Computer Associates 2007 Annual Report Download - page 103

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Approximately $47 million of deferred professional services revenue that was a component of “Trade and installment
accounts receivable, net” at March 31, 2006 has been reclassified between “Accrued expenses and other current liabilities”
and “Other noncurrent liabilities” on the Consolidated Balance Sheet to conform to the March 31, 2007 presentation.
The Company determined in the fourth quarter of fiscal year 2007 that certain tax balances were not properly classified in the
Consolidated Balance Sheet. Specifically, the net asset balance of “Deferred income taxes” was overstated by approximately
$31 million, while “Federal, State, and foreign income taxes payable” was overstated by $58 million. The net difference of
$27 million was related to the impacts from foreign exchange and was reflected as an adjustment to the opening balance of
“Other Comprehensive Income” in the Consolidated Statement of Stockholders’ Equity. 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 or prior financial statements and does not affect the
previously reported Consolidated Statements of Operations or Cash Flows for any prior periods.
(s) Statements of Cash Flows: Interest payments for the fiscal years ended March 31, 2007, 2006 and 2005 were $112 million,
$114 million and $120 million, respectively. Income taxes paid for these fiscal years were $296 million, $207 million and
$12 million (net of a tax refund of $191 million), respectively.
Note 2 — Acquisitions and Divestitures
Acquisitions
During fiscal year 2007, the Company acquired the following companies:
•Cybermation, Inc., a privately held provider of enterprise workload automation solutions.
•MDY Group International, Inc., a privately held provider of enterprise records management software and services.
•XOsoft, Inc., a privately held provider of complete recovery management solutions.
•Cendura Corporation, a privately held provider of IT service management service delivery solutions.
The total cost of these acquisitions was approximately $173 million, net of approximately $20 million of cash and cash
equivalents acquired and excluding a holdback of approximately $9 million.
The acquisitions of Cybermation, MDY, XOsoft and Cendura were accounted for as purchases and accordingly, their results of
operations have been included in the Consolidated Financial Statements since the dates of their acquisitions. The Company
recorded a charge of approximately $10 million for in-process research and development costs associated with the
acquisition of XOsoft during the second quarter of fiscal year 2007. Total goodwill recognized in these transactions
amounted to approximately $121 million. The allocation of a significant portion of the purchase price to goodwill was
predominantly due to the relatively short lives of the developed technology assets, whereby a substantial amount of the
purchase price was based on anticipated earnings beyond the estimated lives of the intangible assets. The 2007 fiscal year
acquisitions included net deferred tax liabilities of approximately $15 million. The purchase price allocations for Cybermation,
MDY, XOsoft and Cendura are based upon estimates which may be revised within one year of the date of acquisition as
additional information becomes available. It is anticipated that the final purchase price allocation for these acquisitions will
not differ materially from their preliminary allocations. The acquisitions completed in fiscal year 2007 were considered
immaterial, both individually and in the aggregate, and therefore pro-forma information for both fiscal years 2007 and 2006
was not presented.
During the fourth quarter of fiscal year 2006, the Company completed its acquisition of Wily.Wily was a provider of enterprise
application management software solutions that enable companies to manage their web applications and infrastructure. The
total purchase price of the acquisition was approximately $374 million which included a holdback of approximately 10% of
the initial purchase price. The acquisition of Wily 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, March 3, 2006.
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