Segments

3 Months Ended

Mar. 31, 2015

Segments:

Segments:

6.Segments: The table on page 26 reflects 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 table reflects this reclassification for the prior-year period.

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 March 31, 2015:
External revenue		$	7,886		$	4,318		$	5,199		$	1,659		$	461		$	19,523
Internal revenue			195			131			964			92			586			1,968
Total revenue		$	8,081		$	4,449		$	6,162		$	1,751		$	1,048		$	21,491
Pre-tax income from
	continuing operations	$	994		$	597		$	1,936		$	24		$	515		$	4,066
Revenue year-to-year change			(11.1)	%		(12.8)	%		(6.5)	%		(24.2)	%		(7.2)	%		(11.3)	%
Pre-tax income year-to-year
	change		(18.2)	%		(21.3)	%		0.9	%		nm			(13.6)	%		0.9	%
Pre-tax income margin			12.3	%		13.4	%		31.4	%		1.4	%		49.2	%		18.9	%
nm - not meaningful
For the three months
	ended March 31, 2014*:
External revenue		$	8,849		$	4,964		$	5,661		$	2,143		$	512		$	22,128
Internal revenue			241			141			932			168			617			2,099
Total revenue		$	9,089		$	5,105		$	6,593		$	2,311		$	1,129		$	24,228
Pre-tax income/(loss) from
	continuing operations	$	1,215		$	759		$	1,918		$	(457)		$	596		$	4,031
Pre-tax income margin			13.4	%		14.9	%		29.1	%		(19.8)	%		52.8	%		16.6	%
* Reclassified to conform with 2015 presentation and to reflect discontinued operations presentation.

Reconciliations to IBM as Reported:
(Dollars in millions)
For the three months ended March 31:		2015		2014*
Revenue:
Total reportable segments		$	21,491	$	24,228
Eliminations of internal transactions			(1,968)		(2,099)
Other revenue adjustments			67		107
	Total consolidated revenue	$	19,590	$	22,236
Pre-tax income from continuing operations:
Total reportable segments		$	4,066	$	4,031
Amortization of acquired intangible assets			(170)		(194)
Acquisition-related charges			0		(8)
Non-operating retirement-related (costs)/income			(442)		(123)
Eliminations of internal transactions			(406)		(524)
Unallocated corporate amounts			(48)		0
	Total pre-tax income from continuing operations	$	3,001	$	3,183
* Reclassified to reflect discontinued operations presentation.