| Segment Information |
Segment Information We operate within a single industry segment—computer software and related services. Operating segments as defined under GAAP are 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 two operating and reportable segments: (1) Software Products, which includes license and related support revenue (including updates and technical support) for all our products except training-related products; and (2) Services, which includes consulting, implementation, training, computer-based training products, including support on these products, and other services revenue. We do not allocate sales and marketing or administrative expenses to our operating segments as these activities are managed on a consolidated basis. The revenue and operating income attributable to our operating segments are summarized as follows: | | | | | | | | | | | | | | | | | | Three months ended | | Nine months ended | | June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 | | (in thousands) | Revenue: | | | | | | | | Total Software Products segment revenue | $ | 258,805 |
| | $ | 236,306 |
| | $ | 748,482 |
| | $ | 712,174 |
| Total Services segment revenue | 77,829 |
| | 78,690 |
| | 241,777 |
| | 236,522 |
| Total revenue | $ | 336,634 |
| | $ | 314,996 |
| | $ | 990,259 |
| | $ | 948,696 |
| Operating income: (1) | | | | | | | | Software Products segment | $ | 166,639 |
| | $ | 148,904 |
| | $ | 479,736 |
| | $ | 434,031 |
| Services segment | 13,516 |
| | 13,227 |
| | 42,566 |
| | 27,321 |
| Sales and marketing expenses | (91,440 | ) | | (89,443 | ) | | (262,085 | ) | | (282,734 | ) | General and administrative expenses | (34,331 | ) | | (29,473 | ) | | (99,749 | ) | | (100,300 | ) | Total operating income | 54,384 |
| | 43,215 |
| | 160,468 |
| | 78,318 |
| Other income (expense), net | (2,278 | ) | | 3,181 |
| | (6,724 | ) | | (491 | ) | Income before income taxes | $ | 52,106 |
| | $ | 46,396 |
| | $ | 153,744 |
| | $ | 77,827 |
|
| | (1) | We recorded restructuring charges of $0.5 million in the third quarter of 2014, all of which was included in general and administrative expenses. We recorded restructuring charges of $1.6 million in the first nine months of 2014. Software Products included $0.1 million; Services included $0.2 million; sales and marketing expenses included $0.5 million; and general and administrative expenses included $0.8 million of these restructuring charges. We recorded restructuring charges of $3.1 million and $34.3 million in the third quarter and first nine months of 2013, respectively. Software Products included $1.0 million and $12.6 million, respectively; Services included $0.3 million and $6.6 million, respectively; sales and marketing expenses included $1.1 million and $12.8 million, respectively; and general and administrative expenses included $0.7 million and $2.3 million, respectively, of these restructuring charges. |
We report revenue by the following three solution areas: | | • | CAD - PTC Creo® and PTC Mathcad®. |
| | • | Extended PLM - our PLM solutions (primarily PTC Windchill®), our ALM solutions (primarily PTC Integrity™) and our SCM Solutions (primarily PTC Windchill FlexPLM®). |
| | • | SLM - PTC Arbortext® , PTC Servigistics® and ThingWorx® products. |
The amounts presented below reflect reclassifications of revenue between solution areas for historical periods to conform to the current classification. Such reclassifications were less than 2% of each solution area’s total revenue for each period.
| | | | | | | | | | | | | | | | | | Three months ended | | Nine months ended | | June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 | | (in thousands) | Revenue: | | | | | | | | CAD | $ | 149,024 |
| | $ | 135,206 |
| | $ | 423,355 |
| | $ | 403,503 |
| Extended PLM | 145,856 |
| | 139,848 |
| | 435,731 |
| | 422,080 |
| SLM | 41,754 |
| | 39,942 |
| | 131,173 |
| | 123,113 |
| Total revenue | $ | 336,634 |
| | $ | 314,996 |
| | $ | 990,259 |
| | $ | 948,696 |
|
| | | | | | | | | | | | | | | | | | Three months ended | | Nine months ended | | June 28,
2014 | | June 29,
2013 | | June 28,
2014 | | June 29,
2013 | | (in thousands) | Revenue: | | | | | | | | Americas (1) | $ | 130,379 |
| | $ | 129,501 |
| | $ | 403,633 |
| | $ | 380,310 |
| Europe (2) | 130,659 |
| | 115,425 |
| | 385,720 |
| | 353,920 |
| Pacific Rim | 36,422 |
| | 36,268 |
| | 106,976 |
| | 114,179 |
| Japan | 39,174 |
| | 33,802 |
| | 93,930 |
| | 100,287 |
| Total revenue | $ | 336,634 |
| | $ | 314,996 |
| | $ | 990,259 |
| | $ | 948,696 |
|
_________________ | | (1) | Includes revenue in the United States totaling $121.0 million and $121.9 million for the quarters ended June 28, 2014 and June 29, 2013, respectively, and $375.9 million and $350.5 million for the nine months ended June 28, 2014 and June 29, 2013, respectively. |
| | (2) | Includes revenue in Germany totaling $48.9 million and $41.8 million for the quarters ended June 28, 2014 and June 29, 2013, respectively, and $139.5 million and $123.5 million for the nine months ended June 28, 2014 and June 29, 2013, respectively. |
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