Segment and Geographic Information

12 Months Ended

Jun. 30, 2014

Segment and Geographic Information

Segment and Geographic Information

(10) Segment and Geographic Information

        Operating segments are defined as components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and to assess performance. Our chief operating decision maker is our President and Chief Executive Officer.

        Prior to fiscal 2014, we had three operating and reportable segments: license; SMS, training and other; and professional services. As our customers have transitioned to our aspenONE licensing model, legacy SMS revenue has decreased and has been offset by a corresponding increase in revenue from aspenONE licensing arrangements and from point product arrangements with Premier Plus SMS (for further information on transition to the aspenONE licensing model and its impact on revenue and our results of operations, please refer to Note 2). As a result, legacy SMS revenue is no longer significant in relation to our total revenue and no longer represents a significant line of business.

        We manage legacy SMS as a part of our broader software licensing business and assess business performance on a combined basis. Our President and Chief Executive Officer evaluates software licensing and maintenance on an aggregate basis in deciding how to assess performance. Effective July 1, 2013, we re-aligned our operating and reportable segments into i) subscription and software and ii) services.

        The subscription and software segment is engaged in the licensing of process optimization software solutions and associated support services. The services segment includes professional services and training.

        The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies (refer to Note 2). We do not track assets or capital expenditures by operating segments. Consequently, it is not practical to present assets, capital expenditures, depreciation or amortization by operating segments.

        Our prior period reportable segment information has been reclassified to reflect the current segment structure and conform to the current period presentation.

        The following table presents a summary of our reportable segments' profits:

	Subscription and software			Services			Total
	(Dollars in Thousands)
Year Ended June 30, 2014:
Segment revenue	$	350,486		$	40,967		$	391,453
Segment expenses(1)		(183,378	)		(32,547	)		(215,925	)
Segment profit	$	167,108		$	8,420		$	175,528
Year Ended June 30, 2013:
Segment revenue	$	276,585		$	34,802		$	311,387
Segment expenses(1)		(176,319	)		(30,200	)		(206,519	)
Segment profit	$	100,266		$	4,602		$	104,868
Year Ended June 30, 2012:
Segment revenue	$	213,465		$	29,669		$	243,134
Segment expenses(1)		(173,387	)		(31,508	)		(204,895	)
Segment profit (loss)	$	40,078		$	(1,839	)	$	38,239

(1)

Our reportable segments' operating expenses include expenses directly attributable to the segments. Segment expenses do not include allocations of general and administrative; restructuring; interest income, net; and other (income) expense, net. As a result of operating and reportable segments realignment, certain costs are more directly attributable to our new operating segments. Starting with fiscal 2014, segment expenses include selling and marketing, research and development, stock-based compensation and certain corporate expenses incurred in support of the segments. Prior to fiscal 2014, segment expenses included certain allocations of selling and marketing; general and administrative; and research and development and did not include restructuring and other corporate expenses incurred in support of these functions.

Reconciliation to Income (Loss) Before Provision for (Benefit from) Income Taxes

        The following table presents a reconciliation of total segment operating profit to income (loss) before provision for (benefit from) income taxes:

	Year Ended June 30,
	2014			2013			2012
	(Dollars in Thousands)
Total segment profit for reportable segments	$	175,528		$	104,868		$	38,239
General and administrative		(45,819	)		(49,273	)		(53,547	)
Restructuring charges		15			5			301
Other income (expense), net		(2,278	)		(1,117	)		(3,519	)
Interest income (net)		1,087			2,955			3,374
Income (loss) before provision for (benefit from) income taxes	$	128,533		$	57,438		$	(15,152	)

Geographic Information:

        Revenue to external customers is attributed to individual countries based on the location the product or services are sold. Domestic and international sales as a percentage of total revenue are as follows:

	Year Ended June 30,
	2014			2013			2012
United States		35.5	%		38.5	%		29.5	%
Europe		30.2			29.3			33.7
Other(1)		34.3			32.2			36.8
		100.0	%		100.0	%		100.0	%

(1)

Other consists primarily of Asia Pacific, Canada, Latin America and the Middle East.

        During fiscal 2014, 2013 and 2012, there were no customers that individually represented greater than 10% of our total revenue.

        We have long-lived assets of approximately $16.7 million that are located domestically and $16.8 million that reside in other geographic locations as of June 30, 2014.