Computer Associates 2007 Annual Report Download - page 54

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decrease was also due to an increase in our average cash balance and an increase in interest rates on the cash balance during
the fiscal year 2006 as compared to the fiscal year 2005, which resulted in an increase in interest income of approximately
$6 million.
Income Taxes
Our effective tax rate from continuing operations was approximately 21%, (28%), and 21% for fiscal years 2007, 2006, and
2005, respectively. Refer to Note 9, “Income Taxes”, in the Notes to the Consolidated Financial Statements for additional
information.
The income tax provision recorded for the fiscal year ended March 31, 2007 includes benefits of approximately $23 million
primarily arising from the resolution of certain international and U.S. Federal tax liabilities.
The income tax benefit recorded for the fiscal year ended March 31, 2006 includes benefits of approximately $51 million
arising from the recognition of certain foreign tax credits, $18 million arising from international stock based compensation
deductions and $66 million arising from foreign export benefits and other international tax rate benefits. Partially offsetting
these benefits was a charge of approximately $46 million related to additional tax liabilities.
During the fourth quarter of fiscal year 2006, we repatriated approximately $584 million from foreign subsidiaries. Total taxes
related to the repatriation were approximately $55 million. The repatriation was initially planned in fiscal year 2005 in
response to the favorable tax benefits afforded by the American Jobs Creation Act of 2004 (AJCA), which introduced a special
one-time dividends received deduction on the repatriation of certain foreign earnings to a U.S. taxpayer (repatriation
provision), provided that certain criteria were met. During fiscal year 2005, we recorded an estimate of this tax charge of
$55 million based on an estimated repatriation amount up to $500 million. In the first quarter of fiscal year 2006, we recorded
a benefit of approximately $36 million reflecting the Department of Treasury and IRS Notice 2005-38 issued on May 10, 2005.
In the fourth quarter of fiscal year 2006, we finalized our estimates of tax liabilities and determined that an adjustment was
necessary and, accordingly, recorded an additional tax charge in the amount of $36 million. No provision has been made for
federal income taxes on the remaining balance of the unremitted earnings of our foreign subsidiaries since we plan to
permanently reinvest all such earnings outside the U.S. Unremitted earnings totaled approximately $838 million and
$685 million at March 31, 2007 and 2006, respectively.
The income tax expense for the fiscal year ended March 31, 2005 includes a charge of $55 million reflecting our original
estimated cost of repatriating approximately $500 million under the AJCA which was partially offset by a $26 million tax
benefit attributable to a refund claim originally made for additional tax benefits associated with prior fiscal years. We received
a letter from the IRS approving the claim for this refund in September 2004.
Selected Quarterly Information
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) JUNE 30
1
SEPT. 30
2
DEC. 31
3
MAR. 31
4
TOTAL
2007 QUARTERLY RESULTS
Revenue $ 949 $ 987 $ 1,002 $ 1,005 $ 3,943
Percent of annual revenue 24% 25% 25% 26% 100%
Income (loss) from continuing operations $ 35 $ 54 $ 52 $ (20) $ 121
Basic income (loss) from continuing operations per share $ 0.06 $ 0.09 $ 0.10 $ (0.04) $ 0.22
Diluted income (loss) from continuing operations per share $ 0.06 $ 0.09 $ 0.10 $ (0.04) $ 0.22
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) JUNE 30
5
SEPT. 30
6
DEC. 31
7
MAR. 31
8
TOTAL
2006 QUARTERLY RESULTS
Revenue $ 921 $ 944 $ 965 $ 942 $ 3,772
Percent of annual revenue 24% 25% 26% 25% 100%
Income (loss) from continuing operations $ 97 $ 46 $ 56 $ (39) $ 160
Basic income (loss) from continuing operations per share $ 0.17 $ 0.08 $ 0.10 $ (0.07) $ 0.28
Diluted income (loss) from continuing operations per share $ 0.16 $ 0.08 $ 0.09 $ (0.07) $ 0.27
1 Includes an after-tax charge of approximately $1 million in connection with certain DPA related costs and an after-tax charge of approximately $6 million for severance and other expenses in
connection with a restructuring plan (refer to “Shareholder Litigation and Government Investigation Settlement” and “Restructuring Charge” within Results of Operations).
42