Segment Information | 6 Months Ended |
Sep. 30, 2014 |
Segment Reporting [Abstract] | ' |
SEGMENT INFORMATION | ' |
NOTE O – SEGMENT INFORMATION |
The Company’s Mainframe Solutions and Enterprise Solutions segments comprise its software business organized by the nature of the Company’s software offerings and the platform on which the products operate. The Services segment comprises product implementation, consulting, customer education and customer training, including those directly related to the Mainframe Solutions and Enterprise Solutions software that the Company sells to its customers. |
Segment expenses do not include share-based compensation expense; amortization of purchased software; amortization of other intangible assets; certain foreign exchange derivative hedging gains and losses; costs associated with the Company’s Fiscal 2014 Plan; and other miscellaneous costs. The Company considers all costs of internally developed software as segment expense in the period the costs are incurred and as a result, the Company will add back capitalized internal software costs and exclude amortization of internally developed software costs previously capitalized from segment expenses. A measure of segment assets is not currently provided to the Company’s Chief Executive Officer and has therefore not been disclosed. |
The Company’s segment information for the three and six months ended September 30, 2014 and 2013 was as follows: |
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Three Months Ended September 30, 2014 | Mainframe | | Enterprise | | Services | | Total |
(dollars in millions) | Solutions | Solutions |
Revenue | $ | 610 | | | $ | 378 | | | $ | 91 | | | $ | 1,079 | |
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Expenses | 234 | | | 327 | | | 89 | | | 650 | |
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Segment profit | $ | 376 | | | $ | 51 | | | $ | 2 | | | $ | 429 | |
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Segment operating margin | 62 | % | | 13 | % | | 2 | % | | 40 | % |
Depreciation | $ | 11 | | | $ | 7 | | | $ | — | | | $ | 18 | |
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Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended September 30, 2014: |
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(in millions) | | | | | | | | | | | | | |
Segment profit | $ | 429 | | | | | | | | | | | | | |
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Less: | | | | | | | | | | | | | |
Purchased software amortization | 31 | | | | | | | | | | | | | |
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Other intangibles amortization | 16 | | | | | | | | | | | | | |
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Software development costs capitalized | — | | | | | | | | | | | | | |
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Internally developed software products amortization | 44 | | | | | | | | | | | | | |
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Share-based compensation expense | 22 | | | | | | | | | | | | | |
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Other expenses, net (1) | (4 | ) | | | | | | | | | | | | |
Interest expense, net | 12 | | | | | | | | | | | | | |
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Income from continuing operations before income taxes | $ | 308 | | | | | | | | | | | | | |
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-1 | Other expenses, net consists of approximately $12 million of costs associated with the Fiscal 2014 Plan, certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs. | | | | | | | | | | | | | | |
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Six Months Ended September 30, 2014 | Mainframe | | Enterprise | | Services | | Total |
(dollars in millions) | Solutions | Solutions |
Revenue | $ | 1,224 | | | $ | 746 | | | $ | 178 | | | $ | 2,148 | |
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Expenses | 469 | | | 652 | | | 171 | | | 1,292 | |
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Segment profit | $ | 755 | | | $ | 94 | | | $ | 7 | | | $ | 856 | |
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Segment operating margin | 62 | % | | 13 | % | | 4 | % | | 40 | % |
Depreciation | $ | 23 | | | $ | 14 | | | $ | — | | | $ | 37 | |
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Reconciliation of segment profit to income from continuing operations before income taxes for the six months ended September 30, 2014: |
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(in millions) | | | | | | | | | | | | | |
Segment profit | $ | 856 | | | | | | | | | | | | | |
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Less: | | | | | | | | | | | | | |
Purchased software amortization | 59 | | | | | | | | | | | | | |
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Other intangibles amortization | 31 | | | | | | | | | | | | | |
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Software development costs capitalized | — | | | | | | | | | | | | | |
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Internally developed software products amortization | 83 | | | | | | | | | | | | | |
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Share-based compensation expense | 42 | | | | | | | | | | | | | |
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Other expenses, net (1) | 8 | | | | | | | | | | | | | |
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Interest expense, net | 26 | | | | | | | | | | | | | |
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Income from continuing operations before income taxes | $ | 607 | | | | | | | | | | | | | |
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-1 | Other expenses, net consists of approximately $21 million of costs associated with the Fiscal 2014 Plan, certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs. | | | | | | | | | | | | | | |
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Three Months Ended September 30, 2013 | Mainframe | | Enterprise | | Services | | Total |
(dollars in millions) | Solutions | Solutions |
Revenue | $ | 624 | | | $ | 384 | | | $ | 97 | | | $ | 1,105 | |
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Expenses | 232 | | | 337 | | | 88 | | | 657 | |
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Segment profit | $ | 392 | | | $ | 47 | | | $ | 9 | | | $ | 448 | |
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Segment operating margin | 63 | % | | 12 | % | | 9 | % | | 41 | % |
Depreciation | $ | 13 | | | $ | 9 | | | $ | — | | | $ | 22 | |
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Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended September 30, 2013: |
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(in millions) | | | | | | | | | | | | | |
Segment profit | $ | 448 | | | | | | | | | | | | | |
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Less: | | | | | | | | | | | | | |
Purchased software amortization | 31 | | | | | | | | | | | | | |
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Other intangibles amortization | 15 | | | | | | | | | | | | | |
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Software development costs capitalized | (8 | ) | | | | | | | | | | | | |
Internally developed software products amortization | 38 | | | | | | | | | | | | | |
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Share-based compensation expense | 20 | | | | | | | | | | | | | |
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Other expenses, net (1) | 7 | | | | | | | | | | | | | |
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Interest expense, net | 13 | | | | | | | | | | | | | |
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Income from continuing operations before income taxes | $ | 332 | | | | | | | | | | | | | |
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-1 | Other expenses, net consists of approximately $2 million of costs associated with the Fiscal 2014 Plan, certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs. | | | | | | | | | | | | | | |
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Six Months Ended September 30, 2013 | Mainframe | | Enterprise | | Services | | Total |
(dollars in millions) | Solutions | Solutions |
Revenue | $ | 1,243 | | | $ | 762 | | | $ | 195 | | | $ | 2,200 | |
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Expenses | 475 | | | 688 | | | 178 | | | 1,341 | |
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Segment profit | $ | 768 | | | $ | 74 | | | $ | 17 | | | $ | 859 | |
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Segment operating margin | 62 | % | | 10 | % | | 9 | % | | 39 | % |
Depreciation | $ | 27 | | | $ | 17 | | | $ | — | | | $ | 44 | |
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Reconciliation of segment profit to income from continuing operations before income taxes for the six months ended September 30, 2013: |
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(in millions) | | | | | | | | | | | | | |
Segment profit | $ | 859 | | | | | | | | | | | | | |
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Less: | | | | | | | | | | | | | |
Purchased software amortization | 59 | | | | | | | | | | | | | |
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Other intangibles amortization | 29 | | | | | | | | | | | | | |
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Software development costs capitalized | (31 | ) | | | | | | | | | | | | |
Internally developed software products amortization | 76 | | | | | | | | | | | | | |
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Share-based compensation expense | 40 | | | | | | | | | | | | | |
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Other expenses, net (1) | 122 | | | | | | | | | | | | | |
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Interest expense, net | 24 | | | | | | | | | | | | | |
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Income from continuing operations before income taxes | $ | 540 | | | | | | | | | | | | | |
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-1 | Other expenses, net consists of approximately $119 million of costs associated with the Fiscal 2014 Plan, certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs. | | | | | | | | | | | | | | |
The table below summarizes the Company’s revenue from the United States and from international (i.e., non-U.S.) locations: |
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| Three Months Ended | | Six Months Ended |
September 30, | September 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
| (in millions) |
United States | $ | 656 | | | $ | 671 | | | $ | 1,299 | | | $ | 1,328 | |
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EMEA (1) | 259 | | | 267 | | | 518 | | | 531 | |
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Other | 164 | | | 167 | | | 331 | | | 341 | |
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Total revenue | $ | 1,079 | | | $ | 1,105 | | | $ | 2,148 | | | $ | 2,200 | |
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-1 | Consists of Europe, the Middle East and Africa. | | | | | | | | | | | | | | |