Computer Associates 2009 Annual Report Download - page 40

with fiscal 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 development and enhancements in fiscal 2008
compared with fiscal 2007 was principally due to a continued focus on transferring development to lower cost regions
and savings realized from restructuring activities.
Depreciation and Amortization of Other Intangible Assets
The decrease in depreciation and amortization of other intangible assets for fiscal 2009 compared with fiscal 2008 was
primarily due to decreased amortization costs of intangible assets relating to prior period acquisitions.
The increase in depreciation and amortization of other intangible assets for fiscal 2008 as compared with fiscal 2007
was primarily due to the amortization of intangibles recognized in conjunction with prior year acquisitions and costs
capitalized in connection with our continued investment in our enterprise resource planning system.
Other (Gains) Expenses, Net
Gains and losses attributable to divestitures of certain assets, certain foreign currency exchange rate fluctuations, and
certain other infrequent events have been included in the “Other (gains) expenses, net” line item in the Consolidated
Statements of Operations. The components of “Other (gains) expenses, net” are as follows:
(IN MILLIONS) 2009 2008 2007
YEAR ENDED MARCH 31,
(Gains) expenses attributable to divestitures of certain assets and other items $ (5) $ 1 $ (17)
Fluctuations in foreign currency exchange rates (11) (28) —
Expenses attributable to litigation claims and settlements 15 33 4
Total $ (1) $ 6 $ (13)
In fiscal 2009, we recorded net foreign exchange gains of $11 million. The foreign exchange amounts recorded in fiscal
2009 included net gains of $77 million associated with derivative foreign exchange contracts, which we use to mitigate
our operating risks and exposures to foreign currency exchange rates. These gains were mostly offset by foreign
exchange losses from other operating activities due to the strengthening of the U.S. dollar against other currencies in
which we conduct our operations. During the third quarter of fiscal 2009, we recognized a gain of $5 million associated
with our repurchase of $148 million principal amount of our 4.750% Senior Notes due 2009. For additional information,
refer to Note 1, “Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements.
For fiscal 2008, we incurred expenses associated with litigation claims of $33 million. Included in the expenses for
litigation claims was a charge of $14 million representing the present value of the obligation to pay additional amounts
in connection with a settlement agreement on our Senior Notes due in 2014 (refer to the discussion of the Fiscal 2005
Senior Notes in the “Liquidity and Capital Resources” section of this MD&A for additional information).
Restructuring and Other
In August 2006, we announced the fiscal 2007 restructuring plan to significantly improve our expense structure and
increase our competitiveness. The objectives of the fiscal 2007 restructuring plan included a workforce reduction, global
facilities consolidations and other cost reduction initiatives. The total cost of the fiscal 2007 restructuring plan was
initially expected to be $200 million.
In April 2008, the objectives of the plan were expanded to include additional workforce reductions, global facilities
consolidations and other cost reduction initiatives with expected additional costs of $75 million to $100 million, bringing
the total pre-tax restructuring charges for the fiscal 2007 restructuring plan to $275 million to $300 million.
On March 31, 2009, our Board of Directors approved additional cost reduction and restructuring actions relating to the
fiscal 2007 restructuring plan. The objectives were expanded to now include (1) an additional workforce reduction of
300 to bring the total to 3,100 positions since the inception of the fiscal 2007 restructuring plan, (2) additional global
facilities consolidations and (3) additional other cost reduction initiatives. These additional charges of $45 million bring
the total expected pre-tax restructuring charges for the fiscal 2007 restructuring plan to $345 million, $340 million of
which was incurred by the end of fiscal 2009. Refer to Note 3, “Restructuring and Other” in the Notes to the
Consolidated Financial Statements for additional information.
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