Computer Associates 2008 Annual Report Download - page 84

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best estimates, but these items involve uncertainties based on market and other conditions outside of our control. As a
result, if other assumptions had been used, stock-based compensation expense could have been materially affected.
Furthermore, if different assumptions are used in future periods, stock-based compensation expense could be materially
affected in future years.
As described in Note 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 performance measured
against specified targets and will be determined after a three-year or one-year period as applicable. The fair value of
each award is estimated on the date that the performance targets are established based on the fair value of our stock
and our estimate of the level of achievement of our performance targets. We are required to recalculate the fair value of
issued PSUs each reporting period until the underlying shares are granted. The adjustment is based on the quoted
market price of our stock on the reporting period date. Each quarter, we compare the actual performance we expect to
achieve with the performance targets.
(i) Net Income from Continuing Operations per Share: Basic earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by
dividing (i) the sum of net income and the after-tax amount of interest expense recognized in the period associated with
outstanding dilutive Convertible Senior Notes by (ii) the sum of the weighted average number of common shares
outstanding for the period and dilutive common share equivalents.
For the fiscal years ended March 31, 2008, 2007 and 2006, approximately 13 million, 15 million and 11 million
restricted stock awards and options to purchase common stock, respectively, were excluded from the calculation, as
their effect on earnings per share was anti-dilutive during the respective periods.
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2008 2007 2006
YEAR ENDED MARCH 31,
Income from continuing operations, net of taxes $ 500 $ 121 $ 160
Interest expense associated with the 1.625% Convertible Senior
Notes, net of tax 555
Numerator in calculation of diluted income per share $ 505 $ 126 $ 165
Weighted average shares outstanding and common share equivalents
Weighted average common shares outstanding 514 544 581
Weighted average shares upon assumed conversion of 1.625% Convertible Senior Notes 23 23 23
Weighted average awards outstanding 423
Denominator in calculation of diluted income per share 541 569 607
Diluted income per share from continuing operations $ 0.93 $ 0.22 $ 0.27
(j) Comprehensive Income: Comprehensive income includes net income, foreign currency translation adjustments and
unrealized gains (losses), net of taxes on the Company’s available-for-sale securities. As of March 31, 2008 and 2007,
accumulated other comprehensive loss included foreign currency translation losses of approximately $101 million and
$98 million, respectively. Accumulated other comprehensive loss also includes an unrealized gain on equity securities,
net of tax, of less than $1 million for the fiscal year ended March 31, 2008 and an unrealized gain on equity securities,
net of tax, of $2 million for the fiscal year ended March 31, 2007. The components of comprehensive income, net of
applicable tax, for the fiscal years ended March 31, 2008, 2007 and 2006 are included within the Consolidated
Statements of Stockholders’ Equity.
(k) Fair Value of Financial Instruments: The carrying value of financial instruments classified as current assets and current
liabilities, such as cash and cash equivalents, accounts payable, accrued expenses, and short-term debt, approximate fair
value due to the short-term maturity of the instruments. The fair values of marketable securities, derivatives and long-
term debt, including current maturities, have been based on quoted market prices. Refer to Note 4, “Marketable
Securities,” and Note 7, “Debt” in these Notes to the Consolidated Financial Statements for additional information.
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