Computer Associates 2015 Annual Report Download - page 74

Compensation Committee approves attainment of the specified performance targets, at which time a grant date is deemed
to have been achieved for accounting purposes, the value of the award is fixed and any remaining unrecognized
compensation expense is recognized over the remaining time-based vesting period. See Note 14, ‘‘Stock Plans,’’ for
additional information.
(i) Net Income Per Common Share: Unvested share-based payment awards that contain non-forfeitable rights to dividends or
dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of net
income per share under the two-class method. Under the two-class method, net income is reduced by the amount of
dividends declared in the period for each class of common stock and participating securities. The remaining undistributed
income is then allocated to common stock and participating securities as if all of the net income for the period had been
distributed. Basic net income per common share excludes dilution and is calculated by dividing net income allocable to
common shares by the weighted average number of common shares outstanding for the period. Diluted net income per
common share is calculated by dividing net income allocable to common shares by the weighted average number of common
shares outstanding at the balance sheet date, as adjusted for the potential dilutive effect of non-participating share-based
awards. See Note 13, ‘‘Income from Continuing Operations Per Common Share,’’ for additional information.
(j) Concentration of Credit Risk: Financial instruments that potentially subject the Company to concentration of credit risk
consist primarily of cash and cash equivalents, investments, derivatives and accounts receivable. The Company historically
has not experienced any material losses in its cash and cash equivalent or investment portfolios.
Amounts included in accounts receivable expected to be collected from customers, as disclosed in Note 5, ‘‘Trade Accounts
Receivable,’’ have limited exposure to concentration of credit risk due to the diverse customer base and geographic areas
covered by operations.
(k) Cash and Cash Equivalents: All financial instruments purchased with an original maturity of three months or less at the
time of purchase are considered cash equivalents. The Company’s cash and cash equivalents are held by its subsidiaries
throughout the world, frequently in each subsidiary’s respective functional currency which may not be the U.S. dollar.
Approximately 69% and 61% of cash and cash equivalents were maintained outside the United States at March 31, 2015
and 2014, respectively.
Total interest income, which primarily relates to the Company’s cash and cash equivalent balances and investments, for fiscal
years 2015, 2014 and 2013 was approximately $30 million, $21 million and $20 million, respectively, and is included in
‘‘Interest expense, net’’ in the Consolidated Statements of Operations.
(l) Fair Value Measurements: Fair value is the price that would be received for an asset or the amount paid to transfer a
liability in an orderly transaction between market participants. The Company is required to classify certain assets and
liabilities based on the following fair value hierarchy:
• Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical,
unrestricted assets or liabilities;
• Level 2: Quoted prices for identical assets and liabilities in markets that are not active, or quoted prices for similar
assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly
or indirectly; and
• Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and
unobservable.
See Note 10, ‘‘Fair Value Measurements,’’ for additional information.
Impairment of Long-Lived Assets, Excluding Goodwill and Other Intangibles: Long-lived assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If
circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares
undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of
the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to
the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques
including discounted cash flow models or, when available, quoted market values and third-party appraisals.
71
(m) Long-Lived Assets: