Computer Associates 2008 Annual Report Download

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CA Annual Report 2008

Table of contents

  • Page 1
    CA Annual Report 2008

  • Page 2

  • Page 3
    ...twelve months, and our plans to build on that success in the coming year. Our Core Business Foremost among our priorities in Fiscal 2008 was refocusing the company on selling new software licenses. We made great progress in this regard; our sales of new licenses to new and existing customers reached...

  • Page 4
    ... against our vision with products we build, products we acquire to broaden our capabilities and the integration of new products with the existing EITM portfolio. Of course, we are not doing this alone. We seek out opinions and advice from our customers about how we should help them solve their...

  • Page 5
    ... CA has leading technology: IT governance, application performance management, data center automation, IT security management, infrastructure management and service management. Operational improvements in Fiscal 2008 included outsourcing some of our core back-office functions, continued reduction...

  • Page 6
    ... to our customers. We head into Fiscal 2009 with strong momentum, excellent technology and an exceptional team. I look forward to sharing our success with you in the years ahead. Thank you for your continued support. John A. Swainson Chief Executive Officer ca annual report 2008 | page 4

  • Page 7
    ... (I.R.S. Employer Identification Number) One CA Plaza, Islandia, New York (Address of Principal Executive Offices) 11749 (Zip Code) 1-800-225-5224 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: (Title of Each Class) Common stock...

  • Page 8
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  • Page 9
    ... Market Risk ...Financial Statements and Supplementary Data...Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ...Part III Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security...

  • Page 10
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  • Page 11
    ... through April 27, 2008, our common stock was traded on the New York Stock Exchange under the symbol "CA." On April 28, 2008 we commenced trading on The NASDAQ Global Select Market tier of The NASDAQ Stock Market LLC under the same symbol. We help customers govern, manage and secure their entire IT...

  • Page 12
    ...'s Compensation and Human Resources Committee. • In March 2008, we named Michael J. Christenson as CA's President. He continues as our Chief Operating Officer, reporting to our Chief Executive Officer, John A. Swainson. Mr. Christenson oversees our direct and indirect sales, services, technical...

  • Page 13
    ...in December 2007. • In May 2007, we promoted George Fischer to Executive Vice President of Worldwide Direct Sales and John Ruthven to Executive Vice President of Worldwide Sales Operations. Mr. Fischer and Mr. Ruthven were also promoted to our Executive Leadership team and continue to report to Mr...

  • Page 14
    ... offering that helps customers more securely and efficiently enable their businesses with Service Oriented Architecture (SOA) and Web services. Sales and Marketing We offer our solutions through our direct sales force, and indirectly through global systems integrators, value-added partners, original...

  • Page 15
    ... of CA Recovery Management that enables companies to simplify management, tighten security and speed recovery of critical business information. CA Recovery Management includes new releases of CA ARCserve» Backup, CA XOsoftTM High Availability and CA XOsoftTM Replication, offering channel partners...

  • Page 16
    ... to address the range of customer needs, all with the goal of helping customers get the most out of their technology investments. Our blended learning solutions range from classroom-based training in our Global Learning Centers to self-paced and online training offerings. • CA Technical Support...

  • Page 17
    ...; San Diego, California; Lisle, Illinois; Framingham, Massachusetts; Mount Laurel, New Jersey; Islandia, New York; Plano, Texas; and Herndon, Virginia. We also are becoming more efficient in our product development. In October 2007, we announced the official opening of our new CA India Technology...

  • Page 18
    ..., 2008: LOCATION EMPLOYEES AS OF MARCH 31, 2008 FUNCTIONAL AREA EMPLOYEES AS OF MARCH 31, 2008 Corporate headquarters Other U.S. offices International offices Total 2,000 5,300 6,400 13,700 Professional services Support services Selling and marketing General and administrative Product development...

