0000356028
2008-06-30 0000356028
2008-03-31 0000356028
2008-09-30 0000356028
2009-07-17 0000356028
2009-06-30 0000356028
2009-03-31 0000356028
2008-04-01 2008-06-30
0000356028
2009-04-01 2009-06-30
iso4217:USD xbrli:shares
xbrli:shares
iso4217:USD
<!--DOCTYPE html PUBLIC "-//W3C//DTD
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<!-- XBRL,ns --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div> <div align="left"> </div> <div align="center"
style="font-size: 10pt"><b></b></div> <div align="center"
style="font-size: 10pt"><b></b></div> <div align="center"
style="font-size: 10pt"><b></b></div> <div align="left"
style="font-size: 10pt; margin-top: 12pt">NOTE A — BASIS OF PRESENTATION
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The
accompanying unaudited Condensed Consolidated Financial Statements of CA,
Inc. (the Company) have been prepared in accordance with U.S. generally accepted
accounting principles (GAAP) for interim financial information and
with the instructions to Rule 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by GAAP
for complete financial statements. For further information, refer to the Company’s
Consolidated Financial Statements and Notes thereto included in the Company’s
Annual Report on Form 10-K for the fiscal year ended March 31, 2009
(2009 Form 10-K). </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. All such adjustments
are of a normal, recurring nature. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes. Although
these estimates are based on management’s knowledge of current events
and actions it may undertake in the future, these estimates may ultimately
differ from actual results. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">Operating results for the three-month period ended
June 30, 2009 are not necessarily indicative of the results that
may be expected for the fiscal year ending March 31, 2010. </div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><i>Basis
of Revenue Recognition:</i> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">The Company generates revenue from the following
primary sources: (1) licensing software products; (2) providing
customer technical support (referred to as “maintenance”);
and (3) providing professional services, such as product implementation,
consulting and education. Revenue is recorded net of applicable sales taxes.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The
Company recognizes revenue pursuant to the requirements of Statement of Position
(SOP) 97-2, “<i>Software Revenue Recognition</i>,”
issued by the American Institute of Certified Public Accountants, as amended
by SOP 98-9, “<i>Modification of SOP 97-2, Software Revenue
Recognition, With Respect to Certain Transactions.</i>” In
accordance with SOP 97-2, the Company begins to recognize revenue from licensing
and maintenance when all of the following criteria are met: (1) the
Company has evidence of an arrangement with a customer; (2) the Company
delivers the products; (3) license agreement terms are fixed or determinable
and free of contingencies or uncertainties that may alter the agreement such
that it may not be complete and final; and (4) collection is probable.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The
Company’s software licenses generally do not include acceptance
provisions. An acceptance provision allows a customer to test the software
for a defined period of time before committing to license the software. If
a license agreement includes an acceptance provision, the Company does not
recognize revenue until the earlier of the receipt of a written customer acceptance
or, if not notified by the customer to cancel the license agreement, the expiration
of the acceptance period. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">Under the Company’s subscription model,
implemented in October 2000, software license agreements typically
combine the right to use specified software products, the right to maintenance,
and the right to receive unspecified future software products for no additional
fee during the term of the agreement. Under these subscription licenses, once
all four of the above-noted revenue recognition criteria are met, the Company
is required under GAAP to recognize revenue ratably over the term of the license
agreement. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">For license agreements signed prior to October 2000, once
all four of the above-noted revenue recognition criteria were met, software
license fees were recognized as revenue generally when the software was delivered
to the customer, or “up-front” (as the contracts did not
include a right to unspecified future software products), and the maintenance
fees were deferred and subsequently recognized as revenue over the term of
the license. Currently, a relatively small amount of the Company’s
revenue from software licenses is recognized on an up-front basis, subject
to meeting the same revenue recognition criteria in accordance with SOP 97-2
as described above. Software fees from such licenses are recognized up-front
and are reported in the “Software fees and other” line
item in the Condensed Consolidated Statements of Operations. Maintenance fees
from such licenses are recognized ratably over the term of the license and
are recorded on the “Subscription and maintenance revenue”
line item in the Condensed Consolidated Statements of Operations. License
agreements with software fees that are recognized up-front do not include
the right to receive unspecified future software products. However, in the
event such license agreements are executed within close proximity to or in
contemplation of other license agreements, for which we do not have vendor
specific objective evidence (VSOE) of fair value and are accounted
for under the Company’s subscription model, with the same customer,
the licenses together may be considered a single multi-element agreement,
and all such revenue is required to be recognized ratably and is recorded
as “Subscription and maintenance revenue” in the Condensed
Consolidated Statements of Operations. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">Since the Company implemented its subscription model
in October 2000, the Company’s practice with respect to
products of newly acquired businesses with established VSOE has been to record
revenue initially on the acquired company’s systems, generally under
an up-front model; and, starting within the first fiscal year after the acquisition,
to enter new licenses for such products under the Company’s subscription
model, following which revenue is recognized ratably and recorded as “Subscription
and maintenance revenue.” In some instances, the Company sells newly
developed and recently acquired products on an up-front model. The software
license fees from these contracts are presented as “Software fees
and other.” Selling such licenses under an up-front model may result
in higher total revenue in a current reporting period than if such licenses
were based on the Company’s subscription model and the associated
revenue recognized ratably. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">Revenue from professional service arrangements is
generally recognized as the services are performed. Revenue from committed
professional services that are sold as part of a subscription license agreement
is deferred and recognized on a ratable basis over the term of the related
software license. If it is not probable that a project will be completed or
the payment will be received, revenue recognition is deferred until the uncertainty
is removed. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">Revenue from sales to distributors, resellers, and value-added resellers
commences when all four of the SOP 97-2 revenue recognition criteria noted
above are met and when these entities sell the software product to their customers.
This is commonly referred to as the sell-through method. Revenue from the
sale of products to distributors, resellers and value-added resellers that
include licensing terms that provide the right for the end-users to receive
certain unspecified future software products is recognized on a ratable basis.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The
Company has an established business practice of offering installment payment
options to customers and has a history of successfully collecting substantially
all amounts due under such agreements. The Company assesses collectability
based on a number of factors, including past transaction history with the
customer and the creditworthiness of the customer. If, in the Company’s
judgment, collection of a fee is not probable, revenue will not be recognized
until the uncertainty is removed, which is generally through the receipt of
cash payment. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">For further information, refer to the Company’s Consolidated
Financial Statements and Notes thereto included in the Company’s
2009 Form 10-K. </div> <div align="left" style="font-size: 10pt;
margin-top: 12pt"><u><i>Cash Dividends:</i></u>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In
May 2009, the Company’s Board of Directors declared a quarterly
cash dividend of $0.04 per share. The dividend totaled approximately $21 million
and was paid on June 16, 2009 to stockholders of record at the close
of business on May 31, 2009. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">In June 2008, the Company’s Board
of Directors declared a quarterly cash dividend of $0.04 per share. The dividend
totaled approximately $21 million and was paid on June 27,
2008 to stockholders of record at the close of business on June 17,
2008. </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt"> <b>
</b> </div> <div align="left" style="font-size: 10pt; margin-top:
12pt"><u><i>Cash, Cash Equivalents and Marketable Securities:</i></u>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The
Company’s cash, cash equivalents and marketable securities are held
in numerous locations throughout the world, with approximately 41% being held
by the Company’s foreign subsidiaries outside the United States
at June 30, 2009. Marketable securities were less than $1 million
at both June 30, 2009 and March 31, 2009. </div> <div
align="left" style="font-size: 10pt; margin-top: 12pt"><u><i>Restricted
Cash: </i></u> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">The Company’s insurance subsidiary requires
a minimum restricted cash balance of $50 million. In addition, the
Company has other restricted cash balances, including cash collateral for
letters of credit. The total amount of restricted cash was approximately $56 million
as of June 30, 2009 and March 31, 2009 and is included in
the “Other noncurrent assets, net” line item in the Condensed
Consolidated Balance Sheets. </div> <div align="left" style="font-size:
10pt; margin-top: 12pt"><u><i>Deferred Revenue (Billed or Collected)</i></u><i>:</i>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The
Company accounts for unearned revenue on billed amounts due from customers
on a “gross method” of presentation. Under the gross method,
unearned revenue on billed installments (collected or uncollected) is reported
as deferred revenue in the liability section of the balance sheet. The components
of “Deferred revenue (billed or collected) — current”
and “Deferred revenue (billed or collected) — noncurrent”
as of June 30, 2009 and March 31, 2009 are as follows: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">June 30,</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">March 31,</td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">2009</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">2009</td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6">(in
millions)</td> <td> </td> </tr> <!-- End
Table Head --> <!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Current:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Subscription and maintenance </div></td>
<td> </td> <td align="left">$</td> <td
align="right">2,158</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">2,272</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Professional
services </div></td> <td> </td> <td> </td>
<td align="right">153</td> <td> </td> <td> </td>
<td> </td> <td align="right">150</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Financing obligations and other </div></td>
<td> </td> <td> </td> <td align="right">8</td>
<td> </td> <td> </td> <td> </td>
<td align="right">9</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:45px; text-indent:-15px">Total deferred revenue (billed
or collected) — current </div></td> <td> </td>
<td> </td> <td align="right">2,319</td> <td> </td>
<td> </td> <td> </td> <td align="right">2,431</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Noncurrent: </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Subscription and maintenance
</div></td> <td> </td> <td> </td>
<td align="right">1,103</td> <td> </td> <td> </td>
<td> </td> <td align="right">987</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Professional services </div></td> <td> </td>
<td> </td> <td align="right">7</td> <td> </td>
<td> </td> <td> </td> <td align="right">10</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Financing
obligations and other </div></td> <td> </td>
<td> </td> <td align="right">3</td> <td> </td>
<td> </td> <td> </td> <td align="right">3</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:45px; text-indent:-15px">Total deferred revenue
(billed or collected) — noncurrent </div></td> <td> </td>
<td> </td> <td align="right">1,113</td> <td> </td>
<td> </td> <td> </td> <td align="right">1,000</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Total
deferred revenue (billed or collected) </div></td> <td> </td>
<td align="left">$</td> <td align="right">3,432</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">3,431</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">Deferred revenue (billed or collected)
excludes unrealized revenue from contractual obligations that will be billed
by the Company in future periods. </div> <div align="left" style="font-size:
10pt; margin-top: 12pt"><u><i>Concentration of Credit Risk:</i></u>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Financial
instruments that potentially subject the Company to concentration of credit
risk consist primarily of cash equivalents, marketable securities, derivatives
and accounts receivable. The Company holds cash and cash equivalents in major
financial institutions and related money market funds. Approximately $700 million
of the Company’s money market funds are protected by the U.S. Treasury’s
Temporary Guarantee Program for Money Market Funds which expires in September 2009.
