Computer Associates 2015 Annual Report Download - page 84

guarantees and other local credit lines. At March 31, 2015, none of these arrangements were drawn down by third parties.
At March 31, 2014, less than $1 million of these arrangements were drawn down by third parties.
The Company uses a notional pooling arrangement with an international bank to help manage global liquidity. Under this
pooling arrangement, the Company and its participating subsidiaries may maintain either cash deposit or borrowing
positions through local currency accounts with the bank, so long as the aggregate position of the global pool is a notionally
calculated net cash deposit. Because it maintains a security interest in the cash deposits and has the right to offset the cash
deposits against the borrowings, the bank provides the Company and its participating subsidiaries favorable interest terms
on both. At March 31, 2015 and 2014, the borrowings outstanding under this notional pooling arrangement, and changes
therein, were as follows:
AT MARCH 31,
(in millions) 2015 2014
Total borrowings outstanding at beginning of year(1) $ 139 $ 136
Borrowings 5,371 3,702
Repayments (5,207) (3,734)
Foreign exchange effect (165) 35
Total borrowings outstanding at end of year(1) $ 138 $ 139
(1) Included in ‘‘Accrued expenses and other current liabilities’’ in the Company’s Consolidated Balance Sheets.
Note 9 — Derivatives
The Company is exposed to financial market risks arising from changes in interest rates and foreign exchange rates.
Changes in interest rates could affect the Company’s monetary assets and liabilities, and foreign exchange rate changes
could affect the Company’s foreign currency denominated monetary assets and liabilities and forecasted transactions. The
Company enters into derivative contracts with the intent of mitigating a portion of these risks.
Interest Rate Swaps: During the third quarter of fiscal year 2015, the Company repaid its 6.125% Senior Notes due
December 2014 in full. The Company had interest rate swap derivatives with a total notional value of $500 million, which
swapped a total of $500 million of its 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 year 2015.
At March 31, 2015, the Company had no interest rate swap derivatives outstanding.
At March 31, 2014, the fair value of the interest rate swap derivatives was an asset of approximately $8 million, which is
included in ‘‘Other current assets’’ in the Company’s Consolidated Balance Sheet.
Foreign Currency Contracts: The Company enters into foreign currency option and forward contracts to manage foreign
currency risks. The Company has not designated its foreign exchange derivatives as hedges. Accordingly, changes in fair
value from these contracts are recorded as ‘‘Other expenses (gains), net’’ in the Company’s Consolidated Statements of
Operations.
At March 31, 2015, foreign currency contracts outstanding consisted of purchase and sale contracts with a total gross
notional value of approximately $298 million, and durations of less than three months. The net fair value of these contracts
at March 31, 2015 was a net asset of approximately $2 million, of which approximately $5 million is included in ‘‘Other
current assets’’ and approximately $3 million is included in ‘‘Accrued expenses and other current liabilities’’ in the
Company’s Consolidated Balance Sheet.
At March 31, 2014, foreign currency contracts outstanding consisted of purchase and sale contracts with a total gross
notional value of approximately $250 million and durations of less than three months. The net fair value of these contracts
at March 31, 2014 was a net asset of approximately $1 million, of which approximately $2 million is included in ‘‘Other
current assets’’ and approximately $1 million is included in ‘‘Accrued expenses and other current liabilities’’ in the
Company’s Consolidated Balance Sheet.
81