Computer Associates 2010 Annual Report Download - page 52

inception to March 31, 2010 was approximately $1 million and is reflected in “Other current assets” in the Consolidated
Balance Sheets. The carrying value of the debt was adjusted by an equal and offsetting amount. Each 25 basis point increase
or decrease in interest rates would have a corresponding effect on the annual interest expense related to our interest rates
swaps that relate to the 6.125% Notes of less than $1 million as of March 31, 2010.
Foreign currency exchange risk
We conduct business on a worldwide basis through subsidiaries in 46 countries and, as such, a portion of our revenues,
earnings and net investments in foreign affiliates is exposed to changes in foreign exchange rates. We seek to manage our
foreign exchange risk in part through operational means, including managing expected local currency revenues in relation to
local currency costs and local currency assets in relation to local currency liabilities. In October 2005, our Board of Directors
adopted our Risk Management Policy and Procedures, which authorize us to manage, based on management’s assessment,
our risks and exposures to foreign currency exchange rates through the use of derivative financial instruments (e.g., forward
contracts, options and swaps) or other means. We only use derivative financial instruments in the context of hedging and do
not use them for speculative purposes.
During fiscal 2010 and 2009, we did not designate our foreign exchange derivatives as hedges. Accordingly, all foreign
exchange derivatives are recognized on the Consolidated Balance Sheets at fair value and unrealized or realized changes in
fair value from these contracts are recorded as “Other expenses (gains), net” in our Consolidated Statements of Operations.
Refer to Note 4, “Derivatives and Fair Value Measurement,” for additional information regarding our derivative activities.
If foreign currency exchange rates affecting our business weakened by 10% on an overall basis in comparison to the
U.S. dollar, the amount of cash and cash equivalents we would report in U.S. dollars would decrease by approximately
$119 million.
Item 8. Financial statements and supplementary data.
Our Consolidated Financial Statements are included in Part IV, Item 15 of this Annual Report on Form 10-K and are
incorporated herein by reference.
The Supplementary Data specified by Item 302 of Regulation S-K as it relates to selected quarterly data is included in the
“Selected Quarterly Information” section of Item 7, “Management’s Discussion and Analysis of Financial Condition and Results
of Operations.” Information on the effects of changing prices is not required.
Item 9. Changes in and disagreements with accountants on accounting and financial
disclosure.
Not applicable.
Item 9A. Controls and procedures.
(a) Evaluation of disclosure controls and procedures
Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and
Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures as such term is
defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act). Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are
effective as of the end of the period covered by this report.
(b) Management’s report on internal control over financial reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting
as defined in Exchange Act Rules 13a-15(f ) and 15d-15(f ). The Company’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles.
The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
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