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Segment Information
 6 Months Ended
Jun. 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 June 30, 2017 and 2016 was $0.9 million and $0.4 million, respectively. The amount for the six months ended June 30, 2017 and 2016 was $1.0 million and $0.5 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 six month periods ended June 30, 2017 and 2016 is presented below:
 
 
 
Total
 
Corporate
 
Services
 
Technology
Three Months Ended June 30, 2017
 
 
 
 
 
 
 
 
Customer revenue
 
$
666.2

 
$
—

 
$
574.8

 
$
91.4

Intersegment
 
—

 
(5.4
)
 
—

 
5.4

Total revenue
 
$
666.2

 
$
(5.4
)
 
$
574.8

 
$
96.8

Operating income (loss)
 
$
(24.8
)
 
$
(49.8
)
 
$
(9.4
)
 
$
34.4

 
 
 
 
 
 
 
 
 
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


Six Months Ended June 30, 2017
 
 
 
 
 
 
 
 
Customer revenue
 
$
1,330.7

 
$
—

 
$
1,160.1

 
$
170.6

Intersegment
 
—

 
(10.7
)
 
—

 
10.7

Total revenue
 
$
1,330.7

 
$
(10.7
)
 
$
1,160.1

 
$
181.3

Operating income (loss)
 
$
(27.5
)
 
$
(92.8
)
 
$
17.9

 
$
47.4

 
 
 
 
 
 
 
 
 
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



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,
 
 
2017
 
2016
 
2017
 
2016
Total segment operating income
 
$
25.0

 
$
80.3

 
$
65.3

 
$
98.4

Interest expense
 
(14.3
)
 
(7.8
)
 
(20.0
)
 
(12.2
)
Other income (expense), net
 
(3.2
)
 
2.6

 
(11.6
)
 
1.4

Cost reduction charges(a)
 
(27.7
)
 
(10.2
)
 
(47.8
)
 
(37.1
)
Corporate and eliminations
 
(22.1
)
 
(20.6
)
 
(45.0
)
 
(39.4
)
Total income (loss) before income taxes
 
$
(42.3
)
 
$
44.3

 
$
(59.1
)
 
$
11.1

(a)
The three and six months ended June 30, 2017 excludes $(0.2) million and $5.1 million, respectively, for foreign currency translation (gains) losses 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 June 30,
 
Six Months Ended
June 30,
 
 
2017
 
2016
 
2017
 
2016
Services
 
 
 
 
 
 
 
 
Cloud & infrastructure services
 
$
326.9

 
$
340.0

 
$
662.2

 
$
675.9

Application services
 
196.4

 
220.4

 
397.9

 
431.0

Business process outsourcing services
 
51.5

 
53.4

 
100.0

 
102.0

 
 
574.8

 
613.8

 
1,160.1

 
1,208.9

Technology
 
91.4

 
135.1

 
170.6

 
206.8

Total
 
$
666.2

 
$
748.9

 
$
1,330.7

 
$
1,415.7


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,
 
 
2017
 
2016
 
2017
 
2016
United States
 
$
308.5

 
$
348.4

 
$
642.3

 
$
679.3

United Kingdom
 
66.6

 
109.3

 
145.5

 
191.3

Other foreign
 
291.1

 
291.2

 
542.9

 
545.1

Total
 
$
666.2

 
$
748.9

 
$
1,330.7

 
$
1,415.7