The Company has not historically experienced any losses in its cash and cash
equivalent portfolios. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">Amounts included in accounts receivable expected
to be collected from customers, as disclosed in Note E, “Trade and
Installment Accounts Receivable,” have limited exposure to concentration
of credit risk due to the diverse customer base and geographic areas covered
by operations. Unbilled amounts due under the Company’s prior business
model that are expected to be collected from customers include one large IT
outsourcer with a license arrangement that extends through fiscal year 2012
with a net unbilled receivable balance of approximately $185 million
at June 30, 2009. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">Prior to fiscal year 2001, the Company sold individual
accounts receivable from certain financial institutions to a third party subject
to certain recourse provisions. The outstanding principal balance subject
to recourse of these receivables was approximately $38 million as
of June 30 and March 31, 2009. The Company has established
a liability for the fair value of the recourse provisions of approximately
$2 million associated with these receivables as of June 30,
2009 and March 31, 2009. </div> <div align="left" style="font-size:
10pt; margin-top: 12pt"><u><i>Statement of Cash Flows:</i></u>
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">For
the three-month periods ended June 30, 2009 and 2008, interest payments
were $30 million and $50 million, respectively, and income
taxes paid were $120 million and $108 million, respectively.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Non-cash
financing activities for the three-month periods ended June 30, 2009
and 2008 consisted of treasury shares issued in connection with the following:
share-based incentive awards granted under the Company’s equity
compensation plans of approximately $61 million (net of approximately
$21 million of withholding taxes) and $50 million (net of
approximately $24 million of withholding taxes), respectively; the
Company’s Employee Stock Purchase Plan of approximately $21 million
and $17 million, respectively; and discretionary stock contributions
to the CA, Inc. Savings Harvest Plan of approximately $33 million
and $19 million, respectively. </div> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><u><i>Adoption of
new accounting principles:</i></u> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">Effective April 1, 2009,
the Company adopted Statement of Financial Accounting Standards No. 157,
“<i>Fair Value Measurements,” </i>(SFAS No. 157)
for all nonfinancial assets and nonfinancial liabilities, except those that
are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually), which was adopted by the Company on April 1,
2008. The adoption of the remaining provisions of SFAS No. 157 related
to nonfinancial assets and nonfinancial liabilities on April 1, 2009,
did not have an impact on the Condensed Consolidated Financial Statements.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Effective
April 1, 2009, the Company adopted Financial Accounting Standards
Board (FASB) Staff Position (FSP) Emerging Issues Task Force
(EITF) No. 03-6-1 (FSP EITF 03-6-1), “<i>Determining
Whether Instruments Granted in Share-Based Payment Transactions are Participating
Securities</i>.” FSP EITF 03-6-1 clarifies that unvested share-based
payment awards that contain non-forfeitable rights to dividends or dividend
equivalents (whether paid or unpaid) are participating securities and are
to be included in the computation of earnings per share under the two-class
method described in SFAS No. 128, “<i>Earnings Per
Share</i>.” FSP EITF 03-6-1 required all prior-period earnings
per share data to be adjusted retrospectively. Adoption did not have a material
impact on the Company’s previously reported earnings per share.
See Note C, “Income Per Common Share” for additional information
regarding the Company’s earnings per share calculation. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Effective
April 1, 2009, the Company adopted FSP No. Accounting Principles
Board Opinion (APB) 14-1, “<i>Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement).” </i>FSP No. APB 14-1 requires
the issuer of convertible debt instruments with cash settlement features to
account separately for the liability and equity components of the instruments.
The debt is recognized at the present value of its cash flows discounted using
the issuer’s nonconvertible debt borrowing rate at the time of issuance
with the resulting debt discount being amortized over the expected life of
the debt. The equity component is recognized as the difference between the
proceeds from the issuance of the convertible debt instrument and the fair
value of the liability. FSP No. APB 14-1 requires retrospective application
to all periods presented, and does not grandfather existing instruments. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company
estimated a borrowing rate of 11% for a similar non-convertible instrument
at the time the debt was issued. The fair value at issuance of the liability
component of the Company’s $460 million 1.625% Convertible Senior
Notes due December 2009 (the 1.625% Senior Notes) assuming an interest
rate of 11% was $251 million, reflecting a discount of $209 million.
This discount is being amortized to interest expense over a seven-year period
ending December 2009, the date on which holders of the notes may
first require the Company to repurchase all or a portion of their notes at
a price of $20.04. </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">The accompanying Condensed Consolidated Balance Sheet
as of March 31, 2009 and the Condensed Consolidated Statement of
Operations for the three months ended June 30, 2008 have been revised
for the retrospective application of FSP APB 14-1. The Condensed Consolidated
Balance Sheet as of March 31, 2009 has been revised to reflect a
reduction in current debt of $29 million for the remaining unamortized
discount, an increase in additional paid in capital of $129 million
for the equity component (net of deferred taxes of $80 million), a decrease
in retained earnings of $111 million for the cumulative expense from
amortization of the discount, and a decrease to deferred tax assets of $11 million.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The
June 30, 2008 Condensed Consolidated Statement of Operations has
been revised to reflect an increase in interest expense of $7 million,
a decrease in income tax expense of approximately $3 million, a decrease in
net income of $4 million and a decrease in basic earnings per share
of $0.01. Diluted net income per share for the three months ended June 30,
2008 was not affected. The recognition of interest expense at 11%, calculated
in accordance with the requirements of FSP APB 14-1, decreased the Company’s
reported net income for fiscal year 2009 by approximately $23 million as compared
with the stated interest rate of 1.625%. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">The unamortized discount associated
with the 1.625% Senior Notes was approximately $21 million at June 30,
2009. Total interest expense associated with the 1.625% Senior Notes was approximately
$10 million and $9 million for the three month periods ended June 30,
2009 and June 30, 2008, respectively. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">Concurrent with the issuance of
the 1.625% Senior Notes, the Company entered into call spread repurchase option
transactions to partially mitigate potential dilution from conversion of the
1.625% Senior Notes. See the Notes to the Consolidated Financial Statements
included in the Company’s 2009 Form 10-K for more information about
the call spread repurchase options. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">Effective April 1, 2009, the Company adopted
FSP FAS 107-1 and APB 28-1, <i>“Interim Disclosures About
Fair Value of Financial Instruments” </i>(FSP FAS 107-1 and
APB 28-1). FSP FAS 107-1 and APB 28-1 require disclosure of the fair value
of the Company’s financial instruments in interim reporting periods.
These disclosures have been provided in Note G, “Derivatives and
Fair Value Measurements”. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">Effective April 1, 2009, the Company adopted
FASB SFAS No. 165, <i>“Subsequent Events”
</i>(SFAS 165). SFAS 165 establishes general standards for accounting
for and disclosure of events that occur after the balance sheet date but before
financial statements are available to be issued (subsequent events). These
standards are largely the same guidance on subsequent events which previously
existed only in auditing literature. SFAS 165 also requires disclosure of
the date through which subsequent events have been evaluated, as well as whether
that date is the date the financial statements were issued or the date the
financial statements were available to be issued. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">For purposes of this interim financial
information, July 24, 2009 is the date through which subsequent events
have been evaluated and represents the date the financial statements were
issued. </div> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt"> <b>
</b> </div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 2 - us-gaap:ComprehensiveIncomeNoteTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt">NOTE B — COMPREHENSIVE INCOME </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Comprehensive
income includes net income, unrealized gains on cash flow hedges and foreign
currency translation adjustments. The components of comprehensive income for
the three-month periods ended June 30, 2009 and 2008 are as follows:
</div> <div align="center"> <table style="font-size: 10pt;
text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6">Three
Months</td> <td> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px
solid #000000">Ended June 30,</td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">2009</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">2008<sup style="font-size:
85%; vertical-align: text-top">(1)</sup></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6">(in
millions)</td> <td> </td> </tr> <!-- End
Table Head --> <!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
income </div></td> <td> </td> <td align="left">$</td>
<td align="right">195</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">196</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Net unrealized gain
on cash flow hedges, net of tax </div></td> <td> </td>
<td> </td> <td align="right">1</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign
currency translation adjustments </div></td> <td> </td>
<td> </td> <td align="right">41</td> <td> </td>
<td> </td> <td> </td> <td align="right">6</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Total comprehensive
income </div></td> <td> </td> <td align="left">$</td>
<td align="right">237</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">202</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <!-- End Table Body -->
</table> </div> <div align="left"> <div style="font-size:
3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div> </div> <table width="100%" border="0" cellpadding="0"
cellspacing="0" style="font-size: 10pt; text-align: left"> <tr> <td
width="3%"></td> <td width="1%"></td> <td width="96"></td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(1)</td>
<td> </td> <td>Net income for the three months
ended June 30, 2008 has been revised to reflect the retrospective
adoption of FSP APB 14-1. For further information refer to Note A, “Basis
of Presentation,” in the Notes to these Condensed Consolidated Financial
Statements.</td> </tr> </table> <!-- Folio --> <!--
/Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="center" style="font-size:
10pt; margin-top: 0pt"> <b> </b> </div> </div>
</body> </html>
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XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 3 - us-gaap:EarningsPerShareTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt">NOTE C — INCOME PER COMMON SHARE </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Effective
April 1, 2009, the Company adopted FSP EITF 03-6-1, “<i>Determining
Whether Instruments Granted in Share-Based Payment Transactions are Participating
Securities</i>.” FSP EITF  03-6-1 clarifies that
unvested share-based payment awards that contain non-forfeitable rights to
dividends or dividend equivalents (whether paid or unpaid) are participating
securities and are to be included in the computation of earnings per share
under the two-class method described in SFAS No. 128, “<i>Earnings
Per Share</i>.” The retrospective application required the
Company to adjust prior period earnings per share amounts. The implementation
of FSP EITF 03-6-1 resulted in a reduction of less than $0.01 in Basic earnings
per common share as reported in the Condensed Consolidated Statement of Operations
for the three months ended June 30, 2008. Diluted earnings per common
share was not affected. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">Under the two-class method, net earnings are reduced
by the amount of dividends declared in the period for each class of common
stock and participating securities. The remaining undistributed earnings are
then allocated to common stock and participating securities as if all of the
net earnings for the period had been distributed. Basic earnings per common
share excludes dilution and is calculated by dividing net earnings allocable
to common shares by the weighted-average number of common shares outstanding
for the period. Diluted earnings per common share is calculated by dividing
net earnings allocable to common shares by the weighted-average number of
common shares as of the balance sheet date, as adjusted for the potential
dilutive effect of non-participating share-based awards and convertible notes.
