Computer Associates 2006 Annual Report Download - page 68

March 31,
2006
March 31,
2005
(restated)
(in millions)
Deferred Subscription Value:
Deferred subscription revenue (collected) — current.................... $1,517 $1,407
Deferred subscription revenue (collected) — noncurrent ................. 448 273
Deferred subscription revenue current, billed ......................... 534 314
Deferred subscription value — current, uncollected .................... 476 661
Deferred subscription value — noncurrent, uncollected, related to current
accounts receivable . ......................................... 1,204 1,133
Deferred subscription value — noncurrent, uncollected .................. 1,236 1,698
Aggregate deferred subscription value balance ........................ $5,415 $5,486
Approximately 11% of the total deferred subscription value balance of approximately $5.42 billion at March 31,
2006 is associated with multi-year contracts signed with the U.S. Federal Government and other U.S. state and local
governmental agencies that are generally subject to annual fiscal funding approval and/or may be terminated at the
convenience of the government. While funding under these contracts is not assured, we do not believe any
circumstances exist which might indicate that such funding will not be approved and paid in accordance with the
terms of our contracts. For any contracts with governmental agencies who are first-time customers that are subject
to annual fiscal funding approval, we generally do not record the deferred subscription value for the unbilled portion
of the contract until the funding is approved. We also receive contracts from non-U.S. governmental agencies that
contain similar provisions. The total balance of deferred subscription value related to non-U.S. governmental
agencies that may be terminated at the convenience of the agencies is not material to the overall deferred
subscription value balance.
Unbilled amounts under the Company’s business model are collectible over one to five years. As of March 31, 2006,
on a cumulative basis, approximately 58%, 87%, 97%, 99% and 100% of amounts due from customers recorded
under the Company’s business model come due within fiscal years ended 2007 through 2011, respectively.
Unbilled amounts under the prior business model are collectible over three to six years. As of March 31, 2006, on a
cumulative basis, approximately 33%, 53%, 68%, 82% and 94% of amounts due from customers recorded under the
prior business model come due within fiscal years ended 2007 through 2011, respectively.
Fiscal Year 2006 compared to Fiscal Year 2005
Operating Activities
Cash generated from continuing operating activities for fiscal year 2006 of $1.38 billion declined by approximately
10% compared to the prior year’s cash from continuing operations of $1.53 billion. The decrease in cash generated
from continuing operations was the result of several factors. The Company experienced an increase of
approximately $254 million in collections on accounts receivable compared to the prior year. This increase
was more than offset by year over year increases in payments for taxes of approximately $195 million, incremental
restitution fund payments of $75 million, and higher payments to vendors and employees of approximately
$165 million. The level of payments to vendors in the current year was favorably impacted by the Company’s
concerted effort to extend payment terms. In fiscal year 2006, the Company experienced an increase in accounts
payable and accrued expenses of approximately $106 million, compared to the prior year which experienced a
decrease of $141 million.
Investing Activities
Cash used in investing activities was approximately $847 million compared to $740 million in the prior year. The
change in cash from investing activities primarily relates to $1.01 billion of cash used to fund recent acquisitions.
Partly offsetting the cash used for acquisitions was $398 million in cash received from the sales of marketable
securities. In addition, the Company also entered into three sale/leaseback transactions during the second half of
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