(Mark One) | ||
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended March 31, 2006 | ||
OR
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-2857434 | |
(State or Other Jurisdiction of
Incorporation or Organization) |
(I.R.S. Employer
Identification Number) |
|
One CA Plaza,
Islandia, New York (Address of Principal Executive Offices) |
11749
(Zip Code) |
(Title of each class) | (Name of each exchange on which registered) | |
Common stock, par value
$0.10 per share
Series One Junior Participating Preferred Stock, Class A |
New York Stock Exchange
New York Stock Exchange |
2
3
Additional
|
Additional
|
|||||||
Fiscal Year
|
Pre-Tax Expense | After-Tax Expense | ||||||
(in millions) | (in millions) | |||||||
Years prior to fiscal year 2002
|
$ | 165 | $ | 78 | ||||
2002
|
83 | 50 | ||||||
2003
|
50 | 30 | ||||||
2004
|
29 | 16 | ||||||
2005
|
12 | | ||||||
2006
|
3 | 1 | ||||||
Total cost for all fiscal periods
|
$ | 342 | $ | 175 | ||||
4
Item 1. | Business. |
(a) | General Development of Business |
| We aligned our product development by software business units. The business unit structure is designed to increase our accountability to customer needs and to be more responsive to the changing dynamics of the management software marketplace. Please refer to Item 1, Business (c) Narrative Description of the Business Business Unit Structure below for more information. | |
| We completed several acquisitions throughout fiscal year 2006, including but not limited to the following: |
| In March 2006, we completed the acquisition of Wily Technology, Inc. (Wily), a provider of enterprise application management solutions, for a total purchase price of approximately $374 million. Wily is now part of our Enterprise Systems Management business unit. |
5
| In October 2005, we completed the acquisition of iLumin Software Services, Inc. (iLumin), a privately held provider of enterprise message management and archiving software, for a total purchase price of approximately $48 million. iLumins Assentor product line has been added to our Storage Management business unit. | |
| In July 2005, we completed the acquisition of Niku Corporation (Niku), a provider of IT management and governance solutions, for a total purchase price of approximately $345 million. Niku is now part of our Business Service Optimization business unit. | |
| In June 2005, we completed the acquisition of Concord Communications, Inc. (Concord), a provider of network service management software solutions, for a total purchase price of approximately $359 million. Concords solutions are now part of our Enterprise Systems Management business unit. |
| In November 2005, we held CA World where we unveiled our Enterprise IT Management, or EITM, strategy and announced 26 EITM-enabled products, including the release of Unicenter r11. This was CAs first Unicenter upgrade in 4 years and one of CAs biggest product launches ever. | |
| In July 2005, we announced a restructuring plan to more closely align our investments with strategic growth opportunities. We recorded charges of approximately $66 million in fiscal year 2006 for severance and other termination benefits and facility closures in connection with our restructuring plan, which included a workforce reduction of approximately five percent or 800 positions worldwide. The plan is expected to yield about $75 million in savings on an annualized basis, once the reductions are fully implemented. We anticipate the total restructuring plan will cost up to $85 million. | |
| We have increased our operations in India, primarily in product support and development. This has increased the efficiency of our support and development activities. | |
| During fiscal year 2006, we repurchased approximately $590 million in Company stock. |
(b) | Financial Information About Segments |
(c) | Narrative Description of the Business |
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| We have 5,800 engineers globally, designing and supporting software to extend our functionality and capabilities in the network and systems management, security and storage areas, and have charged approximately $0.7 billion to operations in each of the fiscal years ended March 31, 2006, 2005, and 2004. | |
| Development activities are tied directly to customer needs and our five business units. Please refer to Business Unit Structure below for more information. |
| Channel partners are critical to our success. We need a broad base of channel partners to reach a wider range of customers. By developing strong relationships with systems integrators, distribution channel partners, value-added resellers (VARs) and original equipment manufacturers (OEMs), we extend CA technology to customers who otherwise wouldnt have access to it. | |
| Distribution and OEM channel partners, referred to as indirect or channel partners, make up approximately 11% of our new deferred subscription value a figure we believe we can grow. | |
| We characterize our channel partners in two ways: |
| Value These channel partners sell CA solutions that require a high level of expertise to sell. In fiscal year 2006, we launched the Enterprise Solution Provider Program to recruit, train and educate VARs on CA products and solutions. Through this program, we have authorized approximately 800 channel partners worldwide to sell CA solutions and are now extending the program to global solutions providers who sell solutions to multi-national companies. | |
| Volume These channel partners, who sell CA products that dont require the same technical expertise to sell as enterprise solutions, are primarily geared toward small to medium-sized businesses (SMBs). We are focusing on the SMB market by evolving our products to keep them current and relevant, such as our Business Protection Suite, recruiting channel partners who know this segment, and increasing our marketing efforts. |
| We are enhancing our sales infrastructure in Asia Pacific and Latin America. In February 2006, we opened our new Asia Pacific & Japan headquarters in Hong Kong. | |
| We are also growing our India Technology Center (in Hyderabad); tapping an important talent pool in the Czech Republic (Prague) for mainframe development; and gaining important entree into fast-growing countries such as China. | |
| We use our Customer Interaction Centers in Tampa, Florida, and Barcelona, Spain, as our global channel and telemarketing sales-generators. |
| We consider acquisitions that will support our EITM approach, extend our market position, and/or expand our geographic footprint. | |
| These acquisitions fill technology gaps in our portfolio, strengthen our position in core focus areas, and help round out our EITM offerings to better serve our customers. In fiscal year 2006, we completed four significant acquisitions (see Note 2, Acquisitions, Divestitures, and Restructuring, in the Notes to the Consolidated Financial Statements for more information). |
7
| Service Availability these products monitor and optimize the health, availability and performance of the infrastructure and the technologies critical to our customers business operations to make sure they are always up and running. | |
| Resource Optimization these products, which include configuration management, provisioning and capacity management, provision assets dynamically according to business priorities or consumption rates, and help customers make sure they maximize their IT resources. | |
| Process Automation these products, which include workload automation, automate tedious or error-prone manual procedures to reduce infrastructure downtime and allow customers to redeploy their valuable IT resources in more strategic ways. |
| Identity and Access Management these products empower IT organizations to manage growing internal and external user populations, secure an increasingly complex array of resources and services and comply with critical regulatory mandates. | |
| Threat Management these products are designed to help customers identify and eliminate internal and external threats such as harmful computer viruses and security weaknesses associated with operating systems, databases, networks and passwords. | |
| Security Information Management these products help to integrate and prioritize security information created by CA and third-party security products, enable customers to increase operational efficiencies, help ensure business continuity, help customers adhere to regulatory compliance, and mitigate risks. |
8
| Recovery Management these solutions help customers mitigate risk and improve business continuity in a cost-effective manner by providing backup/recovery, tape and media management, and high-availability solutions. | |
| Resource Management these solutions help customers achieve operational efficiency and gain business flexibility. They enable customers to identify information, data and storage resources; monitor the storage environment; classify data, information and resources based on their value to the business; and define and automate storage processes. | |
| Information Management these solutions help customers address compliance issues as they pertain to message management, discovery and archive requirements, and extend the data lifecycle to align with corporate governance and business requirements. | |
| Mainframe these solutions offer an integrated, intelligent enterprise-wide storage management approach enabling z/OS-centric businesses to reduce costs, mitigate risks and align business requirements with IT. |
| Business Process Management these solutions help companies reduce costs and mitigate risk by achieving process efficiency and agility through automation and the understanding and management of IT and business processes and policies. | |
| Service Management these solutions enable IT and business alignment by defining IT service offerings in business terms, provisioning, supporting, and allocating costs for these service offerings, improving service levels, and managing change. | |
| Asset Management these solutions help organizations control costs, improve process efficiencies and maximize their return on investments by managing the technical and business aspects of hardware and software from procurement through disposal. | |
| IT Governance these solutions help assure operational excellence by linking IT decisions with business objectives; providing strong financial control, optimizing IT resources and assets, and controlling software changes. The acquisition of Niku significantly strengthened our IT governance offering. |
| Database Management systems these solutions enable reliable management of large data and transaction volumes, exploit advances in database technology, and integrate these information stores to distributed and web-based business needs, leveraging database process integrity across the enterprise. |
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| Application Development systems these solutions enable customers to build custom business applications in a variety of environments using technology-neutral business process definitions, and to test and deploy those applications across an evolving IT infrastructure. | |
| Enterprise Reporting and Information Management systems these solutions enable customers to efficiently and rapidly report on and process business information. | |
| Other solutions these solutions include a wide variety of tools and utilities to optimize the IT environment. |
| Common Technologies our Foundation Services and Management Database are technologies common across CA products that enable our products to work together easily and also to work with other vendors management software products to deliver an IT environment that is simpler, more secure, less costly to maintain, and more agile. | |
| Research CA Labs drives research in advanced technologies related to management and security by performing research internally and working with major universities and standard setting bodies. Current areas of focus include securing and managing on-demand computing, grids, virtualized environments, and service-oriented architectures. | |
| Emerging Technology Incubator the Office of the CTO also runs incubator projects to create and bring to market management and security solutions that enable customer adoption of new technologies. Current incubation projects focus on management of wireless networks, smart phones, and radio frequency identification technologies. | |
| Architecture the Office of the CTO is chartered with ensuring that all CA products are implemented according to a proven and consistent technical architecture. Consistent architecture accelerates our support for key industry advances, such as the evolution of Service Oriented Architectures and Grid Computing and Virtualization. Having unified technical architecture also promotes greater product quality and integration while lowering development costs. |
10
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| CA Technical Support staffed with a highly skilled customer response team, we manage more than 70 Technical Support centers in over 25 countries providing quality support online or over the telephone regardless of customer location or language. | |
| SupportConnect to help fully meet the needs of our customers, we provide online self-service resources. More than 190,000 customers use these resources to review their account information, research technical information, open and maintain incident reports, order and download products, and much more. Automated self-service resources are convenient to our customers and are a means of controlling costs for CA. | |
| Support Availability Management (SAM) supporting our customers sometimes requires a personal touch. This service provides our customers with access to Support Availability Managers with specialized skills in accessing information and resolving issues at a site level. | |
| Channel Partners Support Program in line with CAs drive to increase our channel partner presence and sales, we believe CA channel partners should receive one of the best technical support programs in the industry. |
12
Employees as
|
Employees as
|
|||||||||
of March 31,
|
of March 31,
|
|||||||||
Location
|
2006 |
Functional Area
|
2006 | |||||||
Corporate headquarters
|
2,200 | Product development and support | 5,800 | |||||||
Sales and support | 4,900 | |||||||||
Other U.S. offices
|
6,200 | Professional services | 1,400 | |||||||
Information technology support, | ||||||||||
International offices
|
7,600 | finance, and administration | 3,900 | |||||||
Total
|
16,000 | Total | 16,000 | |||||||
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(d) | Financial Information About Geographic Areas |
(e) | Available Information |
Item 1A. | Risk Factors. |
| Timing and impact of threat outbreaks ( e.g. worms and viruses); | |
| The rate of adoption of new product technologies and releases of new operating systems; | |
| Demand for products and services; | |
| Length of sales cycle; | |
| Customer difficulty in implementation of our products; |
14
| Magnitude of price and product and/or services competition; | |
| Introduction of new hardware; | |
| General economic conditions in countries in which customers do a substantial amount of business; | |
| Changes in customer budgets for hardware, software and services; | |
| Ability to develop and introduce new or enhanced versions of our products; | |
| Changes in foreign currency exchange rates; | |
| Ability to control costs; | |
| The number and terms and conditions of licensing transactions; | |
| Reorganizations of the sales and technical services forces; | |
| The results of litigation, including the government and internal investigations; and | |
| Ability to retain and attract qualified personnel. |
| Reorganizations of the sales and technical services workforce; | |
| Fluctuations in foreign exchange currency rates; | |
| Staffing key managerial positions; | |
| The ability to successfully localize software products for a significant number of international markets; | |
| General economic conditions in foreign countries; | |
| Political stability; and | |
| Trade restrictions such as tariffs, duties or other controls affecting foreign operations. |
15
16
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19
| Loss of or delay in revenues and loss of market share; | |
| Loss of customers, including the inability to do repeat business with existing key customers; | |
| Damage to our reputation; | |
| Failure to achieve market acceptance; | |
| Diversion of development resources; | |
| Increased service and warranty costs; | |
| Legal actions by customers against us which could, whether or not successful, increase costs and distract our management; | |
| Increased insurance costs; and | |
| Failure to successfully complete service engagements for product installations and implementations. |
20
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Item 1B. | Unresolved Staff Comments. |
Item 2. | Properties. |
24
Item 3. | Legal Proceedings. |
Item 4. | Submission of Matters to a Vote of Security Holders. |
Name
|
Age
|
Position
|
||||
John A. Swainson
|
52 | President, Chief Executive Officer, and Director | ||||
Russell M. Artzt
|
59 | Executive Vice President, Products | ||||
James Bryant
|
62 | Executive Vice President and Chief Administrative Officer | ||||
Michael J. Christenson
|
47 | Executive Vice President and Chief Operating Officer | ||||
Robert G. Cirabisi
|
42 | Acting Chief Financial Officer, Senior Vice President and Corporate Controller | ||||
Donald Friedman
|
60 | Executive Vice President and Chief Marketing Officer | ||||
Andrew Goodman
|
47 | Executive Vice President, Worldwide Human Resources | ||||
Kenneth V. Handal
|
57 | Executive Vice President, General Counsel and Corporate Secretary | ||||
Gary Quinn
|
45 | Executive Vice President, Indirect Sales/Channel Partners | ||||
Patrick J. Gnazzo
|
59 | Senior Vice President, Business Practices, and Chief Compliance Officer | ||||
Alan F. Nugent
|
51 | Senior Vice President and Chief Technology Officer | ||||
Una ONeill
|
36 | Senior Vice President, Technology Services | ||||
Mary Stravinskas
|
46 | Senior Vice President and Treasurer |
25
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Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Fiscal Year 2006 | Fiscal Year 2005 | |||||||||||||||
High | Low | High | Low | |||||||||||||
Fourth Quarter
|
$ | 29.36 | $ | 26.75 | $ | 30.82 | $ | 26.42 | ||||||||
Third Quarter
|
$ | 29.45 | $ | 26.25 | $ | 31.52 | $ | 26.03 | ||||||||
Second Quarter
|
$ | 29.37 | $ | 26.24 | $ | 27.67 | $ | 22.61 | ||||||||
First Quarter
|
$ | 29.28 | $ | 26.80 | $ | 29.17 | $ | 25.30 |
Approximate
|
||||||||||||||||
Total Number
|
Dollar Value
|
|||||||||||||||
of Shares
|
of Shares that
|
|||||||||||||||
Purchased as
|
May Yet Be
|
|||||||||||||||
Total Number
|
Average
|
Part of Publicly
|
Purchased Under
|
|||||||||||||
of Shares
|
Price Paid
|
Announced Plans
|
the Plans
|
|||||||||||||
Period
|
Purchased | per Share | or Programs | or Programs | ||||||||||||
(in thousands, except average price paid per share) | ||||||||||||||||
January 2006
|
2,169 | $ | 28.64 | 2,169 | $ | 171,964 | ||||||||||
February 2006
|
2,348 | $ | 27.23 | 2,348 | $ | 107,978 | ||||||||||
March 2006
|
3,593 | $ | 27.23 | 3,593 | $ | 600,000 | ||||||||||
Total
|
8,110 | 8,110 | ||||||||||||||
27
Item 6. | Selected Financial Data. |
Year Ended March 31, | ||||||||||||||||||||
2006 | 2005 (1) | 2004 (1) | 2003 (1) | 2002 (1) | ||||||||||||||||
(restated) | (restated) | (restated) | (restated) | |||||||||||||||||
(in millions, except per share amounts) | ||||||||||||||||||||
STATEMENT OF OPERATIONS
DATA
|
||||||||||||||||||||
Revenue
|
$ | 3,796 | $ | 3,603 | $ | 3,332 | $ | 3,057 | $ | 2,910 | ||||||||||
Income (loss) from continuing
operations
(2)
|
156 | 26 | (89 | ) | (372 | ) | (1,220 | ) | ||||||||||||
Basic income (loss) from
continuing operations per share
|
0.27 | 0.04 | (0.15 | ) | (0.65 | ) | (2.11 | ) | ||||||||||||
Diluted income (loss) from
continuing operations per share
|
0.26 | 0.04 | (0.15 | ) | (0.65 | ) | (2.11 | ) | ||||||||||||
Dividends declared per common share
|
0.16 | 0.08 | 0.08 | 0.08 | 0.08 |
March 31, | ||||||||||||||||||||
2006 | 2005 (1) | 2004 (1) | 2003 (1) | 2002 (1) | ||||||||||||||||
(restated) | (restated) | (restated) | (restated) | |||||||||||||||||
(in millions) | ||||||||||||||||||||
BALANCE SHEET AND OTHER
DATA
|
||||||||||||||||||||
Cash provided by continuing
operating activities
|
$ | 1,380 | $ | 1,527 | $ | 1,279 | $ | 1,310 | $ | 1,241 | ||||||||||
Working (deficit)
capital
(3)(4)
|
(729 | ) | 133 | 635 | (327 | ) | 37 | |||||||||||||
Total
assets
(4)
|
10,438 | 11,396 | 10,862 | 11,417 | 12,493 | |||||||||||||||
Deferred subscription
value
(5)
|
5,415 | 5,486 | 4,354 | 3,959 | 3,548 | |||||||||||||||
Long-term debt (less current
maturities)
|
1,810 | 1,810 | 2,298 | 2,298 | 3,334 | |||||||||||||||
Stockholders equity
|
4,680 | 5,042 | 4,919 | 4,567 | 4,763 |
(1) | As disclosed under the Explanatory Note Restatements immediately preceding Part I, Item 1 of this Form 10-K, the Company has restated certain financial data for the fiscal years ended March 31, 2005, 2004, 2003, and 2002. The effects on revenue related to these restatements were: for fiscal year 2005, an increase of $43 million and for fiscal year 2004, an increase of $12 million. The net effects on income (loss) from continuing operations related to these restatements were: for fiscal year 2005, an increase of $28 million; for fiscal year 2004, a decrease of $8 million; for fiscal year 2003, a decrease of $32 million; and for fiscal year 2002, a decrease of $62 million. Refer to Note 12, Restatements, in the Notes to the Consolidated Financial Statements for additional information. | |
(2) | In fiscal year 2006, we incurred after-tax charges of approximately $54 million for restructuring and other costs and an after-tax benefit of approximately $5 million relating to the gain on the divestiture of assets that were contributed during the formation of Ingres Corp. We also incurred an after-tax charge of approximately $18 million for write-offs of in-process research and development costs due to our recent acquisitions. In fiscal year 2005, we incurred an after-tax charge of approximately $144 million related to the shareholder litigation and |
28
government investigation settlements, a tax expense charge of $55 million related to the planned repatriation of $500 million in cash under the American Jobs Creation Act of 2004, and an after-tax charge of approximately $17 million for severance and other expenses in connection with a restructuring plan. Refer to Shareholder Litigation and Government Investigation Settlement, Income Taxes, and Restructuring Charge within Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations for additional information. | ||
Our adoption of SFAS No. 142, Goodwill and Other Intangible Assets, had the effect of prospectively eliminating the amortization of goodwill and certain other intangible assets beginning on April 1, 2002. Refer to Note 1, Significant Accounting Policies Goodwill, in the Notes to the Consolidated Financial Statements for additional information. We amortized goodwill and assembled workforce for fiscal year 2002 of $458 million. | ||
(3) | Current liabilities include deferred subscription revenue (collected) current of approximately $1.52 billion, $1.41 billion, $1.21 billion, $0.92 billion and $0.58 billion for the fiscal years ended March 31, 2006, 2005, 2004, 2003 and 2002, respectively. Also included in current liabilities is deferred maintenance revenue of approximately $0.25 billion, $0.27 billion, $0.29 billion, $0.32 billion, and $0.46 billion for the fiscal years ended March 31, 2006, 2005, 2004, 2003 and 2002, respectively. | |
(4) | Certain prior year balances have been reclassified to conform to the current years presentation. Refer to Note 1, Significant Accounting Policies Reclassifications, in the Notes to the Consolidated Financial Statements for additional information. | |
(5) | See Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, for details. |
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations. |
29
30
31
32
Percent
|
|||||||||||||||||
For the Year Ended March 31, | 2006 | 2005 | Change | Change | |||||||||||||
(restated) | |||||||||||||||||
(in millions) | |||||||||||||||||
Subscription revenue
|
$ | 2,838 | $ | 2,587 | $ | 251 | 10 | % | |||||||||
Total revenue
|
$ | 3,796 | $ | 3,603 | $ | 193 | 5 | % | |||||||||
Subscription revenue as a percent
of total revenue
|
75 | % | 72 | % | 3 | % | N/A | ||||||||||
Deferred subscription value
|
$ | 5,415 | $ | 5,486 | $ | (71 | ) | (1 | ) | % | |||||||
New deferred subscription value
(direct)
|
$ | 2,610 | $ | 3,493 | $ | (883 | ) | (25 | ) | % | |||||||
New deferred subscription value
(indirect)
|
$ | 195 | $ | 144 | $ | 51 | 35 | % | |||||||||
Weighted average license agreement
duration in years (direct)
|
3.03 | 3.10 | (.07 | ) | (2 | ) | % | ||||||||||
Cash from continuing operating
activities
|
1,380 | 1,527 | $ | (147 | ) | (10 | ) | % | |||||||||
Income from continuing operations
|
156 | 26 | $ | 130 | 500 | % |
Percent
|
||||||||||||||||
As of March 31, | 2006 | 2005 | Change | Change | ||||||||||||
(in millions) | ||||||||||||||||
Total cash, cash equivalents, and
marketable securities
|
$ | 1,865 | $ | 3,125 | $ | (1,260 | ) | (40 | )% | |||||||
Total debt
|
$ | 1,811 | $ | 2,636 | $ | (825 | ) | (31 | )% |
33
Fiscal Year 2006 | Fiscal Year 2005 | |||||||||||||||
New Deferred
|
Weighted
|
New Deferred
|
Weighted
|
|||||||||||||
Subscription
|
Average
|
Subscription
|
Average
|
|||||||||||||
Value from
|
Duration
|
Value from
|
Duration in
|
|||||||||||||
Direct Sales | in Years | Direct Sales | Years | |||||||||||||
(in millions) | ||||||||||||||||
Fourth Quarter
|
$ | 969 | 2.89 | $ | 1,469 | 3.40 | ||||||||||
Third Quarter
|
730 | 3.46 | 845 | 2.95 | ||||||||||||
Second Quarter
|
575 | 2.92 | 649 | 2.90 | ||||||||||||
First Quarter
|
336 | 2.70 | 530 | 2.75 | ||||||||||||
$ | 2,610 | 3.03 | $ | 3,493 | 3.10 | |||||||||||
34
45
48
66
67
68
87
88
89
90
91
92
118
119
133
Fiscal Year 2006
Fiscal Year 2005
Percentage
Percentage
of
of
Percentage of
Dollar
Percentage of
Dollar
Total
Change
Total
Change
Revenue
2006/
Revenue
2005/
2006
2005
2005
2005
2004
2004
(restated)
(restated)
(restated)
75
%
72
%
10
%
72
%
63
%
22
%
11
%
12
%
(2
)%
12
%
16
%
(15
)%
4
%
7
%
(36
)%
7
%
10
%
(23
)%
1
%
2
%
(42
)%
2
%
4
%
(43
)%
9
%
7
%
32
%
7
%
7
%
4
%
100
%
100
%
5
%
100
%
100
%
8
%
35
Table of Contents
36
Table of Contents
37
Table of Contents
Fiscal Year 2006
Fiscal Year 2005
2006
%
2005
%
Change
2005
%
2004
%
Change
(restated)
(restated)
(restated)
(in millions)
$
2,006
53
$
1,878
52
7
%
$
1,878
52
$
1,766
53
6
%
1,790
47
1,725
48
4
%
1,725
48
1,566
47
10
%
$
3,796
100
$
3,603
100
5
%
$
3,603
100
$
3,332
100
8
%
38
Table of Contents
Fiscal Year 2006
Fiscal Year 2005
Percentage
Percentage
of
of
Percentage of
Dollar
Percentage of
Dollar
Total
Change
Total
Change
Revenue
2006/
Revenue
2005/
2006
2005
2005
2005
2004
2004
(restated)
(restated)
(restated)
12
%
12
%
12
%
14
%
(3
)%
7
%
6
%
18 %
6
%
7
%
2 %
42
%
38
%
18 %
38
%
40
%
3 %
18
%
20
%
(2
)%
20
%
21
%
1 %
10
%
9
%
16 %
9
%
8
%
27 %
4
%
4
%
3 %
4
%
4
%
(3
)%
2
%
N/A
2
%
1
%
214 %
1
%
N/A
6
%
N/A
6
%
5
%
39%
96
%
96
%
5 %
96
%
100
%
4%
1
%
3
%
(61
)%
3
%
4
%
(9
)%
39
Table of Contents
40
Table of Contents
Year Ended March 31,
2006
2005
2004
(in millions)
$
(7
)
$
$
(19
)
(9
)
8
41
1
(13
)
26
4
$
(15
)
$
(5
)
$
52
41
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Shareholder
NYSE Closing
Litigation Settlement
Stock Price
Estimated Value
(in millions)
$
31.03
$
174
26.30
156
28.06
163
26.86
158
27.34
158
26.11
150
25.00
144
42
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43
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June 30
(1)
Sept.
30
(2)
Dec.
31
(3)
Mar.
31
(4)
Total
(restated)
(restated)
(restated)
(in millions, except per share amounts)
$
927
$
950
$
971
$
948
$
3,796
24
%
25
%
26
%
25
%
100
%
$
97
$
46
$
54
$
(41
)
$
156
$
0.17
$
0.08
$
0.09
$
(0.07
)
$
0.27
$
0.16
$
0.08
$
0.09
$
(0.07
)
$
0.26
44
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June 30
Sept.
30
(5)
Dec.
31
(6)
Mar.
