Computer Associates 2007 Annual Report Download - page 60

outstanding borrowings under such commitments). Based on our credit ratings as of May 2007, the facility fee is 0.225% of
the $1 billion committed amount.
The 2004 Revolving Credit Facility contains customary covenants for transactions of this type, including two financial
covenants: (i) for the 12 months ending each quarter-end, the ratio of consolidated debt for borrowed money to consolidated
cash flow, each as defined in the 2004 Revolving Credit Facility, must not exceed 4.00 for the quarters ending March 31, 2007
and thereafter; and (ii) for the 12 months ending each quarter-end, the ratio of consolidated cash flow to the sum of interest
payable on, and amortization of debt discount in respect of, all consolidated debt for borrowed money, as defined in the 2004
Revolving Credit Facility, must not be less than 5.00. In addition, as a condition precedent to each borrowing made under the
2004 Revolving Credit Facility, as of the date of such borrowing, (i) no event of default shall have occurred and be continuing
and (ii) we are to reaffirm that the representations and warranties made in the 2004 Revolving Credit Facility (other than the
representation with respect to material adverse changes, but including the representation regarding the absence of certain
material litigation) are correct. As of May 2007, we are in compliance with these debt covenants.
Fiscal Year 1999 Senior Notes
In fiscal year 1999, the Company issued $1.75 billion of unsecured Senior Notes in a transaction pursuant to Rule 144A under
the Securities Act of 1933 (Rule 144A). Amounts borrowed, rates, and maturities for each issue were $575 million at 6.25%
due April 15, 2003, $825 million at 6.375% due April 15, 2005, and $350 million at 6.5% due April 15, 2008. In April 2005, the
Company repaid the $825 million remaining balance of the 6.375% Senior Notes from available cash balances. As of
March 31, 2007, $350 million of the 6.5% Senior Notes remained outstanding.
Fiscal Year 2005 Senior Notes
In November 2004, the Company issued an aggregate of $1 billion of unsecured Senior Notes (2005 Senior Notes) in a
transaction pursuant to Rule 144A. The Company issued $500 million of 4.75%, 5-year notes due December 2009 and
$500 million of 5.625%, 10-year notes due December 2014.The Company used the net proceeds from this issuance to repay
debt. The Company has the option to redeem the 2005 Senior Notes at any time, at redemption prices equal to the greater of
(i) 100% of the aggregate principal amount of the notes of such series being redeemed and (ii) the present value of the
principal and interest payable over the life of the 2005 Senior Notes, discounted at a rate equal to 15 basis points and 20 basis
points for the 5-year notes and 10-year notes, respectively, over a comparable U.S. Treasury bond yield. The maturity of the
2005 Senior Notes may be accelerated by the holders upon certain events of default, including failure to make payments when
due and failure to comply with covenants in the 2005 Senior Notes. The 5-year notes were issued at a price equal to 99.861%
of the principal amount and the 10-year notes at a price equal to 99.505% of the principal amount for resale under Rule 144A
and Regulation S. The Company also agreed for the benefit of the holders to register the 2005 Senior Notes under the
Securities Act of 1933 pursuant to a registered exchange offer so that the 2005 Senior Notes could be sold in the public
market. Because the Company did not meet certain deadlines for completion of the exchange offer, the interest rate on the
2005 Senior Notes increased by 25 basis points as of September 27, 2005 and increased by an additional 25 basis points as of
December 26, 2005 since the delay was not cured prior to that date. The additional 50 basis points ceased to accrue as of
November 18, 2006, when the 2005 Senior Notes could be sold under Rule 144, without registration, to the public by holders
who are not affiliated with the Company.
1.625% Convertible Senior Notes
In fiscal year 2003, the Company issued $460 million of unsecured 1.625% Convertible Senior Notes (1.625% Notes), due
December 15, 2009, in a transaction pursuant to Rule 144A. The 1.625% Notes are senior unsecured indebtedness and rank
equally with all existing senior unsecured indebtedness. Concurrent with the issuance of the 1.625% Notes, we entered into
call spread repurchase option transactions (1.625% Notes Call Spread) to partially mitigate potential dilution from conversion
of the 1.625% Notes. The option purchase price of the 1.625% Notes Call Spread was $73 million and the entire purchase
price was charged to Stockholders’ Equity in December 2002. Under the terms of the 1.625% Notes Call Spread, the Company
can elect to receive (i) outstanding shares equivalent to the number of shares that will be issued if all of the 1.625% Notes are
converted into shares (23 million shares) upon payment of an exercise price of $20.04 per share (aggregate price of
$460 million); or (ii) a net cash settlement, net share settlement or a combination, whereby the Company will receive cash or
shares equal to the increase in the market value of the 23 million shares from the aggregate value at the $20.04 exercise price
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