Segment Information

6 Months Ended

Jun. 30, 2014

Segment Reporting [Abstract]

Segment Information

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated on a regular basis by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources to an individual segment and in assessing performance. The Company's CODM is its Chief Executive Officer.

The Company identifies such segments based upon target client markets because each operating segment helps clients identify and act upon opportunities to improve their business performance, but strategically serves a different market. The Company considered qualitative factors, including the economic characteristics of each operating segment to determine if any qualified for aggregation. More specifically, the Company evaluated the economic characteristics, the nature of products and services, the methods used to provide services, the types of customers, and the nature of the corresponding regulatory environment of its operating segments. As a result, the Company identified the following reportable segments: SapientNitro, Sapient Global Markets, and Sapient Government Services.

The CODM evaluates performance based upon each segment's operating income, which is defined as income before allocations of certain marketing and general and administrative expenses. These charges are excluded from evaluation of performance because these activities and costs generally impact areas that support all of the segments and, therefore, are managed separately. Management does not allocate amortization of purchased intangible assets, acquisition costs and other related charges (benefits), stock-based compensation expense, impairment of intangible asset, restructuring and other related charges (benefits), or interest and other income to the segments for the review of results by the CODM. Asset information by segment is not reported to or reviewed by the CODM, and therefore, the Company has not disclosed asset information for the segments.

The following tables present the service revenues and income from operations attributable to the Company’s reportable segments for the periods presented (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
				As Restated						As Restated
Service Revenues:
SapientNitro	$	241,518		$	212,695		$	469,302		$	408,541
Sapient Global Markets	98,506			87,542			192,295			170,598
Sapient Government Services	22,163			14,097			42,131			27,833
Total service revenues	$	362,187		$	314,334		$	703,728		$	606,972
Income Before Income Taxes:
SapientNitro	$	81,779		$	69,873		$	150,543		$	125,597
Sapient Global Markets	28,705			27,550			55,783			51,563
Sapient Government Services	4,130			3,926			7,844			7,816
Total reportable segments operating income (1)	114,614			101,349			214,170			184,976
Less: reconciling items (2)	(77,938		)	(66,625		)	(156,000		)	(138,158		)
Total income before income taxes	$	36,676		$	34,724		$	58,170		$	46,818

(1) Segment operating income does not represent the total operating results for each business unit, as it does not contain an allocation of certain corporate and general and administrative expenses incurred in support of the business unit segments. Segment operating income reflects restructuring charges allocated to the SapientNitro and Sapient Global Markets reportable segments consisting of immaterial amounts for the three months ended June 30, 2013, and $1.3 million and $0.5 million, respectively, for the six months ended June 30, 2013.

(2) Adjustments that are made to reconcile total reportable segments operating income to consolidated income before income taxes include the following (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
				As Restated						As Restated
Centrally managed functions	$	65,406		$	58,043		$	130,750		$	115,227
Stock-based compensation expense	8,127			7,834			16,094			14,990
Restructuring and other related charges (benefits)	1,871			(31		)	1,864			1,983
Amortization of purchased intangible assets	3,822			3,263			7,041			6,920
Acquisition costs and other related charges (benefits)	46			(1,284		)	428			(384		)
Impairment of intangible asset	—			—			—			1,494
Other (3)	—			—			2,815			—
Interest and other income, net	(1,334		)	(1,200		)	(2,992		)	(2,072		)
Total reconciling items	$	77,938		$	66,625		$	156,000		$	138,158

(3) In the six months ended June 30, 2014, the Company incurred a $2.8 million one-time project personnel expense charge to reimburse employees for costs incurred as part of a restructuring of a global travel program. As this is unrelated to current operations, and neither comparable to prior periods nor predictive of future results, the Company has excluded it from the reportable segments operating income in evaluating management performance.