Computer Associates 2008 Annual Report Download - page 94

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Severance: The Company currently estimates a reduction in workforce of approximately 2,800 individuals under the fiscal
2007 plan, including approximately 300 positions from the divestitures of consolidated majority-owned subsidiaries
considered joint ventures during the fiscal year ended March 31, 2007. The termination benefits the Company has
offered in connection with this workforce reduction are substantially the same as the benefits the Company has
provided historically for non-performance-based workforce reductions, and in certain countries have been provided
based upon prior experiences with the restructuring plan announced in July 2005 (the fiscal 2006 plan) as described
below. These costs have been recognized in accordance with SFAS No. 112, “Employers Accounting for Post Employment
Benefits, an Amendment of FASB Statements No. 5 and 43” (SFAS No. 112). Enhancements to termination benefits which
exceed past practice, will be recognized as incurred in accordance with SFAS No. 146 “Accounting for Costs Associated
With Exit or Disposal Activities” (SFAS No. 146). The Company incurred approximately $71 million and $124 million of
severance costs for the fiscal years ended March 31, 2008 and March 31, 2007, respectively. These charges relate to a
total of approximately 1,000 individuals in fiscal year 2008 and approximately 1,400 individuals in fiscal year 2007. The
Company anticipates total severance for the fiscal 2007 plan will cost approximately $200 million to $215 million, the
remainder of which the Company expects to recognize in the fiscal year ending March 31, 2009. Final payment of these
amounts is dependent upon settlement with the works councils in certain 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 or abandonment when the
Company ceased to utilize the leased property. Under SFAS No. 146, the liability associated with lease termination or
abandonment is measured as the present value of the total remaining lease costs and associated operating costs, less
probable sublease income. The Company accretes its obligations related to facilities abandonment to the then-present
value and, accordingly, recognizes accretion expense as a restructuring expense in future periods. The Company incurred
approximately $26 million and $23 million of charges related to abandoned properties during the fiscal years ended
March 31, 2008 and March 31, 2007, respectively. The Company anticipates the facilities abandonment portion of the
fiscal 2007 plan will cost approximately $75 million to $85 million, the remainder of which the Company expects to
recognize in the fiscal year ending March 31, 2009.
Accrued restructuring costs and changes in the accruals for fiscal years 2008 and 2007 associated with the fiscal 2007
plan were as follows:
(IN MILLIONS) SEVERANCE
FACILITIES
ABANDONMENT
Additions $ 124 $ 23
Payments (37) (6)
Accrued balance as of March 31, 2007 $ 87 $ 17
Additions 71 26
Payments (65) (16)
Accrued balance as of March 31, 2008 $93 $27
The liability balance for the severance portion of the remaining reserve is included in the “Salaries, wages and
commissions” line on the Consolidated Balance Sheets. The liability for the facilities portion of the remaining reserve is
included in the “Accrued expenses and other current liabilities” line item on the Consolidated Balance Sheets. The costs
are included in the “Restructuring and other” line item on the Consolidated Statements of Operations for the fiscal years
ended March 31, 2008 and March 31, 2007.
Fiscal 2006 Plan: In July 2005, the Company announced the fiscal 2006 plan to increase efficiency and productivity and
to more closely align its investments with strategic growth opportunities. The Company accounted for the individual
components of the restructuring plan as follows:
Severance: The fiscal 2006 plan included a workforce reduction of approximately five percent, or 800 positions,
worldwide. The termination benefits the Company offered in connection with this workforce reduction were substantially
the same as the benefits the Company has provided historically for non-performance-based workforce reductions, and in
certain countries have been provided based upon statutory minimum requirements. The employee termination
obligations incurred in connection with the fiscal 2006 plan were accounted for in accordance with SFAS No. 112. In
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