Computer Associates 2008 Annual Report Download - page 93

The operating results of Benit are summarized as follows:
(IN MILLIONS) 2007 2006
YEAR ENDED MARCH 31,
Subscription and maintenance revenue $11 $16
Software fees and other 32
Professional services 76
Total revenue $21 $24
Loss from sale of discontinued operation, net of taxes $ (2) $ —
Loss from discontinued operation, net of taxes $ (1) $ (4)
In fiscal year 2006, the Company sold its wholly-owned subsidiary MultiGen-Paradigm, Inc. (MultiGen) to Parallax
Capital Partners. MultiGen was a provider of real-time, end-to-end 3D solutions for visualizations, simulations and
training applications used for both civilian and government purposes. The sale price was approximately $6 million, which
includes reimbursement for certain employee-related costs. The purchase price was received in the form of an interest
bearing note, which was paid in full during the first quarter of fiscal year 2008. Prior to the sale, MultiGen had revenues
of approximately $9 million for fiscal year 2006. As a result of the sale in fiscal year 2006, the Company recorded an
approximate $3 million gain, net of a tax benefit of approximately $10 million and separately presented the gain on the
disposal of MultiGen as a discontinued operation for the period. The impact of MultiGen’s results on prior periods was
not considered material.
Other
In fiscal year 2006, 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 before they disrupt critical IT
services.
In fiscal year 2006, the Company announced an agreement with Garnett & Helfrich Capital, a private equity firm, to
create an independent corporate entity, Ingres Corporation (Ingres). As part of the agreement, the Company contributed
intellectual property, support contracts, the services of certain employees and other assets used exclusively in the
business of the intellectual property contributed. The contributions from the Company and Garnett & Helfrich Capital,
L.P. formed Ingres. The Company has a 25% ownership interest in the newly formed entity, in which the Company
received an equity stake of $15 million. As a result of the transaction, the Company recorded a non-cash pre-tax gain of
approximately $7 million due to the value of assets that were contributed during the formation of Ingres in accordance
with Emerging Issues Task Force (EITF) Issue No. 01-2 Interpretations of APB Opinion No. 29. The gain was recorded as
“Other expenses (gains), net” in the Consolidated Statements of Operations. As of March 31, 2007, the net book value
of the investment in Ingres was reduced to $0, as a result of reported losses by Ingres subsequent to its formation,
which were recorded under the equity method of accounting.
Note 3 — Restructuring and Other
Restructuring
Fiscal 2007 Plan: In August 2006, the Company announced the fiscal 2007 plan to significantly improve the Company’s
expense structure and increase its competitiveness. The fiscal 2007 plan’s objectives included a workforce reduction,
global facilities consolidations and other cost reduction initiatives. The total cost of the fiscal 2007 plan was initially
expected to be approximately $200 million.
In April 2008, the Company announced additional cost reduction and restructuring actions relating to the fiscal 2007
plan. The objectives were expanded to include additional workforce reductions, global facilities consolidations and other
cost reduction initiatives with expected additional cost of $75 million to $100 million, bringing the total pre-tax
restructuring charges for the fiscal 2007 plan to $275 million to $300 million. Through March 31, 2008, the Company
has incurred approximately $244 million in expenses under the fiscal 2007 plan, comprised of approximately $97 million
and $147 million in fiscal years 2008 and 2007, respectively.
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