Computer Associates 2012 Annual Report Download - page 42

Depreciation and Amortization of Other Intangible Assets
The decrease in depreciation and amortization of other intangible assets for fiscal 2012 compared with fiscal 2011 was primarily due
to decreased amortization costs of intangible assets relating to prior period acquisitions.
The increase in depreciation and amortization of other intangible assets for fiscal 2011 compared with fiscal 2010 was primarily due
to the increase in depreciation and amortization expenses for acquired assets and fixed assets placed into service during fiscal 2011.
Other Expenses, Net
Other expenses, net includes gains and losses attributable to divested assets, foreign currency, exchange rate changes, impairment
charges and other miscellaneous items.
YEAR ENDED MARCH 31,
(in millions) 2012 2011 2010
Losses (gains) attributable to divesture of assets $2 $ (11) $ (1)
Foreign currency losses, net 418 10
Expense attributable to litigation claims and settlements 9—5
Other losses, net ——4
Total $15 $7 $18
For fiscal 2012, other expenses, net included $7 million of losses from foreign currency exchange rate fluctuations, partially offset by
$3 million of gains relating to our foreign exchange derivative contracts, which we use to mitigate our operating risks and exposure to
foreign currency exchange rates. In addition, for fiscal 2012, other expenses, net included $9 million of expenses in connection with
litigation claims.
For fiscal 2011, other expenses, net included $14 million of losses relating to our foreign exchange derivative contracts, which were
used to mitigate our operating risks and exposure to foreign currency exchange rates. These losses were offset by foreign currency
transaction gains due to the weakening of the U.S. dollar against the currencies of other countries in which we conduct our
operations. During fiscal 2011, we received $10 million in settlements of claims associated with previous stockholder derivative
actions following the substitution of us as plaintiff in those actions. These settlements were offset by expenses in connection with
other litigation claims. In addition, during fiscal 2011 we recorded a $10 million gain from the sale of our interest in an investment.
In fiscal 2010, other expense, net included net foreign exchange losses of $10 million. The foreign exchange amounts recorded in
fiscal 2010 included net losses of $20 million associated with derivative contracts. These losses were offset by foreign currency
transaction gains due to the weakening of the U.S. dollar against the currencies of other countries in which we conduct our
operations. In addition, for fiscal 2010, other expenses, net included an impairment charge of $3 million for internally developed
software.
Interest Expense, Net
The decrease in interest expense, net for fiscal 2012 compared with fiscal 2011 was primarily due to the decrease in interest expense
resulting from our overall decrease in debt. During the first quarter of fiscal 2012, we repaid $250 million of our revolving credit
facility, which was due August 2012.
The decrease in interest expense, net for fiscal 2011 compared with fiscal 2010 was primarily due to the decrease in interest expense
resulting from our overall decrease in debt. During the third quarter of fiscal 2010, we reduced our debt outstanding and increased our
weighted average maturity, enhancing our capital structure and financial flexibility.
Refer to the “Liquidity and Capital Resources” section of this MD&A and Note 9, “Debt,” in the Notes to the Consolidated Financial
Statements for additional information.
Income Taxes
Our effective tax rate was 31%, 32% and 34%, for fiscal 2012, 2011 and 2010, respectively.
The reduction in the effective tax rate for fiscal 2012, compared with fiscal 2011, resulted primarily from the recognition of tax
benefits related to an investment in a foreign subsidiary and a decrease in the valuation allowance from the recognition of state net
operating loss carryforwards due to a change in forecasted state taxable income. These items taken together resulted in a net benefit
of $36 million for fiscal 2012 as we continue our efforts to improve our long-term tax profile.
The reduction in the effective tax rate for fiscal 2011, compared with fiscal 2010, resulted primarily from affirmative claims in the
context of tax audits, resolutions of uncertain tax positions relating to non-U.S. jurisdictions and the retroactive reinstatement of the
30