Segment Information

3 Months Ended

Mar. 31, 2012

Segment Reporting [Abstract]

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 maintenance 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 maintenance on these products, and other support revenue. In our consolidated statements of operations, maintenance revenue is included in service 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						Six months ended
	March 31, 2012			April 2, 2011			March 31, 2012			April 2, 2011
	(in thousands)
Revenue:
Total Software Products segment revenue	$	221,653		$	203,156		$	458,616		$	405,066
Total Services segment revenue	79,472			66,033			160,785			130,675
Total revenue	$	301,125		$	269,189		$	619,401		$	535,741
Operating income: (1)
Software Products segment	$	128,343		$	125,205		$	280,302		$	251,724
Services segment (2)	7,959			4,896			15,854			3,492
Sales and marketing expenses	(98,248		)	(81,163		)	(196,025		)	(165,684		)
General and administrative expenses	(31,151		)	(24,712		)	(60,723		)	(48,196		)
Total operating income	$	6,903		$	24,226		$	39,408		$	41,336

(1) We recorded restructuring charges of $20.8 million in the second quarter of 2012. Software Products included $9.2 million; Services included $2.7 million; sales and marketing expenses included $7.3 million; and general and administrative expenses included $1.6 million of these restructuring charges.

(2) In the first quarter of 2011, we made a strategic decision to enter into a contract with a customer in the automotive industry, for which we expected our costs to exceed our revenue by approximately $5 million. Services segment operating income in the first three months of 2011 included immediate recognition of the approximately $5 million estimated loss on this contract.

We report revenue by product group, Desktop and Enterprise. Desktop revenue includes our CAD Solutions, primarily: Creo Parametric, Creo Elements/Direct, Mathcad and Arbortext authoring products. Enterprise revenue includes our PLM solutions, primarily: Windchill, Arbortext enterprise products, Creo View and Integrity.

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Revenue:
Desktop	$	147,751	$	154,839	$	301,614	$	300,800
Enterprise	153,374		114,350		317,787		234,941
Total revenue	$	301,125	$	269,189	$	619,401	$	535,741

Data for the geographic regions in which we operate is presented below.

	Three months ended				Six months ended
	March 31, 2012		April 2, 2011		March 31, 2012		April 2, 2011
	(in thousands)
Revenue:
Americas (1)	$	109,483	$	94,399	$	226,973	$	194,492
Europe (2)	115,780		105,955		248,955		213,831
Pacific Rim	37,373		36,208		74,623		69,820
Japan	38,489		32,627		68,850		57,598
Total revenue	$	301,125	$	269,189	$	619,401	$	535,741

_________________

(1) Includes revenue in the United States totaling $102.3 million and $89.9 million for the three months ended March 31, 2012 and April 2, 2011, respectively, and $213.0 million and $185.3 million for the six months ended March 31, 2012 and April 2, 2011, respectively.

(2) Includes revenue in Germany totaling $41.2 million and $38.5 million for the three months ended March 31, 2012 and April 2, 2011, respectively, and $97.4 million and $71.8 million for the six months ended March 31, 2012 and April 2, 2011, respectively.