Computer Associates 2007 Annual Report Download - page 102

purchase outstanding shares of CA common stock, at a price not less than $22.50 and not greater than $24.50 per share.This
tender offer represented the initial phase of the up to $2 billion stock repurchase plan that the Company announced in June
2006, which replaced the prior $600 million common stock repurchase plan. In the tender offer, CA offered to purchase for
cash up to 40,816,327 shares of its common stock, par value $0.10 per share, including the Associated Rights to Purchase
Series One Junior Participating Preferred Stock, Class A at a per share purchase price of not less than $22.50 nor greater than
$24.50, net to the seller in cash, without interest. The tender offer also allowed CA the right to purchase up to 11,345,647
additional shares without amending or extending the offer.
On September 14, 2006, the expiration date of the tender offer, CA purchased 41,225,515 shares at a purchase price of
$24.00 per share, for a total price of approximately $989 million, which excludes bank, legal and other associated charges of
approximately $2 million. Upon completion of the tender offer, the Company retired all the shares that were purchased, which
resulted in a reduction of the common stock issued and outstanding as reflected in the Company’s stockholders’ equity on the
Consolidated Balance Sheet at March 31, 2007. A total of $750 million was drawn down from the Company’s revolving credit
facility (the 2004 Revolving Credit Facility) in September 2006 in order to finance a portion of the tender offer. The Company’s
current borrowing rate is 6.49%. The maximum committed amount available under the 2004 Revolving Credit Facility is
$1 billion, exclusive of incremental credit increases of up to an additional $250 million which are available subject to certain
conditions and the agreement of the Company’s lenders. Total interest expense relating to the borrowing for the fiscal year
2007 was approximately $25 million.
(r) Reclassifications and other adjustments: Certain prior year balances have been reclassified to conform to the current period’s
presentation.
Approximately $134 million of current liabilities that were components of “Accounts payable” at March 31, 2006 have been
reclassified to “Accrued expenses and other current liabilities” on the Consolidated Balance Sheet to conform to the March 31,
2007 presentation.
Approximately $5 million of capital lease obligations that were components of “Accrued expenses and other current liabilities”
at March 31, 2006 have been reclassified accordingly between “Current portion of long-term debt and loans payable” and
“Long-term debt, net of current portion” on the Consolidated Balance Sheet to conform to the March 31, 2007 presentation.
Approximately $32 million of deferred tax assets that were offset against “Deferred income taxes — long term liabilities” at
March 31, 2006 have been reclassified to “Deferred income taxes — current assets” on the Consolidated Balance Sheet to
conform to the March 31, 2007 presentation.
Subsequent to the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2006, the
Company determined in the second quarter of fiscal year 2007 that deferred tax assets associated with certain outstanding
stock options were understated by approximately $47 million through an $8 million understatement in “Deferred income
taxes — current assets” and a $39 million overstatement in “Deferred income taxes — noncurrent liabilities” on the
Consolidated Balance Sheet as of March 31, 2006. Correspondingly, “Additional paid-in capital” was understated by
$47 million on the Consolidated Balance Sheet and Statement of Stockholders’ Equity as of and for the year ended
March 31, 2006. This error has been corrected on the Consolidated Balance Sheet as of March 31, 2006 in this Annual
Report on Form 10-K.The impact of this correction on the affected line items is not considered material to the March 31, 2006
financial statements and does not affect the previously reported Consolidated Statements of Operations or Cash Flows for any
prior periods.
During fiscal year 2007, the Company transferred its right and interest in future committed installment payments of
approximately $111 million due under certain software license agreements. In accordance with Emerging Issue Task Force
88-18 (EITF 88-18), “Sales of Future Revenues”, the Company determined that these types of transactions should be reported
as a financing obligation as opposed to deferred subscription revenue (collected). As of March 31, 2006, approximately
$25 million of “Deferred subscription revenue (collected) — current” and $25 million of “Deferred subscription revenue
(collected) — noncurrent”, was reclassified to “Financing obligations (collected) — current” and “Financing obligations
(collected) — noncurrent”, respectively, on the Consolidated Balance Sheet to conform to the March 31, 2007 presentation.
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