31
(7)
Total
(restated)
(restated)
(restated)
(restated)
(in millions, except per share amounts)
$
868
$
875
$
930
$
930
$
3,603
24
%
24
%
26
%
26
%
100
%
$
56
$
(91
)
$
37
$
24
$
26
$
0.10
$
(0.16
)
$
0.06
$
0.04
$
0.04
$
0.09
$
(0.16
)
$
0.06
$
0.04
$
0.04
(1)
Includes a tax benefit of
approximately $36 million reflecting the Department of
Treasury and Internal Revenue Service Notice 2005-38, which
permitted the utilization of additional foreign tax credits to
reduce the estimated taxes associated with cash repatriation
(Refer to Income Taxes within Results of
Operations). Also includes a charge of approximately
$4 million related to the write-off of in-process research
and development costs in relation to the acquisition of Concord
(refer to Note 2, Acquisitions, Divestitures and
Restructuring, in the Notes to the Consolidated Financial
Statements) and an after-tax credit of approximately
$2 million related to a reduction in the allowance for
doubtful accounts (refer to Note 5, Trade and
Installment Accounts Receivable, in the Notes to the
Consolidated Financial Statements).
(2)
Includes an after-tax charge of
approximately $14 million related to the write-off of
in-process research and development costs in relation to the
acquisition of Niku (refer to Note 2, Acquisitions,
Divestitures and Restructuring, in the Notes to the Consolidated
Financial Statements), an after-tax charge of approximately
$6 million in connection with certain DPA related costs and
the termination of a non-core application development
professional services project, an after-tax charge of
approximately $23 million for severance and other expenses
in connection with a restructuring plan (refer to
Shareholder Litigation and Government Investigation
Settlement and Restructuring Charge within
Results of Operations), and an after-tax credit of approximately
$6 million related to a reduction in the allowance for
doubtful accounts (refer to Note 5, Trade and
Installment Accounts Receivable, in the Notes to the
Consolidated Financial Statements).
(3)
Includes the after-tax impact of
approximately $19 million for the quarterly restatement of
commission expense. Also includes an after-tax charge of
approximately $2 million in connection with certain DPA
related costs, an after-tax charge of approximately
$9 million for severance and other expenses in connection
with a restructuring plan (refer to Shareholder Litigation
and Government Investigation Settlement and
Restructuring Charge within Results of Operations),
a tax charge of $2 million relating to the loss on a
sale/leaseback transaction, an after-tax credit of approximately
$2 million related to a reduction in the allowance for
doubtful accounts (refer to Note 5, Trade and
Installment Accounts Receivable, in the Notes to the
Consolidated Financial Statements), and an after-tax credit of
approximately $5 million relating to the gain on the sale
of assets that were contributed during the formation of Ingres
Corp. (refer to Note 2, Acquisitions, Divestitures
and Restructuring, in the Notes to the Consolidated
Financial Statements).
(4)
Includes a tax charge of
$36 million required due to the companys finalization
of its 2006 tax estimates, including its repatriation of
$584 million of cash in the fourth quarter of fiscal year
2006. (Refer to Income Taxes within Results of
Operations). Also includes an after-tax charge of approximately
$3 million in connection with certain DPA related costs, an
after-tax charge of approximately $9 million for severance
and other expenses in connection with a restructuring plan
(refer to Shareholder Litigation and Government
Investigation Settlement and Restructuring
Charge within Results of Operations), a tax charge of
approximately $2 million relating to the loss on a
sale-leaseback transaction, and after-tax credits of
approximately $1 million related to a reduction in the
allowance for doubtful accounts (refer to Note 5,
Trade and Installment Accounts Receivable, in the
Notes to the Consolidated Financial Statements), $6 million
due to full year reductions in variable compensation programs,
and $7 million due to the Companys decision in the
fourth quarter of fiscal year 2006 to forego its discretionary
contribution to the company-sponsored 401(k) plan.
(5)
Includes an after-tax charge of
approximately $130 million related to the shareholder
litigation and government investigation settlements, an
after-tax charge of approximately $17 million for severance
and other expenses in connection with a restructuring plan
(refer to Shareholder Litigation and Government
Investigation Settlement and Restructuring
Charge within Results of Operations), and an after-tax
credit of approximately $3 million related to a reduction
in the allowance for doubtful accounts (refer to Note 5,
Trade and Installment Accounts Receivable, in the
Notes to the Consolidated Financial Statements).
(6)
Includes an after-tax charge of
approximately $6 million of cash and stock-based
compensation expense associated with the appointment of our new
President and CEO in November 2004 and an after-tax credit of
approximately $4 million related to a reduction in the
allowance for doubtful accounts (refer to Note 5,
Trade and Installment Accounts Receivable, in the
Notes to the Consolidated Financial Statements).
(7)
Includes a tax expense charge of
$55 million related to the repatriation of
$500 million in cash under the American Jobs Creation Act
of 2004 (Refer to Income Taxes within Results of
Operations), an after-tax gain of approximately $10 million
related to the settlement with Quest Software Inc., and an
after-tax credit of approximately $8 million related to a
reduction in the allowance for doubtful accounts (refer to
Note 5, Trade and Installment Accounts
Receivable, in the Notes to the Consolidated Financial
Statements).
Table of Contents
46
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March 31,
March 31,
2006
2005
(restated)
(in millions)
$
828
$
794
77
39
1,680
1,794
254
391
(25
)
(35
)
2,814
2,983
(44
)
(62
)
(4
)
(23
)
(534
)
(314
)
(476
)
(661
)
(1,204
)
(1,133
)
(47
)
(14
)
505
776
1,236
1,698
511
759
(20
)
(53
)
1,727
2,404
(34
)
(79
)
(8
)
(32
)
(1,236
)
(1,698
)
449
595
$
954
$
1,371
47
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March 31,
March 31,
2006
2005
(restated)
(in millions)
$
1,517
$
1,407
448
273
534
314
476
661
1,204
1,133
1,236
1,698
$
5,415
$
5,486
Table of Contents
2006
2005
Maximum
Outstanding
Maximum
Outstanding
Available
Balance
Available
Balance
(in millions)
$
1,000
$
$
1,000
$
825
350
350
500
500
460
460
500
500
1
1
$
1,811
$
2,636
49
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50
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51
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Payments Due by Period
Less Than
1-3
3-5
More than
Total
1 Year
Years
Years
5 Years
(in millions)
$
2,223
$
85
$
506
$
1,048
$
584
612
128
186
111
187
118
50
37
25
6
78
17
25
14
22
$
3,031
$
280
$
754
$
1,198
$
799
(1)
The contractual obligations for
noncurrent operating leases include sublease income totaling
$93 million expected to be received in the following
periods: $25 million (less than 1 year);
$40 million (1-3 years); $18 million
(3-5 years); and $10 million (more than 5 years).
(2)
Other long-term liabilities
primarily relate to operating expenses associated with operating
lease obligations.
52
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We will incur approximately $105 million (pre-tax) in
non-cash stock-based compensation charges in connection with
SFAS No. 123(R) (we incurred approximately
$99 million of total stock-based compensation charges in
fiscal year 2006);
Cash generated from operations will be negatively impacted by an
additional $200 million in tax payments, higher
disbursements due to a decline in the days payables cycle and
lower collections from contracts with accelerated payment
terms; and
Our effective tax rate should be approximately 34% in fiscal
year 2007.
53
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54
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Historical information, such as general collection history of
multi-year software agreements;
Current customer information/events, such as extended
delinquency, requests for restructuring, and filing for
bankruptcy;
Results of analyzing historical and current data; and
The overall macroeconomic environment.
55
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56
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57
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Item 7A.
Quantitative
and Qualitative Disclosures About Market Risk.
58
Table of Contents
Item 8.
Financial
Statements and Supplementary Data.
Item 9.
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Item 9A.
Controls
and Procedures.
59
Table of Contents
(i)
The Company did not maintain an effective control environment
due to a lack of effective communication policies and
procedures. Specifically, (a) there was a lack of
coordination and communication among certain of the
Companys senior executives with responsibility for the
sales and finance functions and within the sales and finance
functions regarding potentially significant financial
information; and (b) there were communications by certain
senior executives that failed to set a proper tone, which could
discourage escalation of information of possible importance in
clarifying or resolving financial issues. These deficiencies
resulted in more than a remote likelihood that a material
misstatement of the annual or interim financial statements would
not be prevented or detected and contributed to the material
weaknesses in internal controls described in items (ii) and
(iii) below.
60
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(ii)
The Companys policies and procedures relating to controls
over the accounting for sales commissions were not effective.
Specifically, the Company did not effectively estimate, record
and monitor its sales commissions and related accruals. The
Company also did not reconcile its commission expense accrual to
actual payments on a timely basis. These deficiencies resulted
in a material error in the recognition of commission expense,
which resulted in a restatement of the interim financial
statements for the three and nine-month periods ended
December 31, 2005.
(iii)
The Companys policies and procedures relating to the
identification, analysis and documentation of non-routine tax
matters were not effective. The Companys tax function also
did not provide timely communication to management of its
assumptions regarding certain non-routine tax matters. This
deficiency resulted in a material error in the recognition of
taxes associated with the Companys cash repatriation,
which occurred in the fourth quarter of fiscal year 2006.
(iv)
The Companys policies and procedures relating to the
accounting for and disclosure of stock-based compensation
relating to stock options were not effective. Specifically,
controls including monitoring controls, were not effective in
ensuring the existence, completeness, valuation and presentation
of the Companys granting of stock options, which impacted
the Companys determination of the fair value associated
with these awards and recognition of stock-based compensation
expense over the related vesting periods from fiscal year 2002
through fiscal year 2006. This deficiency resulted in material
errors in the recognition of compensation expense, additional
paid-in capital, deferred taxes and related financial
disclosures relating to such stock options, which contributed to
a restatement of annual financial statements for fiscal years
2005 through 2002, and for interim financial statements for
fiscal years 2006 and 2005.
(v)
The Companys policies and procedures were not effectively
designed to identify, quantify and record the impact on
subscription revenue when license agreements have been cancelled
and renewed more than once prior to the expiration date of each
successive license agreement. This deficiency resulted in
material errors in the recognition of revenue, which contributed
to a restatement of annual financial statements for fiscal years
2005 and 2004, and for interim financial statements for fiscal
years 2006 and 2005.
61
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During the quarter ended June 30, 2005, the Company began
maintaining a separate schedule of credits granted under
software contracts executed under the Companys prior
business model;
During the quarter ended June 30, 2005, the financial
reporting department began quarterly reviews of utilized credits
to determine the proper accounting for utilized credits that
were originally granted under software contracts executed under
the Companys prior business model; and
Beginning with the quarter ended June 30, 2005, management
and internal audit began periodic testing of the completeness
and accuracy of the credit schedule prepared by the sales
accounting department and of all accounting entries related to
the utilization of any such credits by the Companys
customers.
Disciplinary proceedings against members of management and other
employees in the EMEA region, leading to their resignation or
termination subsequent to March 31, 2005;
The appointment of a new Head of Global Procurement in April
2005;
The appointment of a new Head of Procurement for the EMEA region
in June 2005;
The appointment of a new General Manager for the EMEA region in
June 2005;
The appointment of a new Head of Facilities for the EMEA region
in July 2005;
62
Table of Contents
The hiring of additional finance personnel, including a new
controller for the UK in August 2005;
The initiation of changes to the roles and responsibilities, as
well as reporting lines, of executives in charge of the EMEA
region for more effective segregation of duties throughout
fiscal year 2006; and
Ongoing communications from senior management and provision of
training to employees regarding the importance of the control
environment, financial integrity, and the Companys code of
ethics.
The Company completed an inventory of active prior business
model contracts on a worldwide basis and established a central
database to track such contracts;
The Company revised its revenue recognition checklists to
identify the renewal of any prior business model contracts for
proper disposition; and
The Company began monitoring the renewal of prior business model
license agreements to ensure that any remaining deferred
maintenance and unamortized discounts are recognized ratably
over the life of the new subscription based license agreement.
Personnel and organizational changes:
Appointment of a new Chief Operating Officer and the appointment
of a new Chief Financial Officer to be effective on or about
August 15, 2006;
Realignment of reporting of the Chief Financial Officer from
Chief Operating Officer to the Chief Executive Officer;
Reorganization of the Sales Function including:
Elimination of the position Executive Vice President Worldwide
Sales, and establishment of direct reporting of the field sales
organization to the Chief Operating Officer;
Appointment of a Senior Vice President Sales Operations with
direct reporting to the Chief Operating Officer;
Implementation of recurring meetings with representation from
key departments including legal, finance, operations and human
resources to address operating and financial performance, as
well as the identification, tracking and communication of
information of potential significance to financial reporting and
disclosure issues; and
Provision of focused training relating to ethics, the
Companys Code of Conduct and its core values.
Review of commissions accounting procedures by the Internal
Audit Department;
63
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Appointment of a quality review team to assess the adequacy and
efficacy of the business processes, IT Systems and financial
oversight for the administration of sales commissions;
Formalization of policies and procedures including communication
and reporting responsibilities among the Companys sales,
human resources and finance functions to ensure that the
administration, payments of and accounting for commissions
expense are coordinated;
Reconciliation of commission expense accruals to actual
commission payments on a quarterly basis; and
Monitoring of progress on remediation and to provide governance,
including organizational alignment, by a cross functional review
committee.
Review of the tax departments policies and procedures
including its use of external advisors;
Establishment of new documentation and analysis requirements for
non-routine tax matters to ensure among other things, that
accounting conclusions involving such matters are thoroughly
documented and identify the critical factors that support the
basis for such conclusions; and
Formalization of communication and review of non-routine tax
matters between the tax function and senior finance management.
Formalization of policies and procedures, as well as provision
of training, on the identification, quantification and recording
of the impact on subscription revenue of such license agreements.
64
Table of Contents
Item 10.
Directors
and Executive Officers of the Registrant.
Director
Age
Since
Chairman of Midway Games Inc.
since June 2004. Interim CEO of the Company from April 2004 to
February 2005. From June 2001 to January 2004, Mr. Cron
served as Chairman and CEO of Vivendi Universal Games, Inc., a
publisher of online, PC and console-based interactive
entertainment and a division of Vivendi Universal, S.A.
Mr. Cron served as Chief Executive Officer of the Flipside
Network, which later became a part of Vivendi Universal Net USA,
from March 2001 to June 2001. He was Chairman and Chief
Executive Officer of Uproar Inc. from September 1999 to March
2001, when Uproar was acquired by Flipside.
49
2002
Managing Director of Park
Strategies LLC, a business consulting firm, since January 1999.
Mr. DAmato was a United States Senator from January
1981 until January 1999. During his tenure in the Senate, he
served as Chairman of the Senate Committee on Banking, Housing
and Urban Affairs, and Chairman of the Commission on Security
and Cooperation in Europe.
68
1999
Chairman of FLF Investments, a
family business involved with the acquisition and management of
commercial real estate properties and other assets, since 1999.
Since his retirement as Vice Chairman from Electronic Data
Systems Corporation in 1998, he founded Convergent Partners, a
venture capital fund focusing on buyouts of technology enabled
companies. In addition, from 2000 to 2001, Mr. Fernandes
served as Chairman and CEO of GroceryWorks.com, an internet
grocery fulfillment company. In November 1998, he founded
Voyagers The Travel Store Holdings, Inc., a chain of travel
agencies, and was President and sole shareholder of Voyagers.
Voyagers filed a petition under Chapter 7 of the federal
bankruptcy laws in October 2001. Mr. Fernandes serves on
the board of directors of BancTec, Inc. and Blockbuster Inc. He
is also a member of the board of governors of the
Boys & Girls Clubs of America and Trustee for the
OHara Trust and the Hall-Voyer Foundation.
62
2003
65
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Director
Age
Since
Founder and President of Robert E.
La Blanc Associates, Inc., an information technologies
consulting and investment banking firm, since 1981.
Mr. La Blanc was previously Vice Chairman of
Continental Telecom Corporation and, before that, a general
partner of Salomon Brothers, Inc. He is also a director of
Fibernet Telecom Group, Inc. and a family of Prudential Mutual
Funds.
72
2002
President and Chief Executive
Officer of Schneider National, Inc., a provider of
transportation, logistics and related services, since 2002.
Prior to being appointed CEO, Mr. Lofgren served as Chief
Operating Officer from 2000 to 2002, and Chief Information
Officer from 1996 to 2002. Mr. Lofgren is a member of the
Board of Directors of the American Trucking Associations, Inc.
(ATA) and the Board of Directors of the American
Transportation Research Institute, a research trust affiliated
with the ATA, whose purpose is to conduct research in the field
of transportation. He also serves as a member of the Board of
Directors of the Boys & Girls Club of Green Bay.
47
2005
Louis Kirstein Professor of Human
Relations at the Harvard Business School since 1978.
Mr. Lorsch has served as Faculty Chairman of the Harvard
Business Schools Global Corporate Governance Initiative
since 1998. He is the author of more than a dozen books and
consultant to the boards of directors of several Fortune
500 companies. He has held several major administrative
positions at the school, including Senior Associate Dean from
1986 to 1995.
73
2002
President of Executive Consulting
Group, LLC. During a
36-year
tenure at IBM, Mr. McCracken held several different
executive offices, including serving as general manager of the
IBM Printing Systems Division and general manager of Worldwide
Marketing of IBM PC Company. He is currently a member of the
Board of Directors of IKON Office Solutions. He is also Chairman
of the Board of Trustees of Lutheran Social Ministries of New
Jersey and President of the Greater Plainfield Habitat for
Humanity.
63
2005
Table of Contents
Director
Age
Since
Chairman of the Board of the
Company since April 2004; Lead Independent Director of the
Company from 2002 to April 2004. Mr. Ranieri is the prime
originator and founder of the Hyperion private equity funds and
chairman
and/or
director of various other non-operating entities owned directly
and indirectly by Hyperion. Mr. Ranieri also serves as
Chairman, Chief Executive Officer and President of
Ranieri & Co., Inc., a private investment advisor and
management corporation. He is also Chairman of American
Financial Realty Trust, Capital Lease Funding, Inc., Franklin
Bank Corp. and Root Markets, Inc., an internet-based marketing
company. In addition, Mr. Ranieri serves on the Board of
Directors of Reckson Associates Realty Corp. Prior to forming
Hyperion, Mr. Ranieri had been Vice Chairman of Salomon
Brothers, Inc., and worked for Salomon from July 1968 to
December 1987. Mr. Ranieri has served on the National
Association of Home Builders Mortgage Roundtable continuously
since 1989. Mr. Ranieri acts as a trustee or director of
Environmental Defense and the Metropolitan Opera Association and
is Chairman of the Board of the American Ballet Theatre and Vice
Chairman of the Kennedy Center Corporate Fund Board.
59
2001
Independent consultant since
February 2000. Mr. Schuetze was Chief Accountant to the
Securities and Exchange Commission Division of Enforcement from
November 1997 to February 2000, an independent consultant from
April 1995 to November 1997, and Chief Accountant to the
Securities and Exchange Commission from January 1992 to March
1995. He was a charter member of the Financial Accounting
Standards Board, a member of the Financial Accounting Standards
Advisory Council, and a member and chair of the Accounting
Standards Executive Committee of the American Institute of
Certified Public Accountants. He is also a director and chairman
of the Audit Committee of TransMontaigne Inc.
73
2002
Chief Executive Officer of the
Company since February 2005 and President and Director since
November 2004. From November 2004 to February 2005, he served as
the Companys Chief Executive Officer-elect. From July to
November 2004, Mr. Swainson was Vice President of Worldwide
Sales and Marketing of IBMs Software Group, responsible
for selling its diverse line of software products through
multiple channels. From 1997 to July 2004, he was General
Manager of the Application Integration and Middleware division
of IBMs Software Group, a division he started in 1997. He
is also a director of Visa U.S.A. Inc. and Cadence Design
Systems, Inc.
52
2004
Table of Contents
Director
Age
Since
Ms. Unger was a Commissioner of
the Securities and Exchange Commission from November 1997 to
February 2002, including Acting Chairperson of the SEC from
February to August 2001. From June 2002 through June 2003,
Ms. Unger was employed by CNBC as a Regulatory Expert.
Before being appointed to the SEC, Ms. Unger served as
Counsel to the United States Senate Committee on Banking,
Housing and Urban Affairs from October 1990 to November 1997.
Prior to working on Capitol Hill, Ms. Unger was an attorney
with the Enforcement Division of the SEC. Ms. Unger serves
as a director of Ambac Financial Group, Inc. and Childrens
National Medical Center, and acts as the Independent Consultant
to JPMorgan Chase for the Global Research Settlement.
45
2004
Chairman of the Board of Cognos
Incorporated, a developer of business intelligence software,
since May 2004 and a director since 1994. Mr. Zambonini was
Chief Executive Officer of Cognos from September 1995 to May
2004 and President from 1993 to April 2002. Mr. Zambonini
currently serves on the Board of Directors of Reynolds and
Reynolds Company and Emergis Inc.
59
2005
Table of Contents
the name of the stockholder and evidence of the
stockholders ownership of Company common stock, including
the number of shares owned and the length of time of such
ownership; and
the name of the candidate, the candidates résumé
or a listing of his or her qualifications to be a director of
the Company, and the persons consent to be named as a
director nominee if recommended by the Committee and nominated
by the Board.
69
Table of Contents
Item 11.
Executive
Compensation.
70
Table of Contents
Long-Term Compensation
Annual Compensation
Awards
Payouts
Other
Restricted
Securities
Annual
Stock
Underlying
LTIP
All Other
Fiscal
Salary
Bonus
Compen-
Awards
Options/
Payouts
Compensation
Year
($)(1)
($)(2)
sation ($)(3)
($)(5)
SARs(6)
($)(7)
($)(8)
2006
1,000,000
337,565
231,354
655,240
170,700
1,750
2005
359,853
333,334
77,338
(4)
6,022,000
350,000
5,335,000
(9)
2004
2006
750,000
202,543
12,000
393,140
102,400
5,250
2005
750,000
522,375
12,000
1,840,421
135,176
15,650
2004
750,000
520,000
12,000
2,167,602
161,400
17,250
2006
525,000
148,412
4,379
288,094
75,100
438
2005
63,263
371,840
2004
2006
750,000
17,136
119,500
5,250
2005
650,000
796,000
59,577
(4)
694,773
155,157
150,000
(9)
2004
4,513
235,000
2006
550,000
135,021
10,000
262,101
68,300
5,250
2005
395,833
861,832
22,020
(4)
455,585
101,742
14,369
2004
350,000
540,136
623,152
46,400
2006
450,000
280,998
12,000
196,023
51,200
82,071
5,250
2005
450,000
1,011,713
12,000
849,413
62,388
15,650
2004
450,000
947,000
12,000
999,192
74,400
17,250
(1)
Mr. Swainsons employment
with the Company commenced on November 22, 2004 and
Mr. Clarkes employment commenced on March 30,
2004. Mr. Clarkes last day of employment was
April 30, 2006. Mr. Christenson succeeded
Mr. Clarke as Chief Operating Officer. Although
Mr. Christenson was not one of the four most highly
compensated executive officers for fiscal year 2006, the Company
determined to include him in these tables as a Named Executive
Officer as Mr. Clarkes successor.
Mr. Christensons employment with the Company
commenced on February 11, 2005 and he served as Executive
Vice President, Business Development until named Chief Operating
Officer. Mr. Corgans employment also terminated after
the end of fiscal year 2006 and his last day with the Company
was June 30, 2006. (See also the summary of his severance
arrangements under Employment Agreements; Severance
Arrangements; Change in Control Arrangements
Severance Arrangements below.) Since the position of
Executive Vice President, Worldwide Sales was eliminated, there
was no successor appointed to this position.
(2)
As discussed in the Compensation
and Human Resource Committee Report on Executive Compensation
below, no annual cash bonuses were paid to any Named Executive
Officers under the Companys fiscal year 2006 Annual Bonus
program. Except for a discretionary bonus of $180,000 paid to
Mr. Quinn for fiscal year 2006, the amounts in the
Bonus column represent the value of the portion of
the restricted stock award granted with respect to fiscal year
2006 that was immediately vested at the time of grant on
June 7, 2006 (based on the closing price of the stock on
the date of grant). Additional details about this grant are
provided in footnote (5) to this table.
(3)
Consists of non-reimbursed car
allowance for Messrs. Artzt and Quinn. In lieu of car
allowances and in order to help maintain the confidentiality of
business matters when outside of the office,
Messrs. Swainson, Christenson and Clarke had use of a
Company car and driver in fiscal year 2006. Amounts attributable
for personal use of such car and driver have been reflected in
this column and are de minimis in amount. In addition, several
executives, including Messrs. Swainson, Clarke and Corgan,
utilized the corporate aircraft and helicopter for personal use
in fiscal year 2006, in accordance with the Companys
Aircraft Use Policy (the Aircraft Policy). The
Aircraft Policy requires Mr. Swainson to use the corporate
aircraft and helicopter for personal use for security reasons
and other executives may use them for personal purposes only
with the express permission of the Chief Compliance Officer. The
Company determined the value of such use for
Messrs. Swainson, Clarke and Corgan, based on the
incremental cost to the Company, plus additional charges
comparable to first-class airfare (or in the case of helicopter
use, charter fares) for family members, as applicable, to be
$151,820, $14,880 and $10,000, respectively. This valuation of
aircraft use is different from the standard industry fare level
(SIFL) valuation used to impute income for these executives for
tax purposes. To the extent relocation and housing expenses were
treated as perquisites by the Company and imputed as income to
the
71
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Named Executive Officers in fiscal
year 2006, such expenses have been included in this table. With
regard to Mr. Swainson, the Company treated as perquisites
$52,367 for housing in fiscal year 2006, which amount was
grossed up for tax purposes in an amount equal to
approximately $23,634. Messrs. Swainson and Clarke also
received annual health examinations in fiscal 2006 for which the
Company paid $2,375 and $1,975, respectively.
(4)
Consists of use of corporate
aircraft and helicopter for personal use for
Messrs. Swainson and Corgan. The Company determined the
value of such use for Messrs. Swainson and Corgan, based on
the incremental cost to the Company, plus additional charges
comparable to first-class airfare (or in the case of helicopter
use, charter fares) for family members, as applicable, to be
$39,204 and $22,020, respectively. To the extent relocation and
housing expenses were treated as perquisites by the Company and
imputed as income to the Named Executive Officers, such expenses
have been included in this table. With regard to
Messrs. Swainson and Clarke, the Company treated as
perquisites $10,655 and $33,660, respectively, for housing and
relocation, which amounts were grossed up for tax
purposes in amounts equal to $4,920 and $25,894, respectively.
