Computer Associates 2013 Annual Report Download - page 90

At March 31, 2013 and 2012, there were no outstanding borrowings under the revolving credit facility due August 2016 and,
based on the Company’s credit ratings, the rates applicable to the facility at March 31, 2013 and 2012 were as follows:
AT MARCH 31,
2013 2012
Applicable margin on Base Rate borrowing 0.25% 0.25%
Weighted average interest rate on outstanding borrowings —% —%
Applicable margin on Eurocurrency Rate borrowing 1.10% 1.10%
Facility commitment fee 0.15% 0.15%
The interest rate that would have applied at March 31, 2013 to a borrowing under the revolving credit facility due August
2016 would have been 3.50% for Base Rate borrowings and 1.30% for Eurocurrency Rate borrowings. The Company
capitalized the transaction fees of approximately $2 million associated with the revolving credit facility due August 2016.
These fees are being amortized to ‘‘Interest expense, net’’ in the Consolidated Statements of Operations.
There was no borrowing activity under the revolving credit facility for fiscal year 2013. Total interest expense relating to
borrowings under the revolving credit facility for fiscal years 2012 and 2011 was less than $1 million and $2 million,
respectively. The revolving credit facility due August 2016 contains customary covenants for borrowings of this type,
including two financial covenants: (i) for the 12 months ending each quarter-end, the ratio of consolidated debt for
borrowed money to consolidated cash flow, each as defined in the Credit Agreement, must not exceed 4.00 to 1.00; and
(ii) for the 12 months ending at any date, the ratio of consolidated cash flow to the sum of interest payable on, and
amortization of debt discount in respect of, all consolidated debt for borrowed money, as defined in the Credit Agreement,
must not be less than 3.50 to 1.00. At March 31, 2013, the Company was in compliance with all covenants.
In addition, future borrowings under the revolving credit facility require, at the date of a borrowing, that (i) no event of
default shall have occurred and be continuing and (ii) the Company reaffirm the representations and warranties it made in
the Credit Agreement.
Notes: The Company’s 5.375% Notes and 6.125% Senior Notes (collectively, the ‘‘Notes’’) are senior unsecured obligations
and rank equally in right of payment with all of the Company’s other existing and future senior unsecured indebtedness.
The Notes are subordinated to any future secured indebtedness to the extent of the assets securing such future indebtedness
and structurally subordinated to any indebtedness of the Company’s subsidiaries. The Company has the option to redeem
the Notes at any time, at redemption prices equal to the greater of (i) the principal amount of the securities to be
redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal thereof and interest
thereon that would be due on the securities to be redeemed, discounted to the date of redemption on a semi-annual basis
at the treasury rate plus 30 basis points and 20 basis points for the 5.375% Notes and the 6.125% Notes, respectively.
The maturity of the Notes may be accelerated by the holders upon certain events of default, including failure to make
payments when due and failure to comply with covenants or agreements of the Company set forth in the Notes or the
Indenture after notice and failure to cure.
5.375% Notes Due November 2019: The Company has issued $750 million principal amount of 5.375% Notes due 2019 (the
5.375% Notes). In the event of a change of control, each noteholder will have the right to require the Company to
repurchase all or any part of such holder’s 5.375% Notes in cash at a price equal to 101% of the principal amount of such
Notes plus accrued and unpaid interest, if any, to the date of repurchase. This is subject to the right of holders of record on
the relevant interest payment date to receive interest due.
6.125% Notes Due December 2014: The Company has entered into interest rate swaps to convert $500 million of its 6.125%
Notes into floating interest rate payments through December 1, 2014. Under the terms of the swaps, the Company will pay
quarterly interest at an average rate of 2.88% plus the three-month London Interbank Offered Rate (LIBOR), and will
receive payment at 5.625%. The LIBOR based rate is set quarterly three months prior to the date of the interest payment.
The Company designated these swaps as fair value hedges and accounts for them in accordance with the shortcut method of
FASB ASC Topic 815. The carrying value of the 6.125% Notes has been adjusted by an amount that is equal and offsetting
to the fair value of the swaps.
Other Indebtedness: The Company has an unsecured and uncommitted multi-currency line of credit available to meet
short-term working capital needs for the Company’s subsidiaries operating outside the United States and uses guarantees
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