Segment Information

12 Months Ended

Dec. 31, 2011

Segment Information [Abstract]

Segment Information

15. Segment information

The company has two business segments: Services and Technology. The products and services of each segment are marketed throughout the world to commercial businesses and governments. Revenue classifications by segment are as follows: Services – systems integration and consulting, outsourcing, infrastructure services and core maintenance; Technology – enterprise-class software and servers and other technology.

The accounting policies of each business segment are the same as those described in the summary of significant accounting policies. 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 profit on such shipments of company hardware and software to customers. The Services segment also includes 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 years ended December 31, 2011, 2010 and 2009, was $8.2 million, $7.2 million and $14.8 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.

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 $652 million, $842 million and $927 million in 2011, 2010 and 2009, 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. In 2009, corporate assets include an offset for interests in accounts receivable that have been recorded as sales, because such receivables were included in the assets of the business segments.

Customer revenue by classes of similar products or services, by segment, is presented below:

Year ended December 31 (millions)	2011		2010		2009
Services
Systems integration and consulting	$	1,164.7	$	1,223.1	$	1,360.0
Outsourcing		1,487.2		1,531.3		1,592.2
Infrastructure services		487.0		472.4		563.9
Core maintenance		215.7		230.6		308.8
		3,354.6		3,457.4		3,824.9
Technology
Enterprise-class software and servers		443.9		462.5		464.6
Other technology		55.3		99.7		96.2
		499.2		562.2		560.8
Total	$	3,853.8	$	4,019.6	$	4,385.7

Presented below is a reconciliation of segment operating income to consolidated income from continuing operations before income taxes:

Year ended December 31 (millions)		2011			2010			2009
Total segment operating income	$	360.1		$	373.8		$	301.4
Interest expense		(63.1	)		(101.8	)		(95.2	)
Other income (expense), net		(55.5	)		(51.0	)		(16.6	)
Corporate and eliminations		(35.5	)		1.9			28.6
Total income from continuing operations before income taxes	$	206.0		$	222.9		$	218.2

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

December 31 (millions)		2011		2010		2009
Total segment assets	$	1,555.9	$	1,778.2	$	2,001.2
Cash and cash equivalents		714.9		828.3		647.6
Deferred income taxes		208.6		220.3		200.5
Prepaid postretirement assets		43.9		31.2		–
Elimination for sale of receivables		–		–		(100.0	)
Other corporate assets		88.9		162.9		207.6
Total assets	$	2,612.2	$	3,020.9	$	2,956.9

A summary of the company's operations by business segment for 2011, 2010 and 2009 is presented below:

(millions)		Total		Corporate		Services		Technology
2011
Customer revenue	$	3,853.8			$	3,354.6	$	499.2
Intersegment			$	(102.6)		6.3		96.3
Total revenue	$	3,853.8	$	(102.6)	$	3,360.9	$	595.5
Operating income	$	324.6	$	(35.5)	$	231.8	$	128.3
Depreciation and amortization		194.8				116.4		78.4
Total assets		2,612.2		1,056.3		1,164.7		391.2
Capital expenditures		134.4		9.8		65.2		59.4
2010
Customer revenue	$	4,019.6			$	3,457.4	$	562.2
Intersegment			$	(116.6)		5.9		110.7
Total revenue	$	4,019.6	$	(116.6)	$	3,463.3	$	672.9
Operating income	$	375.7	$	1.9	$	231.6	$	142.2
Depreciation and amortization		250.6				191.4		59.2
Total assets		3,020.9		1,242.7		1,359.9		418.3
Capital expenditures		203.1		12.0		125.3		65.8
2009
Customer revenue	$	4,385.7			$	3,824.9	$	560.8
Intersegment			$	(170.8)		6.9		163.9
Total revenue	$	4,385.7	$	(170.8)	$	3,831.8	$	724.7
Operating income	$	330.0	$	28.6	$	213.6	$	87.8
Depreciation and amortization		352.5				275.1		77.4
Total assets		2,956.9		955.7		1,529.2		472.0
Capital expenditures		201.3		1.5		141.8		58.0

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 (millions)		2011		2010		2009
Revenue
United States	$	1,577.9	$	1,733.1	$	2,005.4
United Kingdom		408.7		426.2		469.2
Other foreign		1,867.2		1,860.3		1,911.1
Total	$	3,853.8	$	4,019.6	$	4,385.7
Properties, net
United States	$	127.1	$	142.8	$	135.4
United Kingdom		22.1		23.1		27.0
Other foreign		42.1		53.8		63.3
Total	$	191.3	$	219.7	$	225.7
Outsourcing assets, net
United States	$	61.5	$	69.6	$	72.3
United Kingdom		37.3		31.9		71.5
Other foreign		39.1		60.8		69.9
Total	$	137.9	$	162.3	$	213.7