Computer Associates 2006 Annual Report Download - page 25

Restatement of Third Quarter Fiscal Year 2006 Results:
In this Form 10-K we have restated financial results for the third quarter of fiscal year 2006 to reflect approximately
$31 million of additional commission expense that should have been recorded in that period. This restatement does
not affect previously reported cash flows from operations or financial results for the full fiscal year. Refer to Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of
Operations — Commissions, Royalties and Bonuses”, and Item 9A, “Controls and Procedures”, for additional
information.
Additionally, while not related to this commission expense restatement, the Company also identified approximately
$14 million in income taxes recorded in the third quarter of fiscal year 2006 associated with foreign taxable income
from prior fiscal years. Since we are restating the results for the third quarter of fiscal year 2006, as well as prior
fiscal periods, we have determined that this charge should properly be reflected in the periods to which it related.
Accordingly, an adjustment is also being made to decrease income taxes in the third quarter of fiscal year 2006 by
approximately $14 million and increase income tax expense primarily in fiscal years 2003 and 2002 by
approximately $2 million and $12 million, respectively.
PART I
Item 1. Business.
(a) General Development of Business
Overview
CA, Inc. is one of the world’s largest independent providers of information technology (IT) management software.
We develop, market, deliver and license software products and services that allow organizations to run, manage and
automate aspects of their computing environments, or IT infrastructures, which are critical to their business.
The Company was incorporated in Delaware in 1974, began operations in 1976, and completed an initial public
offering of common stock in December 1981. Our common stock is traded on the New York Stock Exchange under
the symbol “CA”.
We are considered an Independent Software Vendor (ISV). ISVs develop and license software products that can
increase the efficiency of computer hardware platforms or operating systems sold by other vendors.
Our software helps our customers dynamically manage all of the people, processes, computers, networks and the
range of technologies that make up their IT infrastructure. We have a broad portfolio of software products and
services that span the areas of infrastructure management, security management, storage management and business
service optimization. Our solutions work across all networks and systems, across distributed and mainframe
environments, and across all major hardware and software platforms in use by our customers.
Because many organizations have increased their investments in technology over the years, their IT infrastructures
are complex and security has become an increasing concern. Customers therefore place high value on software and
services that can help them manage their entire IT infrastructures better and more securely.
Business Developments and Highlights
In fiscal year 2006, we took the following actions to support our business:
• We aligned our product development by software business units. The business unit structure is designed to
increase our accountability to customer needs and to be more responsive to the changing dynamics of the
management software marketplace. Please refer to Item 1, “Business — (c) Narrative Description of the
Business — Business Unit Structure” below for more information.
• We completed several acquisitions throughout fiscal year 2006, including but not limited to the following:
• In March 2006, we completed the acquisition of Wily Technology, Inc. (Wily), a provider of enterprise
application management solutions, for a total purchase price of approximately $374 million. Wily is
now part of our Enterprise Systems Management business unit.
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