-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VNM4sm33FRElgrVbBLCkK85wPLITmWYaJpGxp0uurswPhGucknjAqzUjVm2/8VFU 5beZ/temtd6s1+j6QenR9g== 0000356028-98-000011.txt : 19980928 0000356028-98-000011.hdr.sgml : 19980928 ACCESSION NUMBER: 0000356028-98-000011 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980330 FILED AS OF DATE: 19980925 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER ASSOCIATES INTERNATIONAL INC CENTRAL INDEX KEY: 0000356028 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 132857434 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-09247 FILM NUMBER: 98715137 BUSINESS ADDRESS: STREET 1: ONE COMPUTER ASSOCIATES PLAZA CITY: ISLANDIA STATE: NY ZIP: 11788 BUSINESS PHONE: 5163425224 11-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the Fiscal Year ended March 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _______ to ________ Commission file number 1-9247 COMPUTER ASSOCIATES SAVINGS HARVEST PLAN (Full title of the Plan) Computer Associates International, Inc. One Computer Associates Plaza Islandia, NY 11788-7000 (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office) ITEM 1. Financial Statements and Exhibits. (a) The financial statements filed herewith consist of the Following: Report of Independent Auditors F-1 Statement of Net Assets Available for Benefits March 30, 1998 and 1997 F-2 Statements of Changes in Net Assets Available for Benefits Years Ended March 30, 1998 and 1997 F-4 Notes to Financial Statements March 30, 1998 F-6 ITEM 27a Schedule of Assets Held for Investment purposes As of March 30, 1998 F-13 ITEM 27d Schedule of Reportable Transactions as of March 30, 1998 F-14 (b) The exhibits filed in connection with this Annual Report Are as follows: Exhibit Number Document Exhibit 23(a) Consent of Ernst & Young SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Plan committee (who Administer the Computer Associates Savings Harvest Plan) have duly caused this Annual Report to be signed by the Undersigned thereunto duly authorized. COMPUTER ASSOCIATES SAVINGS HARVEST PLAN Date: September 25, 1998 By: /s/ Ira Zar ---------------------- Ira Zar Member, Plan Committee Financial Statements and Schedules Computer Associates Savings Harvest Plan Years ended March 30, 1998 and 1997 with Report of Independent Auditors Computer Associates Savings Harvest Plan Financial Statements and Schedules Years ended March 30, 1998 and 1997
Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Net Assets Available for Benefits 2 Statements of Changes in Net Assets Available for Benefits 4 Notes to Financial Statements 6 Schedules Item 27a Schedule of Assets Held for Investment Purposes 13 Item 27d Schedule of Reportable Transactions 14
Party-in-interest transactions: A schedule of party-in-interest transactions has not been presented because there were no party-in-interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 1 Report of Independent Auditors Administrative Committee Computer Associates Savings Harvest Plan We have audited the accompanying statements of net assets available for benefits of Computer Associates Savings Harvest Plan (the Plan) as of March 30, 1998 and 1997, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at March 30, 1998 and 1997, and the changes in its net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of March 30, 1998, and reportable transactions for the year then ended, are presented for purposes of complying with the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the financial statements. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. August 27, 1998 2 Computer Associates Savings Harvest Plan Statement of Net Assets Available for Benefits March 30, 1998
U.S. Equity Growth and Computer Retirement Diversified Participant Intermediate Puritan Index Magellan Income Associates Money Market International Loans Total Bond Fund Fund Portfolio Fund Portfolio Stock Fund Portfolio Fund Fund Assets Investments, at fair value $575,333,126 $18,990,952 $53,662,491 $44,142,965 $45,571,421 $56,558,178 $294,116,810 $57,398,828 $4,891,481 Loans receivable from employees 9,138,599 $9,138,599 Contributions receivable: Computer Associates International Inc. 16,864,631 16,864,631 ----------------------------------------------------------------------------------------------------------------------- Total assets 601,336,356 18,990,952 53,662,491 44,142,965 45,571,421 56,558,178 310,981,441 57,398,828 4,891,481 9,138,599 ----------------------------------------------------------------------------------------------------------------------- Net assets available for benefits $601,336,356 $18,990,952 $53,662,491 $44,142,965 $45,571,421 $56,558,178 $310,981,441 $57,398,828 $4,891,481 $9,138,599 See accompanying notes.
