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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2023
1-2360
(Commission file number)
INTERNATIONAL BUSINESS MACHINES CORPORATION
(Exact name of registrant as specified in its charter)
New York
(State of incorporation)
13-0871985
(IRS employer identification number)
One New Orchard Road
Armonk, New York
(Address of principal executive offices)
10504
(Zip Code)
914-499-1900
(Registrant’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange
on which registered
Capital stock, par value $.20 per shareIBMNew York Stock Exchange
  NYSE Chicago
1.125% Notes due 2024IBM 24ANew York Stock Exchange
2.875% Notes due 2025IBM 25ANew York Stock Exchange
0.950% Notes due 2025IBM 25BNew York Stock Exchange
0.875% Notes due 2025IBM 25CNew York Stock Exchange
0.300% Notes due 2026IBM 26BNew York Stock Exchange
1.250% Notes due 2027IBM 27BNew York Stock Exchange
3.375% Notes due 2027IBM 27FNew York Stock Exchange
0.300% Notes due 2028IBM 28BNew York Stock Exchange
1.750% Notes due 2028IBM 28ANew York Stock Exchange
1.500% Notes due 2029IBM 29New York Stock Exchange
0.875% Notes due 2030IBM 30ANew York Stock Exchange
1.750% Notes due 2031IBM 31New York Stock Exchange
3.625% Notes due 2031IBM 31BNew York Stock Exchange
0.650% Notes due 2032IBM 32ANew York Stock Exchange
1.250% Notes due 2034IBM 34New York Stock Exchange
3.750% Notes due 2035IBM 35New York Stock Exchange
4.875% Notes due 2038IBM 38New York Stock Exchange
1.200% Notes due 2040IBM 40New York Stock Exchange
4.000% Notes due 2043IBM 43New York Stock Exchange
7.00% Debentures due 2025IBM 25New York Stock Exchange
6.22% Debentures due 2027IBM 27New York Stock Exchange
6.50% Debentures due 2028IBM 28New York Stock Exchange
5.875% Debentures due 2032IBM 32DNew York Stock Exchange
7.00% Debentures due 2045IBM 45New York Stock Exchange
7.125% Debentures due 2096IBM 96New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section l3 or l5(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒
The registrant had 911,006,240 shares of common stock outstanding at June 30, 2023.


Table of Contents
Index

Page
2

Table of Contents
Part I - Financial Information
Item 1. Consolidated Financial Statements:
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED INCOME STATEMENT
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
(Dollars in millions except per share amounts) 2023 2022 2023 2022
Revenue:    
Services$7,553 $7,640 $15,077 $15,343 
Sales7,739 7,748 14,271 14,087 
Financing183 147 380 303 
Total revenue15,475 15,535 29,727 29,732 
Cost:    
Services5,294 5,399 10,604 10,747 
Sales1,587 1,750 2,910 3,165 
Financing93 96 203 194 
Total cost6,974 7,246 13,717 14,107 
Gross profit8,501 8,290 16,010 15,625 
Expense and other (income):    
Selling, general and administrative4,900 4,855 9,754 9,452 
Research, development and engineering1,687 1,673 3,342 3,352 
Intellectual property and custom development income(248)(176)(428)(297)
Other (income) and expense(261)(81)(506)166 
Interest expense423 297 790 607 
Total expense and other (income)6,501 6,568 12,952 13,280 
Income from continuing operations before income taxes2,000 1,722 3,058 2,345 
Provision for income taxes419 257 543 218 
Income from continuing operations$1,581 $1,465 $2,515 $2,127 
Income/(loss) from discontinued operations, net of tax2 (73)(4)(2)
Net income$1,583 $1,392 $2,511 $2,125 
Earnings/(loss) per share of common stock:    
Assuming dilution:    
Continuing operations$1.72 $1.61 $2.74 $2.34 
Discontinued operations0.00 (0.08)0.00 0.00 
Total$1.72 $1.53 $2.73 $2.34 
Basic:    
Continuing operations$1.74 $1.62 $2.77 $2.36 
Discontinued operations0.00 (0.08)0.00 0.00 
Total$1.74 $1.54 $2.76 $2.36 
Weighted-average number of common shares outstanding: (millions)    
Assuming dilution919.5 910.7 918.6 910.0 
Basic909.9 901.5 908.7 900.4 

