Computer Associates 2006 Annual Report Download - page 62

liabilities” on the Consolidated Balance Sheets. Final payment of these amounts is dependent upon settlement with the
works councils in certain international locations and our ability to negotiate lease terminations.
During the fiscal year ended March 31, 2006, we incurred approximately $15 million in connection with certain
DPA related costs and the termination of a non-core application development professional services project (see also
Note 7, “Commitments and Contingencies”, in the Notes to the Consolidated Financial Statements) and other
expenses. In addition, as part of its restructuring initiatives and associated review of the benefits of owning versus
leasing certain properties, the Company also entered into three sale/leaseback transactions during the second half of
fiscal year 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 is being recognized ratably as a reduction to rent expense over
the life of the lease term.
In the second quarter of fiscal year 2005, we announced a restructuring plan that was designed to more closely align
our investments with strategic growth opportunities. The restructuring plan included a workforce reduction of
approximately 5% or 750 positions worldwide, slightly lower than our original estimate of 800 positions. As of
March 31, 2005, the Company had made all payments under the plan.
Shareholder Litigation and Government Investigation Settlement
In prior fiscal years, a number of stockholder class action lawsuits were initiated that alleged, among other things,
that the Company made misleading statements of material fact or omitted to state material facts necessary in order
to make the statements, in light of the circumstances under which they were made, not misleading in connection
with the Company’s financial performance. Refer to Note 7, “Commitments and Contingencies”, in the Notes to the
Consolidated Financial Statements for additional information concerning the shareholder litigation.
In August 2003, we announced the settlement of all outstanding litigation related to these actions. Under the
settlement, we agreed to issue a total of up to 5.7 million shares of common stock to the shareholders represented in
the three class action lawsuits, including payment of attorneys’ fees. In January 2004, approximately 1.6 million
settlement shares were issued along with approximately $3.3 million to the plaintiffs’ attorneys for attorney fees and
related expenses. In March 2004, approximately 0.2 million settlement shares were issued to participants and
beneficiaries of the CASH Plan. On October 8, 2004, the Federal Court signed an order approving the distribution of
the remaining 3.8 million settlement shares, less administrative expenses. All the remaining shareholder litigation
settlement shares were issued in December 2004. Of the 3.8 million settlement shares, approximately 51,000 were
used for the payment of administrative expenses in connection with the settlement, approximately 76,000 were
liquidated for cash distributions to class members entitled to receive a cash distribution, and the remaining
settlement shares were distributed to class members entitled to receive a distribution of shares.
The final shareholder litigation settlement value of approximately $174 million was calculated using the New York
Stock Exchange (NYSE) closing price of our common stock on December 14, 2004, the date the settlement shares
were issued, and also included certain administrative costs associated with the settlement. An initial estimate for the
value of the shareholder litigation settlement was established on August 22, 2003. The chart below summarizes the
NYSE closing price of our common stock and the estimated value of the shareholder litigation settlement since the
initial estimate was established.
NYSE Closing
Stock Price
Shareholder
Litigation Settlement
Estimated Value
(in millions)
December 14, 2004 .................................. $31.03 $174
September 30, 2004 .................................. 26.30 156
June 30, 2004 ...................................... 28.06 163
March 31, 2004 ..................................... 26.86 158
December 31, 2003 .................................. 27.34 158
September 30, 2003 .................................. 26.11 150
August 22, 2003 .................................... 25.00 144
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