Segments

9 Months Ended

Sep. 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 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	$	1,649		$	453		$	1,192		$	339		$	244		$	3,876
Revenue year-to-year change	2.6		%	(2.3		)%	(3.4		)%	12.3		%	(8.5		)%	(0.6		)%
Pre-tax income year-to-year change	4.8		%	(16.8		)%	(7.5		)%	149.7		%	(31.4		)%	(0.5		)%
Pre-tax income margin	32.8		%	10.8		%	13.8		%	17.4		%	34.9		%	18.9		%
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
Pre-tax income margin	32.1		%	12.7		%	14.4		%	7.8		%	46.5		%	18.9		%

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended September 30:	2017			2016
Revenue:
Total reportable segments	$	20,482		$	20,613
Eliminations of internal transactions	(1,384		)	(1,468		)
Other revenue	56			81
Total consolidated revenue	$	19,153		$	19,226
Pre-tax income from continuing operations:
Total reportable segments	$	3,876		$	3,897
Amortization of acquired intangible assets	(238		)	(265		)
Acquisition-related (charges)/income	0			(4		)
Non-operating retirement-related (costs)/income	(306		)	(139		)
Eliminations of internal transactions	(126		)	(185		)
Unallocated corporate amounts	(141		)	(42		)
Total pre-tax income from continuing operations	$	3,065		$	3,263

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, 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	$	4,539		$	1,065		$	2,888		$	227		$	836		$	9,555
Revenue year-to-year change	1.4		%	(3.3		)%	(3.6		)%	(6.0		)%	(16.0		)%	(3.1		)%
Pre-tax income year-to-year change	12.4		%	(12.0		)%	2.2		%	(35.9		)%	(30.7		)%	(0.8		)%
Pre-tax income margin	30.2		%	8.5		%	11.3		%	4.2		%	38.5		%	15.7		%
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
Pre-tax income margin	27.3		%	9.4		%	10.6		%	6.1		%	46.7		%	15.4		%

Reconciliations to IBM as Reported:

(Dollars in millions)
For the nine months ended September 30:	2017			2016
Revenue:
Total reportable segments	$	60,670		$	62,599
Eliminations of internal transactions	(4,265		)	(4,673		)
Other revenue	192			223
Total consolidated revenue	$	56,597		$	58,149
Pre-tax income from continuing operations:
Total reportable segments	$	9,555		$	9,636
Amortization of acquired intangible assets	(731		)	(742		)
Acquisition-related (charges)/income	(19		)	(1		)
Non-operating retirement-related (costs)/income	(1,065		)	(444		)
Eliminations of internal transactions	(515		)	(873		)
Unallocated corporate amounts	(294		)	(230		)
Total pre-tax income from continuing operations	$	6,931		$	7,345