Computer Associates 2005 Annual Report Download - page 58

Table of Contents
Depreciation and Amortization of Other Intangible Assets
Depreciation and amortization of other intangible assets for fiscal year 2005 decreased $4 million from fiscal year 2004 to $130 million.
The decrease in depreciation and amortization of other intangible assets was a result of certain intangible assets from past acquisitions
becoming fully amortized.
Depreciation and amortization of other intangible assets for fiscal year 2004 decreased $6 million from fiscal year 2003 to $134 million.
The decrease in depreciation and amortization of goodwill and other intangible assets was a result of certain intangible assets from past
acquisitions becoming fully amortized.
Goodwill Impairment
During the fourth quarters of fiscal years 2005 and 2004, we performed our annual goodwill impairment review under SFAS No. 142
and determined that no impairment charge was necessary. Refer to “Critical Accounting Policies and Estimates” for additional
information about our annual review process.
As a result of our annual goodwill impairment review during the fourth quarter of fiscal year 2003, we recorded a non-cash goodwill
impairment charge of $80 million related to our professional services organization. The impairment was attributable to our
lower-than-expected results and our projected performance at the date of the review.
Other Gains/Expenses, Net
Gains and losses attributable to sales of fixed assets, certain foreign currency exchange rate fluctuations, and certain other infrequent
events have been included in the “Other gains/expenses, net” line item on the Consolidated Statements of Operations. The components
of “Other gains/expenses, net” are as follows:
Year Ended March 31,
2005 2004 2003
(in millions)
(Gains) losses attributable to sales of fixed assets $
—
$ (19) $ 3
Expenses attributable to fluctuations in foreign currency exchange rates 8 41 66
(Gains) expenses attributable to legal settlements (13) 26 15
Impairment of capitalized software
—
4
—
Payment to Ranger Governance Ltd
—
—
10
Total $ (5) $ 52 $ 94
Restructuring Charge
In the second quarter of fiscal year 2005, we announced a restructuring plan that was designed to more closely align our investments with
strategic growth opportunities. The restructuring plan included a workforce reduction of approximately five percent or 750 positions
worldwide, slightly lower than our original estimate of 800 positions. The plan is expected to yield about $70 million in savings on an
annualized basis. In connection with the restructuring plan, we recorded a charge of approximately $28 million in the second quarter of
fiscal year 2005 for severance and other termination benefits, and we do not expect to incur any additional charges related to this
restructuring plan. As of March 31, 2005, we have made substantially all payments under the plan.
Shareholder Litigation and Government Investigation Settlement
In prior fiscal years, a number of stockholder class action lawsuits were initiated that alleged, among other things, that the Company
made misleading statements of material fact or omitted to state material facts necessary in order to make the statements, in light of the
circumstances under which they were made, not misleading in connection with the Company’ s financial performance. Refer to Note 7,
“Commitments and Contingencies” of the Consolidated Financial Statements for additional information concerning the shareholder
litigation.
In August 2003, we announced the settlement of all outstanding litigation related to these actions. Under the settlement, we agreed to
issue a total of up to 5.7 million shares of common stock to the shareholders represented in the three class action lawsuits, including
payment of attorneys’ fees. In January 2004, approximately 1.6 million settlement shares were issued along with approximately
$3.3 million to the plaintiffs’ attorneys for attorney fees and related expenses. In March 2004, approximately 200,000 settlement shares
were issued to participants and beneficiaries of the CASH Plan. On October 8, 2004, the Federal Court signed an order approving the
distribution of the remaining 3.8 million settlement shares, less administrative expenses. All the remaining shareholder litigation
settlement shares were issued in December 2004. Of the 3.8 million settlement shares, approximately 51,000 were used for the payment
of administrative expenses in connection with the settlement, approximately 76,000 were liquidated for cash distributions to class
members entitled to receive a cash distribution, and the remaining settlement shares were distributed to class members entitled to receive
a distribution of shares.
The final shareholder litigation settlement value of approximately $174 million was calculated using the New York Stock Exchange
(NYSE) closing price of our common stock on December 14, 2004, the date the settlement shares were issued, and also includes certain
administrative costs associated with the settlement. An initial estimate for the value of
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