Computer Associates 2005 Annual Report Download - page 66

Table of Contents
cash. Refer to Note 2, “Acquisitions, Divestitures, and Restructuring,” of the Consolidated Financial Statements for additional
information relating to our acquisition of Pest Patrol and Netegrity.
In fiscal year 2004, we acquired certain assets from eSecurity Online, Silent Runner, and Miramar Systems. The aggregate purchase
price for these assets totaled $53 million, of which $52 million was paid in cash.
In March 2004, we received approximately $90 million in cash from the sale of our approximate 90% interest in ACCPAC. In
April 2004, we received the remaining proceeds of approximately $14 million. See Item 1, “Business — Business Developments” in the
2005 Form 10-K/A for additional information.
In January 2004, we established Premier Management Insurance, Inc. (Premier), an insurance subsidiary, to give us access to
re-insurance markets, to enhance insurance coverage, and to take advantage of potential future savings in insurance premiums. Premier
requires a minimum cash balance of $50 million. As such, $50 million of our cash is deemed restricted and was recorded in the “Other
noncurrent assets” line item on the Consolidated Balance Sheets.
Additionally, we reported restricted cash balances of $17 million and $6 million at March 31, 2005 and 2004, respectively, which were
included in the “Other noncurrent assets” line item.
In October 2003, we established a software development center in Hyderabad, India (the India Technology Center) for the purpose of
enhancing our development and support capabilities and to take advantage of certain incentives made available by the Government of
Andhra Pradesh (GoAP) in accordance with local law. We currently employ approximately 770 professionals and have approximately
135,000 square feet of commercially leased office space in Hyderabad. In February 2004, we entered into a definitive agreement with the
GoAP to acquire more than 30 acres in an undeveloped Software Technology Park zone outside Hyderabad, where we intend to
construct a development facility. We have delivered a $2 million bank guarantee in favor of the GoAP to secure our title to the 30-acre
site. To date, we have invested approximately $30 million in connection with operations of the India Technology Center, related capital
equipment, and early-stage planning for the development of our facility in Hyderabad.
In April 2003, we received $18 million in proceeds related to the sale of certain fixed assets. Since the fixed assets were fully depreciated,
the entire amount was recorded as a gain in the quarter ended June 30, 2003.
We pre-fund contributions to our broad-based, employee defined-contribution retirement plan annually each March. Pre-funded
contributions totaled $45 million in each of the years ended March 31, 2005 and 2004.
Peak borrowings under all debt facilities during the fiscal year 2005 totaled approximately $3.3 billion, with a weighted average interest
rate of 5.3%.
Capital resource requirements as of March 31, 2005 consisted of lease obligations for office space, equipment, mortgage or loan
obligations, and amounts due as a result of product and company acquisitions. Refer to “Contractual Obligations and Commitments” for
additional information.
It is expected that existing cash, cash equivalents, marketable securities, the availability of borrowings under existing and renewable
credit lines and in the capital markets, and cash expected to be provided from operations will be sufficient to meet ongoing cash
requirements. We expect our long-standing history of providing extended payment terms to our customers to continue.
Off-Balance Sheet Arrangements
We have commitments to invest approximately $3 million in connection with joint venture agreements. In prior fiscal years, we sold
individual accounts receivable under the prior business model to an external third-party subject to certain recourse provisions. The
outstanding principal balance subject to recourse of these receivables approximated $183 million and $207 million as of March 31, 2005
and 2004, respectively. As of March 31, 2005, we have not incurred any losses related to these receivables. Other than the commitments
and recourse provisions described above, we do not have any other off-balance sheet arrangements with unconsolidated entities or
related parties and, accordingly, off-balance sheet risks to our liquidity and capital resources from unconsolidated entities are limited.
Contractual Obligations and Commitments
We have commitments under certain contractual arrangements to make future payments for goods and services. These contractual
arrangements secure the rights to various assets and services to be used in the future in the normal course of business. For example, we
are contractually committed to make certain minimum lease payments for the use of property under operating lease agreements. In
accordance with current accounting rules, the future rights and related obligations pertaining to such contractual arrangements are not
reported as assets or liabilities on our Consolidated Balance Sheets. We expect to fund these contractual arrangements with cash
generated from operations in the normal course of business.
31