Computer Associates 2007 Annual Report Download - page 45

Download and view the complete annual report

Please find page 45 of the 2007 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 144

  • 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
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144

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, 2007, 2006, and 2005.
These comparisons of financial results are not necessarily indicative of future results.
2007 2006 2007/2006 2006 2005 2006/2005
PERCENTAGE
OF TOTAL
REVENUE
PERCENTAGE
OF DOLLAR
CHANGE
PERCENTAGE
OF TOTAL
REVENUE
PERCENTAGE
OF DOLLAR
CHANGE
FISCAL YEAR 2007 FISCAL YEAR 2006
Revenue:
Subscription revenue 78% 75% 8% 75% 72% 10%
Maintenance 10% 11% (6)% 11% 12% (3)%
Software fees and other 3% 4% (33)% 4% 7% (37)%
Financing fees —% 1% (42)% 1% 2% (42)%
Professional services 9% 9% 11% 9% 7% 31%
Total revenue 100% 100% 5% 100% 100% 5%
Note — Fiscal year 2006 previously reported information has been reclassified to exclude discontinued operations
Total Revenue
Total revenue for the fiscal year ended March 31, 2007 increased $171 million, or 5%, from the fiscal year ended March 31,
2006, to $3.94 billion. As more fully described below, the increase was primarily due to growth in subscription revenue and
professional services revenue.These increases were partly offset by declines in software fees and other revenue, maintenance,
and financing fee revenue. Total revenue was favorably impacted by foreign exchange of approximately $74 million for the
fiscal year ended March 31, 2007.
Total revenue for the fiscal year ended March 31, 2006 increased $189 million from the fiscal year ended March 31, 2005, to
$3.77 billion. As more fully described below, the increase was partially attributable to higher subscription revenue associated
with the continued transition to our business model and to the sales of recently acquired products which contributed
approximately $125 million of separately identifiable revenue. These increases were partially offset by decreases in
maintenance and financing fee revenue, resulting from the way these items are accounted for under our business model,
as well as by lower revenue in our indirect or channel business due to the conversion to our subscription model since the
beginning of the second quarter of fiscal year 2005. Prior to that time, the majority of revenue from the indirect business was
recognized on an up-front basis. Total revenue for fiscal year 2006 was negatively impacted by foreign exchange of
approximately $17 million, as compared with fiscal year 2005.
Subscription Revenue
Subscription revenue represents the portion of revenue ratably recognized on software license agreements entered into under
our business model. Some of the licenses recorded between October 2000, when our business model was implemented, and
the third quarter of fiscal year 2007 continued to contribute to subscription revenue on a monthly, ratable basis. As a result,
subscription revenue for the fiscal year ended March 31, 2007 includes the ratable recognition of contracts recorded in the
fiscal year 2007, as well as contracts and related renewals recorded between October 2000 and the third quarter of fiscal year
2007, depending on the contract length. As we reach maturity of our model and based upon the timing of remaining prior
business model contract renewals, the impact of the transition to our business model on revenues will decline.
Under the prior business model, maintenance revenue was separately identified and was reported on the “Maintenance” line
item in the Consolidated Statements of Operations. Under our business model, maintenance that is bundled with product
sales is not separately identified in our customers’ license agreements and therefore is included within the “Subscription
revenue” line item in the Consolidated Statements of Operations. Under the prior business model, financing fee revenue was
also separately identified in the Consolidated Statements of Operations. Since the adoption of our business model, financing
33