Segment information

The company has two business segments: Services and Technology. Revenue classifications within the Services and Technology 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 developing and managing new leading-edge applications for select industries, 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.


•	Technology. This represents revenue from designing and developing software and offering hardware and other related products to help clients reduce costs, improve security and flexibility and improve the efficiency of their data-center environments.

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, 2017, 2016 and 2015 was $6.3 million, $0.7 million and $9.2 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 $571 million, $564 million and $569 million in 2017, 2016 and 2015, 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,	2017		2016		2015
Services
Cloud & infrastructure services	$	1,317.0	$	1,352.9	$	1,513.1
Application services	808.3		859.0		868.9
BPO services	202.9		194.4		223.6
Total Services	2,328.2		2,406.3		2,605.6
Technology	413.6		414.4		409.5
Total customer revenue	$	2,741.8	$	2,820.7	$	3,015.1

Presented below is a reconciliation of segment operating income to consolidated income (loss) before income taxes:



Year ended December 31,	2017			2016			2015
Total segment operating income	$	235.4		$	208.4		$	174.9
Interest expense	(52.8		)	(27.4		)	(11.9		)
Other income (expense), net	(23.9		)	0.3			8.2
Cost reduction charges^(a)	(135.0		)	(82.1		)	(118.5		)
Corporate and eliminations	(95.8		)	(78.7		)	(111.5		)
Total income (loss) before income taxes	$	(72.1	)	$	20.5		$	(58.8	)

^(a) Year ended December 31, 2017 excludes $11.8 million for net foreign currency losses related to exiting foreign countries which are reported in Other income (expense), net in the consolidated statements of income.

Presented below is a reconciliation of total business segment assets to consolidated assets:



As of December 31,	2017		2016		2015
Total segment assets	$	1,364.5	$	1,339.0	$	1,486.0
Cash and cash equivalents	733.9		370.6		365.2
Deferred income taxes	119.9		146.1		127.4
Prepaid postretirement assets	148.3		33.3		45.1
Other corporate assets	175.8		132.6		106.3
Total assets	$	2,542.4	$	2,021.6	$	2,130.0

A summary of the company’s operations by business segment for 2017, 2016 and 2015 is presented below:



	Total			Corporate			Services		Technology
2017
Customer revenue	$	2,741.8		$	—		$	2,328.2	$	413.6
Intersegment	—			(25.9		)	—		25.9
Total revenue	$	2,741.8		$	(25.9	)	$	2,328.2	$	439.5
Operating income (loss)	$	4.6		$	(230.8	)	$	64.8	$	170.6
Depreciation and amortization	156.5			—			84.6		71.9
Total assets	2,542.4			1,177.9			985.9		378.6
Capital expenditures	176.5			4.3			102.7		69.5
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

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,	2017		2016		2015
Revenue
United States	$	1,257.0	$	1,309.3	$	1,454.9
United Kingdom	315.8		348.0		375.8
Other foreign	1,169.0		1,163.4		1,184.4
Total Revenue	$	2,741.8	$	2,820.7	$	3,015.1
Properties, net
United States	$	85.8	$	91.4	$	96.9
United Kingdom	16.7		15.1		18.8
Other foreign	40.0		38.8		38.1
Total Properties, net	$	142.5	$	145.3	$	153.8
Outsourcing assets, net
United States	$	81.1	$	105.1	$	119.4
United Kingdom	89.9		39.0		36.6
Other foreign	31.3		28.4		26.0
Total Outsourcing assets, net	$	202.3	$	172.5	$	182.0