The Company also paid $22,379 for legal fees associated with the
negotiation of Mr. Swainsons employment agreement. In
lieu of car allowances and in order to help maintain the
confidentiality of business matters when outside of the office,
Messrs. Swainson and Clarke had use of a Company car and
driver in fiscal year 2005. Amounts attributable for personal
use of such car and driver have been reflected in this column
and are de minimis in amount.
(5)
For fiscal year 2006, the amounts
represent the value of 66% of the restricted stock award granted
on June 7, 2006 with respect to fiscal year 2006 on the
date of grant. The first 34% of the grant (reflected in the
Bonus column and described in footnote (2) to this table),
was immediately vested upon grant. The Named Executive Officers
were awarded the following number of restricted shares relating
to performance in fiscal year 2006 (including the shares
reflected in the Bonus column which became immediately vested at
grant on June 7, 2006): Mr. Swainson
45,375, Mr. Artzt 27,225,
Mr. Christenson 19,950,
Mr. Clarke 0, Mr. Corgan
18,150 and Mr. Quinn 13,575. These restricted
share awards vest as follows: 34% on the date of grant, 33% on
the first anniversary of the date of grant and 33% on the second
anniversary. Restricted shares carry the same dividend and
voting rights as unrestricted shares of Common Stock.
As of March 31, 2006 and based
on the closing stock price on that date, the approximate number
and value of the aggregate restricted stock and restricted stock
units holdings by the Named Executive Officers were as follows:
Mr. Swainson 212,041 and $5,769,636 (includes
45,375 restricted shares awarded in June 2006 relating to
performance in fiscal year 2006 and 100,000 restricted stock
units), Mr. Artzt 121,713 and $3,311,811
(includes 27,225 restricted shares awarded in June 2006 relating
to performance in fiscal year 2006),
Mr. Christenson 29,283 and $796,790 (includes
19,950 restricted shares awarded in June 2006 relating to
performance in fiscal year 2006), Mr. Clarke
17,010 and $462,842, Mr. Corgan 37,037 and
$1,007,777 (includes 18,150 restricted shares awarded in June
2006 relating to performance in the fiscal year 2006) and
Mr. Quinn 57,169 and $1,555,569 (includes
13,575 restricted shares awarded in June 2006 relating to
performance in fiscal year 2006). The disclosure of the grants
made in June 2006 relating to performance in fiscal 2006
includes the portion of such grants that became immediately
exercisable upon grant, as described in footnote (2) of
this table. Mr. Swainsons restricted stock units,
granted at the time of his hire, carry dividend equivalent
rights that entitle him to the same amount that he would have
received if he were a holder of an equal number of the
underlying Company shares at the time a dividend is declared.
Restricted stock and restricted stock units that are unvested at
the time of termination of employment are forfeited.
(6)
The grants in fiscal year 2006 do
not include options granted in April 2005 that relate to
performance in fiscal year 2005.
(7)
Represents the value of shares of
Common Stock issued to Mr. Quinn, based on the closing
price on the day of issuance, under the Companys 1998
Incentive Award Plan. Under this plan, phantom shares of Common
Stock were granted to certain employees that were subject to
time-based vesting and performance-based criteria.
Mr. Quinn became fully vested in his phantom shares on
August 25, 2004 and, under the terms of the plan, became
entitled to receive payment in shares of Common Stock in four
annual installments beginning on August 25, 2005.
Mr. Quinns first installment, representing 10% of his
award (3,117 shares), was issued to him on August 25,
2005, the value of which is reflected in this column.
(8)
Amounts represent contributions and
allocations made by the Company under its 401(k), excess benefit
and restoration plans (qualified and non-qualified defined
contribution plans).
(9)
Includes signing bonuses paid under
Mr. Swainsons and Mr. Clarkes employment
agreements of $2,500,000 and $150,000, respectively. In
addition, in respect of certain benefits Mr. Swainson would
have received had he remained employed with IBM, the Company
credited to a deferred compensation account and deposited
$2,835,000 into a rabbi trust (as described below in
the Chief Executive Officer Compensation section of
the Compensation and Human Resource Committee Report on
Executive Compensation).
72
Table of Contents
Number of
Percent of Total
Securities
Options
Underlying
Granted to
Grant Date
Options
Employees in
Exercise Price
Expiration
Present Value
Granted(1)
Fiscal Year(2)
($/share)
Date
($)(3)
170,700
9.53
%
28.98
5/20/15
2,664,559
102,400
5.72
%
28.98
5/20/15
1,598,423
75,100
4.20
%
28.98
5/20/15
1,172,281
119,500
6.67
%
28.98
5/20/15
1,865,347
68,300
3.81
%
28.98
5/20/15
1,066,136
51,200
2.86
%
28.98
5/20/15
799,212
(1)
Options generally vest in equal
installments over a three-year period beginning one year after
the date of grant and have a ten-year term.
(2)
Based on a total of 1,790,321
options issued with respect to fiscal year 2006 (and does not
include approximately 891,000 options granted in April 2005 that
relate to performance in fiscal year 2005). Does not include
options granted to employees under plans assumed by the Company
in connection with acquisitions completed in fiscal year 2006.
The total number of options granted to employees including under
assumed plans would be 1,870,485 and the percentages would be as
follows: Mr. Swainson 9.13%; Mr. Artzt 5.47%;
Mr. Christenson 4.01%; Mr. Clarke 6.39%;
Mr. Corgan 3.65%; and Mr. Quinn 2.74%.
(3)
The Black-Scholes option pricing
model was selected to estimate the Grant Date Present Value of
the options set forth in this table. The Companys use of
this model should not be construed as an endorsement of its
accuracy in valuing options. The following assumptions were made
for purposes of calculating the Grant Date Present Value:
expected life of six years, volatility of 0.56, dividend yield
of 0.55% and a risk-free interest rate of 3.9%.
Fiscal Year-End Option Values
Number of Securities
Value of Unexercised
Value
Underlying Unexercised
In-The-Money Options
Shares
Realized
Options at March 31, 2006
at March 31, 2006 ($)(2)
Acquired
($)(1)
Exercisable
Unexercisable
Exercisable
Unexercisable
0
0
119,000
401,700
0
0
555,062
5,356,065
863,139
290,837
4,720,525
9,321
0
0
0
75,100
0
0
0
0
209,169
300,488
55,108
27,143
0
0
115,003
151,439
674,441
2,679
79,199
830,585
779,245
138,139
755,020
4,296
(1)
Value realized was calculated based
on the market value of the shares purchased at the exercise date
less the aggregate option exercise price.
(2)
Valuation based on the closing
price of $27.21 on March 31, 2006 (the last trading day of
the fiscal year), less the respective exercise prices of the
options.
(3)
Generally and subject to applicable
law, options that are not exercised within 30 days of the
date of termination of employment are forfeited.
73
Table of Contents
Performance
Number of
or Other
Shares, Units
Period Until
Estimated Future Payouts
or Other
Maturation
Under Non-Stock Price-Based Plans
Rights(1)
or Payout
Threshold (#)
Target (#)
Maximum (#)
64,200
3/31/08
0
64,200
128,400
38,500
3/31/08
0
38,500
77,000
28,300
3/31/08
0
28,300
56,600
45,000
3/31/08
0
45,000
90,000
25,700
3/31/08
0
25,700
51,400
19,300
3/31/08
0
19,300
38,600
(1)
As part of the Long-Term Incentive
Bonus program for fiscal year 2006, participants are eligible to
receive unrestricted shares of Common Stock after the completion
of a three-year performance period beginning on April 1,
2005 and ending on March 31, 2008. The targets for this
three-year cycle are based on (i) average
three-year
adjusted net income growth and (ii) average three-year
return on invested capital, each responsible for determining
one-half of the payout under the award. The actual award can
range from 0 to 200% of the target amount. The right to receive
shares is forfeited upon a termination of employment that occurs
prior to March 31, 2008, unless it is a termination without
cause (as defined under the program), in which case the
executive may be eligible for a pro-rated grant at the end of
the performance period based on the portion of the period during
which the executive was employed. In all cases, the Compensation
and Human Resource Committee of the Board of Directors has
discretion to reduce the amount of any award for any reason.
74
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75
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76
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ON EXECUTIVE COMPENSATION
77
Table of Contents
(i)
responsibilities of the position;
(ii)
the experience of the individual;
(iii)
periodic reference to the competitive marketplace, including
comparisons of base salaries for selected comparable positions
in our peer group and general industry; and
(iv)
the financial performance and certain non-financial performance
measures of the Company, and the performance of the executive
officer.
(i)
billings growth;
(ii)
adjusted cash flow from operations; and
(iii)
adjusted net income growth.
78
Table of Contents
(i)
33% of stock options;
(ii)
33% of restricted stock (the number to be awarded is based on
the achievement of one-year performance targets); and
(iii)
34% of performance shares with a three-year performance cycle.
79
Table of Contents
AND HUMAN RESOURCE COMMITTEE
Gary J. Fernandes
Jay W. Lorsch
William E. McCracken
80
Table of Contents
AMONG CA, INC., THE S&P 500 INDEX
AND THE S&P SYSTEMS SOFTWARE INDEX
3/31/01
3/31/02
3/31/03
3/31/04
3/31/05
3/31/06
100.0
80.66
50.61
99.84
101.01
102.00
100.0
100.24
75.42
101.91
108.73
121.48
100.0
103.26
81.42
91.14
97.33
107.32
*
The Standard & Poors Systems Software Index is
composed of the following companies:
Novell, Inc.
Oracle Corporation
Symantec Corporation
81
Table of Contents
Item 12.
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
Number of Securities
Number of
Remaining Available for
Securities Issuable
Weighted Average
Future Issuance Under
Upon Exercise of
Exercise Price of
Equity Compensation
Outstanding
Outstanding Options,
Plans (Excluding
Options, Warrants
Warrants and Rights
Securities Reflected in
and Rights
($)(2)
the First Column)
28,231,289
(1)
29.90
56,652,365
(3)
4,797,704
(4)
23.77
33,028,993
28.95
56,652,365
(3)
(1)
Includes all stock options
outstanding under the 2001 Stock Option Plan and the 2002
Incentive Plan, all restricted stock units awarded under the
2002 Incentive Plan, all deferred stock units outstanding under
compensation plans for non-employee directors and stock units
awarded to employees under the 1998 Incentive Award Plan.
(2)
The calculation of the weighted
average exercise price does not include the outstanding deferred
stock units, restricted stock units and stock units reflected in
the first column.
(3)
Consists of 24,007,572 shares
available for issuance under the Companys Year 2000
Employee Stock Purchase Plan, 31,976,845 shares available
for issuance under the 2002 Incentive Plan and
667,948 shares available under the 2003 Compensation Plan
for Non-Employee Directors.
(4)
Consists solely of options and
rights assumed by the Company in connection with acquisitions.
The stockholders of the Company did not approve these plans. No
additional options or rights will be granted under these assumed
equity rights plans.
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STOCKHOLDERS, THE BOARD AND MANAGEMENT
Number of
Shares
Beneficially
Percent of
Owned(1)
Class
125,813,380
22.07
%
Utoquai 49
8022 Zurich, Switzerland
83,578,757
14.66
%
Suite 500
Naples, FL 34108
65,977,808
11.58
%
Los Angeles, CA 90017
41,616,371
7.30
%
Los Angeles, CA 90067
210,786
*
100,250
*
1,125
*
7,750
*
*
6,750
*
*
174,050
*
14,250
*
313,230
*
*
*
2,374,930
*
55,497
*
23,096
*
194,503
*
873,801
*
5,081,258
0.89
%
*
Represents less than 1% of the outstanding Common Stock.
(1)
Except as indicated below, all
persons have represented to the Company that they exercise sole
voting and investment power with respect to their shares. The
amounts shown in this column include the following shares of
Common Stock issuable upon exercise of stock options that either
are currently exercisable or will become exercisable within
60 days after July 5, 2006: Mr. Cron 164,388;
Mr. DAmato 20,250;
83
Table of Contents
Mr. Fernandes 1,125;
Mr. La Blanc 6,750; Mr. Lorsch 6,750;
Mr. Ranieri 6,750; Mr. Schuetze 6,750;
Mr. Swainson 177,038; Mr. Artzt 943,915;
Mr. Corgan 172,139; Mr. Quinn 785,443;
Mr. Christenson 25,534; and all directors and executive
officers as a group 2,827,402. Amounts shown in the above table
also include shares held in the CA Savings Harvest Plan, our
401(k) plan, and acquired through the Employee Stock Purchase
Plan.
(2)
According to a Schedule 13D/A
filed on October 30, 2003, Walter H. Haefner, through
Careal Holding AG, a company wholly owned by Mr. Haefner,
exercises sole voting power and sole dispositive power over
these shares.
(3)
According to a Schedule 13G/A
filed on February 14, 2006, Private Capital Management,
L.P., an investment adviser registered under the Investment
Advisers Act of 1940 (PCM), exercises shared voting
and dispositive power over these shares. In addition, according
to said Schedule 13G/A, Bruce S. Sherman, the CEO of PCM,
exercises sole voting and dispositive power over
1,835,350 shares and shared voting and dispositive power
over 83,664,957 shares. Gregg J. Powers, the President of
PCM, exercises sole voting and dispositive power over
469,516 shares, and shared voting and dispositive power
over 83,578,757 shares. Messrs. Sherman and Powers
exercise shared voting and dispositive power with respect to
shares held by PCMs clients and managed by PCM.
Messrs. Sherman and Powers disclaim beneficial ownership of
the shares held by PCMs clients.
(4)
According to a Schedule 13G/A
filed on July 10, 2006 by Hotchkis and Wiley Capital
Management, LLC, an investment advisor registered under the
Investment Advisors Act of 1940 (HWCM), HWCM
exercises sole voting power over 50,990,724 shares and sole
dispositive power over 65,977,808 shares. Securities
reported on the Schedule 13G/A are beneficially owned by
clients of HWCM.
(5)
According to a Schedule 13G/A
filed on February 14, 2006 by NWQ Management Company, LLC,
an investment advisor registered under the Investment Advisors
Act of 1940 (NWQ), NWQ exercises sole voting power
over 35,955,214 shares and sole dispositive power over
41,616,371 shares. Securities reported on the
Schedule 13G/A are beneficially owned by clients of NWQ.
(6)
Under the Companys prior and
current compensation plans for non-employee directors, such
directors have received a portion of their fees in the form of
deferred stock units. On the January 1st immediately
following termination of service, a director receives shares of
Common Stock in an amount equal to the number of deferred stock
units accrued in
his/her
deferred compensation account. As of July 5, 2006, the
Companys non-employee directors had the following
approximate number of deferred stock units: Mr. Cron
15,478; Mr. DAmato 16,221; Mr. Fernandes 17,419;
Mr. La Blanc 20,899; Mr. Lofgren 4,582;
Mr. Lorsch 21,237; Mr. McCracken 4,507;
Mr. Ranieri 10,323; Mr. Schuetze 18,363;
Ms. Unger 5,627; and Mr. Zambonini 3,955. The deferred
stock units are not included in the above table. See
Director Compensation for more information.
(7)
The Board has elected to reduce the
number of non-independent directors serving on the Board from
two to one. In fiscal year 2006, Messrs. Swainson and Cron
were deemed non-independent directors. Consequently, the term of
Mr. Cron will expire at the Companys 2006 Annual
Meeting of Stockholders. In addition, the Board decreased its
size from twelve directors to eleven directors, effective upon
the commencement of the 2006 Annual Meeting.
(8)
Although Mr. Christenson is
not one of the four most highly compensated executive officers
of the Company in the fiscal year ended March 31, 2006, the
Company has determined to include him in the table as the
successor to Mr. Clarke as the Companys Chief
Operating Officer.
(9)
Mr. Corgans employment
terminated after the end of fiscal year 2006 and his last day
with the Company was June 30, 2006. Generally and subject
to applicable law, options that are not exercised within
30 days of the date of termination of employment are
forfeited.
Item 13.
Certain
Relationships and Related Transactions.
Item 14.
Principal
Accounting Fees and Services.
Fiscal Year 2006
Fiscal Year 2005
Fees
Fees
$
21,769,000
$
10,990,000
390,000
230,000
33,000
9,000
4,000
$
22,168,000
$
11,257,000
(1)
Includes $13,456,000 in fiscal year
2006 and $5,888,000 in fiscal year 2005 for fees associated with
the audit work performed on the Companys internal control
over financial reporting.
84
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85
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Item 15.
Exhibits,
Financial Statement Schedules.
Regulation S-K
2
.1
Agreement and Plan of Merger,
dated as of January 5, 2006, by and among Computer
Associates International, Inc., Wily Technology, Inc.,
Watermelon Merger Company and David Strohm, as
Shareholders Representative.
Previously filed as
Exhibit 2.1 to the Companys Current Report on
Form 8-K
dated January 5, 2006, and incorporated herein by reference.
2
.2
Agreement and Plan of Merger,
dated as of April 7, 2005, by and among Computer Associates
International, Inc., Minuteman Acquisition Corp., and Concord
Communications, Inc.
Previously filed as
Exhibit 2.1 to the Companys Current Report on
Form 8-K
dated April 7, 2005, and incorporated herein by reference.
2
.3
Agreement and Plan of Merger,
dated as of June 9, 2005, by and among Computer Associates
International, Inc., Nebraska Acquisition Corp., and Niku
Corporation.
Previously filed as
Exhibit 2.1 to the Companys Current Report on
Form 8-K
dated June 9, 2005, and incorporated herein by reference.
2
.4
Announcement of Restructuring Plan.
Previously filed as Item 2.05
and Exhibit 99.2 to the Companys Current Report on
Form 8-K
dated July 22, 2005, and incorporated herein by reference.
2
.5
Agreement and Plan of Merger,
dated as of September 30, 2005, by and among iLumin
Software Services, Inc., the Stockholders listed therein,
Jonathan Perl as the Stockholders Representative, Computer
Associates International, Inc. and Lost Ark Acquisition, Inc.
Previously filed as
Exhibit 2.1 to the Companys Current Report on
Form 8-K
dated October 14, 2005, and incorporated herein by
reference.
3
.1
Restated Certificate of
Incorporation.
Previously filed as
Exhibit 3.3 to the Companys Current Report on
Form 8-K
dated March 6, 2006, and incorporated herein by reference.
3
.2
By-Laws of the Company, as amended.
Previously filed as
Exhibit 3.1 to the Companys Current Report on
Form 8-K
dated March 6, 2006, and incorporated herein by reference.
4
.1
Restated Certificate of
Designation of Series One Junior Participating Preferred
Stock, Class A of the Company.
Previously filed as
Exhibit 3.2 to the Companys Current Report on
Form 8-K
dated March 6, 2006, and incorporated herein by reference.
4
.2
Rights Agreement dated as of
June 18, 1991, between the Company and Manufacturers
Hanover Trust Company.
Previously filed as Exhibit 4
to the Companys Current Report on
Form 8-K
dated June 18, 1991, and incorporated herein by reference.
86
Table of Contents
Regulation S-K
4
.3
Amendment No. 1 dated
May 17, 1995, to Rights Agreement dated as of June 18,
1991.
Previously filed as Exhibit C
to the Companys Annual Report on
Form 10-K
for the fiscal year ended March 31, 1995, and incorporated
herein by reference.
4
.4
Amendment No. 2 dated
May 23, 2001, to Rights Agreement dated as of June 18,
1991.
Previously filed as
Exhibit 4.6 to the Companys Annual Report on
Form 10-K
for the fiscal year ended March 31, 2001, and incorporated
herein by reference.
4
.5
Amendment No. 3 dated
November 9, 2001, to Rights Agreement dated as of
June 18, 1991.
Previously filed as
Exhibit 99.1 to the Companys
Form 8-K
dated November 9, 2001, and incorporated herein by
reference.
4
.6
Indenture with respect to the
Companys $1.75 billion Senior Notes, dated
April 24, 1998, between the Company and The Chase Manhattan
Bank, as Trustee.
Previously filed as
Exhibit 4(f) to the Companys Annual Report on
Form 10-K
for the fiscal year ended March 31, 1998, and incorporated
herein by reference.
4
.7
Indenture with respect to the
Companys 1.625% Convertible Senior Notes due 2009,
dated December 11, 2002, between the Company and State
Street Bank and Trust Company, as Trustee.
Previously filed as
Exhibit 4.1 to the Companys
Form 10-Q
for the fiscal quarter ended December 31, 2002, and
incorporated herein by reference.
4
.8
Indenture with respect to the
Companys 4.75% Senior Notes due 2009 and 5.625%
Senior Notes due 2014, dated November 18, 2004, between the
Company and The Bank of New York, as Trustee.
Previously filed as
Exhibit 4.2 to the Companys Current Report on
Form 8-K
dated November 15, 2004, and incorporated herein by
reference.
4
.9
Registration Rights Agreement
dated November 18, 2004, among the Company and the Initial
Purchasers of the 4.75% Senior Notes due 2009 and
5.625% Senior Notes due 2014.
Previously filed as
Exhibit 4.3 to the Companys Current Report on
Form 8-K
dated November 15, 2004, and incorporated herein by
reference.
4
.10
Purchase Agreement dated
November 15, 2004, among the Initial Purchasers of the
4.75% Senior Notes due 2009 and 5.625% Senior Notes due
2014, and the Company.
Previously filed as
Exhibit 4.1 to the Companys Current Report on
Form 8-K
dated November 15, 2004, and incorporated herein by
reference.
10
.1*
CA, Inc. 1991 Stock Incentive
Plan, as amended.
Previously filed as Exhibit 1
to the Companys
Form 10-Q
for the fiscal quarter ended September 30, 1997, and
incorporated herein by reference.
10
.2*
1993 Stock Option Plan for
Non-Employee Directors.
Previously filed as Annex 1 to the
Companys definitive Proxy Statement dated July 7,
1993, and incorporated herein by reference.
10
.3*
Amendment No. 1 to the 1993
Stock Option Plan for Non-Employee Directors dated
October 20, 1993.
Previously filed as Exhibit E
to the Companys Annual Report on
Form 10-K
for the fiscal year ended March 31, 1994, and incorporated
herein by reference.
10
.4*
1996 Deferred Stock Plan for
Non-Employee Directors.
Previously filed as Exhibit A
to the Companys Proxy Statement dated July 8, 1996,
and incorporated herein by reference.
10
.5*
Amendment No. 1 to the 1996
Deferred Stock Plan for Non-Employee Directors.
Previously filed on Exhibit A
to the Companys Proxy Statement dated July 6, 1998,
and incorporated herein by reference.
Table of Contents
Regulation S-K
10
.6*
1998 Incentive Award Plan.
Previously filed on Exhibit B
to the Companys Proxy Statement dated July 6, 1998,
and incorporated herein by reference.
10
.7*
CA, Inc. Year 2000 Employee Stock
Purchase Plan.
Previously filed on Exhibit A
to the Companys Proxy Statement dated July 12, 1999,
and incorporated herein by reference.
10
.8*
2001 Stock Option Plan.
Previously filed as Exhibit B
to the Companys Proxy Statement dated July 18, 2001,
and incorporated herein by reference.
10
.9*
CA, Inc. 2002 Incentive Plan,
effective April 1, 2002 (Amended and Restated Effective as
of March 31, 2004), as amended May 20, 2005,
Previously filed as Exhibit B
to the Companys Proxy Statement dated July 26, 2002,
and incorporated herein by reference.
10
.10*
CA, Inc. 2002 Compensation Plan
for Non-Employee Directors.
Previously filed as Exhibit C
to the Companys Proxy Statement dated July 26, 2002,
and incorporated herein by reference.
10
.11*
CA, Inc. 2003 Compensation Plan
for Non-Employee Directors.
Previously filed as Exhibit A
to the Companys Proxy Statement dated July 17, 2003,
and incorporated herein by reference.
10
.13
Credit Agreement dated as of
December 2, 2004, among the Company, the Banks which are
parties thereto and Citicorp North America, Inc., Bank Of
America, N.A., and JP Morgan Chase Bank, N.A., as agents, with
respect to a $1 billion Revolving Loan.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated December 2, 2004, and incorporated herein by
reference.
10
.14*
Employment agreement, dated
March 7, 2005, between the Company and Mark Barrenechea.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated March 7, 2005, and incorporated herein by reference.
10
.15*
Employment agreement, dated
February 1, 2005, between the Company and Robert W. Davis.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated February 1, 2005, and incorporated herein by
reference.
10
.16*
Restricted Stock Award for Robert
W. Davis.
Previously filed as
Exhibit 10.3 to the Companys Current Report on
Form 8-K
dated February 1, 2005, and incorporated herein by
reference.
10
.17*
Relocation Polices including Form
of Moving and Relocation Expense Agreement.
Previously filed as
Exhibit 10.4 to the Companys Current Report on
Form 8-K
dated February 1, 2005, and incorporated herein by
reference.
10
.18*
Employment agreement, dated
November 22, 2004, between the Company and John A. Swainson.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated November 18, 2004, and incorporated herein by
reference.
10
.19*
Employment agreement, dated
November 22, 2004, between the Company and Jeff Clarke.
Previously filed as
Exhibit 10.2 to the Companys Current Report on
Form 8-K
dated November 18, 2004, and incorporated herein by
reference.
Table of Contents
Regulation S-K
10
.20*
Restricted Stock Unit Agreement
for John A. Swainson.
Previously filed as
Exhibit 10.5 to the Companys Current Report on
Form 8-K
dated November 18, 2004, and incorporated herein by
reference.
10
.21*
Form of Moving and Relocation
Expense Agreement.
Previously filed as
Exhibit 10.6 to the Companys Current Report on
Form 8-K
dated November 18, 2004, and incorporated herein by
reference.
10
.22*
CA, Inc. Change in Control
Severance Policy.
Filed herewith.
10
.23*
Letter Agreement, dated
August 26, 2004, between the Company and Sanjay Kumar.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated September 22, 2004, and incorporated herein by
reference.
10
.24*
Notice of Revocation dated
September 22, 2004.
Previously filed as
Exhibit 10.2 to the Companys Current Report on
Form 8-K
dated September 22, 2004, and incorporated herein by
reference.
