Industry Segments

FASB ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of a public entity about which separate financial information is available that is evaluated regularly by the chief operating decision makers (“CODMs”), or decision making group, in deciding how to allocate resources and in assessing performance. Our CODMs are our Principal Executive Officer (“PEO”) and President. While our CODMs are apprised of a variety of financial metrics and information, we manage our business primarily on a segment basis, with the CODMs evaluating performance based upon segment operating profit or loss, with certain corporate and other common expenses included in the Other segment. Our CODMs review the operating results of our three segments, assess performance and allocate resources in a manner that is consistent with the changing market dynamics that we have experienced. We recently updated our operating segments to reflect the fact that we provide our software solutions through three major operating segments, which are further broken down into a total of six major product and service groups. The three operating segments are (1) Supply Chain Management (“SCM”), (2) Information Technology (“IT”) Consulting and (3) Other.

The SCM segment primarily consists of Logility, which is a leading provider of collaborative supply chain optimization and advanced retail planning solutions that help medium, large and Fortune 500 companies transform their supply chain operations to gain a competitive advantage and which is recognized for its high-touch approach to customer service, rapid implementations and industry-leading return on investment (ROI). The SCM segment also includes (i) Demand Management, Inc (“DMI”), which delivers affordable, easy-to-use SaaS supply chain planning solutions designed to increase forecast accuracy, improve customer service and reduce inventory to maximize profits and lower costs, (ii) New Generation Computing (“NGC”), which is a leading provider of cloud-based supply chain and product lifecycle management solutions for brands, retailers and consumer products companies, and (iii) Halo Business Intelligence (“Halo”), which is an advanced analytics software provider leveraging an innovative blend of artificial intelligence and machine learning technology to drive greater supply chain performance. The Other segment consists of (i) American Software ERP, which provides purchasing and materials management, customer order processing, financial, e-commerce and traditional manufacturing solutions, and (ii) corporate overhead and other common expenses.

Previously, we maintained three operating segments: (1) SCM, (2) IT and (3) Enterprise Resource Planning (“ERP”). As a result of the organizational realignment during the third quarter of fiscal 2018, NGC was repositioned out of the ERP segment and into the SCM segment. There were no changes to the IT segment. Certain prior year amounts have been recast to conform to fiscal 2019 presentation. The change in reportable segments had no effect on our previously reported consolidated financial position or results of operations.

All of our revenues are derived from external customers. We do not have any intersegment revenue. Our income taxes and dividends are paid at a consolidated level. Consequently, it is not practical to show these items by operating segment.

In the following table, we have broken down the intersegment transactions applicable to the three and nine months ended January 31, 2019 and 2018 (in thousands):



	Three Months Ended January 31,						Nine Months Ended January 31,
	2019			2018			2019			2018
Revenues:
Supply Chain Management	$	21,494		$	24,902		$	65,066		$	67,965
IT Consulting	4,938			4,557			15,517			13,522
Other	571			658			1,852			1,853
	$	27,003		$	30,117		$	82,435		$	83,340
Operating income (loss) before intersegment eliminations:
Supply Chain Management	$	4,981		$	5,969		$	12,021		$	15,551
IT Consulting	244			185			999			775
Other	(3,095		)	(1,950		)	(8,757		)	(5,258		)
	$	2,130		$	4,204		$	4,263		$	11,068
Intersegment eliminations*:
Supply Chain Management	—			—			—			—
IT Consulting	—			—			—			—
Other	—			—			—			—
	—			—			—			—
Operating income (loss) after intersegment eliminations:
Supply Chain Management	$	4,981		$	5,969		$	12,021		$	15,551
IT Consulting	244			185			999			775
Other	(3,095		)	(1,950		)	(8,757		)	(5,258		)
	$	2,130		$	4,204		$	4,263		$	11,068
Capital expenditures:
Supply Chain Management	$	21		$	79		$	145		$	160
IT Consulting	—			2			1			8
Other	99			120			868			245
	$	120		$	201		$	1,014		$	413
Capitalized software:
Supply Chain Management	$	2,073		$	1,035		$	4,162		$	3,652
IT Consulting	—			—			—			—
Other	—			—			—			—
	$	2,073		$	1,035		$	4,162		$	3,652
Depreciation and amortization:
Supply Chain Management	$	1,862		$	1,551		$	5,416		$	4,157
IT Consulting	2			2			6			6
Other	96			46			249			142
	$	1,960		$	1,599		$	5,671		$	4,305
Earnings (loss) before income taxes:
Supply Chain Management	$	5,190		$	6,099		$	12,248		$	15,892
IT Consulting	244			185			999			775
Other	(2,777		)	(506		)	(7,894		)	(2,750		)
	$	2,657		$	5,778		$	5,353		$	13,917


*	Fiscal 2018 recast to adjust for corporate overhead and other common expenses, which were no longer allocated starting in fiscal 2019.