Computer Associates 2010 Annual Report Download - page 21

General economic conditions, including concerns regarding a global recession and credit constraints, or
unfavorable economic conditions in a particular region, business or industry sector, may lead our customers to
delay or forgo technology investments and could have other impacts, any of which could adversely affect our
business, financial condition, operating results and cash flow.
Our products are designed to improve the productivity and efficiency of our customers’ information processing resources.
However, a general slowdown or recession in the global economy, or in a particular region, or business or industry sector
(such as the financial services sector), or tightening of credit markets, could cause customers to: have difficulty accessing
credit sources; delay contractual payments; or delay or forgo decisions to (i) license new products (particularly with respect to
discretionary spending for software), (ii) upgrade their existing environments or (iii) purchase services. Any such impacts could
adversely affect our business, financial condition, operating results and cash flow.
Such a general slowdown or recession in the global economy may also materially affect the global banking system, including
individual institutions as well as a particular business or industry sector, which could cause further consolidations or failures
in such a sector. Approximately one third of our revenue is derived from arrangements with financial institutions (i.e., banking,
brokerage and insurance companies). The majority of these arrangements are for the renewal of mainframe capacity and
maintenance associated with transactions processed by our financial institution customers. While we cannot predict what
impact there may be on our business from further consolidation of the financial industry sector, or the impact from the
economy in general on our business, to date the impact has not been material to our balance sheet, results of operations or
cash flows. The vast majority of our subscription and maintenance revenue in any particular reporting period comes from
contracts signed in prior periods, generally pursuant to contracts ranging in duration from three to five years.
These adverse financial events could also result in further government intervention in the U.S. and world markets. Any of
these results could affect the manner in which we are able to conduct business, including within a particular industry sector
or market and could adversely affect our business, financial condition, operating results and cash flow.
Failure to expand our channel partner programs related to the sale of CA solutions may result in lost sales
opportunities, increases in expenses and a weakening in our competitive position.
We sell CA solutions through global systems integrators, managed service providers 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 could materially adversely
affect our success with channel partners, resulting in lost sales opportunities and an increase in expenses, as well as weaken
our competitive position.
If we do not adequately manage and evolve our financial reporting and managerial systems and processes,
including the successful implementation of our enterprise resource planning software, our ability to manage and
grow our business may be harmed.
Our ability to successfully implement our business plan and comply with regulations requires effective planning and
management systems and processes. We need to continue to improve and implement existing and new operational and
financial systems, procedures and controls to manage our business effectively in the future. As a result, we have licensed
enterprise resource planning software, consolidated certain finance functions into regional locations, and are in the process of
expanding and upgrading our operational and financial systems. Any delay in the implementation of, or disruption in the
transition to, our new or enhanced systems, procedures or internal controls, could adversely affect our ability to accurately
forecast sales demand, manage our supply chain, achieve accuracy in the conversion of electronic data and records, and
report financial and management information, including the filing of our quarterly or annual reports with the SEC, on a timely
and accurate basis. Failure to properly or adequately address these issues could result in the diversion of management’s
attention and resources, adversely affect our ability to manage our business and materially adversely affect our business,
financial condition, results of operations and cash flow. Refer to Item 9A, “Controls and Procedures,” for additional
information.
We may encounter difficulties in successfully integrating companies and products that we have acquired or may
acquire into our existing business, and any failed integration could materially adversely affect our infrastructure,
market presence, business, financial condition, operating results and cash flow.
In the past we have acquired, and in the future we expect to acquire, complementary companies, products, services and
technologies (including through mergers, asset acquisitions, joint ventures, partnerships, strategic alliances, and equity
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