Segments

6 Months Ended

Jun. 30, 2017

Segments:

Segments:

6. Segments: The tables on pages 29 and 30 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 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

	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 June 30, 2017:
External revenue	$	4,559		$	4,097		$	8,406		$	1,747		$	415		$	19,224
Internal revenue	655			93			173			177			290			1,388
Total revenue	$	5,214		$	4,190		$	8,579		$	1,924		$	705		$	20,612
Pre-tax income from continuing operations	$	1,615		$	321		$	1,009		$	74		$	282		$	3,302
Revenue year-to-year change	(1.0		)%	(3.9		)%	(4.8		)%	(10.8		)%	(23.9		)%	(5.1		)%
Pre-tax income year-to-year change	11.3		%	(32.5		)%	(21.1		)%	(67.5		)%	(39.6		)%	(15.4		)%
Pre-tax income margin	31.0		%	7.7		%	11.8		%	3.9		%	40.0		%	16.0		%
For the three months ended June 30, 2016:
External revenue	$	4,675		$	4,255		$	8,857		$	1,950		$	424		$	20,162
Internal revenue	594			103			156			206			502			1,561
Total revenue	$	5,269		$	4,359		$	9,013		$	2,156		$	926		$	21,723
Pre-tax income from continuing operations	$	1,451		$	476		$	1,279		$	229		$	467		$	3,901
Pre-tax income margin	27.5		%	10.9		%	14.2		%	10.6		%	50.5		%	18.0		%

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended June 30:	2017			2016
Revenue:
Total reportable segments	$	20,612		$	21,723
Eliminations of internal transactions	(1,388		)	(1,561		)
Other revenue	65			76
Total consolidated revenue	$	19,289		$	20,238
Pre-tax income from continuing operations:
Total reportable segments	$	3,302		$	3,901
Amortization of acquired intangible assets	(243		)	(265		)
Acquisition-related (charges)/income	(6		)	(23		)
Non-operating retirement-related (costs)/income	(381		)	(163		)
Eliminations of internal transactions	(161		)	(334		)
Unallocated corporate amounts	(67		)	(67		)
Total pre-tax income from continuing operations	$	2,443		$	3,049

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 six months ended June 30, 2017:
External revenue	$	8,621		$	8,103		$	16,622		$	3,142		$	819		$	37,307
Internal revenue	1,371			179			333			344			653			2,881
Total revenue	$	9,992		$	8,282		$	16,955		$	3,486		$	1,473		$	40,188
Pre-tax income from continuing operations	$	2,889		$	612		$	1,696		$	(112	)	$	593		$	5,679
Revenue year-to-year change	0.8		%	(3.7		)%	(3.7		)%	(13.8		)%	(19.1		)%	(4.3		)%
Pre-tax income year-to-year change	17.2		%	(8.0		)%	10.3		%	nm		%	(30.5		)%	(1.0		)%
Pre-tax income margin	28.9		%	7.4		%	10.0		%	(3.2		)%	40.3		%	14.1		%
For the six months ended June 30, 2016:
External revenue	$	8,654		$	8,387		$	17,280		$	3,626		$	834		$	38,781
Internal revenue	1,262			216			321			418			988			3,206
Total revenue	$	9,916		$	8,603		$	17,602		$	4,044		$	1,822		$	41,987
Pre-tax income from continuing operations	$	2,465		$	665		$	1,537		$	218		$	853		$	5,739
Pre-tax income margin	24.9		%	7.7		%	8.7		%	5.4		%	46.8		%	13.7		%

nm - not meaningful

Reconciliations to IBM as Reported:

(Dollars in millions)
For the six months ended June 30:	2017			2016
Revenue:
Total reportable segments	$	40,188		$	41,987
Eliminations of internal transactions	(2,881		)	(3,206		)
Other revenue	136			142
Total consolidated revenue	$	37,443		$	38,923
Pre-tax income from continuing operations:
Total reportable segments	$	5,679		$	5,739
Amortization of acquired intangible assets	(493		)	(477		)
Acquisition-related (charges)/income	(19		)	3
Non-operating retirement-related (costs)/income	(759		)	(306		)
Eliminations of internal transactions	(388		)	(689		)
Unallocated corporate amounts	(154		)	(189		)
Total pre-tax income from continuing operations	$	3,867		$	4,082