Computer Associates 2006 Annual Report Download - page 134

Note 2 — Acquisitions, Divestitures and Restructuring (Continued)
In November 2004, the Company acquired the common stock of Netegrity, Inc. (Netegrity) for an aggregate
purchase price approximately $455 million. The Company converted employee stock options to acquire the
common stock of Netegrity to employee stock options to acquire shares of the Company at a cost of approximately
$11 million for vested options and incurred acquisition costs of approximately $5 million. Netegrity was a provider
of business security software, principally in the areas of access and identity management. The Company has made
Netegrity’s identity and access management solutions available both as independent products and as integrated
components of the Company’s eTrust Identity and Access Management Suite. The acquisition of Netegrity has been
accounted for as a purchase and, accordingly, its results of operations have been included in the Consolidated
Financial Statements since the date of its acquisition, November 24, 2004. The acquisition cost of Netegrity has
been allocated to assets acquired and liabilities assumed based on estimated fair values at the date of acquisition as
follows:
(in millions)
Cash and marketable securities ........................................... $ 97
Deferred income taxes, net .............................................. 4
Purchased software products ............................................. 37
Customer relationships . . . .............................................. 45
Trademarks/tradenames . . . .............................................. 26
Goodwill............................................................ 258
Liabilities assumed, net . . . .............................................. (12)
Purchase price........................................................ $455
Purchased software products and customer relationships are being amortized over seven years and twelve years,
respectively.
In August 2004, the Company acquired PestPatrol, Inc., a privately held provider of anti-spyware and security
solutions for approximately $40 million. The products acquired in this transaction were integrated into the
Company’s eTrust Threat Management software product portfolio. This portfolio protects organizations from
diverse Internet dangers such as viruses, spam, and inappropriate use of the Web by employees.
Accrued acquisition-related costs and changes in these accruals, including additions related to the Company’s
acquisitions of Wily, iLumin, Niku, Concord and Netegrity were as follows:
Duplicate
Facilities and
Other Costs
Employee
Costs
(in millions)
Balance as of March 31, 2004 ................................. $58 $12
Additions ................................................. 8 3
Settlements ................................................ (15) (6)
Adjustments ............................................... (10) —
Balance as of March 31, 2005 ................................. $41 $ 9
Additions ................................................. 31 61
Settlements ................................................ (18) (18)
Adjustments ............................................... 6 —
Balance as of March 31, 2006 ................................. $60 $52
The liabilities for duplicate facilities and other costs relate to operating leases, which are actively being renegotiated
and expire at various times through 2010, negotiated buyouts of the operating lease commitments, and other
contractually related liabilities. The liabilities for employee costs relate to involuntary termination benefits.
Adjustments, which reduce the corresponding liability and related goodwill accounts, are recorded when
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