Computer Associates 2015 Annual Report Download - page 55

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio and debt. We
have a prescribed methodology whereby we invest our excess cash in investments that are composed of money market funds,
debt instruments of government agencies and investment grade corporate issuers (Standard and Poor’s single ‘‘BBB+’’
rating and higher).
At March 31, 2015, our outstanding debt was $1,263 million, all of which was in fixed rate obligations. Refer to Note 8,
‘‘Debt,’’ in the Notes to the Consolidated Financial Statements for additional information.
During the third quarter of fiscal 2015, we repaid our 6.125% Senior Notes due December 2014 in full. We had interest rate
swap derivatives with a total notional value of $500 million, which swapped a total of $500 million of our 6.125% Senior
Notes due December 2014 into floating interest rate debt through December 1, 2014. These swaps were designated as fair
value hedges and matured in the third quarter of fiscal 2015.
At March 31, 2015, we had no interest rate swap derivatives outstanding. At March 31, 2014, the fair value of the interest
rate swap derivatives was an asset of $8 million, which is included in ‘‘Other current assets’’ in our Consolidated Balance
Sheet.
Foreign Exchange Risk
We conduct business on a worldwide basis through subsidiaries in 45 foreign countries and, as such, a portion of our
revenues, earnings and net investments in foreign affiliates is exposed to changes in foreign exchange rates. We seek to
manage our foreign exchange risk in part through operational means, including managing expected local currency revenues
in relation to local currency costs and local currency assets in relation to local currency liabilities. In October 2005, our
Board of Directors adopted our Risk Management Policy and Procedures, which authorize us to manage, based on
management’s assessment, our risks and exposures to foreign exchange rates through the use of derivative financial
instruments (e.g., forward contracts, options and swaps) or other means. We only use derivative financial instruments in the
context of hedging and do not use them for speculative purposes.
During fiscal 2015 and 2014, we did not designate our foreign exchange derivatives as hedges. Accordingly, all foreign
exchange derivatives are recorded in our Consolidated Balance Sheets at fair value and unrealized or realized changes in
fair value from these contracts are recorded as ‘‘Other expenses (gains), net’’ in our Consolidated Statements of Operations.
Refer to Note 9, ‘‘Derivatives’’ for additional information regarding our derivative activities.
If foreign exchange rates affecting our business weakened by 10% on an overall basis in comparison to the U.S. dollar, the
amount of cash and cash equivalents we would report in U.S. dollars would decrease by approximately $193 million.
Item 8. Financial Statements and Supplementary Data.
Our Consolidated Financial Statements are included in Part IV, Item 15 of this Form 10-K and are incorporated herein by
reference.
The supplementary data specified by Item 302 of Regulation S-K as it relates to selected quarterly data is included in the
‘‘Selected Quarterly Information’’ section of Item 7, ‘‘Management’s Discussion and Analysis of Financial Condition and
Results of Operations.’’ Information on the effects of changing prices is not required.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and
the Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act).
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