Segment Information

9 Months Ended

Jun. 30, 2011

Segment Information

6. Segment Information

We are organized into the following three reportable segments to align with internal management of our worldwide business operations based on product offerings.

• Applications. Our Applications products are pre-configured Decision Management applications and associated professional services, designed for a specific type of business problem or process, such as marketing, account origination, customer management, fraud and insurance claims management.

• Scores. This segment includes our business-to-business scoring solutions, our myFICO^® solutions for consumers and associated professional services. Our scoring solutions give our clients access to analytics that can be easily integrated into their transaction streams and decision-making processes. Our scoring solutions are distributed through major credit reporting agencies, as well as services through which we provide our scores to clients directly.

• Tools. The Tools segment is composed of software tools and associated professional services that clients can use to create their own custom Decision Management applications.

Our Chief Executive Officer evaluates segment financial performance based on segment revenues and segment operating income. Segment operating expenses consist of direct and indirect costs principally related to personnel, facilities, consulting, travel and depreciation. Indirect costs are allocated to the segments generally based on relative segment revenues, fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. We do not allocate share-based compensation expense, restructuring expense, amortization expense, various corporate charges and certain other income and expense measures to our segments. These income and expense items are not allocated because they are not considered in evaluating the segment’s operating performance. Our Chief Executive Officer does not evaluate the financial performance of each segment based on its respective assets or capital expenditures; rather, depreciation amounts are allocated to the segments from their internal cost centers as described above.

The following tables summarize segment information for the three and nine months ended June 30, 2011 and 2010:

	Quarter Ended June 30, 2011
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	63,355		$	40,798		$	7,587		$	—		$	111,740
Professional services		25,893			610			3,079			—			29,582
License		2,812			385			6,160			—			9,357
Total segment revenues		92,060			41,793			16,826			—			150,679
Segment operating expense		(64,413	)		(11,739	)		(13,270	)		(18,352	)		(107,774	)
Segment operating income	$	27,647		$	30,054		$	3,556		$	(18,352	)		42,905
Unallocated share-based compensation expense														(3,557	)
Unallocated amortization expense														(1,942	)
Operating income														37,406
Unallocated interest income														1,923
Unallocated interest expense														(8,023	)
Unallocated other income, net														631
Income before income taxes													$	31,937
Depreciation expense	$	3,050		$	232		$	377		$	252		$	3,911

	Quarter Ended June 30, 2010
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	62,939		$	46,153		$	6,810		$	—		$	115,902
Professional services		21,500			352			3,689			—			25,541
License		6,991			—			6,895			—			13,886
Total segment revenues		91,430			46,505			17,394			—			155,329
Segment operating expense		(68,003	)		(15,907	)		(15,409	)		(18,397	)		(117,716	)
Segment operating income	$	23,427		$	30,598		$	1,985		$	(18,397	)		37,613
Unallocated share-based compensation expense														(3,853	)
Unallocated amortization expense														(2,683	)
Operating income														31,077
Unallocated interest income														393
Unallocated interest expense														(5,462	)
Unallocated other income, net														701
Income before income taxes													$	26,709
Depreciation expense	$	3,753		$	333		$	540		$	325		$	4,951

	Nine Months Ended June 30, 2011
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	194,054		$	121,197		$	22,682		$	—		$	337,933
Professional services		74,128			1,579			8,824			—			84,531
License		17,450			792			18,728			—			36,970
Total segment revenues		285,632			123,568			50,234			—			459,434
Segment operating expense		(211,162	)		(42,252	)		(41,417	)		(48,412	)		(343,243	)
Segment operating income	$	74,470		$	81,316		$	8,817		$	(48,412	)		116,191
Unallocated share-based compensation expense														(11,762	)
Unallocated amortization expense														(5,804	)
Unallocated restructuring expense														(12,391	)
Operating income														86,234
Unallocated interest income														2,084
Unallocated interest expense														(24,401	)
Unallocated other income, net														477
Income before income taxes													$	64,394
Depreciation expense	$	9,971		$	783		$	1,289		$	776		$	12,819

	Nine Months Ended June 30, 2010
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	194,376		$	129,181		$	21,152		$	—		$	344,709
Professional services		62,583			1,411			11,710			—			75,704
License		14,239			—			15,893			—			30,132
Total segment revenues		271,198			130,592			48,755			—			450,545
Segment operating expense		(201,525	)		(45,386	)		(43,298	)		(52,412	)		(342,621	)
Segment operating income	$	69,673		$	85,206		$	5,457		$	(52,412	)		107,924
Unallocated share-based compensation expense														(13,235	)
Unallocated amortization expense														(8,918	)
Operating income														85,771
Unallocated interest income														1,439
Unallocated interest expense														(16,293	)
Unallocated other income, net														1,347
Income before income taxes													$	72,264
Depreciation expense	$	11,257		$	1,013		$	1,583		$	991		$	14,844