  • Page 19
    ... in CA securities by directors and executive officers. These documents can also be obtained in print by writing to our Executive Vice President, Global Risk & Compliance, and Corporate Secretary, Kenneth V. Handal, at the Company's world headquarters in Islandia, New York, at the address listed on...

  • Page 20
    ... our total worldwide revenue. Continued success in selling and developing our products outside the United States will depend on a variety of factors, including: • Workforce reorganizations in various locations around the world, including reorganizations of sales, technical services, finance, human...

  • Page 21
    ... - Sales and Marketing" for more information. The purpose of these changes was to enable the Company to increase its sales of new products and solutions to new and existing customers while protecting the Company's installed base. In addition, these changes may require our sales force to acquire new...

  • Page 22
    ... with hardware vendors or greater financial, technical and marketing resources. Competitors for our various products include large technology companies. We also face competition from numerous smaller companies that specialize in specific aspects of the highly fragmented software industry...

  • Page 23
    ... rather than purchase our products. In addition, the software industry is currently undergoing consolidation as software companies seek to offer more extensive suites and broader arrays of software products and services, as well as integrated software and hardware solutions. This consolidation...

  • Page 24
    ... affect our revenue and earnings and subject us to product liability claims, which may be costly and time consuming. The software products we offer are inherently complex. Despite testing and quality control, we cannot be certain that errors will not be found in current versions, new versions or...

  • Page 25
    ... our proprietary technology, including our software and our source code for such software. Failure to protect such technology could lead to our loss of valuable assets and competitive advantage. We protect our proprietary information through the use of patents, copyrights, trademarks, trade secret...

  • Page 26
    ... furnished with "source code," which makes the operating system understandable to programmers; or "object code," which directly controls the hardware; and other technical documentation. Since the availability of source code facilitated the development of systems and applications software, which must...

  • Page 27
    ... the future. Risks associated with these actions and other workforce management issues include delays in implementation of anticipated workforce reductions, changes in restructuring plans that increase or decrease the number of employees affected, decreases in employee morale and the failure to meet...

  • Page 28
    ... 3. LEGAL PROCEEDINGS. On April 9, 2007, we filed a complaint in the United States District Court for the Eastern District of New York against Rocket Software, Inc. (Rocket). On August 1, 2007, we filed an amended complaint alleging that Rocket stole intellectual property associated with a number of...

  • Page 29
    ... Vice President of Worldwide Sales and Marketing of the Software Group at International Business Machines Corporation (IBM), a manufacturer of information processing products and a technology, software, and networking systems manufacturer and developer. From 1997 to July 2004, he was General Manager...

  • Page 30
    ..., and New Product Development. Mr. Lamm joined the Company in 1998 with the acquisition of Professional Help Desk, where he was co-founder and served as executive vice president and chief technology officer. From March 2007 until January 2008, he served as the Company's Executive Vice President and...

  • Page 31
    ... the symbol "CA." On April 28, 2008, we commenced trading on The NASDAQ Global Select Market tier of The NASDAQ Stock Market LLC under the same symbol. The following table sets forth, for the fiscal quarters indicated, the quarterly high and low closing sales prices on the New York Stock Exchange...

  • Page 32
    ...subscription license agreements, maintenance, and professional services. It does not include unearned revenue on future installments not yet billed as of the respective balance sheet dates. 4 In the fourth quarter of fiscal 2008, the Company identified approximately $36 million of tax-related errors...

  • Page 33
    ...license our software products directly to customers as well as through distributors, resellers and value-added resellers. We generate revenue from the following sources: license fees - licensing our products on a right-to-use basis; maintenance fees - providing customer technical support and product...

  • Page 34
    ...billion as of March 31, 2008 and March 31, 2007, respectively. Under our license agreements, customers generally make installment payments for the right to use our software products over the term of the associated software license agreement. While the timing of revenue recognition is affected by the...

  • Page 35
    ... subscription license agreements entered into during a reporting period. These amounts relate to the sale of products, by distributors, resellers and value-added resellers to end-users, where the contracts incorporate the right for end-users to receive unspecified future software products. These...

