Segments

9 Months Ended

Sep. 30, 2018

Segments

Segments

7. Segments: The tables below reflect the continuing operations results of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is based on operating pre-tax income from continuing operations. The segments represent components of the company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker (the chief executive officer) in determining how to allocate resources and evaluate performance.

SEGMENT INFORMATION

							Technology
				Global			Services &
	Cognitive			Business			Cloud						Global			Total
(Dollars in millions)	Solutions			Services			Platforms			Systems			Financing			Segments
For the three months ended September 30, 2018:
External revenue	$	4,148		$	4,130		$	8,292		$	1,736		$	388		$	18,694
Internal revenue	639			77			240			181			338			1,476
Total revenue	$	4,787		$	4,207		$	8,533		$	1,917		$	726		$	20,170
Pre-tax income from continuing operations	$	1,629		$	579		$	1,075		$	209		$	308		$	3,801
Revenue year-to-year change	(4.8		)%	0.5		%	(1.0		)%	(1.6		)%	4.0		%	(1.5		)%
Pre-tax income year-to-year change	(0.9		)%	30.9		%	(8.6		)%	(37.9		)%	26.9		%	(1.1		)%
Pre-tax income margin	34.0		%	13.8		%	12.6		%	10.9		%	42.5		%	18.8		%
For the three months ended September 30, 2017:
External revenue	$	4,400		$	4,093		$	8,457		$	1,721		$	427		$	19,098
Internal revenue	629			92			164			227			272			1,384
Total revenue	$	5,030		$	4,185		$	8,621		$	1,948		$	698		$	20,482
Pre-tax income from continuing operations *	$	1,643		$	442		$	1,177		$	337		$	243		$	3,843
Pre-tax income margin *	32.7		%	10.6		%	13.7		%	17.3		%	34.8		%	18.8		%

* Recast to reflect adoption of the FASB guidance on presentation of net benefit cost.

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended September 30:	2018			2017
Revenue:
Total reportable segments	$	20,170		$	20,482
Eliminations of internal transactions	(1,476		)	(1,384		)
Other revenue	62			56
Total consolidated revenue	$	18,756		$	19,153
Pre-tax income from continuing operations:
Total reportable segments	$	3,801		$	3,843	*
Amortization of acquired intangible assets	(207		)	(238		)
Acquisition-related (charges)/income	(2		)	0
Non-operating retirement-related (costs)/income	(389		)	(273		)*
Eliminations of internal transactions	(116		)	(126		)
Unallocated corporate amounts	(91		)	(141		)
Total pre-tax income from continuing operations	$	2,996		$	3,065

* Recast to reflect adoption of the FASB guidance on presentation of net benefit cost.

SEGMENT INFORMATION

							Technology
				Global			Services &
	Cognitive			Business			Cloud						Global			Total
(Dollars in millions)	Solutions			Services			Platforms			Systems			Financing			Segments
For the nine months ended September 30, 2018:
External revenue	$	13,027		$	12,495		$	25,533		$	5,412		$	1,188		$	57,655
Internal revenue	2,122			249			550			576			1,240			4,738
Total revenue	$	15,149		$	12,744		$	26,083		$	5,989		$	2,428		$	62,392
Pre-tax income from continuing operations	$	4,718		$	1,109		$	2,395		$	352		$	1,042		$	9,616
Revenue year-to-year change	0.8		%	2.2		%	2.0		%	10.2		%	11.8		%	2.8		%
Pre-tax income year-to-year change	4.3		%	7.1		%	(15.8		)%	58.8		%	24.8		%	1.7		%
Pre-tax income margin	31.1		%	8.7		%	9.2		%	5.9		%	42.9		%	15.4		%
For the nine months ended September 30, 2017:
External revenue	$	13,021		$	12,196		$	25,079		$	4,863		$	1,246		$	56,405
Internal revenue	2,001			271			497			571			925			4,265
Total revenue	$	15,022		$	12,467		$	25,576		$	5,434		$	2,171		$	60,670
Pre-tax income from continuing operations *	$	4,522		$	1,035		$	2,845		$	222		$	835		$	9,459
Pre-tax income/(loss) margin *	30.1		%	8.3		%	11.1		%	4.1		%	38.5		%	15.6		%

* Recast to reflect adoption of the FASB guidance on presentation of net benefit cost.

Reconciliations to IBM as Reported:

(Dollars in millions)
For the nine months ended September 30:	2018			2017
Revenue:
Total reportable segments	$	62,392		$	60,670
Eliminations of internal transactions	(4,738		)	(4,265		)
Other revenue	176			192
Total consolidated revenue	$	57,830		$	56,597
Pre-tax income from continuing operations:
Total reportable segments	$	9,616		$	9,459	*
Amortization of acquired intangible assets	(613		)	(731		)
Acquisition-related (charges)/income	(3		)	(19		)
Non-operating retirement-related (costs)/income	(1,185		)	(969		)*
Eliminations of internal transactions	(625		)	(515		)
Unallocated corporate amounts	(283		)	(294		)
Total pre-tax income from continuing operations	$	6,908		$	6,931

* Recast to reflect adoption of the FASB guidance on presentation of net benefit cost.