Computer Associates 2012 Annual Report Download - page 79

The purchase price allocation was finalized in the second quarter of fiscal year 2012 and no material adjustments were made to
amounts previously reported. The Company’s other acquisitions during fiscal year 2011 were immaterial, both individually and in the
aggregate. The following represents the allocation of the purchase price and estimated useful lives to the acquired net assets of Arcot
and the Company’s other fiscal year 2011 acquisitions:
(dollars in millions) ARCOT
OTHER FISCAL YEAR
2011 ACQUISITIONS
ESTIMATED
USEFUL LIFE
Finite-lived intangible assets(1) $ 39 $ 12 2-8 years
Purchased software 86 41 10 years
Goodwill 62 17 Indefinite
Deferred tax liabilities (3) (1) —
Other assets net of other liabilities assumed 13 2 —
Purchase price $197 $ 71
(1) Includes customer relationships and trade names.
The excess purchase price over the estimated value of the net tangible and intangible assets was recorded as goodwill. Goodwill
recognized in the purchase price allocation includes synergies expected to be achieved through integration of the acquired technology
with the Company’s existing product portfolio and the intangible assets that are not separable, such as assembled workforce and
going concern. The goodwill relating to the Company’s acquisition of Arcot is not deductible for tax purposes. A majority of the
goodwill relating to the Company’s other fiscal year 2011 acquisitions is deductible for tax purposes.
The Company had approximately $24 million and $77 million of accrued acquisition-related costs at March 31, 2012 and 2011,
respectively, related to purchase price amounts withheld subject to indemnification protections.
Note 3 — Discontinued Operations
In the first quarter of fiscal year 2012, the Company sold its Internet Security business for approximately $14 million and recognized
a gain on disposal of approximately $23 million, including tax expense of approximately $18 million. In the first quarter of fiscal year
2011, the Company sold its Information Governance business, consisting primarily of the CA Records Manager and CA Message
Manager software offerings and related professional services for approximately $19 million and recognized a loss on disposal of
approximately $5 million, including tax expense of approximately $4 million.
The income (loss) from the discontinued components for fiscal years 2012, 2011 and 2010 consisted of the following:
(in millions)
FISCAL YEAR
2012
FISCAL YEAR
2011
FISCAL YEAR
2010
Subscription and maintenance revenue $15$ 83 $ 122
Professional services ——4
Total revenue $15$ 83 $ 126
(Loss) income from operations of discontinued components, net of tax benefit (expense) of $6
million, $(4) million and $(7) million, respectively $ (10) $9$12
Gain (loss) on disposal of discontinued components, net of taxes 23 (5) —
Income from discontinued operations, net of taxes $13$4$12
Note 4 — Severance and Exit Costs
Fiscal Year 2012 Workforce Reduction: The fiscal year 2012 workforce reduction plan (Fiscal 2012 Plan) was announced in July
2011 and consisted of a workforce reduction of approximately 400 positions.
This action is part of the Company’s efforts to reallocate resources and divest non-strategic parts of the business. The total amounts
incurred with respect to severance under the Fiscal 2012 Plan were $42 million, of which approximately $22 million is included in
“Selling and marketing,” $9 million is included in “General and administrative,” $8 million is included in “Product development and
enhancements,” $2 million is included in “Costs of licensing and maintenance” and $1 million is included in “Cost of professional
services” in the Consolidated Statements of Operations. Actions under the Fiscal 2012 Plan were substantially completed by the end
of fiscal year 2012.
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