Computer Associates 2007 Annual Report Download - page 47

representing approximately $190 million of new deferred subscription value. In contrast, there were ten such contracts
executed in fiscal year 2005, representing approximately $278 million of new deferred subscription value.
Annualized new deferred subscription value represents the annual amount of new deferred subscription value to be
recognized as subscription revenue from our direct business in future years based on the weighted average duration of
the underlying contracts. It is calculated by dividing the total value of all new term-based software license agreements entered
into during a period in our direct business by the weighted average life of all such license agreements recorded during the same
period. The annualized new deferred subscription value for fiscal year 2007 increased approximately $83 million, or 10%, as
compared with fiscal year 2006, to $944 million. The annualized new deferred subscription value during fiscal year 2006
decreased approximately $266 million, or 24% from the comparable prior fiscal year to approximately $861 million.
Maintenance
Maintenance revenue for fiscal year 2007 decreased $24 million, or 6%, from the comparable prior fiscal year to $391 million.
The decline in maintenance revenue was primarily attributable to our transition to, and the increased number of license
agreements under, our business model, where maintenance revenue, bundled along with license revenue, is reported on the
“Subscription revenue” line item on the Consolidated Statements of Operations. The combined maintenance and license
revenue on these types of license agreements is recognized on a monthly basis ratably over the term of the agreement.We are
unable to quantify the impact that our transition to our business model had on maintenance revenue since maintenance
bundled with software licenses is not separately identified.The decline in maintenance revenue was partly offset by separately
identifiable maintenance revenue recorded from acquisitions completed subsequent to the fourth quarter of fiscal year 2006
of approximately $40 million. Maintenance revenue attributable to the indirect business increased $13 million compared to
comparable prior fiscal year to $67 million.
Maintenance revenue for the fiscal year ended March 31, 2006 decreased $11 million, or 3%, from the comparable prior year
to $415 million. As noted above, the decline was principally a result of our transition to, and increased number of license
agreements under, our business model, where maintenance revenue is bundled along with license revenue, and is reported on
the “Subscription revenue” line item in the Consolidated Statements of Operations. We cannot quantify the impact that the
transition to our business model had on maintenance revenue since maintenance bundled with software licenses under our
business model is not separately identifiable. Maintenance revenue from our indirect business declined $5 million from the
comparable prior period to $54 million. Partially offsetting these declines was an increase of $49 million associated with
acquisitions completed prior to March 31, 2006.
Software Fees and Other
Software fees and other revenue consists of revenue related to distribution and original equipment manufactures (OEM)
channel partners (sometimes referred to as our “indirect” or “channel” revenue) that has been recorded on an up-front sell-
through basis, certain revenue associated with acquisitions prior to the transition to our business model, revenue from joint
ventures, and other revenue. Our historical practice has been that revenue from acquisitions is initially recorded on the
acquired company’s systems, generally under a perpetual or up-front model, and is typically converted to our ratable model
within the first fiscal year after the acquisition. As new contracts are entered into that contain the right to receive unspecified
future software products, revenue is recognized ratably as subscription revenue on a monthly basis over the term of the
agreement. For fiscal year 2007, the Company recorded approximately $40 million of revenue on an up-front basis relating to
acquisitions that occurred subsequent to the fourth quarter of fiscal year 2006. We expect that a portion of this revenue will
continue to be recorded on an up-front basis as “Software fees and other” which will initially result in higher total revenue for
the period than if this revenue had been transitioned to our ratable subscription model in accordance with our historical
practice.
For the fiscal year ended March 31, 2007, software fees and other revenue for fiscal year 2007 decreased $52 million, or 33%,
from the comparable prior year period to $108 million. The decline is principally due to lower revenue from acquisitions which
had transitioned to our business model, as well as the divestiture of certain business units and joint ventures such as Ingres
Corporation and MultiGen.
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