Computer Associates 2010 Annual Report Download - page 34

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The license and maintenance agreements that contribute to subscription and maintenance bookings represent binding
payment commitments by customers over periods that range generally from three to five years on a weighted average basis,
although individual customer commitments can be for longer or shorter periods. These current period bookings are often
renewals of prior contracts that also had various durations, usually from three to five years. The amount of new subscription
and maintenance bookings recorded in a period is affected by the volume, duration and value of contracts renewed during
that period. Our subscription and maintenance bookings typically increase in each consecutive quarter during a fiscal year,
with the first quarter having the least amount of bookings and the fourth quarter having the highest bookings. However,
subscription and maintenance bookings may not always follow the pattern of increasing in consecutive quarters during a
fiscal year, and the quarter-to-quarter differences in subscription and maintenance bookings may vary. Given the varying
durations of the contracts being renewed, year-over-year comparisons on bookings are not always indicative of the overall
bookings trend. We believe our revenue backlog is our best indicator of future revenue due to the high percentage of our
revenue that is recognized from license agreements that are already committed and being recognized ratably.
Additionally, period-to-period changes in subscription and maintenance bookings do not necessarily correlate to changes in
cash receipts. The contribution to current period revenue from subscription and maintenance bookings from any single license
or maintenance agreement is relatively small, since revenue is recognized ratably over the applicable term for these
agreements.
Weighted average subscription and maintenance license agreement duration in years — The weighted average subscription and
maintenance license agreement duration in years reflects the duration of all subscription and maintenance agreements
executed during a period, weighted by the total contract value of each individual agreement.
Annualized subscription and maintenance bookings — Annualized subscription and maintenance bookings is an indicator that
normalizes the bookings recorded in the current period to account for contract length. It is calculated by dividing the total
value of all new subscription and maintenance license agreements entered into during a period by the weighted average
subscription and license agreement duration in years for all such subscription and maintenance license agreements recorded
during the same period.
Total revenue backlog — Total revenue backlog represents the aggregate amount we expect to recognize as revenue in the
future as either subscription and maintenance revenue, professional services revenue or software fees and other revenue
associated with contractually committed amounts billed or to be billed as of the balance sheet date. Total revenue backlog is
composed of amounts recognized as liabilities in our Consolidated Balance Sheets as deferred revenue (billed or collected) as
well as unearned amounts yet to be billed under subscription and maintenance and software fees and other agreements.
Amounts are classified as current or non-current depending on when they are expected to be earned and therefore recognized
as revenue. The portion of the total revenue backlog that relates to subscription and maintenance agreements is recognized
as revenue evenly on a monthly basis over the duration of the underlying agreements and is reported as subscription and
maintenance revenue in our Consolidated Statements of Operations.
“Deferred revenue (billed or collected)” is composed of: (i) amounts received from customers in advance of revenue
recognition, (ii) amounts billed but not collected for which revenue has not yet been earned, and (iii) amounts received in
advance of revenue recognition from financial institutions where we have transferred our interest in committed installments.
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