Computer Associates 2008 Annual Report Download - page 90

The following table summarizes the expense section of the Company’s Consolidated Statements of Operations for the
reported prior periods indicated, giving effect to the reclassifications described above.
(IN MILLIONS)
PREVIOUSLY
REPORTED
1
REVISED
PREVIOUSLY
REPORTED
1
REVISED
YEAR ENDED
MARCH 31, 2007
YEAR ENDED
MARCH 31, 2006
Cost of professional services $ 326 $ 326 $ 263 $ 263
Cost of licensing and maintenance — 244 — 236
Amortization of capitalized software costs 354 354 449 449
Selling and marketing — 1,269 — 1,327
Selling, general and administrative 1,653 — 1,578 —
General and administrative — 646 — 547
Product development and enhancements 712 544 697 559
Commissions, royalties and bonuses 338 — 394 —
Depreciation and amortization of other intangible assets 148 148 134 134
Other expenses (gains), net (13) (13) (15) (15)
Restructuring and other 201 201 88 88
Charge for in-process research and development costs 10 10 18 18
Total expenses before interest and taxes $ 3,729 $ 3,729 $ 3,606 $ 3,606
1 As reported in the Company’s Annual Report on Form 10-K for the period ended March 31, 2007.
Balance Sheet: During the fourth quarter of fiscal year 2008, the Company changed its method of accounting for
unearned revenue on billed and uncollected amounts due from customers from a “net method” of presentation to a
“gross method” of presentation. Under the gross method, unearned revenue on billed but uncollected installments is
reported as deferred revenue in the liability section of the balance sheet, while under the net method, unearned revenue
on billed but uncollected installments is reflected as a contra-asset and netted against the accounts receivable balances.
The Company believes the gross method is preferable because it reflects the future committed cash flows expected to
be collected from trade and installment accounts receivable, and separately records a liability for revenue to be earned
on amounts billed in advance of revenue recognition. The Company also believes this method is preferable since the
customer is typically in receipt of a significant portion of the value to be delivered under the contract upon execution of
the license agreements. The change from the net method to the gross method has been applied retrospectively. As a
result of this change, “Trade and installment accounts receivable, net” current and noncurrent for the year ended
March 31, 2007 increased by approximately $612 million and $3 million, respectively, with “Total deferred revenue billed
(collected)” increasing by the same amounts. This change in accounting did not affect the Consolidated Statements of
Operations or total Cash Flows from Operations for the periods presented. The components of “Deferred revenue (billed
or collected)” as of March 31, 2008 and 2007 are as follows:
(IN MILLIONS) 2008
PREVIOUSLY
REPORTED
2007
3
REVISED
2007
YEAR ENDED MARCH 31,
Current:
Subscription $ 2,271 $ 1,753 $ 1,985
Maintenance 184 154 198
Professional services
1
166 — 137
Financing obligations 43 63 63
Total deferred revenue (billed or collected) — current 2,664 1,970 2,383
Noncurrent:
Subscription 1,001 495 834
Professional services
2
22 —20
Financing obligations 13 39 39
Total deferred revenue (billed or collected) — noncurrent 1,036 534 893
Total deferred revenue (billed or collected) $ 3,700 $ 2,504 $ 3,276
1 Deferred Professional services revenue amounts were previously included in “Accrued expenses and other current liabilities.”
2 Deferred Professional services revenue noncurrent amounts were previously included in “Other noncurrent liabilities.”
3 As reported in the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2007.
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