XML 50 R27.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Segment information | 12 Months Ended
--- | ---
Dec. 31, 2019
Segment Reporting [Abstract] |
Segment information | Segment information Effective January 1, 2018, the company adopted the requirements of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which resulted in an adjustment to Technology revenue and profit of $53.0 million in the first quarter of 2018. The adjustment represents revenue from software license extensions and renewals, which were contracted for in the fourth quarter of 2017 and properly recorded as revenue at that time under the revenue recognition rules then in effect (Topic 605). Topic 606 requires revenue related to software license renewals or extensions to be recorded when the new license term begins, which in the case of the $53.0 million, is January 1, 2018. 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 improve security, reduce costs 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, 2019, 2018 and 2017 was $5.7 million, $4.2 million and $6.3 million, respectively. The profit on these transactions is eliminated in Corporate. The company evaluates business segment performance based on operating income exclusive of postretirement 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 $726 million, $574 million and $571 million in 2019, 2018 and 2017, 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, |  | 2019 |  |  | 2018 |  |  | 2017 |
Services |  |  |  |  |  |
Cloud & infrastructure services |  | $ | 1,567.7 |  |  | $ | 1,363.4 |  |  | $ | 1,334.3 |
Application services |  | 750.4 |  |  | 772.4 |  |  | 791.0 |
BPO services |  | 234.6 |  |  | 250.5 |  |  | 202.9 |
Total Services |  | 2,552.7 |  |  | 2,386.3 |  |  | 2,328.2 |
Technology |  | 396.0 |  |  | 438.7 |  |  | 413.6 |
Total customer revenue |  | $ | 2,948.7 |  |  | $ | 2,825.0 |  |  | $ | 2,741.8 |
Presented below is a reconciliation of segment operating income to consolidated income (loss) before income taxes:
Year ended December 31, |  | 2019 |  |  | 2018 |  |  | 2017 |
Total segment operating income |  | $ | 280.4 |  |  | $ | 305.4 |  |  | $ | 235.4 |
Interest expense |  | (62.1 | ) |  | (64.0 | ) |  | (52.8 | )
Other income (expense), net |  | (136.4 | ) |  | (76.9 | ) |  | (116.4 | )
Cost reduction charges(i) |  | (28.7 | ) |  | (19.7 | ) |  | (135.0 | )
Corporate and eliminations |  | (13.5 | ) |  | (1.6 | ) |  | (3.3 | )
Total income (loss) before income taxes |  | $ | 39.7 |  |  | $ | 143.2 |  |  | $ | (72.1 | )
(i) 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, |  | 2019 |  |  | 2018 |  |  | 2017 |
Total segment assets |  | $ | 1,450.9 |  |  | $ | 1,436.6 |  |  | $ | 1,364.5 |
Cash and cash equivalents |  | 538.8 |  |  | 605.0 |  |  | 733.9 |
Deferred income taxes |  | 114.0 |  |  | 109.3 |  |  | 119.9 |
Operating lease right-of-use assets |  | 127.1 |  |  | — |  |  | — |
Prepaid postretirement assets |  | 136.2 |  |  | 147.6 |  |  | 148.3 |
Other corporate assets |  | 137.0 |  |  | 159.1 |  |  | 175.8 |
Total assets |  | $ | 2,504.0 |  |  | $ | 2,457.6 |  |  | $ | 2,542.4 |
A summary of the company’s operations by business segment for 2019, 2018 and 2017 is presented below:
|  | Total |  |  | Corporate |  |  | Services |  |  | Technology |
2019 |  |  |  |  |  |  |  |
Customer revenue |  | $ | 2,948.7 |  |  | $ | — |  |  | $ | 2,552.7 |  |  | $ | 396.0 |
Intersegment |  | — |  |  | (15.2 | ) |  | — |  |  | 15.2 |
Total revenue |  | $ | 2,948.7 |  |  | $ | (15.2 | ) |  | $ | 2,552.7 |  |  | $ | 411.2 |
Operating income (loss) |  | $ | 238.2 |  |  | $ | (42.2 | ) |  | $ | 108.2 |  |  | $ | 172.2 |
Depreciation and amortization |  | 147.4 |  |  | — |  |  | 91.9 |  |  | 55.5 |
Total assets |  | 2,504.0 |  |  | 1,053.1 |  |  | 1,037.7 |  |  | 413.2 |
Capital expenditures |  | 159.8 |  |  | 7.1 |  |  | 74.0 |  |  | 78.7 |
2018 |  |  |  |  |  |  |  |
Customer revenue |  | $ | 2,825.0 |  |  | $ | — |  |  | $ | 2,386.3 |  |  | $ | 438.7 |
Intersegment |  | — |  |  | (24.7 | ) |  | — |  |  | 24.7 |
Total revenue |  | $ | 2,825.0 |  |  | $ | (24.7 | ) |  | $ | 2,386.3 |  |  | $ | 463.4 |
Operating income (loss) |  | $ | 284.1 |  |  | $ | (21.3 | ) |  | $ | 67.6 |  |  | $ | 237.8 |
Depreciation and amortization |  | 164.1 |  |  | — |  |  | 97.2 |  |  | 66.9 |
Total assets |  | 2,457.6 |  |  | 1,021.0 |  |  | 1,013.1 |  |  | 423.5 |
Capital expenditures |  | 189.3 |  |  | 8.0 |  |  | 92.9 |  |  | 88.4 |
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) |  | $ | 97.1 |  |  | $ | (138.3 | ) |  | $ | 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 |
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, |  | 2019 |  |  | 2018 |  |  | 2017 |
Revenue |  |  |  |  |  |
United States |  | $ | 1,549.9 |  |  | $ | 1,240.0 |  |  | $ | 1,257.0 |
United Kingdom |  | 334.3 |  |  | 360.7 |  |  | 315.8 |
Other foreign |  | 1,064.5 |  |  | 1,224.3 |  |  | 1,169.0 |
Total Revenue |  | $ | 2,948.7 |  |  | $ | 2,825.0 |  |  | $ | 2,741.8 |
Properties, net |  |  |  |  |  |
United States |  | $ | 90.7 |  |  | $ | 85.3 |  |  | $ | 85.8 |
United Kingdom |  | 10.5 |  |  | 5.3 |  |  | 16.7 |
Other foreign |  | 23.2 |  |  | 30.7 |  |  | 40.0 |
Total Properties, net |  | $ | 124.4 |  |  | $ | 121.3 |  |  | $ | 142.5 |
Outsourcing assets, net |  |  |  |  |  |
United States |  | $ | 99.9 |  |  | $ | 97.6 |  |  | $ | 81.1 |
United Kingdom |  | 71.7 |  |  | 86.5 |  |  | 89.9 |
Australia |  | 21.5 |  |  | 21.7 |  |  | 18.1 |
Other foreign |  | 9.4 |  |  | 10.6 |  |  | 13.2 |
Total Outsourcing assets, net |  | $ | 202.5 |  |  | $ | 216.4 |  |  | $ | 202.3 |

X
- References No definition available. + Details
Name: | us-gaap_SegmentReportingAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
Name: | us-gaap_SegmentReportingDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration