Computer Associates 2010 Annual Report Download - page 37

Download and view the complete annual report

Please find page 37 of the 2010 Computer Associates annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

$2,146 million. During fiscal 2009, we renewed a total of 68 license agreements with incremental contract values in excess
of $10 million each, for an aggregate contract value of $2,471 million. The decrease in the dollar value of the agreements in
excess of $10 million was primarily attributable to the large contract renewals that were signed in the second quarter of
fiscal 2009. For fiscal 2010, annualized subscription and maintenance bookings decreased $72 million from the prior year
period to $1,253 million. The weighted average subscription and maintenance license agreement duration in years decreased
slightly from fiscal 2009 to 2010, from 3.61 to 3.54. Although each contract is subject to terms negotiated by the respective
parties, management does not currently expect the weighted average duration of contracts to change materially from current
levels for end-user contracts.
For fiscal 2009 and 2008, our subscription and maintenance bookings were $4,783 million and $4,110 million, respectively.
Subscription and maintenance bookings for fiscal 2009 were favorably affected by an increase in U.S. renewal bookings
compared with the prior year period primarily due to the size and duration of the contracts that were renewed in fiscal 2009,
partially offset by an unfavorable variance due to foreign exchange. During fiscal 2009, we renewed a total of 68 license
agreements with incremental contract values in excess of $10 million each, for an aggregate contract value of $2,471 million.
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. The increase in the dollar value of the agreements in excess of
$10 million was primarily attributable to the execution of several large contract extensions with terms of approximately five
years in the second quarter of fiscal 2009, 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.
Professional services
Professional services revenue primarily includes product implementation, customer training and customer education. The
revenue decrease for fiscal 2010 compared with fiscal 2009 was primarily a result of our customers’ reduced discretionary
spending due to the difficult economic environment.
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 Asia Pacific and Japan (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.
Software fees and other
Software fees and other revenue primarily consists of revenue that is recognized on an up-front basis. This includes revenue
generated through transactions with distributors and volume partners, value-added resellers and exclusive representatives
(sometimes referred to as our “indirect” or “channel” revenue) and certain revenue associated with products sold on an up-
front basis. In fiscal 2009 we recorded $5 million under the license agreement we entered into in connection with a litigation
settlement entered into with Rocket Software, Inc. (Rocket) that expires in fiscal 2014. In fiscal 2010 we recorded $6 million
from a renegotiated payment schedule under this agreement.
Software fees and other revenue increased for fiscal 2010 as compared with fiscal 2009 primarily due to a $39 million
increase in revenue associated with acquired new products and existing application management products sold on an up-front
basis. Approximately $18 million of these revenues were from products of NetQoS, which was acquired during the third
quarter of fiscal 2010.
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 from the aforementioned settlement agreement we entered into with Rocket
partially offset by lower financing fees and other revenue.
26