  • Page 36
    ... by dividing the total value of all new term-based software license agreements entered into during a period in our direct business by the weighted average life of all such license agreements recorded during the same period. The annualized new deferred subscription value measures the revenue to be...

  • Page 37
    ... CHANGE 2007/2006 Revenue: Subscription and maintenance revenue Professional services Software fees and other Total revenue Expenses: Costs of licensing and maintenance Cost of professional services Amortization of capitalized software costs Selling and marketing General and administrative Product...

  • Page 38
    ...maintenance agreements associated with providing customer technical support and access to software fixes and upgrades which are separately identifiable from software usage fees or product sales. For fiscal 2008, subscription and maintenance revenue associated with sales made directly to our end-user...

  • Page 39
    ..., business service optimization and security management led by the sale of acquired products partially offset by the reclassification of $46 million of subscription revenue related to value added resellers that were reclassified to the indirect business in fiscal 2007. Sales made through our channel...

  • Page 40
    ... year after the acquisition, new licenses for such products have historically been executed under our subscription model, which incorporates the right to receive unspecified future software products and therefore requires the associated revenue to be recognized ratably. In fiscal 2008, we decided...

  • Page 41
    ... of certain capitalized software costs related to prior acquisitions. Selling and Marketing Selling and marketing expenses include the costs relating to our sales force, costs relating to our channel partners, corporate and business marketing costs, and our customer training programs. Inclusive of...

  • Page 42
    ... 2006. General and Administrative General and administrative expenses include the costs of corporate and support functions including our executive leadership and administration groups, finance, legal, human resources, corporate communications and other costs such as provisions for doubtful accounts...

  • Page 43
    ... sale of an investment in marketable securities associated with the closure of an international location. During fiscal 2007 and fiscal 2006, we incurred $4 million and $10 million, respectively, in connection with the Deferred Prosecution Agreement (DPA) entered into with the United States Attorney...

  • Page 44
    ...-current income tax liabilities are recorded in the "Federal, state and foreign income taxes payable - noncurrent" line in the Consolidated Balance Sheets. The income tax provision recorded for fiscal 2008 includes charges of $26 million associated with certain corporate income tax rate reductions...

  • Page 45
    ... in connection with a restructuring plan (refer to "Restructuring and Other" within Results of Operations). Also includes an after-tax loss of $3 million, relating to the sale of an investment in marketable securities associated with the closure of an international location (refer to "Restructuring...

  • Page 46
    ...in the payable cycle. Under our subscription licenses, customers generally make installment payments over the term of the agreement, often with at least one payment due at contract execution, for the right to use our software products and receive product support, software fixes and new products when...

  • Page 47
    ... schedule, to the extent amounts are not yet due and payable by the customer, the agreements are considered executory in nature due to our ongoing commitment to provide maintenance and unspecified future software products as part of the agreement terms. We can estimate the total amounts to be billed...

  • Page 48
    ... which included proceeds on the sale-leaseback of our corporate headquarters in Islandia, New York of $201 million. In fiscal 2008, the Company had net purchases of marketable securities of $3 million compared with proceeds from sales of marketable securities in fiscal 2007 of $44 million. Financing...

  • Page 49
    ...for fiscal 2006. Proceeds from the sale of assets were $223 million for fiscal 2007 which included proceeds on the sale-leaseback of our corporate headquarters in Islandia, New York of $201 million. Proceeds received from the sales of marketable securities in fiscal 2007 declined $354 million to $44...

  • Page 50
    ... 31, 2008 we were in compliance with these debt covenants. In September 2006, we drew down $750 million under the 2004 Revolving Credit Facility in order to finance a portion of our $1 billion tender offer to repurchase our common stock. Refer to Part II, Item 5, "Purchases of Equity Securities by...