3 Computer Associates Savings Harvest Plan Statement of Net Assets Available for Benefits March 30, 1997
U.S. Equity Growth and Computer Retirement Participant Intermediate Puritan Index Magellan Income Associates Money Market Fund Total Bond Fund Fund Portfolio Fund Portfolio Stock Fund Portfolio Loans Assets Investments, at fair value $345,246,903 $17,230,435 $44,659,246 $26,241,453 $32,326,423 $33,061,068 $153,194,518 $38,533,760 Loans Receivable From Employees 9,748,596 $9,748,596 Contributions receivable: Computer Associates International Inc. 11,592,381 11,592,381 ------------------------------------------------------------------------------------------------------------- Total assets 366,587,880 17,230,435 44,659,246 26,241,453 32,326,423 33,061,068 164,786,899 38,533,760 9,748,596 ------------------------------------------------------------------------------------------------------------- Net assets available for benefits$366,587,880 $17,230,435 $44,659,246 $26,241,453 $32,326,423 $33,061,068 $164,786,899 $38,533,760 $9,748,596 ========================================================================================================================= See accompanying notes.
4 Computer Associates Savings Harvest Plan Statement of Changes in Net Assets Available for Benefits Year ended March 30, 1998
U.S. Equity Growth and Computer Retirement Diversified Participant Intermediate Puritan Index Magellan Income Associates Money Market International Loans Total Bond Fund Fund Portfolio Fund Portfolio Stock Fund Portfolio Fund Fund Additions Contributions: Computer Associates International, Inc. $ 19,137,875 $ 245,719 $ 594,658 $ 516,009 $ 686,796 $ 790,695 $18,579,437 $(2,330,755) $ 55,316 $ Employees 29,738,401 1,001,354 2,353,951 2,755,256 3,158,122 3,949,783 8,131,428 7,970,876 417,631 Interest and dividend income 15,279,736 1,227,526 4,295,879 892,618 2,745,809 2,363,559 259,399 3,359,702 135,244 Net realized and unrealized appreciation in fair value of investments 231,441,833 464,859 8,856,356 12,326,343 11,545,318 13,955,759 183,866,979 426,219 Transfer from other plan 5,681,661 81,405 208,220 487,598 458,230 799,050 539,971 3,074,798 32,389 ------------------------------------------------------------------------------------------------------------------- Total additions 301,279,506 3,020,863 16,309,064 16,977,824 18,594,275 21,858,846 211,377,214 12,074,621 1,066,799 Deductions Withdrawals and distributions (66,433,459)(2,114,943)(6,566,584)(5,282,074)(6,599,557) (9,109,418) (19,586,742) (15,535,614) (312,315)(1,326,212) Interfund transfers, net 857,760 (733,682) 6,206,562 1,251,903 10,750,969 (45,591,005) 22,404,276 4,137,002 716,215 Administrative expenses (97,571) (3,163) (5,553) (800) (1,623) (3,287) (4,925) (78,215) (5) ------------------------------------------------------------------------------------------------------------------- Total (deductions) additions (66,531,030)(1,260,346)(7,305,819) 923,688 (5,349,277) 1,638,264 (65,182,672) 6,790,447 3,824,682 (609,997) ------------------------------------------------------------------------------------------------------------------- Net additions (deductions) 234,748,476 1,760,517 9,003,245 17,901,512 13,244,998 23,497,110 146,194,542 18,865,068 4,891,481 (609,997) Net assets available for benefits at beginning of year 366,587,880 17,230,435 44,659,246 26,241,453 32,326,423 33,061,068 164,786,899 38,533,760 9,748,596 ------------------------------------------------------------------------------------------------------------------- Net assets available for benefits at end of year $601,336,356$18,990,952$53,662,491$44,142,965$45,571,421 $56,558,178 $310,981,441 $57,398,828 $4,891,481$9,138,599 ================================================================================================================== See accompanying notes.
