Computer Associates 2009 Annual Report Download - page 82

Depreciation expense for the fiscal years ended March 31, 2009, 2008 and 2007 was approximately $96 million,
$91 million and $92 million, respectively.
Capitalized Software Costs and Other Identified Intangible Assets: Capitalized software costs include the fair value of rights
to market software products acquired in purchase business combinations. In allocating the purchase price to the assets
acquired in a purchase business combination, the Company allocates a portion of the purchase price equal to the fair
value at the acquisition date of the rights to market the software products of the acquired company. The Company
amortizes all purchased software costs over their remaining economic lives, estimated to be between two and ten years
from the date of acquisition.
In accordance with SFAS No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed,”
internally generated software development costs associated with new products and significant enhancements to existing
software products are expensed as incurred until technological feasibility has been established. Internally generated
software development costs of approximately $135 million, $112 million and $85 million were capitalized during fiscal
years 2009, 2008 and 2007, respectively. The Company recorded amortization of approximately $68 million, $57 million
and $54 million for the fiscal years ended March 31, 2009, 2008 and 2007, respectively, which was included in the
“Amortization of capitalized software costs” line item in the Consolidated Statements of Operations. Unamortized,
internally generated software development costs included in the “Other noncurrent assets, net” line item on the
Consolidated Balance Sheets as of March 31, 2009 and 2008 were approximately $333 million and $276 million,
respectively. Annual amortization of capitalized software costs is the greater of the amount computed using the ratio
that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that
product or the straight-line method over the remaining estimated economic life of the software product, generally
estimated to be five years from the date the product became available for general release to customers. The Company
amortized capitalized software costs using the straight-line method in fiscal years 2009, 2008 and 2007, as anticipated
future revenue is projected to increase for several years considering the Company is continuously integrating 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 recognized approximately $19 million, $3 million and $7 million, respectively, of customer
relationships and trademarks/trade names.
In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” certain identified intangible assets with
indefinite lives are not subject to amortization. The Company reviews its long lived assets and certain identifiable
intangible assets with indefinite lives for impairment annually or whenever events or changes in business circumstances
indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are
no longer appropriate. During fiscal year 2009, the Company did not record impairment charges relating to certain
identifiable intangible assets that were acquired in conjunction with prior year acquisitions and not subject to
amortization. During the first quarter of fiscal year 2008, the Company recorded impairment charges of less than
$1 million relating to certain identifiable intangible assets that were acquired in conjunction with prior year acquisitions
and not subject to amortization. These impairment charges were reported in the “Restructuring and other” line item in
the Consolidated Statements of Operations.
The Company amortizes all other identified intangible assets over their remaining economic lives, estimated to be
between three and twelve years from the date of acquisition. The Company recorded amortization of other identified
intangible assets of approximately $53 million, $66 million and $57 million in fiscal 2009, 2008 and 2007, respectively.
The net carrying value of other identified intangible assets as of March 31, 2009 and 2008 was approximately
$237 million and $285 million, respectively, and was included in the “Other noncurrent assets, net” line item on the
Consolidated Balance Sheets.
The gross carrying amounts and accumulated amortization for identified intangible assets at March 31, 2009 was
approximately $6,408 million and $5,683 million, respectively. These amounts include fully amortized intangible assets
of approximately $5,042 million, which is composed of purchased software of approximately $4,545 million, internally
developed software of approximately $381 million and other identified intangible assets subject to amortization of
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