Computer Associates 2016 Annual Report Download - page 37

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• Renewal bookings increased by a percentage in the mid-twenties compared with the year-ago period primarily due to the
aforementioned renewal with a large system integrator. Excluding the large system integrator renewal, renewal bookings
increased by a percentage in the low single digits for fiscal 2016 compared with the year-ago period primarily due to the
increase in renewal bookings relating to our second quarter fiscal 2016 acquisitions.
• Total new product sales increased by a percentage in the mid-single digits for fiscal 2016 compared with the year-ago
period. This increase was primarily due to the new sales in connection with our second quarter fiscal 2016 acquisitions and
renewals, including the aforementioned renewal with a large system integrator.
• Mainframe solutions new product sales, including capacity, increased by a percentage in the high-teens compared with the
year-ago period primarily due to the aforementioned renewal with a large system integrator and new product sales in
connection with other renewals.
• Enterprise solutions new product sales increased by a percentage in the low-single digits compared with the year-ago period
primarily as a result of Enterprise Solutions new product sales associated with our second quarter fiscal 2016 acquisitions.
Excluding our second quarter fiscal 2016 acquisitions, Enterprise Solutions new product sales decreased by a percentage in
the high single digits for fiscal 2016 compared with the year-ago period.
• We expect fiscal 2017 renewals to increase by a percentage in the mid-single digits compared with fiscal 2016.
Expenses
• Total expenses before interest and income taxes decreased 7% compared with fiscal 2015 primarily as a result of a decrease
in non-acquisition personnel costs and a favorable effect from foreign exchange during fiscal 2016. These decreases were
partially offset by an increase in costs from our second quarter fiscal 2016 acquisitions.
Income taxes
• Income tax expense for fiscal 2016 and fiscal 2015 was $315 million and $305 million, respectively.
• Our fiscal 2016 and 2015 effective tax rate was 29.1% and 27.4%, respectively. This increase resulted primarily from the
favorable resolutions of uncertain tax positions in fiscal 2015 relating to the completion of the examination of our U.S.
federal income tax returns for the tax years ended March 31, 2011 and 2012.
Diluted income per common share
• Diluted income per common share from continuing operations decreased to $1.78 from $1.82, primarily due to the
decrease in revenue, partially offset by the decrease in operating expenses and the decrease in the weighted average
common shares outstanding.
Segment results
• Mainframe Solutions revenue decreased primarily due to an unfavorable foreign exchange effect of $125 million and, to a
lesser extent, insufficient revenue from new sales to offset the decline in revenue contribution from renewals. Mainframe
Solutions operating margin for fiscal 2016 increased primarily due to a decrease in personnel-related costs.
• Enterprise Solutions revenue decreased due to an unfavorable foreign exchange effect of $71 million. Excluding the
unfavorable effect of foreign exchange, Enterprise Solutions revenue increased as a result of additional revenue associated
with our second quarter fiscal 2016 acquisitions. Enterprise Solutions operating margin for fiscal 2016 decreased primarily
due to costs from our second quarter fiscal 2016 acquisitions, partially offset by a decrease in non-acquisition personnel-
related costs.
• Services revenue decreased primarily due to an unfavorable foreign exchange effect of $16 million and, to a lesser extent, a
decline in professional services engagements in the first half of fiscal 2016 and during fiscal 2015, partially offset by an
increase in services revenue from our Rally acquisition. Operating margin for Services increased to 7% for fiscal 2016
compared with 3% for fiscal 2015 primarily due to a decrease in personnel-related costs as a result of our prior period
severance actions and a decrease in external consulting costs.
Cash flow from continuing operations
• Net cash provided by continuing operating activities increased slightly due to lower disbursements, lower payments
associated with our Fiscal Year 2014 Rebalancing Plan (Fiscal 2014 Plan) and lower income tax payments, net, offset by a
decrease in cash collections from billings, which included lower single installment payments. There was an overall
unfavorable effect from foreign exchange on net cash provided by continuing operating activities.
Performance Indicators
Management uses several quantitative and qualitative performance indicators to assess our financial results and condition. Each
provides a measurement of the performance of our business and how well we are executing our plan.
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