SEGMENT REPORTING

3 Months Ended

Mar. 31, 2013

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 6:   SEGMENT REPORTING

In the first quarter of 2013, we reorganized our internal financial reporting structure.  Under the new structure, we began reporting our financial performance based on the following two reportable segments:  the Technology segment and the Bankruptcy and Settlement Administration segment.  The composition of the segment previously called eDiscovery remains unchanged and is now referred to as the Technology segment.  The former Bankruptcy segment and Settlement Administration segment were combined and will now be reported as the Bankruptcy and Settlement Administration segment.  Although our consolidated results of operation, financial position and cash flows were not impacted we have updated the segment disclosures for prior periods to reflect our new internal reporting structure.

Our Technology segment provides eDiscovery managed services and technology solutions comprised of consulting, collections and forensics, processing, search and review, and document review to companies and law firms.  Produced documents are made available primarily through a hosted environment utilizing our proprietary software DocuMatrix™, and third-party software which allows for efficient attorney review and data requests Our Bankruptcy and Settlement Administration segment provides managed services and technology solutions that address the needs of our customers with respect to litigation, claims and project administration, compliance matters, controlled disbursements corporate restructuring bankruptcy and class action proceedings.

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, certain 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 March 31, 2013.

	Three Months Ended March 31, 2013
	Technology		Bankruptcy and Settlement Administration		Eliminations			Total
	(in thousands)
Revenues:
Operating revenues	$	54,787	$	48,121	$	—		$	102,908
Intersegment revenues	5		—		(5		)	—
Operating revenues including intersegment revenue	54,792		48,121		(5		)	102,908
Reimbursable expenses	287		20,395		—			20,682
Total revenues	55,079		68,516		(5		)	123,590
Direct costs, selling, general and administrative costs	38,687		53,917		(5		)	92,599
Segment performance measure	$	16,392	$	14,599	$	—		$	30,991

Following is a summary of segment information for the three months ended March 31, 2012.

	Three Months Ended March 31, 2012
	Technology		Bankruptcy and Settlement Administration		Eliminations			Total
	(in thousands)
Revenues:
Operating revenues	$	48,848	$	33,979	$	—		$	82,827
Intersegment revenues	48		—		(48		)	—
Operating revenues including intersegment revenue	48,896		33,979		(48		)	82,827
Reimbursable expenses	456		5,189		—			5,645
Total revenues	49,352		39,168		(48		)	88,472
Direct costs, selling, general and administrative costs	31,759		24,949		(48		)	56,660
Segment performance measure	$	17,593	$	14,219	$	—		$	31,812

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

	Three Months Ended March 31,
	2013			2012
	(in thousands)
Segment performance measure	$	30,991		$	31,812
Unallocated corporate expenses	(10,324		)	(11,162		)
Share-based compensation expense	(1,539		)	(1,854		)
Depreciation and software and leasehold amortization	(6,999		)	(6,728		)
Amortization of intangible assets	(4,966		)	(6,769		)
Other operating expense (income)	(47		)	171
Income from operations	7,116			5,470
Interest expense, net	(1,835		)	(2,720		)
Income before income taxes	$	5,281		$	2,750

Following are total assets by segment.

	March 31,  2013		December 31, 2012
	(in thousands)
Assets
Technology	$	337,908	$	335,051
Bankruptcy and Settlement Administration	289,184		296,811
Unallocated corporate	37,637		22,854
Total consolidated assets	$	664,729	$	654,716