Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Robert Breza – RBC Capital Markets.
Robert Breza – RBC Capital Markets
I’m just wondering, as you look at the cash flow outlook and the guidance, can you help us understand what you’re assuming relative to maybe some investments as it relates to the balance sheet? Specifically, you guys have made great progress with DSOs which helps a little bit but I would assume you have to make some assumptions around DSOs increasing and the impact there to cash flow? Then, maybe just as we’re talking about cash flow if you can talk a little bit about your assumptions? Deferred revenue was down a little bit this quarter relative to my expectations and maybe just comment the difference between that and what you’re seeing in your backlog?
Ahmed Rubaie
In terms of our cash flow assumptions for the current fiscal year, you’re absolutely right, the level of DSO improvements that we saw in the last couple of quarters is not sustainable or repeatable. So, when you look at reconciling last year deliver to the projection this year, and be mindful that this is the projection as we enter the year so we’ll continue to narrow that bandwidth as we go quarter-to-quarter but, as you reconcile from where we ended last year to what we’re projecting for the fiscal year 2010, recall there is an element of about $8 million of insurance proceeds that we had in the first quarter of last year.
In terms of the DSO improvement, again not all of that is sustainable. So, reconciling that you back out about $8 or $9 million from the $89, you get to $80, a little bit in terms of what is repeatable on DSO and you get to that range of $70 to $80 million. In terms of the deferred revenue piece and the backlog, at the end of the day, that’s really truly a arithmetic calculation in terms of what goes in to our final cash flow assumption. So, there’s really nothing noteworthy to discuss on that front Rob.
Operator
Your next question comes from Greg Dunham – Deutsche Bank Securities.
Greg Dunham – Deutsche Bank Securities
Looking at the on-demand metric and the maintenance business together, clearly when you look at that maintenance stream it’s been $70 million plus for the last five years so the growth in subscription revenue hasn’t come at the expense of maintenance customers switching over. However, when you look at the adoption of software as a service solutions in larger enterprises that seems to be picking up. Are you seeing legacy customers switch from old versions to SAS? And if so, are there things that you’re trying to do to encourage that? How difficult is that transition and what should investors expect going forward?
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