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Segment information
 12 Months Ended
Dec. 31, 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 and infrastructure services. This represents revenue from helping clients apply cloud and as-a-service delivery models to capitalize on business opportunities, make their end users more productive, and manage and secure their IT infrastructure and operations more economically.
•
Application services. This represents revenue from helping clients transform their business processes by providing advanced solutions for select industries, developing and managing new leading-edge applications, offering advanced data analytics and modernizing existing enterprise applications.
•
Business process outsourcing (BPO) services. This represents revenue from the management of critical processes and functions for clients in target industries, helping them improve performance and reduce costs.
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 software and hardware shipments to customers under Services contracts. The Services segment, in turn, recognizes customer revenue and marketing profits on such shipments of company software and hardware to customers. The Services segment also includes the sale of software and hardware 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 software and hardware 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 years ended December 31, 2016, 2015 and 2014 was $0.7 million, $9.2 million and $17.0 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. No single customer accounts for more than 10% of revenue. Revenue from various agencies of the U.S. Government, which is reported in both business segments, was approximately $564 million, $569 million and $529 million in 2016, 2015 and 2014, respectively.
Corporate assets are principally cash and cash equivalents, prepaid postretirement assets and deferred income taxes. The expense or income related to corporate assets is allocated to the business segments.
Customer revenue by classes of similar products or services, by segment, is presented below:
Year ended December 31,
 
2016

 
2015

 
2014

Services
 
 
 
 
 
 
Cloud & infrastructure services
 
$
1,352.9

 
$
1,513.1

 
$
1,704.9

Application services
 
859.0

 
868.9

 
819.8

BPO services
 
194.4

 
223.6

 
261.0

 
 
2,406.3

 
2,605.6

 
2,785.7

Technology
 
414.4

 
409.5

 
570.7

Total
 
$
2,820.7

 
$
3,015.1

 
$
3,356.4


Presented below is a reconciliation of segment operating income to consolidated income (loss) before income taxes:
Year ended December 31,
 
2016

 
2015

 
2014

Total segment operating income
 
$
208.4

 
$
174.9

 
$
233.6

Interest expense
 
(27.4
)
 
(11.9
)
 
(9.2
)
Other income (expense), net
 
0.3

 
8.2

 
(0.2
)
Cost reduction charges
 
(82.1
)
 
(118.5
)
 
—

Corporate and eliminations
 
(78.7
)
 
(111.5
)
 
(78.7
)
Total income (loss) before income taxes
 
$
20.5

 
$
(58.8
)
 
$
145.5


Presented below is a reconciliation of total business segment assets to consolidated assets:
As of December 31,
 
2016

 
2015

 
2014

Total segment assets
 
$
1,339.0

 
$
1,486.0

 
$
1,533.8

Cash and cash equivalents
 
370.6

 
365.2

 
494.3

Deferred income taxes
 
146.1

 
127.4
*
 
146.3
*
Prepaid postretirement assets
 
33.3

 
45.1

 
19.9

Other corporate assets
 
132.6

 
106.3
*
 
126.7
*
Total assets
 
$
2,021.6

 
$
2,130.0
*
 
$
2,321.0
*

*Changed to conform to the current-year presentation. See Note 5.


A summary of the company’s operations by business segment for 2016, 2015 and 2014 is presented below:
 
 
Total

 
Corporate

 
Services

 
Technology

2016
 
 
 
 
 
 
 
 
Customer revenue
 
$
2,820.7

 
 
 
$
2,406.3

 
$
414.4

Intersegment
 
 
 
$
(22.6
)
 
—

 
22.6

Total revenue
 
$
2,820.7

 
$
(22.6
)
 
$
2,406.3

 
$
437.0

Operating income (loss)
 
$
47.6

 
$
(160.8
)
 
$
46.9

 
$
161.5

Depreciation and amortization
 
155.6

 
 
 
81.8

 
73.8

Total assets
 
2,021.6

 
682.6

 
963.3

 
375.7

Capital expenditures
 
147.1

 
3.0

 
74.8

 
69.3

2015
 
 
 
 
 
 
 
 
Customer revenue
 
$
3,015.1

 
 
 
$
2,605.6

 
$
409.5

Intersegment
 
 
 
$
(49.0
)
 
0.1

 
48.9

Total revenue
 
$
3,015.1

 
$
(49.0
)
 
$
2,605.7

 
$
458.4

Operating income (loss)
 
$
(55.1
)
 
$
(230.0
)
 
$
61.2

 
$
113.7

Depreciation and amortization
 
180.1

 
 
 
104.8

 
75.3

Total assets
 
2,130.0
*
 
644.0
*
 
1,081.7

 
404.3

Capital expenditures
 
213.7

 
1.9

 
143.3

 
68.5

2014
 
 
 
 
 
 
 
 
Customer revenue
 
$
3,356.4

 
 
 
$
2,785.7

 
$
570.7

Intersegment
 
 
 
$
(58.4
)
 
0.3

 
58.1

Total revenue
 
$
3,356.4

 
$
(58.4
)
 
$
2,786.0

 
$
628.8

Operating income
 
$
154.9

 
$
(78.7
)
 
$
96.0

 
$
137.6

Depreciation and amortization
 
168.6

 
 
 
103.2

 
65.4

Total assets
 
2,321.0
*
 
787.2
*
 
1,099.2

 
434.6

Capital expenditures
 
212.8

 
4.9

 
133.8

 
74.1


*Changed to conform to the current-year presentation. See Note 5.
Geographic information about the company’s revenue, which is principally based on location of the selling organization, properties and outsourcing assets, is presented below:
Year ended December 31,
 
2016

 
2015

 
2014

Revenue
 
 
 
 
 
 
United States
 
$
1,309.3

 
$
1,454.9

 
$
1,378.1

United Kingdom
 
348.0

 
375.8

 
435.4

Other foreign
 
1,163.4

 
1,184.4

 
1,542.9

Total
 
$
2,820.7

 
$
3,015.1

 
$
3,356.4

Properties, net
 
 
 
 
 
 
United States
 
$
91.4

 
$
96.9

 
$
111.9

United Kingdom
 
15.1

 
18.8

 
22.0

Other foreign
 
38.8

 
38.1

 
34.8

Total
 
$
145.3

 
$
153.8

 
$
168.7

Outsourcing assets, net
 
 
 
 
 
 
United States
 
$
105.1

 
$
119.4

 
$
99.7

United Kingdom
 
39.0

 
36.6

 
25.8

Other foreign
 
28.4

 
26.0

 
25.4

Total
 
$
172.5

 
$
182.0

 
$
150.9