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Table of Contents
Note 7 — Commitments and Contingencies (Continued)
court alleging that he is entitled to attorney fees in connection with the original litigation filed in Texas. The two actions have been
consolidated. On March 31, 2005, the plaintiffs amended their complaint to allege a claim that they were defrauded into entering the
2002 agreements and seeking rescission of those agreements and damages. The amended complaint in the Ranger Governance litigation
seeks rescission of the 2002 agreements, unspecified compensatory, consequential and exemplary damages and a declaratory judgment
that the 2002 agreements are null and void and that plaintiffs did not breach the 2002 agreements. On May 11, 2005, the Company
moved to dismiss the Texas litigation. That motion is pending.
Other Civil Actions
In June 2004, a lawsuit captioned Scienton Technologies, Inc. et al. v. Computer Associates International, Inc., was filed in the Federal
Court. The complaint seeks monetary damages in various amounts, some of which are unspecified, but which are alleged to exceed
$868 million, based upon claims for, among other things, breaches of contract, misappropriation of trade secrets, and unfair competition.
This matter is in the early stages of discovery. Although the ultimate outcome cannot be determined, the Company believes that the
claims are unfounded and that the Company has meritorious defenses. In the opinion of management, the resolution of this lawsuit is not
likely to result in the payment of any amount approximating the alleged damages and in any event, is not expected to have a material
adverse effect on the financial position of the Company.
In September 2004, two complaints to compel production of the Company’ s books and records, including files that have been produced
by the Company to the USAO and SEC in the course of their joint investigation of the Company’ s accounting practices (refer to The
Government Investigation) were filed by two purported shareholders of the Company in Delaware Chancery Court pursuant to
Section 220 of the Delaware General Corporation Law. The first complaint was filed on September 15, 2004, after the Company denied
the purported shareholder access to some of the files requested in her initial demand, in particular files that had been produced by the
Company to the USAO and SEC during the course of their joint investigation. This complaint concerns the inspection of certain
Company documents to determine whether the Company has been involved in obstructing the joint investigation by the USAO and SEC
and whether certain Company employees have breached their fiduciary duties to the Company and wasted corporate assets; these
individuals include Sanjay Kumar, Charles Wang, Ira H. Zar, Lloyd Silverstein, Steven M. Woghin, Stephen Richards, Russell Artzt,
Kenneth Cron, Alfonse D’ Amato, Robert La Blanc, Lewis S. Ranieri, Jay Lorsch, Walter Schuetze, Alex Serge Vieux, Gary Fernandes,
Willem de Vogel, Shirley Strum Kenny, Richard Grasso and Irving Goldstein. The second complaint, filed on September 21, 2004,
concerns the inspection of documents related to Mr. Kumar’ s compensation and the independence and ability of the Company’ s Board
of Directors to sue for return of that compensation. The Company filed answers to these complaints on October 15, 2004.
The Company, various subsidiaries, and certain current and former officers have been named as defendants in various other lawsuits and
claims arising in the normal course of business. The Company believes that it has meritorious defenses in connection with such lawsuits
and claims, and intends to vigorously contest each of them. In the opinion of the Company’ s management, the results of these other
lawsuits and claims, either individually or in the aggregate, are not expected to have a material effect on the Company’ s financial
position, results of operations, or cash flow.
Note 8 — Income Taxes
The amounts of income (loss) from continuing operations before taxes attributable to domestic and foreign operations are as follows:
Year Ended March 31,
2005 2004 2003
(restated) (restated) (restated)
(in millions)
Domestic $ (236) $ (211) $ (520)
Foreign 238 113 72
$ 2 $ (98) $ (448)
85