(Amounts may not add due to rounding.)
(The accompanying notes are an integral part of the financial statements.)
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Table of Contents
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
(Dollars in millions) 2023 2022 2023 2022
Net income$1,583 $1,392 $2,511 $2,125 
Other comprehensive income/(loss), before tax:    
Foreign currency translation adjustments116 213 29 655 
Net changes related to available-for-sale securities:    
Unrealized gains/(losses) arising during the period(17)0 (1)(1)
Reclassification of (gains)/losses to net income    
Total net changes related to available-for-sale securities(17)0 (1)(1)
Unrealized gains/(losses) on cash flow hedges:    
Unrealized gains/(losses) arising during the period178 200 149 260 
Reclassification of (gains)/losses to net income(30)16 (152)16 
Total unrealized gains/(losses) on cash flow hedges148 217 (3)276 
Retirement-related benefit plans:    
Prior service costs/(credits)   (5)
Net (losses)/gains arising during the period0 1 2 10 
Curtailments and settlements6 11 5 19 
Amortization of prior service (credits)/costs(2)6 (4)13 
Amortization of net (gains)/losses130 450 261 917 
Total retirement-related benefit plans134 468 263 954 
Other comprehensive income/(loss), before tax381 897 289 1,885 
Income tax (expense)/benefit related to items of other comprehensive income(101)(534)(48)(819)
Other comprehensive income/(loss), net of tax280 363 241 1,066 
Total comprehensive income$1,863 $1,755 $2,751 $3,191 

(Amounts may not add due to rounding.)
(The accompanying notes are an integral part of the financial statements.)
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Table of Contents
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
(Dollars in millions)At June 30, 2023At December 31, 2022
Assets:  
Current assets:  
Cash and cash equivalents$9,394 $7,886 
Restricted cash31 103 
Marketable securities6,904 852 
Notes and accounts receivable — trade (net of allowances of $217 in 2023 and $233 in 2022)
5,673 6,541 
Short-term financing receivables:
Held for investment (net of allowances of $143 in 2023 and $145 in 2022)
5,564 6,851 
Held for sale865 939 
Other accounts receivable (net of allowances of $108 in 2023 and $89 in 2022)
838 817 
Inventory, at lower of average cost or net realizable value:
Finished goods174 158 
Work in process and raw materials1,327 1,394 
Total inventory1,501 1,552 
Deferred costs957 967 
Prepaid expenses and other current assets2,730 2,611 
Total current assets34,458 29,118 
Property, plant and equipment18,588 18,695 
Less: Accumulated depreciation13,145 13,361 
Property, plant and equipment — net5,443 5,334 
Operating right-of-use assets — net2,653 2,878 
Long-term financing receivables (net of allowances of $28 in 2023 and $28 in 2022)
5,221 5,806 
Prepaid pension assets8,735 8,236 
Deferred costs897 866 
Deferred taxes6,340 6,256 
Goodwill56,385 55,949 
Intangible assets — net10,496 11,184 
Investments and sundry assets1,585 1,617 
Total assets$132,213 $127,243 

(Amounts may not add due to rounding.)
(The accompanying notes are an integral part of the financial statements.)
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Table of Contents
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET – (CONTINUED)
(UNAUDITED)
LIABILITIES AND EQUITY
(Dollars in millions except per share amounts)At June 30, 2023At December 31, 2022
Liabilities:
Current liabilities:  
Taxes$1,606 $2,196 
Short-term debt6,785 4,760 
Accounts payable3,732 4,051 
Compensation and benefits3,185 3,481 
Deferred income12,712 12,032 
Operating lease liabilities842 874 
Other accrued expenses and liabilities3,651 4,111 
Total current liabilities32,513 31,505 
Long-term debt50,691 46,189 
Retirement and nonpension postretirement benefit obligations9,385 9,596 
Deferred income3,264 3,499 
Operating lease liabilities1,986 2,190 
Other liabilities12,103 12,243 
Total liabilities109,942 105,222 
Equity:  
IBM stockholders’ equity:  
Common stock, par value $0.20 per share, and additional paid-in capital
58,963 58,343 
Shares authorized: 4,687,500,000
  
