers that incorporates the right for the end-users...

  • Page 52
    ... Historical information, such as general collection history of multi-year software agreements; • Current customer information and events, such as extended delinquency, requests for restructuring, and filings for bankruptcy; • Results of analyzing historical and current data; and • The overall...

  • Page 53
    ... the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The fair value of a reporting unit under the first step of the goodwill impairment test is measured using the quoted market price method...

  • Page 54
    ... continuously integrating current software technology into new software products. Accounting for Stock-Based Compensation We currently maintain several stock-based compensation plans. We use the Black-Scholes option-pricing model to compute the estimated fair value of certain stock-based awards. The...

  • Page 55
    ...with installment payment terms in connection with our software license agreements. The aggregate amounts due from customers include an imputed interest element, which can vary with the interest rate environment. Each 25 basis point increase in interest rates would currently have an associated annual...

  • Page 56
    ... to materially affect, the Company's internal control over financial reporting. As previously disclosed in Item 9A of our 2008 Form 10-K, the Company began the migration of certain financial and sales processing systems to an enterprise resource planning (ERP) system in fiscal 2007 as part of its on...

  • Page 57
    ... and efficiency associated with the financial reporting process. Additional changes are planned for fiscal 2010 and the Company will continue to monitor and test these systems as part of management's annual evaluation of internal control over financial reporting. The Company's independent registered...

  • Page 58
    ..., or persons performing similar functions. Our Code of Conduct is available on our website at ca.com/investor. Any amendment or waiver to the "code of ethics" provisions of our Code of Conduct that applies to our directors or executive officers will be included in a report filed with the SEC on Form...

  • Page 59
    ...as Trustee. Indenture with respect to the Company's 4.75% Senior Notes due 2009 and 5.625% Senior Notes due 2014, dated November 18, 2004, between the Company and The Bank of New York, as Trustee. 4.2 4.3 Previously filed as Exhibit 4(f) to the Company's Annual Report on Form 10-K for fiscal 1998...

  • Page 60
    ... as of April 27, 2007). CA, Inc. 2002 Compensation Plan for NonEmployee Directors. CA, Inc. 2003 Compensation Plan for NonEmployee Directors. Relocation Polices including Form of Moving and Relocation Expense Agreement. Restricted Stock Unit Agreement for John A. Swainson. 10.3* 10.4* 10.5* 10...

  • Page 61
    ... Certificate (Employment Agreement). Form of Incentive Stock Option Award Certificate. Form of Incentive Stock Option Award Certificate (Employment Agreement). CA, Inc. Deferred Compensation Plan for John A. Swainson, dated April 29, 2005. Trust Agreement between Computer Associates International...

  • Page 62
    ... for the non-executive Chairman of the Board, effective February 23, 2007. Amendment to the CA, Inc. 2003 Compensation Plan for Non-Employee Directors, dated August 24, 2005. Employment Agreement, dated as of June 28, 2006, between the Company and James Bryant. Employment Agreement, dated as of...

  • Page 63
    ... 25, 2008. CA, Inc. Change in Control Severance Policy. 10.49 10.50* 10.51* 10.52* 10.53* 10.54* 10.55* 10.56* First Amendment to CA, Inc. 2003 Compensatory Plan for Non-Employee Directors. Amendment to Employment Agreement, dated December 8, 2008, between the Company and John Swainson...

  • Page 64
    Regulation S-K Exhibit Number 10.60* Amendment to Employment Agreement, dated December 18, 2008, between the Company and Amy Fliegelman Olli. Amendment to Employment Agreement, dated December 29, 2008, between the Company and James Bryant. Letter dated July 21, 2006 from the Company to Ajei S. Gopal...

  • Page 65
    ... in the capacities and on the dates indicated: By: /s/ NANCY E. COOPER Nancy E. Cooper Executive Vice President and Chief Financial Officer By: /s/ RICHARD J. BECKERT Richard J. Beckert Corporate Senior Vice President and Corporate Controller (Principal Accounting Officer) Dated: May 15, 2009 55

  • Page 66
    ... /s/ William E. McCracken William E. McCracken /s/ John A. Swainson John A. Swainson /s/ Laura S. Unger Laura S. Unger /s/ Arthur F. Weinbach Arthur F. Weinbach /s/ Renato Zambonini Renato Zambonini Dated: May 15, 2009 Director Director Director Director Director Non-Executive Chairman of...

