Computer Associates 2016 Annual Report Download - page 42

Download and view the complete annual report

Please find page 42 of the 2016 Computer Associates annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 108

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108

government customers that are not directly related to our software product sales. We also experienced a decline in professional
services engagements that are connected to new product sales, due to a decrease in our new product sales. There was also an
unfavorable foreign exchange effect of $6 million for fiscal 2015.
Software Fees and Other
Software fees and other revenue consists of revenue that is recognized on an up-front basis and also includes our SaaS revenue.
Upfront revenue 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). Our SaaS revenue is recognized as the services are provided,
generally ratably over the term of the SaaS arrangement, rather than up-front.
Software fees and other revenue for fiscal 2016 increased compared with fiscal 2015 due to an increase of $70 million from
revenue associated with our second quarter fiscal 2016 acquisitions, mainly due to SaaS revenue from Rally. This increase was
partially offset by an unfavorable foreign exchange effect of $13 million for fiscal 2016 and a decrease in the percentage of
enterprise solutions product sales recognized on an up-front basis during the first half of fiscal 2016.
Software fees and other revenue for fiscal 2015 increased slightly compared with fiscal 2014 primarily as a result of an increase
of $14 million in SaaS revenue, offset by a decrease of $12 million in sales of enterprise solutions products recognized on an up-
front basis. There was also an unfavorable foreign exchange effect of $6 million for fiscal 2015.
Total Revenue by Geography
The following table presents the amount of revenue earned from sales to unaffiliated customers in the United States and
international regions and corresponding percentage changes for fiscal 2016, 2015 and 2014:
Fiscal 2016
Compared With
Fiscal 2015
Fiscal 2015
Compared With
Fiscal 2014
(dollars in millions)
2016(1)
%Of
Total 2015(1)
%Of
Total
%
Change 2015(1)
%Of
Total 2014(1)
%Of
Total
%
Change
United States $ 2,585 64% $ 2,615 61% (1)% $ 2,615 61% $ 2,645 60% (1)%
International 1,440 36% 1,647 39% (13)% 1,647 39% 1,767 40% (7)%
Total $ 4,025 100% $ 4,262 100% (6)% $ 4,262 100% $ 4,412 100% (3)%
(1) Information presented excludes the results of our discontinued operations.
Revenue in the United States decreased by $30 million, or 1%, for fiscal 2016 compared with fiscal 2015, primarily due to a
decrease in subscription and maintenance revenue and professional services revenue, as described above, partially offset by
revenue associated with our second quarter fiscal 2016 acquisitions. International revenue decreased by $207 million, or 13%,
for fiscal 2016 compared with fiscal 2015, due to an unfavorable foreign exchange effect of $212 million.
Revenue in the United States decreased by $30 million, or 1%, for fiscal 2015 compared with fiscal 2014, primarily due to a
decrease in subscription and maintenance revenue and professional services revenue, as described above. International revenue
decreased by $120 million, or 7%, for fiscal 2015 compared with fiscal 2014, primarily due to an unfavorable foreign exchange
effect of $71 million and a decrease in subscription and maintenance revenue within the Europe, Middle East and Africa region.
Price changes do not have a material effect on revenue in a given period as a result of our ratable subscription model.
Expenses
Operating Expenses
Operating expenses for fiscal 2016 decreased compared with fiscal 2015 primarily as a result of a decrease in non-acquisition
personnel costs of $129 million and a favorable effect from foreign exchange of $69 million during fiscal 2016, which includes a
year-over-year change in our foreign exchange derivative contracts reflected within other expenses, net. These decreases were
partially offset by an increase in costs from our second quarter fiscal 2016 acquisitions of $149 million.
Operating expenses for fiscal 2015 decreased compared with fiscal 2014 primarily as a result of a decrease in costs associated
with our Fiscal Year 2014 Rebalancing Plan (Fiscal 2014 Plan), as described below, a favorable effect from foreign exchange
and a decrease in selling and marketing costs driven by a decrease in commissions expense due to lower new sales during fiscal
2015. These decreases were partially offset by an increase in severance costs of $40 million as a result of our fourth quarter fiscal
2015 severance actions.
32