Computer Associates 2012 Annual Report Download - page 34

Under a perpetual license, the customer has the right to use the licensed program for an indefinite period of time upon payment of a
one-time license fee. If the customer wants to receive maintenance, the customer is required to pay an additional annual maintenance
fee.
Under a subscription license, the customer has the right to usage and maintenance of the licensed products during the term of the
agreement. Under our flexible licensing terms, customers can license our software products under multi-year licenses, with most
customers choosing terms of one-to-five years, although longer terms may sometimes be negotiated by customers in order to obtain
greater cost certainty. Thereafter, the license generally renews for the same period of time on the same terms and conditions, but
subject to the customer’s payment of our then prevailing subscription license fee.
For our mainframe solutions, the majority of our licenses provide customers with the right to use one or more of our products up to a
specific license capacity, generally measured in millions of instructions per second (MIPS). For these products, customers may
acquire additional capacity during the term of a license by paying us an additional license fee. For our enterprise solutions, our
licenses may provide customers with the right to use one or more of our products limited to a number of servers, users or gigabytes,
among other things. Customers may license these products for additional servers, users or gigabytes, etc., during the term of a license
by paying us an additional license fee.
SaaS is another delivery model we offer to our customers who prefer to utilize our technology off-premises with little to no
infrastructure required. Our SaaS offerings are typically licensed using a subscription fee, most commonly on a monthly or annual
basis.
Our services are typically delivered on a time and materials basis, but alternative pay arrangements, such as fixed fee or staff
augmentations, can also be arranged.
Executive Summary
The following is a summary of the analysis of our results contained in our MD&A.
Total revenue for fiscal 2012 increased 9% to $4,814 million compared with $4,429 million in fiscal 2011. The increase was
primarily attributable to an increase in subscription and maintenance revenue, an increase in software fees and other revenue and to a
lesser extent an increase in professional services 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. For fiscal 2012, total revenue reflected a favorable
foreign exchange effect of $89 million compared with fiscal 2011. Revenue increased 7% from existing products and services and 2%
from acquired businesses (which we define as businesses acquired within the prior 12 months). The growth in revenue from existing
products and services was positively affected by the aforementioned license agreement with a large IT outsourcer, the favorable
effect of foreign exchange and increases in software fees and other revenue. Excluding the foreign exchange effect, revenue increased
5% from existing products and services and 2% from acquired businesses.
Total bookings for fiscal 2012 decreased 5% to $4,663 million compared with $4,888 million in fiscal 2011. Bookings for fiscal 2011
include a license agreement with a large IT outsourcer for approximately $500 million executed in the fourth quarter of fiscal 2011.
The decrease in bookings attributable to the effect of this large contract being booked in fiscal 2011 was partially offset by an
increase in fiscal 2012 bookings that are recognized as software fees and other revenue and an increase in professional services
bookings (primarily attributable to an increase in professional service engagements and to a lesser extent our fiscal 2012 acquisition
of Base Technologies). Our total new product and capacity sales for fiscal 2012 increased by a low single digit percentage from fiscal
2011. The increase was primarily a result of new product sales within the Mainframe Solutions segment, partially offset by a decrease
in new product sales within the Enterprise Solutions segment. Capacity sales for fiscal 2012 were consistent with fiscal 2011.
Renewal bookings for fiscal 2012, which generally do not include new product and capacity sales and professional services
arrangements, were slightly better than the 15% year-over-year decline we previously expected. This decline was primarily due to the
aforementioned license agreement with the large IT outsourcer executed in the fourth quarter of fiscal 2011. In addition, weighted
average subscription and maintenance license agreement duration in years was consistent with fiscal 2011. We currently expect our
fiscal 2013 renewal portfolio to decline in the single-digits compared with fiscal 2012. For fiscal 2012, our renewal yield was slightly
below 90%.
Total expense before interest and income taxes of $3,425 million for fiscal 2012 grew 8%, compared with $3,175 million in fiscal
2011. The increase in operating expenses for fiscal 2012 compared with fiscal 2011 was primarily due to an increase in costs
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