Segment Information

3 Months Ended

Jun. 30, 2015

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; charges relating to rebalancing initiatives that are large enough to require approval from the Company’s Board of Directors (i.e., 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 months ended June 30, 2015 and 2014 was as follows:

Three Months Ended June 30, 2015	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	560		$	338		$	79		$	977
Expenses	211			290			71			572
Segment profit	$	349		$	48		$	8		$	405
Segment operating margin	62		%	14		%	10		%	41		%
Depreciation	$	9		$	7		$	—		$	16

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended June 30, 2015:

(in millions)
Segment profit	$	405
Less:
Purchased software amortization	28
Other intangibles amortization	11
Internally developed software products amortization	32
Share-based compensation expense	22
Other expenses, net (1)	8
Interest expense, net	9
Income from continuing operations before income taxes	$	295

(1) Other expenses, net consists of costs associated with certain foreign exchange derivative hedging gains and losses, and other miscellaneous costs.

Three Months Ended June 30, 2014	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	614		$	368		$	87		$	1,069
Expenses	235			325			82			642
Segment profit	$	379		$	43		$	5		$	427
Segment operating margin	62		%	12		%	6		%	40		%
Depreciation	$	12		$	7		$	—		$	19

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended June 30, 2014:

(in millions)
Segment profit	$	427
Less:
Purchased software amortization	28
Other intangibles amortization	15
Internally developed software products amortization	39
Share-based compensation expense	20
Other expenses, net (1)	12
Interest expense, net	14
Income from continuing operations before income taxes	$	299

(1) Other expenses, net consists 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:

	Three Months Ended June 30,
	2015		2014
	(in millions)
United States	$	619	$	643
EMEA (1)	221		259
Other	137		167
Total revenue	$	977	$	1,069

(1) Consists of Europe, the Middle East and Africa.