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Computer Associates International, Inc.
1999 Annual Report
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Table of contents

  • Page 1
    That Can Sof t w are Think TM Computer Associates International, Inc. 1999 Annual Report

  • Page 2
    Financial Highlight s Pre-t ax income, excluding int erest , t he ef f ect of t he charges f or purchased research and development associat ed w it h acquisit ions, and t he ef f ect of ot her one-t ime special charges. 1

  • Page 3
    ... inued st rengt h across all our businesses. Our client/server business, driven by t he popular Unicent er TNG® p roduct f amily, cont inues t o enjoy a commanding lead over ot her netw ork and syst ems management solut ions. In addition, w e reached new height s in inf orm at ion management solut...

  • Page 4
    ... pow erf ul new solut ions built around CA's Unicent er TNG and Jasmine® t echnologies int o the upper echelons of t he ent erprise-w ide dist ribut ed application market space. In t he largest deal in t he hist ory of t he sof t w are i n d u st ry, CA announced the acquisit ion of PLATINUM t ech...

  • Page 5
    ...necessary t echnology t o maximize business on t he Web. With Jasmine TND and Unicenter ® TNDTM (Th e Next Dimension)TM , CA is proud t o be t he only company t o off er a complet e set of t ools t o accomplish t hese t asks. The new advanced version of Jasmine delivers a unique combinat ion of int...

  • Page 6
    " Toget her, Jasm ine TND and Unicent er TND deliver t he only complet e e-com m erce solut ion." 5

  • Page 7
    ... Visualization Working Seeing Is i n t erf aces, imagery, and object s to Unicent er TNG and t he Jasmine TND inf ormat ion inf rast ru ct u re. CA's visualizat ion t echnologies can help clients p rovide more sophist icat ed, Int ernet -based applicat ions. For example, t he Sharper Image applies...

  • Page 8
    " CA's 3-D visualizat ion t echnologies w ere crucial t o t he development of our Int ernet -based applications." 7

  • Page 9
    ... ies of Unicent er TNG, allows businesses to avert impending problems inst ead of react ing t o t hem. This can help increase reven u egenerating act ivit ies, as well as minimize t he associated cost s due t o system dow nt ime. As Neugent s cont inue to appear throughout t he CA product line...

  • Page 10
    " Neugent s can t hink , just like people do - only a million t imes f ast er ." 9

  • Page 11
    ... Chief Execut ive Off i cer New York St ock Exchange Execut ive Charles B. Wang Of f icers Ch ai rman and Chief Execut ive Off i cer Comput er Associat es International, Inc. Sanjay Kumar Charles B. Wang Ch ai rman and Chief Execut ive Off i cer Comput er Associates Int ernat ional, Inc. Shirley...

  • Page 12
    11

  • Page 13
    Financial 1999 13 13 Rep o rt Of M anagement Rep o rt Of Independent Audit ors Review 14 M an ag em en t 's Discussion And Analysis 20 Consolidated Balance Sheets 22 Consolidated Stat ement s Of Operations 23 Consolidated Stat ement s Of St ockholders' Equity 24 Consolidat ed ...

  • Page 14
    ... report ing mat t ers. Report Of Independent Audit ors St ockholders and Board of Direct ors Comput er ...1999, in conf ormit y w it h generally accept ed account ing principles. ERNST & YOUNG LLP CHARLES B. WANG Chairman of t he Board and Chief Execut ive Off icer New York, New York M ay 26, 1999...

  • Page 15
    ... computing environments. In fiscal year 1999, new and existing product enhancement research and development expendit ures increased $54 million, or 15% . Cont inued emphasis on adapt ing and enhancing product s f or t he client /server environment , in part icular Unicent er TNG, Jasmine®, Opal...

  • Page 16
    ... personnel, as w ell as major promot ional event s, including t he product launch f or Jasmine, a pure object dat abase solut ion, and t he Unicent er TNG® Framew ork release. In f iscal year 1998, new and exist ing product enhancement and research and development expenditures increased $51 million...