  • Page 51
    ... of credit is available to meet short-term working capital needs for the Company's subsidiaries operating outside the United States. The line of credit is available on an offering basis, meaning that transactions under the line of credit will be on such terms and conditions, including interest rate...

  • Page 52
    ... of 5.12%. Capital resource requirements as of March 31, 2008 and 2007 consisted of lease obligations for office space, equipment, mortgage and loan obligations, our enterprise resource planning implementation, and amounts due as a result of product and company acquisitions. Refer to "Contractual...

  • Page 53
    ... Recognition We generate revenue from the following primary sources: (1) licensing software products; (2) providing customer technical support (referred to as maintenance); and (3) providing professional services, such as consulting and education. Revenue is recorded net of applicable sales taxes...

  • Page 54
    ... to newly acquired products with established VSOE of fair value has been to record revenue initially on the acquired company's systems, generally under a perpetual or up-front model; and, starting within the first fiscal year after the acquisition, to enter new licenses for such products under our...

  • Page 55
    ... distributors, resellers and value added resellers that incorporates the right for the end-users to receive certain unspecified future software products is recognized on a ratable basis. We have an established business practice of offering installment payment options to customers and have a history...

  • Page 56
    ...ratable recognition of revenue in accordance with GAAP. The NOLs expire between fiscal 2009 and 2028. Additionally, $61 million of the valuation allowance as of March 31, 2008 and as of March 31, 2007 is attributable to acquired NOLs that are subject to annual limitations under Internal Revenue Code...

  • Page 57
    ...revenue is projected to increase for several years considering the Company is continuously integrating current software technology into new software products. Accounting for Stock-Based Compensation We currently maintain several stock-based compensation plans. We use the Black-Scholes option-pricing...

  • Page 58
    ... rates relates primarily to our investment portfolio, debt, and installment accounts receivable. We have a prescribed methodology whereby we invest our excess cash in liquid investments that are composed of money market funds and debt instruments of government agencies and high-quality corporate...

  • Page 59
    ... year. Equity Price Risk As of March 31, 2008, we did not hold significant investments in marketable equity securities of publicly traded companies. Our investments in marketable securities were considered available for sale. Unrealized gains or temporary losses on available for sale securities are...

  • Page 60
    ... and operational systems is part of its on-going project to implement ERP at the Company's facilities worldwide. Additional changes are planned for fiscal 2009 and the Company will continue to monitor and test the system as part of management's annual evaluation of internal control over financial...

  • Page 61
    The Company's independent registered public accountants, KPMG LLP, have audited the effectiveness of the Company's internal control over financial reporting as stated in their report which appears on page 63 of this Form 10-K. ITEM 9B. OTHER INFORMATION. Not applicable 51

  • Page 62
    ... the SEC on Form 8-K. The Code of Conduct is available without charge in print to any stockholder who requests a copy by writing to Kenneth V. Handal, Executive Vice President, Global Risk & Compliance, Chief Compliance Officer, and Corporate Secretary, at CA, Inc., One CA Plaza, Islandia, New York...

  • Page 63
    ... due 2009 and 5.625% Senior Notes due 2014, and the Company. First Supplemental Indenture, dated as of November 30, 2007, to the Indenture, dated as of November 18, 2004, between CA, Inc. and The Bank of New York, as trustee. 4.2 4.3 Previously filed as Exhibit 4(f) to the Company's Annual Report...

  • Page 64
    ... to the Company's Proxy Statement dated July 17, 2003, and incorporated herein by reference. Previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated December 2, 2004, and incorporated herein by reference. 10.2* 1993 Stock Option Plan for Non-Employee Directors. Amendment...

  • Page 65
    Regulation S-K Exhibit Number 10.17* Restricted Stock Unit Agreement for John A. Swainson. Form of Moving and Relocation Expense Agreement. CA, Inc. Change in Control Severance Policy. Previously filed as Exhibit 10.5 to the Company's Current Report on Form 8-K dated November 18, 2004, and ...

