| Summary of Businesses and Operating Segments Results |
| | | Three Months Ended | | Nine Months Ended | (in millions) | | | February 28, 2013 | | February 29, 2012 | | February 28, 2013 | | February 29, 2012 | New software licenses and cloud software subscriptions: | | | | | | | | | | | | | | Revenues(1) | | | $ | 2,334 | | $ | 2,370 | | $ | 6,321 | | $ | 5,908 | Sales and distribution expenses | | | | 1,379 | | | 1,239 | | | 3,812 | | | 3,595 | Margin(2) | | | $ | 955 | | $ | 1,131 | | $ | 2,509 | | $ | 2,313 | Software license updates and product support: | | | | | | | | | | | | | | Revenues(1) | | | $ | 4,344 | | $ | 4,068 | | $ | 12,752 | | $ | 12,098 | Software license updates and product support expenses | | | | 276 | | | 282 | | | 808 | | | 824 | Margin(2) | | | $ | 4,068 | | $ | 3,786 | | $ | 11,944 | | $ | 11,274 | Total software business: | | | | | | | | | | | | | | Revenues(1) | | | $ | 6,678 | | $ | 6,438 | | $ | 19,073 | | $ | 18,006 | Expenses | | | | 1,655 | | | 1,521 | | | 4,620 | | | 4,419 | Margin(2) | | | $ | 5,023 | | $ | 4,917 | | $ | 14,453 | | $ | 13,587 | Hardware systems products: | | | | | | | | | | | | | | Revenues | | | $ | 671 | | $ | 869 | | $ | 2,185 | | $ | 2,851 | Hardware systems products expenses | | | | 336 | | | 425 | | | 1,086 | | | 1,365 | Sales and distribution expenses | | | | 212 | | | 250 | | | 643 | | | 788 | Margin(2) | | | $ | 123 | | $ | 194 | | $ | 456 | | $ | 698 | Hardware systems support: | | | | | | | | | | | | | | Revenues(1) | | | $ | 572 | | $ | 610 | | $ | 1,740 | | $ | 1,900 | Hardware systems support expenses | | | | 210 | | | 247 | | | 646 | | | 767 | Margin(2) | | | $ | 362 | | $ | 363 | | $ | 1,094 | | $ | 1,133 | Total hardware systems business: | | | | | | | | | | | | | | Revenues(1) | | | $ | 1,243 | | $ | 1,479 | | $ | 3,925 | | $ | 4,751 | Expenses | | | | 758 | | | 922 | | | 2,375 | | | 2,920 | Margin(2) | | | $ | 485 | | $ | 557 | | $ | 1,550 | | $ | 1,831 | Total services business: | | | | | | | | | | | | | | Revenues(1) | | | $ | 1,049 | | $ | 1,145 | | $ | 3,294 | | $ | 3,514 | Services expenses | | | | 826 | | | 893 | | | 2,579 | | | 2,700 | Margin(2) | | | $ | 223 | | $ | 252 | | $ | 715 | | $ | 814 | Totals: | | | | | | | | | | | | | | Revenues(1) | | | $ | 8,970 | | $ | 9,062 | | $ | 26,292 | | $ | 26,271 | Expenses | | | | 3,239 | | | 3,336 | | | 9,574 | | | 10,039 | Margin(2) | | | $ | 5,731 | | $ | 5,726 | | $ | 16,718 | | $ | 16,232 | | | | | | | | | | | | | | |
(1) | Operating segment revenues generally differ from the external reporting classifications due to certain software license products that are classified as service revenues for management reporting purposes. New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud software subscriptions contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying condensed consolidated statements of operations in the amounts of $6 million and $37 million for the three and nine months ended February 28, 2013, respectively. Software license updates and product support revenues for management reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying condensed consolidated statements of operations in the amounts of $4 million and $17 million for the three months ended February 28, 2013 and February 29, 2012, respectively, and $12 million and $40 million for the nine months ended February 28, 2013 and February 29, 2012, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $2 million and $6 million for the three months ended February 28, 2013 and February 29, 2012, respectively, and $10 million and $26 million for the nine months ended February 28, 2013 and February 29, 2012, respectively. See Note 8 for an explanation of these adjustments and the table below for a reconciliation of our total operating segment revenues to our total revenues. | | | (2) | The margins reported reflect only the direct controllable costs of each line of business and do not include allocations of product development, marketing and partner programs, and corporate, general and administrative and information technology expenses. Additionally, the margins do not reflect amortization of intangible assets, acquisition related and other expenses, restructuring expenses, stock-based compensation, interest expense or certain other expenses, net. | | |
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| Reconciliation of Total Operating Segment Margin to Income before Provision for Income Taxes |
Total margin for operating segments | | $ | 5,731 | | $ | 5,726 | | $ | 16,718 | | $ | 16,232 | | New software licenses and cloud software subscriptions revenues(1) | | | (6) | | | — | | | (37) | | | — | | Software license updates and product support revenues(1) | | | (4) | | | (17) | | | (12) | | | (40) | | Hardware systems support revenues(1) | | | (2) | | | (6) | | | (10) | | | (26) | | Product development | | | (1,050) | | | (1,022) | | | (3,180) | | | (2,937) | | Marketing and partner program expenses | | | (136) | | | (138) | | | (426) | | | (426) | | Corporate, general and administrative and information technology expenses | | | (352) | | | (354) | | | (1,062) | | | (1,127) | | Amortization of intangible assets | | | (586) | | | (606) | | | (1,789) | | | (1,790) | | Acquisition related and other | | | (32) | | | (38) | | | 347 | | | (63) | | Restructuring | | | (42) | | | (64) | | | (318) | | | (217) | | Stock-based compensation | | | (172) | | | (157) | | | (536) | | | (453) | | Interest expense | | | (205) | | | (190) | | | (588) | | | (574) | | Other, net | | | (54) | | | 14 | | | (35) | | | — | | Income before provision for income taxes | | $ | 3,090 | | $ | 3,148 | | $ | 9,072 | | $ | 8,579 | | | | | | | | | | | | | | | |
(1) | New software licenses and cloud software subscriptions revenues for management reporting included revenues related to cloud software subscriptions contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying condensed consolidated statements of operations in the amounts of $6 million and $37 million for the three and nine months ended February 28, 2013, respectively. Software license updates and product support revenues for management reporting included revenues related to software support contracts that would have otherwise been recorded by the acquired businesses as independent entities but were not recognized in the accompanying condensed consolidated statements of operations in the amounts of $4 million and $17 million for the three months ended February 28, 2013 and February 29, 2012, respectively, and $12 million and $40 million for the nine months ended February 28, 2013 and February 29, 2012, respectively. In addition, we did not recognize hardware systems support revenues related to hardware systems support contracts that would have otherwise been recorded by the acquired businesses as independent entities in the amounts of $2 million and $6 million for the three months ended February 28, 2013 and February 29, 2012, respectively, and $10 million and $26 million for the nine months ended February 28, 2013 and February 29, 2012, respectively. | | |
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