Computer Associates 2006 Annual Report Download - page 59

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Expenses
The following table presents expenses as a percentage of total revenue and the percentage of period-over-period
dollar change for the expense line items in our Consolidated Statements of Operations for the fiscal years ended
March 31, 2006, 2005, and 2004. These comparisons of financial results are not necessarily indicative of future
results.
2006 2005
2006/
2005 2005 2004
2005/
2004
Percentage of
Total
Revenue
Percentage
of
Dollar
Change
Percentage of
Total
Revenue
Percentage
of
Dollar
Change
Fiscal Year 2006 Fiscal Year 2005
(restated) (restated) (restated)
Operating expenses:
Amortization of capitalized software
costs ........................... 12% 12% — 12% 14% (3)%
Cost of professional services ........... 7% 6% 18% 6% 7% 2%
Selling, general, and administrative ...... 42% 38% 18% 38% 40% 3%
Product development and enhancements . . . 18% 20% (2)% 20% 21% 1%
Commissions, royalties and bonuses...... 10% 9% 16% 9% 8% 27%
Depreciation and amortization of other
intangible assets .................. 4% 4% 3% 4% 4% (3)%
Other gains/expenses, net.............. — — — — 2% N/A
Restructuring and other ............... 2% 1% 214% 1% — N/A
Charge for in-process research and
development costs ................. — — — — — —
Shareholder litigation and government
investigation settlements ............ — 6% N/A 6% 5% 39%
Total operating expenses .............. 96% 96% 5% 96% 100% 4%
Interest expense, net ................. 1% 3% (61)% 3% 4% (9)%
Note — Amounts may not add to their respective totals due to rounding.
Amortization of Capitalized Software Costs
Amortization of capitalized software costs consists of the amortization of both purchased software and internally
generated capitalized software development costs. Internally generated capitalized software development costs are
related to new products and significant enhancements to existing software products that have reached the
technological feasibility stage. Amortization of capitalized software costs for fiscal years 2006 and 2005
increased $2 million and decreased $16 million, respectively, from the prior fiscal years to $449 million and
$447 million, respectively. The increase in 2006 was predominantly due to the Company’s current year acquisitions.
The decrease in 2005 was primarily due to certain purchased software assets becoming fully amortized in 2005. We
recorded amortization of purchased software products for the fiscal years ended March 31, 2006, 2005, and 2004 of
$401 million, $406 million, and $423 million, respectively. We recorded amortization of internally generated
capitalized software development costs for the fiscal years ended March 31, 2006, 2005, and 2004 of $48 million,
$41 million, and $40 million, respectively.
Cost of Professional Services
Cost of professional services consists primarily of the personnel-related costs associated with providing
professional services and training to customers. Cost of professional services for fiscal year 2006 increased
$42 million from fiscal year 2005 to $272 million, mostly due to increased sales of professional services. The
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