Segment Information

6 Months Ended

Jun. 30, 2011

Segment Information

Segment Information

g. The company has two business segments: Services and Technology. Revenue classifications by segment are as follows: Services – systems integration and consulting, outsourcing, infrastructure services and core maintenance; Technology – enterprise-class servers and other technology.

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, 2011 and 2010 was $3.9 million and $.1 million, respectively. The amount for the six months ended June 30, 2011 and 2010 was $4.7 million and $.5 million, respectively. The profit on these transactions is eliminated in Corporate.

The company evaluates business segment performance on operating income exclusive of restructuring charges and unusual and nonrecurring items, which are included in Corporate. Effective January 1, 2011, the company changed the measurement of segment performance that it evaluates to exclude pension income or expense. Prior periods have been reclassified to conform to the 2011 presentation. 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, 2011 and 2010 is presented below (in millions of dollars):

	Total		Corporate			Services		Technology
Three Months Ended June 30, 2011
Customer revenue	$	937.2				$	842.7	$	94.5
Intersegment			$	(22.2	)		.9		21.3
Total revenue	$	937.2	$	(22.2	)	$	843.6	$	115.8
Operating income	$	48.1	$	(15.0	)	$	60.3	$	2.8
Three Months Ended June 30, 2010
Customer revenue	$	1,037.0				$	892.0	$	145.0
Intersegment			$	(36.2	)		1.5		34.7
Total revenue	$	1,037.0	$	(36.2	)	$	893.5	$	179.7
Operating income	$	106.5	$	3.8		$	54.5	$	48.2
Six Months Ended June 30, 2011
Customer revenue	$	1,848.4				$	1,643.0	$	205.4
Intersegment			$	(43.8	)		1.8		42.0
Total revenue	$	1,848.4	$	(43.8	)	$	1,644.8	$	247.4
Operating income	$	90.0	$	(19.5	)	$	92.3	$	17.2
Six Months Ended June 30, 2010
Customer revenue	$	2,014.4				$	1,742.5	$	271.9
Intersegment			$	(59.3	)		2.4		56.9
Total revenue	$	2,014.4	$	(59.3	)	$	1,744.9	$	328.8
Operating income	$	165.0	$	2.4		$	94.5	$	68.1

Presented below is a reconciliation of total business segment operating income to consolidated (loss) income from continuing operations before income taxes (in millions of dollars):

	Three Months Ended June 30						Six Months Ended June 30
	2011			2010			2011			2010
Total segment operating income	$	63.1		$	102.7		$	109.5		$	162.6
Interest expense		(13.3	)		(25.3	)		(39.2	)		(51.8	)
Other income (expense), net		(49.4	)		(7.5	)		(73.2	)		(44.4	)
Corporate and eliminations		(15.0	)		3.8			(19.5	)		2.4
Total (loss) income from continuing operations before income taxes	$	(14.6	)	$	73.7		$	(22.4	)	$	68.8

Customer revenue by classes of similar products or services, by segment, is presented below (in millions of dollars):

	Three Months Ended June 30				Six Months Ended June 30
	2011		2010		2011		2010
Services
Systems integration and consulting	$	286.0	$	335.3	$	570.9	$	630.5
Outsourcing		369.6		383.0		721.5		751.8
Infrastructure services		129.9		115.1		240.1		240.7
Core maintenance		57.2		58.6		110.5		119.5
		842.7		892.0		1,643.0		1,742.5
Technology
Enterprise-class servers		79.6		131.6		179.3		234.0
Other technology		14.9		13.4		26.1		37.9
		94.5		145.0		205.4		271.9
Total	$	937.2	$	1,037.0	$	1,848.4	$	2,014.4

Geographic information about the company's revenue, which is principally based on location of the selling organization, is presented below (in millions of dollars):

	Three Months Ended June 30				Six Months Ended June 30
	2011		2010		2011		2010
United States	$	363.2	$	450.2	$	724.2	$	880.8
United Kingdom		99.1		113.7		198.9		211.6
Other international		474.9		473.1		925.3		922.0
Total	$	937.2	$	1,037.0	$	1,848.4	$	2,014.4