Computer Associates 2010 Annual Report Download - page 39

Amortization of capitalized software costs
Amortization of capitalized software costs consists of the amortization of both purchased software and internally generated
capitalized software development costs. Internally generated capitalized software development costs relate to new products
and significant enhancements to existing software products that have reached the technological feasibility stage.
The increases in amortization of capitalized software costs for fiscal 2010 as compared with fiscal 2009 and in fiscal 2009 as
compared with fiscal 2008 were principally due to the capitalizable value of projects that have reached technological
feasibility in recent periods.
Selling and marketing
Selling and marketing expenses include costs relating to our sales force, channel partners, corporate and business marketing
and customer training programs. The increase in selling and marketing expenses for fiscal 2010 as compared with fiscal 2009
was primarily due to increased personnel costs of $20 million partially from acquired companies and higher commission costs
of $30 million resulting from new product sales partially offset by reduced promotion expenses of $21 million, principally
attributable to the timing of CA World in fiscal 2009. CA World is our largest periodic promotional and marketing event that
takes place approximately every 18 months, which did not occur during fiscal 2010.
Including a $15 million decrease due to foreign exchange, the decline in selling and marketing expenses for fiscal 2009
compared with fiscal 2008 was primarily due to decreases in personnel costs of $48 million, promotion expenses of
$26 million, office and IT costs of $14 million and external consulting costs of $11 million in connection with our cost
reduction efforts.
General and administrative
General and administrative expenses include the costs of corporate and support functions, including our executive leadership
and administration groups, finance, legal, human resources and corporate communications and other costs, such as provisions
for doubtful accounts. For fiscal 2010, general and administrative costs increased $15 million as compared with fiscal 2009
primarily due to $17 million in costs related to the departure of our Chief Executive Officer and the transition to his successor.
We also incurred a $12 million increase in costs attributable to acquisitions and other strategic initiatives partially offset by a
$7 million reduction in bad debt expenses and other cost reductions.
Including a $4 million decrease due to foreign exchange, general and administrative expenses decreased in fiscal 2009
compared with fiscal 2008 primarily due to lower office and IT costs of $28 million, lower personnel-related expenses of
$16 million, lower external consulting costs of $18 million and a reduction in bad debt expenses of $9 million. These
decreases were partially offset by a $12 million reduction in general and administrative expenses we recorded in fiscal 2008
due to obligations from prior period acquisitions that were settled for amounts less than originally estimated (refer to Note 2,
“Acquisitions,” in the Notes to the Consolidated Financial Statements for additional information).
Product development and enhancements
Product development and enhancements expenses for fiscal 2010 decreased from fiscal 2009 primarily due to an increase in
resources dedicated to internally developed software for strategic investments in our security, mainframe and infrastructure
management products, which are capitalized and reflected in the Capitalized development costs and other intangible assets,
net line on the Consolidated Balance Sheets. Mostly offsetting this decrease in expenses were increased personnel costs, an
increase in our investment in product development and enhancements for emerging technologies, and a broadening of our
enterprise product offerings to build on our portfolio of software and services to meet next-generation market opportunities.
Expenses declined during fiscal 2009 as compared with fiscal 2008 primarily due to the strategic partnership agreement
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.
For fiscal 2010, 2009 and 2008, product development and enhancements expenses represented approximately 11%, 11%
and 12% of total revenue, respectively.
Depreciation and amortization of other intangible assets
The increase in depreciation and amortization of other intangible assets for fiscal 2010 as compared with fiscal 2009 was
primarily due to the increased value of fixed assets placed into service during fiscal 2010.
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