10
.25
Deferred Prosecution Agreement,
including the related Information and Stipulation of Facts.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated September 22, 2004, and incorporated herein by
reference.
10
.26
Final Consent Judgment of
Permanent Injunction and Other Relief, including SEC complaint.
Previously filed as
Exhibit 10.2 to the Companys Current Report on
Form 8-K
dated September 22, 2004, and incorporated herein by
reference.
10
.27*
Form of Restricted Stock Unit
Certificate.
Previously filed as
Exhibit 10.1 to the Companys
Form 10-Q
for the fiscal quarter ended December 31, 2004, and
incorporated herein by reference.
10
.28*
Form of Non-Qualified Stock Option
Certificate.
Previously filed as
Exhibit 10.2 to the Companys
Form 10-Q
for the fiscal quarter ended December 31, 2004, and
incorporated herein by reference.
10
.29*
Employment agreement, dated
July 8, 2004, between the Company and Kenneth D. Cron.
Previously filed as
Exhibit 10.1 to the Companys
Form 10-Q
for the fiscal quarter ended June 30, 2004, and
incorporated herein by reference.
10
.30*
Employment agreement, dated
June 14, 2004, between the Company and Kenneth V. Handal.
Previously filed as
Exhibit 10.2 to the Companys
Form 10-Q
for the fiscal quarter ended June 30, 2004, and
incorporated herein by reference.
10
.31*
Agreement, dated April 11,
2005, between the Company and John A. Swainson.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated April 11, 2005, and incorporated herein by reference.
10
.32*
Agreement, dated April 11,
2005, between the Company and Jeff Clarke.
Previously filed as
Exhibit 10.2 to the Companys Current Report on
Form 8-K
dated April 11, 2005, and incorporated herein by reference.
Table of Contents
Regulation S-K
10
.33*
Agreement, dated April 11,
2005, between the Company and Robert W. Davis.
Previously filed as
Exhibit 10.3 to the Companys Current Report on
Form 8-K
dated April 11, 2005, and incorporated herein by reference.
10
.34*
Agreement, dated April 11,
2005, between the Company and Michael J. Christenson.
Previously filed as
Exhibit 10.4 to the Companys Current Report on
Form 8-K
dated April 11, 2005, and incorporated herein by reference.
10
.35*
Employment Agreement, dated
March 23, 2005, between the Company and Donald Friedman.
Previously filed as
Exhibit 10.12 to the Companys Current Report on
Form 8-K
dated April 11, 2005, and incorporated herein by reference.
10
.36*
Amended and Restated Employment
Agreement, dated as of June 27, 2006, between the Company
and Michael J. Christenson.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated June 26, 2006, and incorporated herein by reference.
10
.37*
Form of RSU Award Certificate.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated June 2, 2006, and incorporated herein by reference.
10
.38*
Form of RSU Award Certificate
(Employment Agreement).
Previously filed as
Exhibit 10.2 to the Companys Current Report on
Form 8-K
dated June 2, 2006, and incorporated herein by reference.
10
.39*
Form of Restricted Stock Award
Certificate.
Previously filed as
Exhibit 10.3 to the Companys Current Report on
Form 8-K
dated June 2, 2006, and incorporated herein by reference.
10
.40*
Form of Restricted Stock Award
Certificate (Employment Agreement).
Previously filed as
Exhibit 10.4 to the Companys Current Report on
Form 8-K
dated June 2, 2006, and incorporated herein by reference.
10
.41*
Form of Non-Qualified Stock Option
Award Certificate.
Previously filed as
Exhibit 10.5 to the Companys Current Report on
Form 8-K
dated June 2, 2006, and incorporated herein by reference.
10
.42*
Form of Non-Qualified Stock Option
Award Certificate (Employment Agreement).
Previously filed as
Exhibit 10.6 to the Companys Current Report on
Form 8-K
dated June 2, 2006, and incorporated herein by reference.
10
.43*
Form of Incentive Stock Option
Award Certificate.
Previously filed as
Exhibit 10.7 to the Companys Current Report on
Form 8-K
dated June 2, 2006, and incorporated herein by reference.
10
.44*
Form of Incentive Stock Option
Award Certificate (Employment Agreement).
Previously filed as
Exhibit 10.8 to the Companys Current Report on
Form 8-K
dated June 2, 2006, and incorporated herein by reference.
10
.45*
CA, Inc. Deferred Compensation
Plan for John A. Swainson, dated April 29, 2005.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated April 29, 2005, and incorporated herein by reference.
Table of Contents
Regulation S-K
10
.46*
Trust Agreement between Computer
Associates International, Inc. and Fidelity Management Trust
Company, dated as of April 29, 2005.
Previously filed as
Exhibit 10.2 to the Companys Current Report on
Form 8-K
dated April 29, 2005, and incorporated herein by reference.
10
.47*
Employment Agreement, dated
December 8, 2004, between the Company and Patrick J. Gnazzo.
Previously filed as
Exhibit 10.52 to the Companys Annual Report on
Form 10-K
dated June 29, 2005, and incorporated herein by reference.
10
.48*
Amendment to Employment Agreement,
dated March 7, 2006, between the Company and Patrick J.
Gnazzo.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated March 6, 2006, and incorporated herein by reference.
10
.49*
1995 Key Employee Stock Ownership
Plan, as amended on June 26, 2000 and February 25,
2003.
Previously filed as
Exhibit 10.7 to the Companys Annual Report on
Form 10-K
for the fiscal year ended March 31, 2003, and incorporated
herein by reference.
10
.50*
Program whereby certain designated
employees, including the Companys named executive
officers, are provided with certain covered medical services,
effective August 1, 2005.
Previously filed as Item 1.01
and Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated August 1, 2005, and incorporated herein by reference.
10
.51*
Amended and Restated CA, Inc.
Executive Deferred Compensation Plan, effective April 1,
2006.
Filed herewith.
10
.52*
Form of Deferral Election.
Filed herewith.
10
.53*
Amendment, dated August 24,
2005, to Employment Agreement between Computer Associates
International, Inc. and John A. Swainson.
Previously filed as
Exhibit 10.3 to the Companys Current Report on
Form 8-K
dated August 24, 2005, and incorporated herein by reference.
10
.54*
Modified compensation arrangements
for the non-employee directors of the Company, effective
August 24, 2005.
Previously filed as Item 1.01
of the Companys Current Report on
Form 8-K
dated August 24, 2005 and incorporated herein by reference.
10
.55*
Amendment to the CA, Inc. 2003
Compensation Plan for Non-Employee Directors, dated
August 24, 2005.
Previously filed as
Exhibit 10.4 to the Companys Current Report on
Form 8-K
dated August 24, 2005 and incorporated herein by reference.
10
.56*
Agreement, effective as of
April 1, 2006, between the Company and Jeff Clarke.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated April 4, 2006, and incorporated herein by reference.
10
.57*
Employment Agreement, dated as of
June 28. 2006, between the Company and James Bryant
Previously filed as
Exhibit 10.2 to the Companys Current Report on
Form 8-K
dated June 26, 2006, and incorporated herein by reference.
10
.58*
Separation Agreement and General
Claims Release, dated as of July 24, 2006, between CA, Inc.
and Gregory Corgan.
Previously filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
dated July 24, 2006, and incorporated herein by reference.
21
Subsidiaries of the Registrant.
Filed herewith.
Table of Contents
Regulation S-K
23
Consent of Independent Registered
Public Accounting Firm.
Filed herewith.
31
.1
Certification of the CEO pursuant
to §302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
31
.2
Certification of the CFO pursuant
to §302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
32
.1
Certification pursuant to
§906 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
*
Management contract or compensatory plan or arrangement.
(b)
Exhibits: Refer to Index to Exhibits.
(c)
Financial Statement Schedules: The response to this portion of
Item 15 is submitted as a separate section of this Report.
Table of Contents
By:
By:
93
Table of Contents
Director
Director
Director
Director
Director
Director
Director
Non-Executive Chairman
Director
President, Chief Executive Officer
and Director
Director
Director
94
Table of Contents
ISLANDIA, NEW YORK
ITEM 8, ITEM 9A, ITEM 15(a)(1) AND (2), AND
ITEM 15(c)
AND FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENT SCHEDULES
Page
95
98
99
100
101
102
146
95
Table of Contents
CA, Inc.:
96
Table of Contents
97
Table of Contents
98
Table of Contents
Year Ended March 31,
2006
2005
2004
(restated)
(restated)
(in millions, except per share amounts)
$
2,838
$
2,587
$
2,113
430
441
520
162
254
331
45
77
134
321
244
234
3,796
3,603
3,332
449
447
463
272
230
225
1,597
1,353
1,318
697
708
703
394
339
267
134
130
134
(15
)
(5
)
52
88
28
18
234
168
3,634
3,464
3,330
162
139
2
41
106
117
121
33
(115
)
(35
)
7
(26
)
156
26
(89
)
3
61
(2
)
$
159
$
24
$
(28
)
$
0.27
$
0.04
$
(0.15
)
0.00
0.00
0.10
$
0.27
$
0.04
$
(0.05
)
581
588
580
$
0.26
$
0.04
$
(0.15
)
0.01
0.00
0.10
$
0.27
$
0.04
$
(0.05
)
607
590
580
99
Table of Contents
CONSOLIDATED BALANCE SHEETS
100
Table of Contents
Accumulated
Additional
Other
Total
Common
Paid-In
Retained
Comprehensive
Unearned
Treasury
Stockholders
Stock
Capital
Earnings
Loss
Compensation
Stock
Equity
(restated)
(restated)
(restated)
(in millions, except dividends declared per share)
$
63
$
3,896
$
1,955
$
(215
)
$
$
(1,222
)
$
4,477
263
(173
)
90
63
4,159
1,782
(215
)
(1,222
)
4,567
(28
)
(28
)
104
104
8
8
84
126
126
(68
)
(68
)
(47
)
(47
)
11
39
50
(33
)
116
83
(13
)
34
21
(56
)
(56
)
159
159
$
63
$
4,341
$
1,707
$
(103
)
$
$
(1,089
)
$
4,919
24
24
36
36
(2
)
(2
)
(7
)
(7
)
51
100
100
(71
)
(71
)
(47
)
(47
)
32
87
119
1
113
114
23
(11
)
12
3
16
19
15
645
660
(673
)
(673
)
(161
)
(161
)
63
4,444
1,684
(76
)
(11
)
(1,062
)
5,042
159
159
(61
)
(61
)
net of taxes $1
3
3
101
96
96
(67
)
(67
)
(93
)
(93
)
(4
)
151
147
24
5
29
2
13
15
(590
)
(590
)
$
63
$
4,495
$
1,750
$
(134
)
$
(6
)
$
(1,488
)
$
4,680
101
Table of Contents
Year Ended March 31,
2006
2005
2004
(restated)
(restated)
(in millions)
$
159
$
24
$
(28
)
3
61
(2
)
156
26
(89
)
583
577
597
(340
)
(192
)
(301
)
99
116
149
(7
)
(19
)
18
(9
)
8
41
16
158
4
274
379
238
142
167
452
149
164
220
179
(8
)
92
(20
)
(27
)
(55
)
75
164
35
(150
)
143
10
56
3
106
(141
)
70
69
132
(323
)
1,380
1,527
1,279
(1,011
)
(469
)
(52
)
(37
)
(21
)
(19
)
(143
)
(69
)
(30
)
2
21
14
90
75
7
(9
)
(56
)
(54
)
(390
)
(55
)
398
274
50
(84
)
(70
)
(44
)
(847
)
(740
)
(95
)
(93
)
(47
)
(47
)
(590
)
(161
)
(56
)
1,000
(912
)
(4
)
(826
)
(12
)
(673
)
127
99
78
(1,468
)
202
(851
)
(935
)
989
333
(63
)
47
55
(998
)
1,036
388
2,829
1,793
1,405
$
1,831
$
2,829
$
1,793
102
Table of Contents
Note 1
Significant
Accounting Policies
103
Table of Contents
104
Table of Contents
March 31, 2006
March 31, 2005
Estimated
Estimated
Cost
Fair Value
Cost
Fair Value
(in millions)
$
30
$
34
$
298
$
297
$
1,811
$
1,956
$
2,636
$
2,831
105
Table of Contents
106
Table of Contents
At March 31, 2006
Gross
Accumulated
Net
Assets
Amortization
Assets
(in millions)
$
4,760
$
4,299
$
461
558
363
195
628
266
362
26
26
$
5,972
$
4,928
$
1,044
At March 31, 2005
Gross
Accumulated
Net
Assets
Amortization
Assets
(in millions)
$
4,625
$
3,899
$
726
494
330
164
415
215
200
26
26
$
5,560
$
4,444
$
1,116
107
Table of Contents
Year Ended March 31,
2007
2008
2009
2010
2011
(in millions)
$
296
$
52
$
41
$
29
$
18
53
47
39
32
20
50
50
50
50
50
$
399
$
149
$
130
$
111
$
88
108
Table of Contents
Year Ended March 31,
2006
2005
2004
(restated)
(restated)
(in millions, except per share amounts)
$
156
$
26
$
(89
)
5
$
161
$
26
$
(89
)
581
588
580
23
3
2
607
590
580
$
0.26
$
0.04
$
(0.15
)
(1)
If the common share equivalents for
the 5% Convertible Senior Notes (27 million shares)
issued in March 2002 and the 1.625% Convertible Senior
Notes (23 million shares) issued in December 2002
(collectively, the Notes) had been dilutive, interest expense,
net of tax, related to the Notes would have been added back to
income from continuing operations to calculate diluted earnings
per share from continuing operations. The related interest
expense, net of tax, for each of the fiscal years ended
March 31, 2005 and 2004 totaled approximately
$25 million.
(2)
If all common share equivalents for
the fiscal years ended March 31, 2005 and 2004 had been
dilutive, the weighted average shares outstanding and common
share equivalents would have been 640 million and
635 million, respectively.
109
Table of Contents
Note 2
Acquisitions,
Divestitures and Restructuring
110
Table of Contents
(in millions)
$
2
4
21
36
(9
)
(6
)
$
48
111
Table of Contents
For the Year Ended March 31,
2006
2005
(restated)
unaudited
(in millions)
$
3,880
$
3,711
109
(29
)
112
(29
)
$
0.19
$
(0.05
)
0.01
$
0.20
$
(0.05
)
$
0.18
$
(0.05
)
0.01
$
0.19
$
(0.05
)
112
Table of Contents
113
Table of Contents
Duplicate
Facilities and
Employee
Other Costs
Costs
(in millions)
$
58
$
12
8
3
(15
)
(6
)
(10
)
$
41
$
9
31
61
(18
)
(18
)
6
$
60
$
52
114
Table of Contents
Year Ended
March 31,
2004(1)
(in millions)
$
38
40
$
78
$
1
$
1
(1)
Fiscal year 2004 includes operating
results through December 2003, the measurement date for the
ACCPAC sale.
115
Table of Contents
Facilities
Severance
Abandonment
(in millions)
$
$
36
30
(19
)
(3
)
1
$
18
$
27
116
Table of Contents
Note 3
Marketable
Securities
Year Ended March 31,
2006
2005
(in millions)
$
30
$
298
4
(1
)
$
34
$
297
117
Table of Contents
Note 3
Marketable
Securities (Continued)
March 31, 2006
March 31, 2005
Estimated
Estimated
Cost
Fair Value
Cost
Fair Value
(in millions)
$
1
$
1
$
185
$
185
5
5
82
81
1
1
11
11
5
5
20
20
12
12
298
297
18
22
$
30
$
34
$
298
$
297
Note 4
Segment
and Geographic Information
United
States
Europe
Other
Eliminations
Total
(in millions)
$
2,006
$
1,123
$
667
$
$
3,796
459
(459
)
2,465
1,123
667
(459
)
3,796
428
166
40
634
8,741
1,403
294
10,438
4,300
940
518
5,758
$
1,878
$
1,096
$
629
$
$
3,603
472
(472
)
2,350
1,096
629
(472
)
3,603
404
184
34
622
9,866
1,137
393
11,396
5,063
894
397
6,354
Table of Contents
Note 4
Segment
and Geographic Information (Continued)
United
States
Europe
Other
Eliminations
Total
(in millions)
$
1,766
$
999
$
567
$
$
3,332
502
(502
)
2,268
999
567
(502
)
3,332
430
182
29
641
9,427
1,054
381
10,862
4,940
504
499
5,943
(1)
Represents royalties from foreign
subsidiaries determined as a percentage of certain amounts
invoiced to customers.
Note 5
Trade and
Installment Accounts Receivable
March 31,
March 31,
2006
2005
(restated)
(in millions)
$
828
$
794
77
39
254
391
(25
)
(35
)
(629
)
(413
)
$
505
$
776
$
511
$
759
(20
)
(53
)
(42
)
(111
)
$
449
$
595
Table of Contents
Note 5
Trade and
Installment Accounts Receivable (Continued)
March 31,
March 31,
2006
2005
(restated)
(in millions)
$
44
$
62
4
23
534
314
47
14
$
629
$
413
$
34
$
79
8
32
$
42
$
111
Note 6
Debt
March 31,
2006
2005
Maximum
Outstanding
Maximum
Outstanding
Available
Balance
Available
Balance
(in millions)
$
1,000
$
1,000
120
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Note 6
Debt
(Continued)
March 31,
2006
2005
(in millions)
$
$
825
350
350
500
500
460
460
500
500
121
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Note 6
Debt
(Continued)
March 31,
2006
2005
Maximum
Outstanding
Maximum
Outstanding
Available
Balance
Available
Balance
(in millions)
$
5
$
$
5
$
1
1
122
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Note 6
Debt
(Continued)
Year Ended March 31,
2007
2008
2009
2010
2011
Thereafter
(in millions)
$
1
$
$
350
$
960
$
$
500
Note 7
Commitments
and Contingencies
123
Table of Contents
Note 7
Commitments
and Contingencies (Continued)
(in millions)
$
153
129
97
74
55
197
705
(93
)
$
612
124
Table of Contents
Note 7
Commitments
and Contingencies (Continued)
125
Table of Contents
Note 7
Commitments
and Contingencies (Continued)
126
Table of Contents
Note 7
Commitments
and Contingencies (Continued)
127
Table of Contents
Note 7
Commitments
and Contingencies (Continued)
128
Table of Contents
Note 7
Commitments
and Contingencies (Continued)
129
Table of Contents
Note 7
Commitments
and Contingencies (Continued)
Year Ended March 31,
2006
2005
2004
(restated)
(restated)
(in millions)
$
(84
)
$
(208
)
$
(228
)
205
241
113
$
121
$
33
$
(115
)
130
Table of Contents
Year Ended March 31,
2006
2005
2004
(restated)
(restated)
(in millions)
$
108
$
50
$
135
55
5
20
19
137
129
121
$
305
$
199
$
275
$
(180
)
$
(138
)
$
(225
)
(55
)
55
(32
)
(27
)
(29
)
(73
)
(82
)
(47
)
$
(340
)
$
(192
)
$
(301
)
$
(72
)
$
(88
)
$
(90
)
55
(27
)
(7
)
(10
)
64
47
74
$
(35
)
$
7
$
(26
)
Year Ended March 31,
2006
2005
2004
(restated)
(restated)
(in millions)
$
(35
)
$
7
$
(26
)
(10
)
(1
)
36
$
(45
)
$
6
$
10
131
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Year Ended March 31,
2006
2005
2004
(restated)
(restated)
(in millions)
$
42
$
12
$
(40
)
3
10
55
6
6
(84
)
(72
)
(27
)
(51
)
(26
)
1
5
(5
)
21
15
22
30
15
8
$
(35
)
$
7
$
(26
)
Year Ended March 31,
2006
2005
(restated)
(In millions)
$
120
$
13
12
105
138
1
51
85
59
286
147
(154
)
(102
)
62
69
28
22
56
40
602
436
132
Table of Contents
Year Ended March 31,
2006
2005
(restated)
(In millions)
35
76
166
150
87
76
60
55
302
403
$
300
$
33
Table of Contents
134
Table of Contents
Year Ended March 31,
2006
2005
2004
(restated)
(restated)
(in millions)
$
3
$
5
$
6
64
60
77
32
35
43
99
100
126
(28
)
(27
)
(31
)
$
71
$
73
$
95
135
Table of Contents
136
Table of Contents
137
Table of Contents
Number
Weighted Average
of Shares
Exercise Price
(shares in millions)
48.2
$
28.74
6.4
27.68
(3.9
)
14.57
(6.9
)
36.49
43.8
$
28.63
0.8
28.56
1.4
20.91
(3.9
)
18.42
(8.5
)
32.43
33.6
$
28.50
2.7
28.59
2.3
20.62
(5.0
)
19.63
(2.8
)
32.29
30.8
$
28.96
Number
Weighted Average
of Shares
Exercise Price
(shares in millions)
26.0
$
30.88
25.5
29.81
25.8
29.27
Options Outstanding
Options Exercisable
Weighted
Weighted
Average
Weighted
Average
Range of
Aggregate
Remaining
Average
Aggregate
Remaining
Weighted
Exercise
Intrinsic
Contractual
Exercise
Intrinsic
Contractual
Average
Prices
Shares
Value
Life
Price
Shares
Value
Life
Exercise Price
(shares and aggregate intrinsic value in millions)
3.5
$
47
6.8 years
$
13.58
3.2
$
44
6.7 years
$
13.54
19.1
25
5.3 years
26.23
15.0
24
4.4 years
25.84
4.3
3.1 years
34.69
3.7
2.3 years
35.21
1.7
1.9 years
47.11
1.7
1.9 years
47.11
2.2
3.3 years
52.04
2.2
3.3 years
52.04
30.8
$
72
$
28.96
25.8
$
68
$
29.27
138
Table of Contents
Year Ended March 31,
2006
2005
2004
.57
%
.28
%
.30
%
.56
.65
.67
4.1
%
3.6
%
3.0
%
6.0
4.5
4.5
(1)
Measured using historical daily
price changes of the Companys stock over the respective
term of the options and the implied volatility derived from the
market prices of the Companys traded options.
(2)
The risk-free rate for periods
within the contractual term of the share options is based on the
U.S. Treasury yield curve in effect at the time of grant.
(3)
The expected term is the number of
years that the Company estimates, based primarily on historical
experience, that options will be outstanding prior to exercise.
The increase in expected term in fiscal year 2006 as compared
with fiscal year 2005 and 2004 was largely related to a change
in the demographics of the recipients of the stock options. In
fiscal year 2005, stock options were granted to a broad base of
employees. In fiscal year 2006, stock options were primarily
granted to executive management who historically hold options
longer than the broad base of employees.
Weighted Average
Number
Grant Date
of Shares
Fair Value
(shares in thousands)
106
$
52.88
106
$
52.88
153
29.53
(53
)
28.42
206
$
41.85
1,825
27.00
(11
)
52.88
(198
)
27.00
1,822
$
28.53
139
Table of Contents
Weighted Average
Number
Grant Date
of Shares
Fair Value
(shares in thousands)
$
627
26.86
627
$
26.86
577
25.30
(105
)
26.96
(382
)
26.75
717
$
25.64
354
27.41
(302
)
26.12
(63
)
23.51
706
$
26.51
0.58
%
0.45
4.0
%
3.8
140
Table of Contents
0.59
%
0.46
3.6
%
3.2
0.26
%
0.67
3.4
%
4.5
Year Ended March 31,
2006
2005
2004
.58
%
.27
%
.33
%
.20
.25
.53
3.9
%
2.1
%
1.0
%
0.5
0.5
0.5
(1)
Expected volatility is measured
using historical daily price changes of the Companys stock
over the respective term of the offer period.
(2)
The risk-free rate for periods
within the contractual term of the offer period is based on the
U.S. Treasury yield curve in effect at the beginning of the
offer period.
(3)
The expected term is the offer
period.
141
Table of Contents
142
Table of Contents
Additional
Additional
Pre-tax expense
After-tax expense
(in millions)
(in millions)
$
165
$
78
83
50
50
30
29
16
12
3
1
$
342
$
175
143
Table of Contents
Year Ended
Year Ended
March 31, 2005
March 31, 2004
Previously
Previously
Reported(1)
Restated
Reported(1)
Restated
(in millions, except per share data)
$
2,544
$
2,587
$
2,101
$
2,113
3,560
3,603
3,320
3,332
229
230
224
225
1,346
1,353
1,300
1,318
704
708
693
703
3,452
3,464
3,301
3,330
108
139
19
2
2
33
(98
)
(115
)
4
7
(17
)
(26
)
(2
)
26
(81
)
(89
)
(4
)
24
(20
)
(28
)
$
(0.01
)
$
0.04
$
(0.14
)
$
(0.15
)
$
(0.01
)
$
0.04
$
(0.14
)
$
(0.15
)
$
(0.01
)
$
0.04
$
(0.03
)
$
(0.05
)
$
(0.01
)
$
0.04
$
(0.03
)
$
(0.05
)
March 31, 2005
March 31, 2004
Previously
Previously
Reported(1)
Restated
Reported(1)
Restated
(in millions)
$
721
$
776
$
1,017
$
1,029
126
106
316
312
4,129
4,164
3,439
3,447
130
209
14
108
11,282
11,396
10,760
10,862
342
356
256
271
4,017
4,031
2,797
2,812
6,340
6,354
5,928
5,943
4,191
4,444
4,073
4,341
1,837
1,684
1,888
1,707
4,942
5,042
4,832
4,919
$
11,282
$
11,396
$
10,760
$
10,862
(1)
As presented in the Companys
Form 10-K/A
for the fiscal year ended March 31, 2005.
144
Table of Contents
June 30
September 30
December 31
Previously
Previously
Previously
Reported(1)
Restated
Reported(1)
Restated
Reported(1)
Restated
(unaudited)
(in millions, except per share data)
$
695
$
702
$
696
$
704
$
713
$
717
920
927
942
950
967
971
388
389
382
383
405
405
171
172
179
179
171
171
62
62
68
68
87
118
825
827
892
893
887
918
95
100
50
57
80
53
86
91
40
47
68
41
(8
)
(6
)
(1
)
1
12
(13
)
94
97
41
46
56
54
$
94
$
97
$
41
$
46
$
59
$
57
$
0.16
$
0.17
$
0.07
$
0.08
$
0.09
$
0.09
$
0.15
$
0.16
$
0.07
$
0.08
$
0.09
$
0.09
(1)
As reported in the Companys
Form 10-Qs
for the applicable periods then ended.
