Computer Associates 2012 Annual Report Download - page 45

Service segment expenses include cost of professional services and assigned general and administrative expenses that are not
included in the cost of professional services expense lines of the Consolidated Statement of Operations.
For fiscal 2012, Services revenue and expenses compared with fiscal 2011 increased primarily as a result of our fiscal 2012
acquisition of Base Technologies. For fiscal 2012, Services revenue reflected a favorable foreign exchange effect of $7 million
compared with fiscal 2011. For fiscal 2012 compared with fiscal 2011, Services operating margin remained consistent.
For fiscal 2011, Services revenue and expenses compared with fiscal 2010 increased primarily due to an increase in services projects
during the period. As a result of the increase in revenue and a decrease in general and administrative expenses related to services
headquarters functions, gross margins on professional services increased to 5% for fiscal 2011 compared with 3% for fiscal 2010.
Refer to Note 18, “Segment and Geographic Information,” in the Notes to the Consolidated Financial Statements for additional
information.
Bookings
For fiscal 2012, total bookings decreased $225 million from $4,888 million in fiscal 2011 to $4,663 million in fiscal 2012, primarily
as a result of a license renewal agreement with a large IT outsourcer for approximately $500 million, which was executed in the
fourth quarter of fiscal 2011 and is included in subscription and maintenance bookings. This decrease was partially offset by an
increase in bookings that are recognized as software fees and other revenue. In addition, there was an increase in professional services
bookings primarily attributable to an increase in the number of professional services engagements entered into during the fourth
quarter of fiscal 2012 and to a lesser extent our fiscal 2012 acquisition of Base Technologies.
For fiscal 2012, total bookings from new product and capacity sales 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, which includes the aforementioned
Final License Payment. This increase was partially offset by a decrease in Enterprise Solutions segment new product sales. Capacity
sales for fiscal 2012 were consistent with fiscal 2011.
Bookings in the United States for fiscal 2012 decreased from fiscal 2011, primarily due to the aforementioned fiscal 2011 license
agreement with a large IT outsourcer executed in the fourth quarter of fiscal 2011. This decrease was partially offset by the increase
in professional services bookings and the new product sales within the Mainframe Solutions segment. Total international bookings
for fiscal 2012 increased from fiscal 2011. Bookings in Latin America for fiscal 2012 increased primarily as a result of an increase in
renewals and an increase in new product and capacity sales in fiscal 2012. Bookings in Asia-Pacific-Japan region for fiscal 2012
increased from fiscal 2011 primarily due to an increase in renewals and new product and capacity sales. Total bookings in the
Europe, Middle East and Africa region increased slightly for fiscal 2012, primarily due to a large multi-year contract with a financial
institution in Europe executed in the fourth quarter of fiscal 2012.
For fiscal 2011 and fiscal 2010, total bookings were $4,888 million and $4,843 million, respectively. Total fiscal 2011 bookings
included the license agreement with a large IT outsourcer for approximately $500 million. The increase in bookings reflected
favorable results for new product sales in connection with software fees and other bookings (recognized as software fees and other
revenue in the current period), which was partially offset by a decrease in subscription and maintenance bookings for fiscal 2011.
Total new product sales and mainframe capacity grew in the low single digits for the fiscal year. Within new product and capacity
sales in fiscal 2011, the increase in new distributed products was partially offset by a decrease in mainframe capacity and new
mainframe product sales. Bookings in Europe, Middle East and Africa declined due to the lower number of scheduled renewals and
new product sales during fiscal 2011. This decline was mostly offset by growth in the United States.
Subscription and Maintenance Bookings
For fiscal 2012 and fiscal 2011, subscription and maintenance bookings were $3,776 million and $4,256 million, respectively.
Subscription and maintenance bookings for fiscal 2011, includes a five-year license renewal agreement with a large IT outsourcer for
approximately $500 million, which was executed in the fourth quarter of fiscal 2011.
During fiscal 2012, we renewed a total of 57 license agreements with incremental contract values in excess of $10 million each, for
an aggregate contract value of $1,722 million. During fiscal 2011, we renewed a total of 56 license agreements with incremental
contract values in excess of $10 million each, for an aggregate contract value of $1,994 million.
Generally, quarters with smaller renewal inventories result in a lower level of bookings both because renewal bookings will be lower
and, to a lesser extent, because renewals also remain an important selling opportunity for new products. Renewal bookings for fiscal
2012, which generally do not include new product and capacity sales and professional services arrangements, were slightly better
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