Segment Reporting

9 Months Ended

Dec. 31, 2011

Segment Reporting [Abstract]

Segment Reporting

(9) Segment Reporting

We are organized into two business segments, Enterprise Service Management (ESM) and Mainframe Service Management (MSM). The ESM segment derives its revenue from our service support, service assurance and service automation solutions, along with professional services revenue derived from consulting, implementation, integration and educational services related to our software products. The MSM segment derives its revenue from products for mainframe database management, monitoring and automation, middleware management, enterprise scheduling and output management solutions.

Segment performance is measured based on segment operating income, reflecting segment revenue less direct and allocated indirect segment operating expenses. Direct segment operating expenses primarily include cost of revenue, selling and marketing, research and development and general and administrative expenses that can be specifically identified to a particular segment and are directly controllable by segment management, while allocated indirect segment operating expenses primarily include indirect costs within these operating expense categories that are not specifically identified to a particular segment or controllable by segment management. The indirect operating expenses are allocated to the segments based on budgeted bookings, revenue and other allocation methods that management believes to be reasonable. Our measure of segment operating income does not include the effect of share-based compensation expenses, amortization of acquired technology and other intangible assets or the costs associated with severance, exit costs and related charges, which are collectively included in unallocated operating expenses below. Assets and liabilities are reviewed by management at the consolidated level only.

The following tables summarize segment performance for the quarters and nine months ended December 31, 2011 and 2010:

	Enterprise		Mainframe
	Service		Service
Quarter Ended December 31, 2011	Management		Management		Consolidated
	(In millions)
Revenue:
License	$	133.7	$	91.3	$	225.0
Maintenance		147.7		124.6		272.3
Professional services		50.9		—		50.9
Total revenue		332.3		215.9		548.2
Direct and allocated indirect segment operating expenses:		256.1		79.4		335.5
Segment operating income		76.2		136.5		212.7
Unallocated operating expenses						(50.9	)
Other loss, net						(3.5	)
Earnings before income taxes					$	158.3

	Enterprise		Mainframe
	Service		Service
Quarter Ended December 31, 2010	Management		Management		Consolidated
	(In millions)
Revenue:
License	$	148.9	$	85.7	$	234.6
Maintenance		139.9		119.4		259.3
Professional services		46.0		—		46.0
Total revenue		334.8		205.1		539.9
Direct and allocated indirect segment operating expenses:		263.2		89.2		352.4
Segment operating income		71.6		115.9		187.5
Unallocated operating expenses						(48.1	)
Other income, net						1.7
Earnings before income taxes					$	141.1

	Enterprise		Mainframe
	Service		Service
Nine Months Ended December 31, 2011	Management		Management		Consolidated
	(In millions)
Revenue:
License	$	398.2	$	246.0	$	644.2
Maintenance		434.5		372.9		807.4
Professional services		155.7		—		155.7
Total revenue		988.4		618.9		1,607.3
Direct and allocated indirect segment operating expenses:		763.8		243.9		1,007.7
Segment operating income		224.6		375.0		599.6
Unallocated operating expenses						(161.7	)
Other loss, net						(9.9	)
Earnings before income taxes					$	428.0

	Enterprise		Mainframe
	Service		Service
Nine Months Ended December 31, 2010	Management		Management		Consolidated
	(In millions)
Revenue:
License	$	393.4	$	220.5	$	613.9
Maintenance		413.4		352.2		765.6
Professional services		123.6		—		123.6
Total revenue		930.4		572.7		1,503.1
Direct and allocated indirect segment operating expenses:		717.0		250.4		967.4
Segment operating income		213.4		322.3		535.7
Unallocated operating expenses						(144.7	)
Other loss, net						(3.5	)
Earnings before income taxes					$	387.5