145
Table of Contents
June 30
September 30
December 31
March 31
Previously
Previously
Previously
Previously
Reported(1)
Restated
Reported(1)
Restated
Reported(1)
Restated
Reported(1)
Restated
(unaudited)
(in millions, except per share data)
$
604
$
611
$
621
$
631
$
650
$
663
$
669
$
682
861
868
865
875
917
930
917
930
56
57
54
54
57
57
62
62
311
313
342
344
352
354
341
342
174
175
178
179
172
173
180
181
759
763
1,025
1,028
841
844
827
829
102
105
(160
)
(153
)
76
86
90
101
76
79
(184
)
(177
)
47
57
63
74
29
23
(88
)
(86
)
16
20
47
50
47
56
(96
)
(91
)
31
37
16
24
$
47
$
56
$
(98
)
$
(93
)
$
31
$
37
$
16
$
24
$
0.08
$
0.10
$
(0.17
)
$
(0.16
)
$
0.05
$
0.06
$
0.03
$
0.04
$
0.08
$
0.09
$
(0.17
)
$
(0.16
)
$
0.05
$
0.06
$
0.03
$
0.04
(1)
Derived from the
restated column of Note 12 of the Consolidated
Financial Statements included in the Companys
Form 10-K/A
for the fiscal year ended March 31, 2005.
146
Table of Contents
Additions/
(Deductions)
Charged/
Charged/
Balance at
(Credited) to
(Credited)
Balance
Beginning
Costs and
to Other
at End
of Period(1)
Expenses
Accounts(2)
Deductions(3)
of Period
(in millions)
$
88
$
(18
)
$
$
(25
)
$
45
$
136
$
(25
)
$
(2
)
$
(21
)
$
88
$
264
$
(53
)
$
(2
)
$
(73
)
$
136
(1)
A reclassification was made to
increase the accounts receivable balance by $20 million
($2 million current and $18 million non-current) and
the allowance for doubtful accounts by $20 million
($2 million current and $18 million non-current). The
reclassification was made to adjust the presentation of a
valuation reserve that had previously been netted against the
gross accounts receivable. There was no impact to net accounts
receivable, current or non-current, due to this reclassification.
(2)
Reserves and adjustments thereto of
acquired and divested operations.
(3)
Write-offs of amounts against
allowance provided.
(4)
The Company expects the allowance
for doubtful accounts to continue to decline as net installment
accounts receivable under the prior business model are billed
and collected over the remaining life. Under the Companys
Business Model, cash is often received prior to revenue
recognition, thus reducing the need to provide for estimated bad
debt associated with recorded revenue.
147
EXHIBIT 10.22
COMPUTER ASSOCIATES INTERNATIONAL, INC.
CHANGE IN CONTROL SEVERANCE POLICY
1. Purpose. The purpose of the Computer Associates International, Inc. Change in Control Severance Policy (the "POLICY") is to secure the continued services of certain senior executives of the Company and to ensure their continued dedication to their duties in the event of any threat or occurrence of a Change in Control (as defined in Section 2).
2. Definitions. As used in this Policy, the following terms shall have the respective meanings set forth below:
(a) "ANNUAL PERFORMANCE BONUS" means the annual cash bonus awarded under the Company's incentive plan, as in effect from time to time (as of the date of adoption of this Policy the "annual performance bonus" within the meaning of Section 4.4 of the Company's 2002 Incentive Plan, amended and restated effective as of March 31, 2004 (the "COMPANY INCENTIVE PLAN")).
(b) "BASE SALARY" means the higher of (i) the Participant's highest annual rate of base salary during the twelve-month period immediately prior to the Participant's Date of Termination or (ii) the average of the Participant's annual base salary earned during the past three (3) completed fiscal years of the Company immediately preceding the Participant's Date of Termination (annualized in the event the Participant was not employed by the Company (or its affiliates) for the whole of any such fiscal year).
(c) "BOARD" means the Board of Directors of the Company and, after a Change in Control, the "board of directors" of the Parent Corporation or Surviving Corporation, as the case may be, as defined for purposes of Section 2(f).
(d) "BONUS AMOUNT" means the higher of (i) the Participant's target Annual Performance Bonus for the fiscal year in which the Participant's Date of Termination occurs (or if the Participant's Qualifying Termination is on account of Good Reason pursuant to a reduction in a Participant's compensation or compensation opportunity under Section 2(k)(ii), the Participant's target Annual Performance Bonus for the prior fiscal year if higher) or (ii) the average of the Annual Performance Bonuses earned by the Participant from the Company (or its affiliates) during the last three (3) completed fiscal years of the Company (or such shorter period of time during which the Participant was employed by the Company) immediately preceding the Participant's Date of Termination (annualized in the event the Participant was not employed by the Company (or its affiliates) for the whole of any such fiscal year).
(e) "CAUSE" means (i) the willful and continued failure of the Participant to perform substantially his duties with the Company (other than any such failure resulting from the Participant's incapacity due to physical or mental illness or any
such failure subsequent to the Participant being delivered a notice of termination without Cause by the Company or delivering a notice of termination for Good Reason to the Company) after a written demand for substantial performance is delivered to the Participant by or on behalf of the Board which specifically identifies the manner in which the Board believes that the Participant has not substantially performed his duties, (ii) the willful engaging by the Participant in illegal conduct or gross misconduct which is demonstrably and materially injurious to the Company or its affiliates, (iii) the engaging by the Participant in conduct or misconduct that materially harms the reputation or financial position of the Company, (iv) the Participant (x) obstructs or impedes, (y) endeavors to influence, obstruct or impede or (z) fails to materially cooperate with, an Investigation, (v) the Participant withholds, removes, conceals, destroys, alters or by other means falsifies any material which is requested in connection with an Investigation, or attempts to do so or solicits another to do so, (vi) the commission of a felony by the Participant or (vii) the Participant is found liable in any SEC or other civil or criminal securities law action or enters into any cease and desist orders with respect to such action regardless of whether the Participant admits or denies liability. For purposes of this paragraph (d), no act or failure to act by the Participant shall be considered "willful" unless done or omitted to be done by the Participant in bad faith and without reasonable belief that the Participant's action or omission was in the best interests of the Company or its affiliates. Any act, or failure to act, in accordance with authority duly given by the Board, based upon the advice of counsel for the Company (including counsel employed by the Company) shall be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Company. Cause shall not exist unless and until the Company has delivered to the Participant a copy of a resolution duly adopted by three-quarters (3/4) of the entire Board (excluding the Participant from both the numerator and denominator if the Participant is a Board member) at a meeting of the Board called and held for such purpose (after reasonable notice to the Participant and an opportunity for the Participant, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board an event set forth in clauses (i), (ii), (iii), (iv), (v), (vi) or (vii) has occurred and specifying the particulars thereof in detail.
(f) "CHANGE IN CONTROL" means the occurrence of any one of the following events:
(i) individuals who, on the effective date of the Policy, constitute the Board (the "INCUMBENT DIRECTORS") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the effective date of the Policy whose election or nomination for election was approved by a vote of a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;
(ii) any "person" (as such term is defined in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35% or
more of the combined voting power of the Company's then outstanding
securities eligible to vote generally in the election of directors (the
"COMPANY VOTING SECURITIES"); provided, however, that the event described
in this paragraph (ii) shall not be deemed to be a Change in Control by
virtue of any of the following acquisitions: (A) by the Company or any
Subsidiary, (B) by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any Subsidiary, (C) by any underwriter
temporarily holding securities pursuant to an offering of such securities,
(D) pursuant to a Non-Qualifying Transaction (as defined in paragraph
(iii)), (E) pursuant to any acquisition by the Participant or any group of
persons including the Participant (or any entity controlled by the
Participant or any group of persons including the Participant); or (F) a
transaction (other than one described in (iii) below) in which Company
Voting Securities are acquired from the Company, if a majority of the
Incumbent Directors approve a resolution providing expressly that the
acquisition pursuant to this clause (F) does not constitute a Change in
Control under this paragraph (ii);
(iii) the consummation of a merger, consolidation, statutory share exchange, reorganization, sale of all or substantially all the Company's assets or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company's stockholders, whether for such transaction or the issuance of securities in the transaction (a "BUSINESS COMBINATION"), unless immediately following such Business Combination: (A) at least 60% of the total voting power of (x) the corporation resulting from such Business Combination (the "SURVIVING CORPORATION"), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of at least 95% of the voting securities eligible to elect directors of the Surviving Corporation (the "PARENT CORPORATION"), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 35% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is
no Parent Corporation, the Surviving Corporation) and (C) at least a
majority of the members of the board of directors of the Parent Corporation
(or, if there is no Parent Corporation, the Surviving Corporation)
following the consummation of the Business Combination were Incumbent
Directors at the time of the Board's approval of the execution of the
initial agreement providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in (A), (B) and
(C) above shall be deemed to be a "NON-QUALIFYING TRANSACTION" and any
Business Combination which does not satisfy all of the criteria specified
in (A) (B) and (C) shall be deemed a "QUALIFYING TRANSACTION"); or
(iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of more than 35% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company or its affiliates which reduces the number of Company Voting Securities outstanding; provided, that if after the consummation of such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur. For purposes of this Change in Control definition, "corporation" shall include any limited liability company, partnership, association, business trust and similar organization, "board of directors" shall refer to the ultimate governing body of such organization and "director" shall refer to any member of such governing body.
(g) "COMPANY" means Computer Associates International, Inc.
(h) "DATE OF TERMINATION" means (i) the effective date on which the Participant's employment by the Company terminates as specified in a prior written notice by the Company or the Participant, as the case may be, to the other, delivered pursuant to Section 9 or (ii) if the Participant's employment by the Company terminates by reason of death, the date of death of the Participant.
(i) "DISABILITY" shall mean long-term disability under the terms of Company's long-term disability plan, as then in effect.
(j) "EQUITY INCENTIVE COMPENSATION" means all equity-based compensation (including stock options and restricted stock) awarded under the Company's incentive plan, as in effect from time to time (as of the date of adoption of this Policy the "restricted stock," "stock options" and "other equity-based awards" within the meaning of Sections 4.5, 4.6 and 4.7, respectively, of the Company Incentive Plan).
(k) "GOOD REASON" means, without the Participant's express written consent, the occurrence of any of the following events after a Change in Control:
(i) (A) any change in the duties, responsibilities or status
(including reporting responsibilities) of the Participant that is
inconsistent in any material and adverse respect with the Participant's
position(s), duties, responsibilities or status with the Company
immediately prior to such Change in Control (including any material and
adverse diminution of such duties or responsibilities); provided, however,
that Good Reason shall not be deemed to occur upon a change in duties,
responsibilities (other than reporting responsibilities) or status that is
solely and directly a result of the Company no longer being a publicly
traded entity and does not involve any other event set forth in this
Section 2(k) or (B) a material and adverse change in the Participant's
titles or offices (including, if applicable, membership on the Board) with
the Company as in effect immediately prior to such Change in Control;
(ii) a more than 10% reduction by the Company in the Participant's rate of annual base salary or Annual Performance Bonus, Long-Term Performance Bonus or Equity Incentive Compensation target opportunities (including any material and adverse change in the formula for such targets) as in effect immediately prior to such Change in Control;
(iii) the failure of the Company to (A) continue in effect any significant employee benefit plan, compensation plan, welfare benefit plan or material fringe benefit plan in which the Participant is participating immediately prior to such Change in Control or the taking of any action by the Company which would adversely affect the Participant's participation in or materially reduce the Participant's benefits under any such plan, unless the Participant is permitted to participate in other plans providing the Participant with substantially equivalent benefits in the aggregate (at substantially equivalent or lower cost with respect to welfare benefit plans), or (B) provide the Participant with paid vacation in accordance with the most favorable vacation policies of the Company as in effect for the Participant immediately prior to such Change in Control (including the crediting of all service for which the Participant had been credited under such vacation policies prior to the Change in Control); or
(iv) the failure of the Company to obtain the assumption of the
Company's obligations hereunder from any successor as contemplated in
Section 8(b).
An isolated, insubstantial and inadvertent action taken in good faith and which is remedied by the Company within ten (10) days after receipt of notice thereof given by the Participant shall not constitute Good Reason. The Participant's right to terminate employment for Good Reason shall not be affected by the Participant's incapacities due to mental or physical illness and the Participant's continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason.
(l) "HOME COUNTRY" shall mean a Participant's country of residence immediately before the Participant commenced employment with the Company.
(m) "INVESTIGATION" means an investigation authorized by the Board, a self-regulatory organization empowered with self-regulatory responsibilities under federal or state laws or a governmental department or agency.
(n) "LONG-TERM PERFORMANCE BONUS" means the long-term bonus awarded under the Company's incentive plan, as in effect from time to time (as of the date of adoption of this Policy the "long-term performance bonus" within the meaning of Section 4.5 of the Company Incentive Plan).
(o) "PARTICIPANT" means each of the senior executives of the Company who are selected by the Board for coverage by this Policy and identified on Schedules A, B and C from time to time.
(p) "POTENTIAL CHANGE IN CONTROL" means the execution or entering into of any agreement by the Company the consummation of which can be expected to be a Qualifying Transaction.
(q) "QUALIFYING TERMINATION" means a termination of the Participant's employment (i) by the Company other than for Cause or (ii) by the Participant for Good Reason. Termination of the Participant's employment on account of death, Disability or Retirement shall not be treated as a Qualifying Termination. Notwithstanding the preceding sentence, the death of the Participant after notice of termination for Good Reason or without Cause has been validly provided shall be deemed to be a Qualifying Termination.
(r) "RETIREMENT" means the Participant's mandatory retirement (not including any mandatory early retirement) in accordance with the Company's retirement policy generally applicable to its salaried employees, as in effect immediately prior to the Change in Control, or in accordance with any retirement arrangement established with respect to the Participant with the Participant's written consent.
(s) "SUBSIDIARY" means any corporation or other entity in which the Company has a direct or indirect ownership interest of 50% or more of the total combined voting power of the then outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors (or members of any similar governing body) or in which the Company has the right to receive 50% or more of the distribution of profits or 50% of the assets or liquidation or dissolution.
(t) "TERMINATION PERIOD" means the period of time beginning with a Change in Control and ending two (2) years following such Change in Control. Notwithstanding anything in this Policy to the contrary, if (i) the Participant's employment is terminated prior to a Change in Control (or, if applicable, a Potential Change of Control) for reasons that would have constituted a Qualifying Termination if
they had occurred following a Change in Control; (ii) the Participant reasonably
demonstrates that such termination (or Good Reason event) was at the request of
a third party who had indicated an intention or taken steps reasonably
calculated to effect a Change in Control; and (iii) a Change in Control (or a
Potential Change in Control) involving such third party (or a party competing
with such third party to effectuate a Change in Control) does occur within six
(6) months from the date of such termination (or, in the case of a Potential
Change in Control, such Potential Change in Control occurs within three (3)
months of such termination), then for purposes of this Policy, the date
immediately prior to the date of such termination of employment or event
constituting Good Reason shall be treated as a Change in Control. For purposes
of determining the timing of payments and benefits to the Participant under
Section 4, the date of the actual Change in Control (or, if applicable, the
Potential Change of Control) shall be treated as the Participant's Date of
Termination under Section 2(h), and for purposes of determining the amount of
payments and benefits owed to the Participant under Section 4, the date the
Participant's employment is actually terminated shall be treated as the
Participant's Date of Termination under Section 2(h).
3. Eligibility. The Board shall determine in its sole discretion which senior executives of the Company shall be Participants and whether a Participant shall be listed on Schedule A, B or C, and the Board may remove the name of any senior executive from Schedule A, B or C and participation in this Policy at any time in its sole discretion; provided, however, that a Participant may not be removed from Schedule A, B or C without his or her prior written consent within the two-year period after a Change in Control or within the period of time beginning on a date three (3) months prior to a Potential Change in Control and ending on the termination of the agreement that constituted the Potential Change in Control. The Board may delegate its authority to identify the Participants on Schedule A, B or C and to remove a Participant from Schedule A, B or C to the Compensation and Human Resource Committee (or any successor committee) of the Board.
4. Payments Upon Termination of Employment. If during the Termination Period the employment of the Participant is terminated pursuant to a Qualifying Termination, then, subject to the Participant's execution of a Separation Agreement and Release in the form attached to this Policy as Exhibit A (the "SEPARATION AGREEMENT AND RELEASE"), the Company shall provide to the Participant:
(a) within ten (10) days following the Date of Termination (or, if
later, the execution by the Participant of the Separation Agreement and
Release), a lump sum cash payment equal to the result of multiplying (i) the sum
of (A) the Participant's Base Salary, plus (B) the Participant's Bonus Amount by
(ii) either 2.99 for a Participant identified on Schedule A, or 2.00 for a
Participant identified on Schedule B or 1.00 for a Participant identified on
Schedule C; and
(b) within ten (10) days following the Date of Termination (or, if later, the execution by the Participant of the Separation Agreement and Release), a cash
payment equal to the Participant's target Annual Performance Bonus for the fiscal year in which the Participant's Date of Termination occurs, multiplied by a fraction the numerator of which shall be the number of days the Participant was employed by the Company during the fiscal year in which the Date of Termination occurred and the denominator of which is 365; and
(c) within ten (10) days following the Date of Termination (or, if later, the execution by the Participant of the Separation Agreement and Release), a cash payment equal to the Participant's target Long-Term Performance Bonus for any incomplete performance cycle(s) as of the Participant's Date of Termination, multiplied by a fraction the numerator of which shall be the number of days the Participant was employed by the Company during the applicable performance cycle and the denominator of which shall be the total number of days in the performance cycle; and
(d) within ten (10) days following the Date of Termination (or, if later, the execution by the Participant of the Separation Agreement and Release), a cash payment equal to the Company's monthly premium cost of health care for Participant and/or the Participant's family at the Date of Termination, multiplied by eighteen (18); and
(e) for a period of one (1) year following the Participant's Date of Termination, the Company shall make outplacement services available to the Participant in accordance with its outplacement policy in effect immediately before the Change in Control (or if no such policy is in effect, the Participant may choose a provider of outplacement services, provided that the total cost of such outplacement services for the Participant shall not exceed $10,000 USD); and
(f) if on the Date of Termination the Participant is working in a country other than the Participant's Home Country and the Participant wishes to relocate to such Participant's Home Country within one (1) year following the Date of Termination, the Company shall provide relocation benefits to the Participant and his or her dependants in accordance with the Company's relocation program as in effect immediately before the Change in Control (or if no such program is in effect, the Company shall reimburse the Participant for reasonable relocation benefits incurred by the Participant and his or her dependants in returning to the Participant's Home Country to the extent that such costs do not exceed $75,000 USD); and
(g) to the extent provided in Appendix A, if the Participant is subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "EXCISE TAX"), a gross-up payment in accordance with the provisions of Appendix A.
Except as otherwise expressly provided pursuant to this Policy, this Policy shall be construed and administered in a manner which avoids duplication of compensation and benefits which may be provided under any other plan, program, policy, or other
arrangement or individual contract. In the event a Participant is covered by any other plan, program, policy, individually negotiated agreement or other arrangement, in effect as of his or her Date of Termination, that may duplicate the payments and benefits provided for in this Section 4, the Board is specifically empowered to reduce or eliminate the duplicative benefits provided for under the Policy.
5. Withholding Taxes. The Company may withhold from all payments due to the Participant (or his beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.
6. Reimbursement of Expenses. Except as provided in Section 16(a) of a Participant's Employment and Confidentiality Agreement, if any contest or dispute shall arise under this Policy involving termination of a Participant's employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall reimburse the Participant on a current basis for all reasonable legal fees and related expenses, if any, incurred by the Participant in connection with such contest or dispute (regardless of the result thereof), together with interest in an amount equal to the prime rate as reported in The Wall Street Journal, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue thirty (30) days from the date the Company receives the Participant's statement for such fees and expenses through the date of payment thereof, regardless of whether or not the Participant's claim is upheld by a court of competent jurisdiction or an arbitration panel; provided, however, that the Participant shall be required to repay immediately any such amounts to the Company to the extent that a court or an arbitration panel issues a final and non-appealable order setting forth the determination that the position taken by the Participant was frivolous or advanced by the Participant in bad faith.
7. Scope of Policy. Nothing in this Policy shall be deemed to entitle the Participant to continued employment with the Company or its Subsidiaries, and if a Participant's employment with the Company shall terminate prior to a Change in Control, the Participant shall have no further rights under this Policy (except as otherwise provided hereunder); provided, however, that any termination of a Participant's employment during the Termination Period shall be subject to all of the provisions of this Policy.
8. Successors; Binding Agreement.
(a) This Policy shall not be terminated by any Business Combination. In the event of any Business Combination, the provisions of this Policy shall be binding upon the Surviving Corporation, and such Surviving Corporation shall be treated as the Company hereunder.
(b) The Company agrees that in connection with any Business Combination, it will cause any successor entity to the Company unconditionally to assume all of the obligations of the Company hereunder. Failure of the Company to obtain such assumption prior to the effectiveness of any such Business Combination that constitutes a Change in Control, shall be a breach of this Policy and shall constitute Good Reason hereunder and shall entitle the Participant to compensation and other benefits from the Company in the same amount and on the same terms as the Participant would be entitled hereunder if the Participant's employment were terminated following a Change in Control by reason of a Qualifying Termination. For purposes of implementing the foregoing, the date on which any such Business Combination becomes effective shall be deemed the date Good Reason occurs, and shall be the Date of Termination if requested by a Participant.
(c) The benefits provided under this Policy shall inure to the benefit of and be enforceable by the Participant's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Participant shall die while any amounts would be payable to the Participant hereunder had the Participant continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Policy to such person or persons appointed in writing by the Participant to receive such amounts or, if no person is so appointed, to the Participant's estate.
9. Notice. (a) For purposes of this Policy, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given when delivered or five (5) days after deposit in the United States mail, certified and return receipt requested, postage prepaid, addressed as follows:
If to the Participant: the address listed as the Participant's address in the Company's personnel files.
If to the Company:
Computer Associates International, Inc.
Attention: Corporate Secretary
One Computer Associates Plaza
Islandia, NY 11749
or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
(b) A written notice of the Participant's Date of Termination by the Company or the Participant, as the case may be, to the other, shall (i) indicate the specific termination provision in this Policy relied upon, (ii) to the extent applicable, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Participant's employment under the provision so indicated and
(iii) specify the termination date (which date shall be not less than fifteen
(15) nor more than sixty (60) days after the giving of such notice). The failure
by the Participant or the Company to set forth in such notice any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Participant or the Company hereunder or preclude the
Participant or the Company from asserting such fact or circumstance in enforcing
the Participant's or the Company's rights hereunder.
10. Full Settlement; Resolution of Disputes and Costs.
(a) The Company's obligation to make any payments provided for in this Policy and otherwise to perform its obligations hereunder shall be in lieu and in full settlement of all other severance payments to the Participant under any other severance or employment agreement between the Participant and the Company, and any severance plan of the Company. In no event shall the Participant be obligated to seek other employment or take other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Policy and, except as provided in the Separation Agreement and Release, such amounts shall not be reduced whether or not the Participant obtains other employment.
(b) Any dispute or controversy arising under or in connection with
this Policy shall be settled exclusively by arbitration in New York by three
arbitrators in accordance with the commercial arbitration rules of the American
Arbitration Association ("AAA") then in effect. One arbitrator shall be selected
by the Company, the other by the Participant and the third jointly by these
arbitrators (or if they are unable to agree within thirty (30) days of the
commencement of arbitration the third arbitrator will be appointed by the AAA).
Judgment may be entered on the arbitrators' award in any court having
jurisdiction. In the event of any such dispute or controversy arising during a
Termination Period, the Company shall bear all costs and expenses arising in
connection with any arbitration proceeding on the same terms as set forth in
Section 6 of this Policy. Notwithstanding anything in this Policy to the
contrary, any court, tribunal or arbitration panel that adjudicates any dispute,
controversy or claim arising between a Participant and the Company, or any of
their delegates or successors, in respect of a Participant's Qualifying
Termination, will apply a de novo standard of review to any determinations made
by such person. Such de novo standard shall apply notwithstanding the grant of
full discretion hereunder to any such person or characterization of any such
decision by such person as final, binding or conclusive on any party.
11. Employment with Subsidiaries. Employment with the Company for purposes of this Policy shall include employment with any Subsidiary.
12. Survival. The respective obligations and benefits afforded to the Company and the Participant as provided in Sections 4 (to the extent that payments or
benefits are owed as a result of a termination of employment that occurs during the term of this Policy) 5, 6, 8(c) and 10 shall survive the termination of this Policy.
13. GOVERNING LAW; VALIDITY. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS POLICY SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLE OF CONFLICTS OF LAWS, AND APPLICABLE FEDERAL LAWS. THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS POLICY SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS POLICY, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.
14. Amendment and Termination. The Board may amend or terminate the Policy at any time; provided, however, that during the period commencing on a Change in Control and ending on the second anniversary of the Change in Control, the Policy may not be amended or terminated by the Board in any manner which is materially adverse to the interests of any Participant then listed on Schedule A, B or C without the prior written consent of such Participant; provided, further, that any termination or amendments to the Policy that are adverse to the interests of any Participant then listed on Schedule A, B or C, and that occur during the period of time beginning on a date three (3) months prior to a Potential Change in Control and ending on the termination of the agreement that constituted the Potential Change in Control, shall be void.
15. Interpretation and Administration. The Policy shall be administered by the Board. The Board may delegate any of its powers under the Policy to the Compensation and Human Resource Committee of the Board (or any successor committee). The Board or the Compensation and Human Resource Committee (or any successor committee) shall have the authority (i) to exercise all of the powers granted to it under the Policy, (ii) to construe, interpret and implement the Policy, (iii) to prescribe, amend and rescind rules and regulations relating to the Policy, (iv) to make all determinations necessary or advisable in administration of the Policy and (v) to correct any defect, supply any omission and reconcile any inconsistency in the Policy. Actions of the Board or the Compensation and Human Resource Committee (or any successor committee) shall be taken by a majority vote of its members.
