Segment Information

9 Months Ended

Mar. 31, 2015

Segment Information

Segment Information

12.  Segment 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.

During fiscal 2014, we re-aligned our operating and reportable segments into i) subscription and software; and ii) services, in order to conform our segment structure to the manner in which our President and Chief Executive Officer manages our business.

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 in the financial statements of our Form 10-K for the year ended June 30, 2014). 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.

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

	Subscription and software			Services			Total
	(Dollars in Thousands)
Three Months Ended March 31, 2015
Segment revenue	$	102,543		$	8,756		$	111,299
Segment expenses (1)	(48,887		)	(6,905		)	(55,792		)
Segment profit	$	53,656		$	1,851		$	55,507
Three Months Ended March 31, 2014
Segment revenue	$	91,309		$	12,278		$	103,587
Segment expenses (1)	(51,390		)	(9,956		)	(61,346		)
Segment profit	$	39,919		$	2,322		$	42,241
Nine Months Ended March 31, 2015
Segment revenue	$	300,002		$	26,213		$	326,215
Segment expenses (1)	(135,960		)	(21,142		)	(157,102		)
Segment profit	$	164,042		$	5,071		$	169,113
Nine Months Ended March 31, 2014
Segment revenue	$	258,916		$	31,005		$	289,921
Segment expenses (1)	(138,991		)	(24,835		)	(163,826		)
Segment profit	$	119,925		$	6,170		$	126,095

(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 the 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 Before Income Taxes

The following table presents a reconciliation of total segment profit to income before income taxes for the three and nine months ended March 31, 2015 and 2014:

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2015			2014			2015			2014
	(Dollars in Thousands)
Total segment profit for reportable segments	$	55,507		$	42,241		$	169,113		$	126,095
General and administrative	(13,776		)	(10,839		)	(36,227		)	(33,732		)
Other income (expense), net	414			(472		)	354			(1,807		)
Interest income (net)	121			269			381			937
Income before income taxes	$	42,266		$	31,199		$	133,621		$	91,493