XML 28 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
Segment Information
 6 Months Ended
Jun. 30, 2016
Segment Reporting [Abstract]  
Segment Information
Segment Information.
The company has two business segments: Services and Technology. Revenue classifications within the Services segment are as follows:
 
•
Cloud & infrastructure services. This represents revenue from work the company performs in the data center and cloud area, technology consulting and technology-based systems integration projects, as well as global service desks and global field services.
•
Application services. This represents revenue from application managed services and application development, maintenance and support work.
•
Business processing outsourcing services. This represents revenue from the management of clients’ specific business processes.
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 June 30, 2016 and 2015 was $0.4 million and $6.0 million, respectively. The amount for the six months ended June 30, 2016 and 2015 was $0.5 million and $7.5 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 six month periods ended June 30, 2016 and 2015 is presented below:
 
 
 
Total
 
Corporate
 
Services
 
Technology
Three Months Ended June 30, 2016
 
 
 
 
 
 
 
 
Customer revenue
 
$
748.9

 
 
 
$
613.8

 
$
135.1

Intersegment
 
 
 
$
(5.9
)
 
—

 
5.9

Total revenue
 
$
748.9

 
$
(5.9
)
 
$
613.8

 
$
141.0

Operating income (loss)
 
$
49.5

 
$
(30.8
)
 
$
12.7

 
$
67.6

Three Months Ended June 30, 2015
 
 
 
 
 
 
 
 
Customer revenue
 
$
764.8

 
 
 
$
661.5

 
$
103.3

Intersegment
 
 
 
$
(22.0
)
 
0.1

 
21.9

Total revenue
 
$
764.8

 
$
(22.0
)
 
$
661.6

 
$
125.2

Operating income (loss)
 
$
(49.5
)
 
$
(83.3
)
 
$
14.3

 
$
19.5


 
 
Total
 
Corporate
 
Services
 
Technology
Six Months Ended June 30, 2016
 
 
 
 
 
 
 
 
Customer revenue
 
$
1,415.7

 
 
 
$
1,208.9

 
$
206.8

Intersegment
 
 
 
$
(11.5
)
 
—

 
11.5

Total revenue
 
$
1,415.7

 
$
(11.5
)
 
$
1,208.9

 
$
218.3

Operating income (loss)
 
$
21.9

 
$
(76.5
)
 
$
16.7

 
$
81.7

Six Months Ended June 30, 2015
 
 
 
 
 
 
 
 
Customer revenue
 
$
1,486.0

 
 
 
$
1,300.5

 
$
185.5

Intersegment
 
 
 
$
(28.7
)
 
0.1

 
28.6

Total revenue
 
$
1,486.0

 
$
(28.7
)
 
$
1,300.6

 
$
214.1

Operating income (loss)
 
$
(79.5
)
 
$
(109.4
)
 
$
5.8

 
$
24.1




Presented below is a reconciliation of total business segment operating income to consolidated income (loss) before income taxes:
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
Total segment operating income
 
$
80.3

 
$
33.8

 
$
98.4

 
$
29.9

Interest expense
 
(7.8
)
 
(2.7
)
 
(12.2
)
 
(5.3
)
Other income (expense), net
 
2.6

 
1.4

 
1.4

 
6.3

Cost reduction charges
 
(10.2
)
 
(52.6
)
 
(37.1
)
 
(52.6
)
Corporate and eliminations
 
(20.6
)
 
(30.7
)
 
(39.4
)
 
(56.8
)
Total income (loss) before income taxes
 
$
44.3

 
$
(50.8
)
 
$
11.1

 
$
(78.5
)

Customer revenue by classes of similar products or services, by segment, is presented below:
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
Services
 
 
 
 
 
 
 
 
Cloud & infrastructure services
 
$
340.0

 
$
387.7

 
$
675.9

 
$
766.1

Application services
 
220.4

 
217.5

 
431.0

 
419.9

Business processing outsourcing services
 
53.4

 
56.3

 
102.0

 
114.5

 
 
613.8

 
661.5

 
1,208.9

 
1,300.5

Technology
 
135.1

 
103.3

 
206.8

 
185.5

Total
 
$
748.9

 
$
764.8

 
$
1,415.7

 
$
1,486.0


Geographic information about the company’s revenue, which is principally based on location of the selling organization, is presented below:
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2016
 
2015
 
2016
 
2015
United States
 
$
348.4

 
$
383.9

 
$
679.3

 
$
725.9

United Kingdom
 
109.3

 
83.6

 
191.3

 
171.5

Other foreign
 
291.2

 
297.3

 
545.1

 
588.6

Total
 
$
748.9

 
$
764.8

 
$
1,415.7

 
$
1,486.0