Segments and Related Information

6 Months Ended

Jun. 30, 2013

Segments and Related Information

7. SEGMENTS AND RELATED INFORMATION

The Outsourced Portals segment is the Company’s only reportable segment and generally includes the Company’s subsidiaries operating enterprise-wide outsourced state and local government portals and the corporate divisions that directly support portal operations. The Other Software & Services category primarily includes the Company’s subsidiaries that provide software development and services, other than enterprise-wide 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. Unallocated corporate-level expenses are reported in the reconciliation of the segment totals to the related consolidated totals as “Other Reconciling Items.” 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). 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 months ended June 30 (in thousands):

	Outsourced Portals		Other Software & Services		Other Reconciling  Items			Consolidated Total
2013
Revenues	$	62,094	$	3,844	$	-		$	65,938
Costs & expenses		37,463		1,321		7,362			46,146
Depreciation & amortization		1,971		14		64			2,049
Operating income (loss)	$	22,660	$	2,509	$	(7,426	)	$	17,743
2012
Revenues	$	49,042	$	2,940	$	-		$	51,982
Costs & expenses		32,606		1,075		6,260			39,941
Amortization of acquisition-related
intangible assets		81		-		-			81
Depreciation & amortization		1,247		14		58			1,319
Operating income (loss)	$	15,108	$	1,851	$	(6,318	)	$	10,641

The following is a reconciliation of total segment operating income to total consolidated income before income taxes for the three months ended June 30 (in thousands):

	2013			2012
Total segment operating income	$	25,169		$	16,959
Other reconciling items		(7,426	)		(6,318	)
Other expense, net		(2	)		-
Consolidated income before income taxes	$	17,741		$	10,641

The table below reflects summarized financial information for the Company’s reportable segments for the six months ended June 30 (in thousands):

	Outsourced Portals		Other Software & Services		Other Reconciling Items			Consolidated Total
2013
Revenues	$	120,136	$	7,026	$	-		$	127,162
Costs & expenses		72,338		2,526		14,756			89,620
Depreciation & amortization		3,918		29		129			4,076
Operating income (loss)	$	43,880	$	4,471	$	(14,885	)	$	33,466
2012
Revenues	$	94,754	$	5,971	$	-		$	100,725
Costs & expenses		63,022		2,074		12,489			77,585
Amortization of acquisition-related
intangible assets		161		-		-			161
Depreciation & amortization		2,481		28		121			2,630
Operating income (loss)	$	29,090	$	3,869	$	(12,610	)	$	20,349

The following is a reconciliation of total segment operating income to total consolidated income before income taxes for the six months ended June 30 (in thousands):

	2013			2012
Total segment operating income	$	48,351		$	32,959
Other reconciling items		(14,885	)		(12,610	)
Other expense, net		(21	)		(1	)
Consolidated income before income taxes	$	33,445		$	20,348

For the three- and six-month periods ended June 30, 2013, the Company’s Texas portal contract accounted for approximately 22% and 23%, respectively, of the Company’s total consolidated revenues. For the three- and six-month periods ended June 30, 2012, the Company’s Texas portal contract accounted for approximately 20% and 21%, respectively, of the Company’s total consolidated revenues. No other state portal contract accounted for more than 10% of the Company’s total consolidated revenues for the three- and six-month periods ended June 30, 2013 or 2012.