Computer Associates 2006 Annual Report Download - page 132

Note 2 — Acquisitions, Divestitures and Restructuring (Continued)
Approximately $14 million of the purchase price represents the estimated fair value of projects that, as of the Niku
Acquisition Date, had not reached technological feasibility and had no alternative future use. Accordingly, this
amount was immediately expensed and has been included in the “Charge for in-process research and development
costs” line item in the Consolidated Statements of Operations.
Purchased software products are being amortized over approximately five years, trademarks/tradenames will be
amortized over seven years, and customer relationships will be amortized over eight years.
The allocation of a significant portion of the Niku purchase price to goodwill was predominantly due to the
relatively short lives of the acquired developed technology assets, whereby a substantial amount of the purchase
price was based on earnings beyond the estimated lives of the intangible assets.
Based upon additional information received subsequent to the Niku Acquisition Date, goodwill was adjusted
downward by approximately $83 million as of March 31, 2006, primarily due to the recognition of deferred tax
assets associated with acquired net operating losses. This adjustment has been included in the allocation presented
above.
The allocation of the purchase price is based upon estimates which may be revised within one year of the date of
acquisition as additional information becomes available. It is anticipated that the final purchase price allocation will
not differ materially from the preliminary allocation plus the subsequent adjustment presented above.
The following unaudited pro-forma financial information presents the combined results of operations of the
Company, Wily, iLumin and Niku as if the acquisitions had occurred at April 1, 2004. The historical results of the
Company for the fiscal year ended March 31, 2006 include the results of Wily, iLumin and Niku from their
respective acquisition dates. The pro-forma results presented below for the fiscal year ended March 31, 2006
combine the results of the Company for the fiscal year ended March 31, 2006 and the historical results of Wily,
iLumin and Niku for their comparable reporting periods. The pro-forma results for the fiscal year ended March 31,
2005 combine the historical results of the Company for the fiscal year ended March 31, 2005 with the combined
historical results for the comparable reporting periods for Wily, iLumin and Niku. The unaudited pro-forma
financial information is not intended to represent or be indicative of the Company’s consolidated results of
operations or financial condition that would have been reported had the acquisitions of Wily, iLumin and Niku been
completed as of the beginning of the periods presented and should not be taken as indicative of the Company’s
future consolidated results of operations or financial condition. Pro-forma adjustments are tax-effected at the
Company’s statutory tax rate.
2006 2005
For the Year Ended
March 31,
(restated)
unaudited
(in millions)
Revenue ...................................................... $3,880 $3,711
Income (loss) from continuing operations .............................. 109 (29)
Net income (loss) ............................................... 112 (29)
Basic earnings (loss) per share:
Income (loss) from continuing operations .............................. $ 0.19 $ (0.05)
Discontinued operations ........................................... 0.01 —
Net income (loss) ............................................... $ 0.20 $ (0.05)
Diluted earnings (loss) per share:
Income (loss) from continuing operations .............................. $ 0.18 $ (0.05)
Discontinued operations ........................................... 0.01 —
Net income (loss) ............................................... $ 0.19 $ (0.05)
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