REPORTABLE SEGMENT AND RELATED INFORMATION

9 Months Ended

Sep. 30, 2016

REPORTABLE SEGMENT AND RELATED INFORMATION

5. REPORTABLE SEGMENT AND RELATED INFORMATION

The Outsourced Portals segment is the Company’s only reportable segment and generally includes the Company’s subsidiaries operating outsourced state and local government portals. The Other Software & Services category primarily includes the Company’s subsidiaries that provide software development and digital government services, other than 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. Beginning in the fourth quarter of 2015, certain corporate divisions that support the Company’s portal businesses, which were previously reported in the Outsourced Portals segment, are now reported with all other corporate divisions as unallocated corporate-level expenses and reported in the reconciliation of the segment totals to the related consolidated totals as “Other Reconciling Items.” The new presentation is consistent with the manner by which information is presently used internally by the Company’s chief operating decision maker to evaluate performance and make resource allocation decisions. The prior periods presented have been recast to conform to the current segment reporting. These changes had no impact on total consolidated revenues, total operating expenses or total operating income before income taxes. 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) before income taxes. 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-month period ended September 30 (in thousands):

	Outsourced Portals		Other Software & Services		Other Reconciling Items			Consolidated Total
2016
Revenues	$	74,997	$	5,376	$	-		$	80,373
Costs & expenses		45,140		1,495		11,676			58,311
Depreciation & amortization		792		23		859			1,674
Operating income (loss) before income taxes	$	29,065	$	3,858	$	(12,535	)	$	20,388
2015
Revenues	$	70,123	$	4,924	$	-		$	75,047
Costs & expenses		41,058		1,365		10,577			53,000
Depreciation & amortization		1,174		15		927			2,116
Operating income (loss) before income taxes	$	27,891	$	3,544	$	(11,504	)	$	19,931

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

	Outsourced Portals		Other Software & Services		Other Reconciling Items			Consolidated Total
2016
Revenues	$	223,707	$	15,866	$	-		$	239,573
Costs & expenses		134,878		4,353		34,183			173,414
Depreciation & amortization		2,498		55		2,521			5,074
Operating income (loss) before income taxes	$	86,331	$	11,458	$	(36,704	)	$	61,085
2015
Revenues	$	207,067	$	14,151	$	-		$	221,218
Costs & expenses		125,367		3,976		31,933			161,276
Depreciation & amortization		3,754		33		2,925			6,712
Operating income (loss) before income taxes	$	77,946	$	10,142	$	(34,858	)	$	53,230

For the three- and nine-month periods ended September 30, 2016, the Company’s Texas portal contract accounted for approximately 21% and 20%, respectively, of the Company’s total consolidated revenues and 21% in each of the corresponding prior year periods. No other state portal contract accounted for more than 10% of the Company’s total consolidated revenues.