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Segment Information
 6 Months Ended
Mar. 31, 2014
Segment Information

11. Segment Information

We are organized into the following three reportable segments to align with internal management of our worldwide business operations based on product offerings.

 

  •   Applications. Our Applications products are pre-configured decision management applications and associated professional services, designed for a specific type of business problem or process, such as marketing, account origination, customer management, fraud and insurance claims management.

 

  •   Scores. This segment includes our business-to-business scoring solutions, our myFICO® solutions for consumers and associated professional services. Our scoring solutions give our clients access to analytics that can be easily integrated into their transaction streams and decision-making processes. Our scoring solutions are distributed through major credit reporting agencies, as well as services through which we provide our scores to clients directly.

 

  •   Tools. The Tools segment is composed of software tools and associated professional services that clients can use to create their own custom decision management applications.

Our Chief Executive Officer evaluates segment financial performance based on segment revenues and segment operating income. Segment operating expenses consist of direct and indirect costs principally related to personnel, facilities, consulting, travel and depreciation. Indirect costs are allocated to the segments generally based on relative segment revenues, fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. We do not allocate broad-based incentive expense, share-based compensation expense, restructuring expense, amortization expense, various corporate charges and certain other income and expense measures to our segments. These income and expense items are not allocated because they are not considered in evaluating the segment’s operating performance. Our Chief Executive Officer does not evaluate the financial performance of each segment based on its respective assets or capital expenditures; rather, depreciation amounts are allocated to the segments from their internal cost centers as described above. We have recast certain prior period amounts within this note to conform to the way we internally managed and monitored segment performance during the current fiscal year, reflecting immaterial movements of business activities between segments and changes in cost allocations.

 

The following tables summarize segment information for the quarters and six months ended March 31, 2014 and 2013:

 

     Quarter Ended March 31, 2014  
     Applications     Scores     Tools     Unallocated
Corporate
Expenses		     Total  
     (In thousands)  

Segment revenues:

           

Transactional and maintenance

    $ 76,898      $ 46,560      $ 8,911      $ —        $ 132,369   

Professional services

      28,373        777        5,469        —          34,619   

License

      10,339        521        7,614        —          18,474   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total segment revenues

      115,610        47,858        21,994        —          185,462   

Segment operating expense

      (78,951 )      (10,939 )      (20,804 )      (24,072 )      (134,766 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Segment operating income

    $ 36,659      $ 36,919      $ 1,190      $ (24,072 )      50,696   
  

 

 

    

 

 

    

 

 

    

 

 

    

Unallocated share-based compensation expense

              (9,051 ) 

Unallocated amortization expense

              (2,908 ) 
          

 

 

  

Operating income

              38,737   

Unallocated interest income

              10   

Unallocated interest expense

              (7,109 ) 

Unallocated other expense, net

              (351 ) 
          

 

 

  

Income before income taxes

            $ 31,287   
          

 

 

  

Depreciation expense

    $ 3,461      $ 198      $ 622      $ 656      $ 4,937   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     Quarter Ended March 31, 2013  
     Applications     Scores     Tools     Unallocated
Corporate
Expenses		     Total  
     (In thousands)  

Segment revenues:

           

Transactional and maintenance

    $ 76,012      $ 42,206      $ 8,221      $ —        $ 126,439   

Professional services

      27,315        1,624        5,170        —          34,109   

License

      13,888        232        4,657        —          18,777   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total segment revenues

      117,215        44,062        18,048        —          179,325   

Segment operating expense

      (86,285 )      (12,934 )      (15,438 )      (21,445 )      (136,102 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Segment operating income

    $ 30,930      $ 31,128      $ 2,610      $ (21,445 )      43,223   
  

 

 

    

 

 

    

 

 

    

 

 

    

Unallocated share-based compensation expense

              (6,413 ) 

Unallocated amortization expense

              (3,604 ) 
          

 

 

  

Operating income

              33,206   

Unallocated interest income

              9   

Unallocated interest expense

              (7,855 ) 

Unallocated other income, net

              27   
          

 

 

  

Income before income taxes

            $ 25,387   
          

 

 

  

Depreciation expense

    $ 3,490      $ 223      $ 480      $ 663      $ 4,856   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

     Six Months Ended March 31, 2014  
     Applications     Scores     Tools     Unallocated
Corporate
Expenses		     Total  
     (In thousands)  

Segment revenues:

           

Transactional and maintenance

    $ 154,677      $ 89,878      $ 17,469      $ —        $ 262,024   

Professional services

      55,160        1,366        12,379        —          68,905   

License

      17,689        3,794        17,393        —          38,876   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total segment revenues

      227,526        95,038        47,241        —          369,805   

Segment operating expense

      (160,913 )      (21,314 )      (41,875 )      (45,829 )      (269,931 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Segment operating income

    $ 66,613      $ 73,724      $ 5,366      $ (45,829 )      99,874   
  

 

 

    

 

 

    

 

 

    

 

 

    

Unallocated share-based compensation expense

              (16,286 ) 

Unallocated amortization expense

              (5,921 ) 

Unallocated restructuring and acquisition-related

              (3,660 ) 
          

 

 

  

Operating income

              74,007   

Unallocated interest income

              16   

Unallocated interest expense

              (14,241 ) 

Unallocated other expense, net

              (1,312 ) 
          

 

 

  

Income before income taxes

            $ 58,470   
          

 

 

  

Depreciation expense

    $ 7,098      $ 410      $ 1,236      $ 1,347      $ 10,091   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     Six Months Ended March 31, 2013  
     Applications     Scores     Tools     Unallocated
Corporate
Expenses		     Total  
     (In thousands)  

Segment revenues:

           

Transactional and maintenance

    $ 155,637      $ 84,643      $ 16,057      $ —        $ 256,337   

Professional services

      53,474        2,527        10,445        —          66,446   

License

      32,811        339        13,412        —          46,562   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total segment revenues

      241,922        87,509        39,914        —          369,345   

Segment operating expense

      (166,751 )      (25,480 )      (30,910 )      (47,494 )      (270,635 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Segment operating income

    $ 75,171      $ 62,029      $ 9,004      $ (47,494 )      98,710   
  

 

 

    

 

 

    

 

 

    

 

 

    

Unallocated share-based compensation expense

              (12,245 ) 

Unallocated amortization expense

              (6,976 ) 

Unallocated restructuring and acquisition-related

              (3,289 ) 
          

 

 

  

Operating income

              76,200   

Unallocated interest income

              30   

Unallocated interest expense

              (15,735 ) 

Unallocated other expense, net

              (65 ) 
          

 

 

  

Income before income taxes

            $ 60,430   
          

 

 

  

Depreciation expense

    $ 6,775      $ 439      $ 951      $ 1,292      $ 9,457