Segment Information

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segment Information

Segment Information

In January 2021, the company changed its organizational structure to more effectively address evolving client needs. With these changes, the company changed its reportable segments, but this did not impact the consolidated financial statements as of December 31, 2020.

The company’s reportable segments are as follows:

•Digital Workplace Services (DWS), which provides services and IP-led solutions that support clients’ employees’ productivity, satisfaction and ability to securely work anywhere, any time;

•Cloud & Infrastructure Services (C&I), which provides hybrid and multi-cloud solutions in select markets to accelerate innovation and increase efficiency of our clients’ businesses; and

•ClearPath Forward® (CPF), which provides server systems and operating system software and services that are secure, innovative, and reliable for mission-critical processing.

The accounting policies of each 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 CPF segment records intersegment revenue and manufacturing profit on hardware and software shipments to customers under contracts of other segments. These segments, in turn, record customer revenue and marketing profits on such shipments of company hardware and software to customers. In the company’s consolidated statements of income, the manufacturing costs of products sourced from the CPF segment and sold to other segments’ customers are reported in cost of revenue for these other segments. Also included in the CPF segment’s sales and gross profit are sales of hardware and software sold to other segments for internal use in their engagements. The amount of such profit included in gross profit of the CPF segment for the three months ended March 31, 2021 and 2020 was $0.7 million and zero, respectively. The sales and profit on these transactions are eliminated in Corporate.

The company evaluates segment performance based on gross profit exclusive of the service cost component of postretirement income or expense, restructuring charges, amortization of purchased intangibles and unusual and nonrecurring items, which are included in Corporate. During the first quarter of 2021, the company also changed its internal measurement of segment profitability. Prior period amounts have therefore been reclassified to be comparable to the current period’s presentation.

A summary of the company’s operations by segment is presented below:

	Total Segments		DWS		C&I		CPF
Three Months Ended March 31, 2021
Customer revenue	$	432.0	$	141.1	$	123.3	$	167.6
Intersegment	1.0		—		—		1.0
Total revenue	$	433.0	$	141.1	$	123.3	$	168.6
Gross profit	$	133.6	$	18.5	$	12.0	$	103.1
Three Months Ended March 31, 2020
Customer revenue	$	435.9	$	160.2	$	104.0	$	171.7
Intersegment	0.1		—		—		0.1
Total revenue	$	436.0	$	160.2	$	104.0	$	171.8
Gross profit	$	104.5	$	7.2	$	(2.8)	$	100.1

Presented below is a reconciliation of total segment revenue to total consolidated revenue:

	Three Months Ended March 31,
	2021		2020
Total segment revenue	$	433.0	$	436.0
Other revenue	77.8		79.5
Elimination of intercompany revenue	(1.0)		(0.1)
Total consolidated revenue	$	509.8	$	515.4

Other revenue and, in the table below, other gross profit, is comprised of an aggregation of a number of immaterial business activities that principally provide for the management of critical processes and functions for clients in select industries, helping them improve performance and reduce costs.

Presented below is a reconciliation of total segment gross profit to consolidated loss from continuing operations before income taxes:

	Three Months Ended March 31,
	2021		2020
Total segment gross profit	$	133.6	$	104.5
Other gross profit	5.6		8.6
Total gross profit	139.2		113.1
Selling, general and administrative expense	(90.0)		(86.8)
Research and development expense	(5.6)		(6.2)
Interest expense	(10.1)		(13.9)
Other (expense), net	(182.6)		(48.1)
Total loss from continuing operations before income taxes	$	(149.1)	$	(41.9)

Geographic information about the company’s revenue, which is principally based on location of the selling organization, is presented below:

	Three Months Ended March 31,
	2021		2020
United States	$	234.5	$	215.6
United Kingdom	68.0		64.5
Other foreign	207.3		235.3
Total	$	509.8	$	515.4