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Segment Information
12 Months Ended
Sep. 30, 2016
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 three operating and reportable segments: (1) the Solutions Group, which includes license, subscription, support and cloud services revenue for our core CAD, SLM and PLM products; (2) the IoT Group, which includes license, subscription, support and cloud services revenue for our IoT, analytics and augmented reality solutions, and (3) Professional Services, which includes consulting, implementation and training revenue. Our reported segment profit includes revenue from third party sales of our products and services, less direct controllable segment costs. Direct costs of the segments include certain costs of revenue, research and development and certain marketing costs. Costs excluded from segment margin include cost of revenue, selling expenses, corporate marketing and general and administrative costs that are incurred in support of all of our segments and are not specifically allocated to our segments for management reporting. Additionally, the segment profit does not include stock-based compensation, amortization of intangible assets, restructuring charges and certain other identified costs that we do not allocate to the segments for purposes of evaluating their operational performance.
The revenue and profit attributable to our operating segments are summarized below. We do not produce asset information by reportable segment; therefore, it is not reported.
 
Year ended September 30,
 
2016
 
2015
 
2014
 
(in thousands)
Solutions Group
 
 
 
 
 
Revenue
$
871,225

 
$
980,274

 
$
1,073,426

Direct costs
186,174

 
224,042

 
244,020

Profit
685,051

 
756,232

 
829,406

 
 
 
 
 
 
IoT Group
 
 
 
 
 
Revenue
72,371

 
49,249

 
4,815

Direct costs
83,747

 
28,998

 
8,534

Profit (loss)
(11,376
)
 
20,251

 
(3,719
)
 
 
 
 
 
 
Professional Services
 
 
 
 
 
Revenue
196,937

 
225,719

 
278,726

Direct costs
165,325

 
193,397

 
237,689

Profit
31,612

 
32,322

 
41,037

 
 
 
 
 
 
Total segment revenue
1,140,533

 
1,255,242

 
1,356,967

Total segment costs
435,246

 
446,437

 
490,243

Total segment profit
705,287

 
808,805

 
866,724

 
 
 
 
 
 
Other unallocated operating expenses (1)
666,028

 
723,780

 
641,742

Restructuring charges
76,273

 
43,409

 
28,406

Total operating income (loss)
(37,014
)
 
41,616

 
196,576

Interest and other expense, net
30,178

 
15,091

 
10,464

Income (loss) before income taxes
$
(67,192
)
 
$
26,525

 
$
186,112



(1)
The Solutions Group segment includes depreciation of $5.4 million, $5.6 million and $5.7 million in 2016, 2015 and 2014, respectively. The IoT Group segment includes depreciation of $1.6 million, $1.0 million and $0.1 million in 2016, 2015 and 2014, respectively. The Professional Services segment includes depreciation of $2.0 million, $2.2 million and $2.3 million in 2016, 2015 and 2014, respectively. Unallocated departments includes depreciation of $19.7 million, $20.1 million and $19.0 million in 2016, 2015 and 2014, respectively.

We report revenue by the following four product areas:
CAD: PTC Creo® and PTC Mathcad®.
PLM: PLM solutions (primarily PTC Windchill®), PTC Integrityand Atego®.
SLM: PTC Arbortext® and PTC Servigistics®.
IoT: ThingWorx®, Axeda® and Vuforia.
 
Year ended September 30,
 
2016
 
2015
 
2014
 
(in thousands)
CAD
$
462,307

 
$
511,582

 
$
581,508

PLM
456,285

 
524,741

 
599,312

SLM
141,644

 
166,060

 
170,980

IoT
80,297

 
52,859

 
5,167

Total revenue
$
1,140,533

 
$
1,255,242

 
$
1,356,967


Revenue and long-lived tangible assets for the geographic regions in which we operate is presented below.
 
Year ended September 30,
 
2016
 
2015
 
2014
 
(in thousands)
Revenue:
 
 
 
 
 
Americas (1)
$
487,594

 
$
530,311

 
$
558,671

Europe (2)
424,268

 
467,805

 
528,090

Pacific Rim
123,766

 
139,165

 
148,151

Japan
104,905

 
117,961

 
122,055

Total revenue
$
1,140,533

 
$
1,255,242

 
$
1,356,967

 
September 30,
 
2016
 
2015
 
2014
 
(in thousands)
Long-lived tangible assets:
 
 
 
 
 
Americas (3)
$
48,281

 
$
47,509

 
$
51,027

Europe
6,915

 
7,424

 
7,020

Asia-Pacific
11,917

 
10,229

 
9,736

Total long-lived tangible assets
$
67,113

 
$
65,162

 
$
67,783


(1)
Includes revenue in the United States totaling $463.1 million, $500.6 million and $518.7 million for 2016, 2015 and 2014, respectively.
(2)
Includes revenue in Germany totaling $167.2 million, $177.1 million and $200.3 million for 2016, 2015 and 2014, respectively.
(3)
Substantially all of the Americas long-lived tangible assets are located in the United States.
Our international revenue is presented based on the location of our customer. We license products to customers worldwide. Our sales and marketing operations outside the United States are conducted principally through our international sales subsidiaries throughout Europe and the Asia-Pacific regions. Intercompany sales and transfers between geographic areas are accounted for at prices that are designed to be representative of unaffiliated party transactions.