5 Computer Associates Savings Harvest Plan Statement of Changes in Net Assets Available for Benefits Year ended March 30, 1997 CAPTION> U.S. Equity Growth and Computer Retirement Participant Intermediate Puritan Index Magellan Income Associates Money Market Loans Total Bond Fund Fund Portfolio Fund Portfolio Stock Fund Portfolio Funds Additions Contributions: Computer Associates International, Inc. $11,628,366 $ 290,866 $ 649,514 $ 416,269 $ 810,130 $ 701,164 $13,022,371 $(4,261,948) $ Employees 8,189,022 1,010,009 2,386,412 1,722,230 3,166,087 2,927,345 6,060,440 (9,083,501) Interest and dividend income 21,286,436 1,412,399 6,279,134 726,820 8,069,690 1,768,975 253,100 2,776,318 Net realized and unrealized appreciation (depreciation) in fair value of investments (27,891,719) (479,381) (544,902) 3,594,830 (4,215,570) 2,691,058 (28,937,754) Transfer from other plan 466,518 419,679 46,839 ---------------------------------------------------------------------------------------------------------------- Total additions 13,678,623 2,233,893 8,770,158 6,460,149 7,830,337 8,088,542 (9,601,843) (10,149,452) 46,839 Deductions Withdrawals and Distributions (71,383,710)(4,109,393)(11,820,192)(3,522,806) (14,233,903) (6,445,344) (16,531,198) (13,644,033) (1,076,841) Interfund Transfers,net (3,708,852) (6,203,974) 2,382,713 (13,962,939) 4,570,344 11,460,486 4,273,799 1,188,423 Administrative Expenses (126,513) (4,060) (6,261) (907) (1,944) (2,968) (3,935) (106,438) ---------------------------------------------------------------------------------------------------------------- Total (deductions) additions (71,510,223)(7,822,305)(18,030,427)(1,141,000) (28,198,786) (1,877,968) (5,074,647) (9,476,672) 111,582 =============================================================================================================== Net additions (deductions) (57,831,600)(5,588,412) (9,260,269) 5,319,149 (20,368,449) 6,210,574 (14,676,490) (19,626,124) 158,421 Net assets available for benefits at beginning of year 424,419,480 22,818,847 53,919,515 20,922,304 52,694,872 26,850,494 179,463,389 58,159,884 9,590,175 ----------------------------------------------------------------------------------------------------------------- Net assets Available for benefits at end of year $366,587,880$17,230,435 $44,659,246$26,241,453 $32,326,423 $33,061,068 $164,786,899 $38,533,760 $9,748,596 ================================================================================================================ See accompanying notes.
6 Computer Associates Savings Harvest Plan Notes to Financial Statements March 30, 1998 1. Description of the Plan General The following description of the Computer Associates Savings Harvest Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plans provisions. The Plan is a defined contribution plan covering all eligible salaried employees. Employees are eligible to participate in the Plan with respect to employee contributions as of the first of the month following date of hire. Eligibility with respect to employer matching and discretionary contributions occurs in the month following completion of one full year of service to Computer Associates International, Inc. (the Company). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). As a result of an acquisition by the Company, the assets of the Preferred Systems, Inc. 401 (k) Savings Plan were transferred into the Plan during the Plan year ended March 30, 1997. Substantially all the assets of the Legent Retirement Security were transferred into the Plan during the Plan year end March 30, 1996, with the remaining assets being transferred into the Plan during the Plan year ended March 30, 1997. The Company also acquired Cheyenne Software, Inc. during the Plan year ended March 30, 1997; however, the assets of the Cheyenne Software, Inc. 401 (k) Plan were not transferred into the Plan until the first quarter of the 1998 Plan year. The Plan was amended for these acquisitions. Contributions During each payroll period, Plan participants may elect to contribute a percentage of their base compensation ranging from 2% to 15%. Each participant can change this election at any time, but not more than once quarterly. To comply with the Tax Reform Act of 1986, pre-tax contributions elected by any participant may not exceed $10,000 and $9,500 for the calendar years ended December 31, 1998 and 1997, respectively. Participants may contribute on an after-tax basis as well. For eligible participants, the Company makes a matching contribution to the Plan on behalf of each participant equal to 50% of such participants contribution up to a maximum of 2.5% of 7 Computer Associates Savings Harvest Plan Notes to Financial Statements (continued) 1. Description of the Plan (continued) the participants base compensation. (Contributions are subject to certain IRS limitations).The matching contributions for the years ended March 30, 1998 and 1997 were $5,427,488 and $4,946,628, of which $3,154,244 and $4,917,947 was funded from Plan forfeitures, respectively. In addition to its matching