Computer Associates 2005 Annual Report Download - page 47

Table of Contents
Note” immediately preceding Part I, Item 1 of this Form 10-K/A, and are reflected in the table of selected financial data. See Note 12,
“Restatements,” to the Consolidated Financial Statements for additional information.
We have not separately amended our Annual Reports on Form 10-K for the fiscal years ended March 31, 2004, 2003, 2002, 2001 and
2000 or our Quarterly Reports on Form 10-Q for the quarterly periods for the fiscal years ended March 31, 2005, 2004, 2003, 2002, 2001
and 2000. Consequently, the financial and other information contained in such reports should be read in conjunction with the restated
financial data for these fiscal periods, which is set forth in the Prior Restatement 8-Ks and this Form 10-K/A.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Introduction
This “Management’ s Discussion and Analysis of Financial Condition and Results of Operations” (MD&A) is intended to provide an
understanding of our financial condition, change in financial condition, cash flow, liquidity, and results of operations. As described in
Note 2, “Acquisitions, Divestitures, and Restructuring” of the Consolidated Financial Statements, in fiscal year 2004 we divested a
subsidiary, ACCPAC International, Inc. (ACCPAC). The assets, liabilities, results of operations, and cash flow of ACCPAC have been
classified as a discontinued operation for all periods presented prior to the sale of ACCPAC in March 2004. The following discussion
and analysis of financial condition and results of operations excludes the effect of the discontinued operation.
Additionally, the information below reflects the effects of (1) the restatements announced in 2004 as more fully described in Part I,
Item 6 of the 2005 Form 10-K/A, (2) the subsequent restatements more fully described in the “Explanatory Note” immediately
preceding Part I, Item 1 of this Form 10-K/A, and (3) the restatement to reflect the modified retrospective adoption of SFAS No. 123(R)
more fully described in Note 9, “Stock Plans” of the Consolidated Financial Statements, included in this Form 10-K/A. This Form
10-K/A is not superseding or restating financial statements contained in the company’ s quarterly report on Form 10-Q for the quarter
ended June 30, 2005 or any current report on Form 8-K filed subsequent to March 31, 2005. However, the financial statements for the
first quarter of the 2005 fiscal year, which are also contained in the Form 10-Q for the quarter ended June 30, 2005 for comparison
purposes, have been restated in the Amended Form 10-K/A (though not in the Form 10-Q for the quarter ended June 30, 2005).
Accordingly, the information in the Form 10-Q for the quarter ended June 30, 2005 should be considered in light of the information in
the Amended Form 10-K/A.
Business Overview
We are one of the world’ s largest providers of management software. Our software enables our customers to manage their complex IT
infrastructures across systems and networks, security, and storage solutions.
Our platform-neutral, integrated technologies help customers manage the investments they have made in IT and make it possible for
them to manage all of the computers, networks, and other technologies that comprise their computing environment. Our products enable
customers to better manage and reduce IT costs and risks.
Our products participate in a number of high-growth areas, including systems and security management, and business services
optimization — which helps organizations align IT to business processes. Our products include both mainframe and distributed solutions,
each of which comprise about half of our revenue.
We are focused on four key strategies to drive growth:
Internal Product Development
• In fiscal year 2005, we invested approximately 20 percent of our revenue in research and development to deliver innovative and
relevant technology. In particular, we are focused on market leadership in the core areas of systems management and security
management.
• In April 2005, we reorganized our product development group into five business units to enable us to be more accountable to business
and customer needs and to be more responsive to the changing dynamics of the management software marketplace.
International Expansion
• We are increasing our investments in emerging markets, such as China, India, and other countries, to expand our reach and to grow
sales. Partnerships and relationships with systems integrators and channel participants are of particular importance in these regions.
• In addition to our focus on enterprise customers, we are pursuing the small and medium sized customer market, particularly in the
Europe, Middle East, and Africa (EMEA) region.
Alternative Routes to Market
• We have a direct sales force of over 2,200 quota-carrying salespeople who generate most of our revenue. However, not all customers
buy technology directly from the software vendor, providing additional growth opportunities in the area of indirect sales. Developing
further channel partnerships is a top priority for us.
• To help accelerate the growth of our channel business, we recently launched a new Enterprise Solution Provider Program that makes
it easier for customers to buy products and to eliminate potential conflicts between direct and indirect sales channels.
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