  • Page 67
    CA, Inc. and Subsidiaries Islandia, New York ANNUAL REPORT ON FORM 10-K ITEM 8, ITEM 9A, ITEM 15(a)(1) AND (2), AND ITEM 15(c) LIST OF CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE YEAR ENDED MARCH 31, 2009 PAGE...

  • Page 68
    ... listed in Item 15(c). We also have audited CA, Inc.'s internal control over financial reporting as of March 31, 2009, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). CA, Inc.'s management...

  • Page 69
    ... reporting as of March 31, 2009, based on criteria established in Internal Control - Integrated Framework issued by COSO. Effective April 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes...

  • Page 70
    ...) 2009 2008 2007 Revenue: Subscription and maintenance revenue Professional services Software fees and other Total Revenue Expenses: Costs of licensing and maintenance Cost of professional services Amortization of capitalized software costs Selling and marketing General and administrative Product...

  • Page 71
    CA, Inc. and Subsidiaries Consolidated Balance Sheets MARCH 31, (DOLLARS IN MILLIONS) 2009 2008 Assets Current Assets Cash, cash equivalents and marketable securities Trade and installment accounts receivable, net Deferred income taxes - current Other current assets Total Current Assets Installment...

  • Page 72
    ... 31, 2009 2008 Liabilities and Stockholders' Equity Current Liabilities Current portion of long-term debt and loans payable Accounts payable Accrued salaries, wages, and commissions Accrued expenses and other current liabilities Deferred revenue (billed or collected) - current Taxes payable, other...

  • Page 73
    ... of options related to acquisitions, net of amortization Treasury stock purchased Common stock purchased and retired Balance as of March 31, 2007 Net income Translation adjustment in 2008 Unrealized loss on marketable securities, net of taxes Comprehensive income Adoption of new accounting principle...

  • Page 74
    ... as of March 31, 2008 Net income Translation adjustment in 2009 Unrealized loss on derivatives, net of $3 million in taxes Comprehensive income Stock-based compensation Dividends declared ($0.16 per share) Exercise of common stock options, ESPP, and other items Treasury stock purchased Balance as of...

  • Page 75
    ... acquisitions: Decrease in trade and current installment accounts receivable, net Decrease in noncurrent installment accounts receivable, net (Decrease) increase in deferred revenue (billed or collected) - current and noncurrent Increase (decrease) in taxes payable, net Decrease in accounts payable...

  • Page 76
    ... ENDED MARCH 31, 2009 2008 2007 FINANCING ACTIVITIES: Dividends paid Purchases of common stock Debt borrowings Debt repayments Debt issuance costs Exercise of common stock options and other Net Cash Used in Financing Activities Increase in Cash and Cash Equivalents before Effect of Exchange Rate...

  • Page 77
    ..., 2009, 2008 and 2007, respectively. Refer to Note 4, "Derivatives and Fair Value Measurements," for additional information. (f) Revenue Recognition: The Company generates revenue from the following primary sources: (1) licensing software products; (2) providing customer technical support (referred...

  • Page 78
    .... Revenue from the sale of products to distributors, resellers and value-added resellers that include licensing terms that provide the right for the end-users to receive certain unspecified future software products is recognized on a ratable basis. In the second quarter of fiscal year 2008, the...

  • Page 79
    ... agreements associated with providing customer technical support and access to software fixes and upgrades which are separately identifiable from software usage fees or product sales. Deferred revenue (billed or collected) is comprised of: (i) amounts received in advance of revenue recognition...

  • Page 80
    ...performance targets. The Company recalculates the fair value of issued PSUs each reporting period until the underlying shares are granted. The adjustment is based on the quoted market price of the Company's stock on the reporting period date. Each quarter, the Company compares the actual performance...

  • Page 81
    ... the United States at March 31, 2009. Marketable securities were less than $1 million at March 31, 2009 and March 31, 2008. Total interest income, which primarily related to the Company's cash and cash equivalent balances, for the fiscal years ended March 31, 2009, 2008 and 2007 was approximately...

  • Page 82
    ... current software technology into new software products. Other identified intangible assets include both customer relationships and trademarks/trade names. In connection with the acquisition of Cybermation, Inc., MDY Group International, Inc., and XOsoft, Inc., in fiscal year 2007, the Company...

  • Page 83
    ... 2014 Capitalized software: Purchased Internally developed Other identified intangible assets subject to amortization Total $ 51 87 53 $ 191 $ 40 83 52 $ 175 $ 28 67 32 $ 127 $ 20 53 26 $ 99 $ 12 34 21 $ 67 Accounting for Long-Lived Assets: The carrying values of purchased software products, other...

