Computer Associates 2007 Annual Report Download - page 108

subsidiaries considered to be joint ventures. The sale of Benit resulted in a headcount reduction of approximately 250
positions. Pursuant to SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company has
separately presented the results of Benit as a discontinued operation, including the loss on the sale on the Consolidated
Statement of Operations.
The operating results of Benit are summarized as follows:
(IN MILLIONS) 2007 2006 2005
YEARS ENDED MARCH 31,
Subscription revenue $— $1 $1
Maintenance 11 15 15
Software fees and other 32—
Professional services 764
Total revenue $21 $ 24 $20
Loss from sale of discontinued operation, net of taxes $(2) —$—
Loss from discontinued operation, net of taxes $(1) $ (4) $ 1
In December 2005, the Company sold its wholly-owned subsidiary MultiGen-Paradigm, Inc. (MultiGen) to Parallax Capital
Partners. MultiGen was a provider of real-time, end-to-end 3D solutions for visualizations, simulations and training
applications used for both civilian and government purposes. The sale price was approximately $6 million, which
includes reimbursement for certain employee-related costs. The purchase price was received in the form of an interest
bearing note, which was paid in full during the first quarter of fiscal year 2008. Prior to the sale, MultiGen had revenues of
approximately $9 million and $15 million for fiscal years 2006 and 2005, respectively. As a result of the sale in the third
quarter of fiscal year 2006, the Company recorded a $3 million gain, net of a tax benefit of approximately $10 million. The
Company has separately presented the gain on the disposal of MultiGen as a discontinued operation for the period ending
December 31, 2005. The impact of MultiGen’s results on prior periods was not considered material.
Other
In December 2005, the Company acquired certain assets and liabilities of Control F-1 Corporation (Control F-1) for a total
purchase price of approximately $14 million which was paid in January 2006. Control F-1 was a privately held provider of
support automation solutions that automatically prevent, detect, and repair end-user computer problems before they disrupt
critical IT services.
In November 2005, the Company announced an agreement with Garnett & Helfrich Capital, a private equity firm, to create an
independent corporate entity, Ingres Corporation (Ingres). As part of the agreement, the Company contributed intellectual
property, support contracts, the services of certain employees and other assets used exclusively in the business of the
intellectual property contributed.The contributions from the Company and Garnett & Helfrich Capital, L.P., formed Ingres.The
Company has a 25% ownership interest in the newly formed entity, in which it received an equity stake of $15 million. As a
result of the transaction, the Company recorded a non-cash pre-tax gain for the three months ended December 31, 2005 of
approximately $7 million due to the value of assets that were contributed during the formation of Ingres in accordance with
Emerging Issues Task Force (EITF) Issue No. 01-2 Interpretations of APB Opinion No. 29. The gain was recorded as “Other gains,
net” in the Consolidated Statements of Operations. As of March 31, 2007, the net book value of the investment in Ingres was
reduced to $0, as a result of reported losses by Ingres subsequent to its formation, which were recorded under the equity
method of accounting.
Note 3 — Restructuring and Other
Restructuring
Fiscal 2007 Plan: In August 2006, the Company announced the fiscal 2007 plan to significantly improve the Company’s
expense structure and increase its competitiveness. The fiscal 2007 plan’s objectives include a workforce reduction, global
facilities consolidations and other cost reduction initiatives. The total cost of the fiscal 2007 plan is expected to be
approximately $200 million, of which approximately $147 million was recognized in fiscal year 2007.
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