Computer Associates 2013 Annual Report Download - page 40

that are not expected to recur. The positive resolution of a tax audit subsequent to the end of fiscal 2013 is expected to
favorably affect tax expense for fiscal 2014 (see Note 19, ‘‘Subsequent Events,’’ in the Notes to the Consolidated Financial
Statements for additional information).
Diluted income per common share from continuing operations for fiscal 2013 was $2.07 compared with $1.90 in fiscal 2012,
primarily reflecting an increase in income from continuing operations, our repurchases of common shares and a decrease in
our fiscal 2013 effective tax rate.
For fiscal 2013, our segment results were as follows:
For fiscal 2013, Mainframe Solutions revenue decreased from the year ago period by $123 million, or 5%. The reduction
was driven primarily by an unfavorable foreign exchange effect of $56 million, $39 million in revenue received in the third
quarter of fiscal 2012 under a license agreement we entered into in connection with a litigation settlement (see the
‘‘Software Fees and Other’’ section under Results of Operations for additional information), and a decrease in new product
and capacity sales in prior periods. The increase in Mainframe Solutions operating margin for fiscal 2013 was primarily a
result of the decrease in selling and marketing expenses, a favorable effect of foreign exchange on operating expenses, a
decrease in general and administrative expenses and a decrease in severance costs.
For fiscal 2013, Enterprise Solutions revenue decreased from the year ago period by $48 million, or 3%, primarily due to an
unfavorable foreign exchange effect of $32 million and lower new product sales from prior periods. Within Enterprise
Solutions revenue, there was a decrease in revenue from our service assurance, automation and data management products,
partially offset by an increase in revenue attributable to our ITKO and Nimsoft products. Enterprise Solutions operating
margin for fiscal 2013 increased by one percentage point from 8 percent to 9 percent as a result of the income from a
$35 million intellectual property transaction in the first quarter of fiscal 2013 (see ‘‘Other gains, net’’ under Results of
Operations for additional information), which contributed two percentage points to Enterprise Solutions operating margin in
fiscal 2013, as well as a decrease in severance costs compared with fiscal 2012. These favorable items were offset by our
additional investments in ITKO and Nimsoft products.
For fiscal 2013, Services revenue and expenses compared with fiscal 2012 remained consistent. Services operating margin
was 6% for fiscal 2013 and fiscal 2012.
Total revenue backlog for fiscal 2013 decreased 8% to $7,774 million compared with $8,473 million in fiscal 2012. The
decrease was primarily due to the decline of total bookings in fiscal 2013 and prior periods and the increase in the
percentage of bookings recognized as up-front revenue in software fees and other revenue in fiscal 2013, which is not
included in revenue backlog. The current portion of revenue backlog for fiscal 2013 decreased 4% to $3,563 million
compared with $3,714 million in fiscal 2012. Excluding the effect of foreign exchange, the current portion of revenue
backlog decreased 3%. Based on fiscal 2013 performance and our expectation that our renewal portfolio for fiscal 2014 will
be back-end loaded, we expect a continued decline in current revenue backlog into the second half of fiscal 2014. Generally,
we believe that a change in the current portion of revenue backlog on a year-over-year basis is an indicator of future
subscription and maintenance revenue performance due to the high percentage of our revenue that is recognized from
license agreements that are already committed and being recognized ratably.
Cash provided by operating activities-continuing operations for fiscal 2013 decreased 6% to $1,408 million compared with
$1,505 million in fiscal 2012. The decrease was primarily due to the decrease in cash collections from billings of
$285 million, partially offset by the decrease in vendor disbursements, payroll and other disbursements, net of $101 million
and the decrease in income tax payments of $87 million. For fiscal 2013, there was an increase in single installment
payments of $193 million. Product development and enhancements expenses are expected to increase in future periods as
the amount capitalized for internally developed software costs decreases (see ‘‘Amortization of Capitalized Software Costs’’
under Results of Operations for additional information). This will result in additional operating cash outflows relating to
development expenses for fiscal 2014. In addition, we currently expect the payments associated with our fiscal 2014
re-balancing actions (see Note 19, ‘‘Subsequent Events,’’ in the Notes to the Consolidated Financial Statements for
additional information) and an increase in cash taxes to have unfavorable effects on cash flows from operations for fiscal
2014. As a result, we expect a year-over-year decrease in cash flows from operations for fiscal 2014 compared with fiscal
2013.
24