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SEGMENT INFORMATION (Tables)
 6 Months Ended
Nov. 30, 2014
Segment Information [Abstract]  
Summary of Businesses and Operating Segments Results

 

 

Three Months Ended

November 30,

 

Six Months Ended

November 30,

(in millions)

 

2014

 

2013

 

2014

 

2013

New software licenses and cloud software subscriptions:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

$

2,407

 

$

2,378

 

$

4,114

 

$

4,031

Cloud software-as-a-service and platform-as-a-service expenses

 

 

158

 

 

100

 

 

299

 

 

194

Sales and distribution expenses

 

 

1,433

 

 

1,390

 

 

2,717

 

 

2,569

Margin(2)

 

$

816

 

$

888

 

$

1,098

 

$

1,268

Cloud infrastructure-as-a-service:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

155

 

$

97

 

$

293

 

$

206

Cloud infrastructure-as-a-service expenses

 

 

83

 

 

71

 

 

158

 

 

140

Sales and distribution expenses

 

 

21

 

 

16

 

 

40

 

 

30

Margin(2)

 

$

51

 

$

10

 

$

95

 

$

36

Software license updates and product support:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

$

4,773

 

$

4,517

 

$

9,505

 

$

8,949

Software license updates and product support expenses

 

 

280

 

 

273

 

 

538

 

 

548

Margin(2)

 

$

4,493

 

$

4,244

 

$

8,967

 

$

8,401

Total software and cloud business:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

$

7,335

 

$

6,992

 

$

13,912

 

$

13,186

Expenses

 

 

1,975

 

 

1,850

 

 

3,752

 

 

3,481

Margin(2)

 

$

5,360

 

$

5,142

 

$

10,160

 

$

9,705

Hardware systems products:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

717

 

$

714

 

$

1,295

 

$

1,383

Hardware systems products expenses

 

 

368

 

 

369

 

 

664

 

 

697

Sales and distribution expenses

 

 

221

 

 

243

 

 

420

 

 

461

Margin(2)

 

$

128

 

$

102

 

$

211

 

$

225

Hardware systems support:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

$

619

 

$

613

 

$

1,206

 

$

1,211

Hardware systems support expenses

 

 

210

 

 

205

 

 

393

 

 

407

Margin(2)

 

$

409

 

$

408

 

$

813

 

$

804

Total hardware systems business:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

$

1,336

 

$

1,327

 

$

2,501

 

$

2,594

Expenses

 

 

799

 

 

817

 

 

1,477

 

 

1,565

Margin(2)

 

$

537

 

$

510

 

$

1,024

 

$

1,029

Total services business:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

 

$

937

 

$

964

 

$

1,794

 

$

1,885

Services expenses

 

 

737

 

 

731

 

 

1,403

 

 

1,422

Margin(2)

 

$

200

 

$

233

 

$

391

 

$

463

Totals:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues(1)

$

9,608

 

$

9,283

 

$

18,207

 

$

17,665

Expenses

 

 

3,511

 

 

3,398

 

 

6,632

 

 

6,468

Margin(2) 

$

6,097

 

$

5,885

 

$

11,575

 

$

11,197

 

 

 

 

 

 

 

 

 

 

 

 

 

______________________

(1)

New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud SaaS and PaaS 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 amount of $3 million for each of the three months ended November 30, 2014 and 2013, and $5 million and $7 million for the six months ended November 30, 2014 and 2013, 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 $5 million and $1 million for the three months ended November 30, 2014 and 2013, respectively, and $6 million and $1 million for the six months ended November 30, 2014 and 2013, 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 $2 million and $4 million for the three months ended November 30, 2014 and 2013, respectively, and $2 million and $10 million for the six months ended November 30, 2014 and 2013, 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. Our new software license and services revenues for management reporting also differ from amounts reported per our consolidated statements of operations for the periods presented due to certain insignificant reclassifications between these lines for management reporting purposes.

 

 

(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 income (expense), net.

 
Reconciliation of Total Operating Segment Revenues to Total Revenues

 

Three Months Ended

November 30,

 

Six Months Ended

November 30,

(in millions)

 

2014

 

2013

 

2014

 

2013

Total revenues for operating segments

 

$

9,608

 

$

9,283

 

$

18,207

 

$

17,665

Cloud software-as-a-service and platform-as-a-service revenues(1)

 

 

(3)

 

 

(3)

 

 

(5)

 

 

(7)

Software license updates and product support revenues(1)

 

 

(5)

 

 

(1)

 

 

(6)

 

 

(1)

Hardware systems support revenues(1)

 

 

(2)

 

 

(4)

 

 

(2)

 

 

(10)

Total revenues

 

$

9,598

 

$

9,275

 

$

18,194

 

$

17,647

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

Total margin for operating segments

 

$

6,097

 

$

5,885

 

$

11,575

 

$

11,197

Cloud software-as-a-service and platform-as-a-service revenues(1)

 

 

(3)

 

 

(3)

 

 

(5)

 

 

(7)

Software license updates and product support revenues(1)

 

 

(5)

 

 

            (1)

 

 

(6)

 

 

(1)

Hardware systems support revenues(1)

 

 

(2)

 

 

(4)

 

 

(2)

 

 

(10)

Product development

 

 

(1,209)

 

 

(1,139)

 

 

(2,382)

 

 

(2,235)

Marketing and partner program expenses

 

 

(135)

 

 

(146)

 

 

(254)

 

 

(277)

Corporate, general and administrative and information technology expenses

 

 

(362)

 

 

(354)

 

 

(729)

 

 

(699)

Amortization of intangible assets

 

 

(568)

 

 

(577)

 

 

(1,116)

 

 

(1,172)

Acquisition related and other

 

 

20

 

 

(17)

 

 

(4)

 

 

(27)

Restructuring

 

 

(51)

 

 

(52)

 

 

(120)

 

 

(108)

Stock-based compensation

 

 

(240)

 

 

(182)

 

 

(451)

 

 

(378)

Interest expense

 

 

(282)

 

 

(230)

 

 

(544)

 

 

(446)

Non-operating income, net

 

 

9

 

 

23

 

 

25

 

 

29

Income before provision for income taxes

 

$

3,269

 

$

3,203

 

$

5,987

 

$

5,866

 

______________________

(1)

New software licenses and cloud software subscriptions revenues, software license updates and product support revenues and hardware systems support revenues for management reporting included revenues that would have otherwise been recorded by our acquired businesses as independent entities but were not recognized in the accompanying condensed consolidated statements of operations for the periods presented due to business combination accounting requirements. Refer to footnote (1) of our business and operating segments summary results table above in this Note 12 for additional information.