Computer Associates 2005 Annual Report Download - page 117

Table of Contents
Note 2 — Acquisitions, Divestitures, and Restructuring (Continued)
Purchased software products and customer relationships will be amortized over 7 years and 12 years, respectively. The Netegrity
acquisition contributed approximately $32 million of revenue in the second half of fiscal year 2005.
The allocation of the purchase price is based upon estimates which may be revised within one year of the date of acquisition as additional
information becomes available. It is anticipated that the final purchase price allocation will not differ materially from the preliminary
allocation presented above.
In August 2004, the Company acquired Pest Patrol, a privately held provider of anti-spyware solutions for approximately $40 million.
The products acquired in this transaction were integrated into the Company’ s eTrust Threat Management software product portfolio.
This portfolio protects organizations from diverse Internet dangers such as viruses, spam, and inappropriate use of the Web by
employees.
During fiscal year 2005, the Company also acquired a software product that automates the clean-up of large security databases from
Infosec, Inc. The aggregate purchase price for this asset was approximately $10 million, all of which was paid in cash.
During fiscal year 2004, the Company purchased certain assets to complement certain of its product lines. These include asset purchases
from eSecurity Online, a maker of security and security-related software; Silent Runner, a maker of network security software that
safeguards electronic property; and Miramar Systems, a leading provider of desktop migration tools. The aggregate purchase price for
these assets was approximately $53 million, of which $52 million was paid in cash.
During fiscal year 2003, the Company acquired certain consulting businesses and product technologies, which, individually and
collectively, were not material to the consolidated financial statements taken as a whole. The aggregate purchase price for these
acquisitions was approximately $19 million. The Consolidated Statements of Operations reflect the results of operations of the
companies since the effective dates of the acquisitions.
As of March 31, 2005 and other than Netegrity, the Company did not complete any acquisitions since fiscal year 2003 that generated
additional acquisition-related liabilities. Accrued acquisition-related costs and changes in the accruals related to past acquisitions were
as follows:
Duplicat
e
Facilities
and Employee
Other
Costs Costs
(in millions)
Balance as of March 31, 2003 $ 74 $23
Settlements (10) (9)
Adjustments (6) (2)
Balance as of March 31, 2004 $ 58 $ 12
Additions 8 3
Settlements (15) (6)
Adjustments (10)
—
Balance as of March 31, 2005 $ 41 $ 9
The liabilities for duplicate facilities and other costs relate to operating leases, which are actively being renegotiated and expire at
various times through 2010, negotiated buyouts of the operating lease commitments, and other contractually related liabilities. The
liabilities for employee costs relate to involuntary termination benefits. Adjustments, which reduce the corresponding liability and
related goodwill accounts, are recorded when obligations are settled at amounts less than those originally estimated. The remaining
liability balances are included in the “Accrued expenses and other liabilities” line item on the Consolidated Balance Sheets.
Divestitures
In March 2004, the Company sold its approximate 90% interests in ACCPAC to The Sage Group, plc. (Sage). The Company’ s net
proceeds totaled $104 million for all of our outstanding equity interests of ACCPAC, including options and change of control payments
for certain ACCPAC officers and managers. The Company received approximately $90 million of the net proceeds in fiscal year 2004
and the remainder in fiscal year 2005. ACCPAC specializes in accounting, customer relationship management, human resources,
warehouse management, manufacturing, electronic data interchange, and point-of-sale software for small and medium-sized businesses.
As a result of the sale in the fourth quarter of fiscal year 2004, the Company realized a gain of approximately $60 million, net of taxes of
$36 million, in fiscal year 2004. In the second quarter of fiscal year 2005, the Company recorded an adjustment to the gain of $2
72