Segments

9 Months Ended

Sep. 30, 2015

Segments:

Segments:

6.Segments: The tables on pages 28 and 29 reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is based on pre-tax income from continuing operations. These results are used, in part, by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments.

In January 2015, the company’s business process outsourcing business, Global Process Services, which was previously managed within Global Technology Services, was integrated into Global Business Services, creating an end-to-end business transformation capability for clients and to better leverage the company’s industry knowledge. The following tables reflect this reclassification for the prior-year periods.

SEGMENT INFORMATION
			Global Services
		Global			Global
		Technology			Business						Systems			Global			Total
(Dollars in millions)		Services			Services			Software			Hardware			Financing			Segments
For the three months
	ended September 30, 2015:
External revenue		$	7,937		$	4,206		$	5,136		$	1,492		$	447		$	19,219
Internal revenue			190			120			785			121			584			1,800
Total revenue		$	8,127		$	4,326		$	5,921		$	1,613		$	1,031		$	21,019
Pre-tax income from
	continuing operations	$	1,274		$	673		$	1,899		$	(24)		$	562		$	4,384
Revenue year-to-year change			(10.6)	%		(13.0)	%		(9.9)	%		(38.3)	%		(4.9)	%		(13.6)	%
Pre-tax income year-to-year
	change		(21.6)	%		(21.8)	%		(18.6)	%		(75.6)	%		18.1	%		(15.6)	%
Pre-tax income margin			15.7	%		15.6	%		32.1	%		(1.5)	%		54.5	%		20.9	%
For the three months
	ended September 30, 2014*:
External revenue		$	8,837		$	4,840		$	5,708		$	2,434		$	487		$	22,305
Internal revenue			252			135			862			182			598			2,029
Total revenue		$	9,089		$	4,975		$	6,570		$	2,616		$	1,084		$	24,334
Pre-tax income/(loss) from
	continuing operations	$	1,625		$	861		$	2,333		$	(99)		$	475		$	5,195
Pre-tax income margin			17.9	%		17.3	%		35.5	%		(3.8)	%		43.9	%		21.3	%
* Reclassified to conform with 2015 presentation.

Reconciliations to IBM as Reported:
(Dollars in millions)
For the three months ended September 30:		2015		2014
Revenue:
Total reportable segments		$	21,019	$	24,334
Eliminations of internal transactions			(1,800)		(2,029)
Other revenue			60		92
	Total consolidated revenue	$	19,280	$	22,397
Pre-tax income from continuing operations:
Total reportable segments		$	4,384	$	5,195
Amortization of acquired intangible assets			(162)		(201)
Acquisition-related charges			(4)		0
Non-operating retirement-related (costs)/income			(204)		(71)
Eliminations of internal transactions			(380)		(402)
Unallocated corporate amounts			(14)		(160)
	Total pre-tax income from continuing operations	$	3,621	$	4,361

SEGMENT INFORMATION
			Global Services
		Global			Global
		Technology			Business						Systems			Global			Total
(Dollars in millions)		Services			Services			Software			Hardware			Financing			Segments
For the nine months
	ended September 30, 2015:
External revenue		$	23,891		$	12,869		$	16,165		$	5,209		$	1,386		$	59,520
Internal revenue			589			380			2,519			320			1,874			5,683
Total revenue		$	24,480		$	13,249		$	18,684		$	5,529		$	3,261		$	65,203
Pre-tax income from
	continuing operations	$	3,516		$	1,926		$	6,107		$	255		$	1,690		$	13,494
Revenue year-to-year change			(10.8)	%		(12.6)	%		(8.9)	%		(32.0)	%		(4.2)	%		(12.6)	%
Pre-tax income year-to-year
	change		(22.0)	%		(26.8)	%		(11.9)	%		nm			1.6	%		(12.3)	%
Pre-tax income margin			14.4	%		14.5	%		32.7	%		4.6	%		51.8	%		20.7	%
nm - not meaningful
For the nine months
	ended September 30, 2014*:
External revenue		$	26,696		$	14,742		$	17,857		$	7,590		$	1,502		$	68,387
Internal revenue			739			416			2,652			541			1,900			6,248
Total revenue		$	27,435		$	15,158		$	20,508		$	8,131		$	3,403		$	74,635
Pre-tax income/(loss) from
	continuing operations	$	4,509		$	2,633		$	6,935		$	(354)		$	1,664		$	15,386
Pre-tax income margin			16.4	%		17.4	%		33.8	%		(4.4)	%		48.9	%		20.6	%
* Reclassified to conform with 2015 presentation.

Reconciliations to IBM as Reported:
(Dollars in millions)
For the nine months ended September 30:		2015		2014
Revenue:
Total reportable segments		$	65,203	$	74,635
Eliminations of internal transactions			(5,683)		(6,248)
Other revenue			162		292
	Total consolidated revenue	$	59,682	$	68,680
Pre-tax income from continuing operations:
Total reportable segments		$	13,494	$	15,386
Amortization of acquired intangible assets			(492)		(596)
Acquisition-related charges			(11)		(10)
Non-operating retirement-related (costs)/income			(831)		(246)
Eliminations of internal transactions			(1,294)		(1,433)
Unallocated corporate amounts			(19)		(209)
	Total pre-tax income from continuing operations	$	10,846	$	12,891