Computer Associates 2009 Annual Report Download - page 24

Consequently, the discovery of errors in our products after delivery could have a material adverse effect on our business,
financial condition, operating results and cash flow.
We have a significant amount of debt. Changes in market conditions or our ratings could increase our interest costs and
adversely affect the cost of refinancing our debt and our ability to refinance our debt, which could materially adversely
affect our business, financial condition, operating results and cash flow.
As of March 31, 2009, we had $1,937 million of debt outstanding, consisting of unsecured fixed-rate senior note
obligations, convertible senior notes, and credit facility borrowings. Refer to Note 7, “Debt,” in the Notes to the
Consolidated Financial Statements for the payment schedule of our long-term debt obligations. Our senior unsecured
notes are rated by Moody’s Investors Service, Fitch Ratings, and Standard and Poor’s. These agencies or any other credit
rating agency could downgrade or take other negative action with respect to our credit ratings in the future. If our credit
ratings were downgraded or other negative action is taken, we would be required to, among other things, pay additional
interest on outstanding borrowings under our principal revolving credit agreement. Any downgrades could affect our
ability to obtain additional financing in the future and may affect the terms of any such financing.
We expect that existing cash, cash equivalents, marketable securities, cash provided from operations and our bank credit
facilities will be sufficient to meet ongoing cash requirements. However, our failure to generate sufficient cash as our
debt becomes due or to renew credit lines prior to their expiration could materially adversely affect our business,
financial condition, operating results and cash flow.
Failure to protect our intellectual property rights and source code would weaken our competitive position.
Our future success is highly dependent upon 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 laws,
confidentiality procedures and contractual provisions. Notwithstanding our efforts to protect our proprietary rights,
policing unauthorized use or copying of our proprietary information is difficult. Unauthorized use or copying occurs from
time to time and litigation to enforce intellectual property rights could result in significant costs and diversion of
resources. Moreover, the laws of some foreign jurisdictions do not afford the same degree of protection to our
proprietary rights as do the laws of the United States. For example, for some of our products, we rely on “shrink-wrap”
or “click-on” licenses, which may be unenforceable in whole or in part in some jurisdictions in which we operate. In
addition, patents we have obtained may be circumvented, challenged, invalidated or designed around by other
companies. If we do not adequately protect our intellectual property for these or other reasons, our business, financial
condition, operating results and cash flow could be materially adversely affected. Refer to “Item 1, Business —
(c) Narrative Description of the Business — Patents and Trademarks,” for additional information.
The number, terms and duration of our license agreements as well as the timing of orders from our customers and
channel partners, may cause fluctuations in some of our key financial metrics, which may affect our quarterly financial
results.
Historically, a substantial portion of our license agreements are executed in the last month of a quarter and the number
of contracts executed during a given quarter can vary substantially. In addition, we experience a historically long sales
cycle, which is driven in part by the varying terms and conditions of our software contracts. These factors can make it
difficult for us to predict bookings and cash flow on a quarterly basis. Any failure or delay in executing new or renewed
license agreements in a given quarter could cause declines in some of our key financial metrics (e.g., bookings or cash
flow), and, accordingly, increases the risk of unanticipated variations in our quarterly results and financial condition.
We may become dependent upon large transactions, and the failure to close such transactions on a satisfactory basis
could materially adversely affect our business, financial condition, operating results and cash flow.
In the past, we have been dependent upon large-dollar enterprise transactions with individual customers. There can be
no assurances that we will not be reliant on large-dollar enterprise transactions in the future, and the failure to close
those transactions on terms that are commercially attractive to us could materially adversely affect our business,
financial condition, operating results and cash flow.
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