The following table reconciles earnings per common share under the new methodology
for the three months ended June 30, 2009 and 2008. </div> <div
align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0"
border="0" cellpadding="0" width="100%"> <!-- Begin Table Head -->
<tr valign="bottom"> <td width="76%"> </td> <td
width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6">Three
<br /> Months Ended </td> <td> </td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6"
style="border-bottom: 1px solid #000000">June 30,</td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">2009</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">2008<sup style="font-size:
85%; vertical-align: text-top">(1)</sup></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6">(in
millions, except per share amounts)</td> <td> </td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Basic earnings per common share:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Net income </div></td> <td> </td>
<td>$</td> <td align="right">195</td> <td> </td>
<td> </td> <td>$</td> <td align="right">196</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Less:
Net income allocable to participating securities </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(2</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(2</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Net income allocable
to common shares </div></td> <td> </td> <td>$</td>
<td align="right">193</td> <td> </td> <td> </td>
<td>$</td> <td align="right">194</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Weighted-average common shares
outstanding </div></td> <td> </td> <td> </td>
<td align="right">516</td> <td> </td> <td> </td>
<td> </td> <td align="right">512</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Basic earnings per common share </div></td>
<td> </td> <td>$</td> <td align="right">0.37</td>
<td> </td> <td> </td> <td>$</td>
<td align="right">0.38</td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted
earnings per common share: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Net income </div></td>
<td> </td> <td align="left">$</td> <td
align="right">195</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">196</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Add:
Interest expense associated with Convertible Senior Notes, net of tax </div></td>
<td> </td> <td> </td> <td align="right">6</td>
<td> </td> <td> </td> <td> </td>
<td align="right">5</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Less:
Net income allocable to participating securities </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(2</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(2</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Net
income allocable to common shares </div></td> <td> </td>
<td align="left">$</td> <td align="right">199</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">199</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px"><u>Weighted
average shares outstanding and common share equivalents</u> </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Weighted average common shares
outstanding </div></td> <td> </td> <td> </td>
<td align="right">516</td> <td> </td> <td> </td>
<td> </td> <td align="right">512</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Weighted average shares outstanding upon conversion
of Convertible Senior Notes </div></td> <td> </td>
<td> </td> <td align="right">23</td> <td> </td>
<td> </td> <td> </td> <td align="right">23</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Weighted
average effect of share-based payment awards </div></td> <td> </td>
<td> </td> <td align="right">1</td> <td> </td>
<td> </td> <td> </td> <td align="right">1</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Denominator in calculation
of diluted income per share </div></td> <td> </td>
<td> </td> <td align="right">540</td> <td> </td>
<td> </td> <td> </td> <td align="right">536</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Diluted
income per share </div></td> <td> </td> <td
align="left">$</td> <td align="right">0.37</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">0.37</td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px
solid #000000">  </div> </div> <table width="100%"
border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align:
left"> <tr> <td width="3%"></td> <td width="1%"></td>
<td width="96"></td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>Net income for the three months ended June 30, 2008 has
been revised to reflect the retrospective adoption of FSP APB 14-1. For further
information refer to Note A, “Basis of Presentation.”</td>
</tr> </table> <div align="left" style="font-size: 10pt; margin-top:
6pt">For the three-month periods ended June 30, 2009 and 2008,
approximately 14 million and 12 million of restricted stock
awards and options to purchase common stock, respectively, were excluded from
the calculation, as their effect on income per share was anti-dilutive during
the respective periods. </div> <!-- Folio --> <!-- /Folio -->
</div> <!-- PAGEBREAK --> <div style="font-family: 'Times New
Roman',Times,serif"> <div align="center" style="font-size: 10pt; margin-top:
0pt"> <b> </b> </div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 4 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt">NOTE D — ACCOUNTING
FOR SHARE-BASED COMPENSATION </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">The Company recognized share-based compensation
in the following line items on the Condensed Consolidated Statements of Operations
for the periods indicated: </div> <div align="center"> <table
style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0"
width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6">Three Months</td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px
solid #000000">Ended June 30,</td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">2009</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">2008</td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="6">(in
millions)</td> <td> </td> </tr> <!-- End
Table Head --> <!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Costs
of licensing and maintenance </div></td> <td> </td>
<td align="left">$</td> <td align="right">1</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">1</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Costs
of professional services </div></td> <td> </td>
<td> </td> <td align="right">1</td> <td> </td>
<td> </td> <td> </td> <td align="right">1</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Selling
and marketing </div></td> <td> </td> <td> </td>
<td align="right">8</td> <td> </td> <td> </td>
<td> </td> <td align="right">6</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">General and administrative </div></td> <td> </td>
<td> </td> <td align="right">12</td> <td> </td>
<td> </td> <td> </td> <td align="right">9</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Product
development and enhancements </div></td> <td> </td>
<td> </td> <td align="right">5</td> <td> </td>
<td> </td> <td> </td> <td align="right">8</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Share-based compensation
expense before tax </div></td> <td> </td>
<td> </td> <td align="right">27</td> <td> </td>
<td> </td> <td> </td> <td align="right">25</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Income
tax benefit </div></td> <td> </td> <td> </td>
<td align="right">9</td> <td> </td> <td> </td>
<td> </td> <td align="right">9</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Net
share-based compensation expense </div></td> <td> </td>
<td align="left">$</td> <td align="right">18</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">16</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">There were no capitalized share-based
compensation costs at June 30, 2009 or 2008. </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">The following table
summarizes information about unrecognized share-based compensation costs as
of June 30, 2009: </div> <div align="center"> <table
style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0"
width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2">Weighted</td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2">Unrecognized</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2">Average Period</td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2">Compensation</td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2">Expected to be</td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">Costs</td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000">Recognized</td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2">(in
millions)</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2">(in years)</td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Stock
option awards </div></td> <td> </td> <td
align="left">$</td> <td align="right">1</td> <td> </td>
<td> </td> <td> </td> <td align="right">1.0</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Restricted stock units
</div></td> <td> </td> <td> </td>
<td align="right">13</td> <td> </td> <td> </td>
<td> </td> <td align="right">1.7</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Restricted stock awards
</div></td> <td> </td> <td> </td>
<td align="right">75</td> <td> </td> <td> </td>
<td> </td> <td align="right">1.6</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Performance share units </div></td> <td> </td>
<td> </td> <td align="right">56</td> <td> </td>
<td> </td> <td> </td> <td align="right">1.7</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Total unrecognized share-based
compensation costs </div></td> <td> </td>
<td align="left">$</td> <td align="right">145</td>
<td> </td> <td> </td> <td> </td>
<td align="right">1.6</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <!-- End Table Body --> </table> </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">The value of performance
share unit (PSU) awards are marked to the closing price of the Company’s
common stock on the last trading day of the quarter until the PSUs are granted.
Compensation costs for the PSUs are amortized over the requisite service periods
based on the expected level of achievement of the performance targets. At
the conclusion of the performance periods for the PSUs, the applicable number
of shares of restricted stock awards (RSAs) or restricted stock units (RSUs)
or unrestricted shares granted may vary based upon the level of achievement
of the performance targets and the approval of the Company’s Compensation
and Human Resources Committee (which has discretion to reduce any award for
any reason). </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">Awards under the long-term incentive plans were granted in the first
quarter of fiscal years 2010 and 2009. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">The fiscal year 2009 and 2008 1-year PSU’s
under the long term incentive plans were granted in the first quarter of fiscal
years 2010 and 2009, respectively. The table below summarizes the RSAs and
RSUs granted under these PSUs: </div> <!-- Folio --> <!-- /Folio
--> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times
New Roman',Times,serif"> <div align="center" style="font-size: 10pt;
margin-top: 0pt"> <b> </b> </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="10%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="7"
style="border-bottom: 1px solid #000000">RSAs</td> <td style="border-bottom:
1px solid #000000"> </td> <td nowrap="nowrap" align="center"
colspan="7" style="border-bottom: 1px solid #000000">RSUs</td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3">Weighted</td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3">Weighted
Average</td> </tr> <tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center">Incentive Plans</td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3">Performance</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3">Shares</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3">Average
Grant</td> <td> </td> <td nowrap="nowrap" align="center"
colspan="3">Shares</td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3">Grant Date Fair</td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="center">for
Fiscal Years</td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3">Period</td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3">(millions)</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3">Date
Fair Value</td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3">(millions)</td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3">Value</td> </tr>
<!-- End Table Head --> <!-- Begin Table Body --> <tr style="font-size:
1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000"> </td>
</tr> <tr valign="bottom"> <td align="center"> <div style="margin-left:15px;
text-indent:-15px">2009 </div></td> <td> </td>
<td colspan="3" align="center">1-year</td> <td> </td>
<td> </td> <td align="right">0.9</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">18.05</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="right"> </td> <td align="right">—</td>
<td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td> <td align="right">$</td> <td
align="right">17.96</td> <td> </td> </tr>
<tr valign="bottom"> <td align="center"> <div style="margin-left:15px;
text-indent:-15px">2008 </div></td> <td> </td>
<td colspan="3" align="center">1-year</td> <td> </td>
<td> </td> <td align="right">1.8</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">26.04</td> <td> </td> <td> </td>
<td nowrap="nowrap" align="right"> </td> <td align="right">—</td>
<td nowrap="nowrap"><sup style="font-size: 85%; vertical-align: text-top">(1)</sup></td>
<td> </td> <td align="right">$</td> <td
align="right">25.96</td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px
solid #000000">  </div> </div> <table width="100%"
border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align:
left"> <tr> <td width="3%"></td> <td width="1%"></td>
<td width="96"></td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left"> (1)</td> <td> </td>
<td>Shares granted amounted to less than 0.1 million</td>
</tr> </table> <div align="left" style="font-size: 10pt; margin-top:
6pt">The fiscal year 2007 3-year PSUs under the long-term incentive plan
were granted in the first quarter of fiscal year 2010 resulting in approximately
0.4 million unrestricted shares with a weighted average grant date
fair value of $18.05. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">Share-based awards granted under the Fiscal Year
2009 Sales Retention Equity Program in the first quarter of fiscal year 2010.
The table below summarizes the RSAs and RSUs granted under this program: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="10%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="7" style="border-bottom: 1px solid #000000">RSAs</td>
<td style="border-bottom: 1px solid #000000"> </td> <td
nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid
#000000">RSUs</td> </tr> <tr style="font-size: 8pt" valign="bottom">
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3">Weighted</td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3">Weighted Average</td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="center">Incentive
Plans</td> <td> </td> <td nowrap="nowrap" align="center"
colspan="3">Performance</td> <td> </td> <td
nowrap="nowrap" align="center" colspan="3">Shares</td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3">Average Grant</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3">Shares</td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3">Grant
Date Fair</td> </tr> <tr style="font-size: 8pt" valign="bottom">
<td nowrap="nowrap" align="center">for Fiscal Years</td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3">Period</td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3"><i>(millions)</i></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3">Date
Fair Value</td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><i>(millions)</i></td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3">Value</td> </tr>
<!-- End Table Head --> <!-- Begin Table Body --> <tr style="font-size:
1px"> <td colspan="21" align="left" style="border-top: 1px solid #000000"> </td>
</tr> <tr valign="bottom"> <td align="center"> <div style="margin-left:15px;
text-indent:-15px">2009 </div></td> <td> </td>
<td colspan="3" align="center">1-year</td> <td> </td>
<td> </td> <td align="right">0.5</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">18.05</td> <td> </td> <td> </td>
<td> </td> <td align="right">0.2</td> <td> </td>
<td> </td> <td align="right">$</td> <td
align="right">17.84</td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">For the three-month periods ended
June 30, 2009 and 2008 the Company did not issue options. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The table
below summarizes all of the RSUs and RSAs, including grants provided pursuant
to the long-term incentive plans discussed above, granted during the three-month
periods ended June 30, 2009 and 2008: </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> <td width="5%"> </td>
<td width="3%"> </td> <td width="1%"> </td>
<td width="3%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="7">Three Months</td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="7"
style="border-bottom: 1px solid #000000">Ended June 30,</td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000">2009</td> <td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px
solid #000000">2008</td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="7">(shares in millions)</td>
</tr> <!-- End Table Head --> <!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">RSUs </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Shares
</div></td> <td> </td> <td> </td>
<td align="right">0.6</td> <td> </td> <td> </td>
<td> </td> <td align="right">0.3</td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:30px; text-indent:-15px">Weighted Avg. Grant
Date Fair Value <sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td> <td> </td> <td align="right">$</td>
<td align="right">17.40</td> <td> </td> <td> </td>
<td align="right">$</td> <td align="right">24.38</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">RSAs </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Shares </div></td>
<td> </td> <td> </td> <td align="right">3.7</td>
<td> </td> <td> </td> <td> </td>
<td align="right">3.8</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Weighted
Avg. Grant Date Fair Value <sup style="font-size: 85%; vertical-align:
text-top">(2)</sup> </div></td> <td> </td>
<td align="right">$</td> <td align="right">18.04</td>
<td> </td> <td> </td> <td align="right">$</td>
<td align="right">25.34</td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px
solid #000000">  </div> </div> <table width="100%"
border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align:
left"> <tr> <td width="3%"></td> <td width="1%"></td>
<td width="96"></td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>The fair value is based on the quoted market value of the Company’s
common stock on the grant date reduced by the present value of dividends expected
to be paid on the Company’s common stock prior to vesting of the
RSUs which is calculated using a risk free interest rate.</td> </tr>
<tr style="font-size: 3pt"> <td> </td> </tr>
<tr valign="top"> <td nowrap="nowrap" align="left">(2)</td>
<td> </td> <td>The fair value is based on the quoted
market value of the Company’s common stock on the grant date.</td>
</tr> </table> <!-- Folio --> <!-- /Folio --> </div>
<!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt"> <b>
</b> </div> </div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 5 - us-gaap:LoansNotesTradeAndOtherReceivablesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt">NOTE E — TRADE AND
INSTALLMENT ACCOUNTS RECEIVABLE </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">The Company uses installment license agreements
as a standard business practice and has a history of successfully collecting
substantially all amounts due under the original payment terms without making
concessions on payments, software products, maintenance, or professional services.
Net trade and installment accounts receivable represent amounts due from the
Company’s customers. These accounts receivable balances are presented
net of allowances for doubtful accounts and unamortized discounts. Unamortized
discounts reflect imputed interest for the time value of money for license
agreements under the Company’s prior business model. These balances
do not include unbilled contractual commitments executed under the Company’s
current business model. The components of Net trade and installment accounts
receivable are as follows: </div> <div align="center"> <table
style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0"
width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>March 31,</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6">(in millions)</td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Current:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Accounts receivable — billed </div></td>
<td> </td> <td align="left">$</td> <td
align="right">486</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">658</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Accounts
receivable — unbilled </div></td> <td> </td>
<td> </td> <td align="right">82</td> <td> </td>
<td> </td> <td> </td> <td align="right">71</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Other receivables </div></td>
<td> </td> <td> </td> <td align="right">23</td>
<td> </td> <td> </td> <td> </td>
<td align="right">34</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Unbilled amounts due within
the next 12 months — prior business model </div></td>
<td> </td> <td> </td> <td align="right">103</td>
<td> </td> <td> </td> <td> </td>
<td align="right">108</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Less:
Allowance for doubtful accounts </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(25</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(25</td>
<td nowrap="nowrap">)</td> </tr> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:30px;
text-indent:-15px">Less: Unamortized discounts </div></td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(7</td> <td nowrap="nowrap">)</td>
<td> </td> <td nowrap="nowrap" align="left"> </td>
<td align="right">(7</td> <td nowrap="nowrap">)</td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Net
trade and installment accounts receivable — current </div></td>
<td> </td> <td align="left">$</td> <td
align="right">662</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">839</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td> </tr> <tr valign="bottom"><!--
Blank Space --> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td>
<div style="margin-left:15px; text-indent:-15px">Noncurrent: </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:30px; text-indent:-15px">Unbilled
amounts due beyond the next 12 months — prior business
model </div></td> <td> </td> <td align="left">$</td>
<td align="right">86</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">132</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Less:
Unamortized discounts </div></td> <td> </td>
<td nowrap="nowrap" align="left"> </td> <td align="right">(3</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(4</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Net installment accounts
receivable — noncurrent </div></td> <td> </td>
<td align="left">$</td> <td align="right">83</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">128</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> </div> </body>
</html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 6 - us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt">NOTE F — GOODWILL,
CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">The gross carrying amounts and
accumulated amortization for capitalized software and other intangible assets
at June 30, 2009 were approximately $6,446 million and $5,728 million,
respectively. These amounts include fully amortized intangible assets of approximately
$5,052 million, which is composed of purchased software of approximately $4,547 million,
internally developed software of approximately $385 million and other
identified intangible assets subject to amortization of approximately $120 million.
The remaining gross carrying amounts and accumulated amortization for capitalized
software and other intangible assets that are not fully amortized are as follows:
</div> <!-- Folio --> <!-- /Folio --> </div> <!--
PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt"> <b>
</b> </div> <div align="center"> <table style="font-size:
10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="64%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="10"
style="border-bottom: 1px solid #000000"><b>As of June 30, 2009</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Gross</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"> </td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Amortizable</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Accumulated</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Net</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>Assets</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Amortization</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Assets</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3">(in
millions)</td> <td> </td> <td> </td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Capitalized
software: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:30px; text-indent:-15px">Purchased </div></td>
<td> </td> <td align="left">$</td> <td
align="right">321</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">181</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">140</td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:30px; text-indent:-15px">Internally developed </div></td>
<td> </td> <td> </td> <td align="right">509</td>
<td> </td> <td> </td> <td> </td>
<td align="right">159</td> <td> </td> <td> </td>
<td> </td> <td align="right">350</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Other identified intangible assets subject to amortization
</div></td> <td> </td> <td> </td>
<td align="right">550</td> <td> </td> <td> </td>
<td> </td> <td align="right">336</td> <td> </td>
<td> </td> <td> </td> <td align="right">214</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other
identified intangible assets not subject to amortization </div></td>
<td> </td> <td> </td> <td align="right">14</td>
<td> </td> <td> </td> <td> </td>
<td align="right">—</td> <td> </td>
<td> </td> <td> </td> <td align="right">14</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Total </div></td>
<td> </td> <td align="left">$</td> <td
align="right">1,394</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">676</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">718</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">Internally developed capitalized
software costs and other identified intangible asset costs are included in
“Other noncurrent assets, net” on the Condensed Consolidated
Balance Sheets. </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">Based on the capitalized software and other intangible
assets recorded through June 30, 2009, the annual amortization expense
over the next five fiscal years is expected to be as follows: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="40%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="18"
style="border-bottom: 1px solid #000000"><b>Year Ended March 31,</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>2010</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2012</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2013</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2014</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="18"><i>(in millions)</i></td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Capitalized
software: </div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:30px;
text-indent:-15px">Purchased </div></td> <td> </td>
<td align="left">$</td> <td align="right">51</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">40</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">28</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">20</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">12</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:30px; text-indent:-15px">Internally
developed </div></td> <td> </td> <td> </td>
<td align="right">87</td> <td> </td> <td> </td>
<td> </td> <td align="right">90</td> <td> </td>
<td> </td> <td> </td> <td align="right">75</td>
<td> </td> <td> </td> <td> </td>
<td align="right">61</td> <td> </td> <td> </td>
<td> </td> <td align="right">41</td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Other identified intangible assets subject to amortization
</div></td> <td> </td> <td> </td>
<td align="right">54</td> <td> </td> <td> </td>
<td> </td> <td align="right">54</td> <td> </td>
<td> </td> <td> </td> <td align="right">32</td>
<td> </td> <td> </td> <td> </td>
<td align="right">26</td> <td> </td> <td> </td>
<td> </td> <td align="right">22</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:30px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Total </div></td>
<td> </td> <td align="left">$</td> <td
align="right">192</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">184</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">135</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">107</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">75</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">The carrying value of goodwill
was approximately $5,366 million and $5,364 million as of
June 30, 2009 and March 31, 2009, respectively. </div>
</div> </body> </html>
<!--DOCTYPE html PUBLIC "-//W3C//DTD
XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 7 - us-gaap:FairValueDisclosuresTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt">NOTE G — DERIVATIVES AND FAIR VALUE MEASUREMENTS
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The
Company is exposed to certain financial market risks relating to its business
operations, including changes in interest rates, which could impact the value
of its financial assets and liabilities, and foreign exchange rate risks associated
with the Company’s foreign operations, which could affect foreign
currency denominated monetary assets and liabilities and forecasted transactions.
