Segments (Tables)

9 Months Ended

Sep. 30, 2016

Segments:

Revenue and Pre-tax Income by Segment

SEGMENT INFORMATION

	Cognitive Solutions &
	Industry Services						Technology
				Global			Services &
	Cognitive			Business			Cloud						Global			Total
(Dollars in millions)	Solutions			Services			Platforms			Systems			Financing			Segments
For the three months ended September 30, 2016:
External revenue	$	4,235		$	4,191		$	8,748		$	1,558		$	412		$	19,145
Internal revenue	667			93			180			176			352			1,468
Total revenue	$	4,902		$	4,284		$	8,929		$	1,734		$	763		$	20,613
Pre-tax income from continuing operations	$	1,574		$	544		$	1,288		$	136		$	355		$	3,897
Revenue year-to-year change	7.0		%	(1.0		)%	2.6		%	(20.5		)%	(26.0		)%	(1.0		)%
Pre-tax income year-to-year change	(1.4		)%	(18.0		)%	(2.2		)%	(45.3		)%	(36.8		)%	(11.2		)%
Pre-tax income margin	32.1		%	12.7		%	14.4		%	7.8		%	46.5		%	18.9		%
For the three months ended September 30, 2015*:
External revenue	$	4,052		$	4,206		$	8,541		$	1,973		$	447		$	19,219
Internal revenue	528			120			161			209			584			1,601
Total revenue	$	4,580		$	4,326		$	8,702		$	2,182		$	1,031		$	20,821
Pre-tax income from continuing operations	$	1,596		$	664		$	1,317		$	248		$	562		$	4,387
Pre-tax income margin	34.9		%	15.4		%	15.1		%	11.4		%	54.5		%	21.1		%

* Recast to conform with 2016 presentation.

SEGMENT INFORMATION

	Cognitive Solutions &
	Industry Services						Technology
				Global			Services &
	Cognitive			Business			Cloud						Global			Total
(Dollars in millions)	Solutions			Services			Platforms			Systems			Financing			Segments
For the nine months ended September 30, 2016:
External revenue	$	12,889		$	12,578		$	26,029		$	5,184		$	1,245		$	57,926
Internal revenue	1,929			310			501			594			1,340			4,673
Total revenue	$	14,818		$	12,888		$	26,530		$	5,778		$	2,585		$	62,599
Pre-tax income from continuing operations	$	4,039		$	1,210		$	2,825		$	354		$	1,208		$	9,636
Revenue year-to-year change	3.5		%	(2.7		)%	0.1		%	(20.0		)%	(20.7		)%	(3.0		)%
Pre-tax income year-to-year change	(18.4		)%	(36.2		)%	(26.8		)%	(66.2		)%	(28.5		)%	(28.3		)%
Pre-tax income margin	27.3		%	9.4		%	10.6		%	6.1		%	46.7		%	15.4		%
For the nine months ended September 30, 2015*:
External revenue	$	12,616		$	12,869		$	25,993		$	6,656		$	1,386		$	59,520
Internal revenue	1,695			380			500			571			1,874			5,020
Total revenue	$	14,311		$	13,249		$	26,493		$	7,226		$	3,261		$	64,540
Pre-tax income from continuing operations	$	4,949		$	1,895		$	3,861		$	1,048		$	1,690		$	13,444
Pre-tax income margin	34.6		%	14.3		%	14.6		%	14.5		%	51.8		%	20.8		%

* Recast to conform with 2016 presentation.

Reconciliation of segment revenue to IBM as reported

(Dollars in millions)
For the three months ended September 30:	2016			2015*
Revenue:
Total reportable segments	$	20,613		$	20,821
Eliminations of internal transactions	(1,468		)	(1,601		)
Other revenue	81			60
Total consolidated revenue	$	19,226		$	19,280

(Dollars in millions)
For the nine months ended September 30:	2016			2015*
Revenue:
Total reportable segments	$	62,599		$	64,540
Eliminations of internal transactions	(4,673		)	(5,020		)
Other revenue	223			162
Total consolidated revenue	$	58,149		$	59,682

* Recast to conform with 2016 presentation.

Reconciliation of segment pre-tax income to IBM as reported

(Dollars in millions)
For the three months ended September 30:			2016				2015*
Pre-tax income from continuing operations:
Total reportable segments	$	3,897			$	4,387
Amortization of acquired intangible assets	(265			)	(162			)
Acquisition-related (charges)/income	(4			)	(4			)
Non-operating retirement-related (costs)/income	(139			)	(204			)
Eliminations of internal transactions	(185			)	(362			)
Unallocated corporate amounts	(42			)	(35			)
Total pre-tax income from continuing operations	$	3,263			$	3,621

(Dollars in millions)
For the nine months ended September 30:			2016				2015*
Pre-tax income from continuing operations:
Total reportable segments	$	9,636			$	13,444
Amortization of acquired intangible assets	(742			)	(492			)
Acquisition-related (charges)/income	(1			)	(11			)
Non-operating retirement-related (costs)/income	(444			)	(831			)
Eliminations of internal transactions	(873			)	(1,175			)
Unallocated corporate amounts	(230			)	(88			)
Total pre-tax income from continuing operations	$	7,345			$	10,846

* Recast to conform with 2016 presentation.