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SEGMENT INFORMATION (Tables)
 6 Months Ended
Nov. 30, 2013
Segment Information [Abstract]  
Summary of Businesses and Operating Segments Results

 

 

Three Months Ended

November 30,

 

Six Months Ended

November 30,

(in millions)

 

 

2013

 

2012

 

2013

 

2012

New software licenses and cloud software subscriptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

 

$

2,378

 

$

2,398

 

$

4,031

 

$

3,987

Sales and distribution expenses

 

 

 

1,490

 

 

1,316

 

 

2,763

 

 

2,439

Margin(2)

 

 

$

888

 

$

1,082

 

$

1,268

 

$

1,548

Software license updates and product support:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

 

$

4,517

 

$

4,264

 

$

8,949

 

$

8,408

Software license updates and product support expenses

 

 

 

273

 

 

256

 

 

548

 

 

524

Margin(2)

 

 

$

4,244

 

$

4,008

 

$

8,401

 

$

7,884

Total software business:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

 

$

6,895

 

$

6,662

 

$

12,980

 

$

12,395

Expenses

 

 

 

1,763

 

 

1,572

 

 

3,311

 

 

2,963

Margin(2)

 

 

$

5,132

 

$

5,090

 

$

9,669

 

$

9,432

Hardware systems products:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

$

714

 

$

734

 

$

1,383

 

$

1,513

Hardware systems products expenses

 

 

 

369

 

 

366

 

 

697

 

 

750

Sales and distribution expenses

 

 

 

243

 

 

213

 

 

461

 

 

431

Margin(2)

 

 

$

102

 

$

155

 

$

225

 

$

332

Hardware systems support:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

 

$

613

 

$

590

 

$

1,211

 

$

1,169

Hardware systems support expenses

 

 

 

205

 

 

222

 

 

407

 

 

435

Margin(2)

 

 

$

408

 

$

368

 

$

804

 

$

734

Total hardware systems business:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

 

$

1,327

 

$

1,324

 

$

2,594

 

$

2,682

Expenses

 

 

 

817

 

 

801

 

 

1,565

 

 

1,616

Margin(2)

 

 

$

510

 

$

523

 

$

1,029

 

$

1,066

Total services business:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

 

$

1,061

 

$

1,127

 

$

2,091

 

$

2,245

Services expenses

 

 

 

818

 

 

894

 

 

1,592

 

 

1,743

Margin(2)

 

 

$

243

 

$

233

 

$

499

 

$

502

Totals:

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

 

$

9,283

 

$

9,113

 

$

17,665

 

$

17,322

Expenses

 

 

 

3,398

 

 

3,267

 

 

6,468

 

 

6,322

Margin(2)

 

 

$

5,885

 

$

5,846

 

$

11,197

 

$

11,000

 

 

(1)

Operating segment revenues generally differ from the external reporting classifications due to certain software license products that are classified as service revenues for management reporting purposes. New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud software subscriptions contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying condensed consolidated statements of operations in the amounts of $3 million and $12 million for the three months ended November 30, 2013 and 2012, respectively, and $7 million and $31 million for the six months ended November 30, 2013 and 2012, respectively. Software license updates and product support revenues for management reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying condensed consolidated statements of operations in the amounts of $1 million and $4 million for the three months ended November 30, 2013 and 2012, respectively, and $1 million and $8 million for the six months ended November 30, 2013 and 2012, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $4 million and $3 million for the three months ended November 30, 2013 and 2012, respectively, and $10 million and $8 million for the six months ended November 30, 2013 and 2012, respectively. See Note 8 for an explanation of these adjustments and the table below for a reconciliation of our total operating segment revenues to our total revenues.

 

 

(2)

The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, marketing and partner programs, and corporate, general and administrative and information technology expenses. Additionally, the margins do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other expenses, net.

 
Reconciliation of Total Operating Segment Revenues to Total Revenues

 

Three Months Ended

November 30,

 

Six Months Ended

November 30,

(in millions)

 

2013

 

2012

 

2013

 

2012

Total revenues for operating segments

 

$

9,283

 

$

9,113

 

$

17,665

 

$

17,322

New software licenses and cloud software subscriptions revenues(1)

 

 

(3)

 

 

(12)

 

 

(7)

 

 

(31)

Software license updates and product support revenues(1)

 

 

(1)

 

 

(4)

 

 

(1)

 

 

(8)

Hardware systems support revenues(1)

 

 

(4)

 

 

(3)

 

 

(10)

 

 

(8)

Total revenues

 

$

9,275

 

$

9,094

 

$

17,647

 

$

17,275

 
Reconciliation of Total Operating Segment Margin to Income before Provision for Income Taxes

Total margin for operating segments

 

$

5,885

 

$

5,846

 

$

11,197

 

$

11,000

New software licenses and cloud software subscriptions revenues(1)

 

 

(3)

 

 

(12)

 

 

(7)

 

 

(31)

Software license updates and product support revenues(1)

 

 

            (1)

 

 

(4)

 

 

(1)

 

 

(8)

Hardware systems support revenues(1)

 

 

(4)

 

 

(3)

 

 

(10)

 

 

(8)

Product development

 

 

(1,139)

 

 

(1063)

 

 

(2,236)

 

 

(2,138)

Marketing and partner program expenses

 

 

(146)

 

 

(162)

 

 

(277)

 

 

(290)

Corporate, general and administrative and information technology expenses

 

 

(354)

 

 

(349)

 

 

(699)

 

 

(712)

Amortization of intangible assets

 

 

(577)

 

 

(584)

 

 

(1,172)

 

 

(1,203)

Acquisition related and other

 

 

(17)

 

 

121

 

 

(27)

 

 

380

Restructuring

 

 

(52)

 

 

(131)

 

 

(108)

 

 

(276)

Stock-based compensation

 

 

(182)

 

 

(188)

 

 

(378)

 

 

(365)

Interest expense

 

 

(230)

 

 

(195)

 

 

(446)

 

 

(382)

Other, net

 

 

23

 

 

4

 

 

30

 

 

15

Income before provision for income taxes

 

$

3,203

 

$

3,280

 

$

5,866

 

$

5,982

 

(1)

New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud software subscriptions contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying condensed consolidated statements of operations in the amounts of $3 million and $12 million for the three months ended November 30, 2013 and 2012, respectively, and $7 million and $31 million for the six months ended November 30, 2013 and 2012, respectively. Software license updates and product support revenues for management reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying condensed consolidated statements of operations in the amounts of $1 million and $4 million for the three months ended November 30, 2013 and 2012, respectively, and $1 million and $8 million for the six months ended November 30, 2013 and 2012, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $4 million and $3 million for the three months ended November 30, 2013 and 2012, respectively, and $10 million and $8 million for the six months ended November 30, 2013 and 2012, respectively. See Note 8 for an explanation of these adjustments.