Computer Associates 2004 Annual Report Download - page 46

Weighted-Average License Agreement Duration in Years — The weighted-average license agreement duration in
years represents the sum of the duration of all software licenses executed during a fiscal year, weighted by each individual
software license’s contract value. The annual weighted average duration of 2.78 and 2.81 years for the fiscal years 2004
and 2003, respectively, were derived from the following quarterly new deferred subscription revenue amounts and
weighted-average durations in years, respectively:
Fiscal Year 2004 Fiscal Year 2003
Weighted- Weighted-
New Deferred Average New Deferred Average
Subscription Duration Subscription Duration
Revenue in Years Revenue in Years
(dollars in millions)
Fourth Quarter ...................................................................................... $ 836 2.70 $ 629 2.85
Third Quarter ........................................................................................ 670 2.90 538 2.80
Second Quarter .................................................................................... 405 2.70 394 2.80
First Quarter .......................................................................................... 387 2.85 322 2.75
$2,298 2.78 $1,883 2.81
We believe license agreement durations averaging approximately three years, which is lower than the historical duration
of our license agreements, increase the value customers receive from our software licenses by giving customers
the flexibility to vary their software mix as their needs change. We also believe this flexibility improves our customer
relationships and encourages greater accountability by the Company to each of our customers.
Results of Operations
Revenue
The following table presents the percentage of total revenue and the percentage of period-over-period dollar change for
the revenue line items in our Consolidated Statements of Operations for the fiscal years ended March 31, 2004, 2003,
and 2002. These comparisons of financial results are not necessarily indicative of future results.
Fiscal Year 2004 Fiscal Year 2003
Percentage Percentage Percentage Percentage
of Total of Dollar of Total of Dollar
Revenue Change Revenue Change
2004 2003 2004/2003 2003 2002 2003/2002
Revenue:
Subscription revenue ........................................ 60% 47% 39% 47% 29% 71%
Software fees and other .................................. 9% 11% (12%) 11% 13% (10%)
Maintenance .................................................... 18% 24% (19%) 24% 32% (21%)
Financing fees .................................................. 6% 10% (37%) 10% 15% (35%)
Professional services ........................................ 7% 8% (6%) 8% 11% (18%)
Total revenue ................................................ 100% 100% 8% 100% 100% 5%
Total Revenue
Total revenue for the fiscal year ended March 31, 2004, increased $249 million from the fiscal year ended March 31,
2003, to $3.276 billion. This increase in total revenue was primarily due to the transition to our Business Model that began
during the third quarter of fiscal year 2001. This transition resulted in an increase in subscription revenue from the prior
fiscal year, partially offset by an anticipated decrease in maintenance and financing fees as described below. Professional
services and software fees and other revenue decreased $55 million for fiscal year 2004 as described below. In addition, in
fiscal year 2004, there was a positive impact to revenue of $173 million compared to fiscal year 2003 due to fluctuations
in foreign currency exchange rates, primarily associated with the strengthening of both the euro and the British pound
versus the U.S. dollar. Continued cautious capital spending by our existing and potential customers impacted bookings
of new license agreements and revenue in fiscal year 2004.
Total revenue for the fiscal year ended March 31, 2003, increased $141 million from the fiscal year ended March 31, 2002,
to $3.027 billion. This increase in total revenue was primarily due to the transition to our Business Model. Professional
services and software fees and other revenue decreased $94 million for fiscal year 2003 as described below. In addition, in
fiscal year 2003, there was a positive impact to revenue of $81 million compared to fiscal year 2002 due to fluctuations
in foreign currency exchange rates. This foreign exchange rate impact was fully offset by the impact of the sale of our
interBiz™unit in April 2002, which had contributed approximately $82 million of revenue in fiscal year 2002. Cautious capital
CA 2004 FORM 10-K | PAGE 18