  • Page 66
    ... Award Certificate. Form of Incentive Stock Option Award Certificate (Employment Agreement). CA, Inc. Deferred Compensation Plan for John A. Swainson, dated April 29, 2005. Trust Agreement between Computer Associates International, Inc. and Fidelity Management Trust Company, dated as of April 29...

  • Page 67
    ... CA, Inc. and Nancy Cooper. Employment Agreement, dated as of August 22, 2006, between CA, Inc. and Amy Fliegelman Olli. Acknowledgement between CA, Inc. and Amy Fliegelman Olli. Purchase and Sale Agreement, dated as of August 15, 2006, among CA, Inc., Island Headquarters Operators LLC and Islandia...

  • Page 68
    ... Plan, effective February 25, 2008. Schedules to CA, Inc. Change in Control Severance Policy. Letter regarding change in accounting principles. Subsidiaries of the Registrant. Consent of Independent Registered Public Accounting Firm. Certification of the CEO pursuant to §302 of the Sarbanes-Oxley...

  • Page 69
    ... and in the capacities and on the dates indicated: By: /s/ NANCY E. COOPER Nancy E. Cooper Executive Vice President and Chief Financial Officer By: /s/ MARC F. STOLL Marc F. Stoll Corporate Senior Vice President and Corporate Controller (Principal Accounting Officer) Dated: May 23, 2008 59

  • Page 70
    ... /s/ John A. Swainson John A. Swainson /s/ Laura S. Unger Laura S. Unger /s/ Arthur F. Weinbach Arthur F. Weinbach /s/ Renato Zambonini Renato Zambonini Dated: May 23, 2008 Director Director Director Director Director Director Director Director Chief Executive Officer and Director Director...

  • Page 71
    ...Inc. and Subsidiaries Islandia, New York ANNUAL REPORT ON FORM 10-K ITEM 8, ITEM 9A, ITEM 15(a)(1) AND (2), AND ITEM 15(c) LIST OF CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE YEAR ENDED MARCH 31, 2008 PAGE The...

  • Page 72
    ... an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain...

  • Page 73
    ... Company Accounting Oversight Board (United States), the consolidated balance sheets of CA, Inc. and subsidiaries as of March 31, 2008 and 2007, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the three-year period ended March...

  • Page 74
    ...) 2008 2007 2006 Revenue: Subscription and maintenance revenue Professional services Software fees and other Total Revenue Expenses: Costs of licensing and maintenance Cost of professional services Amortization of capitalized software costs Selling and marketing General and administrative Product...

  • Page 75
    CA, Inc. and Subsidiaries Consolidated Balance Sheets MARCH 31, (DOLLARS IN MILLIONS) 2008 2007 Assets Current Assets Cash, cash equivalents and marketable securities Trade and installment accounts receivable, net Deferred income taxes Other current assets Total Current Assets Installment accounts ...

  • Page 76
    ... payable Accounts payable Salaries, wages, and commissions Accrued expenses and other current liabilities Deferred revenue (billed or collected) - current Taxes payable, other than income taxes payable Federal, state, and foreign income taxes payable Deferred income taxes Total Current Liabilities...

  • Page 77
    ... in 2007 Unrealized gain on marketable securities, net of taxes Comprehensive income Stock-based compensation Dividends declared ($0.16 per share) Exercise of common stock options, ESPP, and other items Issuance of options related to acquisitions, net of amortization Treasury stock purchased Common...

  • Page 78
    ... in 2008 Unrealized loss on marketable securities, net of taxes Comprehensive income Adoption of new accounting principle - FIN 48 Stock-based compensation Dividends declared ($0.16 per share) Exercise of common stock options, ESPP, and other items Issuance of options related to acquisitions, net...

  • Page 79
    ..., purchased software, and other intangible assets, net of cash acquired Settlements of purchase accounting liabilities Purchases of property and equipment Proceeds from sale of assets Proceeds from divestiture of assets Proceeds from sale-lease back transactions Purchase of marketable securities...

