Computer Associates 2005 Annual Report Download - page 67

Table of Contents
The following table summarizes our contractual arrangements at March 31, 2005 and the timing and effect that such commitments are
expected to have on our liquidity and cash flow in future periods. In addition, the table summarizes the timing of payments on our debt
obligations as reported on our Consolidated Balance Sheet as of March 31, 2005.
Payments Due by Period
Less Than 1-3 3-5 More than
Contractual Obligations Total 1 Year Years Years 5 Years
(in millions)
Long-term debt obligations (inclusive of
interest) $ 3,132 $ 912 $ 168 $ 1,421 $ 631
Operating lease obligations(1) 499 128 165 89 117
Purchase obligations 27 10 8 2 7
Other long-term liabilities(2) 97 33 24 17 23
Total $ 3,755 $ 1,083 $ 365 $ 1,529 $ 778
(1) The contractual
obligations for
noncurrent
operating leases
include sublease
income totaling
$132 million
expected to be
received in the
following periods:
$30 million (less
than 1 year);
$49 million
(1-3 years);
$34 million
(3-5 years); and
$19 million (more
than 5 years).
(2) Other long-term
liabilities primarily
relate to operating
expenses associated
with operating lease
obligations.
As of March 31, 2005, we have no material capital lease obligations, either individually or in the aggregate.
Critical Accounting Policies and Estimates
We review our financial reporting and disclosure practices and accounting policies quarterly to help ensure that they provide accurate
and transparent information relative to the current economic and business environment. Note 1, “Significant Accounting Policies” of the
Consolidated Financial Statements contains a summary of the significant accounting policies that we use. Many of these accounting
policies involve complex situations and require a high degree of judgment, either in the application and interpretation of existing
accounting literature or in the development of estimates that impact our financial statements. On an ongoing basis, we evaluate our
estimates and judgments based on historical experience as well as other factors that are believed to be reasonable under the
circumstances. These estimates may change in the future if underlying assumptions or factors change.
We consider the following significant accounting polices to be critical because of their complexity and the high degree of judgment
involved in implementing them.
Revenue Recognition
We generate revenue from the following primary sources: (1) licensing software products; (2) providing customer technical support
(referred to as maintenance); and (3) providing professional services, such as consulting and education.
We recognize revenue pursuant to the requirements of Statement of Position 97-2 “Software Revenue Recognition” (SOP 97-2), issued
by the American Institute of Certified Public Accountants, as amended by SOP 98-9 “Modification of SOP 97-2, Software Revenue
Recognition, With Respect to Certain Transactions.” In accordance with SOP 97-2, we begin to recognize revenue from licensing and
supporting our software products when all of the following criteria are met: (1) we have evidence of an arrangement with a customer;
(2) we deliver the products; (3) license agreement terms are deemed fixed or determinable and free of contingencies or uncertainties that
may alter the agreement such that it may not be complete and final; and (4) collection is probable.
Our software licenses generally do not include acceptance provisions. An acceptance provision allows a customer to test the software for