Segments and Related Information

9 Months Ended

Sep. 30, 2013

Segments and Related Information

7. SEGMENTS AND RELATED INFORMATION

The Outsourced Portals segment is the Company’s only reportable segment and generally includes the Company’s subsidiaries operating enterprise-wide outsourced state and local government portals and the corporate divisions that directly support portal operations. The Other Software & Services category primarily includes the Company’s subsidiaries that provide software development and services, other than enterprise-wide outsourced portal services, to state and local governments as well as federal agencies. Each of the Company’s businesses within the Other Software & Services category is an operating segment and has been grouped together to form the Other Software & Services category, as none of the operating segments meets the quantitative threshold of a separately reportable segment. Unallocated corporate-level expenses are reported in the reconciliation of the segment totals to the related consolidated totals as “Other Reconciling Items.” There have been no significant intersegment transactions for the periods reported. The summary of significant accounting policies applies to all reportable and operating segments.

The measure of profitability by which management, including the Company’s chief operating decision maker, evaluates the performance of its segments and allocates resources to them is operating income (loss). Segment assets or other segment balance sheet information is not presented to the Company’s chief operating decision maker. Accordingly, the Company has not presented information relating to segment assets.

The table below reflects summarized financial information for the Company’s reportable and operating segments for the three months ended September 30 (in thousands):

	Outsourced Portals		Other Software & Services		Other Reconciling Items			Consolidated Total
2013
Revenues	$	57,721	$	3,609	$	-		$	61,330
Costs & expenses		42,577		1,057		7,436			51,070
Depreciation & amortization		2,052		13		80			2,145
Operating income (loss)	$	13,092	$	2,539	$	(7,516	)	$	8,115
2012
Revenues	$	50,198	$	3,008	$	-		$	53,206
Costs & expenses		34,030		1,219		5,842			41,091
Amortization of acquisition-related
intangible assets		53		-		-			53
Depreciation & amortization		1,532		16		58			1,606
Operating income (loss)	$	14,583	$	1,773	$	(5,900	)	$	10,456

The following is a reconciliation of total segment operating income to total consolidated income before income taxes for the three months ended September 30 (in thousands):

	2013			2012
Total segment operating income	$	15,631		$	16,356
Other reconciling items		(7,516	)		(5,900	)
Other income, net		4			-
Consolidated income before income taxes	$	8,119		$	10,456

 The table below reflects summarized financial information for the Company’s reportable segments for the nine months ended September 30 (in thousands):

	Outsourced Portals		Other Software & Services		Other Reconciling Items			Consolidated Total
2013
Revenues	$	177,857	$	10,635	$	-		$	188,492
Costs & expenses		114,915		3,583		22,192			140,690
Depreciation & amortization		5,969		41		211			6,221
Operating income (loss)	$	56,973	$	7,011	$	(22,403	)	$	41,581
2012
Revenues	$	144,952	$	8,979	$	-		$	153,931
Costs & expenses		97,052		3,293		18,331			118,676
Amortization of acquisition-related
intangible assets		214		-		-			214
Depreciation & amortization		4,013		44		179			4,236
Operating income (loss)	$	43,673	$	5,642	$	(18,510	)	$	30,805

The following is a reconciliation of total segment operating income to total consolidated income before income taxes for the nine months ended September 30 (in thousands):

	2013			2012
Total segment operating income	$	63,984		$	49,315
Other reconciling items		(22,403	)		(18,510	)
Other expense, net		(17	)		(1	)
Consolidated income before income taxes	$	41,564		$	30,804

For the three- and nine-month periods ended September 30, 2013, the Company’s Texas portal contract accounted for approximately 24% and 23%, respectively, of the Company’s total consolidated revenues. For each of the three- and nine-month periods ended September 30, 2012, the Company’s Texas portal contract accounted for approximately 21% of the Company’s total consolidated revenues. No other state portal contract accounted for more than 10% of the Company’s total consolidated revenues for the three- and nine-month periods ended September 30, 2013 or 2012.