Computer Associates 2015 Annual Report Download - page 78

Note 3 — Divestitures
In the second quarter of fiscal year 2015, the Company sold arcserve for approximately $170 million and recognized a gain
on disposal of approximately $20 million, including tax expense of approximately $77 million. The effective tax rate on the
disposal was unfavorably affected by non-deductible goodwill of approximately $109 million. In the fourth quarter of fiscal
year 2014, the Company identified ERwin as available for sale. The divestiture of arcserve and the planned divestiture of
ERwin result from an effort to rationalize the Company’s product portfolio within the Enterprise Solutions segment.
The income from discontinued operations relating to both ERwin and the sale of arcserve for fiscal years 2015, 2014 and
2013 consisted of the following:
YEAR ENDED MARCH 31,
(in millions) 2015 2014 2013
Subscription and maintenance $ 43 $ 88 $ 94
Software fees and other 19 47 45
Total revenue $ 62 $ 135 $ 139
Income from operations of discontinued components, net of tax expense of $10 million,
$19 million and $24 million, respectively $ 16 $ 27 $ 34
Gain on disposal of discontinued component, net of tax 20 — —
Income from discontinued operations, net of tax $36$27$34
Note 4 — Severance and Exit Costs
Fiscal Year 2015 Severance Actions: During the fourth quarter of fiscal year 2015, the Company committed to and initiated
severance actions (Fiscal 2015 Severance Actions) to further improve efficiencies in its operations and align its business with
strategic objectives and cost savings initiatives. These actions comprised the termination of approximately 690 employees
and resulted in a charge of approximately $40 million (approximately $16 million is included in ‘‘Product development and
enhancements,’’ $10 million is included in ‘‘Selling and marketing,’’ $8 million is included in ‘‘Cost of professional services,’’
$5 million is included in ‘‘General and administrative’’ and $1 million is included in ‘‘Costs of licensing and maintenance’’ in
the Company’s Consolidated Statements of Operations). The Fiscal 2015 Severance Actions are expected to be substantially
completed by the first quarter of fiscal year 2016.
Fiscal Year 2014 Rebalancing Plan: In fiscal year 2014, the Company’s Board of Directors approved and committed to a
rebalancing plan (Fiscal 2014 Plan) to better align its business priorities. This included the termination of approximately
1,900 employees and global facilities consolidations. Costs associated with the Fiscal 2014 Plan are presented in ‘‘Other
expenses (gains), net’’ in the Company’s Consolidated Statements of Operations. The total amount incurred to date for
severance and facility exit costs under the Fiscal 2014 Plan is approximately $166 million and $22 million, respectively. The
Company expects total costs of the Fiscal 2014 Plan to be approximately $190 million. Severance and facility consolidation
actions under the Fiscal 2014 Plan were substantially completed by the end of fiscal year 2014.
Accrued severance and exit costs and changes in the accruals for fiscal years 2015, 2014 and 2013 were as follows:
ACCRUED ACCRUED
BALANCE AT CHANGE BALANCE AT
MARCH 31, IN ACCRETION MARCH 31,
(in millions) 2014 EXPENSE ESTIMATE PAYMENTS AND OTHER 2015
Severance charges $ 55 $ 60 $ (7) $ (77) $ (3) $ 28
Facility exit charges 29 — — (9) 1 21
Total accrued liabilities $84 $49
ACCRUED ACCRUED
BALANCE AT CHANGE BALANCE AT
MARCH 31, IN ACCRETION MARCH 31,
(in millions) 2013 EXPENSE ESTIMATE PAYMENTS AND OTHER 2014
Severance charges $ 16 $ 160 $ (12) $ (113) $ 4 $ 55
Facility exit charges 23 22 — (13) (3) 29
Total accrued liabilities $39 $84
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