Segment and Geographic Information

3 Months Ended

Sep. 30, 2012

Segment and Geographic Information

Segment and Geographic Information

11.  Segment and Geographic Information

Operating segments are defined as 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 three operating segments: license; SMS, training, and other; and professional services.  The chief operating decision maker assesses financial performance and allocates resources based upon the three lines of business.

The license line of business is engaged in the development and licensing of software. The SMS, training, and other line of business provides customers with a wide range of support services that include on-site support, telephone support, software updates and various forms of training on how to use our products.  The professional services line of business offers implementation, advanced process control, real-time optimization and other professional services in order to provide customers with complete solutions.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies (refer to Note 2 in the financial statements in our Form 10-K for the year ended June 30, 2012). We do not track assets or capital expenditures by operating segments. Consequently, it is not practical to show assets, capital expenditures, depreciation or amortization by operating segments.

The following table presents a summary of operating segments (dollars in thousands):

	License		SMS, Training, and Other		Professional Services			Total
Three Months Ended September 30, 2012
Segment revenue	$	54,080	$	11,702	$	5,675		$	71,457
Segment expenses	15,095		1,824		5,521			22,440
Segment operating profit (1)	$	38,985	$	9,878	$	154		$	49,017
Three Months Ended September 30, 2011
Segment revenue	$	31,910	$	14,167	$	5,148		$	51,225
Segment expenses	16,552		2,692		6,398			25,642
Segment operating profit (loss) (1)	$	15,358	$	11,475	$	(1,250	)	$	25,583

(1)The segment operating profits (losses) reported reflect the direct expenses of the operating segment and contain certain allocations of selling and marketing, general and administrative, development, and do not contain restructuring and other corporate expenses incurred in support of the segments.

Reconciliation to Income (Loss) Before Income Taxes

The following table presents a reconciliation of total segment operating profit to income (loss) before income taxes for the three months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended
	September 30,
	2012			2011
Total segment operating profit for reportable segments	$	49,017		$	25,583
Cost of license	(3,190		)	(2,724		)
Marketing	(3,521		)	(3,868		)
Research and development	(12,986		)	(11,573		)
General and administrative	(9,735		)	(13,107		)
Information technology and overhead	(6,276		)	(6,301		)
Stock-based compensation	(4,315		)	(3,708		)
Restructuring charges	(40		)	73
Other (expense) income, net	(277		)	(2,032		)
Interest income (net)	842			1,139
Income (loss) before income taxes	$	9,519		$	(16,518	)