Computer Associates 2013 Annual Report Download - page 44

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Revenue
As more fully described below, total revenue decreased in fiscal 2013 compared with fiscal 2012 and increased in fiscal 2012
compared with fiscal 2011. During fiscal 2013, total revenue reflected an unfavorable foreign exchange effect of $95 million
compared with fiscal 2012 and a decrease in subscription and maintenance revenue. During fiscal 2012, total revenue
reflected a favorable foreign exchange effect of $89 million compared with fiscal 2011. 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.
Subscription and Maintenance Revenue
Subscription and maintenance revenue is the amount of revenue recognized ratably during the reporting period from:
(i) subscription license agreements that were in effect during the period, generally including maintenance that is bundled
with and not separately identifiable from software usage fees or product sales, (ii) maintenance agreements associated with
providing customer technical support and access to software fixes and upgrades that are separately identifiable from
software usage fees or product sales, and (iii) license agreements bundled with additional products, maintenance or
professional services for which VSOE has not been established. These amounts include the sale of products directly by us,
as well as by distributors and volume partners, value-added resellers and exclusive representatives to end-users, where the
contracts incorporate the right for end-users to receive unspecified future software products, and other contracts entered
into in close proximity or contemplation of such agreements.
The decrease in subscription and maintenance revenue for fiscal 2013 compared with fiscal 2012 was primarily attributable
to an unfavorable foreign exchange effect of $82 million. The decrease in subscription and maintenance revenue was also
attributable to a decrease in both current and prior fiscal years’ new product and mainframe capacity sales. In addition, the
increased percentage of bookings recognized as software fees and other revenue during fiscal 2013 had an unfavorable effect
on subscription and maintenance revenue. If the percentage of these bookings increases in the future, this will continue to
have an unfavorable effect on subscription and maintenance revenue.
The increase in subscription and maintenance revenue for fiscal 2012 compared with fiscal 2011 was primarily due to
revenue associated with a five-year license agreement with a large IT outsourcer for approximately $500 million that was
executed in the fourth quarter of fiscal 2011. In addition, for fiscal 2012, there was a favorable foreign exchange effect of
$79 million compared with fiscal 2011.
Professional Services
Professional services revenue primarily includes product implementation, consulting, customer training and customer
education. Professional services revenue for fiscal 2013 was consistent with fiscal 2012.
Professional services revenue increased in fiscal 2012 compared with fiscal 2011, primarily due to our fiscal 2012 acquisition
of Base Technologies.
Software Fees and Other
Software fees and other revenue primarily consists of revenue that is recognized on an up-front basis. This includes revenue
associated with enterprise solutions products sold on an up-front basis directly by our sales force or through transactions
with distributors and volume partners, value-added resellers and exclusive representatives (sometimes referred to as our
‘‘indirect’’ or ‘‘channel’’ revenue). It also includes our SaaS revenue, which is recognized as the services are provided,
generally ratably over the term of the SaaS arrangement, rather than up-front.
During the third quarter of fiscal 2012, we recognized $39 million in revenue under a license agreement we entered into in
connection with a litigation settlement with Rocket Software, Inc. (Rocket) during fiscal 2009 that resolved our claims
against Rocket for copyright infringement and trade secret misappropriation. Rocket did not admit any wrongdoing in
connection with this settlement. As part of this settlement, Rocket agreed to license technology from us, including source
code authored several years ago and related trade secrets that were the subject of the litigation. The amount received
during the third quarter of fiscal 2012 reflects the final amount owed to us, which was not scheduled to be paid in full until
fiscal 2014 (the Final License Payment). Rocket paid this amount in advance at their discretion, unsolicited by us and
without any discount or concession by us.
Software fees and other revenue decreased for fiscal 2013 compared with fiscal 2012 due to the Final License Payment
recognized in the third quarter of fiscal 2012, partially offset by an increase of $24 million in revenue from our SaaS
offerings and an increase of $6 million in revenue from our perpetual enterprise solutions products.
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