Shares issued: 2023 - 2,262,697,191
  
2022 - 2,257,116,920
  
Retained earnings149,318 149,825 
Treasury stock - at cost(169,581)(169,484)
Shares: 2023 - 1,351,690,951
  
2022 - 1,351,024,943
  
Accumulated other comprehensive income/(loss)(16,499)(16,740)
Total IBM stockholders’ equity22,201 21,944 
Noncontrolling interests70 77 
Total equity22,271 22,021 
Total liabilities and equity$132,213 $127,243 
(Amounts may not add due to rounding.)
(The accompanying notes are an integral part of the financial statements.)
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Table of Contents
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30,
(Dollars in millions) 2023 2022*
Cash flows from operating activities:  
Net income$2,511 $2,125 
Adjustments to reconcile net income to cash provided by operating activities:  
Depreciation1,047 1,251 
Amortization of intangibles1,104 1,251 
Stock-based compensation556 488 
Net (gain)/loss on asset sales and other(113)(100)
Changes in operating assets and liabilities, net of acquisitions/divestitures1,308 (446)
Net cash provided by operating activities6,412 4,569 
Cash flows from investing activities:  
Payments for property, plant and equipment(664)(620)
Proceeds from disposition of property, plant and equipment25 90 
Investment in software(305)(341)
Acquisition of businesses, net of cash acquired(356)(958)
Divestitures of businesses, net of cash transferred6 1,268 
Purchases of marketable securities and other investments(9,260)(2,336)
Proceeds from disposition of marketable securities and other investments2,600 1,711 
Net cash provided by/(used in) investing activities(7,953)(1,186)
Cash flows from financing activities:  
Proceeds from new debt9,432 4,402 
Payments to settle debt(3,260)(3,959)
Short-term borrowings/(repayments) less than 90 days — net(3)(9)
Common stock repurchases for tax withholdings(240)(315)
Financing — other56 25 
Cash dividends paid(3,007)(2,963)
Net cash provided by/(used in) financing activities2,978 (2,819)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(1)(267)
Net change in cash, cash equivalents and restricted cash1,436 297 
Cash, cash equivalents and restricted cash at January 17,988 6,957 
Cash, cash equivalents and restricted cash at June 30$9,425 $7,254 
*    Includes immaterial cash flows from discontinued operations.
(Amounts may not add due to rounding.)
(The accompanying notes are an integral part of the financial statements.)
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INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF EQUITY
(UNAUDITED)
(Dollars in millions except per share amounts)Common
Stock and
Additional
Paid-in
Capital
 Retained
Earnings
 Treasury
Stock
 Accumulated
Other
Comprehensive
Income/(Loss)
 Total IBM
Stockholders'
Equity
 Non-
Controlling
Interests
 Total
Equity
Equity - April 1, 2023$58,675 $149,253 $(169,544)$(16,780)$21,604 $68 $21,672 
Net income plus other comprehensive income/(loss):        
Net income 1,583   1,583  1,583 
Other comprehensive income/(loss)   280 280  280 
Total comprehensive income/(loss)    $1,863  $1,863 
Cash dividends paid — common stock ($1.66 per share)
 (1,510)  (1,510) (1,510)
Common stock issued under employee plans (3,199,344 shares)
288    288  288 
Purchases (1,098,988 shares) and sales (860,470 shares) of treasury stock under employee plans — net
