SEGMENT AND RELATED INFORMATION

We provide integrated information management solutions and services for the public sector, with a focus on local governments.

We provide our software systems and services and appraisal services through five business units, which focus on the following products:


•	financial management, education and planning, regulatory and maintenance software solutions;


•	financial management, municipal courts, planning, regulatory and maintenance, and land and vital records management software solutions;


•	courts and justice and public safety software solutions;


•	data and insights solutions; and


•	appraisal and tax software solutions and property appraisal services.

In accordance with ASC 280-10, Segment Reporting, the financial management, education and planning, regulatory and maintenance software solutions unit; financial management, municipal courts and land and vital records management software solutions unit; and the courts and justice and public safety software solutions unit meet the criteria for aggregation and are presented in one reportable segment, Enterprise Software (“ES”). The ES segment provides municipal and county governments and schools with software systems and services to meet their information technology and automation needs for mission-critical “back-office” functions such as financial management and courts and justice and public safety processes. The Appraisal and Tax (“A&T”) segment provides systems and software that automate the appraisal and assessment of real and personal property as well as property appraisal outsourcing services for local governments and taxing authorities. Property appraisal outsourcing services include: the physical inspection of commercial and residential properties; data collection and processing; computer analysis for property valuation; preparation of tax rolls; community education; and arbitration between taxpayers and the assessing jurisdiction.

We evaluate performance based on several factors, of which the primary financial measure is business segment operating income. We define segment operating income for our business units as income before noncash amortization of intangible assets associated with their acquisition, interest expense and income taxes. Segment operating income includes intercompany transactions. The majority of intercompany transactions relate to contracts involving more than one unit and are valued based on the contractual arrangement. Segment operating income for corporate primarily consists of compensation costs for the executive management team and certain accounting and administrative staff and share-based compensation expense for the entire company. Corporate segment operating income also includes revenues and expenses related to a company-wide user conference. The accounting policies of the reportable segments are the same as those described in Note 1, “Summary of Significant Accounting Policies.”

Segment assets include net accounts receivable, prepaid expenses and other current assets and net property and equipment. Corporate assets consist of cash and investments, prepaid insurance, intangibles associated with acquisitions, deferred income taxes and net property and equipment mainly related to unallocated information and technology assets.

ES segment capital expenditures included $2.2 million in 2018 and $24.4 million in 2017 for the expansion of existing buildings and purchases of buildings and land.



For the year ended December 31, 2018	Enterprise Software		Appraisal and Tax		Corporate			Totals
Revenues
Software licenses and royalties	$	83,735	$	9,706	$	—		$	93,441
Subscriptions	210,740		9,807		—			220,547
Software services	166,921		24,348		—			191,269
Maintenance	359,904		24,617		—			384,521
Appraisal services	—		21,846		—			21,846
Hardware and other	18,745		32		4,881			23,658
Intercompany	13,155		—		(13,155		)	—
Total revenues	$	853,200	$	90,356	$	(8,274	)	$	935,282
Depreciation and amortization expense	50,130		914		10,715			61,759
Segment operating income	237,159		23,094		(68,572		)	191,681
Capital expenditures	13,973		782		10,377			25,132
Segment assets	$	556,100	$	63,670	$	1,171,193		$	1,790,963



For the year ended December 31, 2017 (As Adjusted)	Enterprise Software		Appraisal and Tax		Corporate			Totals
Revenues
Software licenses and royalties	$	78,388	$	7,854	$	—		$	86,242
Subscriptions	164,317		7,859		—			172,176
Software services	161,245		19,215		—			180,460
Maintenance	337,701		21,618		—			359,319
Appraisal services	—		25,023		—			25,023
Hardware and other	13,057		10		4,612			17,679
Intercompany	10,425		—		(10,425		)	—
Total revenues	$	765,133	$	81,579	$	(5,813	)	$	840,899
Depreciation and amortization expense	43,987		760		8,648			53,395
Segment operating income	229,001		20,788		(51,964		)	197,825
Capital expenditures	28,096		1,181		16,341			45,618
Segment assets	$	365,736	$	46,279	$	1,199,336		$	1,611,351



For the year ended December 31, 2016 (As Adjusted)	Enterprise Software		Appraisal and Tax		Corporate			Totals
Revenues
Software licenses and royalties	$	78,271	$	5,462	$	—		$	83,733
Subscriptions	135,469		7,188		—			142,657
Software services	155,322		16,326		—			171,648
Maintenance	302,409		18,589		—			320,998
Appraisal services	—		26,287		—			26,287
Hardware and other	11,526		16		3,015			14,557
Intercompany	6,742		—		(6,742		)	—
Total revenues	$	689,739	$	73,868	$	(3,727	)	$	759,880
Depreciation and amortization expense	43,434		984		5,355			49,773
Segment operating income	196,054		18,871		(41,832		)	173,093
Capital expenditures	23,843		1,432		11,448			36,723
Segment assets	$	321,886	$	33,005	$	1,023,612		$	1,378,503



Reconciliation of reportable segment operating	Years Ended December 31,
income to the Company's consolidated totals:	2018			2017			2016
				As Adjusted			As Adjusted
Total segment operating income	$	191,681		$	197,825		$	173,093
Amortization of acquired software	(22,972		)	(21,686		)	(22,235		)
Amortization of customer and trade name intangibles	(16,217		)	(13,381		)	(13,202		)
Other income (expense), net	3,378			698			(1,998		)
Income before income taxes	$	155,870		$	163,456		$	135,658