  • Page 17
    ... as it complet es t he int egrat ion and rest ruct uring of PLATINUM 's operat ions. In-Process Research And Development There w ere no acquired in-process t echnology charges in f iscal years 1999 and 1998, and an af t er-t ax w rit e-off of $598 million in 1997 relat ed t o t he Cheyenne acquisit...

  • Page 18
    ..., if signif icant exposures w ere ident if ied up t o and including t he Company's comput er syst ems being rendered inoperable. The cont ingency plan addresses t hese issues, including t emporary relocat ion of employees, manual w orkarounds, and t he use of Company-ow ned generat ors and cellular...

  • Page 19
    ...by cust omers w ho are replacing or upgrading comput er syst ems t o accommodat e t he Year 2000 ...1999. A w holly-ow ned subsidiary of t he Company also maint ains an 85 million pound-st erling denominat ed credit f acilit y est ablished t o f inance const ruct ion of it s new European headquart ers...

  • Page 20
    ...o t he const ruct ion of t he European headquart ers in t he U.K. and expansion eff ort s at it s U.S. headquart ers in Islandia, N.Y., capit al resource requirement s as of M arch 31, 1999 consist ed of lease obligat ions f or off ice space, comput er equipment , mort gage or loan obligat ions, and...

  • Page 21
    C Consolidat ed Balance Sheet s M arch 31, ASSETS 1999 1998 (Dollars in millions) CURRENT ASSETS Cash and cash ...ed amort izat ion of $1,476 and $1,305 ... 221 289 EXCESS OF COST OVER NET ASSETS ACQUIRED, net of accumulat ed amort izat ion of $281 and $205... 1,623 1,099 OTHER ASSETS......

  • Page 22
    Consolidat ed Balance Sheet s M arch 31, LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998 (Dollars in millions) CURRENT LIABILITIES Loans payable and current port ion of long-t erm debt ...Account s payable ...Salaries, w ages, and commissions...Accrued expenses and ot her liabilit ies ...Taxes, ot ...

  • Page 23
    Consolidat ed St at em ent s Of Operat ions 1999 REVENUE: Product revenue and ot her relat ed income. . M aint ... St ock Plan charge ...TOTAL COSTS AND EXPENSES Income bef ore income t axes...Income t axes ...NET INCOM E BASIC EARNINGS PER SHARE Basic w eight ed-average shares used in comput at ion*...

  • Page 24
    Consolidat ed St at em ent s Of St ockholders' Equit y Com m on St...St ock opt ions and ot her ...401(k) discret ionary cont ribut ion Translat ion adjust ment in 1999 ...Purchases of t reasury st ock...Balance at M arch 31, 1999 ...$63 $482 $1,426 366 (35) $41 $(530) $1,482 366 (35) 2 13 7 57...

  • Page 25
    ... ed St at em ent s Of Cash Flow s Year Ended M arch 31, 1999 1998 1997 (Dollars in millions) OPERATING ACTIVITIES: Net income ...Adjust ment s t o reconcile net income t o net cash provided by operat ing act ivit ies: Depreciat ion and amort izat ion ...Provision f or def erred income t axes...

  • Page 26
    ...comput er sof t w are solut ions. Principles of Consolidat ion: Signif icant int ercompany it ems...it h client s ...discount ed t o present value. The amount s of t he discount credit ed t o revenue f or t he years ended M arch 31, 1999...gains and losses report ed in St... net asset s acquired is being amort ...

  • Page 27
    ...hin t he cont ract . Eff ect ive f or t he quart er ending June 30, 1999, t he Company w ill implement t he guidelines of t hese SOPs. Based on t he current int erpret at ion, t he Company does not believe t here w ill be a mat erial impact on its overall maintenance deferral; however, as additional...

  • Page 28
    ... in 1999 and 1997, respect ively. Note 2 - Acquisitions On M arch 9, 1999, t he Company acquired more t han 98% of t he issued and out st anding shares of common st ock of Comput er M ... t echnology solut ions t o a Fort une 1000 client base. The acquisit ion w as account ed f or as a purchase. 27

  • Page 29
    ... est imat ed f air value based on published closing prices of securit ies at M arch 31, 1999, by cont ract ual mat urit y, are show n below. Expect ed mat urit ies may diff er f rom cont ract ual mat urit ies because t he issuers of t he securit ies may have t he right t o prepay obligat ions...

