Computer Associates 2007 Annual Report Download - page 43

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Our predominantly subscription-based business model is unique among our competitors in the software industry and it may
be difficult to compare our results for many of our performance indicators with those of our competitors. The following is a
summary of the principal quantitative performance indicators that management uses to review performance:
FOR THE YEAR ENDED MARCH 31,
(IN MILLIONS) 2007 2006 CHANGE
PERCENT
CHANGE
Subscription revenue $ 3,067 $ 2,837 $ 230 8%
Total revenue $ 3,943 $ 3,772 $ 171 5%
Subscription revenue as a percent of total revenue 78% 75% 3% 4%
Deferred subscription value $ 5,800 $ 5,415 $ 385 7%
New deferred subscription value (direct) $ 3,107 $ 2,610 $ 497 19%
New deferred subscription value (indirect) $183 $ 195 $ (12) (6)%
Weighted average license agreement duration in years (direct) 3.29 3.03 0.26 9%
Cash provided by continuing operating activities $ 1,068 $ 1,380 $ (312) (23)%
Income from continuing operations, net of taxes $121 $ 160 $ (39) (24)%
AS OF MARCH 31,
(IN MILLIONS) 2007 2006 CHANGE
PERCENT
CHANGE
Total cash, cash equivalents, and marketable securities $ 2,280 $ 1,865 $ 415 22%
Total debt $ 2,583 $ 1,816 $ 767 42%
Note — previously reported information has been reclassified to exclude discontinued operations
Analyses of our performance indicators, including general trends, can be found in the “Results of Operations” and “Liquidity
and Capital Resources” sections of this MD&A. The performance indicators discussed below are those that we believe are
unique due to our subscription-based business model.
Subscription Revenue — Subscription revenue is the ratable revenue recognized in a period from amounts previously recorded
as deferred subscription value. If the weighted average life of our license agreements remains constant, an increase in deferred
subscription value will ultimately result in an increase in subscription revenue.
Deferred Subscription Value — Under our business model, the portion of the license contract value that has not yet been earned
creates what we refer to as deferred subscription value. As license revenue from “term-based” subscription licenses is ratably
recognized (evenly on a monthly basis), it is reported as “Subscription revenue” on our Consolidated Statements of
Operations, and the deferred subscription value attributable to that contract is correspondingly reduced.
Committed installment payments due under software license agreements are not always paid in equal annual installments
over the life of a license agreement. If a customer pays for software prior to the recognition of revenue, the amount is reported
as a liability entitled “Deferred subscription revenue (collected)” on our Consolidated Balance Sheets. The amount collected
from a customer under a license agreement for the next twelve months but not yet recognized as revenue is reported as a
liability entitled “Deferred subscription revenue (collected) — current” on our Consolidated Balance Sheets. The amount
collected under a license agreement for periods subsequent to the next twelve months, which will be recognized as revenue on
a monthly basis only in those future years, is reported as a liability entitled “Deferred subscription revenue (collected) —
noncurrent” on our Consolidated Balance Sheets. The increase or decrease in payments by customers attributable to
subsequent fiscal periods is reported as an operating activity entitled “Deferred subscription revenue (collected) — current”
and “Deferred subscription revenue (collected) — noncurrent” in our Consolidated Statements of Cash Flows.
If we transfer our financial interest in future committed installments under a license agreement to a third party financing
institution, for which revenue has not yet been recognized, we record the liability associated with the receipt of the cash as
“Financing obligations (collected)” on our Consolidated Balance Sheets. The amounts received from third party financing
institutions are classified as either current or non-current, depending upon when amounts are expected to be payable under
the license agreement with the customer. When the payment is due from the customer to the third party, we relieve our
liability to the financing institution and recognize the previously financed amount as “Deferred subscription revenue
(collected)” on our Consolidated Balance Sheets. The increase or decrease in financing obligations is reported as an
31