Computer Associates 2012 Annual Report Download - page 37

Download and view the complete annual report

Please find page 37 of the 2012 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 106

  • 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

Generally, we believe that an increase in the current portion of revenue backlog on a year-over-year basis is a positive indicator of
future subscription and maintenance revenue growth due to the high percentage of our revenue that is recognized from license
agreements that are already committed and being recognized ratably. Within bookings, we also consider the yield on our renewal
portfolio. We define “renewal yield” as the percentage of the renewable portion of the prior contract (e.g., the maintenance value)
realized in current period bookings. The baseline for calculating renewal yield is an estimate affected by various factors including
contractual renewal terms, price increases and other conditions. We estimate the yield based on a review of material transactions
representing a substantial majority of the dollar value of renewals during the current period. Year-over-year changes in renewal yield
may not be materially correlated to year-over-year changes in bookings.
Additionally, period-to-period changes in subscription and maintenance bookings do not necessarily correlate to changes in cash
receipts. The contribution to current period revenue from subscription and maintenance bookings from any single license or
maintenance agreement is relatively small, since revenue is recognized ratably over the applicable term for these agreements.
Weighted Average Subscription and Maintenance License Agreement Duration in Years — The weighted average subscription and
maintenance license agreement duration in years reflects the duration of all subscription and maintenance agreements executed during
a period, weighted by the total contract value of each individual agreement. Weighted average subscription and maintenance license
agreement duration in years can fluctuate from period to period depending on the mix of license agreements entered into during a
period. Weighted average duration information is disclosed in order to provide additional understanding of the volume of our
bookings.
Total Revenue Backlog — Total revenue backlog represents the aggregate amount we expect to recognize as revenue in the future as
either subscription and maintenance revenue, professional services revenue or software fees and other revenue associated with
contractually committed amounts billed or to be billed as of the balance sheet date. Total revenue backlog is composed of amounts
recognized as liabilities in our Consolidated Balance Sheets as deferred revenue (billed or collected) as well as unearned amounts yet
to be billed under subscription and maintenance and software fees and other agreements. Classification of amounts as current and
noncurrent depends on when such amounts are expected to be earned and therefore recognized as revenue. Amounts that are expected
to be earned and therefore recognized as revenue in 12 months or less are classified as current, while amounts expected to be earned
in greater than 12 months are classified as noncurrent. The portion of the total revenue backlog that relates to subscription and
maintenance agreements is recognized as revenue evenly on a monthly basis over the duration of the underlying agreements and is
reported as subscription and maintenance revenue in our Consolidated Statements of Operations. Generally, we believe that an
increase in the current portion of revenue backlog on a year-over-year basis is a positive indicator of future subscription and
maintenance revenue growth.
“Deferred revenue (billed or collected)” is composed of: (i) amounts received from customers in advance of revenue recognition,
(ii) amounts billed but not collected for which revenue has not yet been earned, and (iii) amounts received in advance of revenue
recognition from financial institutions where we have transferred our interest in committed installments (referred to as “Financing
obligations and other” in Note 8, “Deferred Revenue” in the Notes to our Consolidated Financial Statements).
25