 (8)(37) (45) (45)
Changes in noncontrolling interests     2 2 
Equity – June 30, 2023$58,963 $149,318 $(169,581)$(16,499)$22,201 $70 $22,271 
(Dollars in millions except per share amounts)Common
Stock and
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Income/(Loss)
Total IBM
Stockholders'
Equity
Non-
Controlling
Interests
Total
Equity
Equity - April 1, 2022$57,603 $153,401 $(169,422)$(22,532)$19,050 $62 $19,112 
Net income plus other comprehensive income/(loss):        
Net income 1,392   1,392  1,392 
Other comprehensive income/(loss)   363 363  363 
Total comprehensive income/(loss)    $1,755  $1,755 
Cash dividends paid — common stock ($1.65 per share)
 (1,488)  (1,488) (1,488)
Common stock issued under employee plans (4,398,589 shares)
199    199 199
Purchases (1,723,774 shares) and sales (1,070,214 shares) of treasury stock under employee plans — net
 (7)(100) (107) (107)
Changes in noncontrolling interests     6 6 
Equity - June 30, 2022$57,802 $153,298 $(169,522)$(22,169)$19,409 $67 $19,476 
(Amounts may not add due to rounding.)
(The accompanying notes are an integral part of the financial statements.)
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Table of Contents
INTERNATIONAL BUSINESS MACHINES CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF EQUITY – (CONTINUED)
(UNAUDITED)
(Dollars in millions except per share amounts)Common
Stock and
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Income/(Loss)
Total IBM
Stockholders'
Equity
Non-
Controlling
Interests
Total
Equity
Equity - January 1, 2023$58,343 $149,825 $(169,484)$(16,740)$21,944 $77 $22,021 
Net income plus other comprehensive income/(loss):        
Net income 2,511   2,511  2,511 
Other comprehensive income/(loss)   241 241  241 
Total comprehensive income/(loss)    $2,751  $2,751 
Cash dividends paid — common stock ($3.31 per share)
 (3,007)  (3,007) (3,007)
Common stock issued under employee plans (5,580,271 shares)
619    619  619 
Purchases (1,810,313 shares) and sales (1,144,305 shares) of treasury stock under employee plans — net
 (10)(97) (107) (107)
Changes in noncontrolling interests     (7)(7)
Equity - June 30, 2023$58,963 $149,318 $(169,581)$(16,499)$22,201 $70 $22,271 
(Dollars in millions except per share amounts)Common
Stock and
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Income/(Loss)
Total IBM
Stockholders'
Equity
Non-
Controlling
Interests
Total
Equity
Equity - January 1, 2022$57,319 $154,209 $(169,392)$(23,234)$18,901 $95 $18,996 
Net income plus other comprehensive income/(loss):        
Net income 2,125   2,125  2,125 
Other comprehensive income/(loss)   1,066 1,066  1,066 
Total comprehensive income/(loss)    $3,191  $3,191 
Cash dividends paid — common stock ($3.29 per share)
 (2,963)  (2,963) (2,963)
Common stock issued under employee plans (5,960,724 shares)
420    420  420 
Purchases (2,319,484 shares) and sales (1,470,514 shares) of treasury stock under employee plans — net
 (11)(130) (141) (141)
Other equity63 (63)0 0 
Changes in noncontrolling interests     (27)(27)
Equity - June 30, 2022$57,802 $153,298 $(169,522)$(22,169)$19,409 $67 $19,476 
(Amounts may not add due to rounding.)
(The accompanying notes are an integral part of the financial statements.)
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Notes to Consolidated Financial Statements