16. Claims and Appeals. Participants may submit claims for benefits by
giving notice to the Company pursuant to Section 9 of this Policy. If a
Participant believes that he or she has not received coverage or benefits to
which he or she is entitled under the Policy, the Participant may notify the
Board in writing of a claim for coverage or benefits. If the claim for coverage
or benefits is denied in whole or in part, the Board shall notify the applicant
in writing of such denial within thirty (30) days (which may be extended to
sixty (60) days under special circumstances), with such notice setting forth:
(i) the specific reasons for the denial; (ii) the Policy provisions upon which
the denial is
based; (iii) any additional material or information necessary for the applicant to perfect his or her claim; and (iv) the procedures for requesting a review of the denial. Upon a denial of a claim by the Board, the Participant may: (i) request a review of the denial by the Board or, where review authority has been so delegated, by such other person or entity as may be designated by the Board for this purpose; (ii) review any Policy documents relevant to his or her claim; and (iii) submit issues and comments to the Board or its delegate that are relevant to the review. Any request for review must be made in writing and received by the Board or its delegate within sixty (60) days of the date the applicant received notice of the initial denial, unless special circumstances require an extension of time for processing. The Board or its delegate will make a written ruling on the applicant's request for review setting forth the reasons for the decision and the Policy provisions upon which the denial, if appropriate, is based. This written ruling shall be made within thirty (30) days of the date the Board or its delegate receives the applicant's request for review unless special circumstances require an extension of time for processing, in which case a decision will be rendered as soon as possible, but not later than sixty (60) days after receipt of the request for review. All extensions of time permitted by this Section 16 will be permitted at the sole discretion of the Board or its delegate. If the Board does not provide the Participant with written notice of the denial of his or her appeal, the Participant's claim shall be deemed denied.
17. Type of Policy. This Policy is intended to be, and shall be
interpreted as an unfunded employee welfare plan under Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
Section 2520.104-24 of the Department of Labor Regulations, maintained primarily
for the purpose of providing employee welfare benefits, to the extent that it
provides welfare benefits, and under Sections 201, 301 and 401 of ERISA, as a
plan that is unfunded and maintained primarily for the purpose of providing
deferred compensation, to the extent that it provides such compensation, in each
case for a select group of management or highly compensated employees.
18. Nonassignability. Benefits under the Policy may not be assigned by the Participant. The terms and conditions of the Policy shall be binding on the successors and assigns of the Company.
19. Effective Date. The Policy shall be effective as of October 18, 2004.
SCHEDULE A
(2.99 MULTIPLE)
Chief Executive Officer (John A. Swainson) Executive Vice President of Strategy and Business Development (Michael J. Christenson)
[Employees may be added or eliminated from time to time]
SCHEDULE B
(2.00 MULTIPLE)
Executive Vice President and General Counsel (Kenneth V. Handal) Executive Vice President of Partner Advocacy and Indirect Sales (Gary Quinn) Executive Vice President and Chief Administrative Officer (James Bryant)
[Employees may be added or eliminated from time to time]
SCHEDULE C
(1.00 MULTIPLE)
Executive Vice President of eTrust (Russell Artzt) Senior Vice President of CA Technology Services (Una O'Neill)
George J. Fischer (Senior Vice President & General Manager, North America) John Ruthven (Senior Vice President & General Manager, Asia/Pacific/Japan) Andrew Dutton (Senior Vice President and General Manager, Europe/Middle East/Africa)
[Employees may be added or eliminated from time to time]
APPENDIX A
Additional Reimbursement Payments by the Company
(a) Anything in this Policy to the contrary notwithstanding, in the
event it shall be determined that any payment, award, benefit or distribution
(or any acceleration of any payment, award, benefit or distribution) by the
Company (or any of its affiliated entities) or any entity which effectuates a
Change in Control (or any of its affiliated entities) to or for the benefit of
the Participant (whether pursuant to the terms of this Policy or otherwise, but
determined without regard to any additional payments required under this
Appendix A) (the "PAYMENTS") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "CODE"), or
any interest or penalties are incurred by the Participant with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "EXCISE TAX"), then the Company
shall pay to the Participant an additional payment (a "REIMBURSEMENT PAYMENT")
in an amount such that after payment by the Participant of all taxes (including
any Excise Tax) imposed upon the Reimbursement Payment, the Participant retains
an amount of the Reimbursement Payment equal to the Excise Tax imposed upon the
Payments. For purposes of determining the amount of the Reimbursement Payment,
the Participant shall be deemed to (i) pay federal income taxes at the highest
marginal rates of federal income taxation for the calendar year in which the
Reimbursement Payment is to be made and (ii) pay applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Reimbursement Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes.
Notwithstanding the foregoing provisions of this Appendix A, if it shall be determined that the Participant is entitled to a Reimbursement Payment, but that the Payments would not be subject to the Excise Tax if the Payments were reduced by an amount that is no more than 10% of the portion of the Payments that would be treated as "parachute payments" under Section 280G of the Code, then the amounts payable to the Participant under this Policy shall be reduced (but not below zero) to the maximum amount that could be paid to the Participant without giving rise to the Excise Tax (the "SAFE HARBOR CAP"), and no Reimbursement Payment shall be made to the Participant. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing first the payments under Section 4(a), unless an alternative method of reduction is elected by the Participant. For purposes of reducing the Payments to the Safe Harbor Cap, only amounts payable under this Policy (and no other Payments) shall be reduced. If the reduction of the amounts payable hereunder would not result in a reduction of the Payments to the Safe Harbor Cap, no amounts payable under this Policy shall be reduced pursuant to this provision.
(b) Subject to the provisions of Paragraph (a), all determinations
required to be made under this Appendix A, including whether and when a
Reimbursement Payment is required, the amount of such Reimbursement Payment, the
amount of any Option Redetermination (as defined below), the reduction of the
Payments to the Safe Harbor Cap and the assumptions to be utilized in arriving
at such determinations, shall be made by a public accounting firm that is
retained by the Company as of the date immediately prior to the Change in
Control (the "ACCOUNTING FIRM") which shall provide detailed supporting
calculations both to the Company and the Participant within fifteen (15)
business days of the receipt of notice from the Company or the Participant that
there has been a Payment, or such earlier time as is requested by the Company
(collectively, the "DETERMINATION"). For the avoidance of doubt, the Accounting
Firm may use the Option Redetermination amount in determining the reduction of
the Payments to the Safe Harbor Cap. Notwithstanding the foregoing, in the event
(i) the Board shall determine prior to the Change in Control that the Accounting
Firm is precluded from performing such services under applicable auditor
independence rules or (ii) the Audit Committee of the Board determines that it
does not want the Accounting Firm to perform such services because of auditor
independence concerns or (iii) the Accounting Firm is serving as accountant or
auditor for the person(s) effecting the Change in Control, the Board shall
appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company, and the Company shall enter into any
agreement reasonably requested by the Accounting Firm in connection with the
performance of the services hereunder. The Reimbursement Payment under this
Appendix A with respect to any Payments shall be made no later than thirty (30)
days following such Payment. If the Accounting Firm determines that no Excise
Tax is payable by a Participant, it shall furnish the Participant with a written
opinion to such effect, and to the effect that failure to report the Excise Tax,
if any, on the Participant's applicable federal income tax return will not
result in the imposition of a negligence or similar penalty. In the event the
Accounting Firm determines that the Payments shall be reduced to the Safe Harbor
Cap, it shall furnish the Participant with a written opinion to such effect. The
Determination by the Accounting Firm shall be binding upon the Company and the
Participant.
As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the Determination, it is possible that Reimbursement
Payments which will not have been made by the Company should have been made
("UNDERPAYMENT") or Reimbursement Payments are made by the Company which should
not have been made ("OVERPAYMENT"), consistent with the calculations required to
be made hereunder. In the event the amount of the Reimbursement Payment is less
than the amount necessary to reimburse the Participant for the Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or
for the benefit of the Participant. In the event the amount of the Reimbursement
Payment exceeds the amount necessary to reimburse the Participant
for the Excise Tax, the Accounting Firm shall determine the amount of the
Overpayment that has been made and any such Overpayment (together with interest
at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid
by the Participant (to the extent the Participant has received a refund if the
applicable Excise Tax has been paid to the Internal Revenue Service) to or for
the benefit of the Company. The Participant shall cooperate, to the extent his
or her expenses are reimbursed by the Company, with any reasonable requests by
the Company in connection with any contests or disputes with the Internal
Revenue Service in connection with the Excise Tax. In the event that the Company
makes a Reimbursement Payment to the Participant and subsequently the Company
determines that the value of any accelerated vesting of stock options held by
the Participant shall be redetermined within the context of Treasury Regulation
Section 1.280G-1 Q/A 33 (the "OPTION REDETERMINATION"), the Participant shall
(i) file with the Internal Revenue Service an amended federal income tax return
that claims a refund of the overpayment of the Excise Tax attributable to such
Option Redetermination and (ii) promptly pay the refunded Excise Tax to the
Company; provided that the Company shall pay all reasonable professional fees
incurred in the preparation of the Participant's amended federal income tax
return. If the Option Redetermination occurs in the same year that the
Reimbursement Payment is included in the Participant's taxable income, then in
addition to returning the refund to the Company, the Participant will also
promptly return to the Company any tax benefit realized by the return of such
refund and the return of the additional tax benefit payment (all determinations
pursuant to this sentence shall be made by the Accounting Firm). In the event
that amounts payable to the Participant under this Policy were reduced pursuant
to the second paragraph of Paragraph (a) and subsequently the Participant
determines there has been an Option Redetermination that reduces the value of
the Payments attributable to such options, the Company shall promptly pay to the
Participant any amounts payable under this Policy that were not previously paid
solely as a result of the second paragraph of Paragraph (a) up to the Safe
Harbor Cap.
EXHIBIT A
FORM OF CIC SEPARATION AGREEMENT AND RELEASE (HEREIN
"AGREEMENT")
Computer Associates International, Inc. (the "Company") and _______________ ("Executive") agree as follows:
1. Executive's employment with the Company will terminate effective [DATE].
2. Executive agrees to make himself reasonably available to the Company to respond to requests by the Company for information concerning litigation, regulatory inquiry or investigation, involving facts or events relating to the Company that may be within his knowledge. Executive will cooperate fully with the Company in connection with any and all future litigation or regulatory proceedings brought by or against the Company to the extent the Company reasonably deems Executive's cooperation necessary. Executive will be entitled to reimbursement of reasonable out-of-pocket expenses (not including counsel fees) incurred in connection with fulfilling his obligations under this Section 2.
3. In consideration of Executive's undertakings herein, the Company will pay an amount equal to $____________ in accordance with Section 4 of the Company's Change in Control Severance Policy (the "CIC Severance Policy"), less required deductions (including, but not limited to, federal, state and local tax withholdings) as separation/severance pay (the "Severance Payment"). The Severance Payment will be paid in accordance with the CIC Severance Policy. Payment of the Severance Payment is contingent upon the execution of this Agreement by Executive and Executive's compliance with all terms and conditions of this Agreement and the CIC Severance Policy. Executive agrees that if this Agreement does not become effective, the Company shall not be required to make any further payments to Executive pursuant to this Agreement or the CIC Severance Policy and shall be entitled to recover all payments already made by it (including interest thereon).
4. Executive understands and agrees that any amounts that Executive owes the Company, including any salary or other overpayments related to Executive's employment with the Company, will be offset and deducted from Executive's final paycheck from the Company. Executive specifically authorizes the Company to offset and deduct any such amounts from his final paycheck. Executive agrees and acknowledges that, to the extent the amount of Executive's final paycheck is not sufficient to repay the full amount that Executive owes to the Company, if any, the full remaining amount owed to the Company, if any, will be offset and deducted from the amount of the Severance Payment. Executive specifically authorizes the Company to offset and deduct any such amounts from his Severance Payment.
5. Executive agrees that, after payment of Executive's final paycheck on
[DATE] and the Severance Payment, Executive will have received all compensation
and benefits that are due and owing to Executive by the Company, including but
not limited to salary, vacation pay, bonus, commissions and incentive/override
compensation but excluding any benefits or services provided pursuant to
Sections 4(e) and 4(f) of the CIC Severance Policy.
6. Executive represents that he has returned to the Company all property or information, including, without limitation, all reports, files, memos, plans, lists, or other records (whether electronically stored or not) belonging to the Company or its affiliates, including copies, extracts or other documents derived from such property or information. Executive will immediately forfeit all rights and benefits under this Agreement and the CIC Severance Policy, including, without limitation, the right to receive any Severance Payment if Executive, directly or indirectly, at any time (i) discloses to any third party or entity any trade secrets or other proprietary or confidential information pertaining to the Company or any of its affiliates or uses such secrets or information without the prior written consent of the General Counsel of the Company or (ii) takes any actions or makes or publishes any statements, written or oral, or instigates, assists or participates in the making or publication of any such statements which libel, slander or disparage the Company or any of its past or present directors, officers or employees. Nothing in this Agreement shall prevent or prohibit Executive or the Company from responding to an order, subpoena, other legal process or regulatory inquiry directed to them or from providing information to or making a filing with a governmental or regulatory body. Executive agrees that upon learning of any order, subpoena or other legal process seeking information that would otherwise be prohibited from disclosure under this Agreement, he will promptly notify the Company, in writing, directed to the Company's General Counsel. In the event disclosure is so required, Executive agrees not to oppose any action by the Company to seek or obtain a protective order or other appropriate remedy.
7. Executive agrees that Executive's Employment and Confidentiality Agreement (the "Employment and Confidentiality Agreement") shall continue to be in full force and effect, including but not limited to all non-competition and non-solicitation provisions contained therein.
8. Executive hereby represents that he has not filed any action, complaint, charge, grievance or arbitration against the Company or any of its affiliates in connection with any matters relating, directly or indirectly, to his employment, and covenants and agrees not to file any such action, complaint or arbitration or commence any other judicial or arbitral proceedings against the Company or any of its affiliates with respect to events occurring prior to the termination of his employment with the Company or any affiliates thereof.
9. Effective on [DATE], the Company will cease all health benefit coverage and other benefit coverage for Executive.
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10. GENERAL RELEASE - Effective as of the Effective Date, and in return for the consideration set forth above, Executive agrees not to sue or file any action, claim, or lawsuit against the Company, agrees not to pursue, seek to recover or recover any alleged damages, seek to obtain or obtain any other form of relief or remedy with respect to, and cause the dismissal or withdrawal of, any lawsuit, action, claim, or charge against the Company, and Executive agrees to waive all claims and release and forever discharge the Company, its officers, directors, subsidiaries, affiliates, parents, attorneys, shareholders and employees from any claims, demands, actions, causes of action or liabilities for compensatory damages or any other relief or remedy, and obligations of any kind or nature whatsoever, based on any matter, cause or thing, relating in any way, directly or indirectly, to his employment, from the beginning of time through the Effective Date of this Agreement, whether known or unknown, fixed or contingent, liquidated or unliquidated, and whether arising from tort, statute, or contract, including, but not limited to, any claims arising under or pursuant to the California Fair Employment and Housing Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1871, the Civil Rights Act of 1991, the Americans with Disabilities Act, the Rehabilitation Act, the Family and Medical Leave Act of 1993, the Occupational Safety & Health Act, the Employee Retirement Income Security Act of 1974, the Older Workers Benefit Protection Act of 1990, the Worker Adjustment and Retraining Notification Act, the Fair Labor Standards Act, the Age Discrimination in Employment Act of 1967 ("ADEA"), New York State Labor Law, New York State Human Rights Law, New York Human Rights Law, and any other state, federal, city, county or local statute, rule, regulation, ordinance or order, or the national or local law of any foreign country, any claim for future consideration for employment with the Company, any claims for attorneys' fees and costs and any employment rights or entitlement law, and any claims for wrongful discharge, intentional infliction of emotional distress, defamation, libel or slander, payment of wages, outrageous behavior, breach of contract or any duty allegedly owed to Executive, discrimination based upon race, color, ethnicity, sex, age, national origin, religion, disability, sexual orientation, or another unlawful criterion or circumstance, and any other theory of recovery. It is the intention of the parties to make this release as broad and as general as the law permits.
[Executive acknowledges that he is aware of, has read, has had explained to him by his attorneys, understands and expressly waives any and all rights he has or may have under Section 1542 of the California Civil Code, which provides as follows:
"A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor."]*
Ex-3
11. Executive acknowledges that he may later discover facts different from or in addition to those which he knows or believes to be true now, and he agrees that, in such event, this Agreement shall nevertheless remain effective in all respects, notwithstanding such different or additional facts or the discovery of those facts.
12. This Agreement may not be introduced in any legal or administrative proceeding, or other similar forum, except one concerning a breach of this Agreement or the CIC Severance Policy.
13. Executive acknowledges that Executive has made an independent investigation of the facts, and does not rely on any statement or representation of the Company in entering into this Agreement, other than those set forth herein.
14. Executive agrees that, without limiting the Company's remedies, should he commence, continue, join in, or in any other manner attempt to assert any claim released in connection herewith, or otherwise violate in a material fashion any of the terms of this Agreement, the Company shall not be required to make any further payments to the Executive pursuant to this Agreement or the CIC Severance Policy and shall be entitled to recover all payments already made by it (including interest thereon), in addition to all damages, attorneys' fees and costs the Company incurs in connection with Executive's breach of this Agreement. Executive further agrees that the Company shall be entitled to the repayments and recovery of damages described above without waiver of or prejudice to the release granted by him in connection with this Agreement, and that his violation or breach of any provision of this Agreement shall forever release and discharge the Company from the performance of its obligations arising from the Agreement.
15. Executive has been advised and acknowledges that he has been given forty-five (45) days to consider signing this Agreement, he has seven (7) days following his signing of this Agreement to revoke and cancel the terms and conditions contained herein, and the terms and conditions of this Agreement shall not become effective or enforceable. until the revocation period has expired (the "Effective Date").
16. Executive acknowledges that Executive has been advised hereby to consult with, and has consulted with, an attorney of his choice prior to signing this Agreement.
17. Executive acknowledges that Executive has fully read this Agreement, understands the contents of this Agreement, and agrees to its terms and conditions of his own free will, knowingly and voluntarily, and without any duress or coercion.
18. Executive understands that this Agreement includes a final general release, and that Executive can make no further claims against the Company or the persons listed in Section 10 of this Agreement relating in any way, directly or indirectly, to his employment. Executive also understands that this Agreement precludes Executive from recovering any damages or other relief as a result of any lawsuit, grievance, charge or
Ex-4
claim brought on Executive's behalf against the Company or the persons listed in
Section 10 of this Agreement.
19. Executive acknowledges that Executive is receiving adequate consideration (that is in addition to what Executive is otherwise entitled to) for signing this Agreement.
20. This Agreement and the CIC Severance Policy constitute the complete understanding between Executive and the Company regarding the subject matter hereof and thereof. No other promises or agreements regarding the subject matter hereof and thereof will be binding unless signed by Executive and the Company.
21. Executive and the Company agree that all notices or other communications required or permitted to be given under the terms of this Agreement shall be given in accordance with Section 9 of the CIC Severance Policy.
22. Executive and the Company agree that any disputes relating to any matters covered under the terms of this Agreement shall be resolved in accordance with Section 10 of the CIC Severance Policy.
23. By entering into this Agreement, the Company does not admit and specifically denies any liability, wrongdoing or violation of any law, statute, regulation or policy, and it is expressly understood and agreed that this Agreement is being entered into solely for the purpose of amicably resolving all matters of any kind whatsoever between Executive and the Company.
24. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions or portions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.
25. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.
26. Unless expressly specified elsewhere in this Agreement, this Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York without reference to the principles of conflict of law.
Ex-5
27. This Agreement may be executed in one or more counterparts.
Company Executive By: --------------------------------- ---------------------------------------- Date: Date: ------------------------------- ---------------------------------- |
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EXHIBIT 10.51
1.01 PREAMBLE
By the execution of this Adoption Agreement the Plan Sponsor hereby
(complete a. or b.)
a. [ ] adopts a new plan as of __ ____________ [month, day, year]
b. [X] amends and restates its existing plan as of April 1, 2006 [month, day, year] which is the Amendment Restatement Date.
Original Effective Date: September 1, 2005 [month, day, year]
Pre-409A Grandfathering: [ ] Yes [ ] No (If yes, complete Appendix B, "Summary of Grandfathered Provisions")
1.02 PLAN
Plan Name: CA, Inc. Executive Deferred Compensation Plan
Plan Year: April 1 - March 31
1.03 PLAN SPONSOR
Name: CA, Inc. Address: One CA Plaza, Islandia, NY 11749 Phone # : 631-342-6000 EIN: 13 2847434 Fiscal Yr: March 31 - April 1 Form of Entity: Corporation |
If Plan Sponsor is a Corporation is stock publicly traded?
[X] Yes [ ] No
1.04 EMPLOYER
The following entities have been authorized by the Plan Sponsor to participate in and have adopted the Plan:
Publicly Traded Corporation --------------------------- Entity Yes No ------ --- --- CA Think [ ] [X] CA, Inc. [ ] [X] _______________ [ ] [ ] _______________ [ ] [ ] _______________ [ ] [ ] _______________ [ ] [ ] |
1.05 ADMINISTRATOR
The Employer has designated the following to be responsible for the Administration of the Plan:
Note: The Administrator is the person or persons designated by the Employer to be responsible for the administration of the Plan. This is not Fidelity Investments Institutional Operations Company, Inc. nor any other Fidelity affiliate.
2.01 PARTICIPATION
a. [X] Employees
i. [X] Eligible Employees are selected by the Employer as identified in Appendix C which may be periodically updated by the Employer.
ii. [ ] Eligible Employees are those employees of the Employer who satisfy the following criteria:
b. [ ] Directors
i. [ ] All Directors are eligible to participate.
ii. [ ] Only Directors selected by the Employer and identified in Appendix C are eligible to participate.
3.01 COMPENSATION
For purposes of determining Participant contributions under Article 4 and Employer contributions under Article 5, Compensation shall be defined in the following manner [complete a. or b. and c., if applicable]:
a. [X]
Compensation, for purposes of the April 1, 2006-March 31, 2007 deferral period, shall mean only an employee's Annual Performance Bonus (paid in cash) for fiscal 2007, under the Plan Sponsor's 2002 Incentive Plan, as amended.
b. [ ] Compensation as defined in _________________________________________ ________________________________ [insert name of qualified plan] without regard to the limitation captured in Section 401(a)(17) of the Code for such Plan Year:
c. [ ] Director Compensation shall have the meaning specified in Section 2.9 except that:
d. [ ] Compensation shall, for all Plan purposes, be limited to $_________.
3.02 BONUSES
Compensation, as defined in Section 3.01 of the Adoption Agreement, includes the following type of bonuses:
Will be treated as Performance Based Compensation ------------------------------ Type Yes No ---- --- -- Annual Performance Bonus for fiscal 2007 [X] [ ] under the Plan Sponsor's 2002 Incentive Plan, as amended ________________________________________ [ ] [ ] ________________________________________ [ ] [ ] |
________________________________________ [ ] [ ] ________________________________________ [ ] [ ] |
4.01 PARTICIPANT CONTRIBUTIONS
A. AMOUNT OF DEFERRALS
A Participant may elect within the period specified in Section 4.01b of the Adoption Agreement to defer the following amounts of Compensation (select i. and ii. or iii.):
i. Compensation Other than Bonuses (for each type of remuneration listed, complete "dollar amount" or "percentage amount," but not both)
Dollar Amount % Amount Type of ------------- --------- Remuneration Min Max Min Max Increment ------------ --- --- --- --- --------- a. b. c. |
Note: The increment is required to determine the permissible deferral amounts. For example, a minimum of 0% and maximum of 20% with a 5% increment would allow an individual to defer 0%, 5%, 10%, 15% or 20%.
ii. Bonuses (choose one)
Dollar Amount % Amount ------------- --------- Type of Bonus Min Min Min Max Increment ------------- --- --- --- --- --------- a. Annual Performance Bonus 1% 90% b. c. |
iii. Compensation (do not complete if you completed i. and ii.)
Dollar Amount % Amount ------------- --------- Min Max Min Max Increment --- --- --- --- --------- |
iv. Director Compensation
Dollar Amount % Amount ------------- --------- Type of Compensation Min Min Min Max Increment -------------------- --- --- --- --- --------- Annual Retainer Meeting Fees Other: Other: |
B. ELECTION PERIOD
i. Performance Based Compensation
A special election period
a. [X] Does b. [ ] Does Not
apply to each eligible type of performance based compensation referenced in Section 3.02 of the Adoption Agreement.
The special election period, if applicable, will be determined by the Employer.
ii. Newly Eligible Participants
An employee who is classified or designated as an Eligible Employee during a Plan Year
a. [X] May b. [ ] May Not
elect to defer Compensation otherwise payable during the remainder of the Plan Year by completing a deferral agreement within the 30 day period beginning on the date he is eligible to participate in the Plan.
5.01 EMPLOYER CONTRIBUTIONS
A. MATCHING CONTRIBUTIONS
i. Amount
For each Plan Year, the Employer shall make a Matching
Contribution on behalf of each Participant who defers
Compensation for the Plan Year and satisfies the requirements of
Section 5.01(a)(ii) of the Adoption Agreement equal to (Complete
one):
(A) [ ] _____________ [insert percentage] of the Compensation the Participant has elected to defer for the Plan Year
(B) [ ] An amount determined by the Employer in its sole discretion
(C) [ ] Matching Contributions for each Participant shall be limited to $__________ and/or _________% of Compensation.
