Segment Reporting

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Our reportable segments correspond to how we organize and manage the business, as defined by our Chief Executive Officer, who is also our Chief Operating Decision Maker (CODM), and are aligned to the industries in which our clients operate. Our segments involve the delivery of business process services and include service arrangements where we manage a customer's business activity or process.

In the first quarter of 2020, we realigned our sales organization and certain shared IT and other allocated functions to reflect how we currently manage our business.

In the third quarter of 2020, in order to provide greater visibility into the profitability of our segments, certain costs that were previously included in the Shared IT/Infrastructure and Corporate Costs (now referred to as Unallocated Costs) are being allocated to each of the reportable segments. All prior periods presented have been recast to reflect these changes.

Our financial performance is based on Segment Profit/(Loss) and Segment Adjusted EBITDA for our three reportable segments (Commercial Industries, Government Services and Transportation), Other and Unallocated Costs. Our CODM does not evaluate operating segments using discrete asset information.

Commercial Industries: Our Commercial Industries segment provides business process services and customized solutions to clients in a variety of industries. Across the Commercial Industries segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and their consumers and employees.

Government Services: Our Government Services segment provides government-centric business process services to U.S. federal, state and local and foreign governments for public assistance, program administration, transaction processing and payment services. Our solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations.

Transportation: Our Transportation segment provides systems and support, as well as revenue-generating services, to government clients. On behalf of government agencies and authorities in the transportation industry, we deliver mission-critical mobility and payment solutions that improve automation, interoperability and decision-making to streamline operations, increase revenue and reduce congestion while creating safer communities and seamless travel experiences for consumers.

Other includes our divestitures and our Student Loan business, which the Company exited in the third quarter of 2018.

Unallocated Costs includes IT infrastructure costs that are shared by multiple reportable segments, enterprise application costs and certain corporate overhead expenses not directly attributable or allocated to our reportable segments.

Selected financial information for our reportable segments was as follows:

	Three Months Ended September 30,
(in millions)	Commercial Industries		Government Services		Transportation		Other				Unallocated Costs		Total
2020							Divestitures		Other
Revenue	$	518	$	348	$	175	$	—	$	—	$	—	$	1,041
Segment profit (loss)	$	32	$	122	$	26	$	—	$	6	$	(98)	$	88
Segment depreciation and amortization	$	24	$	6	$	9	$	—	$	—	$	14	$	53
Adjusted EBITDA	$	56	$	128	$	35	$	—	$	6	$	(84)	$	141
2019
Revenue	$	578	$	319	$	201	$	—	$	—	$	—	$	1,098
Segment profit (loss)	$	60	$	70	$	25	$	—	$	—	$	(83)	$	72
Segment depreciation and amortization	$	27	$	7	$	9	$	—	$	—	$	12	$	55
Adjusted EBITDA	$	87	$	77	$	34	$	—	$	—	$	(71)	$	127

	Nine Months Ended September 30,
(in millions)	Commercial Industries		Government Services		Transportation		Other				Unallocated Costs		Total
2020							Divestitures		Other
Revenue	$	1,610	$	969	$	529	$	—	$	—	$	—	$	3,108
Segment profit (loss)	$	99	$	282	$	56	$	—	$	9	$	(258)	$	188
Segment depreciation and amortization	$	79	$	19	$	27	$	—	$	—	$	41	$	166
Adjusted EBITDA	$	178	$	301	$	83	$	—	$	2	$	(217)	$	347
2019
Revenue	$	1,782	$	970	$	579	$	36	$	1	$	—	$	3,368
Segment profit (loss)	$	198	$	202	$	50	$	1	$	—	$	(251)	$	200
Segment depreciation and amortization	$	76	$	24	$	27	$	—	$	—	$	33	$	160
Adjusted EBITDA	$	274	$	226	$	81	$	1	$	—	$	(218)	$	364

(in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss)	2020		2019		2020		2019
Income (Loss) Before Income Taxes	$	(13)	$	(14)	$	(128)	$	(1,471)
Reconciling items:
Amortization of acquired intangible assets	60		61		180		184
Restructuring and related costs	20		8		56		50
Interest expense	14		20		46		60
Goodwill impairment	—		—		—		1,351
(Gain) loss on divestitures and transaction costs	8		3		14		19
Litigation costs (recoveries), net	—		2		20		15
Other (income) expenses, net	(1)		(8)		—		(8)
Segment Pre-tax Income (Loss)	$	88	$	72	$	188	$	200
Segment depreciation and amortization (including contract inducements)	$	53	$	55	$	166	$	160
CA MMIS charge (credit)	—		—		(7)		—
Other adjustments	—		—		—		4
Adjusted EBITDA	$	141	$	127	$	347	$	364

Refer to Note 3 – Revenue for additional information on disaggregated revenues of the reportable segments.