contribution, the Company may contribute to the Plan on behalf of eligible participants, a discretionary contribution in an amount that the Board of Directors of the Company may, in its sole discretion, determine. The discretionary contributions for the years ended March 30, 1998 and 1997 were $16,864,631 and $15,592,381, respectively. The discretionary contribution is allocated to each participant generally in the same ratio that the participants base compensation for the Plan year bears to the base compensation of all participants for such Plan year. In fiscal year 1997, the Plan was amended to allow for the use of forfeitures for Company discretionary contributions. The discretionary contribution for the year ended March 30, 1998 consisted of 299,150 common shares of the Company valued at $16,864,631. The discretionary contribution for the year ended March 30, 1997 was funded with $4,000,000 from Plan forfeitures and 263,463 common shares of the Company valued at $11,592,381. Participant Accounts A separate account is established and maintained in the name of each participant and reflects the participants balance invested therein. Such balance includes earnings and losses allocated to the participants accounts based upon the percentage investment of the account balance to the total fund balances. Forfeited balances of terminated participants nonvested accounts may be used to reduce future company contributions and fund plan expenses. Vesting The matching and discretionary contributions made by the Company vest as follows: Percentage of Vesting After Years of Services --------------------- ----------------------- 20% 3 40% 4 60% 5 80% 6 100% 7 8 Computer Associates Savings Harvest Plan Notes to Financial Statements (continued) 1. Description of the Plan (continued) In addition, 100% vesting occurs upon death or total disability of a participant, upon attainment of normal retirement age, or upon termination of the Plan. Investment Options The assets of the Plan are invested by Fidelity in eight separate funds: Fidelity Intermediate Bond Fund, which invests in high and upper medium grade fixed income obligations with intermediate maturities. Fidelity Puritan Fund, which invests in a wide variety of securities of U.S. and foreign issuers, including some emerging markets. Fidelity U.S. Equity Index, which invests primarily in the common stock of the 500 companies that make up the Standard and Poors 500 index. Fidelity Magellan Fund, which invests in common stock and securities convertible to common stock. Fidelity Growth and Income Portfolio, which invests in common stock, securities convertible to common stock, preferred stock and fixed income securities. Computer Associates Stock Fund, which is invested in the common stock of the Company. Fidelity Retirement Money Market Portfolio, which invests in high quality, U.S. dollar denominated money market instruments. Fidelity Diversified International Fund, which invests primarily in stocks outside of the United States that are included in the Morgan Stanley EAFE Index. Participants may direct future contributions or transfer their current investment balances between funds on a daily basis in increments of 1%. 9 Computer Associates Savings Harvest Plan Notes to Financial Statements (continued) 1. Description of the Plan (continued) Payment of Benefits The Plan provides for benefit distributions to Plan participants or their beneficiaries upon the participants retirement, termination of employment or death. Any participant may apply to withdraw all or part of his/her vested account balance subject to specific hardship withdrawal provision criteria in the Plan and the approval of Computer Associates Savings Harvest Plan Committee. Participant Loans Receivable Any participant may take a loan from his/her account based upon certain provisions of the Plan being met. Upon the death, retirement or termination of employment of the participant, the Plan may deduct the total unpaid balance or any portion thereof from any payment or distribution to which the participant or his beneficiaries may be entitled. Loans bear interest at market rates and are fixed at the time of application for the loan. The rate at March 30, 1998 was 9.5%. All loans must be repaid in equal semi-monthly installments and generally extend from periods of one to five years. Participant loan fees are borne by the participant and were $27,469 and $28,511 for Plan years 1998 and 1997, and are included in administrative expenses. Administrative Expenses To the extent that the costs of recordkeeping and administration of the funds are not covered by Plan forfeitures, they are borne by the Company. Such costs for Plan years 1998 and 1997 were $70,102 and $98,002, respectively, and were covered by Plan forfeitures. Plan Termination Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. 