(D) [ ] Other: __________________________________________________
ii. Eligibility for Matching Contribution
A Participant who defers Compensation for the Plan Year shall receive an allocation of Matching Contributions determined in accordance with Section 5.01(a)(i) provided he satisfies the following requirements (complete the ones that are applicable):
(A) [ ] Is employed on the last day of the Plan Year
(B) [ ] Completes ________ [insert number] of hours of service during the Plan Year
(C) [ ] Is selected by the Employer in its sole discretion to receive an allocation of Matching Contributions
(D) [ ] No requirements
(E) [ ] Other
iii. Time of Allocation
Matching Contributions, if made, shall be treated as allocated
[select one]:
(A) [ ] As of the last day of the Plan Year
(B) [ ] At such times as the Employer shall determine in its sole discretion
(C) [ ] At the time the Compensation on account of which the Matching Contribution is being made would otherwise have been paid to the Participant
(D) [ ] Other:
B. OTHER CONTRIBUTIONS
i. Amount
The Employer shall make a contribution on behalf of each Participant who satisfies the requirements of Section 5.01(b)(ii) equal to [check one]:
(A) [ ] An amount equal to ____________ [insert number] % of the Participant's Compensation
(B) [ ] An amount determined by the Employer in its sole discretion
(C) [ ] Contributions for each Participant shall be limited to $__________
(D) [ ] Other:
ii. Eligibility for Other Contributions
A Participant shall receive an allocation of other Employer contributions for the Plan Year if he satisfies the following requirements:
(B) [ ] Is selected by the Employer in its sole discretion to receive an allocation of other Employer contributions
(C) [ ] No requirements
iii. Time of Allocation
Employer contributions, if made, will be allocated:
(A) [ ] As of the last day of the Plan Year
(B) [ ] At such time or times as the Employer shall determine in its sole discretion
(C) [ ] Other:
6.01 DISTRIBUTIONS
The timing and form of payment of distributions made from the Participant's
vested Account shall be made in accordance with the elections made in this
Section 6.01 of the Adoption Agreement.
a. Timing of Distributions
All distributions shall commence in accordance with the following (choose one):
(i) [X] As soon as administratively practicable
(ii) [ ] Monthly on specified day ____________________ (insert day)
(iii) [ ] Annually on specified month and day _________________
(insert month and day)
(iv) [ ] Calendar quarter on specified day _______________ (insert day)
Note: A six month delay for certain distributions to Key Employees of publicly traded companies will apply.
b. In addition to the distributions that will occur under the terms of the Plan (e.g., upon death or disability or six months from a separation from service), distributions can occur upon the following Distribution Events (If multiple events are chosen, the earliest to occur will trigger payment.)
Lump Sum Installments -------- ------------ (i) [X] Specified Date [5 years, 10 years or X ___ years to ___ years 15 years from end of deferral period] (ii) [ ] Specified Age ________ ___ years to ___ years (iii) [ ] Separation from Service ________ ___ years to ___ years (iv) [ ] Separation from Service plus 6 months ________ ___ years to ___ years (v) [ ] Separation from Service plus ___months ________ ___ years to ___ years (not to exceed ___months) (vi) [ ] Retirement ________ ___ years to ___ years (vii) [ ] Retirement plus 6 months ________ ___ years to ___ years (viii) [ ] Retirement plus ___months (not to ________ ___ years to ___ years exceed ___months) (ix) [ ] Later of Separation from Service or ________ ___ years to ___ years Specified Age (x) [ ] Later of Separation from Service or ________ ___ years to ___ years Specified Date (xi) [ ] Later of Retirement or Specified Age ________ ___ years to ___ years (xii) [ ] Later of Retirement or Specified Date ________ ___ years to ___ years (xiii) [ ] Disability ________ ___ years to ___ years (xiv) [ ] Death ________ ___ years to ___ years |
(xv) [ ] Change in Control ________ ___ years to ___ years |
c. Specified Date and Specified Age elections may not commence beyond age _____.
d. Separation from Service (if this is elected, do not select "Separation from Service" under b. above)
A Separation from Service override
[X] Shall apply.
A Separation from Service override provides that a Participant, whose Separation from Service occurs before or after Retirement, shall receive the vested amount credited to his Account as a lump sum payment.
e. Involuntary Cashouts (Leave blank if not applicable)
(i) [ ] If the Participant's vested Account at the time of his Separation from Service does not exceed $_______________ (insert dollar amount) distribution of the vested Account shall automatically be made in the form of a single lump sum as soon as administratively practicable but in no event later than 60 days after the Separation of Service.
f. Retirement
g. Redeferrals
A Participant
(i) [X] Shall
(ii) [ ] Shall Not
be permitted to modify a scheduled distribution date in accordance with Section 9.2 of the Plan.
A Participant shall generally be permitted to elect such modification one(1) number of times.
Administratively, allowable distribution events will be modified to reflect all options necessary to fulfill the redeferrals provision.
7.01 VESTING
a. Matching Contributions
The Participant's vested interest in the amount credited to his Account attributable to Matching Contributions shall be based on the following schedule:
Years of Service Vesting % ---------------- --------- 0 _________ 1 _________ 2 _________ 3 _________ 4 _________ 5 _________ 6 _________ 7 _________ 8 _________ 9 _________ |
b. Other Employer Contributions
The Participant's vested interest in the amount credited to his Account attributable to Employer contributions other than Matching Contributions shall be based on the following schedule:
Years of Service Vesting % ---------------- --------- 0 _________ 1 _________ 2 _________ 3 _________ 4 _________ 5 _________ 6 _________ 7 _________ 8 _________ 9 _________ |
c. Acceleration of Vesting
A Participant's vested interest in his Account will automatically be 100% upon the occurrence of the following events: (select the ones that are applicable)
(i) [ ] Death
(ii) [ ] Disability
(iii) [ ] Change in Control
(iv) [ ] Eligibility for Retirement
d. Years of Service
i. A Participant's Years of Service shall include all service performed for the Employer and
(A) [ ] Shall
(B) [ ] Shall Not
include service performed for the Related Employer.
ii. Years of Service shall also include service performed for the following entities:
iii. Years of Service shall be determined in accordance with: (select one)
(A) [ ] The elapsed time method in Treas. Reg. Sec. 1.410(a)(7)
(B) [ ] The general method in DOL Reg. Sec. 2530.200b-1 through
8.01 UNFORESEEABLE EMERGENCY
A withdrawal due to an Unforeseeable Emergency as defined in Section 2.2:
a. [X] Will
b. [ ] Will Not
be allowed.
9.01 INVESTMENT DECISIONS
Investment decisions regarding the hypothetical amounts credited to a Participant's Account shall be made by: (select one)
a. [X] The Participant (or his Beneficiary)
b. [ ] The Employer
Investment options are set forth in Appendix A.
10.01 GRANTOR TRUST
The Employer: (select one)
a. [ ] Does
b. [X] Does Not
intend to establish a grantor trust in connection with the Plan, however it reserves the right to do so in its discretion.
11.01 TERMINATION UPON CHANGE IN CONTROL
The Plan Sponsor
a. [X] Reserves
b. [ ] Does Not Reserve
the right to terminate the Plan and distribute all vested amounts credited to Participant Accounts upon a Change in Control as described in Section 9.7.
11.02 CHANGE IN CONTROL
A Change in Control for Plan purposes includes the following:
[X] A change in the ownership of the Employer
[X] A change in the effective control of the Employer
[X] A change in the ownership of a substantial portion of the assets of the Employer
12.01 GOVERNING STATE LAW
The laws of New York (insert name of state) shall apply in the administration of the Plan to the extent not preempted by ERISA.
APPENDIX A
INVESTMENT OPTIONS
INVESTMENT OPTIONS ARE THOSE THAT ARE AVAILABLE UNDER COMPANY'S 401(K) PLAN (THE
CA SAVINGS HARVEST PLAN, AS AMENDED FROM TIME TO TIME (THE "401(K) PLAN")),
EXCEPT FOR CA STOCK FUND. AS OF THE DATE HEREOF, THE INVESTMENT OPTIONS ARE
LISTED BELOW BUT WILL BE UPDATED FROM TIME TO TIME AS AND WHEN UPDATED FOR THE
401(K) PLAN.
Fund Name Fund Number --------- ----------- - Fidelity Puritan - Dodge & Cox Stock Fund - Fidelity Magellan Fund - American Funds Growth Fund of America - Fidelity Growth and Income Fund - Hotchkis & Wiley Mid Cap Value-Class I - Fidelity Intermediate Bond Fund - Artisan Mid Cap Fund - Fidelity Diversified International Fund - American Beacon Small Cap Value- PA - Fidelity Retirement Money Market Portfolio - Fidelity Small Cap Stock - Spartan US Equity Index Portfolio - - - - |
Note: The Plan may not select a common/collective trust fund or a self-directed brokerage option as an investment option.
June 2005
COMPUTER ASSOCIATES INTERNATIONAL, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
June 2005
TABLE OF CONTENTS
PREAMBLE
ARTICLE 1 - GENERAL 1.1 Plan 1.2 Effective Dates 1.3 Grandfathering of Amounts Not Subject to Code Section 409A ARTICLE 2 - DEFINITIONS 2.1 Account 2.2 Administrator 2.3 Adoption Agreement 2.4 Beneficiary 2.5 Board or Board of Directors 2.6 Bonus 2.7 Change in Control 2.8 Code 2.9 Compensation 2.10 Disabled 2.11 Eligible Employee 2.12 Employer 2.13 ERISA 2.14 Key Employee 2.15 Participant 2.16 Plan 2.17 Plan Sponsor 2.18 Plan Year 2.19 Related Employer 2.20 Retirement 2.21 Separation from Service 2.22 Unforeseeable Emergency 2.23 Valuation Date 2.24 Years of Service ARTICLE 3 - PARTICIPATION 3.1 Participation 3.2 Termination of Participation |
ARTICLE 4 - PARTICIPANT CONTRIBUTIONS 4.1 Deferral Agreement 4.2 Amount of Deferral 4.3 Timing of Election to Defer 4.4 Election of Payment Schedule and Form of Payment ARTICLE 5 - EMPLOYER CONTRIBUTIONS 5.1 Matching Contributions 5.2 Other Contributions ARTICLE 6 - ACCOUNTS AND CREDITS 6.1 Establishment of Account 6.2 Credits to Account ARTICLE 7 - INVESTMENT OF CONTRIBUTIONS 7.1 Investment Options 7.2 Adjustment of Accounts ARTICLE 8 - RIGHT TO BENEFITS 8.1 Vesting 8.2 Death 8.3 Disability ARTICLE 9 - DISTRIBUTION OF BENEFITS 9.1 Amount of Benefits 9.2 Method and Timing of Distributions 9.3 Unforeseeable Emergency 9.4 Termination Before Retirement 9.5 Cashouts of Amounts Not Exceeding Stated Limit 9.6 Key Employees 9.7 Change in Control |
ARTICLE 10 - AMENDMENT AND TERMINATION 10.1 Amendment by Employer 10.2 Retroactive Amendments 10.3 Plan Termination 10.4 Distribution Upon Termination of the Plan ARTICLE 11 - THE TRUST 11.1 Establishment of Trust 11.2 Grantor Trust 11.3 Investment of Trust Funds ARTICLE 12 - PLAN ADMINISTRATION 12.1 Powers and Responsibilities of the Administrator 12.2 Claims and Review Procedures 12.3 Plan Administrative Costs ARTICLE 13 - MISCELLANEOUS 13.1 Unsecured General Creditor of the Employer 13.2 Employer's Liability 13.3 Limitation of Rights 13.4 Acceleration of Benefits 13.5 Facility of Payment 13.6 Notices 13.7 Tax Withholding 13.8 Indemnification 13.9 Governing Law |
PREAMBLE
The Computer Associates International, Inc. Executive Deferred Compensation Plan is intended to promote the interests of the Plan Sponsor and its shareholders by encouraging certain Eligible Employees to remain in the employ of the Plan Sponsor and its subsidiaries by providing them with a means by which they may request to defer receipt of a portion of their compensation.
ARTICLE 1 - GENERAL
1.1 PLAN. The Plan will be referred to by the name specified in the Adoption Agreement.
1.2 EFFECTIVE DATES.
(a) Original Effective Date. The Original Effective Date is the date as of which the Plan was initially adopted.
(b) Amendment Effective Date. The Amendment Effective Date is the date specified in the Adoption Agreement as of which the Plan is amended and restated.
(c) Special Effective Date. A Special Effective Date may apply to any given provision if so specified in Appendix D. A Special Effective Date will control over the Original Effective Date or Amendment Effective Date, whichever is applicable, with respect to such provision of the Plan.
1.3 GRANDFATHERING OF AMOUNTS NOT SUBJECT TO CODE SECTION 409A
If the Plan Sponsor has elected to treat amounts deferred before January 1, 2005 that are earned and vested on December 31, 2004 as subject to the provisions of the Plan as in effect on December 31, 2004, such grandfathered amounts will be separately accounted for and administered in accordance with the terms of the Plan as in effect on such date, except as otherwise provided in this Plan document. A summary of the grandfathered provisions is set forth in Appendix B.
Article 1-1
ARTICLE 2 - DEFINITIONS
Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise. Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:
2.1 "ACCOUNT" means an account established for the purpose of recording amounts credited on behalf of a Participant and any income, expenses, gains, losses or distributions included thereon. The Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant pursuant to the Plan.
2.2 "ADMINISTRATOR" means the person or persons designated by the Employer in
Section 1.05 of the Adoption Agreement to be responsible for the
administration of the Plan. If no Administrator is designated in the
Adoption Agreement, the Administrator is the Employer.
2.3 "ADOPTION AGREEMENT" means the agreement adopted by the Plan Sponsor that establishes the Plan.
2.4 "BENEFICIARY" means the persons, trusts, estates or other entitities entitled under Section 8.2 to receive benefits under the Plan upon the death of a Participant.
2.5 "BOARD" OR "BOARD OF DIRECTORS" means the Board of Directors of the Plan Sponsor.
2.6 "BONUS" means an amount of incentive remuneration payable by the Employer to a Participant.
2.7 "CHANGE IN CONTROL" means the occurrence of an event involving the Employer that is described in Section 9.7.
2.8 "CODE" means the Internal Revenue Code of 1986, as amended.
2.9 "COMPENSATION" means the total cash and non-cash remuneration provided to a Participant by the Employer for services rendered in respect of a Plan Year, whether or not includible in the gross income of the Participant for Federal income tax purposes, including bonuses but excluding reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, deferred compensation and welfare benefits.
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2.10 "DISABLED" means a determination by the Administrator that the Participant is either (1) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (2) is, by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Employer.
2.11 "ELIGIBLE EMPLOYEE" means an employee of the Employer who is determined by the Administrator to be a member of a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA and who satisfies the requirements in Section 2.01 of the Adoption Agreement.
2.12 "EMPLOYER" means the Plan Sponsor and any other entity which is authorized by the Plan Sponsor to participate in and, in fact, does adopt the Plan.
2.13 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
2.14 "KEY EMPLOYEE" means a "specified employee" within the meaning of Section 409A(a)(2)(B)(i) of the Code.
2.15 "PARTICIPANT" means an Eligible Employee who commences participation in the Plan in accordance with Article 3.
2.16 "PLAN" means the unfunded plan of deferred compensation set forth herein, including the Adoption Agreement and any trust agreement, as adopted by the Employer and as amended from time to time.
2.17 "PLAN SPONSOR" means the entity specified in the Adoption Agreement.
2.18 "PLAN YEAR" means the period specified in the Adoption Agreement.
2.19 "RELATED EMPLOYER" means the Employer and (a) any corporation that is a
member of a controlled group of corporations as defined in Section 414(b)
of the Code that includes the Employer, (b) any trade or business that is
under common control as defined in Section 414(c) of the Code that includes
the Employer, (c) any member of an affiliated service group as defined in
Section 414(m) of the Code that includes the Employer, and (d) any entity
required to be aggregated with the Employer by Section 414(o) of the Code.
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2.20 "RETIREMENT" has the meaning specified in 6.01f of the Adoption Agreement.
2.21 "SEPARATION FROM SERVICE" is a "separation of service" within the meaning of Section 409A of the Code.
2.22 "UNFORESEEABLE EMERGENCY" means a severe financial hardship of the
Participant resulting from an illness or accident of the Participant, the
Participant's spouse, or the Participant's dependent (as defined in Code
Section 152(a)); loss of the Participant's property due to casualty; or
other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant.
2.23 "VALUATION DATE" means each business day of the Plan Year and such other date(s) as designated by the Plan Sponsor.
2.24 "YEARS OF SERVICE" means a one year period for which the Participant receives service credit in accordance with the provisions of Section 7.01d of the Adoption Agreement.
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ARTICLE 3 - PARTICIPATION
3.1 PARTICIPATION. The Participants in the Plan shall be those "management" or "highly compensated" employees of the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA who satisfy the requirements of Section 2.01 of the Adoption Agreement.
3.2 TERMINATION OF PARTICIPATION. A Participant's participation in the Plan shall cease upon the distribution to him of his vested Account or upon his death prior to such distribution. In addition, the Administrator may terminate a Participant's eligibility to participate in the Plan but any such termination at the direction of the Administrator shall not take effect until the first day of the next Plan Year.
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ARTICLE 4 - PARTICIPANT CONTRIBUTIONS
4.1 DEFERRAL AGREEMENT. Each Eligible Employee may elect to defer his Compensation within the meaning of Section 3.01 of the Adoption Agreement by executing in writing or electronically, a deferral agreement in accordance with rules and procedures established by the Administrator and the provisions of this Article 4.
A new deferral agreement must be timely executed for each Plan Year for which the Eligible Employee desires to defer Compensation. An Eligible Employee who does not timely execute a deferral agreement shall be deemed to have elected zero deferrals of Compensation for such Plan Year.
A deferral agreement may be changed or revoked during the period specified by the Administrator. A deferral agreement becomes irrevocable at the close of the specified period.
An Eligible Employee must have an executed deferral agreement in effect for each year during which an Employer contribution pursuant to Article 5, if any, may be made on his behalf.
4.2 AMOUNT OF DEFERRAL. An Eligible Employee may elect to defer Compensation in any amount permitted by Section 4.01a of the Adoption Agreement.
4.3 TIMING OF ELECTION TO DEFER. Each Eligible Employee who desires to defer Compensation otherwise payable in respect of a Plan Year must execute a deferral agreement within the period preceding the Plan Year specified by the Administrator. Each Eligible Employee who desires to defer Compensation that is a Bonus must execute a deferral agreement within the period preceding the Plan Year during which the Bonus is earned that is specified by the Administrator, except that if the Bonus can be treated as performance based compensation as described in Code Section 409A(a)(4)(B)(iii), the deferral agreement may be executed within the period specified by the Administrator, which period, in no event, shall end after the date which is six months prior to the end of the period during which the Bonus is earned.
An employee who is classified or designated as an Eligible Employee during a Plan Year who is designated as eligible to participate during a Plan Year may elect to defer Compensation (as specified in Section 3.01 of the Adoption Agreement) otherwise earned in respect of the remainder of such Plan Year in accordance with the rules of this Section 4.3 by
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executing a deferral agreement within the thirty (30) day period beginning on the date the employee is classified or designated as an Eligible Employee, if permitted by Section 2.01 of the Adoption Agreement.
4.4 ELECTION OF PAYMENT SCHEDULE AND FORM OF PAYMENT.
At the time an Eligible Employee completes a deferral agreement, the Eligible Employee must elect a time and a form of payment for the Compensation subject to the deferral agreement from among the options the Administrator has made available for this purpose and which are specified in 6.01b of the Adoption Agreement.
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ARTICLE 5 - EMPLOYER CONTRIBUTIONS
5.1 MATCHING CONTRIBUTIONS. If specified in Section 5.01a of the Adoption Agreement, the Employer will credit the Participant's Account with a matching contribution determined in accordance with the formula specified therein. The matching contribution will be credited to the Participant's Account at the time specified therein.
5.2 OTHER CONTRIBUTIONS. If specified in Section 5.01b of the Adoption Agreement, the Employer will credit the Participant's Account with a contribution determined in accordance with the formula or method specified in Section 5.01b of the Adoption Agreement. The contribution will be credited to the Participant's Account at the time specified in Section 5.01b(iii) of the Adoption Agreement.
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ARTICLE 6 - ACCOUNTS AND CREDITS
6.1 ESTABLISHMENT OF ACCOUNT. For accounting and computational purposes only, the Administrator will establish and maintain an Account for each Participant which will reflect the credits made pursuant to Section 6.2 along with the earnings, expenses, gains and losses allocated thereto, attributable to the hypothetical investments made with the amounts in the Participant's Account as provided in Article 7. The Administrator will establish and maintain such other records and accounts, as it decides in its discretion to be reasonably required or appropriate to discharge its duties under the Plan.
6.2 CREDITS TO ACCOUNT. A Participant's Account will be credited for each Plan Year with the amount of his elective deferrals under Section 4.1 at the time the amount subject to the deferral election would otherwise have been payable to the Participant and the amount of Employer contributions made on his behalf under Article 5. Such amounts will be credited to the Participant's Account at the times specified, respectively, in Sections 5.01a(iii) and 5.01b(iii) of the Adoption Agreement.
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ARTICLE 7 - INVESTMENT OF CONTRIBUTIONS
7.1 INVESTMENT OPTIONS. The amount in a Participant's Account shall be treated as invested in the investment options designated for this purpose by the Administrator and set forth in Appendix A to the Adoption Agreement.
7.2 ADJUSTMENT OF ACCOUNTS. The amount in a Participant's Account shall be
adjusted for hypothetical investment earnings, expenses, gains or losses in
an amount equal to the earnings, expenses, gains or losses attributable to
the investment options selected by the party designated in Section 9.01 of
the Adoption Agreement from among the investment options provided in
Section 7.1. If permitted by Section 9.01 of the Adoption Agreement, a
Participant may, in accordance with rules and procedures established by the
Administrator, select the investments from among the options provided in
Section 7.1 to be used for the purpose of calculating future hypothetical
investment adjustments to the Participant's Account or to future credits to
the Account under Section 6.2 effective as the Valuation Date coincident
with or next following notice to the Administrator. The Account of each
Participant shall be adjusted as of each Valuation Date to reflect: (a) the
hypothetical earnings, expenses, gains and losses described above; (b)
amounts credited pursuant to Section 6.2; and (c) payments. In addition,
the Account of each Participant may be adjusted for its allocable share of
the hypothetical costs and expenses associated with the maintenance of the
hypothetical investments provided in Section 7.1.
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ARTICLE 8 - RIGHT TO BENEFITS
8.1 VESTING. A Participant, at all times, has a 100% nonforfeitable interest in the amounts credited to his Account attributable to his elective deferrals made in accordance with Section 4.1.
A Participant's right to the amounts credited to his Account attributable to Employer contributions made in accordance with Article 5 shall be determined in accordance with the relevant schedule specified in Section 7.01 of the Adoption Agreement.
8.2 DEATH. The balance or remaining balance credited to a Participant's vested Account shall be paid to his estate in a single lump sum payment as soon as practicable following the Participant's date of death.
8.3 DISABILITY. The balance or remaining balance credited to a Participant's vested Account shall be paid to the Participant in a single lump sum cash payment as soon as practicable following the date a Participant incurs a Disability as defined in Section 2.11, unless additional forms of payment have been made available for this purpose in Section 6.01b of the Adoption Agreement. If additional forms have been made available, payment shall be made at the time and in the form elected by the Participant in accordance with the provisions of articles 4 and 6. The Administrator, in its sole discretion, shall determine whether a Participant has experienced a disability for purposes of this Section 8.3.
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ARTICLE 9 - DISTRIBUTION OF BENEFITS
9.1 AMOUNT OF BENEFITS. The vested amount credited to a Participant's Account as determined under Articles 6, 7 and 8 shall determine and constitute the basis for the value of benefits payable to the Participant under the Plan.
9.2 METHOD AND TIMING OF DISTRIBUTIONS. Except as otherwise provided in this Article 9, distributions under the Plan shall be made at the time and in the manner specified by the Participant in accordance with the provisions of Article 4. If permitted by Section 6.01g of the Adoption Agreement, a Participant may elect, at least twelve months before a scheduled date of distribution, to delay the payment date for a minimum period of sixty months from the originally scheduled date of payment and such election may not take effect until at least 12 months after the date on which the election is made. The re-deferral election must be made in accordance with procedures and rules established by the Administrator. The Participant may, at the same time the date of payment is deferred, change the form of payment but such change in the form of payment may not affect an acceleration of payment.
9.3 UNFORESEEABLE EMERGENCY. If permitted by Section 8.01 of the Adoption
Agreement, a Participant may request a distribution due to an Unforeseeable
Emergency. The request must be in writing and must be submitted to the
Administrator along with evidence that the circumstances constitute an
Unforeseeable Emergency. The Administrator has the discretion to require
whatever evidence it deems necessary to determine whether a distribution is
warranted. Whether a Participant has incurred an Unforeseeable Emergency
will be determined by the Administrator on the basis of the relevant facts
and circumstances in its sole discretion, but, in no event, will an
Unforeseeable Emergency be deemed to exist if the hardship can be relieved:
(a) through reimbursement or compensation by insurance or otherwise, (b) by
liquidation of the Participant's assets to the extent such liquidation
would not itself cause severe financial hardship, or (c) by cessation of
deferrals under the Plan. A distribution due to an Unforeseeable Emergency
must be limited to the amount reasonably necessary to satisfy the emergency
need and may include any amounts necessary to pay any federal, state or
local income taxes reasonably anticipated to result from the distribution.
The distribution will be made in the form of a single lump sum cash
payment.
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9.4 TERMINATION BEFORE RETIREMENT. If the Employer has elected a Separation
from Service override in accordance with Section 6.01d of the Adoption
Agreement, the following provisions apply. Subject to the provisions in
Section 9.6, a Participant who experiences a Separation from Service before
Retirement for any reason other than death shall receive the vested amount
credited to his Account in a single lump sum payment as soon as practicable
following such termination or cessation of service regardless of whether
the Participant had made different elections of time or form of payment as
to the vested amounts credited to his Account or whether the Participant
was receiving installment payouts at the time of such termination.
9.5 CASHOUTS OF AMOUNTS NOT EXCEEDING STATED LIMIT. If the vested amount credited to the Participant's Account does not exceed the limit established for this purpose by the Employer in Section 6.01e of the Adoption Agreement at the time he separates from service with the Employer for any reason, the Employer shall distribute such amount to the Participant in a single lump sum cash payment as soon as practicable following such termination regardless of whether the Participant had made different elections of time or form of payment as to the vested amount credited to his Account or whether the Participant was receiving installments at the time of such termination.
9.6 KEY EMPLOYEES. In no event shall a distribution made to a Key Employee from his Account by reason of his Separation from Service (other than as a result of such Key Employee's death or Disability) occur before the date which is six months after the date of such Separation from Service with the Employer except in the case of (i) any distribution that occurs in connection with a Change in Control pursuant to Section 10.3 of this Plan or (ii) a distribution on a "specified date", as elected by a Key Employee in accordance with Section 409A of the Code if specified in Section 6.01b of the Adoption Agreement.
