CA, INC. - 10-Q filing on 2015-01-21

Goodwill, Capitalized Software and Other Intangible Assets

9 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS

NOTE E – GOODWILL, CAPITALIZED SOFTWARE AND OTHER INTANGIBLE ASSETS

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at December 31, 2014 were as follows:



	At December 31, 2014
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	5,719	$	4,857	$	862	$	379	$	483
Internally developed software products	1,486		814		672		403		269
Other intangible assets	837		520		317		254		63
Total capitalized software and other intangible assets	$	8,042	$	6,191	$	1,851	$	1,036	$	815

The gross carrying amounts and accumulated amortization for capitalized software and other intangible assets at March 31, 2014 were as follows:



	At March 31, 2014
	Gross Amortizable Assets		Less: Fully Amortized Assets		Remaining Amortizable Assets		Accumulated Amortization on Remaining Amortizable Assets		Net Assets
	(in millions)
Purchased software products	$	5,706	$	4,849	$	857	$	309	$	548
Internally developed software products	1,561		757		804		397		407
Other intangible assets	846		489		357		249		108
Total capitalized software and other intangible assets	$	8,113	$	6,095	$	2,018	$	955	$	1,063

Based on the capitalized software and other intangible assets recorded through December 31, 2014, the projected annual amortization expense for fiscal year 2015 and the next four fiscal years is expected to be as follows:



	Year Ended March 31,
	2015		2016		2017		2018		2019
	(in millions)
Purchased software products	$	115	$	114	$	113	$	108	$	65
Internally developed software products	149		109		79		37		10
Other intangible assets	59		37		9		2		1
Total	$	323	$	260	$	201	$	147	$	76

In the second quarter of fiscal year 2015, the Company recorded an impairment of $13 million relating to capitalized software and other intangible assets within the Enterprise Solutions segment. This adjustment is a result of the Company’s continued effort to rationalize its product portfolio. The impairment was included in “Amortization of capitalized software costs” in the Condensed Consolidated Statement of Operations for the nine months ended December 31, 2014. Amortization of capitalized software costs was not included in segment expenses (see Note P, “Segment Information,” for additional information).

The Company evaluates the useful lives and recoverability of capitalized software and other intangible assets when events or changes in circumstances indicate that an impairment may exist. These evaluations require complex assumptions about key factors such as future customer demand, technology trends and the impact of those factors on the technology the Company acquires and develops for its products. Impairments or revisions to useful lives could result from the use of alternative assumptions that reflect reasonably possible outcomes related to future customer demand or technology trends for assets within the Enterprise Solutions segment.

Goodwill activity by segment for the nine months ended December 31, 2014 was as follows:



(in millions)	Mainframe Solutions		Enterprise Solutions			Services		Total
Balance at March 31, 2014	$	4,178	$	1,663		$	81	$	5,922
Divestiture	—		(109		)	—		(109		)
Foreign currency translation adjustment	—		(4		)	—		(4		)
Balance at December 31, 2014	$	4,178	$	1,550		$	81	$	5,809