Computer Associates 2016 Annual Report Download - page 47

for fiscal 2016 decreased compared with the year-ago period primarily due to costs from our second quarter fiscal 2016
acquisitions of Rally and Xceedium, partially offset by a decrease in non-acquisition personnel-related costs.
Enterprise Solutions revenue for fiscal 2015 decreased compared with the year-ago period primarily due to an unfavorable
foreign exchange effect of $25 million for fiscal 2015 and, to a lesser extent, a decrease in sales of Enterprise Solutions products
recognized within the “Software fees and other” line item of our Consolidated Statements of Operations. Enterprise Solutions
operating margin for fiscal 2015 increased compared with the year-ago period primarily as a result of lower commissions and
personnel-related expenses.
Services Fiscal 2016 Fiscal 2015 Fiscal 2014
Revenue $ 326 $ 351 $ 379
Expenses 303 342 357
Segment profit $ 23$ 9$ 22
Segment operating margin 7% 3% 6%
Services segment expenses include cost of professional services and assigned general and administrative expenses that are not
included within the “Cost of professional services” line item of our Consolidated Statements of Operations.
Services revenue for fiscal 2016 decreased compared with fiscal 2015 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 of $18 million from our second quarter fiscal 2016 acquisition of Rally.
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.
Services revenue for fiscal 2015 decreased compared with fiscal 2014 primarily as a result of a decrease in the size and number
of services engagements during fiscal 2015, including non-core engagements with government customers that are not directly
related to our software product sales. We have 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. Operating margin for our Services segment decreased in fiscal 2015 compared with fiscal
2014 as a result of an increase in severance costs associated with the fourth quarter of fiscal 2015 severance actions. Operating
margin for our Services segment also decreased for fiscal 2015 compared with fiscal 2014 as a result of the decrease in revenue
and lower utilization rates for services personnel due to the decrease in the number of services engagements.
Refer to Note 17, “Segment and Geographic Information,” in the Notes to the Consolidated Financial Statements for additional
information.
Bookings — Fiscal 2016 Compared with Fiscal 2015
Total Bookings: For fiscal 2016 and fiscal 2015, total bookings were $4,247 million and $3,609 million, respectively. The increase
in bookings was primarily due to an increase in renewal bookings, including the renewal with a large system integrator in excess
of $500 million that occurred during the second quarter of fiscal 2016 and bookings relating to our second quarter fiscal 2016
acquisitions. This was partially offset by an unfavorable foreign exchange effect of $133 million.
Subscription and Maintenance Bookings: For fiscal 2016 and fiscal 2015, subscription and maintenance bookings were $3,489
million and $2,942 million, respectively. The increase in subscription and maintenance bookings was primarily attributable to an
increase in renewal bookings, including the aforementioned renewal with a large system integrator.
•Renewal Bookings:
Including the Large System Integrator: For fiscal 2016, 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 unfavorable effect of foreign exchange, renewal bookings for fiscal 2016 increased by approximately 30% compared
with the year-ago period. For the fourth quarter of fiscal 2016, our percentage renewal yield was in the mid 90% range. The
average of the renewal yield percentage for the four quarters of fiscal 2016 was slightly above 90%.
Excluding the 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. Excluding the unfavorable effect of foreign exchange,
renewal bookings for fiscal 2016 increased by a percentage in the high single digits compared with the year-ago period.
•License Agreements over $10 million: During fiscal 2016, we executed a total of 48 license agreements with incremental
contract values in excess of $10 million each, for an aggregate contract value of $1,965 million. During fiscal 2015, we
executed a total of 51 license agreements with incremental contract values in excess of $10 million each, for an aggregate
contract value of $1,448 million.
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