Computer Associates 2007 Annual Report Download - page 48

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For the fiscal year ended March 31, 2006, software fees and other revenue decreased $94 million from the fiscal year ended
March 31, 2005, to $160 million. This reduction is due to a $53 million decrease in prior business model revenue, as ratable
revenue from our business model contracts was recorded as subscription revenue in the Consolidated Statements of
Operations. Additionally, we experienced a decrease in indirect revenue associated with the transition to our subscription
model in July 2004 which represented a $50 million reduction from the prior year as more revenue was deferred as these
indirect contracts were renewed. These decreases were offset by other revenue increases of approximately $9 million.
Financing Fees
Financing fee revenue results from the initial discounting to present value of product sales with extended payment terms
under the prior business model, which required up-front revenue recognition. This discount initially reduced the related
installment accounts receivable and is referred to as “Unamortized discounts.” The related unamortized discount is amortized
over the life of the applicable license agreement and is reported as financing fee revenue. Under our business model, we have
not recorded additional unamortized discounts since we generally do not recognize revenue on an up-front basis for sales of
products with extended payment terms. As expected, for fiscal years 2007 and 2006, financing fee revenue continued to
decline, reflecting a decrease of $19 million and $32 million, respectively, from the prior fiscal years to $26 million and
$45 million, respectively. The decrease in financing fee revenue for all these years is attributable to the discontinuance of
offering license agreements under the prior business model and is expected to decline to zero over the next several years.
Professional Services
Professional services revenue for fiscal year 2007 increased $36 million, or 11%, from fiscal year 2006 to $351 million. The
increase was primarily attributable to professional services engagements relating to product implementations associated with
products acquired subsequent to the fourth quarter of fiscal year 2006 of approximately $13 million, growth in security
software engagements which utilize Access Control and Identity Management solutions and project and portfolio
management services tied to Clarity solutions.
Professional services revenue for fiscal year 2006 increased $75 million, or 31%, from fiscal year 2005 to $315 million. The
increase was largely attributable to the same factors noted above. Professional service engagements relating to acquired
companies resulted in approximately $23 million of additional revenue for fiscal year 2006 as compared to the prior fiscal year.
Total Revenue by Geography
The following table presents the amount of revenue earned from sales to unaffiliated customers in the United States and
international regions and corresponding percentage changes for the fiscal years ended March 31, 2007, 2006 and 2005. These
comparisons of financial results are not necessarily indicative of future results.
(IN MILLIONS) 2007 % 2006 % CHANGE 2006 % 2005 % CHANGE
FISCAL YEAR 2007 FISCAL YEAR 2006
United States $ 2,131 54 $ 2,006 53 6% $ 2,006 53 $ 1,878 52 7%
International 1,812 46 1,766 47 3% 1,766 47 1,705 48 4%
$ 3,943 100 $ 3,772 100 5% $ 3,772 100 $ 3,583 100 5%
Note — previously reported information has been reclassified to exclude discontinued operations
For fiscal year 2007, revenue in the United States increased by approximately $125 million, or 6%, as compared with the prior
fiscal year, and was primarily attributable to growth from acquisitions and higher subscription revenue resulting from an
increase in new deferred subscription value. For fiscal year 2007, International revenue decreased by approximately
$28 million, which was offset by a favorable impact from foreign exchange of approximately $74 million.
For fiscal year 2006, as compared to fiscal year 2005, the increase in revenue from the United States was primarily attributable
to sales of products related to companies acquired during fiscal year 2006, an increase in new deferred subscription value in
prior periods as well as an increase in professional services revenue, partially offset by decreases in revenue from
maintenance, finance fees and software fees and other revenues. International revenue for fiscal year 2006 increased
$61 million, or 4%, as compared with fiscal year 2005, primarily due to increased new deferred subscription value in prior
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