The Company enters into derivative contracts with the intent of mitigating
a certain portion of these risks. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">During the first three months of fiscal years 2010
and 2009, the Company did not designate its foreign exchange derivatives as
hedges under SFAS No. 133. Accordingly, all foreign exchange derivatives
are recognized on the Condensed Consolidated Balance Sheets at fair value
and unrealized and realized changes in fair value from these contracts are
recorded as “Other expenses, net” in the Company’s
Condensed Consolidated Statements of Operations. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">During fiscal year 2009, the Company
entered into interest rate swaps with a total notional value of $250 million
to hedge a portion of its variable interest rate payments. These derivatives
are designated as cash flow hedges under SFAS No. 133. The effective
portion of these cash flow hedges are recorded as “Accumulated other
comprehensive loss” in the Company’s Condensed Consolidated
Balance Sheet and reclassified into “Interest expense, net,”
in the Company’s Condensed Consolidated Statements of Operations
in the same period during which the hedged transaction affects earnings. Any
ineffective portions of the cash flow hedges are recorded immediately to “Interest
expense, net.” No ineffectiveness existed at June 30, 2009
or at March 31, 2009. </div> <!-- Folio --> <!-- /Folio
--> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times
New Roman',Times,serif"> <div align="center" style="font-size: 10pt;
margin-top: 0pt"> <b> </b> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">The following tables present the
Company’s assets and liabilities that are measured at fair value
on a recurring basis at June 30 and March 31, 2009. </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="64%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="10"><b>Fair
Value Measurement at Reporting Date Using</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="10"
style="border-bottom: 1px solid #000000"><b>(in millions)</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Quoted
Prices in</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Significant
Other</b></td> <td> </td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Estimated
Fair</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Active Markets
for</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Observable</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Value at</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Identical Assets</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Inputs</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 1px solid #000000"><b>Description</b></td>
<td style="border-bottom: 1px solid #000000"> </td> <td
nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid
#000000"><b>June 30, 2009</b></td> <td style="border-bottom:
1px solid #000000"> </td> <td style="border-bottom: 1px
solid #000000"> </td> <td nowrap="nowrap" align="center"
colspan="2" style="border-bottom: 1px solid #000000"><b>(Level 1)</b><sup
style="font-size: 85%; vertical-align: text-top"><b>(1)</b></sup></td>
<td style="border-bottom: 1px solid #000000"> </td> <td
style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Level
2)</b><sup style="font-size: 85%; vertical-align: text-top"><b>(2)</b></sup></td>
<td style="border-bottom: 0px solid #000000"> </td> </tr>
<!-- End Table Head --> <!-- Begin Table Body --> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Assets: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Money
market funds </div></td> <td> </td> <td
align="left">$</td> <td align="right">1,414</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">1,414</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Government
securities </div></td> <td> </td> <td> </td>
<td align="right">650</td> <td> </td> <td> </td>
<td> </td> <td align="right">650</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Foreign exchange derivatives
<sup style="font-size: 85%; vertical-align: text-top">(3)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">2</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">2</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Total Assets </div></td>
<td> </td> <td align="left">$</td> <td
align="right">2,066</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">2,064</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">2</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr valign="bottom"><!-- Blank Space --> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Liabilities:
</div></td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Foreign
exchange derivatives <sup style="font-size: 85%; vertical-align: text-top">(3)</sup>
</div></td> <td> </td> <td align="left">$</td>
<td align="right">5</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">5</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Interest
Rate Derivatives <sup style="font-size: 85%; vertical-align: text-top">(4)</sup>
</div></td> <td> </td> <td> </td>
<td align="right">6</td> <td> </td> <td> </td>
<td> </td> <td align="right">—</td>
<td> </td> <td> </td> <td> </td>
<td align="right">6</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Total Liabilities </div></td>
<td> </td> <td align="left">$</td> <td
align="right">11</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">11</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px
solid #000000">  </div> </div> <table width="100%"
border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align:
left"> <tr> <td width="3%"></td> <td width="1%"></td>
<td width="96"></td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>Level 1 is defined as quoted prices in active markets that are unadjusted
and accessible at the measurement date for identical, unrestricted assets
or liabilities per SFAS 157.</td> </tr> <tr style="font-size:
3pt"> <td> </td> </tr> <tr valign="top">
<td nowrap="nowrap" align="left">(2)</td> <td> </td>
<td>Level 2 is defined as quoted prices for identical assets and liabilities
in markets that are not active, quoted prices for similar assets and liabilities
in active markets or financial instruments for which significant inputs are
observable, either directly or indirectly per SFAS 157.</td> </tr>
<tr style="font-size: 3pt"> <td> </td> </tr>
<tr valign="top"> <td nowrap="nowrap" align="left">(3)</td>
<td> </td> <td>Foreign exchange derivatives are
not designated as hedges under SFAS No. 133.</td> </tr>
<tr style="font-size: 3pt"> <td> </td> </tr>
<tr valign="top"> <td nowrap="nowrap" align="left">(4)</td>
<td> </td> <td>Interest rate derivatives are designated
as cash flow hedges under SFAS No. 133.</td> </tr> </table>
<!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK
--> <div style="font-family: 'Times New Roman',Times,serif"> <div
align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b>
</div> <div align="center"> <table style="font-size: 10pt;
text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --> <tr valign="bottom"> <td width="64%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
<td width="5%"> </td> <td width="1%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="10"><b>Fair
Value Measurement at Reporting Date Using</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="10"
style="border-bottom: 1px solid #000000"><b>(in millions)</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Quoted
Prices in</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Significant
Other</b></td> <td> </td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Estimated
Fair</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Active Markets
for</b></td> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Observable</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Value at</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Identical Assets</b></td>
<td> </td> <td> </td> <td nowrap="nowrap"
align="center" colspan="2"><b>Inputs</b></td> <td> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="left" style="border-bottom: 1px solid #000000"><b>Description</b></td>
<td style="border-bottom: 1px solid #000000"> </td> <td
nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid
#000000"><b>March 31, 2009</b></td> <td style="border-bottom:
1px solid #000000"> </td> <td style="border-bottom: 1px
solid #000000"> </td> <td nowrap="nowrap" align="center"
colspan="2" style="border-bottom: 1px solid #000000"><b>(Level 1)</b></td>
<td style="border-bottom: 1px solid #000000"> </td> <td
style="border-bottom: 1px solid #000000"> </td> <td nowrap="nowrap"
align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>(Level
2)</b></td> <td> </td> </tr> <!--
End Table Head --> <!-- Begin Table Body --> <tr valign="bottom"
style="background: #cceeff"> <td> <div style="margin-left:15px;
text-indent:-15px">Assets: </div></td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Money
market funds </div></td> <td> </td> <td
align="left">$</td> <td align="right">1,617</td> <td> </td>
<td> </td> <td align="left">$</td> <td
align="right">1,617</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Government
securities </div></td> <td> </td> <td> </td>
<td align="right">405</td> <td> </td> <td> </td>
<td> </td> <td align="right">405</td> <td> </td>
<td> </td> <td> </td> <td align="right">—</td>
<td> </td> </tr> <tr style="font-size: 1px">
<td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom"> <td>
<div style="margin-left:15px; text-indent:-15px">Total Assets </div></td>
<td> </td> <td align="left">$</td> <td
align="right">2,022</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">2,022</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">—</td> <td> </td>
</tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<tr style="font-size: 10pt"> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Liabilities: </div></td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
</tr> <tr valign="bottom"> <td> <div style="margin-left:15px;
text-indent:-15px">Interest Rate Derivatives <sup style="font-size:
85%; vertical-align: text-top">(1)</sup> </div></td>
<td> </td> <td align="left">$</td> <td
align="right">7</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">7</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid
#000000"> </td> <td> </td> </tr>
<tr valign="bottom" style="background: #cceeff"> <td> <div
style="margin-left:15px; text-indent:-15px">Total Liabilities </div></td>
<td> </td> <td align="left">$</td> <td
align="right">7</td> <td> </td> <td> </td>
<td align="left">$</td> <td align="right">—</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">7</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px
solid #000000">  </div> </div> <table width="100%"
border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align:
left"> <tr> <td width="3%"></td> <td width="1%"></td>
<td width="96"></td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>Interest rate derivatives are designated as cash flow hedges under
SFAS No. 133.</td> </tr> </table> <div align="left" style="font-size:
10pt; margin-top: 6pt">At June 30 and March 31, 2009,
the Company did not have any assets or liabilities measured at fair value
on a recurring basis using significant unobservable inputs (Level 3). </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">At June 30
and March 31, 2009, the Company had approximately $1,364 million
and $1,567 million, respectively, of investments in money market
funds classified as “Cash, cash equivalents and marketable securities”
in its Condensed Consolidated Balance Sheet. The Company also had approximately
$650 million and $405 million, respectively, in treasury
bills, classified as “Cash, cash equivalents and marketable securities.”