1. Basis of Presentation:
The accompanying Consolidated Financial Statements and footnotes of the International Business Machines Corporation (IBM or the company) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The financial statements and footnotes are unaudited. In the opinion of the company’s management, these statements include all adjustments, which are only of a normal recurring nature, necessary to present a fair statement of the company’s results of operations, financial position and cash flows.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) that are reported in the Consolidated Financial Statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates.
In the fourth quarter of 2022, the company completed its annual assessment of the useful lives of its property, plant and equipment. Due to advances in technology, the company determined it should increase the estimated useful lives of its server and network equipment from five to six years for new assets and from three to four years for used assets. This change in accounting estimate was effective beginning January 1, 2023. Based on the carrying amount of server and network equipment included in property, plant and equipment-net in the company's Consolidated Balance Sheet as of December 31, 2022, the effect of this change in estimate was an increase in income from continuing operations before income taxes of $57 million, or $0.05 per basic and diluted share for the three months ended June 30, 2023, and $131 million, or $0.12 and $0.11 per basic and diluted share, respectively, for the six months ended June 30, 2023.
For the three and six months ended June 30, 2023, the company reported a provision for income taxes of $419 million and $543 million, respectively, and its effective tax rate was 21.0 percent and 17.8 percent, respectively. For the three and six months ended June 30, 2022, the company reported a provision for income taxes of $257 million and $218 million, respectively, and its effective tax rate was 14.9 percent and 9.3 percent, respectively. The rates are driven by many factors including the impacts of foreign tax credit regulations, geographical mix of income, incentives and changes in unrecognized tax benefits.
Noncontrolling interest amounts of $3.9 million and $5.5 million, net of tax, for the three months ended June 30, 2023 and 2022, respectively, and $8.4 million and $10.5 million, net of tax, for the six months ended June 30, 2023 and 2022, respectively, are included as a reduction within other (income) and expense in the Consolidated Income Statement.
The company has supplier finance programs with third-party financial institutions where the company agrees to pay the financial institutions the stated amounts of invoices from participating suppliers on the originally invoiced maturity date, which have an average term of 90 days. The financial institutions offer earlier payment of the invoices at the sole discretion of the supplier for a discounted amount. The company does not provide secured legal assets or other forms of guarantees under the arrangements. The company is not a party to the arrangements between its suppliers and the financial institutions. These obligations are recognized as accounts payable in the Consolidated Balance Sheet. The obligations outstanding under these programs at June 30, 2023 and December 31, 2022 were $115 million and $60 million, respectively.
Interim results are not necessarily indicative of financial results for a full year. The information included in this Form 10-Q should be read in conjunction with the company’s 2022 Annual Report.
Within the financial statements and tables presented, certain columns and rows may not add due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts. Certain prior-period amounts have been reclassified to conform to the current-period presentation. This is annotated where applicable.
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Notes to Consolidated Financial Statements — (continued)
2. Accounting Changes:
Standards Implemented
Disclosures of Supplier Finance Program Obligations
Standard/Description–Issuance date: September 2022. This guidance requires an entity to provide certain interim and annual disclosures about the use of supplier finance programs in connection with the purchase of goods or services.
Effective Date and Adoption Considerations–The guidance was effective January 1, 2023 with certain annual disclosures required beginning in 2024 and early adoption was permitted. The company adopted the guidance as of the effective date.
Effect on Financial Statements or Other Significant Matters–The guidance did not have a material impact in the consolidated financial results. Refer to Note 1, "Basis of Presentation," for additional information.
Troubled Debt Restructurings and Vintage Disclosures
Standard/Description–Issuance date: March 2022. This eliminates the accounting guidance for troubled debt restructurings and requires an entity to apply the general loan modification guidance to all loan modifications, including those made to customers experiencing financial difficulty, to determine whether the modification results in a new loan or a continuation of an existing loan. The guidance also requires presenting current-period gross write-offs by year of origination for financing receivables and net investment in leases.
Effective Date and Adoption Considerations–The amendment was effective January 1, 2023 and early adoption was permitted. The company adopted the guidance on a prospective basis as of the effective date.
Effect on Financial Statements or Other Significant Matters–The guidance did not have a material impact in the consolidated financial results. Refer to note 9, "Financing Receivables," for additional information.

