REPORTABLE SEGMENTS AND RELATED INFORMATION

12 Months Ended

Dec. 31, 2014

REPORTABLE SEGMENTS AND RELATED INFORMATION

11. REPORTABLE SEGMENTS AND RELATED INFORMATION

The Outsourced Portals segment is the Company’s only reportable segment and generally 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 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) before income taxes. 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 years ended December 31:

	Outsourced Portals		Other Software & Services		Other Reconciling Items			Consolidated Total
2014
Revenues	$	255,743,418	$	16,353,153	$	-		$	272,096,571
Costs & expenses		169,651,750		4,896,703		25,357,029			199,905,482
Depreciation & amortization		8,817,939		36,999		322,080			9,177,018
Operating income (loss) before income taxes	$	77,273,729	$	11,419,451	$	(25,679,109	)	$	63,014,071
2013
Revenues	$	235,183,005	$	14,095,660	$	-		$	249,278,665
Costs & expenses (1)		157,157,237		4,806,810		26,422,778			188,386,825
Depreciation & amortization		8,001,597		53,475		278,017			8,333,089
Operating income (loss) before income taxes	$	70,024,171	$	9,235,375	$	(26,700,795	)	$	52,558,751
2012
Revenues	$	198,414,662	$	11,757,514	$	-		$	210,172,176
Costs & expenses (1)		134,866,958		4,538,186		21,072,941			160,478,085
Depreciation & amortization		6,225,114		60,557		232,861			6,518,532
Operating income (loss) before income taxes	$	57,322,590	$	7,158,771	$	(21,305,802	)	$	43,175,559

(1) The Company reclassified certain income statement employee benefit-related expenses for the years ended December 31, 2013 and 2012 to conform to the new 2014 presentation. The reclassification resulted in a reduction of costs & expenses in Other Reconciling Items of $4.0 million and $3.4 million for the years ended December 31, 2013 and 2012, respectively, and a corresponding increase in costs & expenses in Outsourced Portals ($3.9 million and $3.3 million for the years ended December 31, 2013 and 2012, respectively) and Other Software & Services ($0.1 million for each of the years ended December 31, 2013 and 2012). See Note 2

The highest volume, most commercially valuable service the Company offers is access to motor vehicle driver history records (referred to as DHR) through the Company’s outsourced government portals. This service accounted for approximately 35%, 34% and 34% of the Company’s total consolidated revenues in 2014, 2013 and 2012, respectively. In addition, the Company offers a service in several states for online motor vehicle registration and licensing. This service accounted for approximately 12%, 13% and 10% of the Company’s total consolidated revenues in 2014, 2013 and 2012, respectively. No other services accounted for 10% or more of the Company’s total consolidated revenues for the years ended December 31, 2014, 2013 or 2012.

A primary source of revenue is derived from data resellers, who use the Company’s government portals to access DHR records for the auto insurance industry. For the years ended December 31, 2014, 2013 and 2012, one of these data resellers accounted for approximately 24%, 22% and 23% of the Company’s total consolidated revenues, respectively. At December 31, 2014 and 2013, this one data reseller accounted for approximately 24% and 23%, respectively, of the Company’s accounts receivable.

For the years ended December 31, 2014, 2013 and 2012, the Company’s Texas portal accounted for approximately 22%, 23% and 21% of the Company’s total consolidated revenues, respectively. No other state portal contract accounted for more than 10% of the Company’s total consolidated revenues for the years ended December 31, 2014, 2013 or 2012.