The Company had $50 million in restricted cash amounts classified
as “Other noncurrent assets, net” at both June 30
and March 31, 2009. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">At June 30, 2009, approximately $2 million
and $5 million of foreign exchange derivatives were included in “Other
Current Assets” and “Other Current Liabilities”,
respectively. At March 31, 2009, the Company had no foreign exchange
derivative contracts outstanding. At June 30 and March 31, 2009,
approximately $6 million and $7 million, respectively, of
the Company’s interest rate derivatives are included in “Other
current liabilities.” </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">For the Company’s interest rate derivatives,
the amount of loss recorded in accumulated other comprehensive loss from the
“Effective Portion” was approximately $6 million
for the three months ended June 30, 2009. The amount of loss reclassified
from accumulated other comprehensive income into “Interest expense,
net” was approximately $2 million for the three months
ended June 30, 2009. In the next twelve months, approximately $5 million
is expected to be released from “Accumulated other comprehensive
loss” to income. </div> <!-- Folio --> <!-- /Folio
--> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times
New Roman',Times,serif"> <div align="center" style="font-size: 10pt;
margin-top: 0pt"> <b> </b> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">A summary of the effect of the
interest rate and foreign exchange derivatives on the Company’s
Condensed Consolidated Statement of Operations is as follows: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Amount
of Net Loss Recognized in Income on</b></td> </tr> <tr
style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>Derivatives</b></td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="7"
style="border-bottom: 1px solid #000000"><b>(in millions)</b></td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="center"><b>Location of Net Loss Recognized in</b></td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"><b>Three
Months Ended</b></td> <td> </td> <td nowrap="nowrap"
align="center" colspan="3"><b>Three Months Ended</b></td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap"
align="center" style="border-bottom: 1px solid #000000"><b>Income
on Derivatives</b></td> <td style="border-bottom: 1px solid
#000000"> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>June 30, 2009</b></td>
<td style="border-bottom: 1px solid #000000"> </td> <td
nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid
#000000"><b>June 30, 2008</b></td> </tr> <!--
End Table Head --> <!-- Begin Table Body --> <tr valign="bottom">
<td valign="top"> <div style="margin-left:0px; text-indent:-0px">Interest
expenses, net <sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td> <td> </td> <td nowrap="nowrap"
align="right" valign="top">$</td> <td align="right" valign="top">2</td>
<td nowrap="nowrap" valign="top"> </td> <td> </td>
<td nowrap="nowrap" align="right" valign="top">$</td> <td align="right"
valign="top">—</td> <td nowrap="nowrap" valign="top"> </td>
</tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px;
text-indent:-0px">Other expenses, net <sup style="font-size: 85%; vertical-align:
text-top">(2)</sup> </div></td> <td> </td>
<td nowrap="nowrap" align="right" valign="top">$</td> <td align="right"
valign="top">20</td> <td nowrap="nowrap" valign="top"> </td>
<td> </td> <td nowrap="nowrap" align="right" valign="top">$</td>
<td align="right" valign="top">1</td> <td nowrap="nowrap" valign="top"> </td>
</tr> <!-- End Table Body --> </table> </div> <div
align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%;
border-top: 1px solid #000000">  </div> </div> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; text-align: left"> <tr> <td width="3%"></td> <td
width="1%"></td> <td width="96"></td> </tr> <tr
valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>Interest rate derivatives designated as cash flow hedges under SFAS
No. 133.</td> </tr> <tr style="font-size: 3pt"> <td> </td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(2)</td>
<td> </td> <td>Foreign exchange derivatives not
designated as hedges under SFAS No. 133.</td> </tr> </table>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The following
table presents the carrying amounts and estimated fair values of the Company’s
instruments that are not measured at fair value on a recurring basis: </div>
<div align="center"> <table style="font-size: 10pt; text-align: left"
cellspacing="0" border="0" cellpadding="0" width="100%"> <!-- Begin
Table Head --> <tr valign="bottom"> <td width="76%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
<td width="5%"> </td> <td width="3%"> </td>
<td width="1%"> </td> <td width="3%"> </td>
</tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="7"><b>At
June 30, 2009</b></td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px
solid #000000"><b>(in millions)</b></td> </tr>
<tr style="font-size: 8pt" valign="bottom"> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="3"
style="border-bottom: 1px solid #000000"><b>Carrying Value</b></td>
<td>    </td> <td nowrap="nowrap"
align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>Estimated
Fair Value</b></td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px"><u>Assets</u>:
</div></td> <td> </td> <td nowrap="nowrap"
align="right" valign="top"> </td> <td align="right" valign="top"> </td>
<td valign="top"> </td> <td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top"> </td> <td valign="top"> </td>
</tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px;
text-indent:-0px">Noncurrent portion of installment accounts receivable
<sup style="font-size: 85%; vertical-align: text-top">(1)</sup>
</div></td> <td> </td> <td nowrap="nowrap"
align="right" valign="top">$</td> <td align="right" valign="top">83</td>
<td nowrap="nowrap" valign="top"> </td> <td> </td>
<td nowrap="nowrap" align="right" valign="top">$</td> <td align="right"
valign="top">83</td> <td nowrap="nowrap" valign="top"> </td>
</tr> <tr valign="bottom"><!-- Blank Space --> <td valign="top">
<div style="margin-left:0px; text-indent:-0px">  </div></td>
<td> </td> <td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top"> </td> <td valign="top"> </td>
<td> </td> <td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top"> </td> <td valign="top"> </td>
</tr> <tr valign="bottom" style="background: #cceeff"> <td
valign="top"> <div style="margin-left:0px; text-indent:-0px"><u>Liabilities</u>:
</div></td> <td> </td> <td nowrap="nowrap"
align="right" valign="top"> </td> <td align="right" valign="top"> </td>
<td valign="top"> </td> <td> </td>
<td nowrap="nowrap" align="right" valign="top"> </td>
<td align="right" valign="top"> </td> <td valign="top"> </td>
</tr> <tr valign="bottom"> <td valign="top"> <div style="margin-left:0px;
text-indent:-0px">Long-term debt <sup style="font-size: 85%; vertical-align:
text-top">(2)</sup> </div></td> <td> </td>
<td nowrap="nowrap" align="right" valign="top">$</td> <td align="right"
valign="top">1,919</td> <td nowrap="nowrap" valign="top"> </td>
<td> </td> <td nowrap="nowrap" align="right" valign="top">$</td>
<td align="right" valign="top">1,937</td> <td nowrap="nowrap"
valign="top"> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td valign="top"> <div style="margin-left:0px; text-indent:-0px">Facilities
abandonment reserve <sup style="font-size: 85%; vertical-align: text-top">(3)</sup>
</div></td> <td> </td> <td nowrap="nowrap"
align="right" valign="top">$</td> <td align="right" valign="top">74</td>
<td nowrap="nowrap" valign="top"> </td> <td> </td>
<td nowrap="nowrap" align="right" valign="top">$</td> <td align="right"
valign="top">78</td> <td nowrap="nowrap" valign="top"> </td>
</tr> <!-- End Table Body --> </table> </div> <div
align="left"> <div style="font-size: 3pt; margin-top: 16pt; width: 18%;
border-top: 1px solid #000000">  </div> </div> <table
width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size:
10pt; text-align: left"> <tr> <td width="3%"></td> <td
width="1%"></td> <td width="96"></td> </tr> <tr
valign="top"> <td nowrap="nowrap" align="left">(1)</td> <td> </td>
<td>Estimated fair value of the noncurrent portion of installment accounts
receivable approximates carrying value due to the relatively short duration
of the liabilities.</td> </tr> <tr style="font-size: 3pt">
<td> </td> </tr> <tr valign="top"> <td
nowrap="nowrap" align="left">(2)</td> <td> </td>
<td>Estimated fair value of long-term debt is based on quoted prices
for similar liabilities for which significant inputs are observable except
for certain long-term lease obligations, for which fair value approximates
carrying value. Estimated fair value of long-term debt includes $13 million
for the conversion feature of the 1.625% Convertible Senior Notes. See the
Notes to the Consolidated Financial Statements included in the Company’s
2009 Form 10-K for more information about the 1.625% Convertible Senior Notes.</td>
</tr> <tr style="font-size: 3pt"> <td> </td>
</tr> <tr valign="top"> <td nowrap="nowrap" align="left">(3)</td>
<td> </td> <td>Estimated fair value for the facilities
abandonment reserve was determined using the Company’s current incremental
borrowing rate. The facilities abandonment reserve includes approximately
$25 million in “Accrued expenses and other current liabilities”
and approximately $49 million in “Other noncurrent liabilities”
line items on the Condensed Consolidated Balance Sheet.</td> </tr>
</table> <div align="left" style="font-size: 10pt; margin-top: 6pt">The
fair value of the Company’s call spread repurchase option associated
with the 1.625% Senior Notes at June 30, 2009 was $13 million
which was based on quoted prices for similar securities. See the Notes to
the Consolidated Financial Statements included in the Company’s
2009 Form 10-K for more information about the call spread repurchase options.
</div> </div> </body> </html>
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XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 8 - us-gaap:RestructuringAndRelatedActivitiesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt">NOTE H — RESTRUCTURING
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Fiscal
2007 Plan: </i>In August 2006, the Company announced the Fiscal
2007 plan to significantly improve the Company’s expense structure
and increase its competitiveness. The Fiscal 2007 plan’s objectives
included a workforce reduction, global facilities consolidations and other
cost reduction initiatives. The Company has recognized substantially all of
the costs associated with the Fiscal 2007 plan. </div> <!-- Folio
--> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div
style="font-family: 'Times New Roman',Times,serif"> <div align="center"
style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company
currently estimates a reduction in workforce of approximately 3,100 individuals
under the Fiscal 2007 plan. Most of these actions have been completed; however,
final payment of the severance amounts is dependent upon settlement with the
works councils in certain international locations. The Company has also recognized
substantially all of the facilities abandonment costs associated with the
Fiscal 2007 plan. </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">For the three months ended June 30, 2009, restructuring
activity under the Fiscal 2007 plan was as follows: </div> <div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0"
cellpadding="0" width="100%"> <!-- Begin Table Head --> <tr valign="bottom">
<td width="76%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> <td width="5%"> </td>
<td width="1%"> </td> </tr> <tr style="font-size:
8pt" valign="bottom"> <td> </td> <td> </td>
<td> </td> <td> </td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"><b>Facilities</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px
solid #000000"><b>Severance</b></td> <td> </td>
<td> </td> <td nowrap="nowrap" align="center" colspan="2"
style="border-bottom: 1px solid #000000"><b>Abandonment</b></td>
<td> </td> </tr> <tr style="font-size: 8pt"
valign="bottom"> <td> </td> <td> </td>
<td nowrap="nowrap" align="center" colspan="6">(in millions)</td>
<td> </td> </tr> <!-- End Table Head -->
<!-- Begin Table Body --> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Accrued
balance as of March 31, 2009 </div></td> <td> </td>
<td align="left">$</td> <td align="right">45</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">71</td> <td> </td> </tr>
<tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Payments
</div></td> <td> </td> <td nowrap="nowrap"
align="left"> </td> <td align="right">(14</td>
<td nowrap="nowrap">)</td> <td> </td> <td
nowrap="nowrap" align="left"> </td> <td align="right">(5</td>
<td nowrap="nowrap">)</td> </tr> <tr style="font-size:
1px"> <td> <div style="margin-left:15px; text-indent:-15px"> 
</div></td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> <td> </td> <td nowrap="nowrap"
colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td> </tr> <tr valign="bottom" style="background:
#cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Accrued
balance as of June 30, 2009 </div></td> <td> </td>
<td align="left">$</td> <td align="right">31</td>
<td> </td> <td> </td> <td align="left">$</td>
<td align="right">66</td> <td> </td> </tr>
<tr style="font-size: 1px"> <td> <div style="margin-left:15px;
text-indent:-15px">  </div></td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> <td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double
#000000"> </td> <td> </td> </tr>
<!-- End Table Body --> </table> </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">The liability balance for the
severance portion of the remaining reserve is included in the “Accrued
salaries, wages and commissions” line on the Condensed Consolidated
Balance Sheets. The liability for the facilities abandonment portion of the
remaining reserve is included in the “Accrued expenses and other
current liabilities” and “Other noncurrent liabilities”
line items on the Condensed Consolidated Balance Sheets. </div> </div>
</body> </html>
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XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 9 - us-gaap:IncomeTaxDisclosureTextBlock--> <div style="font-family:
'Times New Roman',Times,serif"> <div align="left" style="font-size:
10pt; margin-top: 12pt">NOTE I — INCOME TAXES </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">Income tax expense
for the quarter ended June 30, 2009 was $113 million compared
with a tax expense of $101 million for the quarter ended June 30,
2008. During the three months ended June 30, 2008, the Company settled
a U.S. federal income tax audit for the fiscal years 2001 through 2004, which
resulted in a decrease in the liability for uncertain tax positions of $55 million.