  • Page 80
    ..., Inc. and Subsidiaries Consolidated Statements of Cash Flows (IN MILLIONS) (Continued) YEAR ENDED MARCH 31, 2008 2007 2006 Financing Activities: Dividends paid Purchases of common stock Debt borrowings Debt repayments Debt issuance costs Exercise of common stock options and other Net Cash Used in...

  • Page 81
    ... following primary sources: (1) licensing software products; (2) providing customer technical support (referred to as maintenance); and (3) providing professional services, such as consulting and education. Revenue is recorded net of applicable sales taxes. The Company recognizes revenue pursuant to...

  • Page 82
    ... method. Revenue from the sale of products to distributors, resellers and value-added resellers that incorporates the right for the end-users to receive certain unspecified future software products is recognized on a ratable basis. In the second quarter of fiscal year 2008, the Company decided that...

  • Page 83
    ... agreements associated with providing customer technical support and access to software fixes and upgrades which are separately identifiable from software usage fees or product sales. Deferred revenue (billed or collected) is comprised of: (i) amounts received in advance of revenue recognition...

  • Page 84
    ... 10, "Stock Plans," in these Notes to the Consolidated Financial Statements, performance share units (PSUs) are awards under the long-term incentive programs for senior executives where the number of shares or restricted shares, as applicable, ultimately received by the employee depends on Company...

  • Page 85
    ...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...

  • Page 86
    ... purchase price equal to the fair value at the acquisition date of the rights to market the software products of the acquired company. In accordance with SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed," internally generated software development...

  • Page 87
    ... March 31, 2008, the annual amortization expense over the next five fiscal years is expected to be as follows: YEAR ENDED MARCH 31, (IN MILLIONS) 2009 2010 2011 2012 2013 Capitalized software: Purchased Internally developed Other identified intangible assets subject to amortization Total $ 54 72...

  • Page 88
    ..." line item of the Consolidated Statement of Operations for the fiscal year ended March 31, 2008. In April and May 2008, the Company entered into similar derivative contracts as those entered during the fiscal year 2008 relating to the Company's operating exposures. As of March 31, 2007, the Company...

  • Page 89
    ... of sales on the Consolidated Statement of Operations. The Company continues to report "Amortization of capitalized software costs" and "Cost of professional services" as separate line items on the Consolidated Statements of Operations and has now added a new line item entitled "Costs of licensing...

  • Page 90
    ...change in accounting did not affect the Consolidated Statements of Operations or total Cash Flows from Operations for the periods presented. The components of "Deferred revenue (billed or collected)" as of March 31, 2008 and 2007 are as follows: YEAR ENDED MARCH 31, PREVIOUSLY REPORTED 20073 REVISED...

  • Page 91
    ... quarter of fiscal year 2008, the Company determined that "Federal, state and foreign income taxes payable - current" and "Deferred income taxes - current" were each overstated by approximately $32 million, principally related to errors in preparing the year-end estimated tax provisions for North...

  • Page 92
    ... Consolidated Statements of Cash Flows. Benit offered a wide range of corporate solution services, such as IT outsourcing, business integration services, enterprise solutions and IT service management in Korea. The sale was part of the Company's fiscal year 2007 cost reduction and restructuring plan...

  • Page 93
    ..., the Company acquired certain assets and liabilities of Control F-1 Corporation (Control F-1) for a total purchase price of approximately $14 million. Control F-1 was a privately held provider of support automation solutions that automatically prevent, detect, and repair end-user computer problems...

  • Page 94
    ... international locations. The plans associated with the balance of the reductions in workforce are still being finalized and the associated charges will be recorded once the actions are approved by management. Facilities Abandonment: The Company recorded the costs associated with lease termination...

  • Page 95
    ...on the sale of an investment in marketable securities associated with the closure of an international location. During fiscal year 2007, the Company incurred an approximate $4 million expense in connection with the Company's Deferred Prosecution Agreement entered into with the United States Attorney...

