Computer Associates 2015 Annual Report Download - page 41

Segment expenses include costs that are controllable by segment managers (i.e., direct costs) and, in the case of the
Mainframe Solutions and Enterprise Solutions segments, an allocation of shared and indirect costs (i.e., allocated costs).
Segment-specific direct 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 and non-segment-specific direct 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 of cost of professional services and other direct costs included within selling and marketing and
general and administrative expenses. There are no allocated or indirect costs for the Services segment.
Segment expenses do not include share-based compensation expense; amortization of purchased software; amortization of
other intangible assets; approved actions by our Board of Directors (i.e., costs associated with our Fiscal 2014 Plan); and
other miscellaneous costs. We consider all costs of internally developed software as segment expense in the period the costs
are incurred and as a result, we will add back capitalized internal software costs and exclude amortization of internally
developed software costs previously capitalized from segment expenses. A measure of segment assets is not currently
provided to our Chief Executive Officer and has therefore not been disclosed.
Segment financial information for fiscal 2015, 2014 and 2013 is as follows:
FISCAL FISCAL FISCAL
MAINFRAME SOLUTIONS 2015(1) 2014(1) 2013(1)
Revenue $ 2,392 $ 2,478 $ 2,489
Expenses 970 996 1,038
Segment profit $ 1,422 $ 1,482 $ 1,451
Segment operating margin 59% 60% 58%
(1) Information presented excludes the results of our discontinued operations.
For fiscal 2015, Mainframe Solutions revenue decreased compared with the year-ago period primarily due to insufficient
revenue from prior period new sales to offset the decline in revenue contribution from renewals. There was also an
unfavorable foreign exchange effect of $40 million for fiscal 2015. For fiscal 2015, Mainframe Solutions operating margin
decreased slightly as a result of the decrease in revenue.
For fiscal 2014, Mainframe Solutions revenue decreased compared with the year-ago period primarily due to an unfavorable
foreign exchange effect of $18 million. Excluding the effect of foreign exchange, Mainframe Solutions revenue would have
increased slightly primarily as a result of improved renewal yields. The increase in Mainframe Solutions operating margin
for fiscal 2014 compared with fiscal 2013 was primarily a result of a decrease in selling and marketing expense as result of
lower personnel expenses.
FISCAL FISCAL FISCAL
ENTERPRISE SOLUTIONS 2015(1) 2014(1) 2013(1)
Revenue $ 1,519 $ 1,555 $ 1,633
Expenses 1,353 1,440 1,520
Segment profit $ 166 $ 115 $ 113
Segment operating margin 11% 7% 7%
(1) Information presented excludes the results of our discontinued operations.
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.
Enterprise Solutions revenue for fiscal 2014 decreased compared with the year-ago period primarily due to a decrease in
new product sales in both the current and prior fiscal year. This decline in revenue was primarily due to a decrease in sales
of certain mature product lines, partially offset by an increase in sales of recently acquired products. There was also an
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