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Segment Information | 9 Months Ended
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Sep. 30, 2017
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 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, providing digital transformation services, offering advanced data analytics and modernizing existing enterprise applications.
• | Business process outsourcing 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 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, 2017 was immaterial, and for the three months ended September 30, 2016 was $0.1 million. The amount for the nine months ended September 30, 2017 and 2016 was $1.0 million and $0.6 million, respectively. The sales and profit on these transactions are 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, 2017 and 2016 is presented below:
|  | Total |  | Corporate |  | Services |  | Technology
Three Months Ended September 30, 2017 |  |  |  |  |  |  |  |
Customer revenue |  | $ | 666.3 |  |  | $ | — |  |  | $ | 575.5 |  |  | $ | 90.8 |
Intersegment |  | — |  |  | (4.4 | ) |  | — |  |  | 4.4 |
Total revenue |  | $ | 666.3 |  |  | $ | (4.4 | ) |  | $ | 575.5 |  |  | $ | 95.2 |
Operating income (loss) |  | $ | (27.0 | ) |  | $ | (75.3 | ) |  | $ | 18.7 |  |  | $ | 29.6 |
Three Months Ended September 30, 2016 |  |  |  |  |  |  |  |
Customer revenue |  | $ | 683.3 |  |  | $ | — |  |  | $ | 600.9 |  |  | $ | 82.4 |
Intersegment |  | — |  |  | (5.8 | ) |  | — |  |  | 5.8 |
Total revenue |  | $ | 683.3 |  |  | $ | (5.8 | ) |  | $ | 600.9 |  |  | $ | 88.2 |
Operating income (loss) |  | $ | (9.8 | ) |  | $ | (53.9 | ) |  | $ | 15.5 |  |  | $ | 28.6 |
|  | Total |  | Corporate |  | Services |  | Technology
Nine Months Ended September 30, 2017 |  |  |  |  |  |  |  |
Customer revenue |  | $ | 1,997.0 |  |  | $ | — |  |  | $ | 1,735.6 |  |  | $ | 261.4 |
Intersegment |  | — |  |  | (15.1 | ) |  | — |  |  | 15.1 |
Total revenue |  | $ | 1,997.0 |  |  | $ | (15.1 | ) |  | $ | 1,735.6 |  |  | $ | 276.5 |
Operating income (loss) |  | $ | (54.5 | ) |  | $ | (168.1 | ) |  | $ | 36.6 |  |  | $ | 77.0 |
Nine Months Ended September 30, 2016 |  |  |  |  |  |  |  |
Customer revenue |  | $ | 2,099.0 |  |  | $ | — |  |  | $ | 1,809.8 |  |  | $ | 289.2 |
Intersegment |  | — |  |  | (17.3 | ) |  | — |  |  | 17.3 |
Total revenue |  | $ | 2,099.0 |  |  | $ | (17.3 | ) |  | $ | 1,809.8 |  |  | $ | 306.5 |
Operating income (loss) |  | $ | 12.1 |  |  | $ | (130.3 | ) |  | $ | 32.2 |  |  | $ | 110.2 |
Presented below is a reconciliation of total business segment operating income to consolidated loss before income taxes:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2017 |  | 2016 |  | 2017 |  | 2016
Total segment operating income |  | $ | 48.3 |  |  | $ | 44.1 |  |  | $ | 113.6 |  |  | $ | 142.4 |
Interest expense |  | (16.4 | ) |  | (7.7 | ) |  | (36.4 | ) |  | (19.9 | )
Other income (expense), net |  | 3.0 |  |  | 2.3 |  |  | (8.6 | ) |  | 3.7 |
Cost reduction charges(a) |  | (51.8 | ) |  | (31.9 | ) |  | (99.6 | ) |  | (69.0 | )
Corporate and eliminations |  | (23.5 | ) |  | (22.0 | ) |  | (68.5 | ) |  | (61.3 | )
Total loss before income taxes |  | $ | (40.4 | ) |  | $ | (15.2 | ) |  | $ | (99.5 | ) |  | $ | (4.1 | )
(a) | The three and nine months ended September 30, 2017 excludes $5.7 million and $0.6 million, respectively, for net foreign currency translation gains related to exiting foreign countries which are reported in Other income (expense), net in the consolidated statements of income.
Customer revenue by classes of similar products or services, by segment, is presented below:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2017 |  | 2016 |  | 2017 |  | 2016
Services |  |  |  |  |  |  |  |
Cloud & infrastructure services |  | $ | 321.2 |  |  | $ | 341.9 |  |  | $ | 983.4 |  |  | $ | 1,017.8 |
Application services |  | 206.4 |  |  | 210.4 |  |  | 604.3 |  |  | 641.4 |
Business process outsourcing services |  | 47.9 |  |  | 48.6 |  |  | 147.9 |  |  | 150.6 |
|  | 575.5 |  |  | 600.9 |  |  | 1,735.6 |  |  | 1,809.8 |
Technology |  | 90.8 |  |  | 82.4 |  |  | 261.4 |  |  | 289.2 |
Total |  | $ | 666.3 |  |  | $ | 683.3 |  |  | $ | 1,997.0 |  |  | $ | 2,099.0 |
Geographic information about the company’s revenue, which is principally based on location of the selling organization, is presented below:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2017 |  | 2016 |  | 2017 |  | 2016
United States |  | $ | 313.2 |  |  | $ | 327.1 |  |  | $ | 955.5 |  |  | $ | 1,006.4 |
United Kingdom |  | 65.8 |  |  | 72.3 |  |  | 211.3 |  |  | 263.6 |
Other foreign |  | 287.3 |  |  | 283.9 |  |  | 830.2 |  |  | 829.0 |
Total |  | $ | 666.3 |  |  | $ | 683.3 |  |  | $ | 1,997.0 |  |  | $ | 2,099.0 |

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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 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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