  • Page 30
    ... inat ions (Dollars in millions) Tot al M arch 31, 1999: Revenue: To unaff iliat ed cust omers ...Bet w een geographic...040 366 6,084 4,581 (a) The Company operat es w holly-ow ned subsidiaries in Canada and 42 f oreign count ries locat ed in t he M iddle East , Af rica, Europe (22), Sout h America...

  • Page 31
    ...s carrying value. The mat urit ies of long-t erm debt out st...1999, Quick Access, Inc., (a w hollyow ned subsidiary of t he Company) renew ed it s 85 million pounds st erling 364-day revolving credit f acilit y. This f acilit y is being used t o f inance t he const ruct ion of a European headquart ers...

  • Page 32
    ... in t he Unit ed St at es Dist rict Court f or t he East ern Dist rict of New York (" NY Federal Court " ). The def endant s moved t o dismiss...ere aut horized under t he 1995 Key Employee St ock Ow nership Plan (t he " 1995 Plan" ), w as also f iled in t he NY Federal Court . In all but one of t hese...

  • Page 33
    ... t he Company w ere available f or grant t o employees (including off icers of t he Company). The 1981 Plan expired on Oct ober 23, 1991. Theref ore, f rom and af t er t hat dat e no new opt ions can be grant ed under t he 1981 Plan. Pursuant t o t he 1981 Plan, t he exercise price could not be less...

  • Page 34
    ...500 shares of Common St ock of t he Company t o be available f or grant t o each member of t he Board of Direct ors w ho is not ot herw ise an employee of t he Company. Pursuant t o t he 1993 Plan... plans at M arch 31, 1999 (shares in millions): Opt ions Out st anding Weight edWeight edAverage Average...

  • Page 35
    ... and November 5, 1997. Note 10 - Profit Sharing Plan The Company maint ains a prof it sharing plan, t he Comput er Associat es Savings Harvest Plan (" CASH Plan" ), f or t he benef it of employees of t he Company. The CASH Plan is int ended t o be a qualif ied plan under Sect ion 401(a) of t he Int...

  • Page 36
    ... 12 - Subsequent Events On M arch 29, 1999, t he Company and PLATINUM t echnology Int ernat ional, inc. (" PLATINUM " ) announced t he execut ion of a merger agreement pursuant t o w hich t he Company has agreed t o acquire PLATINUM t hrough a cash t ender off er. Under t he t erms of t he merger...

  • Page 37
    ... eet ing of t he St ockholders of Comput er Associat es Int ernat ional, Inc. w ill be held at t he Islandia M arriot t Long Island locat ed at 3635 Express Drive Nort h, Hauppauge, New York, on Wednesday, August 25, 1999 at 10:00 a.m. E.D.T. Computer Associates Stock The Company's Common St ock is...

  • Page 38
    ... Chao Yang District Beijing, P .R.China 100020 (86) 10 6561 1136 Bahrain Computer Associates Middle East Ground Floor, Diplomat Tower Building 315 Road 1705, Block 317 P .O. Box 10551 Manama (97) 3 537 977 Holland Computer Associates B.V. Wattbaan 27 3430 ML Nieuwegein (31) 30 604 83 45 Colombia...

  • Page 39
    India Computer Associates India Pvt. Ltd 511/512 Merchant Chambers 98A Hill Road Bandra, Mumbai 400 050 (91) 22 643 4681/82 Japan Computer Associates Japan, Ltd Shinjuku Mitsui Bld. 2-1-1 Nishi-Shinjuku, Shinjuku-ku Tokyo, 163-0439 (81) 3 5320 8080 New Zealand Computer Associates (NZ) Ltd. Rural ...

  • Page 40
    ...1999) Computer Associates Plc Computer Associates At Ditton Park Riding Court Road Datchet, Berkshire SL3 9JG Computer Associates Plc Computer Associates House 183-187 Bath Road Slough Berkshire SL1 4AA (44) 1753 5777 33 Taiw an Computer Associates Taiwan, Ltd. 6th Floor, 105, Sec. 2, Tun Hwa South...