Computer Associates 2006 Annual Report Download - page 137

Note 2 — Acquisitions, Divestitures and Restructuring (Continued)
2006. Two of these transactions resulted in a loss totaling approximately $7 million which was recorded under
“Restructuring and other” in the Consolidated Statements of Operations. The third sale/leaseback transaction
resulted in a gain of approximately $5 million which will be recognized ratably as a reduction to rent expense over
the life of the lease term. The lease terms of the agreements expire between 2007 and 2015 and represent a total
lease commitment of approximately $32 million. All of these transactions were recorded in accordance with
SFAS No. 28, “Accounting for Sales with Leasebacks — an amendment of FASB Statement No. 13”.
During the fiscal year ended March 31, 2006, the Company incurred approximately $15 million in connection with
certain DPA related costs and for the termination of a non-core application development professional services
project (see also note 7, “Commitments and Contingencies”).
In September 2004, the Company announced a restructuring plan that included a workforce reduction of
approximately five percent or 750 positions worldwide. In connection with the restructuring plan, the
Company recorded a charge of approximately $28 million primarily associated with termination benefits in the
second quarter of fiscal year 2005. The Company does not expect to incur additional charges related to this
restructuring plan. As of March 31, 2005, the Company had made all payments under the plan.
Note 3 — Marketable Securities
The following is a summary of marketable securities classified as available-for-sale:
2006 2005
Year Ended
March 31,
(in millions)
Debt/Equity Securities:
Cost ............................................................. $30 $298
Gross unrealized gains ................................................ 4 —
Gross unrealized losses ............................................... — (1)
Estimated fair value.................................................. $34 $297
Approximately $1 million of marketable securities were restricted as to use for other than current operations at
March 31, 2005 and was included in the “Other noncurrent assets” line item on the Consolidated Balance Sheet.
There were no marketable securities that were considered restricted as of March 31, 2006.
The Company realized gains on sales of marketable securities of approximately $2 million and $8 million for the
fiscal years ended March 31, 2006 and 2005, respectively.
Interest income for the fiscal years ended March 31, 2006, 2005, and 2004 was approximately $57 million,
$50 million, and $22 million, respectively, and was included in the “Interest expense, net” line item in the
Consolidated Statements of Operations.
In March 2005, the Company sold its remaining interest in Viewpoint Corporation (Viewpoint), in a private sale for
$12 million, net of fees. As a result of the sale, the Company reported an $8 million gain that is included in the
“Selling, general, and administrative” line item in the Consolidated Statements of Operations. At the time of the
sale, the Company controlled more than 5% of Viewpoint’s outstanding common stock.
The estimated fair value of debt and equity securities is based upon published closing prices of those securities as of
March 31, 2006. For debt securities, amortized cost is classified by contractual maturity. Expected maturities may
differ from contractual maturities because the issuers of the securities may have the right to prepay obligations
without prepayment penalties.
The Company reviewed its investment portfolio for impairment and determined that, as of March 31, 2006, the total
unrealized loss for investments impaired for both greater and less than 12 months was immaterial. See also Note 1,
“Significant Accounting Policies”.
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