  • Page 84
    ... for the recognition and derecognition of tax positions. (q) Deferred Revenue (Billed or Collected): The Company accounts for unearned revenue on billed amounts due from customers on a "gross method" of presentation. Under the gross method, unearned revenue on billed installments (collected or...

  • Page 85
    ...recorded as treasury stock in the Stockholders' Equity section of the Consolidated Balance Sheet. (s) Adoption of new accounting principles: Effective April 1, 2008, the Company adopted the provisions of SFAS No. 157, "Fair Value Measurements," as modified by the Financial Accounting Standards Board...

  • Page 86
    ... (IN MILLIONS) REPORTED1 REVISED YEAR ENDED MARCH 31, 2007 PREVIOUSLY REPORTED1 REVISED Costs of licensing and maintenance Cost of professional services Amortization of capitalized software costs Selling and marketing General and administrative Product development and enhancements Depreciation and...

  • Page 87
    ... a downward adjustment recorded in fiscal year 2008 of approximately $4 million. The downward adjustment was due to the recognition of deferred tax assets associated with acquired net operating losses. The allocation of a significant portion of the purchase price to goodwill was predominantly due to...

  • Page 88
    ... with the works councils in certain international locations. The plans associated with the balance of the reductions in workforce are still being finalized and the associated charges will be recorded once the actions are approved by management. Facilities Abandonment: The Company recorded the...

  • Page 89
    ... to a loss on the sale of an investment in marketable securities associated with the closure of an international location. Note 4 - Derivatives and Fair Value Measurement The Company is exposed to certain financial market risks relating to its business operations, including changes in interest rates...

  • Page 90
    ... at Reporting Date Using (IN MILLIONS) ESTIMATED FAIR VALUE AS OF MARCH 31, 2009 QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1) SIGNIFICANT OTHER OBSERVABLE INPUTS (LEVEL 2) Assets: Money market funds Government securities Total Assets Liabilities: Interest Rate Derivatives1 Total...

  • Page 91
    ... of the interest rate and foreign exchange derivatives on the Company's Consolidated Statement of Operations is as follows: Location of Net Gain Recognized in Income on Derivatives AMOUNT OF NET (GAIN)/LOSS RECOGNIZED IN INCOME ON DERIVATIVES YEAR ENDED MARCH 31, 2009 YEAR ENDED MARCH 31, 2008 (IN...

  • Page 92
    ... of total revenue for the fiscal years ended March 31, 2009, 2008 or 2007. Note 6 - Trade and Installment Accounts Receivable The Company uses installment license agreements as a standard business practice and has a history of successfully collecting substantially all amounts due under the original...

  • Page 93
    ... 839 $ 817 50 57 103 (30) (27) $ 970 During fiscal year 2008, the Company transferred its rights and interest in future committed installments under ratable software license agreements to third-party financial institutions with an aggregate contract value of approximately $17 million, for which the...

  • Page 94
    ... commitment (without taking into account any outstanding borrowings under such commitments). Based on the Company's credit ratings as of March 31, 2009, the facility commitment fee was 0.125% of the $1 billion committed amount. The 2008 Revolving Credit Facility contains customary covenants for...

  • Page 95
    ...$ 25 - $ - 51 $ 25 - $ - 22 International Line of Credit An unsecured and uncommitted multi-currency line of credit is available to meet short-term working capital needs for the Company's subsidiaries operating outside the United States. The line of credit is available on an offering basis, 85

  • Page 96
    ... and $1,885 million as of March 31, 2009 and 2008, respectively. The fair value of long-term debt is based on quoted market prices. See also Note 1, "Significant Accounting Policies." Interest expense for the fiscal years ended March 31, 2009, 2008 and 2007 was $93 million, $136 million and $122...

  • Page 97
    ...31, 2009 and 2008, respectively. Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004 - Background The Company, its former Chairman and CEO Charles B. Wang, its former Chairman and CEO Sanjay Kumar, its former Chief Financial Officer Ira Zar, and its Vice Chairman and Founder Russell...

  • Page 98
    ... Complaint names as defendants Messrs. Wang, Kumar, Zar, McWade, Schwartz, de Vogel, Grasso, Pieper, Artzt, D'Amato, and Ranieri, Stephen Richards, Steven Woghin, David Kaplan, David Rivard, Lloyd Silverstein, Michael A. McElroy, Gary Fernandes, Robert E. La Blanc, Jay W. Lorsch, Kenneth Cron...

  • Page 99
    ... other parties, including Messrs. Wang and Schwartz. Current Procedural Status of Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004 and Derivative Actions Filed in 2004 By letter dated July 19, 2007, counsel for the Special Litigation Committee advised the Federal Court that...

  • Page 100
    ... for the Eastern District of New York (the Federal Court) against Rocket Software, Inc. (Rocket). On August 1, 2007, the Company filed an amended complaint alleging that Rocket misappropriated intellectual property associated with a number of the Company's database management software products. The...

  • Page 101
    ... 31, 2008 included charges of approximately $26 million associated with certain corporate income tax rate reductions enacted in various non-US tax jurisdictions (with corresponding impacts on the Company's net deferred tax assets). The income tax provision for the fiscal year ended March 31, 2007...

  • Page 102
    ... computed at the federal statutory tax rate as follows: YEAR ENDED MARCH 31, (IN MILLIONS) 2009 2008 2007 Tax expense at U.S. federal statutory tax rate Increase in tax expense resulting from: U.S. share-based compensation Effect of international operations Corporate tax rate changes State taxes...

  • Page 103
    ... resolved. The number of years with open tax audits varies depending on the tax jurisdiction. The Company's major taxing jurisdictions and the related open tax audits are as follows: • United States - federal audits have been completed for all taxable years through 2004; • Germany- audits have...

  • Page 104
    ...non-statutory options to purchase up to a total of 337,500 shares of common stock of the Company to be available for grant to each member of the Board of Directors who is not an employee of the Company. Pursuant to the 1993 Plan, the exercise price was the fair market value of the Company's stock on...

  • Page 105
    ... annual fees in the form of deferred shares and automatic option grants to purchase 6,750 shares of common stock of the Company, up to a total of 650,000 shares. Pursuant to the 2002 Director Plan, the exercise price of the options granted was the fair market value of the Company's stock price...

  • Page 106
    ... no capitalized share-based compensation costs as of March 31, 2009, 2008 or 2007. Stock Option Awards Stock options are awards issued to employees that entitle the holder to purchase shares of the Company's stock at a fixed price. Stock options are generally granted at an exercise price equal to or...

  • Page 107
    ... year 2009. The weighted average estimated values of employee stock option grants, as well as the weighted average assumptions that were used in calculating such values during fiscal years 2008 and 2007 were based on estimates at the date of grant as follows: YEAR ENDED MARCH 31, 2008 2007 Weighted...

  • Page 108
    ... derived from the market prices of the Company's traded options. 2 The risk-free rate for periods within the contractual term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant. 3 The expected life is the number of years that the Company estimates, based...

  • Page 109
    ... shares at the end of the performance cycle if certain performance targets are achieved. Additionally, senior executives were granted RSAs or RSUs for fiscal years 2009 and 2008 and stock options for fiscal year 2007. At the conclusion of each performance cycle, the applicable number of shares of...

  • Page 110
    ... Internal Revenue Code limitations. Shares of the Company's common stock may be purchased at six-month intervals at 85% of the lower of the fair market value of the Company's common stock on the first or last day of each six-month period. During fiscal years 2009, 2008, and 2007, employees purchased...

  • Page 111
    ... II CA, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS (IN MILLIONS) BALANCE AT BEGINNING OF PERIOD ADDITIONS CHARGED TO COSTS AND EXPENSES DEDUCTIONS1 BALANCE AT END OF PERIOD Allowance for doubtful accounts Year ended March 31, 2009 Year ended March 31, 2008 Year ended March 31, 2007...

  • Page 112
    ... Cumulative Total Return* Among CA, Inc., the S&P 500 Index and the S&P Software Index $160 $140 $120 $100 $80 $60 $40 $20 $0 3/04 3/05 3/06 3/07 3/08 3/09 CA, Inc. S&P 500 S&P Software * $100 invested on 3/31/04 in stock or index, including reinvestment of dividends. Fiscal years ending March...

  • Page 113
    ... Officer Nancy E. Cooper Executive Vice President, Chief Financial Officer George J. Fischer Executive Vice President, Global Sales and Marketing Andrew Goodman Executive Vice President, Worldwide Human Resources Ajei S. Gopal Executive Vice President, Products and Technology Group Kenneth...

  • Page 114
    ... common stock was traded on the New York Stock Exchange under the symbol "CA." On April 28, 2008, our common stock commenced trading on the NASDAQ under the same symbol. Transfer Agent Questions concerning dividend reinvestment, stock certificates, address changes, account consolidation, 1099 tax...

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