Computer Associates 2012 Annual Report Download - page 35

associated with our recent acquisitions, an increase in personnel-related costs for selling and marketing and an increase in expenses
for product development and enhancements.
Income before interest and income taxes increased $135 million, or 11%, in fiscal 2012 compared with fiscal 2011, which reflects the
higher growth rate in revenue compared with expenses.
Tax expense increased $30 million, or 8%, in fiscal 2012 compared with fiscal 2011, primarily as a result of an increase in income
before taxes in fiscal 2012, partially offset by the recognition of tax benefits related to an investment in a foreign subsidiary and a
decrease in the valuation allowance from the recognition of state net operating loss carryforwards due to a change in forecasted state
taxable income.
Diluted income per common share from continuing operations for fiscal 2012 was $1.90, compared with $1.60 in fiscal 2011,
primarily reflecting an increase in operating income, our repurchases of common shares and a decrease in our fiscal 2012 tax rate.
For fiscal 2012, our segment performance results were as follows:
Mainframe Solutions revenue increased $133 million, or 5%, from fiscal 2011. The increase was primarily attributable to a license
agreement with a large IT outsourcer for approximately $500 million executed in the fourth quarter of fiscal 2011, a $39 million
license fee received as final payment pursuant to a litigation settlement with Rocket Software, Inc. (Final License Payment) and
revenue recognized from new mainframe capacity sales that were primarily sold in the second half of fiscal 2011. Mainframe
Solutions operating margin for fiscal 2012 was 56% compared with 54% for fiscal 2011. The increase in operating margin for fiscal
2012 was primarily due to the increase in revenue.
Enterprise Solutions revenue increased $197 million, or 12%, from fiscal 2011. The increase was primarily due to growth in revenue
from our security (identity and access management), virtualization and service automation and project and portfolio management
products. The increase in revenue was partially offset by the increase in development investment and selling and marketing expenses.
Operating margins were consistent with fiscal 2011.
Services revenue and expenses increased from fiscal 2011 as a result of our fiscal 2012 acquisition of Base Technologies. For fiscal
2012 compared with fiscal 2011, Services operating margin remained consistent.
Total revenue backlog decreased 3% to $8,473 million compared with $8,760 million from fiscal 2011. The decrease was primarily
attributable to an unfavorable effect of foreign exchange, the decrease in year-over-year bookings associated with the aforementioned
license agreement with a large IT outsourcer signed in the fourth quarter of fiscal 2011, and the increase in bookings recognized as
software fees and other revenue (which would not be reflected in the total revenue backlog at fiscal year-end). Current revenue
backlog was unfavorably affected by foreign exchange. Excluding this effect, total current revenue backlog would have increased
1%. Generally, we believe that an increase in the current portion of revenue backlog on a year-over-year basis is a positive indicator
of future subscription and maintenance revenue growth.
For fiscal 2012, cash provided by operating activities-continuing operations increased 9% to $1,505 million compared with $1,377
million in fiscal 2011. The increase was primarily due to an increase in cash collections from billings of $368 million, offset by an
increase in income tax payments of $198 million and an increase in vendor, payroll and other disbursements of $42 million.
During the first quarter of fiscal 2012, we sold our Internet Security business and during the first quarter of fiscal 2011, we sold our
Information Governance business. The results of these business operations are presented as discontinued operations.
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.
Our predominantly subscription-based business model is less common among our competitors in the software industry and it may be
difficult to compare the results for many of our performance indicators with those of our competitors. The following is a summary of
the principal performance indicators that management uses to review performance:
YEAR ENDED MARCH 31,
CHANGE
PERCENT
CHANGE2012 2011
(dollars in millions)
Total revenue $ 4,814 $ 4,429 $ 385 9%
Income from continuing operations $ 938 $ 823 $ 115 14%
Cash provided by operating activities — continuing operations $ 1,505 $ 1,377 $ 128 9%
Total bookings $ 4,663 $ 4,888 $ (225) (5)%
Subscription and maintenance bookings $ 3,776 $ 4,256 $ (480) (11)%
Weighted average subscription and maintenance license agreement duration in years 3.46 3.46 — —%
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