As a result of this settlement, during the three months ended June 30,
2008, the Company recognized a tax benefit of $11 million and a reduction
of goodwill by $10 million, with the remainder offset against existing
tax refund claims and deferred tax assets previously recorded. </div>
</div> </body> </html>
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XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"
--> <html> <head></head> <body> <!-- Begin Block
Tagged Note 10 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif"> <div align="left"
style="font-size: 10pt; margin-top: 12pt">NOTE J — COMMITMENTS
AND CONTINGENCIES </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">Certain legal proceedings in which the Company is involved
are discussed in Note 8, “Commitments and Contingencies,”
in the Notes to the Consolidated Financial Statements included in the Company’s
2009 Form 10-K. The following discussion should be read in conjunction with
the 2009 Form 10-K. </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt"><u>Stockholder Class Action and Derivative
Lawsuits Filed Prior to 2004 — Background</u> </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">The Company,
its former Chairman and CEO Charles B. Wang, its former Chairman and CEO Sanjay
Kumar, its former Chief Financial Officer Ira Zar, and its Vice Chairman and
Founder Russell M. Artzt were defendants in one or more stockholder class
action lawsuits filed in July 1998, February 2002, and March 2002
in the United States District Court for the Eastern District of New York (the
Federal Court), alleging, among other things, that a class consisting of all
persons who purchased the Company’s Common Stock during the period
from January 20, 1998 until July 22, 1998 were harmed by
misleading statements, misrepresentations, and omissions regarding the Company’s
future financial performance. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">In addition, in May 2003, a class action
lawsuit captioned <i>John A. Ambler v. Computer Associates International,
Inc., et al. </i>was filed in the Federal Court. The complaint in this
matter, a purported class action on behalf of the CA Savings Harvest Plan
(the CASH Plan) and the participants in, and beneficiaries of, the CASH Plan
for a class period from March 30, 1998 through May 30, 2003,
asserted claims of breach of fiduciary duty under the federal Employee Retirement
Income Security Act (ERISA). The named defendants were the Company, the Company’s
Board of Directors, the CASH Plan, the Administrative Committee of the CASH
Plan, and the following current or former employees and/or former directors
of the Company: Messrs. Wang, Kumar, Zar, Artzt, Peter A. Schwartz
(the Company’s former Chief Financial Officer), and Charles P. McWade
(the Company’s former head of Financial Reporting and Business Development);
and various unidentified alleged fiduciaries of the CASH Plan. The complaint
alleged that the defendants breached their fiduciary duties by causing the
CASH Plan to invest in Company securities and sought damages in an unspecified
amount. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">A stockholder derivative lawsuit was filed by Charles Federman against
certain current and former directors of the Company, based on essentially
the same allegations as those contained in the February and March 2002
stockholder lawsuits discussed above. This action was commenced in April 2002
in the Delaware Chancery Court, and an amended complaint was filed in November 2002.
The defendants named in the amended complaint were former Company directors
The Honorable Alfonse M. D’Amato, Shirley Strum Kenny and Messrs. Wang,
Kumar, Artzt, Willem de Vogel, Richard Grasso, Roel Pieper, and Lewis S. Ranieri.
The Company was named as a nominal defendant. The derivative suit alleged
breach of fiduciary duties on the part of all the individual defendants and,
as against the former management director defendants, insider trading on the
basis of allegedly misappropriated confidential, material information. The
amended complaint sought an accounting and recovery on behalf of the Company
of an unspecified amount of damages, including recovery of the profits allegedly
realized from the sale of Common Stock. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">On August 25, 2003, the
Company announced the settlement of the above-described class action lawsuits
against the Company and certain of its present and former officers and directors,
alleging misleading statements, misrepresentations, and omissions regarding
the Company’s financial performance, as well as breaches of fiduciary
duty. At the same time, the Company also announced the settlement of a derivative
lawsuit, in which the Company was named as a nominal defendant, filed against
certain present and former officers and directors of the Company, alleging
breaches of fiduciary duty and, against certain management directors, insider
trading, as well as the settlement of an additional derivative action filed
by Charles Federman that had been pending in the Federal Court. As part of
the class action settlement, which was approved by the Federal Court in December 2003,
the Company agreed to issue a total of up to 5.7 million shares of
Common Stock to the stockholders represented in the three class action lawsuits,
including payment of attorneys’ fees. The Company completed the
issuance of the settlement shares as well as payment of $3.3 million
to the plaintiffs’ attorneys in legal fees and related expenses
in 2004. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">In settling the derivative suits, which settlement was approved by
the Federal Court in December 2003, the Company committed to maintain
certain corporate governance practices. Under the settlement, the Company,
the individual defendants and all other current and former officers and directors
of the Company were released from any potential claim by stockholders arising
from accounting-related or other public statements made by the Company or
its agents from January 1998 through February 2002 (and
from March 11, 1998 through May 2003 in the case of the
employee ERISA action). The individual defendants were released from any potential
claim by or on behalf of the Company relating to the same matters. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">On October 5,
2004 and December 9, 2004, four purported Company stockholders served
motions to vacate the Order of Final Judgment and Dismissal entered by the
Federal Court in December 2003 in connection with the settlement
of the derivative action. These motions primarily sought to void the releases
that were granted to the individual defendants under the settlement. On December 7,
2004, a motion to vacate the Order of Final Judgment and Dismissal entered
by the Federal Court in December 2003 in connection with the settlement
of the 1998 and 2002 stockholder lawsuits discussed above (together with the
October 5, 2004 and December 9, 2004 motions, the 60(b)
Motions) was filed by Sam Wyly and certain related parties (the Wyly Litigants).
The motion sought to reopen the settlement to permit the moving stockholders
to pursue individual claims against certain present and former officers of
the Company. The motion stated that the moving stockholders did not seek to
file claims against the Company. </div> <!-- Folio --> <!--
/Folio --> </div> <!-- PAGEBREAK --> <div style="font-family:
'Times New Roman',Times,serif"> <div align="center" style="font-size:
10pt; margin-top: 0pt"> <b> </b> </div> <div align="left"
style="font-size: 10pt; margin-top: 12pt"><u>Derivative Actions Filed
in 2004</u> </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">In June and July 2004, three purported derivative
actions were filed in the Federal Court by Ranger Governance, Ltd. (Ranger),
Bert Vladimir and Irving Rosenzweig against certain current or former employees
and/or directors of the Company (the Derivative Actions). In November 2004,
the Federal Court issued an order consolidating the Derivative Actions. The
plaintiffs filed a consolidated amended complaint (the Consolidated Complaint)
on January 7, 2005. The Consolidated Complaint names as defendants
Messrs. Wang, Kumar, Zar, McWade, Schwartz, de Vogel, Grasso, Pieper,
Artzt, D’Amato, and Ranieri, Stephen Richards, Steven Woghin, David
Kaplan, David Rivard, Lloyd Silverstein, Michael A. McElroy, Gary Fernandes,
Robert E. La Blanc, Jay W. Lorsch, Kenneth Cron, Walter P. Schuetze, KPMG
LLP, and Ernst & Young LLP. The Company is named as a nominal defendant.
The Consolidated Complaint seeks from one or more of the defendants (1) contribution
towards the consideration the Company had previously agreed to provide current
and former stockholders in settlement of certain class action litigation commenced
against the Company and certain officers and directors in 1998 and 2002 (see
“Stockholder Class Action and Derivative Lawsuits Filed
Prior to 2004 — Background”), (2) compensatory
and consequential damages in an amount not less than $500 million
in connection with the investigations giving rise to the Deferred Prosecution
Agreement (DPA) entered into between the Company and the United States
Attorney’s Office (USAO) in 2004 and a consent to enter
into a final judgment (Consent Judgment) in a parallel proceeding brought
by the SEC regarding certain of the Company’s past accounting practices,
including its revenue recognition policies and procedures during certain periods
prior to the adoption of the Company’s new business model in October 2000.
