Segment and Geographic Information

9 Months Ended

Mar. 31, 2013

Segment and Geographic Information

Segment and Geographic Information

12.  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.

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 March 31, 2013
Segment revenue	$	60,899	$	10,945	$	7,513		$	79,357
Segment expenses	16,031		1,597		5,989			23,617
Segment operating profit (1)	$	44,868	$	9,348	$	1,524		$	55,740
Three Months Ended March 31, 2012
Segment revenue	$	42,444	$	12,935	$	5,958		$	61,337
Segment expenses	17,224		2,179		5,702			25,105
Segment operating profit (1)	$	25,220	$	10,756	$	256		$	36,232
Nine Months Ended March 31, 2013
Segment revenue	$	174,436	$	34,274	$	19,413		$	228,123
Segment expense	48,864		5,286		17,039			71,189
Segment operating profit (1)	$	125,572	$	28,988	$	2,374		$	156,934
Nine Months Ended March 31, 2012
Segment revenue	$	120,856	$	41,504	$	16,757		$	179,117
Segment expense	50,639		7,385		17,945			75,969
Segment operating profit (loss) (1)	$	70,217	$	34,119	$	(1,188	)	$	103,148

(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, research and 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 and nine months ended March 31, 2013 and 2012 (in thousands):

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2013			2012			2013			2012
Total segment operating profit for reportable segments	$	55,740		$	36,232		$	156,934		$	103,148
Cost of subscription and software	(3,229		)	(2,717		)	(9,519		)	(8,063		)
Marketing	(3,896		)	(4,011		)	(9,896		)	(10,326		)
Research and development	(13,028		)	(12,205		)	(38,313		)	(34,350		)
General and administrative	(9,404		)	(11,069		)	(28,555		)	(33,651		)
Information technology and overhead	(6,363		)	(6,303		)	(19,146		)	(18,695		)
Stock-based compensation	(3,527		)	(2,825		)	(11,295		)	(9,604		)
Restructuring charges	41			84			7			143
Other expense, net	(18		)	(26		)	(352		)	(2,483		)
Interest income (net)	795			1,165			2,476			3,323
Income (loss) before income taxes	$	17,111		$	(1,675	)	$	42,341		$	(10,558	)