Computer Associates 2015 Annual Report Download - page 85

A summary of the effect of the interest rate and foreign exchange derivatives on the Company’s Consolidated Statements of
Operations was as follows:
AMOUNT OF NET (GAIN)/LOSS RECOGNIZED IN THE
CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED MARCH 31,
LOCATION OF AMOUNTS RECOGNIZED
(in millions) 2015 2014 2013
Interest expense, net — interest rate swaps designated as fair value hedges $ (8) $ (12) $ (12)
Other expenses (gains), net — foreign currency contracts $ (31) $ (20) $ 11
The Company is subject to collateral security arrangements with most of its major counterparties. These arrangements
require the Company or the counterparty to post collateral when the derivative fair values exceed contractually established
thresholds. The aggregate fair values of all derivative instruments under these collateralized arrangements were in a net
asset position at March 31, 2015 and 2014. The Company posted no collateral at March 31, 2015 or 2014. Under these
agreements, if the Company’s credit ratings had been downgraded one rating level, the Company would still not have been
required to post collateral.
Note 10 — Fair Value Measurements
The following table presents the Company’s assets and liabilities that were measured at fair value on a recurring basis at
March 31, 2015 and 2014:
AT MARCH 31, 2015 AT MARCH 31, 2014
FAIR VALUE MEASUREMENT ESTIMATED FAIR VALUE MEASUREMENT ESTIMATED
USING INPUT TYPES FAIR VALUE USING INPUT TYPES FAIR VALUE
(in millions) LEVEL 1 LEVEL 2 TOTAL LEVEL 1 LEVEL 2 TOTAL
Assets:
Money market funds(1) $ 749 $ — $ 749 $ 1,277 $ — $ 1,277
Foreign exchange derivatives(2) —55—22
Interest rate derivatives(2) ———— 8 8
Total assets $ 749 $ 5 $ 754 $ 1,277 $ 10 $ 1,287
Liabilities:
Foreign exchange derivatives(2) $—$3$3$—$1$1
Total liabilities $—$3$3$—$1$1
(1) The Company’s investments in money market funds are classified as ‘‘Cash and cash equivalents’’ in its Consolidated Balance Sheets.
(2) See Note 9, ‘‘Derivatives’’ for additional information. Interest rate derivatives fair value excludes accrued interest.
At March 31, 2015 and 2014, the Company did not have any assets or liabilities measured at fair value on a recurring basis
using significant unobservable inputs (Level 3).
The carrying values of financial instruments classified as current assets and current liabilities, such as cash and cash
equivalents, short-term investments, accounts payable, accrued expenses, and short-term borrowings, approximate fair value
due to the short-term maturity of the instruments.
The following table presents the carrying amounts and estimated fair values of the Company’s other financial instruments
that were not measured at fair value on a recurring basis at March 31, 2015 and 2014:
AT MARCH 31, 2015 AT MARCH 31, 2014
CARRYING ESTIMATED CARRYING ESTIMATED
(in millions) VALUE FAIR VALUE VALUE FAIR VALUE
Liabilities:
Total debt(1) $ 1,263 $ 1,376 $ 1,766 $ 1,884
Facility exit reserve(2) $21$23$29$33
(1) Estimated fair value of total debt is based on quoted prices for similar liabilities for which significant inputs are observable except for certain long-term lease obligations, for which
fair value approximates carrying value (Level 2).
(2) Estimated fair value for the facility exit reserve is determined using the Company’s incremental borrowing rate at March 31, 2015 and 2014. At March 31, 2015 and 2014, the
facility exit reserve included approximately $4 million and $11 million, respectively, in ‘‘Accrued expenses and other current liabilities’’ and approximately $17 million and
$18 million, respectively, in ‘‘Other noncurrent liabilities’’ in the Company’s Consolidated Balance Sheets (Level 3).
Note 11 — Commitments and Contingencies
The Company leases real estate and equipment with lease terms expiring through fiscal year 2025. Certain leases provide for
renewal options and additional rentals based on escalations in operating expenses and real estate taxes.
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