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Table of Contents
Software License Updates and Product Support:
Software license updates grant customers rights to unspecified software product upgrades
and maintenance releases and patches released during the support period. Product support includes internet access to technical content as well as
internet and telephone access to technical support personnel in our global support centers. Expenses associated with our software license updates
and product support line of business include the cost of providing the support services, largely personnel related expenses, and the amortization
of our intangible assets associated with software support contracts and customer relationships obtained from acquisitions.
Fiscal 2015 Compared to Fiscal 2014: Excluding the effects of unfavorable currency variations of 4 percentage points, software license
updates and product support revenues increased by 8% in fiscal 2015 as a result of new software licenses sold with substantially all of these
customers electing to purchase software support contracts during the trailing 4-quarter period, the renewal of substantially all of the software
support customer base eligible for renewal during the trailing 4-quarter period and incremental revenues from our recent acquisitions. Excluding
the effects of currency rate fluctuations, the Americas contributed 50%, EMEA contributed 36% and Asia Pacific contributed 14% to the
increase in software license updates and product support revenues during fiscal 2015.
As a result of our acquisitions, we recorded adjustments to reduce assumed software support obligations to their estimated fair values at the
acquisition dates. Due to our application of business combination accounting rules, software license updates and product support revenues
related to software support contracts in the amounts of $11 million, $3 million and $14 million that would have been otherwise recorded by our
acquired businesses as independent entities were not recognized in fiscal 2015, 2014 and 2013, respectively. Historically, substantially all of our
software license customers, including customers from acquired companies, renew their software support contracts when such contracts are
eligible for renewal. To the extent these underlying support contracts are renewed, we will recognize the revenues for the full values of these
contracts over the support periods, the substantial majority of which are one year in duration.
61
Year Ended May 31,
Percent Change
Percent Change
(Dollars in millions)
2015
Actual
Constant
2014
Actual
Constant
2013
Software License Updates and Product Support Revenues:
Americas
$
10,418
6%
7%
$
9,858
6%
7%
$
9,322
EMEA
5,920
0%
9%
5,906
10%
7%
5,363
Asia Pacific
2,509
3%
8%
2,442
-
1%
8%
2,457
Total revenues
18,847
4%
8%
18,206
6%
7%
17,142
Expenses:
Software license updates and product support
1,178
3%
8%
1,140
-
1%
0%
1,155
Stock
-
based compensation
21
-
7%
-
7%
22
10%
10%
20
Amortization of intangible assets
741
-
7%
-
7%
801
-
4%
-
4%
836
Total expenses
1,940
-
1%
2%
1,963
-
2%
-
1%
2,011
Total Margin
$
16,907
4%
9%
$
16,243
7%
8%
$
15,131
Total Margin %
90%
89%
88%
% Revenues by Geography:
Americas
55%
54%
55%
EMEA
32%
33%
31%
Asia Pacific
13%
13%
14%
Excluding stock
-
based compensation
Included as a component of
‘
Amortization of Intangible Assets
’
in our consolidated statements of operations
(1)
(2)
(1)
(2)