CA Announces Agreement to Sell ACCPAC Subsidiary

Sale Completes CA Strategy To Exit Business Applications Market

Islandia, NY -- Computer Associates International, Inc. today announced that it has entered into a definitive agreement to sell its 90 percent ownership of its ACCPAC International, Inc. subsidiary to The Sage Group, plc (Sage). The total value of the transaction is $110 million. After transaction and other costs, CA will receive approximately $88 million in cash for its 90 percent share.

The sale is subject to regulatory approvals and is expected to close by the end of February. It culminates CA's multi-year effort to exit the business applications market and focus on the company's announced strategy of offering the industry's most complete management software portfolio. ACCPAC specializes in accounting, CRM, HR, warehouse management, manufacturing, EDI, and point-of-sale software for small and medium-sized businesses.

"CA's strong commitment to addressing the enterprise management challenges of our customers has made us a world leader in our core management software markets," said CA Chairman and CEO Sanjay Kumar. "The sale of ACCPAC to Sage supports that focus - while providing opportunities for ACCPAC employees and transitioning customers to a company that is ideally positioned to care for them."

Financial Impact
The sale of ACCPAC is expected to result in a book gain of approximately $88 million before taxes, which will be recorded upon closing of the transaction. The closing is expected in the company's fourth fiscal quarter ending March 31, 2004. The projected impact on operating (non-GAAP) earnings is expected to be immaterial in the December and March quarters.

As a result of the proposed sale, CA is required to present the assets and liabilities of ACCPAC as "Assets Held for Sale" pursuant to Financial Accounting Standards Board Statement Number 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." Therefore, beginning December 31, 2003, these assets and liabilities will be presented separately on the balance sheet, and the income statement will reflect the operating results of ACCPAC as discontinued operations, net of taxes. This change will cause CA's reported top-line revenue and related expenses to be reduced by ACCPAC's actual revenues and expenses, and CA's historical revenues and expenses will be reclassified accordingly.

CA estimates that ACCPAC will generate approximately $28 million in revenue and incur $27 million of expenses before taxes for the quarter ending December 31, 2003. As a result of the accounting treatment described above, CA's previous projections for revenue and expenses will be reduced by $28 million and $27 million, respectively, for that quarter. There will be a similar impact on the quarter ending March 31, 2004.
ACCPAC, headquartered in Pleasanton, Calif., serves more than 540,000 business customers through more than 7,000 channel partners around the world. The Sage Group, plc, headquartered in the U.K., is a leading international supplier of accounting and business management software solutions and services for small to medium-sized enterprises. In North America, Sage is known as Best Software, Inc.

Source: Computer Associates