Computer Associates 2013 Annual Report Download - page 91

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and letters of credit issued by financial institutions to guarantee performance on certain contracts. At March 31, 2013 and
2012, approximately $53 million and $55 million, respectively, of this line of credit were pledged in support of bank
guarantees and other local credit lines, and none of these arrangements had been drawn down by third parties.
The Company uses a notional pooling arrangement with an international bank to help manage global liquidity requirements.
Under this pooling arrangement, the Company and its participating subsidiaries may maintain either cash deposit or
borrowing positions through local currency accounts with the bank, so long as the aggregate position of the global pool is a
notionally calculated net cash deposit. Because it maintains a security interest in the cash deposits and has the right to
offset the cash deposits against the borrowings, the bank provides the Company and its participating subsidiaries favorable
interest terms on both. At March 31, 2013 and 2012, the borrowing positions outstanding under this cash pooling
arrangement were as follows:
AT MARCH 31,
(in millions) 2013 2012
Total borrowing positions outstanding at beginning of year(1) $ 139 $ —
Borrowings 1,143 476
Repayments (1,139) (331)
Foreign currency exchange effect (7) (6)
Total borrowing positions outstanding at end of year(1) $ 136 $ 139
(1) Included in ‘‘Accrued expenses and other current liabilities’’ in the Company’s Consolidated Balance Sheet.
Note 9 — Derivatives
The Company is exposed to financial market risks arising from changes in interest rates and foreign exchange rates.
Changes in interest rates could affect the Company’s monetary assets and liabilities, and foreign exchange rate changes
could affect the Company’s foreign currency denominated monetary assets and liabilities and forecasted transactions. The
Company enters into derivative contracts with the intent of mitigating a portion of these risks.
Interest Rate Swaps: The Company has interest rate swaps with a total notional value of $500 million, which swap a total of
$500 million of its 6.125% Senior Notes due December 2014 into floating interest rate debt through December 1, 2014.
These swaps are designated as fair value hedges.
At March 31, 2013, the fair value of these derivatives was an asset of approximately $19 million, of which approximately
$11 million is included in ‘‘Other current assets’’ and approximately $8 million is included in ‘‘Other noncurrent assets, net’’
in the Company’s Consolidated Balance Sheet.
At March 31, 2012, the fair value of these derivatives was an asset of approximately $27 million, of which approximately
$11 million is included in ‘‘Other current assets’’ and approximately $16 million is included in ‘‘Other noncurrent assets,
net’’ in the Company’s Consolidated Balance Sheet.
During fiscal year 2009, the Company entered into interest rate swaps with a total notional value of $250 million to hedge a
portion of its variable interest rate payments on the revolving credit facility. These derivatives were designated as cash flow
hedges and matured in October 2010. The effective portion of these cash flow hedges is recorded as ‘‘Accumulated other
comprehensive loss’’ and is reclassified into ‘‘Interest expense, net’’ in the Company’s Consolidated Statements of
Operations in the same period during which the hedged transaction affected earnings. Any ineffective portion of the cash
flow hedges would have been recorded immediately to ‘‘Interest expense, net;’’ however, no ineffectiveness existed for fiscal
year 2011.
Foreign Currency Contracts: The Company enters into foreign currency option and forward contracts to manage foreign
currency risks. The Company has not designated its foreign exchange derivatives as hedges. Accordingly, changes in fair
value from these contracts are recorded as ‘‘Other (gains) expenses, net’’ in the Company’s Consolidated Statements of
Operations.
At March 31, 2013, foreign currency contracts outstanding consisted of purchase and sales contracts with a total notional
value of approximately $597 million and durations of less than one month. The net fair value of these contracts at
March 31, 2013 was a net asset of approximately $1 million, of which approximately $1 million is included in ‘‘Other current
assets’’ in the Company’s Consolidated Balance Sheet.
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