SEGMENTS AND RELATED INFORMATION

9 Months Ended

Sep. 30, 2014

SEGMENTS AND RELATED INFORMATION

7. SEGMENTS AND RELATED INFORMATION

The Outsourced Portals segment is the Company’s only reportable segment and includes the Company’s subsidiaries operating 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-month period ended September 30 (in thousands):

	Outsourced Portals		Other Software & Services		Other Reconciling Items			Consolidated Total
2014
Revenues	$	65,304	$	4,223	$	-		$	69,527
Costs & expenses		41,571		1,275		7,910			50,756
Depreciation & amortization		2,201		8		83			2,292
Operating income (loss)	$	21,532	$	2,940	$	(7,993	)	$	16,479
2013
Revenues	$	57,721	$	3,609	$	-		$	61,330
Costs & expenses		42,577		1,057		7,436			51,070
Depreciation & amortization		2,052		13		80			2,145
Operating income (loss)	$	13,092	$	2,539	$	(7,516	)	$	8,115

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

	2014			2013
Total segment operating income	$	24,472		$	15,631
Other reconciling items		(7,993	)		(7,516	)
Other income (expense), net		(19	)		4
Consolidated income before income taxes	$	16,460		$	8,119

 The table below reflects summarized financial information for the Company’s reportable segments for the nine-month period ended September 30 (in thousands):

	Outsourced Portals		Other Software & Services		Other Reconciling Items			Consolidated Total
2014
Revenues	$	193,595	$	12,484	$	-		$	206,079
Costs & expenses		122,901		3,490		22,634			149,025
Depreciation & amortization		6,568		29		222			6,819
Operating income (loss)	$	64,126	$	8,965	$	(22,856	)	$	50,235
2013
Revenues	$	177,857	$	10,635	$	-		$	188,492
Costs & expenses		114,915		3,583		22,192			140,690
Depreciation & amortization		5,969		41		211			6,221
Operating income (loss)	$	56,973	$	7,011	$	(22,403	)	$	41,581

The following is a reconciliation of total segment operating income to total consolidated income before income taxes for the nine-month period ended September 30 (in thousands):

	2014			2013
Total segment operating income	$	73,091		$	63,984
Other reconciling items		(22,856	)		(22,403	)
Other expense, net		(147	)		(17	)
Consolidated income before income taxes	$	50,088		$	41,564

For both the three- and nine-month periods ended September 30, 2014, the Company’s Texas portal contract accounted for approximately 22% of the Company’s total consolidated revenues. For the three- and nine-month periods ended September 30, 2013, the Company’s Texas portal contract accounted for approximately 24% and 23%, 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 nine-month periods ended September 30, 2014 or 2013.