SEGMENT REPORTING

6 Months Ended

Jun. 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 June 30, 2011. The intersegment revenues in the three months ended June 30, 2011 related primarily to call center and printing services performed by the settlement administration segment for the bankruptcy segment.

	Three Months Ended June 30, 2011
	E-discovery		Bankruptcy		Settlement Administration		Eliminations			Total
	(in thousands)
Revenue:
Operating revenue before reimbursed direct costs	$	38,717	$	21,532	$	8,442	$	—		$	68,691
Intersegment revenue	3		—		370		(373		)	—
Operating revenue before reimbursed direct costs	38,720		21,532		8,812		(373		)	68,691
Operating revenue from reimbursed direct costs	131		1,167		3,965		—			5,263
Total revenue	38,851		22,699		12,777		(373		)	73,954
Direct costs, general and administrative costs	22,555		11,273		11,877		(373		)	45,332
Segment performance measure	$	16,296	$	11,426	$	900	$	—		$	28,622

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

	Three Months Ended June 30, 2010
	E-discovery		Bankruptcy		Settlement Administration		Eliminations			Total
	(in thousands)
Revenue:
Operating revenue before reimbursed direct costs	$	19,786	$	24,418	$	11,835	$	—		$	56,039
Intersegment revenue	28		—		472		(500		)	—
Operating revenue before reimbursed direct costs	19,814		24,418		12,307		(500		)	56,039
Operating revenue from reimbursed direct costs	67		2,633		7,194		—			9,894
Total revenue	19,881		27,051		19,501		(500		)	65,933
Direct costs, general and administrative costs	11,212		13,836		16,700		(500		)	41,248
Segment performance measure	$	8,669	$	13,215	$	2,801	$	—		$	24,685

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

	Three Months Ended June 30,
	2011			2010
	(in thousands)
Segment performance measure	$	28,622		$	24,685
Corporate and unallocated expenses	(8,072		)	(7,466		)
Share-based compensation expense	(1,680		)	(2,191		)
Depreciation and software and leasehold amortization	(5,806		)	(5,246		)
Amortization of intangible assets	(6,195		)	(1,696		)
Other operating expense	(652		)	(25		)
Interest expense, net	(1,746		)	(315		)
Income before income taxes	$	4,471		$	7,746

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

	Six Months Ended June 30, 2011
	E-discovery		Bankruptcy		Settlement Administration		Eliminations			Total
	(in thousands)
Revenue:
Operating revenue before reimbursed direct costs	$	59,688	$	44,306	$	18,910	$	—		$	122,904
Intersegment revenue	8		—		906		(914		)	—
Operating revenue before reimbursed direct costs	59,696		44,306		19,816		(914		)	122,904
Operating revenue from reimbursed direct costs	211		2,154		8,307		—			10,672
Total revenue	59,907		46,460		28,123		(914		)	133,576
Direct costs, general and administrative costs	33,780		22,535		25,915		(914		)	81,316
Segment performance measure	$	26,127	$	23,925	$	2,208	$	—		$	52,260

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

	Six Months Ended June 30, 2010
	E-Discovery		Bankruptcy		Settlement Administration		Eliminations			Total
	(in thousands)
Revenue:
Operating revenue before reimbursed direct costs	$	36,582	$	48,995	$	19,573	$	—		$	105,150
Intersegment revenue	30		—		869		(899		)	—
Operating revenue before reimbursed direct costs	36,612		48,995		20,442		(899		)	105,150
Operating revenue from reimbursed direct costs	95		5,000		11,059		—			16,154
Total revenue	36,707		53,995		31,501		(899		)	121,304
Direct costs, general and administrative costs	21,100		27,101		27,787		(899		)	75,089
Segment performance measure	$	15,607	$	26,894	$	3,714	$	—		$	46,215

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

	Six Months Ended June 30,
	2011			2010
	(in thousands)
Segment performance measure	$	52,260		$	46,215
Corporate and unallocated expenses	(14,275		)	(14,620		)
Share-based compensation expense	(3,517		)	(3,827		)
Depreciation and software and leasehold amortization	(11,013		)	(10,447		)
Amortization of intangible assets	(9,961		)	(3,516		)
Other operating expense	(1,135		)	(69		)
Interest expense, net	(2,551		)	(702		)
Income before income taxes	$	9,808		$	13,034

Following are total assets by segment:

	June 30,  2011		December 31, 2010
	(in thousands)
Assets
E-discovery	$	264,758	$	145,246
Bankruptcy	247,440		260,458
Settlement Administration	53,835		53,830
Corporate and unallocated	39,723		18,684
Total consolidated assets	$	605,756	$	478,218