Segment Information

6 Months Ended

Mar. 31, 2012

Segment Information

12. 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 six months ended March 31, 2012 and 2011:

	Quarter Ended March 31, 2012
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	63,523		$	43,636		$	7,684		$	—		$	114,843
Professional services		25,756			521			4,184			—			30,461
License		6,855			268			7,094			—			14,217
Total segment revenues		96,134			44,425			18,962			—			159,521
Segment operating expense		(70,033	)		(13,103	)		(14,567	)		(17,505	)		(115,208	)
Segment operating income	$	26,101		$	31,322		$	4,395		$	(17,505	)		44,313
Unallocated share-based compensation expense														(4,627	)
Unallocated amortization expense														(1,490	)
Operating income														38,196
Unallocated interest income														106
Unallocated interest expense														(7,984	)
Unallocated other expense, net														(634	)
Income before income taxes													$	29,684
Depreciation expense	$	2,385		$	172		$	269		$	205		$	3,031

	Quarter Ended March 31, 2011
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	64,102		$	39,894		$	7,435		$	—		$	111,431
Professional services		23,486			730			2,825			—			27,041
License		8,348			336			5,668			—			14,352
Total segment revenues		95,936			40,960			15,928			—			152,824
Segment operating expense		(72,262	)		(15,262	)		(13,057	)		(15,425	)		(116,006	)
Segment operating income	$	23,674		$	25,698		$	2,871		$	(15,425	)		36,818
Unallocated share-based compensation expense														(4,171	)
Unallocated amortization expense														(1,933	)
Unallocated restructuring expense														(11,522	)
Operating income														19,192
Unallocated interest income														57
Unallocated interest expense														(8,137	)
Unallocated other expense, net														(78	)
Income before income taxes													$	11,034
Depreciation expense	$	3,431		$	271		$	406		$	274		$	4,382
	Six Months Ended March 31, 2012
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	127,795		$	85,833		$	15,398		$	—		$	229,026
Professional services		50,083			809			8,262			—			59,154
License		28,472			325			12,893			—			41,690
Total segment revenues		206,350			86,967			36,553			—			329,870
Segment operating expense		(140,123	)		(26,398	)		(29,908	)		(30,369	)		(226,798	)
Segment operating income	$	66,227		$	60,569		$	6,645		$	(30,369	)		103,072
Unallocated share-based compensation expense														(9,384	)
Unallocated amortization expense														(3,420	)
Operating income														90,268
Unallocated interest income														194
Unallocated interest expense														(15,971	)
Unallocated other expense, net														(1,182	)
Income before income taxes													$	73,309
Depreciation expense	$	5,180		$	392		$	642		$	415		$	6,629

	Six Months Ended March 31, 2011
	Applications			Scores			Tools			Unallocated Corporate Expenses			Total
	(In thousands)
Segment revenues:
Transactional and maintenance	$	130,699		$	80,399		$	15,095		$	—		$	226,193
Professional services		48,235			969			5,745			—			54,949
License		14,638			407			12,568			—			27,613
Total segment revenues		193,572			81,775			33,408			—			308,755
Segment operating expense		(146,749	)		(30,513	)		(28,147	)		(30,060	)		(235,469	)
Segment operating income	$	46,823		$	51,262		$	5,261		$	(30,060	)		73,286
Unallocated share-based compensation expense														(8,205	)
Unallocated amortization expense														(3,862	)
Unallocated restructuring expense														(12,391	)
Operating income														48,828
Unallocated interest income														161
Unallocated interest expense														(16,378	)
Unallocated other expense, net														(154	)
Income before income taxes													$	32,457
Depreciation expense	$	6,921		$	551		$	912		$	524		$	8,908