Computer Associates 2007 Annual Report Download - page 98

Download and view the complete annual report

Please find page 98 of the 2007 Computer Associates annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 144

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144

(m) Cash and Cash Equivalents and Marketable Securities: All financial instruments purchased with a maturity of three months
or less are considered cash equivalents. The Company has determined that all of its investment securities should be classified
as available-for-sale. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported in
Stockholders’ Equity under the caption “Accumulated Other Comprehensive Loss.” The amortized cost of debt securities is
adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in
the “Interest expense, net” line item in the Consolidated Statements of Operations. Realized gains and losses and declines in
value judged to be other than temporary on available-for-sale securities are included in the “Selling, general, and
administrative” line item in the Consolidated Statements of Operations. The cost of securities sold is based on the
specific identification method. Interest and dividends on securities classified as available-for-sale are included in the
“Interest expense, net” line item in the Consolidated Statements of Operations.
(n) Restricted Cash: The Company’s insurance subsidiary requires a minimum restricted cash balance of $50 million. In
addition, the Company has other restricted cash balances, including cash collateral for letters of credit. The total amount of
restricted cash as of March 31, 2007 and 2006 was $61 million and $60 million, respectively, and is included in the “Other
noncurrent assets” line item on the Consolidated Balance Sheets.
(o) Long-Lived Assets
Property and Equipment: Land, buildings, equipment, furniture, and improvements are stated at cost. Depreciation and
amortization are provided over the estimated useful lives of the assets by the straight-line method. Building and improvements
are estimated to have 5- to 40-year lives, and the remaining property and equipment are estimated to have 3- to 7-year lives.
A summary of property and equipment is as follows:
(DOLLARS IN MILLIONS) 2007 2006
MARCH 31,
Land and buildings $ 233 $488
Equipment, furniture, and improvements 1,158 1,066
1,391 1,554
Accumulated depreciation and amortization (922) (920)
Net property and equipment $ 469 $634
Depreciation expense for the fiscal years ended March 31, 2007, 2006, and 2005 was approximately $92 million, $83 million,
and $89 million, respectively.
On August 15, 2006, the Company entered into a purchase and sale agreement, pursuant to which the Company sold its
corporate headquarters located in Islandia, New York with a net book value of $194 million for approximately $201 million in
net cash proceeds. In connection with the sale of the building, the Company entered into a fifteen year lease agreement for its
corporate headquarters with renewal options for an additional twenty years.The Company is responsible for paying real estate
taxes and operating expenses, as well as any capital expenditures required to maintain the premises in good condition and
repair and in compliance with applicable laws. The Company concluded that the sale of its corporate headquarters qualifies for
sale-leaseback and operating lease accounting treatment. Accordingly, the Company recorded a deferred gain of
approximately $7 million, which is being amortized as a reduction to rent expense on a straight-line basis over the initial
lease term of fifteen years.
86