Computer Associates 2009 Annual Report Download - page 37

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several large contract extensions with terms of approximately five years in the second quarter, two of which had a
combined contract value of approximately $550 million. For fiscal 2009, annualized subscription and maintenance
bookings decreased $54 million from the prior year period to $1,325 million. The weighted average subscription and
maintenance license agreement duration in years increased to 3.61 for fiscal 2009 compared with 2.98 for fiscal 2008
due to an increase in the number and dollar values of contracts executed with contract terms longer than historical
averages. Although each contract is subject to terms negotiated by the respective parties, management does not
currently expect the duration of contracts to increase materially beyond historical levels.
For fiscal 2008 and 2007, we added subscription and maintenance bookings of $4,110 million and $3,610 million,
respectively. Bookings for fiscal 2008 were favorably affected by growth in sales of new products and services,
continued improvement in the management of contract renewals, and an increase in the number and dollar amounts of
large contracts during the fiscal year. During fiscal 2008, we renewed a total of 61 license agreements with incremental
contract values in excess of $10 million each, for an aggregate contract value of $1,396 million. During fiscal 2007, we
renewed 42 license agreements with incremental contract values in excess of $10 million each, for an aggregate
contract value of $1,142 million. For fiscal 2008, annualized subscription and maintenance bookings increased
$151 million from the prior year period to $1,379 million.
Professional Services
Professional services revenue primarily includes product implementation, customer training and customer education. The
revenue decrease for fiscal 2009 compared with fiscal 2008 was primarily due to our concerted efforts to reduce the
number of low margin service contracts in all regions, revenue decreases from customer delays in signing professional
service contracts due to the difficult economic environment and revenue decreases in the APJ region, which was due to
our decision to stop providing professional services in certain markets in conjunction with our change in that region
from a direct to an indirect sales model.
The increase in professional services revenue for fiscal 2008 compared with fiscal 2007 was driven primarily by growth
in the volume of Project and Portfolio Management, Identity and Access Management and Service Management
implementation projects in fiscal 2008.
Software Fees and Other
Software fees and other revenue primarily consists of revenue that is recognized on an up-front basis as required by
SOP 97-2. This includes revenue generated through transactions with distribution and original equipment manufacturer
channel partners (sometimes referred to as our “indirect” or “channel” revenue) and certain revenue associated with new
or acquired products sold on an up-front basis. Also included is financing fee revenue, which results from the
discounting of product sales recognized on an up-front basis with extended payment terms to present value. Revenue
recognized on an up-front basis results in higher revenue for the current period than if the same revenue had been
recognized ratably under our subscription model.
For fiscal 2009, software fees and other revenue increased from fiscal 2008 primarily due to an $11 million increase in
our indirect business revenue and $5 million due to the license agreement we entered into with Rocket Software, Inc.
(Rocket). These increases were partially offset by lower financing fees and other revenues. Refer to Note 8
“Commitments and Contingencies” for additional information relating to the Rocket agreement.
For fiscal 2008, software fees and other revenue slightly decreased compared with fiscal 2007 due to lower financing
fee revenue due to the decrease in the remaining number of contracts from the prior business model with extended
payment terms, which was partially offset by revenue increases in our indirect business.
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