Computer Associates 2005 Annual Report Download - page 118

Table of Contents
Note 2 — Acquisitions, Divestitures, and Restructuring (Continued)
million, net of tax of $1 million, that reduced the net gain to $58 million. Approximately 600 employees were transferred to Sage. The
sale completes the Company’ s multi-year effort to exit the business applications market. Pursuant to SFAS No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets,” the prior year assets and liabilities of ACCPAC have been reclassified as a discontinued
operation and the historical results of operations of ACCPAC, including the gain on the sale in fiscal year 2004 and the adjustment to the
gain in fiscal year 2005, have been recorded as discontinued operations for all periods presented.
The operating results of ACCPAC are summarized as follows:
Year Ended March 31,
2004(1) 2003
(in millions)
Software fees and other $ 38 $46
Maintenance 40 43
Total revenue $ 78 $89
Pre-tax income from discontinued operation $ 1 $ 5
Income from discontinued operation, net of taxes $ 1 $ 3
(1) Fiscal year 2004
includes operating
results through
December 2003, the
measurement date
for the ACCPAC
sale.
In April 2002, the Company completed the divestiture of certain non-core assets to SSA Global Technologies, Inc. (SSA). These assets
consisted principally of the Company’ s supply-chain management, financial management, and human resource management software
product groups operating under the name interBiz. Of the $25 million selling price, approximately $12 million was received in the
quarter ended June 30, 2002. In January 2003, an agreement was reached to offset the remaining selling price SSA owed to the Company
against obligations the Company owed to SSA. These interBiz operations generated approximately $82 million of revenue and
$90 million of direct expenses for fiscal year 2002. As part of the transaction, net billed and unbilled accounts receivable and net
deferred subscription revenue were reduced by approximately $25 million and $72 million, respectively. Approximately 725 employees
were transferred to SSA as part of this transaction.
In October 2002, the Company completed the divestiture of its banking products group, the remaining product group of interBiz, to a
third party. Proceeds from the divestiture totaled approximately $8 million, which was received in the quarter ended December 31, 2002.
Prior to the divestiture, the banking products group generated approximately $12 million of revenue and $7 million of direct expenses
for fiscal year 2003 and approximately $12 million of revenue and $10 million of direct expenses for fiscal year 2002. As part of the
transaction, net billed and unbilled accounts receivable and net deferred subscription revenue were reduced by approximately
$12 million and $18 million, respectively. Approximately 80 employees were transferred to the acquirer as part of this transaction.
Restructuring
In September 2004, the Company announced a restructuring plan that included a workforce reduction of approximately five percent or
750 positions worldwide. In connection with the restructuring plan, the Company recorded a charge of approximately $28 million
primarily associated with termination benefits in the second quarter of fiscal year 2005. The Company does not expect to incur additional
charges related to this restructuring plan.
As of March 31, 2005, the Company has made substantially all payments under the plan.
Note 3 — Marketable Securities
The following is a summary of marketable securities classified as available-for-sale:
Year Ended March 31,
2005 2004
(in millions)
Debt/Equity Securities:
Cost $ 298 $ 96
Gross unrealized gains
—
13
Gross unrealized losses (1)
—
Estimated fair value $ 297 $109
Approximately $1 million of marketable securities are restricted as to use for other than current operations. As a result, the restricted
balance of marketable securities as of March 31, 2005 was included in the “Other noncurrent assets” line item on the Consolidated
Balance Sheet.