(In May 2007, based upon the Company’s compliance with
the terms of the DPA, the Federal Court ordered dismissal of the charges that
had been filed against the Company in connection with the DPA, and the DPA
expired. The injunctive provisions of the Consent Judgment permanently enjoining
the Company from violating certain provisions of the federal securities laws
remain in effect.), (3) unspecified relief for violations of Section
14(a) of the Exchange Act for alleged false and material misstatements made
in the Company’s proxy statements issued in 2002 and 2003, (4) relief
for alleged breach of fiduciary duty, (5) unspecified compensatory,
consequential and punitive damages based upon allegations of corporate waste
and fraud, (6) unspecified damages for breach of duty of reasonable
care, (7) restitution and rescission of the compensation earned under
the Company’s executive compensation plan and (8) pursuant
to Section 304 of the Sarbanes-Oxley Act, reimbursement of bonus
or other incentive-based equity compensation and alleged profits realized
from sales of securities issued by the Company. Although no relief is sought
from the Company, the Consolidated Complaint seeks monetary damages, both
compensatory and consequential, from the other defendants, including current
or former employees and/or directors of the Company, Ernst & Young
LLP and KPMG LLP in an amount totaling not less than $500 million.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">On
February 1, 2005, the Company established a Special Litigation Committee
of independent members of its Board of Directors to, among other things, control
and determine the Company’s response to the Derivative Actions and
the 60(b) Motions. On April 13, 2007, the Special Litigation Committee
issued its reports, which announced the Special Litigation Committee’s
conclusions, determinations, recommendations and actions with respect to the
claims asserted in the Derivative Actions and the 60(b) Motions. The Special
Litigation Committee also served a motion which seeks to dismiss and realign
the claims and parties in accordance with the Special Litigation Committee’s
recommendations. As summarized below, the Special Litigation Committee concluded
as follows: </div> <div align="left" style="font-size: 10pt; margin-top:
6pt"><b>•</b> The Special Litigation Committee
has concluded that it would be in the best interests of the Company to pursue
certain of the claims against Messrs. Wang and Schwartz. </div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>•</b> The
Special Litigation Committee has concluded that it would be in the best interests
of the Company to pursue certain of the claims against the former Company
executives who have pled guilty to various charges of securities fraud and/or
obstruction of justice — including Messrs. Kaplan, Richards,
Rivard, Silverstein, Woghin and Zar. The Special Litigation Committee has
determined and directed that these claims be pursued by the Company using
counsel retained by the Company, unless the Special Litigation Committee is
able to successfully conclude its ongoing settlement negotiations with these
individuals. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt"><b>•</b> The Special Litigation Committee
has reached a settlement (subject to court approval) with Messrs. Kumar,
McWade and Artzt. </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt"><b>•</b> The Special Litigation
Committee believes that the claims (the Director Claims) against current and
former Company directors Messrs. Cron, D’Amato, de Vogel,
Fernandes, Grasso, La Blanc, Lorsch, Pieper, Ranieri and Schuetze, Ms. Kenny,
and Alex Vieux should be dismissed. The Special Litigation Committee has concluded
that these directors did not breach their fiduciary duties and the claims
against them lack merit. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt"><b>•</b> The Special
Litigation Committee has concluded that it would be in the best interests
of the Company to seek dismissal of the claims against Ernst & Young
LLP, KPMG LLP and Mr. McElroy. </div> <div align="left"
style="font-size: 10pt; margin-top: 6pt">The Special Litigation Committee
has served a motion which seeks dismissal of the Director Claims, the claims
against Ernst & Young LLP, KPMG LLP and Mr. McElroy, and
certain other claims. In addition, the Special Litigation Committee has asked
for the Federal Court’s approval for the Company to be realigned
as the plaintiff with respect to claims against certain other parties, including
Messrs. Wang and Schwartz. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt"><u>Current Procedural Status of Stockholder
Class Action and Derivative Lawsuits Filed Prior to 2004 and Derivative
Actions Filed in 2004</u> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">By letter dated July 19, 2007, counsel
for the Special Litigation Committee advised the Federal Court that the Special
Litigation Committee had reached a settlement of the Derivative Actions with
two of the three derivative plaintiffs — Bert Vladimir and Irving
Rosenzweig. In connection with the settlement, both of these plaintiffs have
agreed to support the Special Litigation Committee’s motion to dismiss
and to realign. The Company has agreed to pay the attorney’s fees
of Messrs. Vladimir and Rosenzweig in an amount up to $525,000 each.
If finalized, this settlement would require approval of the Federal Court.
On July 23, 2007, Ranger filed a letter with the Federal Court objecting
to the proposed settlement. On October 29, 2007, the Federal Court
denied the Special Litigation Committee’s motion to dismiss and
realign, without prejudice to renewing the motion after a decision by the
appellate court regarding the Federal Court’s decisions concerning
the 60(b) Motions. </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">In a memorandum and order dated August 2, 2007,
the Federal Court denied all of the 60(b) Motions and reaffirmed the 2003
settlements (the August 2 decision). On August 24, 2007, Ranger and
the Wyly Litigants filed notices of appeal of the August 2 decision. On August 16,
2007, the Special Litigation Committee filed a motion to amend or clarify
the August 2 decision, and the Company joined that motion. On September 12,
2007 and October 4, 2007, the Federal Court issued opinions denying
the motions to amend or clarify. On September 18, 2007, the Wyly
Litigants and Ranger filed notices of appeal of the September 12
decision. The Company filed notices of cross-appeal of the September 12
and October 4 decisions on November 2, 2007. Oral argument on the
appeals and cross-appeals occurred on March 11, 2009. On July 23,
2009, the United States Court of Appeals for the Second Circuit issued a summary
order affirming the August 2, September 12 and October 4,
2007 decisions of the Federal Court referenced above. The summary order also
acknowledged that the Ranger Governance litigation that was part of the 2004
Derivative Actions was not before the Second Circuit and, therefore, the Company
could renew its motion to dismiss and realign that had been dismissed without
prejudice in the October 29, 2007 decision referenced above. </div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><u>Texas
Litigation</u> </div> <div align="left" style="font-size: 10pt;
margin-top: 6pt">On August 9, 2004, a petition was filed by Sam
Wyly and Ranger against the Company in the District Court of Dallas County,
Texas, seeking to obtain a declaratory judgment that plaintiffs did not breach
two separation agreements they entered into with the Company in 2002 (the
2002 Agreements). On February 18, 2005, Mr. Wyly filed a
separate lawsuit in the United States District Court for the Northern District
of Texas (the Texas Federal Court) alleging that he is entitled to attorneys’
fees in connection with the original litigation filed in the District Court
of Dallas County, Texas. The two actions have been consolidated. On March 31,
2005, the plaintiffs amended their complaint to allege a claim that they were
defrauded into entering the 2002 Agreements and to seek rescission of those
agreements and damages. On September 1, 2005, the Texas Federal Court
granted the Company’s motion to transfer the action to the Federal
Court. On November 9, 2007, plaintiffs served a motion to reopen
discovery for 90 days to permit unspecified additional document requests
and depositions. The Federal Court denied plaintiffs’ discovery
motion on August 29, 2008 and certified that discovery was complete
on September 3, 2008. On September 15, 2008, the Company
moved for summary judgment dismissing all of plaintiffs’ claims,
and plaintiffs moved for reconsideration of the Federal Court’s
August 29, 2008 order denying plaintiffs’ discovery motion.
These motions are fully briefed and pending determination by the Federal Court.
</div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><u>Other
Civil Actions </u> </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">In 2004, the Company entered a voluntary disclosure
agreement (VDA) with the State of Delaware, by which the Company
agreed to disclose information about its failure to comply with certain abandoned
property (“escheatment”) procedures and, in return, the
State agreed, among other things, not to impose interest or conduct an audit.
The Company engaged an independent consultant to review its records and provide
an estimate of its liability to the State. The State refused to accept that
estimate. In October 2008, the Company commenced an action entitled
<i>CA, Inc. v. Cordrey, et al, </i>Civil Action No. 4111-CC
in the Delaware Chancery Court (the Delaware Court) seeking, among other things,
to compel the State to abide by its obligations under the VDA. In November 2008,
the State filed a suit in the Delaware Court entitled <i>Cordrey, et
al v. CA, Inc. et al</i>, Civil Action No. 4195-CC, that seeks
to enforce a request for payment of abandoned property liability, compel an
audit and impose interest. By an amended complaint, dated March 2,
2009, the State alleged, among other things, that the Company made material
misrepresentations in and unreasonably delayed the VDA process and the state
added causes of action for fraud and/or negligent misrepresentation. Although
the ultimate outcome cannot be determined, the Company believes that the State’s
claims are unfounded and that the Company has meritorious defenses. In the
opinion of management, the resolution of this lawsuit is not expected to have
a material adverse effect on the Company’s financial position, results
of operations, or cash flows. </div> <div align="left" style="font-size:
10pt; margin-top: 6pt">In December 2008, a lawsuit captioned <i>Information
Protection and Authentication of Texas LLC v. Symantec Corp., et al. </i>was
filed in the United States District Court for the Eastern District of Texas.
The complaint seeks monetary damages in an undisclosed amount against twenty-two
separate defendants including the Company based upon claims for direct and
contributory infringement of two separate patents. The complaint does not
disclose which of the Company’s products allegedly infringe the
claimed patents. In March 2009, the Company both answered the complaint
and filed a cross-complaint seeking a declaratory judgment that the Company
does not infringe the claimed patents and that such patents are invalid. Although
the ultimate outcome cannot be determined, the Company believes that the claims
are unfounded and that the Company has meritorious defenses. In the opinion
of management, the resolution of this lawsuit is not expected to have a material
adverse effect on the Company’s financial position, results of operations,
or cash flows. </div> <div align="left" style="font-size: 10pt; margin-top:
6pt">The Company, various subsidiaries, and certain current and former
officers have been named as defendants in various other lawsuits and claims
arising in the normal course of business. The Company believes that it has
meritorious defenses in connection with such lawsuits and claims, and intends
to vigorously contest each of them. In the opinion of the Company’s
management, the results of these other lawsuits and claims, either individually
or in the aggregate, are not expected to have a material adverse effect on
the Company’s financial position, results of operations, or cash
flows, although the impact could be material to any individual reporting period.
</div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The
Company is obligated to indemnify its officers and directors under certain
circumstances to the fullest extent permitted by Delaware law. As a part of
that obligation, the Company has advanced and will continue to advance certain
attorneys’ fees and expenses incurred by current and former officers
and directors in various litigations and investigations arising out of similar
allegations, including the litigation described above. </div> <div
align="left" style="font-size: 10pt; margin-top: 6pt">Additional information
about litigation involving the Company’s directors and executive
officers is contained in the Company’s periodic and other reports
filed with the SEC. </div> <!-- Folio --> <!-- /Folio -->
</div> </body> </html>
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--03-31
2009-06-30
10-Q
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