Computer Associates 2013 Annual Report Download - page 39

in order to obtain greater cost certainty. Thereafter, the license generally renews for the same period of time on the same
terms and conditions, but subject to the customer’s payment of our then prevailing subscription license fee.
For our mainframe solutions, the majority of our licenses provide customers with the right to use one or more of our
products up to a specific license capacity, generally measured in millions of instructions per second (MIPS). For these
products, customers may acquire additional capacity during the term of a license by paying us an additional license fee. For
our enterprise solutions, our licenses may provide customers with the right to use one or more of our products limited to a
number of servers, users or copies, among other things. Customers may license these products for additional servers, users
or copies, etc., during the term of a license by paying us an additional license fee.
SaaS is another delivery model we offer to our customers who prefer to utilize our technology off-premises with little to no
infrastructure required. Our SaaS offerings are typically licensed using a subscription fee, most commonly on a monthly or
annual basis.
Our services are typically delivered on a time and materials basis, but alternative pay arrangements, such as fixed fee or
staff augmentations, can also be arranged.
Executive Summary
The following is a summary of the analysis of our results contained in our MD&A.
Total revenue for fiscal 2013 decreased 4% to $4,643 million compared with $4,814 million in fiscal 2012 primarily due to an
unfavorable foreign exchange effect and a decrease in subscription and maintenance revenue. Subscription and maintenance
revenue declined primarily due to lower new product and mainframe capacity sales in prior periods. For fiscal 2012,
software fees and other revenue included $39 million in revenue under a license agreement we entered into in connection
with a litigation settlement (refer to the ‘‘Software Fees and Other’’ section under Results of Operations for additional
information). The unfavorable foreign exchange effect for fiscal 2013 was $95 million. Due to our sales performance during
fiscal 2013 and the resulting decrease in our current revenue backlog, we expect a year-over-year decrease in total revenue
for fiscal 2014 compared with fiscal 2013.
Total bookings for fiscal 2013 decreased 12% to $4,114 million compared with $4,663 million in fiscal 2012 primarily as a
result of a year-over-year decline in mainframe renewals, enterprise and mainframe new product sales and mainframe
capacity sales reflected in subscription and maintenance bookings and to a lesser extent a decrease in professional services
bookings. These decreases were slightly offset by an increase in software fees and other bookings that are or will be
recognized as software fees and other revenue and were primarily driven by growth in our SaaS offerings. For fiscal 2012,
software fees and other bookings included the $39 million from the license agreement we entered into in connection with a
litigation settlement. Renewal bookings, which generally do not include new product and capacity sales and professional
services arrangements, for fiscal 2013 declined by a high single digit percentage compared with fiscal 2012, which is slightly
better than the expected decline of approximately 10%. For the fourth quarter of fiscal 2013, our percentage renewal yield
was in the low 90% range. We currently expect the value of our fiscal 2014 renewals to increase by a percentage in the high
single digits, excluding a large customer renewal that is expected to occur in the fourth quarter of fiscal 2014, compared
with fiscal 2013. We expect a majority of the increase in renewals to occur in the second half of fiscal 2014.
Total expense before interest and income taxes for fiscal 2013 decreased 4% to $3,281 million compared with $3,425 million
in fiscal 2012. The decrease was primarily attributable to a decrease in selling and marketing expenses, a decrease in general
and administrative expenses and a favorable foreign exchange effect on operating expenses for fiscal 2013. The decrease in
operating expenses for fiscal 2013 compared with fiscal 2012 was also due to $35 million of income from an intellectual
property transaction recognized in ‘‘Other (gains) expenses, net’’ in the first quarter of fiscal 2013. Partially offsetting these
decreases was an increase in amortization of capitalized software costs, which includes an impairment of $55 million of our
purchased software intangible assets. We currently expect the costs associated with our fiscal 2014 re-balancing actions to
unfavorably affect operating expenses for fiscal 2014 (see Note 19, ‘‘Subsequent Events,’’ in the Notes to the Consolidated
Financial Statements for additional information).
Income before interest and income taxes for fiscal 2013 decreased 2% to $1,362 million compared with $1,389 million in
fiscal 2012, which reflects the overall decrease in revenue.
Tax expense for fiscal 2013 decreased 13% to $363 million compared with $416 million in fiscal 2012, primarily as a result of
a decrease in income before taxes, and from resolutions of uncertain tax positions relating to U.S and non-U.S. jurisdictions
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