Computer Associates 2015 Annual Report Download - page 19

• We may have difficulty incorporating the acquired technologies or products into our existing product lines;
• We may have product liability, customer liability or intellectual property liability associated with the sale of the acquired
company’s products;
• Our ongoing business may be disrupted by transition or integration issues and our management’s attention may be
diverted from other business initiatives;
• We may be unable to obtain timely approvals from governmental authorities under applicable competition and antitrust
laws;
• We may have difficulty maintaining uniform standards, controls, procedures and policies;
• Our relationships with current and new employees, customers and distributors could be impaired;
• An acquisition may result in increased litigation risk, including litigation from terminated employees or third parties;
• Our due diligence process may fail to identify significant issues with the acquired company’s product quality, financial
disclosures, accounting practices, internal control deficiencies, including material weaknesses, product architecture, legal
and tax contingencies and other matters; and
• We may not be able to realize the benefits of recognized goodwill and intangible assets and this may result in the
potential impairment of these assets.
These factors could materially adversely affect our business, results of operations, financial condition and cash flow,
particularly in the case of a large acquisition or number of acquisitions. To the extent we issue shares of stock or other
rights to purchase stock, including options, to pay for acquisitions or to retain employees, existing stockholders’ interests
may be diluted and income per share may decrease.
Our sales to government clients subject us to risks, including lack of fiscal funding approval, renegotiation or
termination at the discretion of the government, as well as audits and investigations, which could result in
litigation, penalties and sanctions including suspension, early termination and debarment.
Approximately 8% of our total revenue backlog at March 31, 2015 is associated with multi-year contracts signed with the
U.S. federal government and other U.S. state and local government agencies. These contracts are generally subject to
annual fiscal funding approval and may be renegotiated or terminated at the discretion of the government. Termination,
renegotiation or the lack of funding approval for a contract could adversely affect our sales, revenue and reputation.
Additionally, our government contracts are generally subject to audits and investigations, which could result in various civil
and criminal actions and penalties, and administrative sanctions, including termination of contracts, refund of a portion of
fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from doing business with
the government, which could materially adversely affect our business, financial condition, operating results and cash flow.
Refer to ‘‘Note 11 — Commitments and Contingencies,’’ for additional information about litigation and related matters in
this area.
Our data center, network, as well as our software products, and the IT environments of our vendors and
customers are subject to hacking or other cybersecurity threats, resulting in a loss or misuse of proprietary,
personally identifiable and confidential information and/or harm to our customer relationships and the market
perception of the effectiveness of our products.
Given that some of our products are intended to manage and secure IT infrastructures and environments, we expect to be
an ongoing target of attacks specifically designed to impede the performance of our products. Use of open source code or
other third-party software in our products and infrastructure could also bring increased cybersecurity risks. Experienced
computer programmers or hackers may attempt to penetrate our network security or the security of our data centers and IT
environments. Others, including employees or vendors, may also intentionally or unintentionally provide unauthorized access
to our IT environments or to our customers’ IT environments. These hackers or others may misappropriate proprietary,
personally identifiable and confidential information of the Company, our customers, our employees or our business partners
or other individuals or cause interruptions of our or our customers’ IT operations, services and businesses. This may cause
contractual disputes and may negatively affect the market perception of the effectiveness of our products and our reputation
even if the unauthorized access is not attributable to our products or personnel. Our SaaS solutions/services business
includes the hosting of customer data, including large amounts of sensitive information. The SaaS business uses third-party
data centers that may also be subject to hacking incidents. Although we continually seek to improve our countermeasures to
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