Segment Information

Effective with the beginning of fiscal 2018, we changed our segments, see Note A. Description of Business and Basis of Presentation for additional 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, subscription and related support revenue (including updates and technical support) for all our products; and (2) Professional Services, which includes consulting, implementation and training services. We do not allocate sales & marketing or general and administrative expense to our operating segments as these activities are managed on a consolidated basis. Additionally, segment profit does not include stock-based compensation, amortization of intangible assets, restructuring charges and certain other identified costs that we do not allocate to the segments for purposes of evaluating their operational performance.

The revenue and profit attributable to our operating segments are summarized below. We do not produce asset information by reportable segment; therefore, it is not reported.



	Year ended September 30,
	2018			2017			2016
	(in thousands)
Software Products
Revenue	$	1,088,487		$	987,316		$	943,596
Operating Costs (1)	387,817			367,224			344,594
Profit	700,670			620,092			599,002

Professional Services
Revenue	153,337			176,723			196,937
Operating Costs (2)	136,816			145,091			165,325
Profit	16,521			31,632			31,612

Total segment revenue	1,241,824			1,164,039			1,140,533
Total segment costs	524,633			512,315			509,919
Total segment profit	717,191			651,724			630,614

Unallocated operating expenses:
Sales and marketing expenses	389,631			357,573			352,806
General and administrative expenses	108,095			108,439			108,548
Restructuring and headquarters relocation charges, net	3,764			7,942			76,273
Intangibles amortization	58,056			58,729			57,802
Stock-based compensation	82,939			76,708			65,996
Other unallocated operating expenses (3)	1,469			1,435			6,203
Total operating income	73,237			40,898			(37,014		)

Interest expense	(41,673		)	(42,400		)	(29,882		)
Interest income and other expense, net	(2,908		)	96			(296		)
Income (loss) before income taxes	$	28,656		$	(1,406	)	$	(67,192	)

(1) Operating costs for the Software Products segment includes all cost of software revenue and research and development costs, excluding stock-based compensation and intangible amortization. Operating costs for the Software Products segment includes depreciation of $5.1 million, $5.0 million and $4.7 million in 2018, 2017 and 2016, respectively.

(2) Operating costs for the Professional Services segment includes all cost of professional services revenue, excluding stock-based compensation, intangible amortization, and fair value adjustments for deferred services costs. The Professional Services segment includes depreciation of $1.6 million, $1.8 million and $2.0 million in 2018, 2017 and 2016, respectively.

(3) Other unallocated operating expenses include acquisition-related and other transactional costs, certain legal accrual expenses, pension plan termination-related costs and fair value adjustments for deferred services costs. Unallocated departments include depreciation of $22.7 million, $21.2 million and $22.1 million in 2018, 2017 and 2016, respectively.

We report revenue by the following four product areas:


•	CAD: Creo^®and Mathcad^®.


•	PLM: PLM solutions (primarily Windchill^®), Integrity^™and Atego^®.


•	IoT: ThingWorx^®, Vuforia^®and Kepware^®.


•	Other, including service parts management.



	Year ended September 30,
	2018		2017		2016
	(in thousands)
CAD	$	499,772	$	474,608	$	462,307
PLM	483,327		454,299		456,285
IoT	139,278		103,359		80,297
Other	119,447		131,773		141,644
Total revenue	$	1,241,824	$	1,164,039	$	1,140,533

Revenue and long-lived tangible assets for the geographic regions in which we operate is presented below.



	Year ended September 30,
	2018		2017		2016
	(in thousands)
Revenue:
Americas (1)	$	511,237	$	500,879	$	487,594
Europe (2)	485,851		435,183		424,268
Asia-Pacific	244,736		227,977		228,671
Total revenue	$	1,241,824	$	1,164,039	$	1,140,533



	September 30,
	2018		2017		2016
	(in thousands)
Long-lived tangible assets:
Americas (3)	$	67,704	$	47,055	$	48,281
Europe	5,303		6,284		6,915
Asia-Pacific	7,606		10,261		11,917
Total long-lived tangible assets	$	80,613	$	63,600	$	67,113


(1)	Includes revenue in the United States totaling $487.3 million, $475.5 million and $463.1 million for 2018, 2017 and 2016, respectively.


(2)	Includes revenue in Germany totaling $193.3 million, $164.7 million and $167.2 million for 2018, 2017 and 2016, respectively.


(3)	Substantially all of the Americas long-lived tangible assets are located in the United States.

Our international revenue is presented based on the location of our customer. We license products to customers worldwide. Our sales and marketing operations outside the United States are conducted principally through our international sales subsidiaries throughout Europe and the Asia-Pacific regions. Intercompany sales and transfers between geographic areas are accounted for at prices that are designed to be representative of unaffiliated party transactions.