  • Page 96
    ...The fair market value of the Company's marketable securities was approximately $1 million and $5 million as of March 31, 2008 and 2007, respectively. Total interest income, which primarily related to the Company's cash and cash equivalent balances, for the fiscal years ended March 31, 2008, 2007 and...

  • Page 97
    ... of total revenue for the fiscal years ended March 31, 2008, 2007 or 2006. Note 6 - Trade and Installment Accounts Receivable The Company uses installment license agreements as a standard business practice and has a history of successfully collecting substantially all amounts due under the original...

  • Page 98
    ... accounts receivable - noncurrent $ 239 (1) (4) $ 234 $ 357 (5) (18) $ 334 $ 817 107 103 (30) (27) $ 970 $ 779 105 147 (32) (32) $ 967 During fiscal years 2008 and 2007, the Company transferred its rights and interest in future committed installments under ratable software license agreements...

  • Page 99
    ... 2004 Revolving Credit Facility in order to finance a portion of the $1 billion tender offer to repurchase the Company's common stock. Senior Note Obligations As of March 31, 2008 and 2007, the Company had the following unsecured, fixed-rate interest, senior note obligations outstanding: YEAR ENDED...

  • Page 100
    ... under the original Registration Rights Agreement entered into with respect to the Notes. The settlement became effective upon the signature of the Stipulation of Dismissal with Prejudice by Justice Ramos of the New York Supreme Court on January 3, 2008. The Company has the option to redeem...

  • Page 101
    ... of credit is available to meet short-term working capital needs for the Company's subsidiaries operating outside the United States. The line of credit is available on an offering basis, meaning that transactions under the line of credit will be on such terms and conditions, including interest rate...

  • Page 102
    ...31, 2008 and 2007, respectively. Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004 - Background The Company, its former Chairman and CEO Charles B. Wang, its former Chairman and CEO Sanjay Kumar, its former Chief Financial Officer Ira Zar, and its Vice Chairman and Founder Russell...

  • Page 103
    ...Ernst & Young LLP. The Company is named as a nominal defendant. The Consolidated Complaint seeks from one or more of the defendants (1) contribution towards the consideration the Company had previously agreed to provide current and former stockholders in settlement of certain class action litigation...

  • Page 104
    ... Reporting), Stephen Richards (CA's former head of Worldwide Sales), David Rivard (CA's former head of Sales Accounting), Lloyd Silverstein (CA's former head of the Global Sales Organization), Steven Woghin (CA's former General Counsel) and Ira Zar (CA's former CFO). The Special Litigation Committee...

  • Page 105
    .... Under the order, the actions are now captioned CA, Inc. Shareholders' Derivative Litigation Employee Option Action. On December 31, 2007, the Company informed the Federal Court that the parties have reached an agreement to settle the action. In connection with the settlement, CA has agreed to...

  • Page 106
    ... ENDED MARCH 31, (IN MILLIONS) 2008 2007 2006 Current: Federal Federal tax cost of repatriation under the American Jobs Creation Act State Foreign $ 203 - 2 107 $ 312 Deferred: Federal Federal tax cost of repatriation under the American Jobs Creation Act State Foreign $ Total: Federal State Foreign...

  • Page 107
    ...the tax expense from continuing operations computed at the federal statutory tax rate as follows: YEAR ENDED MARCH 31, (IN MILLIONS) 2008 2007 2006 Tax expense at U.S. federal statutory tax rate Increase in tax expense resulting from: U.S. share-based compensation Effect of international operations...

  • Page 108
    ... basis accounting Acquisition accruals Share-based compensation Restitution fund/class action settlement Accrued expenses Net operating losses Purchased intangibles amortizable for tax purposes Depreciation Deductible state tax and interest benefits Purchased software Other Total deferred tax assets...