3. Revenue Recognition:
Disaggregation of Revenue
The following tables provide details of revenue by major products/service offerings and revenue by geography.
Revenue by Major Products/Service Offerings
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)2023202220232022
Hybrid Platform & Solutions$4,665 $4,390 $8,844 $8,470 
Transaction Processing1,943 1,776 3,685 3,468 
Total Software$6,608 $6,166 $12,529 $11,938 
Business Transformation2,295 2,227 4,578 4,482 
Application Operations1,758 1,653 3,494 3,272 
Technology Consulting961 928 1,904 1,884 
Total Consulting$5,013 $4,809 $9,975 $9,637 
Hybrid Infrastructure2,260 2,760 3,969 4,461 
Infrastructure Support1,358 1,474 2,747 2,993 
Total Infrastructure$3,618 $4,235 $6,716 $7,453 
Financing*185 146 380 300 
Other51 180 126 404 
Total revenue$15,475 $15,535 $29,727 $29,732 
*Contains lease and loan financing arrangements which are not subject to the guidance on revenue from contracts with customers.
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Notes to Consolidated Financial Statements — (continued)
Revenue by Geography
 Three Months Ended June 30, Six Months Ended June 30,
(Dollars in millions)20232022 20232022
Americas$8,046 $8,142 $15,124 $15,198 
Europe/Middle East/Africa4,602 4,526 8,933 8,757 
Asia Pacific2,827 2,868 5,670 5,778 
Total$15,475 $15,535 $29,727 $29,732 
Remaining Performance Obligations
The remaining performance obligation (RPO) disclosure provides the aggregate amount of the transaction price yet to be recognized as of the end of the reporting period and an explanation as to when the company expects to recognize these amounts in revenue. It is intended to be a statement of overall work under contract that has not yet been performed and does not include contracts in which the customer is not committed, such as certain as-a-Service, governmental, term software license and services offerings. The customer is not considered committed when they are able to terminate for convenience without payment of a substantive penalty. The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property. Additionally, as a practical expedient, the company does not include contracts that have an original duration of one year or less. RPO estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency.
At June 30, 2023, the aggregate amount of the transaction price allocated to RPO related to customer contracts that are unsatisfied or partially unsatisfied was $58 billion. Approximately 72 percent of the amount is expected to be recognized as revenue in the subsequent two years, approximately 26 percent in the subsequent three to five years and the balance thereafter.
Revenue Recognized for Performance Obligations Satisfied (or Partially Satisfied) in Prior Periods
For the three and six months ended June 30, 2023, revenue was reduced by $14 million and $29 million, respectively, for performance obligations satisfied (or partially satisfied) in previous periods mainly due to changes in estimates on contracts with cost-to-cost measures of progress.
Reconciliation of Contract Balances
The following table provides information about notes and accounts receivable–trade, contract assets and deferred income balances.
(Dollars in millions)At June 30, 2023At December 31, 2022
Notes and accounts receivable trade (net of allowances of $217 in 2023 and $233 in 2022)
$5,673 $6,541 
Contract assets*$447 $464 
Deferred income (current)$12,712 $12,032 
Deferred income (noncurrent)$3,264 $3,499 
*Included within prepaid expenses and other current assets in the Consolidated Balance Sheet.


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Notes to Consolidated Financial Statements — (continued)
The amount of revenue recognized during the three and six months ended June 30, 2023 that was included within the deferred income balance at March 31, 2023 and December 31, 2022 was $4.4 billion and $6.8 billion, respectively, and was primarily related to services and software.
The following table provides roll forwards of the notes and accounts receivable–trade allowance for expected credit losses for the six months ended June 30, 2023 and the year ended December 31, 2022.
(Dollars in millions)    
January 1, 2023Additions / (Releases)Write-offs Foreign currency and otherJune 30, 2023
$233 $31 $(47)$1 $217 
January 1, 2022Additions / (Releases)Write-offs Foreign currency and otherDecember 31, 2022
$218 $59 $(31)$(14)$233 
The contract assets allowance for expected credit losses was not material in any of the periods presented.
4. Segments:
The following tables 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 by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments.
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Table of Contents
Notes to Consolidated Financial Statements — (continued)
SEGMENT INFORMATION
(Dollars in millions)SoftwareConsultingInfrastructureFinancingTotal
Segments
For the three months ended June 30, 2023:     
Revenue$6,608 $5,013 $3,618 $185 $15,424