SEGMENT REPORTING

9 Months Ended

Sep. 30, 2011

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 6:   SEGMENT REPORTING

We have three reporting segments: E-discovery, bankruptcy and settlement administration.  Our E-discovery business provides collections and forensics, processing, search and review, and document review services to companies and the litigation departments of law firms.  Produced documents are made available primarily through a hosted environment, and our DocuMatrix™ software allows for efficient attorney review and data requests.  Our bankruptcy business provides solutions that address the needs of trustees to administer bankruptcy proceedings and of debtor corporations that file a plan of reorganization.  Our settlement administration business provides managed services including legal notification, claims administration, project administration and controlled disbursement.

The segment performance measure is based on earnings before interest, taxes, depreciation and amortization, other operating expense, and share-based compensation expense.  In management’s evaluation of performance, certain costs, such as compensation for administrative staff and executive management, are not allocated by segment and, accordingly, the following reporting segment results do not include such unallocated costs.

Assets reported within a segment are those assets that can be identified to a segment and primarily consist of trade receivables, property, equipment and leasehold improvements, software, identifiable intangible assets and goodwill.  Cash, tax-related assets, and certain prepaid assets and other assets are not allocated to our segments.  Although we can and do identify long-lived assets such as property, equipment and leasehold improvements, software, and identifiable intangible assets to reporting segments, we do not allocate the related depreciation and amortization to the segment as management evaluates segment performance exclusive of these non-cash charges.

Following is a summary of segment information for the three months ended September 30, 2011. The intersegment revenues in the three months ended September 30, 2011, related primarily to call center and printing services performed by the settlement administration segment for the bankruptcy segment.

	Three Months Ended September 30, 2011
	E-discovery		Bankruptcy		Settlement Administration		Eliminations			Total
	(in thousands)
Revenue:
Operating revenue before reimbursed direct costs	$	36,626	$	23,842	$	9,284	$	—		$	69,752
Intersegment revenue	25		—		564		(589		)	—
Operating revenue before reimbursed direct costs	36,651		23,842		9,848		(589		)	69,752
Operating revenue from reimbursed direct costs	193		2,447		3,719		—			6,359
Total revenue	36,844		26,289		13,567		(589		)	76,111
Direct costs, general and administrative costs	22,043		14,665		11,630		(589		)	47,749
Segment performance measure	$	14,801	$	11,624	$	1,937	$	—		$	28,362

Following is a summary of segment information for the three months ended September 30, 2010. The intersegment revenues in the three months ended September 30, 2010 related primarily to call center and printing services performed by the settlement administration segment for the bankruptcy segment.

	Three Months Ended September 30, 2010
	E-discovery		Bankruptcy		Settlement Administration		Eliminations			Total
	(in thousands)
Revenue:
Operating revenue before reimbursed direct costs	$	19,957	$	21,993	$	10,049	$	—		$	51,999
Intersegment revenue	11		1		433		(445		)	—
Operating revenue before reimbursed direct costs	19,968		21,994		10,482		(445		)	51,999
Operating revenue from reimbursed direct costs	132		2,076		4,080		—			6,288
Total revenue	20,100		24,070		14,562		(445		)	58,287
Direct costs, general and administrative costs	10,734		11,447		13,077		(445		)	34,813
Segment performance measure	$	9,366	$	12,623	$	1,485	$	—		$	23,474

Following is a reconciliation of our segment performance measure to income before income taxes:

	Three Months Ended September 30,
	2011			2010
	(in thousands)
Segment performance measure	$	28,362		$	23,474
Corporate and unallocated expenses	(7,529		)	(6,502		)
Share-based compensation expense	(2,072		)	(2,165		)
Depreciation and software and leasehold amortization	(5,795		)	(4,911		)
Amortization of identifiable intangible assets	(6,146		)	(1,697		)
Other operating expense	1,621			(281		)
Interest expense, net	(1,459		)	(401		)
Income before income taxes	$	6,982		$	7,517

Following is a summary of segment information for the nine months ended September 30, 2011. The intersegment revenues in the nine months ended September 30, 2011, related primarily to call center and printing services performed by the settlement administration segment for the bankruptcy segment.

	Nine Months Ended September 30, 2011
	E-discovery		Bankruptcy		Settlement Administration		Eliminations			Total
	(in thousands)
Revenue:
Operating revenue before reimbursed direct costs	$	96,314	$	68,148	$	28,194	$	—		$	192,656
Intersegment revenue	33		—		1,470		(1,503		)	—
Operating revenue before reimbursed direct costs	96,347		68,148		29,664		(1,503		)	192,656
Operating revenue from reimbursed direct costs	404		4,601		12,026		—			17,031
Total revenue	96,751		72,749		41,690		(1,503		)	209,687
Direct costs, general and administrative costs	55,823		37,200		37,545		(1,503		)	129,065
Segment performance measure	$	40,928	$	35,549	$	4,145	$	—		$	80,622

Following is a summary of segment information for the nine months ended September 30, 2010. The intersegment revenues in the nine months ended September 30, 2010, related primarily to call center and printing services performed by the settlement administration segment for the bankruptcy segment.

	Nine Months Ended September 30, 2010
	E-Discovery		Bankruptcy		Settlement Administration		Eliminations			Total
	(in thousands)
Revenue:
Operating revenue before reimbursed direct costs	$	56,539	$	70,988	$	29,622	$	—		$	157,149
Intersegment revenue	41		1		1,302		(1,344		)	—
Operating revenue before reimbursed direct costs	56,580		70,989		30,924		(1,344		)	157,149
Operating revenue from reimbursed direct costs	227		7,076		15,139		—			22,442
Total revenue	56,807		78,065		46,063		(1,344		)	179,591
Direct costs, general and administrative costs	31,834		38,548		40,864		(1,344		)	109,902
Segment performance measure	$	24,973	$	39,517	$	5,199	$	—		$	69,689

Following is a reconciliation of our segment performance measure to income before income taxes:

	Nine Months Ended September 30,
	2011			2010
	(in thousands)
Segment performance measure	$	80,622		$	69,689
Corporate and unallocated expenses	(21,804		)	(21,122		)
Share-based compensation expense	(5,589		)	(5,992		)
Depreciation and software and leasehold amortization	(16,808		)	(15,358		)
Amortization of identifiable intangible assets	(16,107		)	(5,213		)
Other operating expense	486			(350		)
Interest expense, net	(4,010		)	(1,103		)
Income before income taxes	$	16,790		$	20,551

Following are total assets by segment:

	September 30,  2011		December 31, 2010
	(in thousands)
Assets
E-discovery	$	254,897	$	145,246
Bankruptcy	247,687		260,458
Settlement Administration	54,561		53,830
Corporate and unallocated	36,915		18,684
Total consolidated assets	$	594,060	$	478,218