Computer Associates 2005 Annual Report Download - page 52

Table of Contents
Results of Operations
Revenue
The following table presents the percentage of total revenue and the percentage of period-over-period dollar change for the revenue line
items in our Consolidated Statements of Operations for the fiscal years ended March 31, 2005, 2004, and 2003. These comparisons of
financial results are not necessarily indicative of future results.
Fiscal Year 2005 Fiscal Year 2004
Percentage Percentage
Percentage of of Percentage of of
Total Dollar Total Dollar
Revenue Change Revenue Change
2005/ 2004/
2005 2004 2004 2004 2003 2003
(restated) (restated) (restated) (restated)
Revenue:
Subscription revenue 72% 63% 21% 63% 52% 33%
Maintenance 12% 16% (15%) 16% 21% (20%)
Software fees and other 7% 10% (23%) 10% 12% (9%)
Financing fees 2% 4% (43%) 4% 7% (39%)
Professional services 7% 7% 4% 7% 8% (6%)
Total revenue 100% 100% 7% 100% 100% 9%
Total Revenue
Total revenue for the fiscal year ended March 31, 2005 increased $240 million from the fiscal year ended March 31, 2004, to
$3.560 billion. This increase was partially a result of the transition to our Business Model, which contributed additional subscription
revenue from the prior fiscal year. The increase in total revenue was also partially attributable to the sales of Netegrity products which
contributed approximately $32 million of revenue in the second half of fiscal year 2005. In addition, as our international contracts are
denominated in local currencies, the strengthening of both the euro and the British pound as well as certain other currencies against the
U.S. dollar increased our revenue by approximately $103 million. Total revenue in fiscal year 2005 as compared with fiscal year 2004
was negatively impacted by anticipated decreases in maintenance and financing fees resulting from how these items are accounted for
under the Business Model. The recognition of maintenance and financing fees under our Business Model is discussed further under
“Subscription revenue” in this MD&A. Our revenues were further negatively impacted by the fact that beginning in the second quarter of
fiscal year 2005, revenue from certain contracts in our channel business is recorded as new deferred subscription revenue, which will be
ratably recognized into subscription revenue in future periods compared to prior periods when the majority of such revenue was
recognized up-front.
Total revenue for the fiscal year ended March 31, 2004 increased $263 million from the fiscal year ended March 31, 2003, to
$3.320 billion. This increase in total revenue was primarily due to the transition to our Business Model that began during the third
quarter of fiscal year 2001. This transition resulted in an increase in subscription revenue from fiscal year 2003, partially offset by an
anticipated decrease in maintenance and financing fees as described below. Professional services and software fees and other revenue
collectively decreased by $47 million for fiscal year 2004 as described below. In addition, in fiscal year 2004, there was a positive
impact to revenue of $173 million compared to fiscal year 2003 due to fluctuations in foreign currency exchange rates, primarily
associated with the strengthening of both the euro and the British pound versus the U.S. dollar. Continued cautious capital spending by
our existing and potential customers impacted bookings of new license agreements and revenue in fiscal year 2004.
Subscription Revenue
Subscription revenue represents the portion of revenue ratably recognized on software license agreements entered into under our
Business Model. Many of the licenses recorded between October 2000, when our Business Model was implemented, and the end of
fiscal year 2005 continued to contribute to subscription revenue on a monthly, ratable basis. As a result, subscription revenue for fiscal
year 2005 includes the ratable recognition of bookings recorded in fiscal year 2005, as well as bookings recorded between October 2000
and the end of fiscal year 2004. This is the primary reason for the increase in subscription revenue in fiscal year 2005 versus fiscal year
2004.
Subscription revenue for the fiscal year ended March 31, 2005 increased $443 million from fiscal year 2004, to $2.544 billion. For the
years ended March 31, 2005 and 2004, we added new deferred subscription revenue related to our direct business of $3.493 billion and
$2.298 billion, respectively. Licenses executed under our Business Model in the years ended March 31, 2005 and 2004 had weighted
average durations of 3.1 and 2.8 years, respectively. Annualized deferred subscription revenue represents the total value of all new
software license agreements entered into during a period divided by the weighted average life of all such license agreements recorded
during the same period. Annualized
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