10 Computer Associates Savings Harvest Plan Notes to Financial Statements (continued) 2. Significant Accounting Policies Valuation of Investments Investments in Fidelity funds and Computer Associates Stock Fund are stated at fair value based upon quoted prices in published sources. The realized net gain or loss on sale of investments is the difference between the proceeds received and the average cost of investments sold. The unrealized net gain or loss is the difference between the fair value and the cost of investments for each year. These combined amounts are included in the statement of changes in net assets available for benefits. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 3. Income Tax Status The Internal Revenue Service has ruled on June 12, 1995, that the Plan qualifies under Section 401(a) of the Internal Revenue Code (the Code), and its related trust is therefore exempt from Federal income tax under Section 501 of the Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code. 11 Computer Associates Savings Harvest Plan Notes to Financial Statements (continued) 4. Reconciliation of Financial Statements to Form 5500 The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
March 30, 1998 -------- Net assets available for benefits per the financial statements $601,336,356 Amounts allocated to withdrawing participants 5,715,610 ----------- Net assets available for benefits per the Form 5500 $595,620,746 ===========
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:
Year ended March 30, 1998 ---------- Benefits paid to participants per the financial statements $66,433,459 Add: Amounts allocated to withdrawing participants at March 30, 1998 5,715,610 Less: Amounts allocated to withdrawing participants at March 30, 1997 3,628,748 ---------- Benefits paid to participants per the Form 5500 $68,520,321
5. Year 2000 Issue (Unaudited) The Plan Sponsor has developed a plan to modify its internal information technology to be ready for the year 2000 and has begun converting critical data processing systems. The project also includes determining whether third party providers have reasonable plans in place to become year 2000 compliant. The Plan Sponsor currently expects the project to be substantially complete by early 1999. The Plan Sponsor does not expect this project to have a significant effect on plan operations. 12 6. Subsequent Event (Unaudited) As of the Plan year end, the Computer Associates Stock Fund consisted principally of 5,072,945 shares valued at $57.75. As of September 21, 1998, the Computer Associates International, Inc. stock price was $31.50. Therefore net assets available for such benefits has decreased by approximately $133,000,000. Schedules 13 Computer Associates Savings Harvest Plan Item 27a Schedule of Assets Held for Investment Purposes March 30, 1998
Identity of Issue, Borrower, Number Current Lessor or Similar Party of Units Cost Value - --------------------------------------------------------------------- Fidelity Intermediate Bond Fund 1,867,350 $19,309,712 $18,990,952 Fidelity Puritan Fund 2,582,411 43,773,490 53,662,491 Fidelity U.S. Equity Index Portfolio 1,112,194 28,480,676 44,142,965 Fidelity Magellan Fund 418,816 35,226,540 45,571,421 Fidelity Growth and Income Portfolio 1,320,219 40,960,836 56,558,178 Fidelity Retirement Money Market Portfolio 57,398,828 57,398,828 57,398,828 Computer Associates Stock Fund* 3,626,594 135,121,961 294,116,810 Fidelity Diversified International Fund 267,586 4,534,206 4,891,481 Participant Loans** 9,138,599 ------------------------ Total $364,806,249 $584,471,725 ======================== *Indicates party-in-interest to the Plan. **Details available upon request.
14 Computer Associates Savings Harvest Plan Item 27d Schedule of Reportable Transactions Year ended March 30, 1998
Number of Purchase Number Sales Cost of Net Gain Identity of Party Involved Purchases Price of Sales Price Assets (Loss) - -------------------------------------------------------------------------------------------------------------------- Category (iii) a series of security transactions in excess of 5% of plan assets: Computer Associates Stock Fund 253 $306,329,341 252 $349,274,028 $295,081,053 $54,192,975 Fidelity Magellan Fund 253 37,810,814 244 36,111,134 34,343,702 1,767,432 Fidelity Growth and Income Portfolio 253 55,927,388 241 46,386,037 43,164,348 3,221,689 Fidelity Retirement Money Market Portfolio 258 286,052,814 253 267,187,746 267,187,746 Fidelity Puritan Fund 251 22,125,719 228 21,978,830 20,272,021 1,706,809 Fidelity U.S. Equity Index Portfolio 251 37,606,012 236 32,030,843 29,133,599 2,897,244 There were no category (i) (ii) or (iv) reportable transactions during the period ended March 30, 1998.
EX-23 2 Exhibit 23(a) Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-20797, as amended, and Form S-8 No. 333-04801) pertaining to the Computer Associates Savings Harvest Plan of Computer Associates International, Inc. and in the related Prospectus of our report dated August 27, 1998, with respect to the Financial statements and schedules of the Computer Associates Savings Harvest Plan included in its Annual Report (Form 11-K) for the year Ended March 30, 1998. /s/ Ernst & Young LLP New York, New York September 24, 1998 -----END PRIVACY-ENHANCED MESSAGE-----