Computer Associates 2015 Annual Report Download - page 22

where continuity of the licensed product would outweigh the premium cost of the license. The unavailability of these
licenses or the necessity of agreeing to commercially unreasonable terms for such licenses could materially adversely affect
our business, financial condition, operating results and cash flow.
Certain software we use is from open source code sources, which, under certain circumstances, may lead to
unintended consequences and, therefore, could materially adversely affect our business, financial condition,
operating results and cash flow.
Some of our products contain software from open source code sources. The use of such open source code may subject us to
certain conditions, including the obligation to offer our products that use open source code for no cost. Further, although
some open source vendors provide warranty and support agreements in conjunction with the use of their open source
software, it is common for many open source software authors to make their open source software available ‘‘as-is’’ with no
warranty, indemnity or support. We monitor our use of such open source code to avoid subjecting our products to
conditions we do not intend. However, the use of such open source code may 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.
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, it is characteristic of our industry when dealing
with enterprise customers to experience long sales cycles, which for us 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, financial condition, operating results and cash flow.
We may encounter events or circumstances that would require us to record an impairment charge relating to
our goodwill or capitalized software and other intangible assets balances.
Under U.S. generally accepted accounting principles, we are required to evaluate our capitalized software and other
intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be
recoverable. We test goodwill for impairment at least annually, and more frequently if impairment indicators are present. In
future periods, we may be subject to factors that may constitute a change in circumstances, indicating that the carrying value
of our goodwill exceeds fair value or our capitalized software and other intangible assets may not be recoverable. These
changes may consist of, but are not limited to, declines in our stock price and market capitalization, reduced future cash
flow estimates, and slower growth rates in our industry. Any of these factors, or others, could require us to record a
significant non-cash impairment charge in our financial statements during a period. If we determine that a significant
impairment of our goodwill or our capitalized software and other intangible assets has occurred in any of our operating
segments, this could materially adversely affect our business, financial condition and operating results.
Potential tax liabilities may materially adversely affect our results.
We are subject to income taxes in the United States and in numerous foreign jurisdictions. Significant judgment is required
in determining our worldwide provision for income taxes. In the ordinary course of our business, we engage in many
transactions and calculations where the ultimate tax determination is uncertain.
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