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 and our 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.

Our primary operating units under our SCM segment include Logility, Inc., New Generation Computing, Inc. (“NGC”), Demand Management, Inc. (“DMI”), and Halo Business Intelligence (“Halo”). Logility and NGC are wholly-owned subsidiaries of American Software; DMI is a wholly-owned subsidiary of Logility; and Halo is a division of Logility. In addition to our core SCM software business, we also offer technology staffing and consulting services through our wholly-owned subsidiary, The Proven Method, Inc., in the IT Consulting segment. The Other segment consists of software and services provided to our legacy enterprise resource planning (“ERP”) customers, as well as corporate overhead and other common expenses.

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 six months ended October 31, 2019 and 2018 (in thousands):



	Three Months Ended October 31,						Six Months Ended October 31,
	2019			2018			2019			2018
Revenues:
Supply Chain Management	$	23,487		$	22,114		$	45,834		$	43,572
IT Consulting	4,158			5,222			8,536			10,579
Other	565			697			1,223			1,281
	$	28,210		$	28,033		$	55,593		$	55,432
Operating income (loss):
Supply Chain Management	$	4,360		$	3,973		$	8,211		$	7,040
IT Consulting	(12		)	396			166			755
Other	(3,505		)	(2,843		)	(6,737		)	(5,662		)
	$	843		$	1,526		$	1,640		$	2,133
Capital expenditures:
Supply Chain Management	$	44		$	52		$	75		$	124
IT Consulting	—			—			—			1
Other	84			128			163			769
	$	128		$	180		$	238		$	894
Capitalized software:
Supply Chain Management	$	605		$	1,204		$	1,890		$	2,088
IT Consulting	—			—			—			—
Other	—			—			—			—
	$	605		$	1,204		$	1,890		$	2,088
Depreciation and amortization:
Supply Chain Management	$	2,089		$	1,828		$	4,241		$	3,554
IT Consulting	1			2			3			4
Other	93			83			184			153
	$	2,183		$	1,913		$	4,428		$	3,711
Earnings (loss) before income taxes:
Supply Chain Management	$	4,480		$	4,008		$	8,516		$	7,058
IT Consulting	(12		)	396			166			755
Other	(2,913		)	(3,068		)	(5,805		)	(5,117		)
	$	1,555		$	1,336		$	2,877		$	2,696