Computer Associates 2012 Annual Report Download - page 27

ultimately subject some of our products to unintended conditions, which could require us to take remedial action that may divert
resources away from our development efforts and, therefore, could materially adversely affect our business, financial condition,
operating results and cash flow.
We may lose access to third-party code and specifications for the development of code, which could materially
adversely affect our ability to develop software compatible with third-party software products in the future.
Our solutions interact with a variety of software and hardware developed by third parties. Some software providers and hardware
manufacturers, including some of the largest vendors, have a policy of restricting the use or availability of their code or technical
documentation for some of their operating systems, applications, or hardware. To date, this policy has not had a material effect on us.
Some companies, however, may adopt more restrictive policies in the future or impose unfavorable terms and conditions for such
access. These restrictions may, in the future, result in higher research and development costs for us in connection with the
enhancement and modification of our existing products and the development of new products. Any additional restrictions could
materially adversely affect our business, financial condition, operating results and cash flow.
Third parties could claim that our products infringe or contribute to the infringement of their intellectual
property rights or that we owe royalty payments to them, which could result in significant litigation expense or
settlement with unfavorable terms, which could materially adversely affect our business, financial condition,
operating results and cash flow.
From time to time, third parties have claimed and may claim that our products infringe various forms of their intellectual property or
that we owe royalty payments to them. Investigation of these claims can be expensive and could affect development, marketing or
shipment of our products. As the number of software patents issued increases, it is likely that additional claims will be asserted.
Defending against such claims is time consuming and could result in significant litigation expense or settlement on unfavorable
terms, which could materially adversely affect our business, financial condition, operating results and cash flow.
The number, terms and duration of our license agreements as well as the timing of orders from our customers
and channel partners, may cause fluctuations in some of our key financial metrics, which may affect our
quarterly financial results.
Historically, a substantial portion of our license agreements are executed in the last month of a quarter and the number of contracts
executed during a given quarter can vary substantially. In addition, we experience a historically long sales cycle, which is driven in
part by the varying terms and conditions of our software contracts. These factors can make it difficult for us to predict sales and cash
flow on a quarterly basis. Any failure or delay in executing new or renewed license agreements in a given quarter could cause
declines in some of our key financial metrics (e.g., revenue or cash flow), and, accordingly, increases the risk of unanticipated
variations in our quarterly results and financial condition.
Failure to renew large license agreement transactions on a satisfactory basis could materially adversely affect
our business, financial condition, operating results and cash flow.
Our core customers are large enterprises with multi-year enterprise license agreements each of which involves substantial aggregate
fee amounts. The failure to renew those transactions in the future, or to replace those enterprise license agreements with new
transactions of similar scope, on terms that are commercially attractive to us could materially adversely affect our business, financial
condition, operating results and cash flow.
Changes in market conditions or our ratings could increase our interest costs and adversely affect the cost of
refinancing our debt and our ability to refinance our debt, which could materially adversely affect our business,
financial condition, operating results and cash flow.
At March 31, 2012, we had $1,301 million of debt outstanding, consisting mostly of unsecured fixed-rate senior note obligations and
credit facility borrowings. Refer to Note 9, “Debt,” in the Notes to the Consolidated Financial Statements for the payment schedule of
our long-term debt obligations. Our senior unsecured notes are rated by Moody’s Investors Service, Fitch Ratings, and Standard and
Poor’s. These agencies or any other credit rating agency could downgrade or take other negative action with respect to our credit
ratings in the future. If our credit ratings were downgraded or other negative action is taken, we could be required to, among other
things, pay additional interest on outstanding borrowings under our principal revolving credit agreement. Any downgrades could
affect our ability to obtain additional financing in the future and may affect the terms of any such financing.
We expect that existing cash, cash equivalents, marketable securities, cash provided from operations and our bank credit facilities
will be sufficient to meet ongoing cash requirements. However, our failure to generate sufficient cash as our debt becomes due or to
renew credit lines prior to their expiration could materially adversely affect our business, financial condition, operating results and
cash flow.
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