Computer Associates 2016 Annual Report Download - page 92

In the opinion of the Company’s management based upon information currently available to the Company, while the outcome
of these lawsuits, claims and disputes is uncertain, the likely results of these lawsuits, claims and disputes are not expected,
either individually or in the aggregate, to have a material adverse effect on the Company’s financial position, results of
operations or cash flows, although the effect could be material to the Company’s results of operations or cash flows for any
interim reporting period. For some of these matters, the Company is unable to estimate a range of reasonably possible loss due
to the stage of the matter and/or other particular circumstances of the matter. For others, a range of reasonably possible loss
can be estimated. For those matters for which such a range can be estimated, the Company estimates that, in the aggregate, the
range of reasonably possible loss is from zero to $45 million. This is in addition to amounts, if any, that have been accrued for
those matters.
The Company is obligated to indemnify its officers and directors under certain circumstances to the fullest extent permitted by
Delaware law. As a part of that obligation, the Company may, from time to time, advance certain attorneys’ fees and expenses
incurred by officers and directors in various lawsuits and investigations, as permitted under Delaware law.
Note 12 — Stockholders’ Equity
Stock Repurchases: On May 14, 2014, the Board approved a stock repurchase program that authorized the Company to acquire
up to $1 billion of its common stock.
In November 2015, the Company entered into and closed on an arrangement with Careal Holding AG (Careal) to repurchase
22 million shares of its common stock in a private transaction. The transaction was valued with an effective share repurchase
price of $26.81 per share, which represented a 3% discount to the 10-trading day volume weighted average price of the
Company’s common stock using a reference date of November 5, 2015. The Company’s payment to Careal upon closing was
reduced by $0.25 per share to account for the Company’s dividend that was paid on December 8, 2015 to stockholders of record
on November 19, 2015. As a result of the share repurchase and dividend payment, in total the Company paid Careal
approximately $590 million during the third quarter of fiscal year 2016 in connection with the 22 million shares repurchased.
The transaction was funded with U.S. cash on hand and effectively concluded CA’s prior $1 billion stock repurchase program
approved by the Board on May 14, 2014.
Including the November 2015 share repurchase arrangement with Careal, the Company repurchased approximately 26 million
shares of its common stock for approximately $707 million during fiscal year 2016.
Prior to entering into and closing on the share repurchase arrangement, Careal held approximately 28.7% of the Company’s
total outstanding stock. In connection with the share repurchase arrangement, Careal transferred an additional 37 million
shares of the Company’s common stock to an entity wholly owned by Martin Haefner, a 50% owner of Careal. Upon completion
of the share repurchase arrangement and the share transfer described above, Careal’s and Martin Haefner’s ownership interests
are approximately 16.0% and 8.9%, respectively, of the Company’s total outstanding common stock. Thus, Careal and its
shareholders collectively own, directly and indirectly, approximately 24.9% of the Company’s total outstanding common stock.
In connection with the share repurchase arrangement with Careal, the Company agreed that it will indemnify Careal for certain
potential tax matters resulting solely from the Company’s breach of the covenant relating to the post-closing holding of the
repurchased shares under this arrangement. The Company believes that the occurrence of an event that could trigger the
indemnification is within its control and is remote. Therefore, the Company has not recorded a liability related to such
indemnification. The maximum potential future payment under this indemnification, excluding interest and penalties, if any, is
estimated to be approximately CHF 101 million (which translated to approximately $105 million at March 31, 2016). Any
changes to the Company’s assessment of the probability of the occurrence of an event that could trigger the indemnification
provision may result in the Company recording a liability in the future, which would impact the results of operations for that
period.
On November 13, 2015, the Board approved a new stock repurchase program that authorized the Company to acquire up to
$750 million of its common stock, which remained fully outstanding at March 31, 2016.
During fiscal year 2015, the Company repurchased approximately 7.2 million shares of its common stock for approximately $215
million. During fiscal year 2014, the Company repurchased approximately 16.3 million shares of its common stock for
approximately $505 million.
Accumulated Other Comprehensive Loss: Foreign currency translation losses included in “Accumulated other comprehensive
loss” in the Company’s Consolidated Balance Sheets at March 31, 2016, 2015 and 2014 were approximately $416 million, $418
million and $171 million, respectively.
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