  • Page 109
    ... to employees under the terms of the Company's equity compensation plans (the Plans). The Plans are administered by the Compensation and Human Resources Committee of the Board of Directors (the Committee). Awards under the Plans may include at-the-money stock options, premium-priced stock options...

  • Page 110
    ...,500 shares of common stock of the Company to be available for grant to each member of the Board of Directors who is not an employee of the Company. Pursuant to the 1993 Plan, the exercise price was the fair market value of the Company's stock on the date of grant. All options expire 10 years from...

  • Page 111
    ... annual fees in the form of deferred shares and automatic option grants to purchase 6,750 shares of common stock of the Company, up to a total of 650,000 shares. Pursuant to the 2002 Director Plan, the exercise price of the options granted was the fair market value of the Company's stock price...

  • Page 112
    The Company recognized share-based compensation in the following line items in the Consolidated Statements of Operations for the periods indicated: YEAR ENDED MARCH 31, (IN MILLIONS) 2008 2007 2006 Cost of professional services Cost of licensing and maintenance Selling and marketing General, and ...

  • Page 113
    ... with respect to stock option plan activity is as follows: (SHARES IN MILLIONS) NUMBER OF SHARES WEIGHTED AVERAGE EXERCISE PRICE Outstanding as of March 31, 2005 Granted Exercised Acquired through acquisition Expired or terminated Outstanding as of March 31, 2006 Granted Exercised Expired or...

  • Page 114
    ... derived from the market prices of the Company's traded options. 2 The risk-free rate for periods within the contractual term of the stock options is based on the U.S. Treasury yield curve in effect at the time of grant. 3 The expected life is the number of years that the Company estimates, based...

  • Page 115
    ... of the attainment of the Price for each tranche. However, the Company is required to reverse expense for any shares that were forfeited as a result of a failure to fulfill the service condition. There were no such credits for the fiscal year ended March 31, 2008, 2007 and 2006. As of March...

  • Page 116
    ... Internal Revenue Code limitations. Shares of the Company's common stock may be purchased at six-month intervals at 85% of the lower of the fair market value of the Company's common stock on the first or last day of each six-month period. During fiscal years 2008, 2007, and 2006, employees purchased...

  • Page 117
    ... than rights held by an Acquiring Person, may be exercised to purchase common stock of the Company or a successor company with a market value of twice the $100 exercise price, provided that the rights will not be triggered by a Qualifying Offer, as defined in the Rights Agreement, if holders of at...

  • Page 118
    ... OF PERIOD ADDITIONS/ (DEDUCTIONS) CHARGED/ (CREDITED) TO COSTS AND EXPENSES BALANCE AT END OF PERIOD DEDUCTIONS 1 Allowance for doubtful accounts Year ended March 31, 2008 Year ended March 31, 2007 Year ended March 31, 2006 1 Write-offs and recoveries of amounts against allowance provided. $ 37...

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  • Page 120
    ...04 3/05 3/06 3/07 3/08 CA, Inc. S&P 500 S&P Systems Software S&P Software * $100 invested on 3/31/03 in stock or index-including reinvestment of dividends. Fiscal year ending March 31. 3/03 3/04 3/05 3/06 3/07 3/08 CA, Inc. S&P 500 S&P Systems Software S&P Software 100.00 100.00 100.00...

  • Page 121
    ..., Worldwide Human Resources Kenneth V. Handal Executive Vice President, Global Risk & Compliance, and Corporate Secretary Jacob Lamm Executive Vice President, Governance Group Alan F. Nugent Executive Vice President, Chief Technology Officer Amy Fliegelman Olli Executive Vice President, General...

  • Page 122
    ...contact CA's transfer agent at the address or telephone number below. FISCAL 2007: Fourth Quarter Third Quarter Second Quarter First Quarter $27.21 $25.28 $24.28 $27.19 $23.32 $21.50 $19.10 $20.55 Transfer Agent On March 31, 2008, the closing price for the Company's Common Stock on the New York...

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