Segment Information

9 Months Ended

Jun. 28, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

We operate within a single industry segment—computer software and related services. Operating segments as defined under GAAP are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our President and Chief Executive Officer. We have two operating and reportable segments: (1) Software Products, which includes license and related support revenue (including updates and technical support) for all our products except training-related products; and (2) Services, which includes consulting, implementation, training, computer-based training products, including support on these products, and other services revenue. We do not allocate sales and marketing or administrative expenses to our operating segments as these activities are managed on a consolidated basis.

The revenue and operating income attributable to our operating segments are summarized as follows:

	Three months ended						Nine months ended
	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013
	(in thousands)
Revenue:
Total Software Products segment revenue	$	258,805		$	236,306		$	748,482		$	712,174
Total Services segment revenue	77,829			78,690			241,777			236,522
Total revenue	$	336,634		$	314,996		$	990,259		$	948,696
Operating income: (1)
Software Products segment	$	166,639		$	148,904		$	479,736		$	434,031
Services segment	13,516			13,227			42,566			27,321
Sales and marketing expenses	(91,440		)	(89,443		)	(262,085		)	(282,734		)
General and administrative expenses	(34,331		)	(29,473		)	(99,749		)	(100,300		)
Total operating income	54,384			43,215			160,468			78,318
Other income (expense), net	(2,278		)	3,181			(6,724		)	(491		)
Income before income taxes	$	52,106		$	46,396		$	153,744		$	77,827

(1) We recorded restructuring charges of $0.5 million in the third quarter of 2014, all of which was included in general and administrative expenses. We recorded restructuring charges of $1.6 million in the first nine months of 2014. Software Products included $0.1 million; Services included $0.2 million; sales and marketing expenses included $0.5 million; and general and administrative expenses included $0.8 million of these restructuring charges. We recorded restructuring charges of $3.1 million and $34.3 million in the third quarter and first nine months of 2013, respectively. Software Products included $1.0 million and $12.6 million, respectively; Services included $0.3 million and $6.6 million, respectively; sales and marketing expenses included $1.1 million and $12.8 million, respectively; and general and administrative expenses included $0.7 million and $2.3 million, respectively, of these restructuring charges.

We report revenue by the following three solution areas:

• CAD - PTC Creo^® and PTC Mathcad^®.

• Extended PLM - our PLM solutions (primarily PTC Windchill^®), our ALM solutions (primarily PTC Integrity^™) and our SCM Solutions (primarily PTC Windchill FlexPLM^®).

• SLM - PTC Arbortext^® , PTC Servigistics^® and ThingWorx^® products.

The amounts presented below reflect reclassifications of revenue between solution areas for historical periods to conform to the current classification. Such reclassifications were less than 2% of each solution area’s total revenue for each period.

	Three months ended				Nine months ended
	June 28, 2014		June 29, 2013		June 28, 2014		June 29, 2013
	(in thousands)
Revenue:
CAD	$	149,024	$	135,206	$	423,355	$	403,503
Extended PLM	145,856		139,848		435,731		422,080
SLM	41,754		39,942		131,173		123,113
Total revenue	$	336,634	$	314,996	$	990,259	$	948,696

	Three months ended				Nine months ended
	June 28, 2014		June 29, 2013		June 28, 2014		June 29, 2013
	(in thousands)
Revenue:
Americas (1)	$	130,379	$	129,501	$	403,633	$	380,310
Europe (2)	130,659		115,425		385,720		353,920
Pacific Rim	36,422		36,268		106,976		114,179
Japan	39,174		33,802		93,930		100,287
Total revenue	$	336,634	$	314,996	$	990,259	$	948,696

_________________

(1) Includes revenue in the United States totaling $121.0 million and $121.9 million for the quarters ended June 28, 2014 and June 29, 2013, respectively, and $375.9 million and $350.5 million for the nine months ended June 28, 2014 and June 29, 2013, respectively.

(2) Includes revenue in Germany totaling $48.9 million and $41.8 million for the quarters ended June 28, 2014 and June 29, 2013, respectively, and $139.5 million and $123.5 million for the nine months ended June 28, 2014 and June 29, 2013, respectively.