Segment Information

3 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE N – 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; amortization of internally developed software products; certain foreign exchange derivative hedging gains and losses; approved severance and facility actions by the Board; and other miscellaneous costs. 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, 2016 and 2015 was as follows:

Three Months Ended June 30, 2016	Mainframe Solutions			Enterprise Solutions			Services			Total
(dollars in millions)
Revenue	$	551		$	371		$	77		$	999
Expenses	208			324			75			607
Segment profit	$	343		$	47		$	2		$	392
Segment operating margin	62		%	13		%	3		%	39		%
Depreciation	$	9		$	6		$	—		$	15

Reconciliation of segment profit to income from continuing operations before income taxes for the three months ended June 30, 2016:

(in millions)
Segment profit	$	392
Less:
Purchased software amortization	43
Other intangibles amortization	5
Internally developed software products amortization	23
Share-based compensation expense	29
Other expenses, net (1)	—
Interest expense, net	15
Income from continuing operations before income taxes	$	277

(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, 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.

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,
	2016		2015
	(in millions)
United States	$	637	$	619
EMEA (1)	225		221
Other	137		137
Total revenue	$	999	$	977

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