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Segment Information | 9 Months Ended
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Sep. 30, 2014
Segment Information | e. Segment Information. The company has two business segments: Services and Technology. Revenue classifications by segment are as follows: Services – systems integration and consulting, outsourcing, infrastructure services and core maintenance; Technology – enterprise-class software and servers and other technology. The accounting policies of each business segment are the same as those followed by the company as a whole. Intersegment sales and transfers are priced as if the sales or transfers were to third parties. Accordingly, the Technology segment recognizes intersegment revenue and manufacturing profit on hardware and software shipments to customers under Services contracts. The Services segment, in turn, recognizes customer revenue and marketing profits on such shipments of company hardware and software to customers. The Services segment also includes the sale of hardware and software products sourced from third parties that are sold to customers through the company’s Services channels. In the company’s consolidated statements of income, the manufacturing costs of products sourced from the Technology segment and sold to Services customers are reported in cost of revenue for Services. Also included in the Technology segment’s sales and operating profit are sales of hardware and software sold to the Services segment for internal use in Services engagements. The amount of such profit included in operating income of the Technology segment for the three months ended September 30, 2014 and 2013 was zero and $1.0 million, respectively. The amount for the nine months ended September 30, 2014 and 2013 was $.4 million and $3.7 million, respectively. The profit on these transactions is eliminated in Corporate. The company evaluates business segment performance based on operating income exclusive of pension income or expense, restructuring charges and unusual and nonrecurring items, which are included in Corporate. All other corporate and centrally incurred costs are allocated to the business segments based principally on revenue, employees, square footage or usage. A summary of the company’s operations by business segment for the three and nine month periods ended September 30, 2014 and 2013 is presented below (in millions of dollars):
|  | Total |  |  | Corporate |  |  | Services |  |  | Technology |
Three Months Ended Sept. 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |
Customer revenue |  | $ | 882.5 |  |  |  |  |  |  | $ | 763.0 |  |  | $ | 119.5 |
Intersegment |  |  |  |  |  | $ | (35.4 | ) |  |  | — |  |  |  | 35.4 |
Total revenue |  | $ | 882.5 |  |  | $ | (35.4 | ) |  | $ | 763.0 |  |  | $ | 154.9 |
Operating income |  | $ | 76.6 |  |  | $ | (15.6 | ) |  | $ | 52.7 |  |  | $ | 39.5 |
Three Months Ended Sept. 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |
Customer revenue |  | $ | 792.1 |  |  |  |  |  |  | $ | 720.0 |  |  | $ | 72.1 |
Intersegment |  |  |  |  |  | $ | (22.3 | ) |  |  | .4 |  |  |  | 21.9 |
Total revenue |  | $ | 792.1 |  |  | $ | (22.3 | ) |  | $ | 720.4 |  |  | $ | 94.0 |
Operating income (loss) |  | $ | 24.0 |  |  | $ | (20.9 | ) |  | $ | 55.2 |  |  | $ | (10.3 | )
Nine Months Ended Sept. 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |
Customer revenue |  | $ | 2,450.6 |  |  |  |  |  |  | $ | 2,166.8 |  |  | $ | 283.8 |
Intersegment |  |  |  |  |  | $ | (58.8 | ) |  |  | .3 |  |  |  | 58.5 |
Total revenue |  | $ | 2,450.6 |  |  | $ | (58.8 | ) |  | $ | 2,167.1 |  |  | $ | 342.3 |
Operating income |  | $ | 72.5 |  |  | $ | (46.6 | ) |  | $ | 94.6 |  |  | $ | 24.5 |
Nine Months Ended Sept. 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |
Customer revenue |  | $ | 2,460.6 |  |  |  |  |  |  | $ | 2,182.7 |  |  | $ | 277.9 |
Intersegment |  |  |  |  |  | $ | (56.5 | ) |  |  | 1.3 |  |  |  | 55.2 |
Total revenue |  | $ | 2,460.6 |  |  | $ | (56.5 | ) |  | $ | 2,184.0 |  |  | $ | 333.1 |
Operating income |  | $ | 63.6 |  |  | $ | (65.6 | ) |  | $ | 107.0 |  |  | $ | 22.2 |
Presented below is a reconciliation of total business segment operating income to consolidated income before income taxes (in millions of dollars):
|  | Three Months Ended Sept. 30 |  |  | Nine Months Ended Sept. 30 |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Total segment operating income |  | $ | 92.2 |  |  | $ | 44.9 |  |  | $ | 119.1 |  |  | $ | 129.2 |
Interest expense |  |  | (2.3 | ) |  |  | (2.4 | ) |  |  | (6.6 | ) |  |  | (7.7 | )
Other income (expense), net |  |  | 3.3 |  |  |  | 1.9 |  |  |  | (9.0 | ) |  |  | 11.1 |
Corporate and eliminations |  |  | (15.6 | ) |  |  | (20.9 | ) |  |  | (46.6 | ) |  |  | (65.6 | )
Total income before income taxes |  | $ | 77.6 |  |  | $ | 23.5 |  |  | $ | 56.9 |  |  | $ | 67.0 |
Customer revenue by classes of similar products or services, by segment, is presented below (in millions of dollars):
|  | Three Months Ended Sept. 30 |  |  | Nine Months Ended Sept. 30 |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Services |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Systems integration and consulting |  | $ | 263.1 |  |  | $ | 227.7 |  |  | $ | 690.6 |  |  | $ | 674.2 |
Outsourcing |  |  | 368.7 |  |  |  | 339.4 |  |  |  | 1,072.2 |  |  |  | 1,055.3 |
Infrastructure services |  |  | 83.9 |  |  |  | 104.7 |  |  |  | 265.7 |  |  |  | 315.3 |
Core maintenance |  |  | 47.3 |  |  |  | 48.2 |  |  |  | 138.3 |  |  |  | 137.9 |
|  |  | 763.0 |  |  |  | 720.0 |  |  |  | 2,166.8 |  |  |  | 2,182.7 |
Technology |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Enterprise-class software and servers |  |  | 107.3 |  |  |  | 54.6 |  |  |  | 260.7 |  |  |  | 246.9 |
Other technology |  |  | 12.2 |  |  |  | 17.5 |  |  |  | 23.1 |  |  |  | 31.0 |
|  |  | 119.5 |  |  |  | 72.1 |  |  |  | 283.8 |  |  |  | 277.9 |
Total |  | $ | 882.5 |  |  | $ | 792.1 |  |  | $ | 2,450.6 |  |  | $ | 2,460.6 |
Geographic information about the company’s revenue, which is principally based on location of the selling organization, is presented below (in millions of dollars):
|  | Three Months Ended Sept. 30 |  |  | Nine Months Ended Sept. 30 |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
United States |  | $ | 377.3 |  |  | $ | 337.6 |  |  | $ | 997.0 |  |  | $ | 1,008.7 |
United Kingdom |  |  | 104.6 |  |  |  | 99.0 |  |  |  | 327.5 |  |  |  | 296.4 |
Other international |  |  | 400.6 |  |  |  | 355.5 |  |  |  | 1,126.1 |  |  |  | 1,155.5 |
Total |  | $ | 882.5 |  |  | $ | 792.1 |  |  | $ | 2,450.6 |  |  | $ | 2,460.6 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 + Details
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