9.7 CHANGE IN CONTROL. If the Employer has elected to permit distributions upon
a Change in Control, the following provisions shall apply. A distribution
made upon a Change in Control will be made in the form elected by the
Participant in accordance with the procedures described in Article 4. A
Change in Control will occur upon a change in the ownership of the
Employer, a change in the effective control of the Employer or a change in
the ownership of a substantial portion of the assets of the Employer. The
Employer, for this purpose, includes any corporation identified in this
Section 9.7.
If a Participant continues to make deferrals in accordance with Article 4 after he has received a distribution due to a Change in Control, the residual amount payable to the Participant shall be paid at the time and in
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the form specified in the elections he makes in accordance with Article 4 or upon his Death or Disability as provided in Article 8.
Whether a Change in Control has occurred will be determined by the Administrator in accordance with the rules and definitions set forth in this Section 9.7. A distribution to the Participant will be treated as occurring upon a Change in Control if the Plan Sponsor terminates the Plan and distributes the Participant's benefits within twelve months of a Change in Control as provided in Section 10.3.
a) RELEVANT CORPORATIONS. To constitute a Change in Control for purposes of the Plan, the event must relate to (i) the corporation for whom the Participant is performing services at the time of the Change in Control, (ii) the corporation that is liable for the payment of the Participant's benefits under the Plan (or all corporations liable if more than one corporation is liable), or (iii) a corporation that is a majority shareholder of a corporation identified in (i) or (ii), or any corporation in a chain of corporations in which each corporation is a majority corporation of another corporation in the chain, ending in a corporation identified in (i) or (ii). A majority shareholder is defined as a shareholder owning more than fifty percent (50%) of the total fair market value and voting power of such corporation.
b) STOCK OWNERSHIP. Code Section 318(a) applies for purposes of determining stock ownership. Stock underlying a vested option is considered owned by the individual who owns the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). If, however, a vested option is exercisable for stock that is not substantially vested (as defined by Treasury Regulation Section 1.83-3(b) and (j)) the stock underlying the option is not treated as owned by the individual who holds the option. Mutual and cooperative corporations are treated as having stock for purposes of this Section 9.7.
c) CHANGE IN THE OWNERSHIP OF A CORPORATION. A change in the ownership of a corporation occurs on the date that any one person or more than one person acting as a group, acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of such corporation. If any one person or more than one person acting as a proxy is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation as
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discussed below in Section 9.7(d)). An increase in the percentage of
stock owned by any one person, or persons acting as a group, as a
result of a transaction in which the corporation acquires its stock in
exchange for property will be treated as an acquisition of stock.
Section 9.7(c) applies only when there is a transfer of stock of a
corporation (or issuance of stock of a corporation) and stock in such
corporation remains outstanding after the transaction. For purposes of
this Section 9.7(c), persons will not be considered to be acting as a
group solely because they purchase or own stock of the same
corporation at the same time or as a result of a public offering.
Persons will, however, be considered to be acting as a group if they
are owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of stock, or similar business transaction with
the corporation. If a person, including an entity, owns stock in both
corporations that enter into a merger, consolidation, purchase or
acquisition of stock, or similar transaction, such shareholder is
considered to be acting as a group with other shareholders in a
corporation prior to the transaction giving rise to the change and not
with respect to the ownership interest in the other corporation.
d) CHANGE IN THE EFFECTIVE CONTROL OF A CORPORATION. A change in the effective control of a corporation occurs on the date that either (i) any one person, or more than one person acting as a group, acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing thirty-five (35%) or more of the total voting power of the stock of such corporation, or (ii) a majority of members of the corporation's board of directors is replaced during any twelve month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation's board of directors prior to the date of the appointment or election, provided that for purposes of this paragraph (ii), the term corporation refers solely to the relevant corporation identified in Section 9.7(a) for which no other corporation is a majority shareholder for purposes of Section 9.7(a). In the absence of an event described in Section 9.7(d)(i) or (ii), a change in the effective control of a corporation will not have occurred. A change in effective control may also occur in any transaction in which either of the two corporations involved in the transaction has a change in the ownership of such corporation as described in Section 9.7(c) or a change in the ownership of a substantial portion of the assets of such corporation as described in Section 9.7(e). If any one person, or more than one person acting as a group, is considered to effectively control a corporation within the meaning of this Section 9.7(d), the acquisition of additional control of the corporation by the same person or persons is not considered to cause a change in the effective control of the corporation or to cause
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a change in the ownership of the corporation within the meaning of
Section 9.7(c). For purposes of this Section 9.7(d), persons will or
will not be considered to be acting as a group in accordance with
rules similar to those set forth in Section 9.7(c) with the following
exception. If a person, including an entity, owns stock in both
corporations that enter into a merger, consolidation, purchase or
acquisition of stock, or similar transaction, such shareholder is
considered to be acting as a group with other shareholders in a
corporation only with respect to the ownership in that corporation
prior to the transaction giving rise to the change and not with
respect to the ownership interest in the other corporation.
e) CHANGE IN THE OWNERSHIP OF A SUBSTANTIAL PORTION OF A CORPORATION'S ASSETS. A change in the ownership of a substantial portion of a corporation's assets occurs on the date that any one person, or more than one person acting as a group (as determined in accordance with rules similar to those set forth in Section 9.7(d)), acquires (or has acquired during the twelve month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation of the value of the assets being disposed of determined without regard to any liabilities associated with such assets. There is no Change in Control event under this Section 9.7(e) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer. A transfer of assets by a corporation is not treated as a change in ownership of such assets if the assets are transferred to (i) a shareholder of the corporation (immediately before the asset transfer) in exchange for or with respect to its stock, (ii) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the corporation, (iii) a person, or more than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the corporation, or (iv) an entity, at least fifty (50%) of the total value or voting power of which is owned, directly or indirectly, by a person described in Section 9.7(e)(iii). For purposes of the foregoing, and except as otherwise provided, a person's status is determined immediately after the transfer of assets.
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ARTICLE 10 - AMENDMENT AND TERMINATION
10.1 AMENDMENT BY EMPLOYER. The Plan Sponsor reserves the right to amend the Plan (for itself and each Employer) through action of the Compensation and Human Resource Committee of the Board of Directors (the "Compensation Committee"). Each amendment shall be effective as determined by the Compensation Committee in its resolution. No amendment can directly or indirectly deprive any current or former Participant or Beneficiary of all or any portion of his Account which had accrued prior to the amendment.
10.2 RETROACTIVE AMENDMENTS. An amendment made by the Plan Sponsor in accordance with Section 10.1 may be made effective on a date prior to the first day of the Plan Year in which it is adopted if such amendment is necessary or appropriate to enable the Plan to satisfy the applicable requirements of the Code or ERISA or to conform the Plan to any change in federal law or to any regulations or ruling thereunder. Any retroactive amendment by the Plan Sponsor shall be subject to the provisions of Section 10.1.
10.3 PLAN TERMINATION. If specified in 11.01 of the Adoption Agreement, the Plan Sponsor reserves the right to terminate the Plan and distribute all amounts credited to all Participant Accounts as soon as administratively feasible, but in no event later than twelve months, following a Change in Control as determined in accordance with the rules set forth in Section 9.7. In addition, the Plan Sponsor reserves the right to terminate the Plan to the extent permitted by Code Section 409A, including a termination at any time with respect to any deferrals made after the effective date of such termination.
10.4 DISTRIBUTION UPON TERMINATION OF THE PLAN. Except as provided in Section 10.3, the Plan may not be terminated before the date on which all amounts credited to all Participant Accounts have been distributed in accordance with Articles 8 and 9.
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ARTICLE 11 - THE TRUST
11.1 ESTABLISHMENT OF TRUST. The Plan Sponsor may but is not required to establish a trust to hold amounts to which the Employers may contribute from time to time to correspond to some or all amounts credited to Participants under Section 6.2. If the Plan Sponsor elects to establish a trust in accordance with Section 10.01 of the Adoption Agreement, the provisions of Sections 11.2 and 11.3 shall become operative.
11.2 GRANTOR TRUST. Any trust established by the Plan Sponsor shall be between the Plan Sponsor and a trustee pursuant to a separate written agreement under which assets are held, administered and managed, subject to the claims of the Employer's creditors in the event of the Employer's insolvency, until paid to the Participant and/or his Beneficiaries specified in the Plan. The trust is intended to be treated as a grantor trust under the Code, and the establishment of the trust shall not cause the Participant to realize current income on amounts contributed thereto. The Plan Sponsor must notify the trustee in the event of a lawsuit, bankruptcy or insolvency.
11.3 INVESTMENT OF TRUST FUNDS. Any amounts contributed to the trust shall be invested by the trustee in accordance with the provisions of the trust and the instructions of the Administrator. Trust investments need not reflect the hypothetical investments selected by Participants under Section 7.1 for the purpose of adjusting Accounts and the earnings or investment results of the trust shall not affect the hypothetical investment adjustments to Participant Accounts under the Plan.
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ARTICLE 12 - PLAN ADMINISTRATION
12.1 POWERS AND RESPONSIBILITIES OF THE ADMINISTRATOR. The Administrator has the full power and the full responsibility to administer the Plan in all of its details, subject, however, to the applicable requirements of ERISA. The Administrator's powers and responsibilities include, but are not limited to, the following:
(a) To make and enforce such rules and regulations as it deems necessary or proper for the efficient administration of the Plan;
(b) To interpret the Plan, its interpretation thereof in good faith to be final and conclusive on all persons claiming benefits under the Plan;
(c) To decide all questions concerning the Plan and the eligibility of any person to participate in the Plan;
(d) To administer the claims and review procedures specified in Section 12.2;
(e) To compute the amount of benefits which will be payable to any Participant, former Participant or Beneficiary in accordance with the provisions of the Plan;
(f) To determine the person or persons to whom such benefits will be paid;
(g) To authorize the payment of benefits;
(h) To comply with the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA;
(i) To appoint such agents, counsel, accountants, and consultants as may be required to assist in administering the Plan;
(j) By written instrument, to allocate and delegate its responsibilities, including the formation of an Administrative Committee to administer the Plan.
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12.2 CLAIMS AND REVIEW PROCEDURES.
(a) Claims Procedure. If any person believes he is being denied any rights or benefits under the Plan, such person may file a claim in writing with the Administrator. If any such claim is wholly or partially denied, the Administrator will notify such person of its decision in writing. Such notification will contain (i) specific reasons for the denial, (ii) specific reference to pertinent Plan provisions, (iii) a description of any additional material or information necessary for such person to perfect such claim and an explanation of why such material or information is necessary, and (iv) information as to the steps to be taken if the person wishes to submit a request for review. Such notification will be given within 90 days after the claim is received by the Administrator (or within 180 days, if special circumstances require an extension of time for processing the claim, and if written notice of such extension and circumstances is given to such person within the initial 90-day period). If such notification is not given within such period, the claim will be considered denied as of the last day of such period and such person may request a review of his claim.
(b) Review Procedure. Within 60 days after the date on which a person receives a written notification of denial of claim (or, if written notification is not provided, within 60 days of the date denial is considered to have occurred), such person (or his duly authorized representative) may (i) file a written request with the Administrator for a review of his denied claim and of pertinent documents and (ii) submit written issues and comments to the Administrator. The Administrator will notify such person of its decision in writing. Such notification will be written in a manner calculated to be understood by such person and will contain specific reasons for the decision as well as specific references to pertinent Plan provisions. The decision on review will be made within 60 days after the request for review is received by the Administrator (or within 120 days, if special circumstances require an extension of time for processing the request, such as an election by the Administrator to hold a hearing, and if written notice of such extension and circumstances is given to such person within the initial 60-day period). If the decision on review is not made within such period, the claim will be considered denied.
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12.3 PLAN ADMINISTRATIVE COSTS. All reasonable costs and expenses (including legal, accounting, and employee communication fees) incurred by the Administrator in administering the Plan shall be paid by the Employer.
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ARTICLE 13 - MISCELLANEOUS
13.1 UNSECURED GENERAL CREDITOR OF THE EMPLOYER. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of any Employer. For purposes of the payment of benefits under the Plan, any and all of the Employer's assets shall be, and shall remain, the general, unpledged, unrestricted assets of the Employer. Each Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.
13.2 EMPLOYER'S LIABILITY. Each Employer's liability for the payment of benefits under the Plan shall be defined only by the Plan and by the deferral agreements entered into between a Participant and the Employer. An Employer shall have no obligation or liability to a Participant under the Plan except as provided by the Plan and a deferral agreement or agreements. An Employer shall have no liability to Participants employed by other Employers.
13.3 LIMITATION OF RIGHTS. Neither the establishment of the Plan, nor any amendment thereof, nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to the Participant or any other person any legal or equitable right against the Employer or Administrator, except as provided herein; and in no event will the terms of employment or service of the Participant be modified or in any way affected hereby.
13.4 ACCELERATION OF BENEFITS. None of the benefits or rights of a Participant or any Beneficiary of a Participant shall be subject to the claim of any creditor. In particular, to the fullest extent permitted by law, all such benefits and rights shall be free from attachment, garnishment, or any other legal or equitable process available to any creditor of the Participant and his or her Beneficiary. Neither the Participant nor his or her Beneficiary shall have the right to alienate, anticipate, commute, pledge, encumber, or assign any of the payments which he or she may expect to receive, contingently or otherwise, under this Plan, except the right to designate a Beneficiary to receive death benefits provided hereunder. A distribution made to comply with Federal conflict of interest requirements shall be permitted, notwithstanding any elections made by the Participant to the contrary.
13.5 FACILITY OF PAYMENT. If the Administrator determines, on the basis of medical reports or other evidence satisfactory to the Administrator, that the recipient of any benefit payments under the Plan is incapable of handling his affairs by reason of minority, illness, infirmity or other incapacity, the Administrator may direct the Employer to disburse such payments to a person or institution designated by a court which has jurisdiction over such recipient or a person or institution otherwise having the legal authority under State law for the care and control of such recipient. The receipt by such person or institution of any such payments therefore, and any such payment to the extent thereof, shall discharge the liability of the Employer for the payment of benefits hereunder to such recipient.
Article 13-1
13.6 NOTICES. Any notice or other communication in connection with the Plan shall be deemed delivered in writing if addressed as provided below and if either actually delivered at said address or, in the case or a letter, 5 business days shall have elapsed after the same shall have been deposited in the United States mails, first-class postage prepaid and registered or certified:
(a) If it is sent to the Employer or Administrator, it will be at the address specified by the Employer; or
(b) In each case at such address as the addressee shall have specified by written notice delivered in accordance with the foregoing to the addressor's then effective notice address.
13.7 TAX WITHHOLDING. The Employer shall have the right to deduct from all payments or deferrals made under the Plan any tax required by law to be withheld. If the Employer concludes that tax is owing with respect to any deferral or payment hereunder, the Employer shall withhold such amounts from any payments due the Participant, as permitted by law, or otherwise make appropriate arrangements with the Participant or his Beneficiary for satisfaction of such obligation. Tax, for purposes of this Section 13.7 means any federal, state, local or any other governmental income tax, employment or payroll tax, excise tax, or any other tax or assessment owing with respect to amounts deferred, any earnings thereon, and any payments made to Participants under the Plan.
13.8 INDEMNIFICATION. Each Employer shall indemnify, to the full extent permitted by law, each employee, officer or director made or threatened to be made a party to any civil or criminal action or proceeding by reason of the fact that he, or his testator or intestate, is or was delegated duties, responsibilities, and authority with respect to the Plan.
13.9 GOVERNING LAW. The Plan shall be construed, administered and governed in
all respects under and by the laws of the State of New York, without
reference to the principles of conflicts of law (except if and to the
extent preempted by applicable Federal law). It is the intent of the Plan
Sponsor that this Plan be considered and interpreted in all respects as
part of a bonus plan within the meaning of U. S. Department of Labor
Regulation Section 2510.3-2(c) and not in any respect as an employee
pension plan for purposes of ERISA. If and to the extent that any portion
of this Plan shall be determined to be an employee pension benefit plan
subject to ERISA, then such portion shall be considered a separate plan
covering only those Participants as to whom this Plan is determined to be a
pension plan. Such pension plan shall in all respects be considered and
interpreted as a plan which is unfunded and maintained primarily for the
purpose of providing deferred compensation for a select group of management
or highly compensated employees and exempt from coverage of Parts 1, 2, 3
and 4 of Subtitle B of Title I of ERISA to the maximum extent permissible
under the provisions thereof. Further, it is the intent of the Plan Sponsor
that this Plan be considered and interpreted in all respects as a
nonqualified deferred compensation plan satisfying the requirements of
Section 409A of the Code and deferring the recognition of income by
Participants in respect of amounts credited to
Article 13-2
Participant Accounts until amounts are actually paid to them pursuant to the Plan.
Article 13-3
EXHIBIT 10.52 CA, INC. DEFERRED COMPENSATION PLAN PLEASE READ CAREFULLY [INSERT FISCAL YEAR] ANNUAL BEFORE COMPLETING THIS PERFORMANCE FORM. BONUS DEFERRAL ELECTION FORM STEP 1 EMPLOYEE INFORMATION YOUR NAME: ___________________________ SSN: ___________ - ________ - _________ DAYTIME PHONE: (____) ________ -______ EVENING PHONE: (____) ________ -_______ DATE OF BIRTH: __________ DATE OF HIRE: __________ |
STEP 2 ANNUAL PERFORMANCE BONUS ELECTION
For the performance period beginning on April 1, [_____] and ending on March 31,
[______], you may defer up to a maximum of 90% of your cash Annual Performance
Bonus, if any, under the CA, Inc. Executive Deferred Compensation Plan (the
"Plan"). The amount of any Annual Performance Bonus you elect to defer (minimum
of 1%) will be withheld and credited to an account on the Company's books at the
time such Annual Performance Bonus would have otherwise been payable, if
applicable.
[ ] I hereby elect to defer ___% of my [___] Annual Performance Bonus (may equal up to 90% of your cash Annual Performance Bonus, minimum 1%) under the Plan.
STEP 3 INVESTMENT ELECTION
I hereby elect to direct that the deferred portion of my ANNUAL PERFORMANCE BONUS will be deemed invested in the following manner under the provisions of the Plan. I understand that this election will apply to the annual performance bonus, if any, that may be paid in connection with the annual performance period beginning on April 1, [_____] and ending on March 31, [_____]. I also understand that at any time I may transfer my account balances from one investment Fund option to another. (Your total Investment Election percentage must equal 100%)
FUND NAME % --------- ----- Fidelity Puritan Fidelity Magellan Fund Fidelity Growth and Income Fund Fidelity Intermediate Bond Fund Fidelity Diversified International Fund Fidelity Retirement Money Market Portfolio Spartan US Equity Index Portfolio Dodge & Cox Stock Fund American Funds Growth Fund of America - Class R4 Hotchkis & Wiley Mid Cap Value - Class I Artisan Mid Cap Fund American Beacon Small Cap Value - PA Fidelity Small Cap Stock |
TOTAL OF ALL INVESTMENT ELECTIONS 100%
STEP 4 DISTRIBUTION ELECTION
In accordance with the terms of the Plan, I understand that I will receive a
lump sum distribution of the value of my deferral account as soon as
administratively practicable after the earlier of (i) six months following my
separation from service, (ii) my death, (iii) my Disability, (iv) a termination
of the Plan in connection with a Change in Control (as set forth in the Plan) or
(v) a date specified by me below (if elected). I understand that I do not need
to elect a specified date, in which case I will receive my distribution upon the
earliest of the other events set forth in the preceding sentence.
Specified Date (choose one, IF desired):
April 1, [___] ____[ ]____ April 1, [___] ____[ ]____ April 1, [___] ____[ ]____ |
STEP 5 SIGNATURE
I HEREBY DIRECT COMPUTER ASSOCIATES TO DEFER MY CASH ANNUAL PERFORMANCE BONUS AS SET FORTH ABOVE AND PURSUANT TO THE TERMS OF THE PLAN AND DEEM IT INVESTED INITIALLY ACCORDING TO MY ELECTIONS IN STEP 3.
The foregoing elections are subject to all of the terms and conditions of the Plan, which are incorporated herein by reference. By executing this election, I acknowledge that (i) I have received and read a copy of the Plan, Offering Memorandum (including the risk factors relating to deferring compensation under the Plan) and related documents, (ii) my rights under the Plan are as a general unsecured creditor of Computer Associates International, Inc., (iii) any compensation that I defer pursuant to this election may be subject to certain employment taxes on a current basis for which I am responsible and (iv) my deferral election is irrevocable and may not be changed, except as otherwise provided under the Plan.
RETURN FORM TO: _______________
CA, INC.
SUBSIDIARIES OF REGISTRANT
EXHIBIT 21
Listed below are all the subsidiaries of Registrant, except for those subsidiaries which are currently inactive.
DOMESTIC INTERNATIONAL -------- ------------- STATE OR JURISDICTION STATE OR JURISDICTION OF OF INCORPORATION NAME OF SUBSIDIARY INCORPORATION NAME OF SUBSIDIARY ------------------------------------------------------------ -------------------------------------------------------------------- Delaware Aprisma Management Technologies, Inc. Australia AMT (Australia) Pty. Ltd Delaware CA Foreign, Inc. United Kingdom Aprisma Management Technologies Limited (UK) Delaware CA Management, Inc. South Africa Black Lion Investments (Pty) Limited Delaware CA Research, Inc. Israel C.A. Computer Associates Israel Ltd(Ex Memco software Ltd.) Delaware Cheyenne Software International Spain C.A. Computer Associates S.A. (Spain) Sales Corp. Delaware Cheyenne Software, Inc. Spain C.A. Foreign Spain, S.L. Puerto Rico Computer Associates Caribbean, Inc. Hong Kong CA (Hong Kong) Limited Texas Computer Associates Child Development Canada CA Canada Company Center of Plano, Inc. New York Computer Associates Child Development Cyprus CA Computer Associates Cyprus Limited Center, Inc Illinois Computer Associates Digital Schoolhouse Germany CA Computer Associates European Holding GmbH Foundation Delaware Computer Associates Finance, Inc. Germany CA Computer Associates GmbH Delaware Computer Associates International, Inc. Germany CA Computer Associates Holding GmbH Delaware Computer Associates Japan NIC JV Corp. India CA Computer Associates India Private Limited Delaware Computer Associates Jingan JV Corp. Germany CA Computer Associates Technology GmbH Delaware Computer Associates Liger Korea CA Korea Inc., Ltd. JV Corporation Illinois Computer Associates Lisle Child Care Cayman Islands CA Marketing Company Center, Inc Delaware Computer Associates Middle East Mexico CA Services, S.A. DE C.V. Holdings, Inc. Delaware Computer Associates Services, Inc Sweden CCRD Communications, Inc. (USA) filial (Sweden Branch) Delaware Computer Associates ShenZhen JV Corp. Venezuela Computer Associates (CAI) de Venezuela, C.A. Delaware Computer Associates SKS Taiwan China Computer Associates (China) Co. Ltd. JV Corporation Delaware Computer Associates Think, Inc. Malaysia Computer Associates (Malaysia) Sdn Bhd Virginia Computer Associates Virginia New Zealand Computer Associates (NZ) Limited Child Care Center Massachusetts Computer Associates Westwood United Kingdom Computer Associates 1 Limited Child Care Center, Inc Delaware Computer Associates Xeca Switzerland Computer Associates AG (Switzerland) JV Corporation Delaware Computer Associates, Inc. Netherlands Computer Associates B.V. Massachusetts Concord Communications, Inc. Turkey Computer Associates Bilgisayar Yazilim Pazarlama Ltd STI New York CSIC Corp. Australia Computer Associates Child Care Centre of Australia Pty Ltd Massachusetts Cullinet Software, Inc Czech Republic Computer Associates CZ, s.r.o. Delaware FirstSense Software, Inc Argentina Computer Associates de Argentina S.A. Delaware Legent Corporation Chile Computer Associates de Chile S.A. Delaware Logic Works, Inc. Colombia Computer Associates de Colombia S.A. California Miramar Systems, Inc. Mexico Computer Associates de Mexico, S.A. de C.V. Delaware Netegrity, Inc. Peru Computer Associates De Peru S.A. Delaware netViz LLC Finland Computer Associates Finland OY Delaware On-Line Software International, Inc Greece Computer Associates Hellas Sole Partner LLC Illinois Pansophic Systems, Incorporated Netherlands Computer Associates Holding 1 BV Delaware Platinum Technology, Inc. Netherlands Computer Associates Holding 4 BV New York Premier Management Insurance, Inc. Thailand Computer Associates International (Thailand) Co., Ltd. Delaware Qurb, Inc. Austria Computer Associates International GmbH (Austria) Georgia Sterliing Software (Southern), Inc. United Kingdom Computer Associates Investments Limited Delaware Sterling Software (U.S.). Inc. Japan Computer Associates Japan, Ltd. Delaware Sterling Software, Inc. Luxembourg Computer Associates Luxembourg S.a.r.L. Massachusetts Vitel Software (Concord) Bahrain Computer Associates Middle East WLL Delaware Wily Technology, Inc. Norway Computer Associates Norway A/S Belgium Computer Associates NV United Kingdom Computer Associates Plc Brazil CA Programas de Computador Ltda Singapore Computer Associates Pte Ltd Australia Computer Associates Pty. Ltd. France Computer Associates S.A. Italy Computer Associates S.p.A. Denmark Computer Associates Scandinavia A/S (Denmark) Poland Computer Associates Sp. z o.o. Sweden Computer Associates Sweden AB Taiwan Computer Associates Taiwan Limited United Kingdom Computer Associates UK Holding Limited Australia Concord Communications (Asia Pacific) Pty. Limited (Australia) United Kingdom Concord Communications UK LTD Germany Cybermation GmbH Portugal Main-Software de Sistemas S.A. Israel Netegrity (Israel) LTD Holland Netegrity BV Germany Niku Corporation Gmbh Australia Niku Corporation Pty., Ltd. United Kingdom Niku Corporation, LTD Philippines Philippine Computer Associates International, Inc Indonesia PT CA Indonesia Luxembourg Sterling Software (Luxembourg) I SARL United Kingdom Sterling Software (Netherlands) II B.V. Netherlands Sterling Software (Netherlands) IV B.V. Portugal Sterling Software (Portugal) Informatica, Lda. United Kingdom Wily Technology (UK) Limited Germany Wily Technology GmbH |
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/s/ KPMG LLP |
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