Computer Associates 2012 Annual Report Download - page 44

costs include a portion of selling and marketing costs, licensing and maintenance costs, product development costs, general and
administrative costs and amortization of the cost of internally developed software. Allocated segment costs primarily include indirect
selling and marketing costs and general and administrative costs that are not directly attributable to a specific segment. The basis for
allocating shared and indirect costs between the Mainframe Solutions and Enterprise Solutions segments is dependent on the nature
of the cost being allocated and is either in proportion to segment revenues or in proportion to the related direct cost category.
Expenses for the Services segment consist only of direct costs and there are no allocated or indirect costs for the Services segment.
Segment expenses do not include the following: share-based compensation expense; amortization of purchased software;
amortization of other intangible assets; derivative hedging gains and losses; and severance, exit costs and related charges associated
with the fiscal 2007 restructuring plan.
Segment financial information for fiscal 2012, 2011 and 2010 is as follows:
MAINFRAME SOLUTIONS FISCAL 2012 FISCAL 2011 FISCAL 2010
Revenue $ 2,612 $ 2,479 $ 2,515
Expenses 1,140 1,129 1,162
Segment profit $ 1,472 $ 1,350 $ 1,353
Segment operating margin 56% 54% 54%
For fiscal 2012, Mainframe Solutions revenue increased $133 million from fiscal 2011. The year-over-year increase in Mainframe
Solutions revenue for fiscal 2012 was primarily attributable to $55 million from the five-year license agreement with a large IT
outsourcer executed in the fourth quarter of fiscal 2011, a favorable foreign exchange effect of $53 million and $39 million from the
aforementioned Final License Payment. 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, partially offset by a $22
million severance charge relating to our Fiscal 2012 Plan.
For fiscal 2011, Mainframe Solutions revenue and operating margin were not materially different compared with fiscal 2010.
ENTERPRISE SOLUTIONS FISCAL 2012 FISCAL 2011 FISCAL 2010
Revenue $ 1,820 $ 1,623 $ 1,424
Expenses 1,668 1,501 1,350
Segment profit $ 152 $ 122 $ 74
Segment operating margin 8% 8% 5%
For fiscal 2012, Enterprise Solutions revenue increased $197 million from fiscal 2011 primarily due to growth in revenue from our
security (identity and access management), virtualization and service automation and service and portfolio management
products. Revenue from these products is recognized in either subscription and maintenance revenue or software fees and other
revenue. Enterprise Solutions revenue was also positively affected by $25 million from the five-year license agreement with a large
IT outsourcer executed in the fourth quarter of fiscal 2011. For fiscal 2012, Enterprise Solutions revenue reflected a favorable foreign
exchange effect of $29 million compared with fiscal 2011. Enterprise Solutions operating margin for each of fiscal 2012 and fiscal
2011 was 8%. Operating margin was affected by an increase in revenue for fiscal 2012, offset by the increased development
investment and selling and marketing expenses within our Enterprise Solutions segment, as well as a severance charge of $19 million
relating to our Fiscal 2012 Plan.
For fiscal 2011, Enterprise Solutions revenue increased $199 million from fiscal 2010. The year-over-year increase in Enterprise
Solutions revenue was primarily due to growth within our service assurance, service and portfolio management and security (identity
and access management) products. The increase in Enterprise Solutions operating margin from 5% in fiscal 2010 to 8% in fiscal 2011
was primarily attributable to the increase in revenue for fiscal 2011, partially offset by increased selling and marketing and costs of
licensing and maintenance expenses within our Enterprise Solutions segment.
SERVICES FISCAL 2012 FISCAL 2011 FISCAL 2010
Revenue $ 382 $ 327 $ 288
Expenses 359 310 280
Segment profit $23$17$ 8
Segment operating margin 6% 5% 3%
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