Computer Associates 2006 Annual Report Download - page 127

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Note 1 — Significant Accounting Policies (Continued)
capitalized during fiscal years 2006, 2005, and 2004, respectively. The Company recorded amortization of
$48 million, $41 million, and $40 million for the fiscal years ended March 31, 2006, 2005, and 2004,
respectively, which also was included in the “Amortization of capitalized software costs” line item in the
Consolidated Statements of Operations. Unamortized, internally generated software development costs
included in the “Other noncurrent assets” line item on the Consolidated Balance Sheets as of March 31, 2006
and 2005 were $195 million and $164 million, respectively. Annual amortization of capitalized software costs is the
greater of the amount computed using the straight-line method over the remaining estimated economic life of the
software product, generally estimated to be five years from the date the product reached technological feasibility.
The Company amortized capitalized software costs using the straight-line method in fiscal years 2006, 2005, and
2004, as anticipated future revenue is projected to increase for several years considering the Company is
continuously integrating current software technology into new software products.
Other identified intangible assets include both customer relationships and trademarks/trade names.
In connection with the acquisition of Concord, Niku, iLumin, and Wily in fiscal year 2006, the Company recognized
approximately $22 million, $44 million, $21 million and $126 million, respectively of customer relationships and
trademarks/trade names. In connection with the acquisition of Netegrity in fiscal year 2005, the Company
recognized approximately $45 million and $26 million of customer relationships and trademarks/trade names,
respectively.
In accordance with SFAS No. 142, “Goodwill and other Intangible Assets”, certain identified intangible assets with
indefinite lives are not subject to amortization. The balance of such assets at March 31, 2006 was $26 million. The
Company amortizes all other identified intangible assets over their remaining economic lives, estimated to be
between six and twelve years. The Company recorded amortization of other identified intangible assets of
$51 million, $40 million and $39 million in the fiscal years ended March 31, 2006, 2005 and 2004,
respectively. The net carrying value of other identified intangible assets as of March 31, 2006 and 2005 was
$388 million and $226 million, respectively, and was included in the “Other noncurrent assets” line item on the
Consolidated Balance Sheets.
The gross carrying amounts and accumulated amortization for identified intangible assets are as follows:
Gross
Assets
Accumulated
Amortization
Net
Assets
At March 31, 2006
(in millions)
Capitalized software:
Purchased ......................................... $4,760 $4,299 $ 461
Internally developed ................................. 558 363 195
Other identified intangible assets subject to amortization ........ 628 266 362
Other identified intangible assets not subject to amortization ..... 26 — 26
Total .............................................. $5,972 $4,928 $1,044
Gross
Assets
Accumulated
Amortization
Net
Assets
At March 31, 2005
(in millions)
Capitalized software:
Purchased ......................................... $4,625 $3,899 $ 726
Internally developed ................................. 494 330 164
Other identified intangible assets subject to amortization ........ 415 215 200
Other identified intangible assets not subject to amortization ..... 26 — 26
Total .............................................. $5,560 $4,444 $1,116
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